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Exhibit 10.20
LOAN AND SECURITY AGREEMENT
Office Centre Corporation
with
First Union National Bank, as Agent
and
the Financial Institutions
Now or Hereafter Parties Hereto, as Lenders
Dated as of July 9, 1998
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS AND INTERPRETATION...................................1
1.1 TERMS DEFINED....................................................1
1.2 ACCOUNTING PRINCIPLES...........................................14
SECTION 2. THE LOANS.......................................................15
2.1 REVOLVING CREDIT - DESCRIPTION..................................15
2.2 ADVANCES, CONVERSIONS, RENEWALS AND PAYMENTS....................16
2.3 REVOLVING CREDIT INTEREST.......................................20
2.4 ADDITIONAL INTEREST PROVISIONS..................................23
2.5 FEES............................................................24
2.6 LIBOR BASED RATE LOAN PREPAYMENTS...............................25
2.7 USE OF PROCEEDS.................................................25
2.8 INDEMNITY.......................................................25
2.9 CAPITAL ADEQUACY................................................25
SECTION 3. COLLATERAL......................................................25
3.1 DESCRIPTION.....................................................25
3.2 LIEN DOCUMENTS..................................................26
3.3 OTHER ACTIONS...................................................27
3.4 SEARCHES AND CERTIFICATES.......................................27
3.5 LANDLORD'S AND WAREHOUSEMAN'S WAIVERS...........................28
3.6 FILING SECURITY AGREEMENT.......................................28
3.7 POWER OF ATTORNEY...............................................28
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES....................28
4.1 RESOLUTIONS, OPINIONS, AND OTHER DOCUMENTS......................28
4.2 ABSENCE OF CERTAIN EVENTS.......................................29
4.3 WARRANTIES AND REPRESENTATIONS AT CLOSING.......................29
4.4 COMPLIANCE WITH THIS AGREEMENT..................................30
4.5 OFFICERS' CERTIFICATE...........................................30
4.6 CLOSING.........................................................30
4.7 WAIVER OF RIGHTS................................................30
SECTION 5. REPRESENTATIONS AND WARRANTIES..................................31
5.1 CORPORATE ORGANIZATION AND VALIDITY.............................31
5.2 PLACES OF BUSINESS..............................................32
5.3 PENDING LITIGATION..............................................32
5.4 TITLE TO PROPERTIES.............................................32
5.5 GOVERNMENTAL CONSENT............................................32
5.6 TAXES...........................................................32
5.7 FINANCIAL STATEMENTS............................................32
5.8 FULL DISCLOSURE.................................................33
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5.9 SUBSIDIARIES......................................................33
5.10 GUARANTEES, CONTRACTS, ETC........................................33
5.11 GOVERNMENT REGULATIONS, ETC.......................................33
5.12 BUSINESS INTERRUPTIONS............................................34
5.13 NAMES.............................................................35
5.14 OTHER ASSOCIATIONS................................................35
5.15 ENVIRONMENTAL MATTERS.............................................35
5.16 REGULATION O......................................................36
5.17 CAPITAL STOCK.....................................................36
5.18 SOLVENCY..........................................................37
5.19 INTERRELATEDNESS OF BORROWER AND OBLIGORS.........................37
5.20 INVESTMENT COMPANY................................................37
5.21 YEAR 2000 ISSUE...................................................37
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS..................................37
6.1 PAYMENT OF TAXES AND CLAIMS.......................................37
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.................38
6.3 BUSINESS CONDUCTED................................................39
6.4 LITIGATION........................................................39
6.5 ISSUE TAXES.......................................................40
6.6 BANK ACCOUNTS.....................................................40
6.7 EMPLOYEE BENEFIT PLANS............................................40
6.8 FINANCIAL COVENANTS...............................................40
6.9 FINANCIAL AND BUSINESS INFORMATION................................41
6.10 OFFICERS' CERTIFICATES............................................43
6.11 AUDITS AND INSPECTION.............................................43
6.12 TAX RETURNS AND REPORTS...........................................44
6.13 INFORMATION CONCERNING BORROWER AND CONSOLIDATED ENTITIES.........44
6.14 MATERIAL ADVERSE DEVELOPMENTS.....................................44
6.15 PLACES OF BUSINESS................................................44
6.16 ACCOUNT VERIFICATION..............................................45
6.17 YEAR 2000 UNDERTAKING.............................................45
SECTION 7. BORROWER'S NEGATIVE COVENANTS:....................................45
7.1 ASSET SALE, MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION.....45
7.2 ACQUISITIONS......................................................45
7.3 LIENS AND ENCUMBRANCES............................................45
7.4 TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES......................47
7.5 GUARANTEES........................................................47
7.6 DISTRIBUTIONS, REDEMPTIONS AND OTHER INDEBTEDNESS.................47
7.7 LOANS AND INVESTMENTS.............................................48
7.8 USE OF LENDER'S NAME..............................................48
7.9 MISCELLANEOUS COVENANTS...........................................48
SECTION 8. DEFAULT...........................................................49
8.1 EVENTS OF DEFAULT.................................................49
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8.2 CURE..............................................................51
8.3 RIGHTS AND REMEDIES ON DEFAULT....................................51
8.4 NATURE OF REMEDIES................................................53
8.5 SET-OFF...........................................................53
SECTION 9. AGENT.............................................................53
9.1 APPOINTMENT AND AUTHORIZATION.....................................53
9.2 GENERAL IMMUNITY..................................................53
9.3 CONSULTATION WITH COUNSEL.........................................54
9.4 DOCUMENTS.........................................................54
9.5 RIGHTS AS A LENDER................................................54
9.6 RESPONSIBILITY OF AGENT...........................................54
9.7 COLLECTIONS AND DISBURSEMENTS.....................................54
9.8 INDEMNIFICATION...................................................55
9.9 EXPENSES..........................................................56
9.10 NO RELIANCE.......................................................56
9.11 REPORTING.........................................................56
9.12 REMOVAL OF AGENT..................................................56
9.13 ACTION ON INSTRUCTIONS OF LENDERS.................................57
9.14 SEVERAL OBLIGATIONS...............................................57
9.15 CONSENT OF LENDERS TO AGENT'S RIGHTS..............................57
9.16 PARTICIPATIONS AND ASSIGNMENTS....................................59
SECTION 10. MISCELLANEOUS.....................................................60
10.1 GOVERNING LAW.....................................................60
10.2 INTEGRATED AGREEMENT..............................................60
10.3 WAIVER............................................................60
10.4 INDEMNITY.........................................................60
10.5 TIME..............................................................61
10.6 EXPENSES OF AGENT.................................................61
10.7 BROKERAGE.........................................................61
10.8 NOTICES...........................................................62
10.9 HEADINGS..........................................................62
10.10 SURVIVAL..........................................................63
10.11 SUCCESSORS AND ASSIGNS............................................63
10.12 DUPLICATE ORIGINALS...............................................63
10.13 MODIFICATION......................................................63
10.14 SIGNATORIES.......................................................63
10.15 THIRD PARTIES.....................................................63
10.16 DISCHARGE OF TAXES, BORROWER'S OBLIGATIONS, ETC...................63
10.17 WITHHOLDING AND OTHER TAX LIABILITIES.............................64
10.18 CONSENT TO JURISDICTION...........................................64
10.19 WAIVER OF JURY TRIAL..............................................64
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EXHIBIT LIST
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Exhibit A -- Form of Blocked Account Notice
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C -- Form of Security Agreement
Exhibit D -- Form of Surety Agreement
Exhibit E -- Form of Revolving Credit Note
Exhibit F -- Form of Advanced Request Form
Exhibit G -- Form of Compliance Certificate
SCHEDULES
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Schedule A -- Blocked Accounts
Schedule 5.1 -- States of Qualifications
Schedule 5.2 -- Places of Business
Schedule 5.3 -- Judgments, Proceedings, Litigation and Orders
Schedule 5.4 -- Existing Liens and Claims
Schedule 5.7 -- Borrower's Federal Tax Identification Numbers
Schedule 5.9 -- Subsidiaries and Affiliates
Schedule 5.10 -- Existing Guaranties, Investments, Leases and
Employment Agreements
Schedule 5.11(c) -- Employee Benefit Plans
Schedule 5.13(a) -- Schedule of Names
Schedule 5.13(b) -- Trademarks, Patents and Copyrights
Schedule 5.14 -- Other Associations
Schedule 5.15 -- Environmental Matters
Schedule 5.17 -- Capital Stock
Schedule 7.6 -- Indebtedness
Schedule 10.8 -- Addresses of Lenders
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LOAN AND SECURITY AGREEMENT
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This Loan and Security Agreement ("Agreement") is dated this 9th day of
July, 1998, by and among Office Centre Corporation, a Delaware corporation
("Borrower") and First Union National Bank, a national banking association, as
Agent ("Agent") and the financial institutions now or hereafter parties hereto,
as Lenders (collectively, the "Lenders" and severally each a "Lender").
BACKGROUND
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A. Borrower desires to establish financing arrangements with Lenders
and Lenders are willing to make loans and extensions of credit to Borrower under
the terms and provisions hereinafter set forth.
B. The parties desire to define the terms and conditions of their
relationship in writing.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED: As used in this Agreement, the following terms have
the following respective meanings:
ACCOUNT - All of the "accounts" (as that term as defined in Section
9106 of the UCC) of Borrower or any other Obligor, whether now existing or
hereafter existing.
ACCOUNT DEBTOR - Any Person obligated on any Account owing to an
Obligor.
ACQUIRED ENTITY - Any Person acquired by Borrower or any other Obligor
pursuant to, or formed or created by Borrower or any other Obligor for the
purpose of making, a Permitted Acquisition.
ADDITIONAL GUARANTOR - Each Acquired Entity and any other Person that
executes and delivers Surety Documents to Lender.
ADJUSTED BASE RATE MARGIN - Section 2.3(b).
ADJUSTED LIBOR RATE - For any LIBOR Interest Period, as applied to a
LIBOR Based Rate Loan, the rate per annum (rounded upwards, if necessary to the
next 1/16 of 1%) determined pursuant to the following formula:
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Adjusted Libor Rate = Libor Rate
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(1 - Reserve Percentage)
For purposes hereof, "Libor Rate" shall mean the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary to the next 1/16 of 1%)
reported on Telerate display page 3750 (or if not so reported, then as
determined by Agent from a comparable replacement) at which Agent is offered
deposits of United States Dollars in the London interbank market on or about
eleven o'clock (11:00) a.m. London time, two (2) London Business Days prior to
the commencement of such LIBOR Interest Period on amounts substantially equal to
such LIBOR Based Rate Loan as to which Borrower may elect the Adjusted LIBOR
Rate to be applicable with a maturity of comparable duration to the LIBOR
Interest Period selected by Borrower for such LIBOR Based Rate Loan.
ADJUSTED LIBOR RATE MARGIN - Section 2.3(d).
ADVANCE(S) - Any monies advanced or credit extended to Borrower by
Lenders (or by Agent or the Initial Lender on their behalf pursuant to the terms
hereof) under the Revolving Credit.
AFFILIATE - As to any Person, (i) any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person or (ii) any other Person who is a
director or executive officer (A) of such Person, (B) of any Subsidiary of such
Person or (C) of any Person described in clause (i) above. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 5% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
AGREEMENT - This Loan and Security Agreement, as it may be amended,
supplemented, modified or replaced from time to time.
ASSET SALE - The sale, transfer, lease, license or other disposition by
any Consolidated Entity to any Person (other than to another Consolidated Entity
to the extent not prohibited hereby) of any Property (including without
limitation stock of other Persons), now owned or hereafter acquired, of any kind
or nature whatsoever in any transaction or series of related transactions.
AUTHORIZED OFFICER - Any officer of Borrower authorized by specific
resolution of Borrower to request Advances as set forth in the incumbency
certificate referred to in Section 4.1(e) of this Agreement.
BANK AFFILIATE - Any bank that is controlled by a Lender. A bank shall
be deemed controlled by a Lender if (i) such Lender, directly or indirectly, or
acting through one or more other Persons owns, controls or has power to vote
twenty five percent (25%) or more of any class of voting securities of the bank;
or (ii) such Lender controls in any manner the election of a majority of the
directors or trustees of the bank.
BASE RATE - The Prime Rate of Agent.
BASE RATE LOANS - Loans under the Revolving Credit subject to interest
calculated under
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the terms hereof based on the Base Rate.
BLOCKED ACCOUNTS - Collectively, all of the deposit accounts of each
Obligor (other than UDI Canada) for the receipt of proceeds or collections of
Collateral as listed on Schedule "A" attached hereto and made part hereof (as
amended or supplemented from time to time).
BLOCKED ACCOUNT NOTICE - Those certain notices, a form of which is
attached hereto as Exhibit "A," to be sent by Borrower (or, as the case may be,
by the Obligor in whose name a Blocked Account is at any time opened) to the
depository institution at which a Blocked Account is at any time opened.
BORROWING BASE - The sum of sixty percent (60%) of Eligible Inventory
PLUS eighty- five percent (85%) of Eligible Wholesaler Rebates PLUS eighty-five
percent (85%) of Eligible Accounts; provided that, if the IPO is not consummated
prior to December 31, 1998, then the maximum amount of the outstanding Advances
attributable to Eligible Accounts and Eligible Wholesaler Rebates of the
Obligors shall not exceed the following amounts during the following periods:
(i) April 1, 1999 through June 30, 1999, - $6,000,000; (ii) July 1, 1999 through
September 30, 1999, - $5,000,000; (iii) October 1, 1999 through December 31,
1999, - $4,000,000; and (iv) January 1, 2000 and thereafter - $3,000,000.
BORROWING BASE CERTIFICATE - A certificate reflecting the then current
status of the Borrowing Base in the form of Exhibit "B" attached hereto.
BUSINESS DAY - A day other than Saturday or Sunday when Agent is open
for business in Philadelphia, Pennsylvania.
CAPITAL STOCK - Any and all shares, interests, participations or other
equivalents, (however designated) of capital stock of a corporation, any and all
other ownership interests in a Person (other than a corporation) and any and all
warrants or options to purchase any of the foregoing.
CAPITALIZED LEASE OBLIGATIONS - Any Indebtedness represented by
obligations under a lease that is now or will be capitalized for financial
reporting purposes in accordance with GAAP.
CASH COLLATERAL ACCOUNT - Section 2.2(b).
CHANGE OF CONTROL - With respect to Borrower, the result (i) prior to
the consummation of the IPO if ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ do not
own (legally and beneficially) more than 50% of the Capital Stock of Borrower
and (ii) as of and at any time after the IPO (a) if any Person other than
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ owns (legally and
beneficially) 25% or more of the Capital Stock of Borrower and (b) with respect
to any Consolidated Entity, if Borrower does not own 100% of the Capital Stock
of such entity (other than director's qualifying shares).
CLOSING - Section 4.6.
CLOSING DATE - Section 4.6.
COLLATERAL - All of the Property and interests in Property described in
Section 3.1 of this
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Agreement and all other Property and interests in Property (including, without
limitation, such Property and interests in Property described in each Security
Agreement), that now or hereafter secure payment of the Obligations and
satisfaction of Obligors of all covenants and undertakings contained in this
Agreement and the other Loan Documents.
COMPLIANCE CERTIFICATE - Section 6.10.
CONSOLIDATED AMORTIZATION EXPENSE - For any period, the aggregate
consolidated amount of amortization expenses of Borrower and each Consolidated
Entity, as determined in accordance with GAAP.
CONSOLIDATED CAPITAL EXPENDITURES - For any period, the aggregate of
all expenditures made by Borrower and each Consolidated Entity during such
period (including that portion of Capitalized Lease Obligations incurred during
that period) for the purchase, construction or other acquisition of fixed or
capital assets determined in accordance with GAAP.
CONSOLIDATED CURRENT ASSETS - At any date, the aggregate consolidated
amount of the current assets of Borrower and each Consolidated Entity as would
be shown on a consolidated balance sheet of Borrower prepared in accordance with
GAAP.
CONSOLIDATED CURRENT LIABILITIES - At any date, the aggregate
consolidated amount of the current liabilities of Borrower and each Consolidated
Entity as would be shown on a consolidated balance sheet of Borrower prepared in
accordance with GAAP (including for such purposes Indebtedness under the
Revolving Credit as a current liability).
CONSOLIDATED DEPRECIATION EXPENSE - For any period, the aggregate
consolidated amount of depreciation expenses of Borrower and each Consolidated
Entity, as determined in accordance with GAAP.
CONSOLIDATED EBITDA - For any period, Consolidated Net Income (or
deficit) PLUS (i) Consolidated Interest Expense, PLUS (ii) Consolidated Tax
Expense, PLUS (iii) Consolidated Depreciation Expense, plus (iv) Consolidated
Amortization Expense, minus (v) extraordinary gains and PLUS (vi) extraordinary
losses, all as determined in accordance with GAAP.
CONSOLIDATED FUNDED DEBT - For any date, without duplication, the
aggregate consolidated principal amount of Indebtedness of Borrower and each
Consolidated Entity (except for the item described in clause (vi) of the
definition of Indebtedness), as determined in accordance with GAAP.
CONSOLIDATED ENTITY - Each Obligor (other than Borrower) and any other
Person whose financial status and performance is reported, in accordance with
GAAP, with that of Borrower on a consolidated basis, after eliminating
intercompany items.
CONSOLIDATED INTEREST EXPENSE - For any period, the aggregate
consolidated amount of interest expense required to be paid or accrued (without
duplication) during such period on all Indebtedness of Borrower and each
Consolidated Entity outstanding during all or any part of such
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period, as determined in accordance with GAAP.
CONSOLIDATED LIABILITIES - At any date, the aggregate consolidated
amount of all liabilities of every kind of Borrower and each Consolidated Entity
as would be shown on a consolidated balance sheet of Borrower, prepared in
accordance with GAAP.
CONSOLIDATED NET INCOME - For any period, the consolidated net income
after taxes of Borrower and each Consolidated Entity as such would appear on a
consolidated statement of income of Borrower, prepared in accordance with GAAP.
CONSOLIDATED NET WORTH - At any date, the amount by which the
consolidated assets of Borrower and each Consolidated Entity exceed Consolidated
Liabilities as would be shown on a consolidated balance sheet of Borrower
prepared in accordance with GAAP.
CONSOLIDATED TANGIBLE NET WORTH - At any date, the amount by which the
consolidated assets of Borrower and each Consolidated Entity (excluding
trademarks, goodwill, covenants not to compete, deferred closing costs and all
other assets which would be determined to be intangible assets under GAAP)
exceed Consolidated Liabilities as would be shown on a consolidated balance
sheet of Borrower prepared in accordance with GAAP.
CONSOLIDATED TAX EXPENSE - For any period, the aggregate consolidated
amount of income and other tax expense of Borrower and each Consolidated Entity,
as determined in accordance with GAAP.
CURRENT RATIO - At any date, the ratio of (i) Consolidated Current
Assets to (ii) Consolidated Current Liabilities.
DEFAULT - Any event, act, condition or occurrence which with notice, or
lapse of time or both, would constitute an Event of Default hereunder.
DISTRIBUTION -
(1) Dividends or other distributions on any now or hereafter
outstanding Capital Stock of Borrower or any Consolidated Entity;
(2) The redemption, repurchase, defeasance (other than defeasance by
virtue of the non-exercise of employee stock options) or acquisition of such
Capital Stock or of warrants, rights or other options to purchase such Capital
Stock; and
(3) Any loans or advances to any shareholder(s) of Borrower or any
Consolidated Entity.
DOMESTIC OBLIGORS - All Obligors other than UDI Canada.
EBITDA - For any period, Net Income (or deficit) PLUS (i) Interest
Expense, PLUS (ii) Tax Expense, PLUS (iii) Depreciation Expense, plus (iv)
Amortization Expense, minus (v) extraordinary
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gains and PLUS (vi) extraordinary losses, all as determined in accordance with
GAAP.
ELIGIBLE ACCOUNTS - All Accounts of any Obligor meeting all of the
following specifications: (i) the Account is lawfully, unconditionally and
exclusively owned by such Obligor and subject to a first priority perfected Lien
in favor of Agent and to no other Lien and such Obligor has the right of
assignment thereof and the power to grant a security interest therein; (ii) the
Account is valid and enforceable representing the undisputed indebtedness of an
Account Debtor for the purchase of Inventory; (iii) the Account is outstanding
and has been for not more than the earlier of (A) one hundred twenty (120) days
past its original invoice date and (B) sixty (60) days past the original due
date; (iv) not more than fifty percent (50%) of the aggregate balance of all
Accounts owing from an Account Debtor obligated on the Accounts are outstanding
more than the earlier of (A) one hundred twenty (120) days past its original
invoice date and (B) sixty (60) days past the original due date; (v) the Account
is net of any defense, set-off, counterclaim, deduction, discount, credit,
chargeback, contra claim, freight claim, allowance or adjustment; (vi) there
shall be excluded from the Account any portion thereof attributable to the sale
of goods that have been returned, rejected, lost or damaged; (vii) if the
Account arises from the sale of goods by such Obligor, such sale was an absolute
sale and not on consignment or on approval or on a sale-or-return basis nor
subject to any other repurchase or return agreement, and such goods have been
shipped to the Account Debtor or its designee (no sooner than the date of the
invoice); (viii) if the Account arises from the performance of services, such
services have actually been performed; (ix) the Account arose in the ordinary
course of such Obligor's business; (x) no notice of the bankruptcy,
receivership, reorganization, liquidation, dissolution, or insolvency of the
Account Debtor has been received by Agent, any Lender or any Obligor (provided
that post-petition obligations, if otherwise eligible, from an Account Debtor
who is a debtor in a Chapter 11 case under the Bankruptcy Code may be included
by Agent on a case by case basis after Agent's review of the Account Debtor's
creditworthiness following Borrower's request); (xi) the Account Debtor is not a
Subsidiary or Affiliate of any Obligor; (xii) the Account is not an Account of
an Account Debtor having its principal place of business or executive office
outside the United States or Canada, unless the payment of such Account is
guaranteed by an irrevocable letter of credit satisfactory to Agent; (xiii) the
Account does not represent a sale to the government of the United States or any
subdivision thereof unless such Obligor has complied, for the benefit of Agent
with the Federal Assignment of Claims Act; (xiv) the Account is not an Account
on which the Account Debtor is obligated to such Obligor under any instrument;
(xv) the transaction which gave rise to the Account complies in all respects
with all applicable laws, rules and regulations of any Governmental Authority;
and (xvi) the Account meets such other specifications and requirements which may
from time to time be reasonably established by Agent. Eligible Accounts shall
not include that portion of an Account representing a rebilling of an existing
Account, interest charges for past due balances or debit memos.
ELIGIBLE INVENTORY - All finished goods Inventory lawfully,
unconditionally and exclusively owned by any Obligor located at such Obligor's
place or places of business shown on Schedule "5.2." Eligible Inventory shall
not include (i) Inventory stored at a leased facility or warehouse for which
Agent has not received a landlord waiver or warehouseman waiver (as
appropriate), in form and substance satisfactory to Agent, or (ii) Inventory
determined by Agent, in its reasonable discretion, to be ineligible, including,
without limitation, work-in-process, supplies and packaging material.
ELIGIBLE WHOLESALER REBATES - Wholesaler Rebates earned by and owed to
an Obligor net of rebate obligations owed by such Obligor to customers of such
Obligor meeting the following
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specifications: (i) the Wholesaler Rebate is lawfully and exclusively owned by
such Obligor and subject to a first priority perfected Lien in favor of Agent
and to no other Lien and such Obligor has the right of assignment thereof and
the power to grant a security interest therein; (ii) the Wholesaler Rebate is
valid and enforceable representing the undisputed obligation of the named
Wholesaler to pay the rebate to the named Obligor; (iii) the Wholesaler Rebate
is not more than sixty (60) days past its due date; (iv) no notice of the
bankruptcy, receivership, reorganization, liquidation, dissolution, or
insolvency of the Wholesaler owing the rebate has been received by Agent, any
Lender or an Obligor (provided that post-petition obligations, if otherwise
eligible, from an Account Debtor who is a debtor in a Chapter 11 case under the
Bankruptcy Code may be included by Agent on a case by case basis after Agent's
review of the Account Debtor's creditworthiness following Borrower's request);
(v) the Wholesaler owing the rebate is not a Subsidiary or Affiliate of any
Obligor; (vi) the Wholesaler owing the rebate does not have its principal place
of business or executive office outside the United States or Canada; (vii) the
obligation is not subject to any defense, offset, counterclaim, deduction,
discount, credit, chargeback, contra claim, allowance or adjustment; and (viii)
the rebate meets such other specifications and requirements which may from time
to time be reasonably established by Agent.
ENVIRONMENTAL LAWS - Any and all Federal, foreign, state, provincial,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees and any and all common law requirements, rules and bases of
liability regulating, relating to or imposing liability or standards of conduct
concerning pollution, protection of the environment, or the impact of
pollutants, contaminants or toxic or hazardous substances on human health or the
environment, as now or may at any time hereafter be in effect.
ERISA - The Employee Retirement Income Security Act of 1974, as the
same may be amended, from time to time.
EVENT OF DEFAULT - Section 8.1.
EXCESS BORROWING AVAILABILITY - The difference (if a positive number)
between (i) the Borrowing Base and (ii) the sum of (A) reserves established by
Lender, (B) Advances outstanding and being requested as of the date such
calculation is made, (C) liabilities of the Obligors delinquent or outstanding
past their due date, and (D) expenses owed by Obligors with respect to the
transactions described herein.
EXPENSES - Section 9.6.
FEDERAL FUNDS RATE - The daily rate of interest announced from time to
time by the Board of Governors of the Federal Reserve System in publication H.15
as the "Federal Funds Rate."
FUNDED DEBT TO TANGIBLE NET WORTH RATIO - At any date, the ratio of (i)
Consolidated Funded Debt to (ii) Consolidated Tangible Net Worth.
GAAP - Generally accepted accounting principles as in effect on the
Closing Date applied in a manner consistent with the most recent audited
financial statements of Borrower furnished to Agent under Section 6.9 herein.
GUARANTORS - Collectively, the Original Guarantor and each Additional
Guarantor.
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GOVERNMENTAL AUTHORITY - Any government or political subdivision, or
any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury, or arbitration
(to the extent having jurisdiction over Borrower or any Consolidated Entity or
any Subsidiary of any Consolidated Entity, in each case whether foreign or
domestic).
HAZARDOUS SUBSTANCE - Any substance defined or designated as hazardous
or toxic waste, hazardous or toxic material, hazardous or toxic substance or
similar term, under any Environmental Law.
INDEBTEDNESS - Of any Person at any date, without duplication, (i) all
indebtedness of such Person for borrowed money (including, with respect to
Obligors, the Obligations) or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (ii) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (iii) all Capitalized Lease Obligations of such Person, (iv)
the face amount of all letters of credit issued for the account of such Person
and all drafts drawn thereunder, (v) all obligations of other Persons which such
Person has guaranteed, and (vi) all liabilities secured by any Lien on any
Property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof but only to the extent of the
value of the property as determined by either the acquisition price of such
property or as otherwise determined by an independent appraisal.
INITIAL BASE RATE MARGIN - Seventy-five (75) basis points.
INITIAL FEES - Those fees owing by Borrower to Agent and the Initial
Lender as set forth in a fee letter among such parties of even date herewith.
INITIAL LENDER - First Union National Bank.
INITIAL LIBOR RATE MARGIN - Three hundred twenty-five (325) basis
points.
INTEREST COVERAGE RATIO - For any period, the ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense.
INVENTORY - All of the "inventory" (as that term is defined in Section
9109 of the UCC) of Borrower or any other Obligor whether now existing or
hereafter acquired or created.
IPO - An initial public offering of Borrower's Capital Stock occurring
on or prior to December 31, 1998 generating no less than Twenty Million Dollars
($20,000,000) of gross cash proceeds for Borrower.
IRS - The United States Internal Revenue Service.
LIBOR BASED RATE - The Adjusted LIBOR Rate PLUS (as determined in
accordance with the terms hereof) the Initial LIBOR Rate Margin or Adjusted
LIBOR Rate Margin.
LIBOR BASED RATE LOANS - Loans under the Revolving Credit subject to
interest
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calculated under the terms hereof based on the LIBOR Based Rate.
LIBOR INTEREST PERIOD - A period of one (1), two (2), three (3) or six
(6) months during which the LIBOR Based Rate is applicable.
LIEN - Any interest of any kind or nature in property securing an
obligation owed to, or a claim of any kind or nature in property by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute, regulation or contract, and including, but not limited to,
a security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt, a lease, consignment or bailment for security
purposes, a trust, or an assignment. The term "Lien" shall include without
limitation, reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property other than those which would not materially
interfere with Borrower's use of the Property and would not materially detract
from the value of the Property. For the purposes of this Agreement, a Person
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes.
LOANS - The unpaid balance of Advances under the Revolving Credit.
LOAN DOCUMENTS - This Agreement, the Revolving Credit Note, the
Trademark Agreements, the Lock Box Agreements, the Surety Documents, and all
agreements, instruments and documents executed and/or delivered in connection
therewith, all as may be supplemented, restated, superseded, amended or replaced
from time to time.
LOCK BOX AGREEMENT - Those certain Lock Box Agreements between an
Obligor and Agent executed and delivered by such Obligor to Agent as it may be
supplemented, restated, superseded, amended, or replaced from time to time.
LOCK BOX - Section 2.2.
LONDON BUSINESS DAY - Any Business Day on which banks in London,
England are open for business.
MAJORITY LENDERS - At any time, Lenders holding Pro Rata Percentages
aggregating at least sixty-six and two-thirds (66-2/3%) percent of the total Pro
Rata Shares at such time.
MATERIAL ADVERSE EFFECT - (a) Any effect (both before and after giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents) which, with respect to the business, assets, properties, financial
condition, prospects or results of operations of Borrower or any Consolidated
Entity materially and adversely affects either Borrower or all Obligors taken as
a whole, or (b) any fact, event, condition or circumstance that, singly or in
the aggregate with any other fact, event, condition or circumstance, has a
reasonable likelihood of resulting in or leading to (i) a material adverse
effect described in clause (a), (ii) the inability of any Obligor to perform in
any material respect its obligations hereunder or under any other Loan Document
or the inability of Agent or Lenders to enforce in any material respect the
rights purported to be granted hereunder or under any
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other Loan Document, or (iii) a material adverse effect on the ability of any
Obligor to effect (including hindering or unduly delaying) the transactions
contemplated by this Agreement and the other Loan Documents on the terms
contemplated hereby and thereby.
MAXIMUM LOAN AMOUNT - The sum of Thirty-Five Million Dollars
($35,000,000.00) (subject to any applicable borrowing limitations set forth in
Section 2.1(a) or any other provision hereof).
▇▇▇▇▇'▇ - Section 7.7.
OBLIGATIONS - All existing and future debts, liabilities and
obligations of every kind or nature at any time owing by Obligors, or any
Obligor, to Lenders and/or Agent if incurred hereunder or under the Loan
Documents, whether joint or several, related or unrelated, primary or secondary,
matured or contingent, due or to become due, and whether principal, interest,
fees or Expenses, including, without limitation, debts, liabilities and
obligations in respect of the Revolving Credit and any extensions,
modifications, substitutions, increases and renewals thereof; the payment of all
amounts advanced by Agent to preserve, protect and enforce rights hereunder and
in the Collateral; and all Expenses incurred by Agent.
OBLIGORS - Collectively, Borrower and all Guarantors.
OVERADVANCE - Section 2.1(a)(i).
ORIGINAL GUARANTORS - Collectively, UDI and UDI Canada.
PBGC - Pension Benefit Guaranty Corporation.
PERMITTED ACQUISITION - The acquisition by Borrower or any other
Obligor of all or substantially all of the Capital Stock, securities or assets
of any Person in any transaction or series of related transactions, provided
that (as of the date of closing on the proposed acquisition, unless otherwise
expressly stated below) (i) no Default or Event of Default has occurred or would
occur after giving effect to such acquisition(including without limitation the
applicable provisions of Section 6.8 of this Agreement) and Agent receives a
written certification to such effect from the chief financial officer of
Borrower; (ii) such Person engages in an industry substantially similar to the
industry in which Obligors engage on the date hereof; (iii) the Acquired Entity
becomes an Additional Guarantor and executes and delivers to Agent, for the pro
rata benefit of Lenders, all Surety Documents as Lenders may require and Agent,
for the pro rata benefit of Lenders, shall have a first priority Lien in all
existing and future Accounts and Inventory, and such priority Lien as Agent may
then approve in all other Property, of such Acquired Entity; (iv) all searches
(performed at Borrower's cost), corporate resolutions, corporate documents and
opinions required by Agent are delivered to Agent, (v) revised or supplemented
Schedules to this Agreement reflecting the addition of the new Obligor(s) are
delivered to Agent, (vi) as to any acquisition as to which the conditions of
clause (vii) or (viii) below are applicable, Borrower shall have provided to
Agent, prior to the consummation of the acquisition, such financial statements
concerning the Acquired Entity as Agent may request; (vii) if the book value of
the Accounts and Inventory of the Acquired Entity exceed $7,500,000 Agent shall
have performed an audit, at Obligors' expense, of the books of such Person with
the results being acceptable to Agent; (viii) for
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each of (1) any such acquisition with cash consideration in excess of
$7,500,000, (2) any acquisition with total consideration but not more than
$10,000,000 and as part of which stock of Borrower is less than 25% of such
consideration, (3) any acquisition with total consideration exceeding
$10,000,000 but not more than $20,000,0000 and as part of which stock of
Borrower is less than 50% of such consideration, and (4) any such acquisition
with total consideration in excess of $20,000,000, the Majority Lenders shall
have given their prior written approval; (ix) for any acquisition covered by
clause (viii) above, Borrower shall have supplied Agent with pro forma
projections demonstrating covenant and Borrower Base compliance for at least one
year following the proposed acquisition; and (x) Borrower shall have given Agent
ten (10) days written notice prior to consummation of any such acquisition.
PERMITTED LIENS - Section 7.3.
PERSON - An individual, partnership, corporation, trust, limited
liability company, limited liability partnership, unincorporated association or
organization, joint venture or any other entity.
PRE IPO LOAN LIMIT - Ten Million Dollars ($10,000,000).
PRIME RATE - That rate publicly designated by Agent at its principal
office from time to time as its prime rate of interest, which is not necessarily
the lowest or best rate of interest charged by Agent.
PRO RATA PERCENTAGE(S) - Section 2.1(a)(ii).
PRO RATA SHARE(S) - Section 2.1(a)(ii).
PROPERTY - Any interest of the applicable Person in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
REGULATION D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as
amended, and any successor thereto.
RESERVE PERCENTAGE - For Agent on any day, that percentage (expressed
as a decimal) which is in effect on such day, prescribed by the Board of
Governors of the Federal Reserve System (or any successor) or any other banking
authority to which Agent (or any Bank Affiliate of Agent) is subject, including
any board or governmental or administrative agency of the United States or any
other jurisdiction to which Agent is subject, for determining the maximum
reserve requirement (including without limitation any basic, supplemental,
marginal or emergency reserves) for (i) deposits of United States Dollars or
(ii) Eurocurrency liabilities as defined in Regulation D, in each case used to
fund a LIBOR Based Rate Loan subject to an Adjusted LIBOR Rate. The Adjusted
LIBOR Rate shall be adjusted automatically on and as of the effective day of any
change in the Reserve Percentage.
REVOLVING CREDIT - Section 2.1(a).
REVOLVING CREDIT BASE RATE - The Base Rate PLUS (as determined in
accordance with the terms hereof) the Initial Base Rate Margin or Adjusted Base
Rate Margin.
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REVOLVING CREDIT LOAN BALANCE - The actual outstanding principal amount
of Loans owing to any Lender at any particular time or from time to time.
REVOLVING CREDIT MATURITY DATE - July 9, 2001.
REVOLVING CREDIT NOTE - Section 2.1(b).
S&P - Section 7.7.
SECURITY AGREEMENT - A security agreement in the form of Exhibit "C"
attached hereto and made a part hereof.
SENIOR DEBT - The principal amount of Indebtedness of Obligors to
Lenders and Indebtedness permitted under this Agreement which is not
Subordinated Debt.
SENIOR DEBT TO EBITDA RATIO - At any date, the ratio of (i) Senior Debt
to (ii) Consolidated EBITDA.
SUBORDINATED DEBT - Indebtedness of Borrower subject to payment terms
and subordination provisions acceptable to Agent, in its sole discretion.
SUBSIDIARY - With respect to any Person at any time, (i) any
corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty
percent (50%) of whose voting stock is legally and beneficially owned by such
Person; (ii) any trust of which a majority of the beneficial interest is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person; and (iii) any partnership, joint
venture or other entity of which ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at such time owned directly or indirectly, beneficially or
of record, by, or which is otherwise controlled directly, indirectly or through
one or more intermediaries by, such Person or one or more Subsidiaries of such
Person.
SURETY AGREEMENT - A surety agreement in the form of Exhibit "D"
attached hereto and made a part hereof.
SURETY DOCUMENTS - A Surety Agreement, Security Agreement, financing
statements, Mortgage (if the Additional Guarantor owns real Property), and such
other instruments, documents or agreements as Agent may require from time to
time, and in form and substance acceptable to Agent, following the Closing Date
that are necessary, in Agent's judgment, to make such Acquired Entity or Person
an Additional Guarantor hereunder.
TRADEMARK AGREEMENTS - Collectively, the Trademark Security Agreement
and related instruments, documents and agreements dated the date hereof pursuant
to which an Obligor grants Agent a lien on, and security interest in, all of
such Obligor's existing or after-acquired trademarks, tradenames and service
marks.
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UCC - The Uniform Commercial Code as adopted in the Commonwealth of
Pennsylvania at 13 Pa.C.S.A. ss.1101 ET SEQ.
UDI - UDI Corp., a Massachusetts corporation.
▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Ltd., an Ontario corporation.
UDI OBLIGORS - UDI and UDI Canada, jointly and severally.
UNFINANCED CAPITAL EXPENDITURES - Capital Expenditures that are not
financed through interest bearing Indebtedness within sixty (60) days of the
acquisition of the asset.
USAGE FEE - Section 2.5(b).
WHOLESALER REBATES - Wholesaler rebates granted to one of the Obligors
as a result of a sale or sales of merchandise by a wholesaler to such Obligor
(regardless of whether delivery is made to such Obligor or directly to a
customer of a such Obligor).
1.2 ACCOUNTING PRINCIPLES: Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP, to the
extent applicable, except as otherwise expressly provided in this Agreement.
SECTION 2. THE LOANS
2.1 REVOLVING CREDIT - DESCRIPTION:
(a) REVOLVING CREDIT:
(i) Subject to the terms and conditions of this Agreement,
each Lender hereby establishes for the benefit of Borrower a revolving credit
facility (the "Revolving Credit") which shall include Advances extended by each
Lender to or for the benefit of Borrower from time to time hereunder. The
aggregate principal amount of unpaid cash Advances shall not, at any time,
exceed the lesser of the Maximum Loan Amount or the Borrowing Base minus such
reserves as Agent may from time to time reasonably establish, in such amounts
and with respect to such matters as Agent may deem appropriate in its reasonable
discretion. Subject to such limitation, the outstanding balance of Advances
under the Revolving Credit may fluctuate from time to time, to be reduced by
repayments made by Borrower, to be increased by future Advances which may be
made by Lenders, to or for the benefit of Borrower, and, subject to the
provisions of Section 8 below, shall be due and payable on the Revolving Credit
Maturity Date. If the aggregate principal amount of unpaid cash Advances at any
time exceed the lesser of the Maximum Loan Amount or the Borrowing Base minus
such reserves established by Agent hereunder (such excess referred to as
"Overadvance"), Borrower shall immediately repay the Overadvance in full.
Notwithstanding anything set forth in this Agreement to the contrary (A) the
aggregate outstanding Advances prior to the consummation of the IPO shall not
exceed the Pre-IPO Loan Limit without prior written approval by the Majority
Lenders, (B) following consummation of the IPO in which proceeds thereof
received by Borrower (which by definition must exceed $20,000,000 of
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gross proceeds) are less than $25,000,000 net of expenses, the aggregate
outstanding Advances shall not exceed $25,000,000, and (C) subject to clause (A)
above and any other applicable limit set forth herein, as of and after July 1,
1999, outstanding Advances against assets of the UDI Obligors shall not in any
event exceed $12,000,000. Outstanding loans under the existing credit facility
previously established by the Initial Lender for UDI, presently evidenced by a
Master Demand Note issued in December, 1997 and having a present principal
balance of $7,418,322, shall be deemed, as of the date hereof, to be Advances
under the Revolving Credit.
(ii) Subject to the terms of this Agreement, each Lender
agrees to lend to Borrower an amount equal to such Lender's respective
percentage (as to each Lender, the percentage of the Revolving Credit set forth
opposite its name on Schedule "A" attached hereto and made a part hereof and
referred to as its "Pro Rata Percentage") of the Advance requested by Borrower.
The outstanding Loans of each Lender shall not exceed the respective maximum
amount (the "Pro Rata Shares") set forth opposite its name on Schedule "A."
Neither Agent nor any Lender shall at any time, for any reason, have any
obligation to advance any portion of any Pro Rata Share of any other Lender.
(iii) Notwithstanding anything contained in this Agreement to
the contrary, (A) Property of UDI Canada shall not be included in the Borrowing
Base unless and until Agent completes a field examination of the Accounts of UDI
Canada with the results being acceptable to Agent, (B) aggregate Advances
against Property of UDI Canada in the Borrowing Base shall not at any time
exceed $1,250,000, and (C) Property of UDI Canada shall noty of UDI Canada is
removed from the Borrowing Base pursuant to subparagraph (C) above, and so long
as no Overadvance or Event of Default is then outstanding, Agent (on behalf of
Lenders) shall terminate the Surety Agreement of UDI Canada and terminate its
Liens on all Property of UDI Canada.
(b) REVOLVING CREDIT NOTE: At Closing (and thereafter, to the extent
provided in Section 9.16(b) below), Borrower shall execute and deliver a
promissory note to each Lender in the amount of each Lender's Pro Rata Share of
the Maximum Loan Amount. Each Revolving Credit Note shall evidence Borrower's
absolute and unconditional obligation to repay such Lender for all Advances made
under the Revolving Credit, with interest as herein and therein provided. Each
Advance under the Revolving Credit shall be deemed evidenced by the Revolving
Credit Notes, which are deemed incorporated herein by reference and made part
hereof. Each Revolving Credit Note shall be substantially in the form of Exhibit
"E" attached hereto and made a part hereof.
(c) TERM: The Revolving Credit shall expire on the Revolving Credit
Maturity Date. On such date, unless having been sooner accelerated by Agent
pursuant to the terms hereof, all sums owing under the Revolving Credit shall be
due and payable in full, and on and after the Revolving Credit Maturity Date,
Lenders shall not make any additional Advances.
(d) COMMITMENT REDUCTION: Borrower shall have the right at any time and
from time to time, upon at least one(1) Business Day's prior written notice to
Agent, to permanently reduce, without premium or penalty (but subject to Section
2.8 of this Agreement), the Maximum Loan Amount in the minimum amount of One
Million Dollars ($1,000,000) and integral multiples of One Million Dollars
($1,000,000) in excess thereof. Any notice to reduce the Maximum Loan Amount
pursuant to this Section 2.1(d) shall be permanent and may not be revoked. In
the event of any such reduction, outstanding Advances in an amount in excess of
the Maximum Loan Amount, as so reduced, shall be
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paid on the effective date of such reduction, with interest accrued on the
amount so paid (subject to Section 2.8 of this Agreement) to the date of
reduction.
2.2 ADVANCES, CONVERSIONS, RENEWALS AND PAYMENTS:
(a) PAYMENTS: Except to the extent otherwise set forth in this
Agreement, all payments of principal and of interest on the Revolving Credit,
the Usage Fee, the Expenses, and all other fees, charges and any other
Obligations of Borrower hereunder, shall be made to Agent at its main
Philadelphia banking office, Broad and Chestnut Streets, Philadelphia,
Pennsylvania, in United States dollars, in immediately available funds. Agent
shall have the unconditional right and discretion to charge the Revolving Credit
or the operating account of Borrower or any other Obligor for the Obligations as
they become due from time to time under this Agreement including, without
limitation, interest, principal, fees and reimbursement of Expenses. All
payments made by or received from UDI Canada shall be applied first to
principal, then to unpaid fees, then to interest. If no Event of Default is
outstanding, Agent shall charge the account of Borrower or the other Domestic
Obligors for all fees and interest before seeking payment thereof from UDI
Canada.
(b) APPLICATION OF FUNDS: Borrower shall maintain and shall
cause each Obligor (other than UDI Canada) to maintain a lockbox account(s)
("Lockbox") with Agent and a depository account(s) ("Cash Collateral Account")
with Agent subject to the provisions of this Section 2.2(b). All collections of
Accounts with respect to such Obligors will be paid directly from Account
Debtors into the Lockbox. In lieu thereof for and only for the first year
following the date hereof (or as to any Additional Guarantor, for a period
expiring on the later of (x) the end of the first three (3) months following a
Permitted Acquisition, or (y) the end of the first year following the date
hereof), such Obligors shall be entitled to have collections of Accounts
directed to a lockbox and deposit account ("Blocked Account") with a financial
institution to whom a Blocked Account Notice has been sent by the applicable
ObligoAgent). Borrower shall notify Agent in writing promptly upon creation of
each Blocked Account whereupon each new Blocked Account shall be deemed added to
and made part of Exhibit A hereto. Borrower shall then cause or shall instruct
such Obligors to cause (and Agent is also hereby irrevocably authorized to
cause) the transfer of such collections from the Lockbox or Blocked Accounts, as
applicable, to the Cash Collateral Account. All funds transferred to or
deposited in the Cash Collateral Account, shall be applied by Agent daily,
subject to Agent's standard clearing procedures and clearing periods for
deposited funds, to reduce the outstanding indebtedness under the Revolving
Credit, with future Advances to be made pursuant to the terms of this Agreement.
All collections of Accounts and proceeds of other Collateral received by
Borrower or any other Obligor (other than UDI Canada) shall be held in trust for
the benefit of Agent and remitted, IN SPECIE, to Agent for deposit in the Cash
Collateral Account immediately upon receipt by Borrower or any such Obligor for
application to the outstanding indebtedness under the Revolving Credit. Neither
Borrower nor any Obligor shall have any right of access to or withdrawal from
the Lockbox, Blocked Account or the Cash Collateral Account; provided that if
there are no outstanding cash Advances and no Event of Default has occurred and
is continuing, then all collections of Accounts shall, subject to Agent's
standard clearing procedures and clearing periods for deposited funds, be
transferred from the Cash Collateral Account to Borrower's operating accounts
with Agent or to the operating account of any Obligor as directed by Borrower in
writing. As to UDI Canada, all collections and proceeds shall, if no Event of
Default is outstanding, be collected by UDI Canada and deposited in UDI Canada's
deposit account for use by UDI Canada as working capital. If an Event of Default
is outstanding, Agent shall have the option to take such
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acecurity agreement given by UDI Canada to Agent or under applicable law to
enforce its rights in the assets of UDI Canada.
(c) SETTLEMENT PROCEDURES:
(i) A. Between each Settlement Date, Agent shall have the
discretion to request the Initial Lender make all Advances hereunder subject to
the Base Rate Option for the account and on behalf of the Lenders. The Initial
Lender may, in its sole discretion, make such Advances. The making of such
Advances at any time or from time to time by the Initial Lender shall not create
any obligation or establish any course of conduct requiring Initial Lender to
continue to do so. Agent shall make a determination of each Lender's Revolving
Credit Loan Balance (by applying each Lender's Pro Rata Percentage to the total
outstanding Loans) periodically but not less frequently than once every week on
the same day of each week, unless such day is not a Business Day, in which event
such determination shall be made the next Business Day ("Settlement Date"),
which outstanding amount shall be calculated as of the close of the Business Day
immediately preceding each respective Settlement Date. A Settlement Date shall
occur notwithstanding any intervening Event of Default or other occurrence,
event or circumstance, including without limitation the commencement of a
bankruptcy or reorganization case. Amounts of principal paid to Agent by
Borrower from time to time shall, between Settlement Dates, be applied to the
Initial Lender's Revolving Credit Loan Balance, with each Lender's respective
Revolving Credit Loan Balance to be adjusted on the next Settlement Date.
Interest shall accrue and each Lender shall be entitled to receive interest from
Borrower at the applicable rate on the actual outstanding funded dollar amount
of its Revolving Credit Loan Balance. Agent shall then promptly issue to each
Lender a settlement schedule containing information with respect to the status
of the Loans and the relevant net positions of the Lenders and their outstanding
Revolving Credit Loan Balances as of the close of the if any, due from each
Lender to Agent (for its own account or on behalf of the Initial Lender) or from
Agent to each Lender, which amount shall be paid by federal funds, via wire
transfer to the party entitled thereto to be received on or before 3:00 p.m.
Philadelphia time on the Settlement Date (provided such settlement schedule has
been delivered prior to 12:00 p.m. Philadelphia time on the Settlement Date).
The obligations of Lenders under this Section are absolute and unconditional,
not subject to setoff, and irrevocable and may not be terminated at any time.
B. Each Lender is absolutely and unconditionally
obligated, without setoff or deduction of any kind, to remit to Agent on the
Settlement Date any amount showing to be owing to Agent or the Initial Lender by
such Lender on the settlement schedule for such date. Agent and/or the Initial
Lender shall also be entitled to recover any and all actual losses and damages
either may incur (including without limitation, reasonable attorneys' fees) from
any Lender failing to remit payment on the Settlement Date in accordance with
this Agreement. Agent may set off the obligations of such Lender under this
paragraph against any distributions or payments of the Obligations to which such
Lender would otherwise be entitled at any time or Agent may withhold such
distributions or payments of such Obligations to which such Lender would
otherwise be entitled and make such distributions or payments to the Initial
Lender in an amount equal to, and as a repayment of, such Lender's Pro Rata
Percentage of the Advance made by the Initial Lender on such Lender's behalf.
(ii) A. With respect to all LIBOR Based Rate Loans, Agent
shall, and in lieu of the procedure set forth in the preceding subparagraph (i)
above with respect to Base Rate Loans, Agent may, in its sole discretion
(regardless of any prior practice), provide the Lenders with
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notice that Borrower has requested a cash Advance (whether subject to the Base
Rate or the LIBOR Based Rate), on the same Business Day as such request, and
request each Lender to provide Agent with such Lender's Pro Rata Percentage of
such requested cash Advance prior to Agent's making such cash Advance. Upon
receipt of such notice from Agent prior to 12:00 p.m., Philadelphia time, on the
day the Advance is requested, each Lender shall remit to Agent its respective
Pro Rata Percentage of such requested cash Advance, prior to 1:00 p.m.
Philadelphia time, on the Business Day Agent is scheduled to make such cash
Advance in accordance with Section 2.3(d) below. Agent shall not be required to
make the full amount of the requested cash Advance unless and until it receives
funds representing each other Lender's Pro Rata Percentage of such requested
cash Advance, but Agent shall advance to Borrower that portion of the requested
cash Advance equal to the Pro Rata Percentages of such requested cash Advance
which it has received from the Lenders.
B. If Agent does not receive each other Lender's Pro Rata
Percentage of such requested cash Advance, and Agent elects, in its sole
discretion, without any obligation at any time to do so, to make the requested
cash Advance on behalf of Lenders or any of them, Agent shall be entitled to
recover each Lender's Pro Rata Percentage of each cash Advance together with
interest at a per annum rate equal to the Federal Funds Rate during the period
commencing on the date such cash Advance is made and ending on (but excluding)
the date Agent recovers such amount. Each Lender is absolutely and
unconditionally obligated,sh Advance made pursuant to the terms of this
Agreement. To the extent Agent is not reimbursed by such Lender, Borrower shall
repay Agent immediately such amount on demand. Agent shall also be entitled to
recover any and all actual losses and damages (including, without limitation,
reasonable attorneys' fees) from any Lender failing to so advance upon demand of
Agent. Agent may set off the obligations of a Lender under this paragraph
against any distributions or payments of the Obligations which Agent would
otherwise make available to such Lender at any time. Notwithstanding the
foregoing, Agent shall have no duty or obligation at any time for any reason to
make any Advance on behalf of any Lender.
(d) ADVANCES:
(i) Advances which may be made by Lenders from time to time
under the Revolving Credit shall be made available by crediting such proceeds to
Borrower's operating account with Agent to be disbursed by Borrower to such
Obligor(s) as Borrower may determine.
(ii) All Advances requested by Borrower under the Revolving
Credit must be in the minimum amount of (A) Fifty Thousand Dollars ($50,000) and
integral multiples of One Thousand Dollars ($1,000) in excess thereof for Base
Rate Loans and (B) One Million Dollars ($1,000,000) and integral multiples of
Two Hundred Fifty Thousand Dollars ($250,000) in excess thereof for LIBOR Based
Rate Loans and must be requested:
(A) by 11:00 A.M., Philadelphia time, on the date such
Advance is to be made if a Base Rate Loan, and
(B) by 11:00 A.M. London time at least three (3)
Business Days in advance if a LIBOR Based Rate Loan.
(iii) All requests for an Advance are to be in writing by
submission to Agent of an advance request form ("Advance Request Form") in the
form of Exhibit "F" attached hereto
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and made a part he effective unless confirmed via telephone with Agent.
2.3 REVOLVING CREDIT INTEREST:
(a) REVOLVING CREDIT BASE RATE - Subject to Sections
2.3 (b) and (d), the unpaid principal balance of cash Advances under the
Revolving Credit shall bear interest, subject to the terms hereof, at the per
annum rate equal to the Base Rate PLUS the Initial Base Rate Margin. Interest on
Base Rate Loans under the Revolving Credit shall be payable monthly, in arrears,
on the first day of each calendar month, beginning on the first day of the first
full calendar month after the Closing Date and on the Revolving Credit Maturity
Date.
(b) As of each fiscal quarter end beginning with the
first full fiscal quarter after consummation of the IPO, the interest rate
applicable to Base Rate Loans under the Revolving Credit may be adjusted and
interest shall in any event thereafter accrue (subject to Borrower's right to
elect a LIBOR Based Rate Loan pursuant to Section 2.3(d)) at the per annum rate
equal to the Base Rate PLUS the applicable Adjusted Base Rate Margin set forth
below. In no event, however, may a downward adjustment occur if a Default or
Event of Default has occurred and is continuing. Any such adjustment shall be
effective on the later of (i) five (5) days after, or (ii) the first day of the
calendar month after, Agent's receipt of the Compliance Certificate
demonstrating which tier of the performance ratio is applicable. The Adjusted
Base Rate Margin shall be determined in accordance with the chart set forth
below:
Consolidated Senior Debt To
---------------------------
Consolidated EBITDA Adjusted Base Rate Margin
------------------- -------------------------
1. Greater than 2.50 to 1.0 75 basis points
2. Less than or equal to 2.50 to 1.0 50 basis points
but greater than 1.75 to 1.0
3. Less than or equal to 1.75 to 1.0 25 basis points
but greater than 1.0 to 1.0
4. Less than or equal to 1.0 0 basis points
(c) CHANGES IN BASE RATE: Changes in the Revolving
Credit Base Rate shall become effective on the same day that Agent announces a
change in its Prime Rate.
(d) LIBOR RATE OPTION:
(i) So long as no Event of Default has occurred and is
continuing, Borrower may, subject to the requirements of Section 2.2, choose to
have all or a portion of the Revolving Credit accrue interest at the Adjusted
LIBOR Rate plus the Initial LIBOR Rate Margin.
(ii) As of each fiscal quarter end beginning with the first
full fiscal quarter after consummation of the IPO, the interest rate applicable
to LIBOR Based Rate Loans under the Revolving Credit may be adjusted and
interest shall thereafter in any event accrue at the per annum rate equal to the
Adjusted LIBOR Rate PLUS the applicable Adjusted LIBOR Rate Margin set forth
below. In no
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event, however, may a downward adjustment occur if an Event of Default has
occurred and is continuing. Any such adjustment shall be effective on the later
of (i) five (5) days after, or (ii) the first day of the calendar month after,
Agent's receipt of the Compliance Certificate demonstrating which tier of the
performance ratio is applicable. The Adjusted LIBOR Rate Margin shall be
determined in accordance with the chart set forth below:
Consolidated Senior Debt
------------------------
To Consolidated EBITDA Adjusted LIBOR Rate Margin
---------------------- --------------------------
1. Greater than 2.50 to 1.0 250 basis points
2. Less than or equal to 2.50 to 1.0 225 basis points
but greater than 1.75 to 1.0
3. Less than or equal to 1.75 to 1.0 200 basis points
but greater than 1.0 to 1.0
4. Less than or equal to 1.0 to 1.0 175 basis points
(iii) Borrower shall select a LIBOR Interest Period during
which the LIBOR Based Rate is applicable; provided, however, that if the LIBOR
Interest Period would otherwise end on a day which shall not be a London
Business Day, such LIBOR Interest Period shall be extended to the next preceding
or succeeding London Business Day as is Agent's custom in the market in which
such LIBOR Based Rate Loan relates. Interest shall accrue from and including the
first day of each LIBOR Interest Period to, but excluding the day on which any
LIBOR Interest Period expires. For any LIBOR Interest Period which begins on the
last London Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Interest Period), the LIBOR Interest Period shall end on the last London
Business Day of a calendar month. All accrued and unpaid interest on a LIBOR
Based Rate Loan must be paid in full on the last day of the applicable LIBOR
Interest Period. Interest shall also be due and payable for a LIBOR Interest
Period in excess of three (3) months on the day of such LIBOR Interest Period
that would have been the last day of such LIBOR Interest Period if such LIBOR
Interest Period were a three (3) month LIBOR Interest Period. No LIBOR Interest
Period may end after the Revolving Credit Maturity Date. Subject to all of the
terms and conditions applicable to a request for a LIBOR Based Rate Loan,
Borrower may convert an existing LIBOR Based Rate Loan as of the last day of the
LIBOR Interest Period to a new LIBOR Based Rate Loan provided all interest
accrued under the expiring LIBOR Interest Period has been paid. If Borrower
fails to notify Lender of the LIBOR Interest Period for such a subsequent LIBOR
Based Rate Loan at least two (2) Business Days prior to the last day of the then
current LIBOR Interest Period of such an outstanding LIBOR Based Rate Loan, then
such outstanding LIBOR Based Rate Loan shall become a Base Rate Loan Interest
Period and shall accrue interest at the Revolving Credit Base Rate in accordance
with Sections 2.3(a) or (b) above.
(iv) The Adjusted LIBOR Rate may be automatically adjusted by
Agent on a prospective basis to take into account the additional or increased
cost of maintaining any necessary reserves for Eurodollar deposits or increased
costs due to changes in applicable law or regulation or the interpretation
thereof occurring subsequent to the commencement of the then applicable LIBOR
Interest Period, including but not limited to changes in tax laws (except
changes of general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of
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Governors of the Federal Reserve System (or any successor), that increase the
cost to Lender of funding the LIBOR Based Rate Loan. Agent shall promptly give
Borrower notice of such a determination and adjustment setting forth the basis
and calculations therefor, which determination shall be, except for manifest
error, and absent written notice from Borrower to Agent within ten (10) days
from submission, final, conclusive and binding for all purposes.
(v) If Borrower has requested the rate based on the Adjusted
LIBOR Rate in accordance with Section 2.3(d) and Agent shall have reasonably
determined that Eurodollar deposits equal to the amount of the principal of the
requested LIBOR Based Rate Loan and for the LIBOR Interest Period specified are
unavailable, or that the rate based on the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost of the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, of making or maintaining the principal
amount of the requested LIBOR Based Rate Loan specified by Borrower during the
LIBOR Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets, adequate and reasonable means do not exist for ascertaining
the rate based on the Adjusted LIBOR Rate applicable to the specified LIBOR
Interest Period, Agent shall promptly give notice of such determination to
Borrower that thvailable. A determination by Agent hereunder shall be prima
facie evidence of the correctness of the fact and amount of such additional
costs or unavailability. Upon such a determination, (A) the obligation to
establish, convert to, or maintain a LIBOR Based Rate Loan at the rate based on
the Adjusted LIBOR Rate shall be suspended until Agent shall have notified
Borrower that such conditions shall have ceased to exist, and (B) the applicable
Revolving Credit portion subject to the requested conversion shall continue to
accrue interest at the Revolving Credit Base Rate in accordance with Sections
2.3(a) or (b) above.
(vi) If, as a result of any changes in applicable law or
regulation or the interpretation thereof, it becomes unlawful for a Lender to
maintain Eurodollar liabilities sufficient to fund any LIBOR Based Rate Loan
subject to the rate based on the Adjusted LIBOR Rate, then such Lender shall
immediately notify Borrower and Agent thereof and such Lender's obligations
hereunder to convert to, or maintain a LIBOR Based Rate Loan at the rate based
on the Adjusted LIBOR Rate shall be suspended until such time as such Lender may
again cause the rate based on the Adjusted LIBOR Rate to be applicable to the
LIBOR Based Rate Loan and the Revolving Credit subject to the LIBOR Based Rate
shall continue to accrue interest at the Revolving Credit Base Rate in
accordance with Sections 2.3(a) or (b) above. Promptly after becoming aware that
it is no longer unlawful for such Lender to maintain such Eurodollar
liabilities, such Lender shall notify Borrower thereof and such suspension shall
cease to exist.
2.4 ADDITIONAL INTEREST PROVISIONS.
(a) CALCULATION OF INTEREST: Interest on the Loans, regardless
of the rate option, shall be charged on the basis of a year of three hundred
sixty (360) days but charged for the actual number of days elapsed.
(b) LIMITATION ON LIBOR BASED RATE LOANS: All Loans not
specifically designated by Borrower, pursuant to the terms hereof or not
requested in conformity with the terms hereof, shall be Base Rate Loans. No
LIBOR Based Rate Loans shall be requested by Borrower or made available by
Lender if a Default or an Event of Default has occurred and is continuing
hereunder. No more than five (5) LIBOR Based Rate Loans may be outstanding at
any one time.
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(c) DEFAULT RATE: After the occurrence and during the
continuance of an Event of Default hereunder, the per annum effective rate of
interest on all outstanding Loans shall be increased by two hundred (200) basis
points retroactively to the date of the occurrence of the Event of Default,
provided, however that the Default Rate shall be applicable only if Obligors
have failed to cure the Event of Default in a manner acceptable to Agent within
ten (10) Business Days following the occurrence thereof. Agent will give
Borrower written notice of such increase within five (5) Business Days after
implementation of such increase.
(d) TERMINATION OF LIBOR BASED RATE LOANS: All LIBOR Based
Rate Loans shall automatically convert to Base Rate Loans at the end of the
current Interest Period therefor, upon the occurrence and during the continuance
of an Event of Default, subject to Agent's rights under Section 2.4(c).
(e) CONTINUATION OF INTEREST CHARGES: All contractual rates of
interest chargeable on outstanding principal under the Loans, regardless of the
rate option, shall continue to accrue and be paid even after the occurrence of a
Default, an Event of Default, maturity, acceleration, judgm: In no contingency
or event whatsoever shall the aggregate of all amounts deemed interest hereunder
and charged or collected pursuant to the terms of this Agreement 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
court determines Lenders have charged or received interest hereunder in excess
of the highest applicable rate, Lenders shall apply, in its sole discretion, and
set off such excess interest received by Lenders against other Obligations due
or to become due and such rate shall automatically be reduced to the maximum
rate permitted by such law.
2.5 FEES:
(a) INITIAL FEES: Borrower shall unconditionally pay to Agent,
for its own account and the account of the Initial Lender (as they may agree),
the Initial Fees in the amounts and at the times set forth in a fee letter
between Borrower and such parties.
(b) USAGE FEE: So long as the Revolving Credit is outstanding
and has not been terminated, Borrower shall unconditionally pay to Agent for the
pro rata benefit of each Lender, a non-refundable fee ("Usage Fee") equal to
three eighths of one percent (.375%) per annum of the daily unused portion of
the Revolving Credit (which shall be calculated as the Maximum Loan Amount (or
$10,000,000 prior to the IPO) minus the average daily outstanding principal
balance of Advances). The Usage Fee shall be computed and paid on a quarterly
basis, in arrears, on the first day of each calendar quarter, beginning on the
first day of the first calendar quarter after the Closing Date and also on the
Revolving Credit Maturity Date. The Usage Fee shall be calculated on the basis
of a year of three hundred sixty (360) days but charged for the actual number of
days elapsed.
(c) AGENT'S FEE: Borrower shall unconditionally pay to Agent
an annual Agent's fee of $20,000, payable annually in advance on a nonrefundable
basis, such fee to accrue as of (and the first annual payment to be made on) the
date the Initial Lender is no longer the only Lender hereunder.
2.6 LIBOR BASED RATE LOAN PREPAYMENTS: No portion of the LIBOR Based
Rate Loans may be prepaid at any time unless Borrower first satisfies in full
its obligation under Section 2.8 below
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arising from such prepayment.
2.7 USE OF PROCEEDS: The extensions of credit under and proceeds of the
Revolving Credit shall be used to (i) provide working capital to Obligors; (ii)
finance Permitted Acquisitions by Obligors; and (iii) provide funding for fees
and expenses associated with the IPO; and (iv) fund other corporate purposes not
prohibited hereby.
2.8 INDEMNITY: Borrower shall and shall cause Obligors to indemnify,
defend and hold harmless Agent and Lenders against (or guaranty Borrower's
indemnity obligation with respect to)any and all loss, liability, cost or
expense which Agent or any one or more Lenders may sustain or incur (including,
without limitation, loss of the Initial LIBOR Applicable Margin or Adjusted
LIBOR Applicable Margin) as a consequence of (a) any failure of Borrower to
convert or extend any LIBOR Based Rate Loan after notice thereof has been given
to Agent or (b) any payment, prepayment or conversion of a LIBOR Based Rate Loan
by Borrower made for any reason on a date other than the last day of the
applicable LIBOR Interest Period. Borrower shall pay the full amount thereof to
Agent on demand by Agent.
2.9 CAPITAL ADEQUACY: If after the date hereof any present or future
law, governmental rule, regulation, policy, guideline, directive or similar
requirement (whether or not having the force of law) imposes, modifies, or deems
applicable any capital adequacy, capital maintenance or similar requirement
which affects the manner in which any Lender allocates capital resources to its
commitments (including any commitments hereunder), and as a result thereof, in
the opinion of such Lender, the rate of return on such Lender's capital with
regard to the Loans is reduced to a level below that which such Lender could
have achieved but for such circumstances, then in such case and upon notice from
such Lender to Borrower, from time to time, Borrower shall pay such Lender such
additional amount or amounts as shall compensate such Lender for such reduction
in such Lender's rate of return. Such notice shall contain the statement of such
Lender with regard to any such amount or amounts, shall set forth the basis and
calculation therefor, and which shall, in the absence of manifest error, be
binding upon Borrower. In determining such amount, such Lender may use any
reasonable method of averaging and attribution that it deems applicable.
SECTION 3. COLLATERAL
3.1 DESCRIPTION: As security for the payment of the Obligations, and
satisfaction by Borrower and each other Obligor of all covenants and
undertakings contained in this Agreement and the other Loan Documents, Borrower
hereby assigns and grants to Agent for the pro rata benefit of all Lenders a
continuing first lien on and security interest in, upon and to the following
Property:
(i) ACCOUNTS, ETC. - All of Borrower's now owned and hereafter
acquired, created, or arising Accounts, accounts receivable, notes receivable,
contract rights, chattel paper, documents (including documents of title),
instruments and letters of credit;
(ii) INVENTORY - All of Borrower's now owned or hereafter
acquired Inventory of every nature and kind, wherever located;
(iii) GENERAL INTANGIBLES - All of Borrower's now owned and
hereafter
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acquired, created or arising general intangibles of every kind and description,
including, without limitation, Wholesaler Rebates, indemnification rights,
customer lists, chooses in action, claims, books, records, patents and patent
applications, copyrights, trademarks, tradenames, service marks, tradestyles,
trademark applications, blueprints, drawings, designs and plans, trade secrets,
contracts, contract rights, licenses, license agreements, formulae, tax and any
other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies including without limitation, credit insurance
and key man life insurance policies, and computer information, software, records
and data;
(iv) EQUIPMENT - All of Borrower's now owned and hereafter
acquired equipment, including, without limitation, machinery, vehicles,
furniture and fixtures, wherever located, and all replacements, parts,
accessories, substitutions and additions thereto;
(v) DEPOSIT ACCOUNTS - All of Borrower's now existing and
hereafter acquired or arising deposit accounts of every nature, wherever
located, and all documents and records associated therewith;
(vi) PROPERTY IN LENDER'S POSSESSION - All Property of
Borrower, now or hereafter in the possession of Agent or any Lender;
(vii) INVESTMENT PROPERTY - All of Borrower's now owned or
hereafter acquired investment property of every kind (excluding capital stock of
Subsidiaries other than UDI Canada to the extent set forth in Section 4.1(l)
below); and
(viii) PROCEEDS - The proceeds (including, without limitation,
insurance proceeds), whether cash or non-cash, of all of the foregoing Property
and interests in Property described in clauses (i) through (vii).
Notwithstanding the foregoing, the Lien granted herein shall not attach to any
equipment lease permitted herein and the equipment covered thereby to the extent
such lease prohibits the granting of other Liens and if a consent is requested
by Agent no consent is obtained from the lessor.
3.2 LIEN DOCUMENTS: At Closing and thereafter as Agent deems necessary,
Borrower shall execute and deliver and cause each Obligor to execute and deliver
to Agent, or have executed and delivered (all in form and substance reasonably
satisfactory to Agent):
(a) FINANCING STATEMENTS - Financing statements pursuant to the UCC or
(as to UDI Canada, the Personal Property Security Act of Ontario), which Agent
may file in any jurisdiction where any Collateral is or may be located and in
any other jurisdiction that Agent deems appropriate; and
(b) MORTGAGES/TITLE INSURANCE - As to each Obligor owning real
Property, Mortgages pursuant to applicable state law in the proper form for
recording in any jurisdiction where any real Property of any Obligor is or may
be located together with title insurance policies from a title insurance company
reasonably acceptable to Agent, in an amount and in form and substance
reasonably satisfactory to Agent.
(c) OTHER AGREEMENTS - Any other agreements, documents, instruments and
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writings, including, without limitation, trademark security agreements,
reasonably required by Agent to evidence, perfect or protect Agent's Liens and
security interests in the Collateral or as Agent may reasonably request from
time to time.
3.3 OTHER ACTIONS: In addition to the foregoing, Borrower shall, and
shall cause each Obligor to do anything further that may be lawfully and
reasonably required by Agent to secure Agent and Lenders and effectuate the
intentions and objects of this Agreement, including, but not limited to, the
execution and delivery of Lockbox Agreements, continuation statements, amend-
ments to financing statements, security agreements, contracts and any other
documents required hereunder. At Agent's request, Borrower shall, and shall
cause each Obligor to immediately deliver (with execution by Borrower or such
Obligor of all necessary documents or forms to reflect, implement or enforce all
Liens described herein thereon) to Agent all items for which Agent must receive
possession to obtain and/or maintain perfected security interests, including
without limitation, all notes, letters of credit, certificates and documents of
title, chattel paper, warehouse receipts, instruments, and any other similar
instruments constituting Collateral.
3.4 SEARCHES AND CERTIFICATES: (a) Borrower shall, prior to or at
Closing, and thereafter as Agent may determine from time to time (including
searches to be conducted by Borrower as to each Additional Guarantor which are
conducted not more than thirty (30) days prior to the consummation of any
Permitted Acquisition), at Borrower's expense, obtain (and Agent may also do so,
at its option, from time to time) the following searches (the results of which
are to be consistent with the warranties made by Borrower in this Agreement and
each Obligor in any other Loan Document):
(i) UCC (or in the case of UDI Canada, equivalent) searches
with the Secretary of State and local filing office of each state or other
jurisdiction where each Obligor maintains its executive office, a place of
business, or assets;
(ii) Judgment, federal tax lien and state tax lien searches,
in all applicable filing offices of each jurisdiction searched under
subparagraph (a) above.
(b) Borrower shall, prior to or at Closing and at consummation of
any Permitted Acquisition and at its expense, obtain and deliver to Agent good
standing certificates showing each Obligor to be in good standing in its
respective jurisdiction of incorporation and in each other state, province or
foreign country in which it is doing and presently intends to do business for
which qualification is required.
3.5 LANDLORD'S AND WAREHOUSEMAN'S WAIVERS: Borrower will use all
reasonable efforts to cause each owner of any premises occupied by Borrower and
any other Obligor or to be occupied by Borrower and any other Obligor, and each
warehouseman of any warehouse, where, in either event, Collateral is held, to
execute and deliver to Agent an instrument, in form and substance satisfactory
to Agent, under which such owner(s) or warehouseman subordinates its/his/their
interests in and waives its/his/their right to distrain on or foreclose against
the Collateral and agrees to allow Agent to remain on such premises to dispose
of or deal with any Collateral located thereon.
3.6 FILING SECURITY AGREEMENT: A carbon, photographic or other
reproduction or other copy of this Agreement or of a financing statement is
sufficient as and may be filed in lieu of a financing
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statement.
3.7 POWER OF ATTORNEY: Each of the officers of Agent is hereby
irrevocably made, constituted and appointed the true and lawful attorney for
Borrower (without requiring any of them to act as such) with full power of
substitution to do the following: (a) endorse the name of Borrower upon any and
all checks, drafts, money orders and other instruments for the payment of monies
that are payable to Borrower and constitute collections on Borrower's Accounts;
(b) execute in the name of Borrower any financing statements, schedules,
assignments, instruments, documents and statements that Borrower is obligated to
give Agent hereunder or is necessary to perfect (or continue or evidence the
perfection of such security interest or Lien) Agent's security interest or Lien
in the Collateral; and (c) do such other and further acts and deeds in the name
of Borrower that Agent may reasonably deem necessary or desirable to enforce any
Account or other Collateral.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to Agent and
Agent's counsel):
4.1 RESOLUTIONS, OPINIONS, AND OTHER DOCUMENTS: Borrower shall have
delivered, or caused to be delivered to Agent, the following:
(a) this Agreement and the Revolving Credit Note properly
executed;
(b) financing statements, and each of the other Loan Documents
to be executed by Borrower or any other Person pursuant to the terms hereof
including, without limitation, Surety Documents executed by each Original
Guarantor;
(c) certified copies of (i) resolutions of Borrower's board of
directors authorizing the execution of this Agreement, the Revolving Credit Note
to be issued hereunder and each document required to be delivered by any Section
hereof and (ii) Borrower's Articles or Certificate of Incorporation and By-laws;
(d) certified copies of (i) resolutions of each Original
Guarantor's board of directors authorizing the execution of each Loan Document
to which such Original Guarantor is a party and (ii) each Original Guarantor's
Articles or Certificate of Incorporation and By-laws;
(e) an incumbency certificate for Borrower and each Original
Guarantor identifying all Authorized Officers, with specimen signatures;
(f) a written opinion of Borrower's and each Original
Guarantor's independent counsel addressed to Agent (on behalf of Lenders)
covering such matters as Agent deems necessary;
(g) such financial statements, reports, certifications and
other operational information as Agent may require including without limitation,
consolidated financial projections of profit and loss statements for the
remainder of the current fiscal year;
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(h) certification by the chief financial officer of Borrower
and each Original Guarantor that there has not occurred any material adverse
change in the operations and condition (financial or otherwise) of Borrower and
each such Obligor since March 31, 1998;
(i) payment by Borrower of all fees including, without
limitation, the balance of the Closing Fee and Expenses associated with the
Loans;
(j) the searches and certificates required under Section 3.4;
(k) landlord or warehouseman waivers required under Section
3.5; and
(l) pledge agreement under which Borrower pledges sixty-five
(65%) percent of the capital stock of UDI Canada (accompanied by delivery of the
original share certificate(s) for such stock and stock power(s) endorsed in
blank therefor).
4.2 ABSENCE OF CERTAIN EVENTS: At the Closing Date, no Default or Event
of Default hereunder shall have occurred and be continuing.
4.3 WARRANTIES AND REPRESENTATIONS AT CLOSING: The warranties and
representations contained in Section 5 as well as any other Section of this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as though made on and as of that date. Borrower and each
Original Guarantor shall not have taken any action or permitted any condition to
exist which would have been prohibited by any Section hereof.
4.4 COMPLIANCE WITH THIS AGREEMENT: Borrower and each Original
Guarantor shall have performed and complied with all agreements, covenants and
conditions contained herein and in the Loan Documents including, without
limitation, the provisions of Sections 6 and 7 hereof, which are required to be
performed or complied with by Borrower or any Original Guarantor before or at
the Closing Date.
4.5 OFFICERS' CERTIFICATE: Agent shall have received a certificate
dated the Closing Date and signed by the chief financial officer of Borrower
certifying that all of the conditions specified in this Section have been
fulfilled.
4.6 CLOSING: Subject to the conditions of this Section, the Revolving
Credit shall be made available on such date (the "Closing Date") and at such
time as may be mutually agreeable to the parties contemporaneously with the
execution hereof ("Closing") at Philadelphia, Pennsylvania.
4.7 WAIVER OF RIGHTS: By completing the Closing hereunder, or by making
Advances hereunder, neither Agent nor Lenders thereby waive a breach of any
warranty or representation made by Borrower or any Original Guarantor hereunder
or any agreement, document, or instrument delivered to Agent or any Lender or
otherwise referred to herein, and any claims and rights of Agent and Lenders,
resulting from any breach or misrepresentation by Borrower or any Original
Guarantor are specifically reserved by Agent.
4.8 CONDITIONS FOR FUTURE ADVANCES: The making of Advances under the
Revolving Credit in
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any form following the Closing Date is subject to the following conditions
precedent (all instruments, documents and agreements to be in form and substance
satisfactory to Agent and Agent's counsel):
(a) This Agreement and each of the other Loan Documents shall
be effective;
(b) No event or condition shall have occurred or become known
to any Obligor, or would result from the making of any requested Advance, which
could be reasonably expected to have a Material Adverse Effect;
(c) No Event of Default then exists;
(d) Each Advance is within and complies with the terms and
conditions of this Agreement including, without limitation, the notice
provisions (including a Borrowing Base Certificate) contained in Section 2.2
hereof; and
(e) Each representation and warranty set forth in Section 5 of
this Agreement or in any other Loan Document is then true and correct in all
respects (except to the extent of changes resulting from transactions permitted
by this Agreement, or to the extent such representations and warranties
expressly relate to an earlier date).
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce Lenders to complete the Closing and make the initial Advances
under the Revolving Credit to Borrower, Borrower warrants and represents to
Lenders that:
5.1 CORPORATE ORGANIZATION AND VALIDITY:
(a) Borrower and each Consolidated Entity are corporations
duly organized and validly existing under the laws of its respective state (or
in the case of UDI Canada, its province) of incorporation, are duly qualified,
validly existing and in good standing and have lawful power and authority to
engage in the business each conducts in each state and each foreign country
where the nature and extent of its business requires qualification except where
failure to so qualify and be in good standing could not be reasonably expected
to have a Material Adverse Effect. A list of all states and other jurisdictions
where Borrower and each other Obligor is qualified to do business is attached
hereto as Schedule "5.1" and made a part hereof.
(b) The making and performance of this Agreement and related
agreements, and each Loan Document required by any Section hereof will not
violate any law, government rule or regulation, or the charter, minutes or
by-law provisions of Borrower or any other Obligor or violate or result in a
default (immediately or with the passage of time) under any contract, agreement
or instrument to which Borrower or such other Obligor is a party, or by which
any is bound. Neither Borrower nor any other Consolidated Entity is in violation
of any term of any agreement or instrument to which it is a party or by which it
may be bound except, as to any non-monetary obligation thereunder, where a
violation thereof could not be expected to have a Material Adverse Effect or of
its charter, minutes or its bylaws.
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(c) Borrower and each other Obligor has all requisite
corporate power and authority to enter into and perform this Agreement and the
applicable Loan Documents and to incur the obligations herein or therein
provided for, and has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Agreement or the
applicable Loan Documents, and the documents and related agreements required
hereby.
(d) This Agreement, the Revolving Credit Note(s) to be issued
hereunder, and all related Loan Documents required to be executed and delivered
by Borrower and each other Obligor hereunder, when delivered, will be valid and
binding upon Borrower and each such other Obligor and enforceable in accordance
with their respective terms subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general equity principles.
5.2 PLACES OF BUSINESS: The only places of business of Borrower and
each other Obligor, and the places where each keeps and intends to keep its
Property, are at the addresses shown on Schedule "5.2" attached hereto and made
part hereof.
5.3 PENDING LITIGATION: There are no judgments or judicial or
administrative orders, decrees, injunctions, litigation, proceedings or
investigations (civil or criminal) pending, or to the knowledge of Borrower,
threatened, against Borrower or any Consolidated Entity in any court or before
any Governmental Authority except as shown on Schedule "5.3" attached hereto and
made part hereof. No matter listed on Schedule 5.3 has caused or, if adversely
determined, is reasonably likely to have a Material Adverse Effect. Neither
Borrower nor any Consolidated Entity is in default with respect to any order or
decree of any Governmental Authority. Neither Borrower nor any Consolidated
Entity has been indicted in connection with or convicted or engaged in any
criminal conduct, or is currently subject to any lawsuit or proceeding or under
investigation in connection with any anti-racketeering or other conduct or
activity which may result in the forfeiture of any property to any Governmental
Authority.
5.4 TITLE TO PROPERTIES: Borrower and each Consolidated Entity has good
and marketable title in fee simple (or its equivalent under applicable law) to
all the Property it respectively purports to own, free from Liens and free from
the claims of any other Person, except for those Permitted Liens.
5.5 GOVERNMENTAL CONSENT: Neither the nature of Borrower nor any other
Obligor or of their business or Property, nor any relationship between Borrower
or any other Obligor and any other Person, nor any circumstance affecting
Borrower or any other Obligor in connection with the issuance or delivery of
this Agreement or other Loan Documents is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of Borrower or any other Obligor in
connection with the execution and delivery of this Agreement or the issuance or
delivery of this Agreement or the other Loan Documents.
5.6 TAXES: All tax returns required to be filed by Borrower and any
Consolidated Entity in any jurisdiction have in fact been filed except where
such failure to file would not be expected to have a Material Adverse Effect,
and all taxes, assessments, fees and other governmental charges upon Borrower
and any Consolidated Entity, or upon any of their respective Property, income or
franchises, which are shown to be due and payable on such returns have been
paid, except for those taxes being
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contested in good faith with due diligence by appropriate proceedings for which
appropriate reserves have been maintained under GAAP. Borrower is not aware of
any proposed additional tax assessment or material tax to be assessed against or
applicable to Borrower or any Consolidated Entity.
5.7 FINANCIAL STATEMENTS: The annual audited consolidated balance sheet
of Borrower as of December 31, 1997, and the related statements of profit and
loss, stockholder's equity and cash flows, each as of such date, all accompanied
by reports thereon from Borrower's independent certified public accountants,
(complete copies of which have been delivered to Lender), and the quarterly
consolidated financial statements of Borrower as of March 31, 1998, have been
prepared in accordance with GAAP and present fairly the financial position of
the Borrower as of such date and the results of its operations for such period.
The fiscal year for Borrower and each Consolidated Entity currently ends on
December 31. Borrower's and each Original Guarantor's federal tax identification
number are shown on Schedule "5.7" attached hereto and made part hereof.
5.8 FULL DISCLOSURE: Neither the financial statements referred to in
Section 5.7, nor this Agreement or related agreements and documents or any
written statement furnished by Borrower or any Consolidated Entity or any of
them to Agent or Lenders in connection with the negotiation of the Revolving
Credit and contained in any financial statements or documents relating to
Borrower or any Consolidated Entity contain any untrue statement of a material
fact or omit a material fact necessary to make the statements contained therein
or herein not misleading.
5.9 SUBSIDIARIES: Neither Borrower nor any Consolidated Entity has any
Subsidiaries or Affiliates, except as shown on Schedule "5.9" attached hereto
and made a part hereof.
5.10 GUARANTEES, CONTRACTS, ETC.
(a) Neither Borrower nor any Consolidated Entity owns or holds
equity or long term debt investments in, has any outstanding advances to, or
serves as guarantor, surety or accommodation maker for the obligations of, any
Person, or has entered into any leases for real or personal Property (whether as
landlord or tenant), except the Surety Documents and as shown on Schedule
"5.10," attached hereto and made part hereof.
(b) Neither Borrower nor any Consolidated Entity is a party to
any contract or agreement, or subject to any charter or other corporate
restriction, which has or is reasonably likely to have a Material Adverse
Effect.
(c) Neither Borrower nor any Consolidated Entity has agreed or
consented to cause or permit any of its Property whether now owned or hereafter
acquired to be subject in the future (upon the happening of a contingency or
otherwise), to a Lien other than a Permitted Lien.
5.11 GOVERNMENT REGULATIONS, ETC.:
(a) The use of the proceeds of and Borrower's issuance of the
Revolving Credit Note will not directly or indirectly violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including, without limitation,
Regulations U, T and X of the Board of Governors of the Federal Reserve System,
12 C.F.R.,
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Chapter II. Borrower does not own or intend to carry or purchase any "margin
stock" within the meaning of said Regulation U with any proceeds of any Advance,
excluding (assuming no breach of the first sentence of this paragraph) any
margin stock of, or which may be owned by, an Acquired Entity acquired through a
Permitted Acquisition.
(b) Borrower and each Consolidated Entity have obtained all
licenses, permits, franchises or other governmental authorizations necessary for
the ownership of its Property and for the conduct of its business, except for
those which, if not obtained, would not cause a Material Adverse Effect.
(c) As of the date hereof, no employee benefit plan , as
defined in Section 3(3) of ERISA, (other than a multi employer plan described in
Section 3(37) of ERISA) maintained by Borrower or any Consolidated Entity or
under which Borrower or any Consolidated Entity could have any liability under
ERISA ("Pension Plan")(i) has failed to meet the minimum funding standards
established in Section 302 of ERISA, (ii) has failed to comply in a material
respect with all applicable requirements of ERISA and of the Internal Revenue
Code, including all applicable rulings and regulations thereunder, except as
shown on Schedule "5.11(c)" attached hereto and made part hereof, (iii) has
engaged in or been involved in a prohibited transaction under Section 406 of
ERISA or Section 4975 of the Internal Revenue Code which would subject Borrower
or any Consolidated Entity to any material liability, or (iv) has been
terminated if such termination would subject Borrower or any Consolidated Entity
to any material liability. Neither Borrower nor any Consolidated Entity has
assumed, or received notice of a claim asserted against Borrower or such
Consolidated Entity for, withdrawal liability (as defined in Section 4207 of
ERISA) with respect to any multi employer pension plan. Borrower and each
Consolidated Entity has timely made all contributions when due with respect to
any multi employer pension plan in which it participates and no event has
occurred triggering a claim against Borrower or such Consolidated Entity for
withdrawal liability with respect to any multi employer pension plan in which
Borrower or such Consolidated Entity participates. All Pension Plans and multi
employer pension plans in which Borrower and each Consolidated Entity
participates are shown on Schedule "5.11(c)".
(d) Neither Borrower nor any Consolidated Entity is in
violation of or has received written notice that it is in violation of any
applicable statute, regulation or ordinance of the United States of America, or
of any state, province, city, town, municipality, county or of any other
jurisdiction, or of any agency, or department thereof, (including without
limitation, Environmental Laws).
(e) Borrower and each Consolidated Entity is current with all
reports and documents required to be filed with any state or federal securities
commission or similar agency and is in full compliance in all material respects
with all applicable rules and regulations of such commissions.
5.12 BUSINESS INTERRUPTIONS: Within five (5) years prior to the date of
this Agreement, none of the business, Property or operations of Borrower or any
Consolidated Entity has been materially and adversely affected in any way by any
casualty, strike, lockout, combination of workers, order of the United States of
America, or any state, province or local government, or any political
subdivision or agency thereof, directed against Borrower or such Consolidated
Entity. There are no pending or threatened labor disputes, strikes, lockouts or
similar occurrences or grievances affecting the business being operated by
Borrower or any Consolidated Entity.
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5.13 NAMES:
(a) Within five (5) years prior to the Closing Date, neither
Borrower nor any other Obligor has conducted business under or used any other
name (whether corporate or assumed) except for the names shown on Schedule
"5.13(a)", attached hereto and made part hereof. Except as shown on Schedule
"5.13(a)", Borrower and each other Obligor is the sole owner of all names shown
on Schedule "5.13(a)" and any and all business done and all invoices issued in
such trade names are Borrower's or such other Obligor's sales, business and
invoices. Each trade name of Borrower and each other Obligor represents a
division or trading style of Borrower and such other Obligor and not a separate
corporate subsidiary or affiliate or independent entity.
(b) All trademarks, service marks, patents or copyrights which
Borrower and each other Obligor uses or plans to use and any license necessary
for such use are shown on Schedule "5.13(b) attached hereto and made part
hereof. The Borrower or such other Obligor identified on Schedule "5.13(b)" is
the sole owner of such Property except to the extent any other Person has claims
or rights in such Property, as such claims and rights are shown on such Schedule
"5.13(b)." Neither Borrower nor any other Obligor is in violation of any rights
of any other Person with respect to such Property.
5.14 OTHER ASSOCIATIONS: Neither Borrower nor any Consolidated Entity
is engaged or has an interest in any joint venture or partnership with any other
Person except as shown on Schedule "5.14" hereto and made part hereof.
5.15 ENVIRONMENTAL MATTERS: Except as shown on Schedule "5.15" attached
hereto and made part hereof:
(a) No Property presently owned, leased, controlled or
operated by Borrower or any Consolidated Entity contains, or has previously
contained, and, no property formerly owned, leased or operated by Borrower or
any Consolidated Entity during the period of such ownership, lease of operation,
contained, any Hazardous Substances in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) is reasonably likely to give
rise to liability to Borrower or to Obligors taken as a whole under, any
Environmental Law which could be reasonable expected to have a Material Adverse
Effect.
(b) Borrower and each Consolidated Entity is in compliance,
and, for the duration of all applicable statutes of limitations periods, have
been in compliance in all material respects with all applicable Environmental
Laws, and there is no violation of any Environmental Law with respect to such
properties which is reasonably likely to interfere with any of their continued
operations or to impair the fair saleable value thereof.
(c) Neither Borrower nor any Consolidated Entity has received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws and Borrower has no knowledge that any such notice will be
received or is being threatened.
(d) Neither Borrower nor any Consolidated Entity has
transported or disposed of
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Hazardous Substances in a manner or to a location which are reasonably likely to
give rise to liability of Borrower or any Consolidated Entity under any
Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of Borrower, threatened, under any
Environmental Law to which Borrower and any Consolidated Entity is or, to
Borrower's knowledge, will be named as a party, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding, the implementation
of which is reasonably likely to have a Material Adverse Effect under any
Environmental Law.
5.16 REGULATION O: No director, executive officer or principal
shareholder of Borrower or any Consolidated Entity is a director, executive
officer or principal shareholder of Agent or any Lender. For the purposes hereof
the terms "director" (when used with reference to a Lender), "executive officer"
and "principal shareholder" have the respective meanings assigned thereto in
Regulation O issued by the Board of Governors of the Federal Reserve System.
5.17 CAPITAL STOCK: The authorized and outstanding Capital Stock of
Borrower and each Consolidated Entity (and the owners thereof as of the date of
this Agreement) is as shown on Schedule "5.17" attached hereto and made part
hereof. All of the Capital Stock of Borrower and each Consolidated Entity has
been duly and validly authorized and issued and is fully paid and non-assessable
and has been sold and delivered to the holders thereof in compliance with, or
under valid exemption from, all Federal and state laws and the rules and
regulations of all regulatory bodies thereof governing the sale and delivery of
securities. Except for the rights and obligations shown on Schedule "5.17",
there are no subscriptions, warrants, options, calls, commitments, rights or
agreements by which Borrower or any Consolidated Entity or any of the
shareholders of Borrower or any Consolidated Entity is bound relating to the
issuance, transfer, voting or redemption of shares of its Capital Stock or any
pre-emptive rights held by any Person with respect to the shares of Capital
Stock of Borrower or any Consolidated Entity. Except as shown on Schedule
"5.17," neither Borrower nor any Consolidated Entity has issued any securities
convertible into or exchangeable for shares of its capital stock or any options,
warrants or other rights to acquire such shares or securities convertible into
or exchangeable for such shares. The representations in this Section 5.17 shall
not be made as to Borrower following consummation of the IPO.
5.18 SOLVENCY: Borrower and each Consolidated Entity is solvent, is
able to pay its respective debts as they become due, and has capital sufficient
to carry on its respective business and all businesses in which each is about to
engage, and now owns Property having a value both at fair valuation and at
present fair salable value greater than the amount required to pay such entity's
debts. Neither Borrower nor any Consolidated Entity will be rendered insolvent
by the execution and delivery of this Agreement or any of the other documents
executed in connection with this Agreement or by the transactions contemplated
hereunder or thereunder.
5.19 INTERRELATEDNESS OF BORROWER AND OBLIGORS: The business operations
of Borrower and each other Obligor are interrelated and complement one another,
and such companies have a common business purpose, with inter-company
bookkeeping and accounting adjustments used to separate their respective
Properties, Liabilities, and transactions. To permit their uninterrupted and
continuous operations, such companies now require and will from time to time
hereafter require funds for general
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business purposes. The proceeds of Advances under the Revolving Credit will
directly or indirectly benefit Borrower and each Obligor hereunder severally and
jointly.
5.20 INVESTMENT COMPANY: Neither Borrower nor any other Obligor is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is Borrower or any other Obligor
controlled by such a company.
5.21 YEAR 2000 ISSUE: Borrower has reviewed the business and operations
of Borrower and the Consolidated Entities to determine whether their business or
operations could be affected by any risk that certain computer hardware,
software or other equipment used by any such entity may be unable to recognize,
interpret or process data or perform date sensitive functions by reason of the
advent of the year 2000 ("Year 2000 Issue"). The Year 2000 Issue is not
reasonably likely to have any Material Adverse Effect.
SECTION 6. BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants that until all Obligations are paid and satisfied in
full and the Revolving Credit has been terminated:
6.1 PAYMENT OF TAXES AND CLAIMS: Borrower shall pay and shall cause
each Consolidated Entity to pay, before they become delinquent,
(a) all taxes (including without limitation withholding
taxes), assessments and governmental charges or levies imposed upon Borrower or
any Consolidated Entity or any of their Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other Persons entitled to the benefit of statutory
or common law Liens, which, if unpaid, would result in the imposition of a Lien
upon its Property; provided, however, that neither Borrower nor any Consolidated
Entity shall be required to pay any such tax, assessment, charge, levy, claim or
demand if the amount, applicability or validity thereof shall at the time be
contested in good faith and by appropriate proceedings, and if Borrower or such
Consolidated Entity shall have set aside on its books adequate reserves in
respect thereof, if so required in accordance with GAAP; which deferment of
payment is permissible so long as no Lien other than a Permitted Lien has been
entered and Borrower's or such Consolidated Entity's title to, and its right to
use, its Property are not materially adversely affected thereby.
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE:
(a) PROPERTY - Borrower shall maintain and shall cause each
Consolidated Entity to maintain its Property in good condition and make all
necessary renewals, replacements, additions, betterments and improvements
thereto and will pay and discharge when due the cost of repairs and maintenance
to its Property, all as in the judgment of Borrower or such Consolidated Entity
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times. Borrower and each
Consolidated Entity shall pay all rentals when due for all real estate leased by
such Borrower and each Consolidated Entity except as may be contested by such
entity
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in good faith by appropriate proceedings with notice thereof timely provided to
Agent.
(b) PROPERTY INSURANCE, PUBLIC AND PRODUCTS LIABILITY INSURANCE - Borrower shall
maintain and shall cause each Consolidated Entity to maintain insurance (i) on
all insurable tangible Property against fire, flood, casualty and such other
hazards (including, without limitation, extended coverage, workmen's
compensation, boiler and machinery, with inflation coverage by endorsement) and
(ii) against public liability, products liability and business interruption
insurance in each case in such amounts, with such deductibles and with such
insurers as are customarily used by companies operating in the same industry as
Borrower and each Consolidated Entity. At or prior to Closing, Borrower shall
furnish Agent with duplicate original policies of insurance or such other
evidence of insurance as Agent may require. In the event Borrower or any
Consolidated Entity fails to procure or cause to be procured any such insurance
or to timely pay or cause to be paid the premium(s) on any such insurance, Agent
may do so for Borrower or such Obligor, but Borrower or such Obligor shall
continue to be liable for the same. The policies of all such casualty insurance
as to Obligors shall contain standard Agent's Loss Payable Clauses issued in
favor of Agent under which all losses thereunder shall be paid to Agent (for the
pro rata benefit of Lenders) as Agent's interest may appear. Such policies shall
expressly provide that the requisite insurance cannot be altered or canceled
without thirty (30) days prior written notice to Agent and shall insure Agent
notwithstanding the act or neglect of Borrower or any other Obligor. Borrower
hereby appoints and shall cause each other Obligor to appoint Agent as such
Obligor's attorney-in-fact, exercisable at Agent's option to endorse any check
(but only a check in excess of $50,000 if no Event of Default is outstanding)
which may be payable to Borrower or any other Obligor in order to collect the
proceeds of such insurance and any amount or amounts collected by Agent pursuant
to the provisions of this Section may be applied by Agent, in its sole
discretion, to any Obligations (if an Event of Default is outstanding) or to
repair, reconstruct or replace the loss of or damage to Collateral under such
procedures as Agent in its judgment may from time to time determine. Borrower
further covenants that all insurance premiums owing under its and any other
Obligor's current casualty policy have been paid. Borrower shall notify and
shall cause each other Obligor to notify Agent, promptly, upon Borrower's or
such Obligor's receipt of a notice of termination, cancellation, or non-renewal
from its insurance company of any such policy.
(c) FINANCIAL RECORDS - Borrower shall keep and shall cause each
Consolidated Entity to keep current and accurate books of records and accounts
in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. Borrower shall not
change and shall not permit any Consolidated Entity to change its respective
fiscal year end date without the prior written consent of Agent.
(d) CORPORATE EXISTENCE AND RIGHTS - Borrower shall do and shall cause each
Consolidated Entity to do (or cause to be done) all things necessary to preserve
and keep in full force and effect its existence, good standing, rights and
franchises, except for any merger permitted under Section 7.1 below.
(e) COMPLIANCE WITH LAWS - Borrower shall be and shall cause each
Consolidated Entity to be in compliance with any and all laws, ordinances,
governmental rules and regulations, and court or administrative orders or
decrees to which it is subject, whether federal, state or local, (including,
without limitation, securities laws and regulations and Environmental Laws), and
shall obtain any and
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all licenses, permits, franchises or other govern- mental authorizations
necessary to the ownership of its Property or to the conduct of its busi-
nesses, which violation or failure to obtain causes or is reasonably likely to
cause a Material Adverse Effect. Borrower shall timely satisfy and shall cause
each Consolidated Entity to timely satisfy all assessments, fines, costs and
penalties imposed by any governmental body against such Consolidated Entity or
any Property of such Consolidated Entity.
6.3 BUSINESS CONDUCTED: Borrower shall continue and shall
cause each other Obligor to continue in the business presently operated by it
using its best efforts to maintain its customers and goodwill. Borrower shall
not engage and shall not permit any other Obligor to engage, directly or
indirectly, in any material respect in any line of business substantially
different from the businesses conducted by Borrower or such Obligor immediately
prior to the Closing Date, unless such line of business is reasonably related to
such business so conducted prior to the Closing Date.
6.4 LITIGATION: Borrower shall give and shall cause each other
Obligor to give prompt notice to Agent of any litigation claiming in excess of
$250,000 from Borrower or such Obligor, or which may otherwise have a Material
Adverse Effect.
6.5 ISSUE TAXES: Borrower shall pay and shall cause each
Consolidated Entity to pay all taxes (other than taxes based upon or measured by
any Lender's income or revenues or any personal property tax), if any, in
connection with the issuance of the Revolving Credit Note(s) and the recording
of any Lien documents. The obligations of Borrower hereunder shall survive the
payment of the Obligations and the termination of this Agreement.
6.6 BANK ACCOUNTS: Borrower shall maintain and shall cause
each other Obligor other than UDI Canada to maintain its major depository and
disbursement account(s) with Agent.
6.7 EMPLOYEE BENEFIT PLANS: Borrower shall and shall cause
each Consolidated Entity to (a) fund each Pension Plan in a manner that will
satisfy the minimum funding standards of Section 302 of ERISA or of the IRS, or
will promptly satisfy any accumulated funding deficiency that arises under
Section 302 of ERISA or of the IRS, (b) furnish Agent, promptly upon Agent's
request of the same, with copies of all reports or other statements filed with
the United States Department of Labor, the PBGC or the IRS with respect to any
such Pension Plan, or which Borrower or such Consolidated Entity may receive
from the United States Department of Labor, the IRS or the PBGC, with respect to
any such Pension Plan, and (c) advise Agent within 30 days of learning of the
occurrence of any Reportable Event (as defined in Section 4043 of ERISA, other
than a Reportable Event for which the thirty (30) day notice requirement has
been waived by the PBGC) or any non-exempt prohibited transaction (under Section
406 of ERISA or Section 4975 of the Internal Revenue Code) with respect to any
such Pension Plan and the action which Borrower or such Consolidated Entity
proposes to take with respect thereto. Borrower shall make and shall cause each
Consolidated Entity to make all contributions when due with respect to any
multi-employer pension plan in which it participates and will promptly advise
Agent (x) upon its receipt of notice of the assertion against Borrower or such
Consolidated Entity of a claim for withdrawal liability, and (y) upon the
occurrence of any event which, to the best of Borrower's knowledge, would
trigger the assertion of a claim for withdrawal liability against Borrower or
such Consolidated Entity or may give rise to any lien against Property of
Borrower or such Consolidated Entity.
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6.8 FINANCIAL COVENANTS:
(a) Borrower shall maintain and comply with the following financial
covenants prior to the consummation of the IPO:
(i) CONSOLIDATED TANGIBLE NET WORTH: Borrower shall have a
Consolidated Tangible Net Worth of not less than $(500,000) as of September 30,
1998, $(750,000) as of December 31, 1998 and at all times through March 30,
1999, and $500,000.00 as of March 31, 1999 and at all times thereafter.
(ii) FUNDED DEBT TO TANGIBLE NET WORTH RATIO: Borrower shall have a
Funded Debt to Tangible Net Worth Ratio of not more than 8 to 1 as of March 31,
1999 and at all times through March 30, 2000 and 6 to 1 as of March 31, 2000 and
at all times thereafter.
(iii) CURRENT RATIO: Borrower shall have a Current Ratio of at least
.6 to 1 at all times through December 30, 1999, .75 to 1 as of December 31, 1999
and at all times through December 30, 2000 and .8 to 1 as of December 31, 2000
and at all times thereafter.
(iv) INTEREST COVERAGE RATIO: Borrower shall have an Interest
Coverage Ratio of at least 1.75 to 1 as of March 31 and June 30, 1999, 2.0 to 1
as of September 30, 1999, 2.25 to 1 as of December 31, 1999 and 2.5 to 1 as of
the last day of each fiscal quarter thereafter.
(v) CONSOLIDATED CAPITAL EXPENDITURES: Borrower shall not expend for
Consolidated Capital Expenditures more than $750,000 in any fiscal year.
(vi) UDI EBITDA: UDI shall achieve an EBITDA of at least $300,000 for
the quarter ending September 30, 1998 and $300,000 for the quarter ending
December 31, 1998.
(b) Borrower shall maintain and comply with the following financial
covenants at all times following consummation of the IPO:
(i) CONSOLIDATED NET WORTH: As of the last day of the fiscal quarter
in which the IPO is consummated, Borrower shall have a Consolidated Net Worth of
not less than the Consolidated Net Worth as of the date the IPO is consummated
plus 50% of Consolidated Net Income in such quarter (without reduction for
losses) minus $5,000,000. As of the last day of each subsequent fiscal quarter,
Borrower shall have a Consolidated Net Worth of not less than the minimum
required Consolidated Net Worth as of the last day of the preceding fiscal
quarter plus 100% of all equity securities issued in such quarter plus 100% of
all increases in equity attributable to the pooling of interests accounting
measurement plus 50% of all Consolidated Net Income in such quarter (without
reduction for losses).
(ii) ND AS OF THE END OF EACH FISCAL QUARTER THEREAFTER.
(iii) SENIOR DEBT TO EBITDA RATIO: Borrower shall have a Senior Debt
to EBITDA Ratio of not more than 5.0 to 1 as of the end of each fiscal quarter
through March 31, 1999, 4.0 to 1 as of June 30, September 30 and December 31,
1999 and 3.0 to 1 as of March 31, 2000 and as
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of the end of each fiscal quarter thereafter.
6.9 FINANCIAL AND BUSINESS INFORMATION: Borrower shall deliver, or cause to
be delivered, to Agent the following:
(a) FINANCIAL STATEMENTS AND COLLATERAL REPORTS: such data, reports,
statements and information, financial or otherwise, as Agent may reasonably
request, including, without limitation:
(i) a Borrowing Base Certificate on a weekly basis (or such more
frequent basis as Agent may request if either (x) an Event of Default is
outstanding or (y) Excess Borrowing Availability is less than 10% of the Maximum
Loan Amount);
(ii) within forty-five (45) days after the end of each calendar
quarter in each fiscal year of Borrower, the consolidated and consolidating
earnings, cash flow and retained earnings statement of Borrower and each
Consolidated Entity for such quarter and for the expired portion of the fiscal
year ending with the end of such month, setting forth in comparative form the
corresponding figures for the corresponding periods of the previous fiscal year,
and the consolidated and consolidating balance sheet of Borrower and each other
Consolidated Entity as at the end of such quarter, setting forth in comparative
form the corresponding figures as at the end of the corresponding period of the
previous fiscal year, all in reasonable detail and certified by the chief
financial officer of Borrower to have been prepared from the books and records
of Borrower;
(iii) within ninety (90) days after the end of each fiscal year of
Borrower, the consolidated earnings, cash flow and retained earnings statements
of Borrower and each Consolidated Entity for such year, the consolidated balance
sheet of Borrower and each Consolidated Entity as at the end of such fiscal year
and a statement of cash flows for such fiscal year, setting forth in each case
in comparative form the corresponding figures as at the end of and for the
previous fiscal year, all in reasonable detail, including all supporting
schedules, and audited and certified, without qualification, by independent
public accountants of recognized standing, selected by Borrower and reasonably
satisfactory to Agent, to have been prepared in accordance with GAAP, and such
independent public accountants shall also certify, without qualification, that
in making the examinations necessary to their certification mentioned above they
have reviewed the terms of this Agreement and the accounts and conditions of
Borrower during the accounting period covered by the certificate and that such
review did not disclose the existence of any condition or event which
constitutes a Default or an Event of Default (or that such conditions or events
existed, describing them) together with copies of any management letters
provided by such accountants to management of Borrower; and
(iv) within fifteen (15) days of the end of each calendar month, an
accounts receivable aging report, accounts payable aging report, inventory
certificates, and account status reports, for Borrower and each other Obligor, a
profit and loss statement for Borrower and each Consolidated Entity, and such
other reports as to Borrower and/or any Consolidated Ent officer as true and
correct, all in form and substance reasonably satisfactory to Agent;
(b) NOTICE OF EVENT OF DEFAULT - promptly upon becoming aware of the
existence of any condition or event which constitutes a Default or an Event of
Default under this Agreement, a written notice specifying the nature and period
of existence thereof and what action the Obligors are
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taking (and propose to take) with respect thereto;
(c) NOTICE OF CLAIMED DEFAULT - promptly upon receipt by Borrower or any
other Consolidated Entity, notice of default, oral or written, given to Borrower
or such Obligor by any creditor for borrowed money, or holding long term
Indebtedness of such Obligor in excess of Two Hundred, Fifty Thousand Dollars
($250,000); and
(d) SECURITIES AND OTHER REPORTS - if Borrower or any Consolidated
Entity shall be required to file reports with the Securities and Exchange
Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, promptly upon its becoming avail- able, one copy of each
financial statement, report, notice or proxy statement sent by Borrower or such
Consolidated Entity to stockholders generally, and, a copy of each regular or
periodic report, and any registration statement, or prospectus in respect
thereof, filed by Borrower or such Consolidated Entity with any securities
exchange or with federal or state securities and exchange commissions or any
successor agency.
6.10 OFFICERS' CERTIFICATES: Along with the set of financial statements
delivered to Agent the end of each calendar quarter and fiscal year pursuant to
Section 6.9(a) hereof, and within thirty (30) days of the consummation of any
Permitted Acquisition, Borrower shall deliver to Lender a certificate
("Compliance Certificate") (in the form of Exhibit "G" attached hereto and made
a part hereof) from the chief financial officer of Borrower (and as to
certificates accompanying the annual statements of Borrower, also certified by
Borrower's independent certified public accountant) setting forth:
(a) COVENANT COMPLIANCE - the information (including detailed
calculations) required in order to establish whether Borrower is in compliance
with the requirements of Sections 6.8 as of the end of the period covered by the
financial statements then being furnished (and any exhibits appended thereto)
under Section 6.9 and after giving effect to any Permitted Acquisition; and
(b) EVENT OF DEFAULT - that the signer has reviewed the relevant terms
of this Agreement, and has made (or caused to be made under his or her
supervision) a review of the transactions and conditions of Borrower and each
other Obligor from the beginning of the accounting period covered by the
earnings statements being delivered therewith to the date of the certificate,
and that such review has not disclosed the existence during such period of any
condition or event which constitutes a Default or an Event of Default or if any
such condition or event existed or exists, specifying the nature and period of
existence thereof and what action Borrower has taken or proposes to take with
respect thereto.
6.11 AUDITS AND INSPECTION: Borrower shall permit and shall cause each
other Obligor to permit any of Agent's officers, agents or other representatives
to visit and inspect any of the locations of Borrower or such other Obligor, to
examine and audit Borrower's or such Obligor's books of account, records,
reports and other papers, to make copies and extracts therefrom and to discuss
its affairs, finances and accounts with its officers, employees and independent
certified public accountants. If no Event of Default is outstanding, there shall
not be more than four (4) audits per year and Obligors shall be obligated to pay
for the first two (2) audits at the standard rates charged by Agent for such
activity (plus Agent's out-of-pocket expenses). If an Event of Default is
outstanding, there shall be no limit on the number of audits and all audits
shall be at Obligors' expense.
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6.12 TAX RETURNS AND REPORTS: At Agent's request from time to time,
Borrower shall furnish and shall cause each Consolidated Entity to promptly
furnish Agent with copies of the annual federal, state or provincial income tax
returns of Borrower and such Consolidated Entity. If requested by Agent,
Borrower shall furnish and shall cause each Consolidated Entity to promptly
furnish Agent with copies of all reports filed with any federal, state or local
govern-mental authority or agency, board or commission.
6.13 INFORMATION CONCERNING BORROWER AND CONSOLIDATED ENTITIES:
(a) Any Lender may divulge to any participant, co-lender or assignee or
prospective participant, co-lender or assignee it may obtain in the Loans or any
portion thereof all information, and furnish to such Person copies of any
reports, financial statements, certificates, and documents obtained under any
provision of this Agreement, or related agreements and documents,
(b) All non-public information provided by or on behalf of Borrower or
any Consolidated Entity pursuant to or in connection with this Agreement shall
be treated as confidential; provided, however that nothing shall prevent Agent
or any Lender from disclosing such information (i)to its employees, attorneys,
accountants, advisors and agents; (ii) upon request or demand of any
governmental or regulatory body; (iii) in response to any court order decree or
other requirements of law; (iv) in the exercise of any remedy hereunder or in
connection herewith; (v) to any party referenced in clause (a) above who agrees
to be bound by the provisions hereof; or (vi) which has been publicly disclosed.
6.14 MATERIAL ADVERSE DEVELOPMENTS: Borrower agrees that immediately upon
becoming aware of any development or other information outside the ordinary
course of business and excluding matters of a general economic, financial or
political nature which would reasonably be expected to have a Material Adverse
Effect, it shall give to Agent telephonic or telegraphic notice specifying the
nature of such development or information and such anticipated effect. In
addition, such verbal communication shall be confirmed by written notice thereof
to Agent on the same day such verbal communication is made on the next business
day thereafter.
6.15 PLACES OF BUSINESS: Borrower shall give and shall cause each other
Obligor to give ten(10) days prior written notice to Agent of any changes in the
location of any of its respective places of business, of the places where
records concerning its Accounts are kept, or the establishment of any new, or
the discontinuance of any existing place of business.
6.16 ACCOUNT VERIFICATION: Whether or not a Default or an Event of Default
has occurred, any of Agent's officers, employees or agents shall have the right
at any time, upon reasonable notice during business hours, in the name of Agent
or Borrower or any other Obligor, to verify the validity, amount or any other
matter relating to Accounts by mail, telephone or otherwise. Borrower shall
cooperate and shall cause each other Obligor to cooperate fully with Agent, its
officers, employees or agents in such process.
6.17 YEAR 2000 UNDERTAKING: Borrower shall take and cause each Consolidated
Entity to take all material actions necessary to assure that at all times the
computer based systems utilized by Borrower and each Consolidated Entity are
able to effectively recognize, interpret and process data by reason of
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the Year 2000 Issue such that no Material Adverse Effect will result from the
Year 2000 Issue. At Agent's request, Borrower shall provide and cause each
Consolidated Entity to provide to Agent assurances reasonably acceptable to
Agent that the computer based systems utilized by Borrower and each Consolidated
Entity are able to recognize, process and perform functions involving dates on
or after December 31, 1999 in compliance with this Section 6.17.
SECTION 7. BORROWER'S NEGATIVE COVENANTS:
Borrower covenants that until all of Obligations are paid and satisfied in
full and the Revolving Credit has been terminated, that:
7.1 ASSET SALE, MERGER, CONSOLIDATION, DISSOLUTION OR LIQUIDATION:
(a) Neither Borrower nor any Consolidated Entity shall engage in any
Asset Sale other than (i) Inventory sold in the ordinary course of such Person's
business, (ii) equipment that is replaced by other equipment of comparable or
superior quality and value within ninety (90) days of such disposition, and
(iii) obsolete or surplus equipment sold or otherwise disposed of from time to
time.
(b) Neither Borrower nor any Consolidated Entity shall merge or
consolidate with any other Person except among themselves or to effectuate a
Permitted Acquisition or commence a dissolution or liquidation.
7.2 ACQUISITIONS: Except for a Permitted Acquisition, neither Borrower nor
any Consolidated Entity shall acquire all or a material portion of the Capital
Stock, securities or assets of any Person in any transaction or in any series of
related transactions or enter into any sale and leaseback transaction.
7.3 LIENS AND ENCUMBRANCES: Neither Borrower nor any Consolidated Entity
shall: (i) execute a negative pledge agreement with any Person covering any of
its Property which may prohibit Liens in favor of Agent or any successors,
assignees or replacement lender(s) from time to time (regardless of the amount
or terms thereof), or (ii) cause or permit or agree or consent to cause or
permit in the future (upon the happening of a contingency or otherwise), its
Property (including, without limitation, the Collateral), whether now owned or
hereafter acquired, to be subject to a Lien or be subject to any claim except
for Permitted Liens. As used herein, "Permitted Liens" means:
(a) Liens securing taxes, assessments or governmental charges or levies
or the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords, and other like persons, provided the payment thereof is not at the
time required by Section 6.1;
(b) Liens incurred or deposits or pledges made in the ordinary course of
business in connection with workers' compensation, unemployment insurance,
social security and other like laws;
(c) Existing Liens shown on Schedule "7.3" attached hereto and made part
hereof;
(d) Liens constituting purchase money security interests hereafter
created by Borrower or a Consolidated Entity to Persons providing financing for
Capital Expenditures permitted
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under this Agreement so long as each obligation secured by a Lien permitted by
this subparagraph (d) does not exceed 100% of the lower of the cost or fair
market value of the Property acquired with such financing;
(e) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(f) All easements, zoning restrictions, flowage rights, rights-of-way,
covenants, conditions, restrictions, licenses, agreements and other similar
matters effecting real Property and/or buildings and improvements, including the
unrecorded easements and similar agreements, which in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
use of the Property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any Consolidated Entity;
(g) All building codes and zoning ordinances and other laws, ordinances,
regulations, rules, orders or determinations of any Federal, state, county,
municipal or other governmental authority now or hereafter enacted;
(h) Liens created pursuant to the Security Documents;
(i) Liens on the equipment and/or real Property of a Person which
becomes an Obligor after the Closing Date securing term Indebtedness; PROVIDED
that (i) such Liens existed at the time such Person became an Obligor and were
not created in anticipation thereof and (ii) any such Lien is not spread to
cover any other Property of such Person; and
(j) Liens on Property of a Consolidated Entity which is not an Obligor
securing Indebtedness described in Section 7.6(b)(vi).
7.4 TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES:
(a) Neither Borrower nor any Consolidated Entity shall enter into any
transaction with any other Consolidated Entity, Subsidiary or other Affiliate
including, without limitation, the purchase, sale, or exchange of Property, or
the loaning or giving of funds to any Affiliate or any Subsidiary unless such
transaction (i) represents an unsecured loan from an Obligor to another Obligor
for working capital needs of such Obligor in the ordinary course of its business
or is a repayment thereof, (ii) represents a sale of inventory among Obligors in
the ordinary course of each entity's business or a payment therefor, (iii) is
intended for incidental administrative purposes, (iv) is permitted under Section
7.1(b) above, or (v) represents an arms' length transaction among Obligors for
consideration and on terms substantially similar to that which would be
available to a party which is not affiliated with such Person.
(b) Neither Borrower nor any Consolidated Entity shall create any
Subsidiary unless such Subsidiary (i) is formed for the purpose of making a
Permitted Acquisition, (ii) is in the same line of business as the Obligors, and
(iii) becomes an Obligor immediately upon creation thereof.
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7.5 GUARANTEES: Neither Borrower nor any Consolidated Entity shall become
or be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety, accommodation maker, or
otherwise, for the existing or future indebtedness of any kind of any other
Person, except for (a) the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection, (b) guaranty obligations
created pursuant to a Surety Agreement, and (c) guarantees by an Obligor of
Indebtedness of another Obligor permitted under this Agreement to be outstanding
so long as the aggregate Indebtedness guaranteed by all such guarantees does not
at any time exceed $500,000.
7.6 DISTRIBUTIONS, REDEMPTIONS AND OTHER INDEBTEDNESS: Neither Borrower nor
any Consolidated Entity shall: (a) declare or pay or make any forms of
Distribution to its share-holders, other than (i) dividends or distributions
made solely with capital stock of Borrower and (iii) dividends by a Consolidated
Entity to Borrower; or (b) hereafter incur or be liable for any Indebtedness
other than from Lenders except (i) Indebtedness giving rise to a Permitted Lien
under Section 7.3(d); (ii) Indebtedness existing as of the date hereof and shown
on Schedule "7.6" attached hereto and made part hereof; (iii) inter-company
Indebtedness permitted under Section 7.4 above; (iv) unsecured Indebtedness
outstanding from time to time in an aggregate amount not exceeding $500,000; (v)
Indebtedness of an Acquired Entity assumed as part of a Permitted Acquisition
which is (A) term Indebtedness and (B) either (1) unsecured or (2) secured by
equipment or real Property of such Acquired Entity subject to the conditions set
forth in Section 7.3(i) and (ii); (vi) Indebtedness of a Consolidated Entity
which is not an Obligor for borrowed money for use by such Consolidated Entity
for working capital; and (vii) Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness is extinguished within five (5) Business Days after Borrower
becomes aware of its existence.
7.7 LOANS AND INVESTMENTS: Neither Borrower nor any Consolidated Entity
shall make or have outstanding loans, advances, extensions of credit or capital
contributions to, or investments in, any Person, other than (a) investments in
(i) commercial paper maturing in one (1) year or less from the date of issuance
rated either A-1 by Standard & Poor's Corporation ("S&P"), P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's") or other similar nationally recognized
credit rating agency of similar standing; (ii) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America, or any agency or instrumentality
thereof, maturing in twelve (12) months or less from the date of acquisition
thereof; (iii) certificates of deposit maturing within ninety (90) days from the
date of origin issued by, or money market funds held by, a Federal Reserve Bank
or a commercial bank with capital, surplus and undivided profits of not less
than Two Hundred Fifty Million Dollars ($250,000,000.00), (iv) Repurchase
Agreements secured by direct obligations of the United States of America, or any
agency thereof, maturing in twelve (12) months or less and having a market value
at the time such repurchase agreement is entered into at least equal to the
amount of the repurchase obligations thereunder, entered into with a Federal
Reserve Bank or a commercial bank with capital, surplus and undivided profits of
not less than Two Hundred and Fifty Million Dollars ($250,000,000), or (v)
equity investments by Borrower or a Consolidated Entity in and to another
Consolidated Entity (which, as to any Consolidated Entity which is not an
Obligor, shall be limited to the investment existing as of the date of this
Agreement), including investment in a corporation which, after giving effect to
such investment will become, by a Permitted Acquisition, an Obligor, and (b)
loans (i) to employees up to an aggregate amount of $100,000 outstanding at any
one
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time from all Consolidated Entities, and (ii) inter-company loans permitted
under Section 7.4.
7.8 USE OF LENDER'S NAME: Neither Borrower nor any Consolidated Entity
shall use Agent's or any Lender's name (or the name of any of any Lender's
Affiliates) in connection with any of its business operations other than to
identify Agent as agent hereunder and Lenders as the lenders hereunder and
depository bank and in such other capacity as any Lender or Agent may agree to
serve. Nothing herein contained is intended to permit or authorize Borrower or
any Consolidated Entity to make any contract on behalf of Agent or any Lender.
7.9 MISCELLANEOUS COVENANTS:
(a) Neither Borrower nor any Consolidated Entity shall become or be a
party to any contract or agreement which at the time of becoming a party to such
contract or agreement materially impairs its ability to perform under this
Agreement.
(b) Neither Borrower nor any other Obligor shall carry or purchase any
"margin stock" within the meaning of Regulations U, T or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II with any proceeds
of any Advance hereunder or in violation of such regulations. Excluded therefrom
(assuming no violation of such regulations) shall be any margin stock of, or
which may be owned by, an Acquired Entity acquired through a Permitted
Acquisition.
SECTION 8. DEFAULT
8.1 EVENTS OF DEFAULT: Each of the following events shall constitute an
event of default ("Event of Default"):
(a) PAYMENTS - if Borrower fails to make any payment of principal or
interest, including any Overadvance, under the Revolving Credit on the due date
of such payment or within five (5) days thereafter (subject, however, to Agent's
ongoing rights contained in the last sentence of Section 2.2 (a) above); or
(b) OTHER CHARGES - if Borrower or any other Obligor fails to pay any
other charges, fees, Expenses or other monetary obligations owing to Agent or
Lenders arising out of or incurred in connection with this Agreement within five
(5) days after notice the date such payment is due and payable or if no date is
specified then within five (5) days after demand is made for such payment; or
(c) PARTICULAR COVENANT DEFAULTS - if Borrower fails to perform, comply
with or observe any covenant or undertaking contained in this Agreement and
(other than with respect to the covenants contained in Section 6.8 and Section 7
for which no cure period shall exist) such failure continues for more than
twenty (20) days after notice from Agent to Borrower of the occurrence thereof;
or
(d) FINANCIAL INFORMATION - if any statement, report, financial
statement, or certificate made or delivered by Borrower or any Obligor or any of
its officers, employees or agents, to Agent or any Lender is not true and
correct, in all material respects, when made; or
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(e) WARRANTIES OR REPRESENTATIONS - if any warranty, representation or
other statement by or on behalf of Borrower or any other Obligor contained in or
pursuant to this Agreement, any of the Loan Documents or in any document,
agreement or instrument furnished in compliance with, relating to, or in
reference to this Agreement, is false, erroneous, or misleading in any material
respect when made; or
(f) AGREEMENTS WITH OTHERS - if Borrower or any other Obligor shall
default beyond any grace period under any agreement with any third party
creditor for the payment of Indebtedness if (i) such default consists of the
failure to pay any principal, premium or interest with respect to such
Indebtedness or (ii) such default consists of the failure to perform any
covenant or agreement with respect to Indebtedness in excess of Five Hundred
Thousand Dollars ($500,000), if the effect of such default under clause (ii) is
to cause Borrower's or such Obligor's obligations which are the subject thereof
to become due prior to its maturity date or prior to its regularly scheduled
date of payment; or
(g) OTHER AGREEMENTS WITH AGENT OR LENDERS - if Borrower or any other
Obligor breaches or defaults beyond any grace period, or if an event of default
occurs under, (i) the Loan Documents, or (ii) any other existing or future
agreement (related or unrelated) between Borrower and such Obligor and Agent or
any Lender if as to a default covered by this clause (ii) (A) such default
consists of the failure to pay any principal, premium or interest with respect
to Indebtedness or (B) such default consists of the failure to perform any
covenant or agreement with respect to Indebtedness in excess of Two Hundred
Fifty Thousand Dollars ($250,000), if the effect of such default under this
clause (B) is to cause Borrower's or such Obligor's obligations which are the
subject thereof to become due prior to its maturity date or prior to its
regularly scheduled date of payment; or
(h) JUDGMENTS - if any final judgment for the payment of money in excess
of One Million Dollars ($1,000,000) (a) which is not fully and unconditionally
covered by insurance or (b) for which Borrower or such Obligor has not
established a segregated cash or cash equivalent reserve (to Agent's
satisfaction) in the amount of such judgment shall be rendered by a court of
record against Borrower or any Obligor and such judgment shall continue
unsatisfied and in effect for a period of twenty (20) consecutive days without
being vacated, discharged, satisfied or bonded pending appeal; or
(i) ASSIGNMENT FOR BENEFIT OF CREDITORS, ETC. - if Borrower or any
Obligor makes or proposes an assignment for the benefit of creditors generally,
or offers a composition or extension to creditors; or
(j) BANKRUPTCY, DISSOLUTION, ETC. - upon the commencement of any action
for the dissolution or liquidation of Borrower or any Obligor, or the
commencement of any case or proceeding for reorganization or liquidation of
Borrower's or any Obligor's debts under the Bankruptcy Code or any other state
or federal law, now or hereafter enacted for the relief of debtors, whether
instituted by or against Borrower or such Obligor (or in the case of UDI Canada
so long as it is an Obligor, files any proposal under the Bankruptcy and
Insolvency Act of Canada); PROVIDED, HOWEVER, that Borrower or such Obligor
shall have sixty (60) days to obtain the dismissal or discharge of involuntary
proceedings filed against it, it being understood that during such sixty (60)
day period, Lenders shall not be obligated to make Advances hereunder, and Agent
(on behalf of Lenders) may seek adequate protection in any bankruptcy
proceeding; or
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(k) RECEIVER - upon the appointment of a receiver, liquidator,
custodian, trustee, administrator or similar official or fiduciary for Borrower
or any Obligor or for any of Borrower's or any Obligor's Property; or
(l) EXECUTION PROCESS, ETC. - the issuance of any execution or distraint
process against any Property of Borrower or any Obligor; or
(m) TERMINATION OF BUSINESS - if Borrower or any Obligor ceases any
portion of its business operations that is material to the business operations
of the Obligors taken as a whole; or
(n) PENSION BENEFITS, ETC. - if Borrower or any Obligor fails to comply
with ERISA, so that proceedings are commenced to appoint a trustee under ERISA
to administer Borrower's or such Obligor's Pension Plans or the PBGC institutes
proceedings to appoint a trustee to administer such plan(s), or a Lien is
entered to secure any deficiency or claim with respect to any such Pension Plan,
or a "Reportable Event" as defined under ERISA occurs with respect to any such
Pension Plan which Agent reasonably determines is likely to result in the
termination of such plan(s) under Title IV of ERISA and the imposition of
liability upon Borrower or any Obligors in excess of $1,000,000; or
(o) INVESTIGATIONS - any indication or evidence received by Agent or any
Lender that reasonably leads it to believe Borrower or any Obligor may have
directly or indirectly been engaged in any type of activity which, would be
reasonably likely to result in the forfeiture of any material property of
Borrower or such Obligor considered as a whole to any governmental entity,
federal, state or local.
(p) CHANGE OF CONTROL - if there shall occur a Change of Control.
(q) INDICTMENT - if Borrower or any Obligor is criminally indicted.
(r) SURETY DOCUMENTS - if any breach or default occurs under any Surety
Document (subject, as to non-monetary breaches thereunder, to the same grace
period as may be applicable under clause (c) above) or any obligation to perform
thereunder is terminated.
(s) PROCEEDINGS AGAINST LENDERS - If any legal or equitable action or
proceeding is commenced by Borrower or any other Obligor against Agent or any
Lender to avoid or invalidate any obligation of any Obligor to Agent or any
Lender, any Lien granted by an Obligor to Agent, or any payment made by an
Obligor to Agent or any Lender.
8.2 CURE - Nothing contained in this Agreement or the other Loan Documents
shall be deemed to compel Agent or Lenders at any time to accept a cure of any
Event of Default hereunder.
8.3 RIGHTS AND REMEDIES ON DEFAULT:
(a) In addition to all other rights, options and remedies granted or
available to Agent or Lenders under this Agreement or the Loan Documents, or
otherwise available at law or in equity, upon or at any time after the
occurrence and during the continuance of a Default or an Event of Default, Agent
may, in its discretion, and shall, at the discretion and upon the written
direction of the Majority Lenders, withhold or cease and instruct Lenders to
withhold or cease making Advances under
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the Revolving Credit.
(b) In addition to all other rights, options and remedies granted or
available to Agent or Lenders under this Agreement or the Loan Documents, or
otherwise available at law or in equity, Agent may, in its discretion, and
shall, at the discretion and upon the written direction of the Majority Lenders,
upon or at any time after the occurrence and during the continuance of any Event
of Default, elect to terminate the Revolving Credit and to declare the
Obligations immediately due and payable, all without demand, notice, presentment
or protest or further action of any kind (it also being understood that the
occurrence of any of the events or conditions set forth in Sections 8.1(j), (k)
or (1) shall automatically cause an acceleration of the Obligations).
(c) In addition to all other rights, options and remedies granted or
available to Agent or Lenders under this Agreement or the Loan Documents, Agent
may, upon or at any time after the acceleration of the Obligations following the
occurrence of an Event of Default (other than the rights with respect to clause
(iv) below which Agent may exercise at any time after the occurrence and during
the continuance and during the continuance of an Event of Default), exercise all
rights under the UCC and any other applicable law or in equity, and under all
Loan Documents permitted to be exercised after the occurrence of an Event of
Default, including the follist of all such rights and remedies):
(i) The right to take possession of, send notices regarding and
collect directly the Collateral, with or without judicial process (including,
without limitation, the right to notify the United States postal authorities to
redirect mail addressed to Borrower or to an address designated by Agent); or
(ii) By its own means or with judicial assistance, enter Borrower's
premises and take possession of the Collateral, or render it unusable, or
dispose of the Collateral on such premises in compliance with subsection (e)
below, without any liability for rent, storage, utilities or other sums, and
Borrower shall not resist or interfere with such action; or
(iii) Require Borrower at Borrower's expense to assemble all or any
part of the Collateral (other than real estate or fixtures) and make it
available to Agent at any place designated by Agent; or
(iv) The right to reduce the Maximum Loan Amount, modify the
Borrowing Base or any portion thereof or the advance rates or to modify the
terms and conditions upon which Lenders may be willing to consider making
Advances under the Revolving Credit or to take additional reserves in the
Borrowing Base for any reason; or
(d) Borrower agrees that a notice received by it at least seven (7) days
before the time of any intended public sale or of the time after which any
private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable Inventory or Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Agent without prior notice to Borrower. Borrower covenants and
agrees not to interfere with or impose any obstacle to Agent's exercise of its
rights and remedies with respect to the Collateral, after the occurrence and
during the continuance of an Event of Default hereunder.
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8.4 NATURE OF REMEDIES: All rights and remedies granted Agent and/or
Lenders hereunder and under the Loan Documents, or otherwise available at law or
in equity, shall be deemed concurrent and cumulative, and not alternative
remedies, and Agent may proceed with any number of remedies at the same time
until all Obligations are satisfied in full. The exercise of any one right or
remedy shall not be deemed a waiver or release of any other right or remedy, and
Agent, upon or at any time after the occurrence of an Event of Default, may
proceed against Borrower, any Obligor, or their Property at any time, under any
agreement, with any available remedy and in any order.
8.5 SET-OFF: If any bank account of any Obligor with Agent or any Lender is
attached or otherwise liened or levied upon by any third party, such Person
shall have and be deemed to have, without notice to Borrower or any other
Obligor, the immediate right of set-off for the pro rata benefit of all Lenders
and may apply the funds or amount thus set-off against any of the Obligations
hereunder.
SECTION 9. AGENT
9.1 APPOINTMENT AND AUTHORIZATION. Each Lender, and each subsequent holder
of any of the Revolving Credit Notes by its acceptance thereof, hereby
irrevocably appoints and authorizes the Agent to take such action on its behalf
and to exercise such powers under this Agreement as are delegated to the Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto. Except as may be otherwise expressly provided herein, Borrower is
hereby authorized by the Lenders to deal solely with the Agent in all
transactions which affect the Lenders under this Agreement and the Loan
Documents. The rights, privileges and remedies accorded to the Agent hereunder
shall be exercised by the Agent on behalf of all of the Lenders.
9.2 GENERAL IMMUNITY. Subject to the provisions of this Agreement, the
Agent will handle all transactions relating to the Loans and all other
Obligations, this Agreement, the Loan Documents and all related documents in
accordance with its usual banking practices. In performing its duties as Agent
hereunder, the Agent will take the same care as it takes in connection with
loans in which it alone is interested. However, neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith except for
its or their own gross negligence or willful misconduct.
9.3 CONSULTATION WITH COUNSEL. The Agent may consult with legal counsel and
any other professional advisors or consultants deemed necessary or appropriate
and selected by Agent and shall not be liable for any action taken or suffered
in good faith by it in accordance with the advice of such counsel.
9.4 DOCUMENTS. The Agent shall not be under a duty to examine into or pass
upon the effectiveness, genuineness or validity of this Agreement or any of the
Revolving Credit Notes or any other instrument or document furnished pursuant
hereto or in connection herewith, and the Agent shall be entitled to assume that
the same are valid, effective and genuine and what they purport to be. In
addition, the Agent shall not be liable for failing to make any inquiry
concerning the accuracy, performance or observance of any of the terms,
provisions or conditions of such instrument or document.
9.5 RIGHTS AS A LENDER. With respect to its applicable Pro Rata Percentage
of the Revolving
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Credit, the Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not the Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. Subject to the provisions of this Agreement,
the Agent may accept deposits from, lend money to and generally engage in any
kind of banking or trust business with Borrower and the other Obligors as if it
were not the Agent.
9.6 RESPONSIBILITY OF AGENT. It is expressly understood and agreed that the
obligations of the Agent hereunder are only those expressly set forth in this
Agreement and that the Agent shall be entitled to assume that no Event of
Default, and no event which with the passage of time, or the giving of notice,
would constitute an Event of Default, has occurred and is continuing, unless the
Agent has actual knowledge of such fact. Except to the extent Agent is required
by the Lenders pursuant to the express terms hereof to take, or refrain from
taking, a specific action, the Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions that it may be able to take under or in respect of, this Agreement
and the Loan Documents. The Agent shall incur no liability under or in respect
of this Agreement and the Loan Documents by acting upon any notice, consent,
certificate, warranty or other paper or instrument believed by it to be genuine
or authentic or to be signed by the proper party or parties, or with respect to
anything that it may do or refrain from doing in the reasonable exercise of its
judgment, or that may seem to it to be necessary or desirable under the
circumstances. The relationship between the Agent and each Lender is and shall
be that of agent and principal only and nothing herein shall be construed to
constitute the Agent a joint venturer with any Lender, a trustee or fiduciary
for any of the Lenders or for the holder of a participation therein nor impose
on the Agent duties and obligations other than those set forth herein.
9.7 COLLECTIONS AND DISBURSEMENTS.
(a) The Agent will have the right to collect and receive all payments of
the Obligations.
(b) Agent shall pay to each Lender, following receipt by Agent, from the
interest actually received by Agent from Borrower, a sum equal to the interest
calculated for the actual number of days elapsed on the basis of a year of 360
days, on each Lender's actual Revolving Credit Loan Balance at the rate equal to
the applicable rate of interest chosen by Borrower with respect to the
outstanding Advances or otherwise in effect under this Agreement. If Agent
should for any reason receive less than the full amount of the interest or other
compensation due under the Loan Documents, each Lender's share of such interest
or compensation shall proportionately decrease.
(c) If any such payment received by the Agent is rescinded, determined
to be unenforceable or invalid or is otherwise required to be returned for any
reason at any time, whether before or after termination of this Agreement and
the Loan Documents, each Lender will, upon written notice from the Agent,
promptly pay over to the Agent its Pro Rata Percentage of the amount so
rescinded, held unenforceable or invalid or required to be returned, together
with interest and other fees thereon if also required to be rescinded or
returned.
(d) All payments by the Agent and the Lenders to each other hereunder
shall be in immediately available funds. The Agent will at all times maintain
proper books of account and records reflecting the interest of each Lender in
the Revolving Credit, in a manner customary to the Agent's
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keeping of such records, which books and records shall be available for
inspection by each Lender at reasonable times during normal business hours, at
such Lender's sole expense. In the event that any Lender shall receive any
payments in reduction of the Obligations in an amount greater than its
applicable Pro Rata Percentage in respect of indebteds), such Lender shall hold
such excess IN TRUST (to the extent such Lender is lawfully able to do so) for
Agent (on behalf of all other Lenders) and shall promptly remit to the Agent
such excess amount so that the amounts received by each Lender hereunder shall
at all times be in accordance with its applicable Pro Rata Percentage. To the
extent necessary for each Lender's actual percentage of all outstanding Loans to
equal its applicable Pro Rata Percentage, the Lender having a greater share of
any payment(s) than its applicable Pro Rata Percentage shall acquire a
participation in the applicable outstanding balances of the Pro Rata Shares of
the other Lenders as determined by Agent.
(e) The proceeds from the sale or disposition of any Collateral shall be
applied first to Expenses incurred by Agent, then to accrued but unpaid
interest, then to accrued but unpaid fees, then to the principal balance of
Loans in accordance with each Lender's Revolving Credit Loan Balance and then to
Expenses, if any, incurred by Lenders (to the extent subject to reimbursement by
Borrower hereunder) in accordance with their Pro Rata Percentages.
9.8 INDEMNIFICATION. To the extent not promptly paid by Borrower, the
Lenders hereby each indemnify the Agent ratably according to their respective
Pro Rata Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by the Agent
under or related to this Agreement or the other Loan Documents or the Loans,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
wilful misconduct. Agent shall have the right to deduct, from any amounts to be
paid by Agent to any Lender hereunder, any amounts owing to Agent by such Lender
by virtue of this paragraph.
9.9 EXPENSES.
(a) All reasonable out-of-pocket costs and out-of-pocket expenses
incurred by Agent and not reimbursed on demand by Borrower, in connection with
the creation, amendment, administration, termination and enforcement of the
Loans (including, without limitation, audit expenses, and counsel fees) and
expenditures to protect, preserve and defend Agent's and each Lender's rights
and interest under the Loan Documents shall be shared and paid on demand by
Lenders pro rata based on their applicable Pro Rata Percentage.
(b) Agent may deduct from payments or distributions to be made to
Lenders such funds as may be necessary to pay or reimburse Agent for such costs
or expenses.
9.10 NO RELIANCE. By execution of or joining in this Agreement, each Lender
acknowledges that it has entered into this Agreement and the Loan Documents
solely upon its own independent investigation and is not relying upon any
information supplied by or any representations made by Agent. Each Lender shall
continue to make its own analysis and evaluation of Borrower. Agent makes no
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representation or warranty and assumes no responsibility with respect to the
financial condition or Property of Borrower, any obligor or any account debtor
of Borrower; the accuracy, sufficiency or currency of any information concerning
the financial condition, prospects or results of operations of Borrower; or for
sufficiency, authenticity, legal effect, validity or enforceability of the Loan
Documents. Agent assumes no responsibility or liability with respect to the
collectibility of the Obligations or the performance by Borrower of any
obligation under the Loan Documents.
9.11 REPORTING. During the term of this Agreement, Agent will promptly
furnish each Lender with a Borrowing Base Certificate as delivered by the
Borrower, field examination reports and weekly settlement sheets, and Agent will
furnish or make available to each Lender at Agent's office in Philadelphia,
Pennsylvania, such other reports and materials actually received by Agent, as
any Lender may reasonably request. Agent will notify Lenders within a reasonable
period of time (not to exceed ten (10) Business Days) after it receives actual
knowledge of any Event of Default under the Loan Documents.
9.12 REMOVAL OF AGENT. The Agent may resign at any time upon giving thirty
(30) days prior written notice thereof to Lenders and Borrower. The Agent may be
removed as Agent hereunder upon the written direction of the Majority Lenders
upon the following: (i) gross negligence or wilful misconduct in the performance
of Agent's duties or responsibilities under this Agreement; or (ii) if a
receiver, trustee or conservator is appointed for Agent or any state or federal
regulatory authority assumes management or control of Agent or if, under
applicable law, the administrative or discretionary duties and responsibilities
of Agent hereunder become controlled by or subject to the approval of any state
or federal regulatory authority. Upon any resignation or permitted removal of
Agent, the Lenders shall have the right to appoint a successor Agent by majority
vote of the other Lenders (based upon the percentages of the total Pro Rata
Shares of the Lenders other than the Lender which is the Agent). Upon the
acceptance of the appointment as a successor Agent hereunder by such successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all rights, powers, obligations and duties of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder,
except that Agent shall execute UCC-3 statements of assignment and execute and
deliver such further documents and take such other actions as are reasonably
requested by Lenders in connection with the appointment of a successor Agent or
to protect the interests of Lenders hereunder.
9.13 ACTION ON INSTRUCTIONS OF LENDERS. With respect to any provision of
this Agreement, or any issue arising thereunder, concerning which the Agent is
authorized to act or withhold action by direction of Lenders (or as the case may
be under this Agreement, the Majority Lenders), the Agent shall in all cases be
fully protected in so acting, or in so refraining from acting, hereunder in
accordance with written instructions signed by the requisite Lenders. Such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all Lenders and on all holders of the Revolving Credit Notes.
9.14 SEVERAL OBLIGATIONS. The obligation of each Lender is several, and
neither the Agent nor any other Lender shall be responsible for any obligation
or commitment hereunder of any other Lender.
9.15 CONSENT OF LENDERS TO AGENT'S RIGHTS.
(a) Subject to the provisions of this Section 9.15, Agent shall have the
sole and exclusive right to service, administer and monitor the Loans and the
Loan Documents, including
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without limitation, the right to exercise all rights, remedies, privileges and
options under the Loan Documents, including without limitation the determination
as to whether Advances should be made under the Agreement and the determination
as to the basis on which and extent to which Advances may be made.
(b) Notwithstanding anything to the contrary contained in subparagraph
(a) above, Agent shall not, without the prior written consent of all Lenders:
(i) extend the Revolving Credit Maturity Date or any scheduled payment due date
under the Revolving Credit, (ii) decrease any interest rate on the Revolving
Credit or any fee or other amount payable for the benefit of the Lenders
hereunder, (iii) compromise or settle all or a portion of the Obligations, (iv)
release any Obligor from the Obligations except (A) in connection with
termination of the Revolving Credit and full payment and satisfaction of all
Obligations, (B) release of UDI Canada pursuant to Section 2.1(a)(iii) hereof
and (C) any release approved by the Majority Lenders in connection with an Asset
Sale which may be approved by the Majority Lenders, (v) increase the advance
rates above those rates initially set forth herein for purposes of determining
the Borrowing Base, (vi) modify Section 9.15(b) or (c) or any other provision of
this Agreement or any other Loan Document expressly providing for consent of all
Lenders, or the definition of Majority Lenders, (vii) release or subordinate
Agent's interest (except with respect to Permitted Liens, to the extent
applicable) in any Collateral except in connection with (A) a sale in the
ordinary course or other permitted disposition or (B) the enforcement of the
Agent's rights and interests in Collateral after the occurrence of an Event of
Default, or (viii) increase the Maximum Loan Limit.
(c) Notwithstanding anything to the contrary contained in subparagraph
(a) abr into any written amendment of, or waive Borrower's noncompliance with,
any Event of Default resulting from Borrower's noncompliance with, any provision
of this Agreement (other than those referred to in Section 9.15(b)) or of the
Loan Documents (which in the case of an amendment to this Section 9, shall also
require Agent's written consent) without the prior written consent of the
Majority Lenders.
(d) After an acceleration of the Obligations, Agent shall have the sole
and exclusive right, with communication (to the extent reasonably practicable
under the circumstances) with all Lenders, to exercise or refrain from
exercising any and all rights, remedies, privileges and options under the Loan
Documents and available at law or in equity to protect and enforce the rights of
the Lenders and collect the Obligations, including, without limitation,
instituting and pursuing all legal actions against Borrower or to collect the
Obligations, or defending any and all actions brought by Borrower or other
Person; or incurring Expenses or otherwise making expenditures to protect the
Loans, the Collateral or Lenders' rights or remedies.
(e) To the extent Agent is required to obtain or otherwise elects to
seek the consent of Lenders to an action Agent desires to take, if any Lender
fails to notify Agent, in writing, of its consent or dissent to any request of
Agent hereunder within ten (10) Business Days of such Lender's receipt of such
written request, such Lender shall be deemed to have given its consent thereto.
(f) Notwithstanding any other provision of this Section 9.15 and without
impairing Agent's discretionary rights under Section 8, to the extent that there
occurs any redetermination of which Accounts constitute Eligible Accounts or
which Inventory constitutes Eligible Inventory which redetermination results in
the creation of an Overadvance and to the extent such Overadvances
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outstanding at any time as permitted underhout right of disapproval by Lenders
or any of them, be entitled to permit Borrower a period not to exceed thirty
(30) days to repay or remove such Overadvance. During such thirty (30) day
period, the amount of Loans constituting such Overadvance shall be excluded in
the determination of whether availability exists within the Borrowing Base for
future Advances.
(g) The provisions of Section 9 of this Agreement are intended solely
for the benefit of Agent and Lenders and not for the benefit of any third party,
including without limitation, any Borrower or any other Obligor and any
amendment to Section 9 of this Agreement shall not require Borrower's consent.
(h) Notwithstanding any other provision hereof, no Lender's Pro Rata
Share shall be increased without such Lender's written consent and the
modification of any Lender's Pro Rata Share shall not be subject to the consent
of any other Lender.
9.16 PARTICIPATIONS AND ASSIGNMENTS:
(a) Each Lender may at any time grant participations in its Pro Rata
Share under this Agreement (collectively, "Participations") to any other bank,
lending institution or other entity which the granting Lender reasonably
determines has the requisite sophistication to evaluate the merits and risks of
investments in Participations ("Participants"); provided however that: (i) all
amounts payable by the Borrower to each Lender hereunder and voting rights of
each Lender hereunder shall be determined as if such Lender had not granted such
Participation; (ii) any agreement pursuant to which any Lender may grant a
Participation (A) shall provide that such Lender is not delegating and therefore
shall retain the sole right and responsibility to exercise all of its rights and
privileges under this Agreement, including, without limitation, the right to
approve any amendment, modification or waiver of any provisions of this
Agreement and (B) shall not release or discharge such Lender from its duties and
obligations, which shall remain absolute, hereunder, including its obligation to
make Advances hereunder; and (iii) upon entering into any such Participation,
the Lender granting such participation shall give written notice thereof to
Agent.
(b) Each Lender may at any time assign all or any portion of its Pro
Rata Share (together with its rights and obligations with respect thereto) and
its right, title and interest therein or in and to this Agreement and the other
Loan Documents to a Lender or any affiliate of a Lender, or to any other bank or
financial institution, in each case with thirty (30) days prior written notice
to Agent and subject to the prior written consent of the Agent and (if no Event
of Default is then outstanding) Borrower, which, in each such case, shall not be
unreasonably withheld; provided however that (i) such assignment shall not
result in either the assigning or acquiring Lender having a Pro Rata Share of
less than $5,000,000; or other documents reasonably requested by Agent; (iii)
Borrower shall execute such replacement Revolving Credit Note(s) as may be
requested by Agent; (iv) the parties to the assignment shall pay Agent a
processing fee of $3,500 at the time of providing such assignment to Agent; and
(v) promptly following receipt of written notice of an assignment, Agent shall
prepare and circulate replacement Schedules "A" and 10.8 reflecting the Lender
interests immediately following such assignment.
(c) Notwithstanding anything to the contrary contained herein, each
Lender may
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at any time collaterally assign all or any portion of its rights under this
Agreement and its Revolving Credit Note to any Federal Reserve Bank to secure
overnight deposits, provided that no such assignment shall release the assigning
Lender from its obligations hereunder.
SECTION 10. MISCELLANEOUS
10.1 GOVERNING LAW: THIS AGREEMENT, AND ALL RELATED AGREEMENTS
AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS
AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED TO HEREIN ARE TO BE
DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL
NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE
AND EFFECT.
10.2 INTEGRATED AGREEMENT: The Revolving Credit Notes, the
other Loan Documents, all related agreements and this Agreement shall be
construed as integrated and complementary of each other, and as augmenting and
not restricting Agent and each Lender's rights and remedies. If, after applying
the foregoing, an inconsistency still exists, the provisions of this Agreement
shall constitute an amendment thereto and shall control.
10.3 WAIVER: No omission or delay by Agent or any Lender in
exercising any right or power under this Agreement or any related agreements and
documents will impair such right or power or be construed to be a waiver of any
Default or Event of Default or an acquiescence therein, and any single or
partial exercise of any such right or power will not preclude other or further
exercise thereof or the exercise of any other right, and as to Borrower or any
other Obligor, no waiver will be valid unless in writing and signed by requisite
Lenders (or Agent on their behalf) and then only to the extent specified.
10.4 INDEMNITY:
(a) Borrower releases and shall indemnify, defend and hold harmless
Agent and Lenders, and its and their respective officers, employees and agents,
of and from any claims, demands, liabilities, obligations, judgments, injuries,
losses, damages and costs and expenses (including, without limitation, legal
fees) resulting from (i) acts or conduct of Borrower or any other Obligor under,
pursuant or related to this Agreement and the other Loan Documents, (ii)
Borrower's or any other Obligor's breach or violation of any representation,
warranty, covenant or undertaking contained in this Agreement or the other Loan
Documents, (iii) Borrower's or any Obligor's failure to comply with any or all
laws, statutes, ordinances, governmental rules, regulations or standards,
whether federal, state or local, or court or administrative orders or decrees,
(including without limitation Environmental Laws, etc.), and (iv) any claim by
any creditor, Governmental Authority or shareholder of Borrower or any other
Obligor arising out of any transaction whether hereunder or in any related to
the Loan Documents, and all costs, expenses, fines, penalties or other damages
resulting therefrom, unless resulting from acts or conduct of Agent or any such
Lender or other indemnified person, constituting wilful misconduct or gross
negligence. This indemnity shall survive the termination of this Agreement.
(b) Promptly after receipt by an indemnified party under subsection (a)
above of notice of the commencement of any action or claim by a third party,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof. The omission so to notify the
indemnifying party shall relieve the indemnifying party from any liability which
it may have to any indemnified party under such subsection if the indemnifying
party is unable to defend such actions as a resbe brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent
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that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. Any indemnifying party hereunder shall not be liable for any
settlement effected without its written consent, which consent shall not be
unreasonably withheld or delayed.
10.5 TIME: Whenever Borrower or any Obligor shall be required to make any
payment, or perform any act, on a day which is not a Business Day, such payment
may be made, or such act may be performed, on the next succeeding Business Day.
Time is of the essence in Borrower's or any other Obligor's performance under
all provisions of this Agreement and all related agreements and documents.
10.6 EXPENSES OF AGENT: At Closing and from time to time thereafter,
Borrower will pay promptly upon demand of Agent all reasonable costs, fees and
expenses of Agent in connection with the (a) analysis, negotiation, preparation,
execution, administration and delivery of this Agreement and other Loan
Documents and the documents and instruments referred to herein and therein and
any amendment, restatement, supplement, waiver or consent relating hereto or
thereto, whether or not any such amendment, amendment and restatement,
supplement, waiver or consent is executed or becomes effective (including,
without limitation, search costs, the reasonable fees, expenses and
disbursements of counsel for Agent and reasonable charges of any expert
consultant to Agent) and (b) the enforcement of any Obligations of, or the
collection of any payments owing from, Borrower or any other Obligor under this
Agreement and/or the other Loan Documents or protection or defense of the rights
of Agent under this Agreement or the Loan Documents, or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement and other Loan Documents in the nature of a "work-out" or of any
insolvency or bankruptcy proceedings, or otherwise (including the reasonable
fees, expenses and disbursements of counsel and any consultant or expert for
Agent and reasonable allocated costs of internal counsel) (collectively, the
"Expenses");
10.7 BROKERAGE: This transaction was brought about and entered into by
Agent, Lenders, Borrower and each other Obligor acting as principals and without
any brokers, agents or finders being the effective procuring cause hereof.
Borrower represents that it has not committed Agent or any Lender to the payment
of any brokerage fee, commission or charge in connection with this transaction.
If any such claim is made by Agent or any Lender by any broker, finder or agent
or other person, Borrower hereby indemnify, defend and save such party harmless
against such claim and further will defend, with counsel satisfactory to Agent,
any action or actions to recover on such claim, at Borrower's own cost and
expense, including such party's reasonable counsel fees. Borrower further agrees
that until any such claim or demand is adjudicated in such party's favor, the
amount demanded shall be deemed a liability of Borrower under this Agreement.
This indemnity shall survive a termination of this Agreement.
10.8 NOTICES:
(a) Any notices or consents required or permitted by this Agreement
shall be in writing and shall be deemed given if delivered in person or if sent
by telecopy or by nationally recognized overnight courier, as follows, unless
such address is changed by written notice hereunder:
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If to Agent to: First Union National Bank
Broad and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
F.C. 1-8-4-18
If to Lenders to: Each financial
institution listed on Schedule "10.8"
attached hereto at the address shown
therein.
With copies to: Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower to: Office Centre Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
(b) Any notice sent by Agent or any Obligor by any of the above methods
shall be deemed to be given when so received.
(c) Agent and each Lender shall be fully entitled to rely upon any
facsimile transmission or other writing purported to be sent by any Authorized
Officer (whether requesting an Advance or otherwise) as being genuine and
authorized.
10.9 HEADINGS: The headings of any paragraph or Section of this Agreement
are for convenience only and shall not be used to interpret any provision of
this Agreement.
10.10 SURVIVAL: All warranties, representations, and covenants made by
Borrower or any Obligor herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by Agent and
Lenders, and shall survive the delivery to Lenders of the Revolving Credit
Notes, regardless of any investigation made by Agent or any Lender. All
statements in any such certificate or other instrument prepared and/or delivered
for the benefit of Agent shall constitute warranties and representations by
Borrower and each other Obligor hereunder. Except as otherwise expressly
provided herein, all covenants made by Borrower and any Obligor hereunder or
under any other Loan Document shall be deemed continuing until all Obligations
are satisfied in full.
10.11 SUCCESSORS AND ASSIGNS: This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties. Borrower
shall not and shall not permit any Obligor to transfer, assign or delegate any
of its duties or obligations hereunder.
10.12 DUPLICATE ORIGINALS: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument. This
Agreement may be executed in counterpart, all of which counterparts taken
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together shall constitute one completed fully executed document.
10.13 MODIFICATION: No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed by, as
applicable, Borrower, such other Obligor, and Lender.
10.14 SIGNATORIES: Each individual signatory hereto represents and warrants
that to the best of his or her knowledge he or she is duly authorized to execute
this Agreement on behalf of his or her principal and that he or she executes the
Agreement in such capacity and not as a principal.
10.15 THIRD PARTIES: No rights are intended to be created hereunder, or
under any related agreements or documents for the benefit of any third party
donee, creditor or incidental beneficiary of Borrower or any other Obligor.
Nothing contained in this Agreement shall be construed as a delegation to Agent
or any Lender of Borrower's or any other Obligor's duty of performance,
including, without limitation, Borrower's duties under any account or contract
with any other Person.
10.16 DISCHARGE OF TAXES, BORROWER'S OBLIGATIONS, ETC.: Agent, in its sole
discretion, shall have the right at any time, and from time to time, with prior
notice to Borrower if Borrower fails to do so five (5) Business Days after
requested in writing to do so by Agent, to: (a) pay for the performance of any
of Borrower's obligations hereunder, and (b) discharge taxes or Liens, at any
time levied or placed on any of Borrower's or any other Obligor's Property in
▇▇▇▇▇-tion of this Agreement unless Borrower or such other Obligor is in good
faith with due diligence by appropriate proceedings contesting such taxes or
Liens and maintaining proper reserves therefor in accordance with GAAP. Expenses
and advances shall be added to the Revolving Credit, bear interest at the same
rate applied to the Revolving Credit, until reimbursed to Agent. Such payments
shall not be construed as a waiver by Agent of an Event of Default under this
Agreement.
10.17 WITHHOLDING AND OTHER TAX LIABILITIES: Lenders shall have the right
to refuse to make any Advances from time to time unless Borrower shall, at
Agent's request, have given to Agent evidence, reasonably satisfactory to Agent,
that Borrower and each other Obligor have properly deposited or paid, as
required by law, all withholding taxes and all federal, state, province, city,
county or other taxes due up to and including the date of the requested Advance
except for any tax contested in good faith and by appropriate proceedings with
notice thereof timely provided to Lender. Copies of deposit slips showing
payment shall likewise constitute satisfactory evidence for such purpose. In the
event that any lien, assessment or tax liability against any Obligor shall arise
in favor of any taxing authority, whether or not notice thereof shall be filed
or recorded as may be required by law, Agent shall have the right (but shall not
be obligated, nor shall Agent or any Lender hereby assume the duty) to pay any
such lien, assessment or tax liability by virtue of which such charge shall have
arisen; provided, however, that Agent shall not pay any such tax, assessment or
lien (a) if the amount, applicability or validity thereof is being contested in
good faith and by appropriate proceedings by an Obligor or (b) without ten (10)
days prior written notice to Borrower if no Event of Default is then
outstanding. In order to pay any such lien, assessment or tax liability, Agent
shall not be obliged to wait until said lien, assessment or tax liability is
filed before taking such action as hereinabove set forth. Any sum or sums which
Agent shall have paid for the discharge of any such lien shall be added to the
Revolving Credit and shall be paid by Obligors to Agent with interest thereon,
upon demand, and Agent shall be subrogated to all rights of such taxing
authority against Obligors.
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10.18 CONSENT TO JURISDICTION: Borrower and Agent hereby irrevocably
consent to the jurisdiction of the Courts of Common Pleas of the Commonwealth of
Pennsylvania or the United States District Court for the Eastern District of
Pennsylvania in any and all actions and proceedings whether arising hereunder or
under any other agreement or undertaking and irrevocably agree to service of
process by certified mail, return receipt requested to the address of the
appropriate party set forth herein.
10.19 WAIVER OF JURY TRIAL: BORROWER, AGENT AND EACH LENDER EACH HEREBY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY
LITIGATION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS.
--------------------------
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement the day and year first above written.
OFFICE CENTRE CORPORATION
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- ---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: CFO, SVP, Secretary and Treasurer
-------------------------------------
FIRST UNION NATIONAL BANK, as Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: Vice President
-------------------------------------
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: Vice President
-------------------------------------
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