AMENDED, RESTATED AND CONSOLIDATED
LOAN AND SECURITY AGREEMENT
Jeh/eagle Supply, Inc. and Eagle Supply, Inc.
as Borrowers
and
Fleet Capital Corporation
as Lender
Dated as of June 20 ,2000
$44,975,000
EX-10.37
AMENDED, RESTATED AND CONSOLIDATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED, RESTATED AND CONSOLIDATED LOAN AND SECURITY
AGREEMENT is made as of this 20th day of June, 2000, by and among
Fleet Capital Corporation, a Rhode Island corporation with an office at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"),
and Jeh/Eagle Supply, Inc., a Delaware corporation with its executive
office and principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("JEH") and Eagle Supply, Inc., a
Florida corporation with its executive office and principal place
of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
("Eagle" and collectively with JEH referred to as the "Borrowers"
and sometimes each individually is also referred to as "Borrower").
Capitalized terms used in this Agreement have the meanings assigned
to them in Appendix A, General Definitions. Accounting terms not
otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.
BACKGROUND
----------
A. On or about December 23, 1994, Lender and Eagle Supply,
Inc. entered into a certain Loan and Security Agreement (as amended
from time to time, the "Eagle Supply Loan Agreement") and certain
related agreements, instruments and documents, including, but not
limited to a revolving credit note, a term note, an equipment note
and a guaranty agreement, to evidence the obligation of Eagle
Supply, Inc. to repay an original maximum amount of $7,500,000
thereunder.
B. On or about July 8, 1997, Lender and JEH/Eagle Supply,
Inc. entered into a certain Loan and Security Agreement (as amended
from time to time, the "JEH Loan Agreement") and certain related
agreements, instruments and documents, including, but not limited
to a revolving credit note, a term note, an equipment note and a
guaranty agreement, to evidence the obligation of JEH/Eagle Supply,
Inc. to repay an original maximum amount of $20,000,000 thereunder.
C. On or about October 22, 1998, Lender and MSI/Eagle
Supply, Inc. entered into a certain Loan and Security Agreement (as
amended from time to time, the "MSI Loan Agreement") and certain
related agreements, instruments and documents, including, but not
limited to a revolving credit note, a term note and a guaranty
agreement, to evidence the obligation of MSI/Eagle Supply, Inc. to
repay an original maximum amount of $9,075,000 thereunder. On or
about May 31, 2000 MSI/Eagle Supply, Inc. and JEH/Eagle Supply,
Inc. merged, with JEH/Eagle Supply Inc. remaining as the surviving
entity.
D. Borrowers continue in the business of selling roofing
supplies, masonry supplies and related products to both residential
and contractor customers. Borrowers wish, from time to time, to
continue to obtain advances from Lender up to the Total Credit
Facility. Lender is willing to continue to make loans and grant
extensions of credit to Borrowers under the terms and provisions
hereinafter set forth.
E. The parties desire to amend, restate and consolidate the
Existing Loan Documents and to define the terms and conditions of
their relationship in writing.
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EX-10.37
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon
the representations and warranties made in, this Agreement and the
other Loan Documents, Lender agrees to make a Total Credit Facility
of up to Forty Four Million Nine Hundred Seventy Five Thousand
Dollars ($44,975,000) available upon Borrowers' request therefor,
as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long
as no Default or Event of Default exists, to make Revolving Credit
Loans to Borrowers from time to time, as requested by Borrowers in
the manner set forth in subsection 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the Borrowing
Base at such time less reserves, if any. Lender shall have the
right to establish reserves in such amounts, and with respect to
such matters, as Lender shall deem necessary or appropriate,
against the amount of Revolving Credit Loans which Borrowers may
otherwise request under this subsection 1.1.1, including, without
limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which
credit memoranda are issued in the ordinary course of Borrowers'
business; (ii) shrinkage, spoilage and obsolescence of Inventory;
(iii) slow moving Inventory, (iv) other sums chargeable against
Borrowers' Loan Account as Revolving Credit Loans under any section
of this Agreement; (v) amounts owing by Borrowers to any Person to
the extent secured by a Lien (other than a Permitted Lien) on, or
trust over, any Collateral of Borrowers; and (vi) such other
matters, events, conditions or contingencies as to which Lender, in
its sole credit judgment, determines reserves should be established
from time to time hereunder.
1.1.2 Overadvances. Lender may in its sole
discretion make Revolving Credit Loans to Borrowers as requested by
Borrowers in accordance with the terms of subsection 3.1.1 hereof
at a time when the unpaid balance of Revolving Credit Loans
exceeds, or would exceed with the making of any such Revolving
Credit Loan, the Borrowing Base (any such loan being herein
referred to individually as an "Overadvance" and collectively as
"Overadvances"). All Overadvances shall be repaid on demand, shall
be secured by all of the Collateral and shall bear interest as
provided in this Agreement for Revolving Credit Base Rate Loans.
1.1.3 Use of Proceeds. The Revolving Credit Loans
shall be used for Borrowers' general working capital needs in a
manner consistent with the provisions of this Agreement and
applicable law.
1.2 Equipment Term Loan. Lender agrees to consolidate and
reset the Equipment Term Loan as of the Closing Date such that the
current principal amount of One Million Eight Hundred Twenty Six
Thousand Six Hundred Forty One and 25/100 Dollars ($1,826,641.25)
shall be repaid in successive monthly installments in accordance
with the terms of the Amended, Restated and Consolidated Equipment
Term Note ("Equipment Note"). Each monthly installment shall be
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EX-10.37
due and payable on the first day of each month, commencing on July
1, 2000, followed by a final installment which shall be due and
payable on the earlier to occur of August 1, 2004, the end of the
Original Term or Renewal Term (as applicable), termination of this
Agreement or acceleration of the Obligations hereunder. The
Equipment Term Loan shall be secured by all of the Collateral.
1.3 Acquisition Term Loan. Lender agrees to consolidate and
reset the Acquisition Term Loan as of the Closing Date such that
the principal amount of Three Million Two Hundred Forty Three
Thousand Nine Hundred Dollars ($3,243,900) shall be repaid in
successive monthly installments in accordance with the terms of the
Amended, Restated and Consolidated Acquisition Term Note
("Acquisition Note"). Each monthly installment shall be due and
payable on the first day of each month, commencing on July 1, 2000,
followed by a final installment which shall be due and payable on
the earlier to occur of November 1, 2005, the end of the Original
Term or Renewal Term (as applicable), the termination of this
Agreement or acceleration of the Obligation hereunder. The
Acquisition Term Loan shall be secured by all of the Collateral.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Revolving Credit Interest:
(a) Rate Options. At the time of each Revolving
Credit Loan under the Revolving Credit Facility, and thereafter
from time to time, Borrowers shall have the right, subject to the
terms and conditions of this Agreement and provided no Default or
Event of Default has occurred and is continuing, to designate to
Lender in writing that all, or a portion of the Revolving Credit
Loans shall bear interest at either the (i) Revolving Credit LIBOR
Rate or (ii) Revolving Credit Base Rate. Interest on each portion
thereof shall accrue and be paid at the time and rate applicable to
the respective option selected by Borrowers or otherwise governing
under the terms of this Agreement. If for any reason the Revolving
Credit LIBOR Rate option is unavailable, or Borrowers do not
designate that the Revolving Credit LIBOR Rate should apply, the
Revolving Credit Base Rate shall apply. The rate of interest on
Revolving Credit Base Rate Loans shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate effective
as of the opening of business on the day that any such change in
the Base Rate occurs.
(b) Revolving Credit LIBOR Rate Option. Provided
no Default or Event of Default has occurred and is continuing, and
subject to the provisions of Section 2.1.1 (a)(i) if Borrowers
desire to have the Revolving Credit LIBOR Rate apply to all or a
portion of the Revolving Credit Loans, Borrowers shall give Lender
a written irrevocable request no later than 11:00 A.M. Eastern time
on the third (3rd) Business Day prior to the requested borrowing
date specifying (i) the date the Revolving Credit LIBOR Rate shall
apply (which shall be a Business Day), (ii) the Interest Period,
and (iii) the amount to be subject to the Revolving Credit LIBOR
Rate provided that such amount shall be at least $250,000 and in an
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EX-10.37
integral multiple of Two Hundred Fifty Thousand Dollars ($250,000.00).
2.1.2 Term Interest:
(a) Rate Options. On the Closing Date, and
thereafter from time to time, Borrowers shall have the right,
subject to the terms and conditions of this Agreement, and provided
no Default or Event of Default has occurred and is continuing, to
designate to Lender in writing (i) that all, or a portion of the
outstanding principal balance of the Equipment Term Loan shall bear
interest at either the (x) Equipment Term LIBOR Rate, or (y)
Equipment Term Base Rate and (ii) that all, or a portion of the
outstanding principal balance of the Acquisition Term Loan shall
bear interest at either the (x) Acquisition Term LIBOR Rate, or (y)
Acquisition Term Base Rate. Interest on each portion thereof
shall accrue and be paid at the time and rate applicable to the
respective option selected by Borrowers or otherwise governing
under the terms of this Agreement. If for any reason an option is
unavailable, Borrowers may designate another option. If Borrowers
do not elect any such option or, if, for any reason the Equipment
Term LIBOR Rate or Acquisition Term LIBOR Rate is not available,
the Equipment Term Loan or the Acquisition Term Loan shall bear
interest at the Equipment Term Base Rate or the Acquisition Term
Base Rate, respectively. The rate of interest on the Term Base
Rate Loans shall increase or decrease by an amount equal to any
increase or decrease in the Base Rate, effective as of the opening
of business on the date that any such change in the Base Rate
occurs.
(b) Term LIBOR Rate Option. Provided no Default or
Event of Default has occurred and is continuing, and subject to the
provisions of Section 2.1.2(a)(i) if Borrowers desire to have the
Equipment Term LIBOR Rate apply to all or a portion of the
Equipment Term Loan or the Acquisition Term LIBOR Rate apply to all
or a portion of the Acquisition Term Loam, Borrowers shall give
Lender a written irrevocable request no later than 11:00 A.M.
Eastern Time on the third (3rd) Business Day prior to the requested
borrowing date specifying (i) the date the Equipment Term LIBOR
Rate or Acquisition Term LIBOR Rate, as applicable, shall apply
(which shall be a Business Day), (ii) the Interest Period, and
(iii) the amount of the Loan to be subject to the Equipment Term
LIBOR Rate or Acquisition Term LIBOR Rate; provided that such
amount shall be at least $250,000 and in an integral multiple of
Two Hundred Fifty Thousand Dollars ($250,000.00).
2.1.3 Default Rate of Interest. Upon and after the
occurrence of an Event of Default, and during the continuation
thereof, the principal amount of the Loans shall bear interest at
a rate per annum equal to two percent (2%) above the rate then
applicable with respect to Base Rate Loans. Interest shall
continue to accrue and be paid at the applicable rates set forth
herein regardless of the rate option, even after default, maturity,
acceleration, judgment, bankruptcy, insolvency proceedings of any
kind or the happening of any event or occurrence whether similar or
dissimilar.
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EX-10.37
2.1.4 Computation of Interest and Fees. Interest,
fees and collection charges hereunder shall be calculated daily and
shall be computed on the actual number of days elapsed over a year
consisting of three hundred and sixty (360) days.
2.1.5 Maximum Interest. In no 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. If any provisions of this Agreement are in contravention
of any such law, such provisions shall be deemed amended to conform
thereto. To the extent the laws of the State of Texas may apply to
this Agreement, notwithstanding anything herein to the contrary, if
at any time the applicable interest rate, together with all fees
and charges which are treated as interest under applicable law
(collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise
contracted for, charged, received, taken or reserved by Lender,
shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by Lender
in accordance with applicable law, the rate of interest payable on
the Loans, together with all Charges payable to Lender, shall be
limited to the Maximum Rate. For purposes of Texas law, the term
"Maximum Rate" means the maximum rate of nonusurious interest
permitted from day to day by applicable law, including as to
Article 5069, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise
without limitation, that rate based upon the "weekly ceiling".
2.2 Collateral Monitoring Fee. Borrowers shall pay to Lender
each month, in arrears, on the first day of the following month, a
collateral monitoring fee of $1,500; provided however, the
collateral monitoring fee shall be reduced to $1,000 per month when
Borrowers consolidate all financial and collateral reports in a
manner determined by Lender to be satisfactory. Such fee shall be
pro-rated for any month during which this Agreement is in effect
for less than a full month.
2.3 Unused Availability Fee. Borrowers shall pay to Lender
an unused availability fee, which shall be payable in arrears on
the first Business Day of each calendar month hereafter. The
unused availability fee shall equal one-quarter of one percent
(1/4%) per annum of the amount by which the Revolving Credit Limit
exceeds the average daily amount of the Revolving Credit Loans
outstanding during the immediately preceding month.
2.4 Audit and Appraisal Fees. Borrowers shall pay to Lender
audit and appraisal fees from time to time in connection with
Lender's periodic audits and appraisals of Borrowers' books and
records and such other matters as Lender shall deem appropriate,
plus all out-of-pocket expenses incurred by Lender in connection
with such audits and appraisals. Such audit and appraisal fees
shall be calculated at the rate of $500.00 for each member of
Lender's field examination staff engaged in any such audit and
appraisal for each day during which such examination is being
conducted and, absent the occurrence and continuance of an Event of
Default, such audits and appraisals shall be conducted not more
than three (3) times during each twelve (12) month period,
commencing as of the Closing Date. Audit fees shall be payable on
the first day of the month following the date of issuance by Lender
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EX-10.37
of a request for payment thereof to Borrowers. Upon Borrowers'
request, Lender shall provide to Borrowers in reasonable detail the
back-up and support of any out-of-pocket expenses referred to
herein.
2.5 Capital Adequacy Change. If Lender shall have determined
that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or
application thereof, or compliance by Lender with any request or
directive regarding capital adequacy (whether or not having the
force of law) from any central bank or governmental authority (each
such law, rule, regulation, request or directive a "Capital
Adequacy Rule"), does or shall have the effect of reducing the rate
of return on Lender's capital as a consequence of its obligations
hereunder to a level below that which Lender could have achieved
but for such adoption, change or compliance (taking into
consideration Lender's policies with respect to capital adequacy)
by a material amount, then from time to time, after submission by
Lender to Borrowers of a written demand therefor (a "Capital
Adequacy Demand"), the Borrowers shall pay to Lender such
additional amount or amounts (each a "Capital Adequacy Amount", it
being understood that Capital Adequacy Amount may include an
increase in the Applicable Interest Rate Margin) as will compensate
Lender for such reduction. A certificate of Lender claiming
entitlement to payment as set forth above shall be conclusive in
the absence of manifest error. Such certificate shall set forth
the nature of the occurrence giving rise to such reduction, the
additional Capital Adequacy Amount or Amounts to be paid to Lender,
and the method by which such Capital Adequacy Amounts were
determined. In determining such Capital Adequacy Amount, Lender
may use any reasonable averaging and attribution method.
2.5.1 Termination of Agreement following Capital
Adequacy Demand. At their option, Borrowers may elect to terminate
this Agreement following their receipt of a Capital Adequacy
Demand, provided Borrowers give Lender notice of such election not
more than thirty (30) days following their receipt of such Capital
Adequacy Demand, and provided, further, that so long as the
effective date of such termination and the payment and satisfaction
in full of all Obligations occurs within one hundred and eighty
(180) days from the date of such notice, Borrowers shall not be
obligated to pay any of the charges described in subsection 4.2.3,
it being understood, however, that until such effective date of
termination and the payment and satisfaction in full of all
Obligations, Borrowers shall continue to be obligated to pay Lender
for each Capital Adequacy Amount theretofore requested by Lender
pursuant to a Capital Adequacy Demand.
2.5.2 Subsequent Change in Capital Adequacy Rules.
In the event that any Capital Adequacy Rule, the adoption or change
in or compliance by Lender with which shall have resulted in a
Capital Adequacy Demand, shall be revised subsequent to the date of
such Capital Adequacy Demand, such that, in Lender's determination,
its rate of return on capital shall be improved to a level more
favorable than the rate of return which, as a result of the initial
change in such Capital Adequacy Rule, precipitated such Capital
Adequacy Demand, then, in such event, effective promptly following
such determination, provided Borrowers shall not have theretofore
given to Lender a notice of election to terminate in accordance
with subsection 2.5.1: (i) in the case of a Capital Adequacy Demand
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EX-10.37
to increase the Applicable Interest Rate Margin, Lender shall
reduce the Applicable Interest Rate Margin by a percentage; and
(ii) in the case of a Capital Adequacy Demand for payment of a fee
or other charge, Lender shall rebate to Borrowers a portion of such
payment, in each case which Lender shall determine to be reasonably
commensurate with the improvement in Lender's rate of return on
capital caused by the subsequent revision to the Capital Adequacy
Rule. Notwithstanding anything hereinabove to the contrary, Lender
shall have no obligation whatsoever to make any such adjustment to
the Applicable Interest Rate Margin, or to otherwise rebate any
Capital Adequacy Amount to Borrowers, at any time on or after: (i)
the occurrence and continuance of an Event of Default; (ii) the
date of Borrowers' notice of election to terminate in accordance
with subsection 2.5.1; or (iii) the effective date of termination
of this Agreement.
2.6 Reimbursement of Expenses. If, at any time or times
regardless of whether or not an Event of Default then exists,
Lender or any Participating Lender incurs reasonable legal or
reasonable accounting expenses or any other reasonable costs or
reasonable out-of-pocket expenses in connection with (i) the
negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement
or any of the other Loan Documents; (ii) the administration of this
Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender,
Borrowers or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or
Borrowers' affairs; (iv) any attempt to enforce any rights of
Lender or any Participating Lender against Borrowers or any other
Person which may be obligated to Lender by virtue of this Agreement
or any of the other Loan Documents, including, without limitation,
the Account Debtors; or (v) any attempt to inspect, verify,
protect, preserve, restore, collect, sell, liquidate or otherwise
dispose of or realize upon the Collateral; then all such reasonable
legal and reasonable accounting expenses and other reasonable costs
and reasonable out of pocket expenses of Lender shall be charged to
Borrowers. All amounts chargeable to Borrowers under this Section
2.6 shall be Obligations secured by all of the Collateral, shall be
payable on demand to Lender or to such Participating Lender, as the
case may be, and shall bear interest from the date such demand is
made until paid in full at the rate applicable to Base Rate Loans
from time to time. Borrowers shall also reimburse Lender for
reasonable expenses incurred by the Lender in its administration of
the Collateral to the extent and in the manner provided in Section
6 hereof.
2.7 Bank Charges. Borrowers shall pay to Lender, on demand,
any and all fees, costs or expenses which Lender or any
Participating Lender pays to a bank or other similar institution
(including, without limitation, any fees paid by the Lender to any
Participating Lender) arising out of or in connection with (i) the
forwarding to Borrowers or any other Person on behalf of Borrowers,
by Lender or any Participating Lender, proceeds of Loans and (ii)
the depositing for collection, by Lender or any Participating
Lender, of any check or item of payment received or delivered to
Lender or any Participating Lender on account of the Obligations.
2.8 [Intentionally Omitted].
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EX-10.37
2.9 Confirmation of Existing Indebtedness. Borrowers
acknowledge and confirm that as of June 20, 2000, they are indebted
to Lender, without defense, set-off or counter-claim under the
Existing Loan Documents in the principal amount of $30,420,911.51
("Existing Indebtedness"). This Agreement and the Notes and the
Surety Agreement, restate and consolidate, but do not extinguish
the indebtedness evidenced by the Existing Loan Documents. The
Existing Indebtedness shall be deemed to constitute Loans hereunder
and Borrowers shall be jointly and severally, absolutely and
unconditionally liable for the repayment of Loans in accordance
with the terms hereof and the other Loan Documents. The execution
and delivery of this Agreement and the other Loan Documents,
however, does not evidence or represent a refinancing, repayment,
accord and/or satisfaction or novation of the Existing
Indebtedness. All of Lenders' obligations to Borrowers with
respect to Loans to be made concurrently herewith or hereafter the
date hereof are set forth in this Agreement. All Liens and
security interests previously granted to or for the benefit of
Lender, pursuant to, or in connection with, the Existing Loan
Documents are acknowledged and reconfirmed and remain in full force
and effect and are not intended to be released, replaced or
impaired. Borrowers confirm that to the extent that any of the
Loan Documents (as defined in the Existing Loan Documents) have not
been amended and/or restated and/or consolidated, they remain in
full force and effect and shall be deemed for all purposes to be
Loan Documents as used herein.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings
under the Credit Facility established pursuant to Section 1 hereof
shall be as follows:
3.1.1 Revolving Credit Loan Requests. A request for
a Revolving Credit Loan shall be made, or shall be deemed to be
made, in the following manner: (i) Borrowers shall give Lender same
day notice, no later than 11:00 A.M. (Eastern time) of such day, of
their intention to borrow a Revolving Credit Base Rate Loan, and at
least three (3) Business Days prior notice of their intention to
borrow a Revolving Credit LIBOR Rate Loan, in which notice
Borrowers shall specify the amount of the proposed borrowing and
the proposed borrowing date; provided, however, that no such
request may be made at a time when there exists a Default or an
Event of Default and (ii) the becoming due of any amount required
to be paid under this Agreement, whether as interest or for any
other Obligation, shall be deemed irrevocably to be a request for
a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation. As an accommodation to
Borrowers, Lender may permit telephone requests for Revolving
Credit Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrowers.
Unless Borrowers specifically direct Lender in writing not to
accept or act upon telephonic or electronic communications from
Borrowers, Lender shall have no liability to Borrowers for any loss
or damage suffered by Borrowers as a result of Lender's honoring
any requests, executions of any instructions, authorizations or
agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent
to Lender by Borrowers, and Lender shall have no duty to verify the
origin of any such communication or the authority of the person
sending it. Each notice of borrowing shall be irrevocable by and
binding on Borrowers, and if such notice requests the borrowing of
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EX-10.37
a LIBOR Rate Loan, such notice shall state the Interest Period with
respect thereto. Borrowers, at their option, may choose Base Rate
Loans or LIBOR Rate Loans, provided that any LIBOR Rate Loan shall
be in a minimum amount of $250,000, and provided, further, that the
right of Borrowers to choose any LIBOR Rate Loan is subject to the
provisions of subsection 3.1.4.
3.1.2 Disbursement. Borrowers hereby irrevocably
authorize Lender to disburse the proceeds of each Revolving Credit
Loan requested, or deemed to be requested, pursuant to this
subsection 3.1.2. as follows: (i) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(i) shall be disbursed
by Lender via wire transfer, in the case of the initial borrowing,
in accordance with the terms of the written disbursement letter
from Borrowers, and in the case of each subsequent borrowing, by
wire transfer to such bank account as may be agreed upon by
Borrowers and Lender from time to time or elsewhere if pursuant to
a written direction from Borrowers; and (ii) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(ii) shall be
disbursed by Lender by way of direct payment of the relevant
interest or other Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably
authorize Lender, in Lender's sole discretion, to advance to
Borrowers, and to charge to Borrowers' Loan Account hereunder as a
Revolving Credit Loan, a sum sufficient to pay all interest accrued
on the Obligations during the immediately preceding month and to
pay all costs, fees and expenses at any time owed by Borrowers to
Lender hereunder.
3.1.4 Notice of Continuation and Notice of
Conversion.
(a) Subject to the provisions of subsection
3.1.4(c), Borrowers may elect to maintain any borrowing consisting
of LIBOR Rate Loans, or any portion thereof, as a LIBOR Rate Loan
by selecting a new Interest Period for such borrowing, which new
Interest Period shall commence on the last day of the then existing
Interest Period. Each selection of a new Interest Period (a
"Continuation") shall be made on three (3) Business Days' prior
notice, given by Borrowers to Lender not later than 11:00 A.M.
(Eastern time) on the third (3rd) Business Day preceding the date
of any proposed Continuation. If the Borrowers elect to maintain
more than one borrowing consisting of LIBOR Rate Loans by combining
such borrowings into one borrowing and selecting a new Interest
Period pursuant to this subsection, each of the borrowings so
combined shall consist of Loans having Interest Periods ending on
the same date provided that Borrowers may not combine Revolving
Credit LIBOR Rate Loans, Equipment Term LIBOR Loans and Acquisition
Term LIBOR Loans with each other. If the Borrowers shall fail to
select a new Interest Period for any borrowing consisting of LIBOR
Rate Loans in accordance with this subsection, such LIBOR Rate
Loans will automatically convert into corresponding Base Rate
Loans.
(b) Subject to the provisions of subsection 3.1.4
(c), Borrowers may, on three (3) Business Days' prior notice given
to Lender, convert the entire amount of or a portion of all Loans
of the same Type into Loans of another Type (a "Conversion"),
provided, that no Default or Event of Default shall have occurred
and be continuing, and provided, further, that any Conversion of
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EX-10.37
any LIBOR Rate Loans into Base Rate Loans may only be made on the
last day of the Interest Period for such LIBOR Rate Loans, and upon
Conversion of any Base Rate Loans into LIBOR Rate Loans, Borrowers
shall pay accrued interest to the date of Conversion on the
principal amount converted on the first day of the following month.
Each such notice shall be given not later than 11:00 A.M. (Eastern
time) on the third (3rd) Business Day preceding the date of any
proposed Conversion. Each Conversion shall be in an aggregate
amount of not less than $250,000. Borrowers may elect to convert
the entire amount of or a portion of all Loans of the same Type
comprising more than one borrowing into Loans of another Type by
combining such borrowings into one borrowing consisting of Loans of
such other Type; provided, however, that if the borrowings so
combined consist of LIBOR Rate Loans, such LIBOR Rate Loans shall
have Interest Periods ending on the same date and; provided
further, that Borrowers may not combine Revolving Credit Loans and
all or a portion of the Equipment Term Loans and Acquisition Term
Loans with each other.
(c) Notwithstanding anything contained in clauses
(a) and (b) above to the contrary:
(i) In the event that Borrowers shall have
requested a LIBOR Rate Loan(s) in accordance with the terms hereof
and Lender shall have reasonably determined that Eurodollar
deposits equal to the amount of the principal of the requested
LIBOR Rate Loan and for the Interest Period specified are
unavailable, impractical or unlawful, or that the rate based on the
LIBOR Rate will not adequately and fairly reflect the cost of funds
of the LIBOR Rate Loan applicable to the specified Interest Period,
of making or maintaining the principal amount of the requested
LIBOR Rate Loan specified by Borrowers during the 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 LIBOR Rate applicable to the
specified Interest Period, Lender shall promptly give notice of
such determination to Borrowers that the rate based on the LIBOR
Rate is not available. A reasonable determination by Lender
hereunder shall be conclusive evidence of the correctness of the
fact and amount of such additional costs or unavailability, absent
manifest error. Upon such a determination, (A) the right of
Borrowers to select, continue or convert to, or maintain a LIBOR
Rate Loan at the rate based on the LIBOR Rate shall be suspended
until Lender shall have notified Borrowers that such conditions
shall have ceased to exist, and (B) the requested LIBOR Rate Loans
shall accrue interest as if such Loans were Base Rate Loans.
(ii) The LIBOR Rate may be automatically
adjusted by Lender 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 by
Lender based on the Federal Reserve Board's or any other applicable
agency's or governing body's directive, mandate or interpretation,
occurring subsequent to the commencement of the then applicable
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 Governors of the Federal Reserve System (or any successor or
other applicable governing body), excluding the Reserve Percentage
10
EX-10.37
and any Reserve which has resulted in a payment pursuant to Section
2.5 above, that increase the cost to Lender of funding the LIBOR
Rate Loans. Lender shall promptly give Borrowers notice of such a
determination and adjustment, which determination shall be
conclusive absent manifest error.
(iii) There shall not be outstanding at any
one time more than an aggregate of six (6) LIBOR Rate Loans.
(d) Each notice of Continuation or Conversion shall
be irrevocable and binding on Borrowers. In the case of (i) any
borrowing of a Loan, Continuation or Conversion that the related
notice of borrowing, notice of Continuation or notice of Conversion
specifies is to be comprised of LIBOR Rate Loans, or (ii) any
payment of principal of, or Conversion or Continuation of, any
LIBOR Rate Loan made other then on the last day of the Interest
Period for such Loan as a result of a payment, prepayment,
Conversion or Continuation of such Loan or acceleration of the
maturity of any of the Obligations pursuant to Section 10 hereof,
or for any other reason, then in any such case, upon Lender's
demand, Borrowers shall pay to Lender and indemnify Lender from and
against (i) any loss, cost or expense incurred by Lender as a
result of any failure to fulfill, on or before the date for such
borrowing, Continuation or Conversion, the applicable conditions
set forth in Section 9 hereof, and (ii) any additional losses,
costs or expenses which Lender may reasonably incur as a result of
such payment, including, without limitation in each such case, any
loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or redeployment of deposits
or other funds acquired by Lender to fund the LIBOR Rate Loans to
be made as part of such borrowing, Continuation or Conversion.
3.1.5 Borrowing Base Certificates. Borrowers shall
give Lender a Borrowing Base Certificate on a monthly basis;
provided that if Borrowers' Availability is, at any time, less than
$250,000.00, Borrowers shall give Lender a Borrowing Base
Certificate on such more frequent basis as Lender may request.
3.2 Payments. Except where evidenced by notes or other
instruments issued or made by Borrowers to Lender specifically
containing payment provisions which are in conflict with this
Section 3.2 (in which event the conflicting provisions of said
notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
3.2.1 Principal.
(a) Principal payable on account of Revolving
Credit Loans shall be payable by Borrowers, jointly and severally,
to Lender immediately upon the earliest of (i) the receipt by
Lender or Borrowers of any proceeds of any of the Collateral other
than Equipment, to the extent of said proceeds, (ii) the occurrence
of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations, or (iii)
termination of this Agreement pursuant to Section 4 hereof;
provided, however, that if an Overadvance shall exist at any time,
Borrowers shall, on demand, repay the Overadvance.
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EX-10.37
(b) Principal payable on account of the Equipment
Term Loan shall be payable by Borrowers, jointly and severally, as
set forth in Sections 1.2, Section 3.3.3 and the corresponding
Equipment Term Note.
(c) Principal payable on account of the Acquisition
Term Loan shall be payable by Borrowers, jointly and severally, as
set forth in Sections 1.3, Section 3.3.3 and the corresponding
Acquisition Term Note
3.2.2 Interest. Interest accrued on all Loans shall
be payable by Borrowers, jointly and severally, and shall be due on
the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the
maturity and payment of the Obligations, or (iii) termination of
this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and
charges payable pursuant to this Agreement shall be payable by
Borrowers, jointly and severally, as and when provided in Section
2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the
Obligations requiring the payment of money, if any, shall be
payable by Borrowers, jointly and severally, to Lender as and when
provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is earlier.
3.3 Prepayments.
3.3.1 Except for dispositions of Inventory permitted
by Section 8.2.7, if any Borrower sells any of the Collateral or if
any of the Collateral is lost or destroyed or taken by
condemnation, Borrowers shall pay to Lender, unless otherwise
agreed to by Lender, or as otherwise expressly authorized by this
Agreement, as and when received by such Borrower and as a mandatory
prepayment of the outstanding Loans, until paid and satisfied in
full, a sum equal to the proceeds (including insurance proceeds)
received by such Borrower from such sale, loss or destruction. Any
such prepayment shall be applied first to the Acquisition Term Loan
and then to the Equipment Term Loan in the inverse order of
maturities and then to the Revolving Credit Loans; provided that if
such Loan is accruing interest at the LIBOR Based Rate, such
prepayment shall be delivered to Lender as and when received by
Borrowers but applied at the end of the applicable Interest Period.
3.3.2 LIBOR Rate Loans. No portion of the LIBOR Rate
Loans may be prepaid during an Interest Period unless Borrowers
first satisfy in full their obligations under Section 3.1.4(d)
above arising from such prepayment.
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3.3.3 Excess Cash Flow Recapture. Borrowers shall,
on an annual basis, within ten (10) Business Days of delivery to
Lender of Borrowers' annual consolidated financial statement,
pursuant to Section 8.1.2(i), prepay the Equipment Term Loan and
the Acquisition Term Loan in an amount equal to fifty percent (50%)
of Borrowers Excess Cash Flow ("Excess Cash Flow Payments"). All
Excess Cash Flow Payments shall be applied to the Equipment Term
Loan and the Acquisition Term Loan, as determined by Lender in its
discretion, in the inverse order of maturity.
3.4 Application of Payments and Collections. All items of
payment received by Lender by 12:00 noon, New York City time, on
any Business Day shall be deemed received on that Business Day.
All items of payment received after 12:00 noon, New York City time,
on any Business Day shall be deemed received on the following
Business Day. For the purpose of computing interest hereunder, all
items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of
such items) on the first Business Day after receipt (or deemed
receipt) by Lender of good funds in Lender's account located in
Chicago, Illinois, or such other account as to which Lender may
advise Borrowers in writing. Borrowers irrevocably waive the right
to direct the application of any and all payments and collections
at any time or times hereafter received by Lender from or on behalf
of Borrowers, and Borrowers do hereby irrevocably agree that Lender
shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times
hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by
Borrowers upon any of their books and records. If as the result of
collections of Accounts as authorized by subsection 6.4.6 hereof a
credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrowers, but shall be
available to Borrowers at any time or times for so long as no
Default or Event of Default exists.
3.5 All Loans to Constitute One Obligation. The Loans shall
constitute one general Obligation of Borrowers, and shall be
secured by Lender's Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to
the Loan Account and shall also record in the Loan Account all
payments made by Borrowers on any Obligations and all proceeds of
Collateral which are paid to Lender, and may record therein, in
accordance with customary accounting practice, other debits and
credits, including interest and all charges and expenses properly
chargeable to Borrowers.
3.7 Statements of Account. Lender will account to Borrowers
monthly with a statement of Loans, charges and payments made
pursuant to this Agreement, and such account rendered by Lender
shall be deemed final, binding and conclusive upon Borrowers unless
Lender is notified by Borrowers in writing to the contrary within
thirty (30) days of the date such accounting is mailed to
Borrowers. Such notice shall only be deemed an objection to those
items specifically objected to therein.
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SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease
making Loans to Borrowers upon or after the occurrence of any
Default or Event of Default, this Agreement shall be in effect for
a period commencing as of the Closing Date and continuing through
and including October 21, 2003 (the "Original Term"), and this
Agreement shall automatically renew itself for one (1) year periods
thereafter (the "Renewal Terms"), unless (a) the party which elects
not to renew this Agreement gives at least one hundred and eighty
(180) days written notice thereof to the other party prior to the
expiration of the Original Term (or the then current Renewal Term,
as the case may be) or (b) this Agreement shall be sooner
terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lender. Lender may terminate
this Agreement without notice at any time on or after the
occurrence of an Event of Default.
4.2.2 Termination by Borrowers. Upon at least ninety
(90) days prior written notice to Lender, Borrowers may, at their
option, terminate this Agreement; provided, however, no such
termination shall be effective until Borrowers have paid all of the
Obligations in immediately available funds. Any notice of
termination given by Borrowers shall be irrevocable unless Lender
otherwise agrees in writing, and Lender shall have no obligation to
make any Loans on or after the termination date stated in such
notice. Borrowers may elect to terminate this Agreement in their
entirety only. No section of this Agreement or Type of Loan
available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of
any termination of this Agreement by Borrowers pursuant to
subsection 4.2.2 hereof, Borrowers shall pay to Lender (in addition
to the then outstanding principal, accrued interest and other
charges owing under the terms of this Agreement and any of the
other Loan Documents) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to one half percent
(1/2%) of the Total Credit Facility if termination occurs during the
period from the Closing Date through and including June, 2001.
Notwithstanding anything hereinabove to the contrary, no
termination charge shall be payable under any of the following
circumstances: (a) if termination of this Agreement occurs pursuant
to and in accordance with the terms of subsection 2.5.1; or (b) if
termination of this Agreement occurs after June, 2001, but on or
before the last day of the Original Term or on the last day of any
Renewal Term.
4.2.4 Effect of Termination. All of the Obligations
shall be immediately due and payable upon the termination date
stated in any notice of termination of this Agreement. All
undertakings, agreements, covenants, warranties and representations
of Borrowers contained in the Loan Documents shall survive any such
termination, and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents
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EX-10.37
notwithstanding such termination until Borrowers have paid the
Obligations to Lender, in full, in immediately available funds,
together with the applicable termination charge, if any.
Notwithstanding the payment in full of the Obligations, Lender
shall not be required to terminate its security interests in the
Collateral unless, with respect to any loss or damage Lender may
incur as a result of dishonored checks or other items of payment
received by Lender from Borrowers or any Account Debtor and applied
to the Obligations, Lender shall, at its option, (i) have received
a written agreement executed by Borrowers and by any Person whose
loans or other advances to Borrowers are used in whole or in part
to satisfy the Obligations, indemnifying Lender from any such loss
or damage; or (ii) have retained such monetary reserves and Liens
on the Collateral for such period of time as Lender, in its
reasonable discretion, may deem necessary to protect Lender from
any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt
payment and performance to Lender of the Obligations, each Borrower
hereby grants to Lender a continuing Lien upon all of the following
Property and interests in such Property of such Borrower, whether
now owned or existing or hereafter created, acquired or arising and
wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Deposit Accounts, Investment Property,
money market accounts and security entitlements, of every nature
wherever located;
(vi) All monies, checks, notes and instruments
of any kind, now or at any time or times hereafter, in the
possession or under the control of Lender or a bailee or Affiliate
of Lender;
(vii) All books and records (including,
without limitation, customer lists, credit files, computer
programs, print-outs, and other computer materials and records) of
such Borrower pertaining to any of (i) through (vi) above; and
(viii) All accessions to, substitutions for
and all replacements, products and cash and non-cash proceeds of
(i) through (vii) above, including, without limitation, proceeds of
and unearned premiums with respect to insurance policies insuring
any of the Collateral;
15
EX-10.37
5.2 Lien Perfection; Further Assurances. Each Borrower shall
execute such UCC-1 financing statements as are required by the Code
and such other instruments, assignments or documents as are
necessary to perfect Lender's Lien upon any of the Collateral and
shall take such other action as may be required to perfect or to
continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by applicable law, each Borrower hereby
authorizes Lender to execute and file any such financing statement
on Borrower's behalf. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof. At Lender's request, each
Borrower shall also promptly execute or cause to be executed and
shall deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry
out the terms or intent of the Loan Documents, including without
limitation delivery of all vehicle titles and appropriate
documentation necessary to have Lender's first lien noted thereon.
5.3 Key Man Life Insurance. As additional security for the
payment and performance to Lender of all Obligations, Borrowers
shall have caused to be assigned to Lender, and maintained at all
times, a Key Man Life Insurance policy on the life of ▇▇▇▇ ▇.
▇▇▇▇▇▇ in an amount equal to at least $2,000,000.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 Location of Collateral. All Collateral, other than
Inventory in transit, will at all times be kept by Borrowers at one
or more of the business locations set forth in Exhibit 6.1 hereto
and shall not, without the prior written approval of Lender, be
moved therefrom except, prior to an Event of Default and Lender's
acceleration of the Obligations in consequence thereof, for sales
of Inventory in the ordinary course of business.
6.2 Insurance of Collateral. Each Borrower shall maintain
and pay for insurance upon all Collateral wherever located and with
respect to such Borrower's business, covering casualty, hazard,
public liability, flood and such other risks in such amounts and
with such insurance companies as are reasonably satisfactory to
Lender. Borrowers shall deliver the originals or copies of such
policies to Lender with lender's loss payable endorsements, in form
satisfactory to Lender, naming Lender as sole loss payee, assignee
or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give
not less than (30) days prior written notice to Lender in the event
of cancellation of the policy for any reason whatsoever and a
clause specifying that the interest of Lender shall not be impaired
or invalidated by any act or neglect of any Borrower or the owner
of the Property or by the occupation of the premises for purposes
more hazardous than are permitted by said policy. If any Borrower
fails to provide and pay for such insurance, Lender may, at its
option, but shall not be required to, procure the same and charge
the Borrowers therefor. Borrowers agree to deliver to Lender,
promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies.
16
EX-10.37
6.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping
the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal or local authority on any of the
Collateral or in respect of the sale thereof shall be borne and
paid by Borrowers. If any Borrower fails to promptly pay any
portion thereof when due, Lender may, at its option, but shall not
be required to, pay the same and charge Borrowers therefor. Lender
shall not be liable or responsible in any way for the safekeeping
of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is
in Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier,
forwarding agency or other person whomsoever, but the same shall be
at Borrowers' sole risk.
6.4 Administration of Accounts.
6.4.1 Records, Schedules and Assignments of Accounts.
Each Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit
to Lender on such periodic basis as Lender shall request a sales
and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth day of each
month from and after the date hereof, Borrowers shall deliver to
Lender, in form acceptable to Lender, a detailed aged trial
balance of all Accounts existing as of the last day of the
preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an
Account so listed ("Schedule of Accounts"), and, upon Lender's
request therefor, copies of proof of delivery and the original
copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so
scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably
request. In addition, if at any time following the Closing Date,
Accounts in an aggregate face amount in excess of Two Hundred
Fifty Thousand Dollars ($250,000) become ineligible because
they fall within one of the specified categories of ineligibility
set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrowers shall notify Lender of such
occurrence on the first Business Day following such occurrence and
the Borrowing Base shall thereupon be adjusted to reflect such
occurrence. If requested by Lender, each Borrower shall execute
and deliver to Lender formal written assignments of all of its
Accounts weekly or daily, which shall include all Accounts that
have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.
6.4.2 Discounts, Allowances, Disputes. If any
Borrowers grants any discounts, allowances or credits that are not
shown on the face of the invoice for the Account involved, such
Borrower shall report such discounts, allowances or credits, as the
case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of Fifty Thousand
Dollars ($50,000) are in dispute between any Borrower and any
Account Debtor, such Borrower shall provide Lender with written
notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and
after the occurrence of an Event of Default which continues without
17
EX-10.37
cure for a period of fifteen (15) days, Lender shall have the right
to settle or adjust all disputes and claims directly with the
Account Debtor and to compromise the amount or extend the time for
payment of the Accounts upon such terms and conditions as Lender
may deem advisable, and to charge the deficiencies, costs and
expenses thereof, including attorneys' fees, to Borrowers.
6.4.3 Taxes. If an Account includes a charge for any
tax payable to any governmental taxing authority, Lender is
authorized, in its sole discretion, to pay the amount thereof to
the proper taxing Authority for the account of any Borrower and to
charge Borrowers therefor; provided, however, that Lender shall not
be liable for any taxes to any governmental taxing authority that
may be due by Borrowers.
6.4.4 Account Verification. Whether or not a Default
or an Event of Default has occurred, any of Lender's officers,
employees or agents shall have the right, at any time or times
hereafter, in the name of Lender, any designee of Lender or
Borrowers, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or
otherwise. Each Borrower shall cooperate fully with Lender in an
effort to facilitate and promptly conclude any such verification
process.
6.4.5 Maintenance of Dominion Account. Borrowers
shall maintain a Dominion Account pursuant to a tripartite
arrangement among Borrowers, Lender and a bank or banks as may be
selected by Borrowers and acceptable to Lender. Such arrangement
shall include such terms and conditions as are acceptable to
Lender. All funds deposited in the Dominion Account shall
immediately become the property of Lender, and Borrowers shall
obtain the agreement by such banks in favor of Lender to waive any
offset rights against the funds so deposited. Lender assumes no
responsibility for such arrangement, including, without limitation,
any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
6.4.6 Collection of Accounts; Proceeds of Collateral.
To expedite collection, Borrowers shall endeavor in the first
instance to make collection of their Accounts for Lender. All
remittances received by Borrowers on account of Accounts, together
with the proceeds of any other Collateral, shall be held as
Lender's property by Borrowers as trustee of an express trust for
Lender's benefit, and Borrowers shall immediately deposit same in
kind in the Dominion Account, except as otherwise permitted in this
Agreement. Lender retains the right at all times after the
occurrence of a Default or an Event of Default to notify Account
Debtors that Accounts have been assigned to Lender and to collect
Accounts directly in its own name and to charge the collection
costs and expenses, including reasonable attorneys' fees to
Borrowers. Lender has no duty to protect, insure, collect or
realize upon the Accounts or preserve rights therein.
6.5 Administration of Inventory.
6.5.1 Records and Reports of Inventory. Each
Borrower shall keep accurate and complete records of their
Inventory. Borrowers shall furnish to Lender Inventory reports in
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EX-10.37
form and detail satisfactory to Lender at such times as Lender may
request, but at least once each month, not later than the twentieth
day of such month. Each Borrower shall conduct a physical
inventory no less frequently than annually and shall provide to
Lender a report based on each such physical inventory promptly
thereafter, together with such supporting information as Lender
shall request.
6.5.2 Returns of Inventory. If at any time or times
hereafter any Account Debtor returns any Inventory to any Borrower,
the shipment of which generated an Account on which such Account
Debtor is obligated in excess of Twenty Five Thousand Dollars
($25,000), such Borrower shall immediately notify Lender of the
same, specifying the reason for such return and the location,
condition and intended disposition of the returned Inventory.
6.6 Records and Schedules of Equipment. Each Borrower shall
keep accurate records, itemizing and describing the kind, type,
quality, quantity and value of their Equipment, and shall furnish
Lender with a current schedule containing the foregoing information
on at least an annual basis and more often if requested by Lender.
Immediately on request therefor by Lender, Borrowers shall deliver
to Lender any and all evidence of ownership, if any, of any of the
Equipment.
6.7 Payment of Charges. All amounts chargeable to Borrowers
under Section 6 hereof shall be Obligations secured by all of the
Collateral, shall be payable on demand and shall bear interest from
the date such advance was made until paid in full at the rate
applicable to Base Rate Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender
to enter into this Agreement and to make advances hereunder,
Borrowers warrant, represent and covenant to Lender that:
7.1.1 Organization and Qualification. Each Borrower
and its Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of the jurisdiction of
their incorporation. Each Borrower and its Subsidiaries are duly
qualified and are authorized to do business and are in good
standing as foreign corporations in each state or jurisdiction
listed on Exhibit 7.1.1 hereto and in all other states and
jurisdictions where the character of their business or the nature
of their activities make such qualification necessary.
7.1.2 Corporate Power and Authority. Each Borrower
and its Subsidiaries are duly authorized and empowered to enter
into, execute, deliver and perform this Agreement and each of the
other Loan Documents to which they are a party. The execution,
delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval
of the shareholders of such Borrower or any of its Subsidiaries;
(ii) contravene such Borrower's or any of its Subsidiaries charter,
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EX-10.37
articles or certificate of incorporation or bylaws; (iii) violate,
or cause such Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect
having applicability to such Borrower or any of its Subsidiaries;
(iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease
or instrument to which such Borrower or any of its Subsidiaries are
a party or by which it or their Properties may be bound or
affected; or (v) result in, or require, the creation or imposition
of any Lien (other than Permitted Liens) upon or with respect to
any of the Properties now owned or hereafter acquired by such
Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement
is, and each of the other Loan Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of each
Borrower and its Subsidiaries enforceable against them in
accordance with their respective terms.
7.1.4 Capital Structure. Exhibit 7.1.4 hereto states
(i) the correct name of each of the Subsidiaries of each Borrower,
their jurisdiction of incorporation and the percentage of their
Voting Stock owned by such Borrower, (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of
the affiliation, (iii) the number, nature and holder of all
outstanding Securities of each Borrower and each of its
Subsidiaries and (iv) the number of authorized, issued and treasury
shares of each Borrower and each of its Subsidiaries. Each
Borrower has good title to all of the shares they purport to own of
the stock of each of its Subsidiaries, free and clear in each case
of any Lien other than Permitted Liens. All such shares have been
duly issued and are fully paid and non-assessable. There are no
outstanding options to purchase, or any rights or warrants to
subscribe for, or any commitments or agreements to issue or sell,
or any Securities or obligations convertible into, or any powers of
attorney relating to, shares of the capital stock of each Borrower
or any of its Subsidiaries. There are no outstanding agreements or
instruments binding upon any of Borrower's shareholders relating to
the ownership of their shares of capital stock.
7.1.5 Corporate Names. Neither Borrowers nor any of
their Subsidiaries have been known as or used any corporate,
fictitious or trade names except those listed on Exhibit 7.1.5
hereto. Except as set forth on Exhibit 7.1.5, neither Borrowers
nor any of their Subsidiaries have been the surviving corporation
of a merger or consolidation or acquired all or substantially all
of the assets of any Person.
7.1.6 Business Locations, Agent for Process. Each
Borrower and its Subsidiaries executive offices and other places of
business are as listed on Exhibit 6.1 hereto. During the preceding
one (1) year period, neither Borrowers nor any of their
Subsidiaries have had an office, place of business or agent for
service of process other than as listed on Exhibit 6.1. Except as
shown on Exhibit 6.1, no Inventory is stored with a bailee,
warehouseman or similar party, nor is any Inventory consigned to
any Person.
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EX-10.37
7.1.7 Title to Properties, Priority of Liens. Each
Borrower and its Subsidiaries has good, indefeasible and marketable
title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to
all of the Collateral and all of its other Property, in each case,
free and clear of all Liens except Permitted Liens. Each Borrower
has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of Borrower's Properties that is not a
Permitted Lien. Except with respect to those Permitted Liens
described in Section 8.2.5(iv), and in Section 8.2.5(vi) and (vii)
which specifically and expressly provide otherwise, the Liens
granted to Lender under Section 5 hereof are first priority
perfected Liens.
7.1.8 Accounts. Lender may rely, in determining
which Accounts are Eligible Accounts, on all statements and
representations made by each Borrower with respect to any Account
or Accounts. Unless otherwise indicated in writing to Lender, with
respect to each Account:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide
sale and delivery of goods or rendition of services by such
Borrower in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts or
other documents relating thereto and forming a part of the contract
between such Borrower and the Account Debtor;
(iii) It is for a liquidated amount
maturing as stated in the duplicate invoice covering such sale or
rendition of services, a copy of which has been furnished or is
available to Lender;
(iv) Such Account, and Lender's security
interest therein, is not, and will not (by voluntary act or
omission of the Borrower) be in the future, subject to any offset,
Lien, deduction, defense, dispute, counterclaim or any other
adverse condition known to such Borrower (or with respect to which
Borrower should reasonably have had such knowledge), except for a
dispute resulting in returned goods where such dispute is deemed by
Lender to be immaterial, and each such Account is absolutely owing
to such Borrower and is not contingent in any respect or for any
reason;
(v) Each Borrower has made no agreement with
any Account Debtor thereunder for any extension, compromise,
settlement or modification of any such Account or any deduction
therefrom, except discounts or allowances which are granted by such
Borrower in the ordinary course of its business for prompt payment
and which are reflected in the calculation of the net amount of
each respective invoice related thereto and are reflected in the
Schedules of Accounts submitted to Lender pursuant to Section 6.4
hereof;
(vi) There are no facts, events or occurrences
which in any way impair the validity or enforceability of any
Accounts or tend to reduce the amount payable thereunder from the
21
EX-10.37
face amount of the invoice and statements delivered to Lender with
respect thereto;
(vii) To the best of such Borrower's
knowledge, the Account Debtor thereunder (i) had the capacity to
contract at the time any contract or other document giving rise to
the Account was executed and (ii) such Account Debtor is Solvent;
and
(viii) To the best of such Borrower's
knowledge, there are no proceedings or actions which are threatened
or pending against any Account Debtor thereunder which might result
in any material adverse change in such Account Debtor's financial
condition or the collectibility of such Account.
7.1.9 Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of
the Equipment shall be maintained and preserved, reasonable wear
and tear excepted.
7.1.10 Financial Statements, Fiscal Year. Borrowers
have caused to be furnished to Lender year end audited financial
statements for June 30, 1999, along with true and complete copies
of the management letter(s) delivered in conjunction therewith.
The fiscal year of Borrowers and each of their Subsidiaries ends on
June 30 of each year.
7.1.11 Full Disclosure. The financial statements
referred to in subsection 7.1.10 hereof do not (to the best of
Borrowers' knowledge), nor does this Agreement or any other written
statement of Borrowers to Lender, contain any untrue statement of
a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no
fact which Borrowers have failed to disclose to Lender in writing
which materially affects adversely or, so far as Borrowers can now
foresee, will materially affect adversely the Property, business,
prospects, profits or condition (financial or otherwise) of
Borrowers or any of their Subsidiaries or the ability of Borrowers
or their Subsidiaries to perform this Agreement or the other Loan
Documents.
7.1.12 Solvent Financial Condition. Each Borrower and
its Subsidiaries are now, and, after giving effect to the Loans to
be made, at all times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrowers nor any
of their Subsidiaries are obligated as surety or indemnitor under
any surety or similar bond or other contract nor has Borrowers or
any of their Subsidiaries issued or entered into any agreement to
assure payment, performance or completion of performance of any
undertaking or obligation of any other Person.
7.1.14 Taxes. JEH's and Eagles' federal tax
identification numbers are ▇▇-▇▇▇▇▇▇▇ and ▇▇-▇▇▇▇▇▇▇, respectively.
The federal tax identification number of each of Borrowers'
Subsidiaries is shown on Exhibit 7.1.14 hereto. Borrowers and each
of their Subsidiaries have filed all federal, state and local tax
22
EX-10.37
returns and other reports they are required by law to file and have
paid, or made provision for the payment of, all taxes, assessments,
fees, levies and other governmental charges upon them, their income
and property as and when such taxes, assessments, fees, levies and
charges are due and payable, unless and to the extent any thereof
are being actively contested in good faith and by appropriate
proceedings, and Borrowers maintain reasonable reserves on their
books therefor. The provision for taxes on the books of Borrowers
and their Subsidiaries are adequate for all years not closed by
applicable statutes, and for their current fiscal year.
7.1.15 Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection
with the transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses.
Each Borrower and its Subsidiaries own or possess all the patents,
trademarks, service marks, trade names, copyrights and licenses
necessary for the present and planned future conduct of their
business without any known conflict with the rights of others. All
such patents, trademarks, service marks, tradenames, copyrights,
licenses and other similar rights are listed on Exhibit 7.1.16
hereto.
7.1.17 Governmental Consents. Each Borrower and its
Subsidiaries has, and are in good standing with respect to, all
governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to
continue to conduct its business as heretofore or proposed to be
conducted by them and to own or lease and operate its Property as
now owned or leased and operated by them.
7.1.18 Compliance with Laws. Each Borrower and its
Subsidiaries has duly complied with, and its Property, business
operations and leaseholds are in compliance in all material
respects with, the provisions of all federal, state and local laws,
rules and regulations applicable to such Borrower or such
Subsidiary, as applicable, their Property or the conduct of their
business, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of their Subsidiaries
under any such law, rule or regulation. Each Borrower and its
Subsidiaries have established and maintain an adequate monitoring
system to insure that they remain in compliance with all federal,
state and local laws, rules and regulations applicable to it. No
Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. Sec. 201 et seq.), as amended.
7.1.19 Restrictions. Neither Borrowers nor any of
their Subsidiaries are a party or subject to any contract,
agreement or charter or other corporate restriction which
materially and adversely affects their business or the use or
ownership of any of their Property. Neither Borrowers nor any of
their Subsidiaries are a party or subject to any contract or
agreement which restricts their right or ability to incur
Indebtedness, other than as set forth on Exhibit 7.1.19 hereto,
none of which prohibit the execution of or compliance with this
Agreement or the other Loan Documents by Borrowers or any of their
Subsidiaries, as applicable.
23
EX-10.37
7.1.20 Litigation. Except as set forth on Exhibit
7.1.20 hereto, there are no actions, suits, proceedings or
investigations pending, or, to the knowledge of Borrowers,
threatened, against or affecting any Borrower or any of its
Subsidiaries, or the business, operations, Property, prospects,
profits or condition of such Borrowers or any of its Subsidiaries.
Neither Borrowers nor any of their Subsidiaries are in default with
respect to any order, writ, injunction, judgment, decree or rule of
any court, governmental authority or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no
condition exists which would, upon or after the execution and
delivery of this Agreement or Borrowers' performance hereunder,
constitute a Default or an Event of Default. Neither Borrowers nor
any of their Subsidiaries are in default, and no event has occurred
and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute,
a default in the payment of any Indebtedness to any Person for
Money Borrowed.
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete
listing of all capitalized leases of each Borrower and its
Subsidiaries, and Exhibit 7.1.22(b) hereto is a complete listing of
all operating leases of each Borrower and its Subsidiaries. Each
Borrower and its Subsidiaries are in full compliance with all of
the terms of each of their respective capitalized and operating
leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit
7.1.23 hereto, neither Borrowers nor any of their Subsidiaries have
any Plan. Borrowers and each of their Subsidiaries are in full
compliance with the requirements of ERISA and the regulations
promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the
financial condition of Borrowers or any of their Subsidiaries
exists in connection with any Plan. Neither Borrowers nor any of
their Subsidiaries have any withdrawal liability in connection with
a Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or
threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between each
Borrower or any of its Subsidiaries and any customer or any group
of customers whose purchases individually or in the aggregate are
material to the business of such Borrower or any of its
Subsidiaries, or with any material supplier, and there exists no
present condition or state of facts or circumstances which would
materially affect adversely such Borrower or any of its
Subsidiaries or prevent such Borrower or any of its Subsidiaries
from conducting such businesses after the consummation of the
transaction contemplated by this Agreement in substantially the
same manner in which they have heretofore been conducted.
7.1.25 Labor Relations. Except as described on
Exhibit 7.1.25 hereto, neither Borrowers nor any of their
Subsidiaries are a party to any collective bargaining agreement.
There are no material grievances, disputes or controversies with
any union or any other organization of Borrowers' or any of their
Subsidiaries' employees, or threats of strikes, work stoppages or
any asserted pending demands for collective bargaining by any union
or organization.
24
EX-10.37
7.1.26 Environmental Matters: Except as disclosed on
Exhibit "7.1.26" attached hereto and made a part hereof, each
Borrower has no knowledge:
(a) of the presence of any Hazardous Substances on
any of the real property where such Borrower conducts operations or
has its personal property; or
(b) of any on-site spills, releases, discharges,
disposal(s) or storage of Hazardous Substances that have occurred
or are presently occurring on any of such real property or where
any Collateral is located; or
(c) of any spills, releases, discharges or
disposal(s) of Hazardous Substances that have occurred or are
presently occurring on any other real property as a result of the
conduct, action or activities of such Borrower.
As used herein, the term "Hazardous Substances" means any
substances defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance or
similar term, by any environmental statute, rule or regulation of
any governmental entity presently in effect and applicable to such
real property.
7.2 Continuous Nature of Representations and Warranties.
Each representation and warranty contained in this Agreement and in
the other Loan Documents shall be continuous in nature and shall
remain accurate, complete and not misleading at all times during
the term of this Agreement, except for changes in the nature of
Borrowers' or their Subsidiaries' businesses or operations that
would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Lender has
consented to such changes or such changes are expressly permitted
by this Agreement.
7.3 Survival of Representations and Warranties. All
representations and warranties of Borrowers contained in this
Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by Lender and the
parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations
to Lender, Borrowers covenant that, unless otherwise consented to
by Lender in writing, they shall:
8.1.1 Visits and Inspections. Permit representatives
of Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and
inspect the Property of Borrowers and each of their Subsidiaries,
inspect, audit and make extracts from their books and records, and
25
EX-10.37
discuss with their officers, their employees and their independent
accountants, Borrowers' and each of their Subsidiaries' businesses,
assets, liabilities, financial condition, business prospects and
results of operations.
8.1.2 Financial Statements. Keep, and cause each
Subsidiary to keep, adequate records and books of account with
respect to their business activities in which proper entries are
made in accordance with sound financial and business practices, in
a manner consistent with the information previously provided to
Lender, reflecting all their financial transactions, and cause to
be prepared and furnished to Lender the following:
(i) not later than one hundred and twenty
(120) days after the close of each fiscal year of Borrowers,
unqualified audited financial statements of Borrowers and their
Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified
public accountants of recognized standing selected by Borrowers but
acceptable to Lender (except for a qualification with respect to
(A) the reasonableness of fees, charges or credits between or among
Borrowers, Parent or any Affiliates or (B) changes in accounting
principles with which the accountants concur);
(ii) not later than forty-five (45) days after
the end of each fiscal month hereafter (other than the first and
last fiscal month of each fiscal year, as to which Borrowers shall
have no obligation to deliver to Lender financial statements as at
and for the end of such fiscal months), unaudited interim financial
statements of Borrowers and their Subsidiaries as of the end of
such month and of the portion of Borrowers' fiscal year then
elapsed, on a Consolidated and consolidating basis, certified by
the chief financial officers of Borrowers as fairly presenting the
Consolidated financial position and results of operations of
Borrowers and their Subsidiaries for such month and period subject
only to changes from audit and year-end adjustments and except that
such statements need not contain notes;
(iii) promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements,
financial statements or reports which Borrowers have made available
to their Public shareholders and copies of any regular, periodic
and special reports or registration statements which Borrowers file
with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies
of any annual report to be filed with ERISA in connection with each
Plan; and
(v) such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably
request, bearing upon or related to the Collateral or Borrowers'
and each of their Subsidiaries' financial condition or results of
operations.
26
EX-10.37
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.2, Borrowers shall
forward to Lender copies of the accountants' letters, if any, to
Borrowers' management that is prepared in connection with such
financial statements and also shall cause to be prepared and shall
furnish to Lender certificates of the aforesaid certified public
accountants certifying to Lender that, based upon their examination
of the financial statements of Borrowers and their Subsidiaries
performed in connection with their examination of said financial
statements, they are not aware of any Default or Event of Default,
or, if they are aware of such Default or Event of Default,
specifying the nature thereof, and acknowledging, in a manner
satisfactory to Lender, that they are aware that Lender is relying
on such financial statements in making their decisions with respect
to the Loans. Concurrently with the delivery of the financial
statements described in clauses (i) and (ii) of this subsection
8.1.2, or more frequently if requested by Lender, Borrowers shall
cause to be prepared and furnished to Lender a compliance
certificate in the form of Exhibit 8.1.2 hereto executed by the
chief financial officers of Borrowers.
8.1.3 Landlord and Storage Agreements. Provide
Lender with copies of all agreements between each Borrower or any
of its Subsidiaries and any landlord or warehouseman which owns any
premises at which any Inventory may, from time to time, be kept.
8.1.4 Subordinations. Provide Lender with a debt
subordination agreement or other instrument, in form and substance
satisfactory to Lender, executed by Borrowers, or any of them, and
in the case of such agreement executed by any Person who is an
officer, director or Affiliate of the Person to whom Borrowers, or
any of them, are or hereafter become indebted for Subordinated
Debt, subordinating in right of payment and claim all of such
Subordinated Debt, and any future advances thereon to the full and
final payment and performance of the Obligations (unless otherwise
provided in such agreement).
8.1.5 Guarantor Financial Statements. Deliver or
cause to be delivered to Lender financial statements for Guarantor
in form and substance satisfactory to Lender at such intervals and
covering such time periods as Lender may request. Without limiting
the generality of the foregoing, Borrowers shall deliver to Lender,
or cause the Parent to deliver to Lender:
(i) no later than one hundred and twenty (120)
days after the close of each fiscal year of the Parent, unqualified
audited financial statement of the Parent and their Subsidiaries as
of the end of such year, on a Consolidated and consolidating basis;
and
(ii) not later than forty-five (45) days after
the end of each fiscal quarter hereafter, unaudited interim
financial statements of the Parent and their Subsidiaries as of the
end of such quarter and of the portion of the Parent's fiscal year
then elapsed, on a Consolidated and consolidating basis, certified
by the chief financial officer of the Parent as fairly presenting
the Consolidated financial position and results of operations of
the Parent and their Subsidiaries for such quarter and period
subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
27
EX-10.37
8.1.6 Projections. No later than ten (10) days prior
to the end of each fiscal year of Borrowers, deliver to Lender
Projections of the financial conditions and results of operation of
Borrowers for the next succeeding fiscal year, such Projections to
be prepared on a month-to-month basis.
8.1.7 Notices. Promptly notify Lender in writing of
the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or in any
of the other Loan Documents inaccurate, incomplete or misleading.
8.1.8 Year 2000 Compliance. Have taken all action
necessary to assure that at all times the computer-based systems
utilized by Borrowers and each of their Subsidiaries were and are
able to effectively interpret, process and manipulate data,
including dates before, on and after December 31, 1999. Borrowers
shall provide to Lender, if requested, assurance reasonably
satisfactory to Lender that the computer-based systems utilized are
performing without error functions involving dates before, on and
after December 31, 1999.
8.2 Negative Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender,
Borrowers covenant that, unless Lender has first consented thereto
in writing, they will not:
8.2.1 Mergers, Consolidations, Acquisitions. Merge
or consolidate, or permit any Subsidiary of any Borrower to merge
or consolidate, with any Person; nor acquire, nor permit any of
their Subsidiaries to acquire, all or any substantial part of the
Property of any Person, without Lender's prior written consent;
provided however, that Borrowers, or any Subsidiary of a Borrower,
may make such acquisitions so long as (i) the Person, and/or assets
being acquired, is in, or relate to, substantially the same type of
business as Borrowers, (ii) the aggregate purchase price for all
such acquisitions on a cumulative basis does not exceed Eight
Million Dollars ($8,000,000), (iii) no Event of Default or Default
shall have occurred and be continuing, (iv) after giving effect to
each such acquisition, no Event of Default or Default shall exist,
and (v) both immediately before and immediately after giving effect
to each such acquisition Borrowers shall have at least Two Million
Dollars ($2,000,000) of Availability under the Borrowing Base; and
provided further that if so requested by Lender (and Lender has
agreed to include certain assets of such Person in the Borrowing
Base), such acquired Person shall become a Borrower hereunder.
8.2.2 Loans. Make, or permit any Subsidiary of
Borrowers to make, any loans or other advances of money (other than
for salary, travel advances, advances against commissions and other
similar advances in the ordinary course of business) to (i) Persons
other than Parent or an Affiliate, in excess of Two Hundred Fifty
Thousand Dollars ($250,000), in the aggregate outstanding at any
one time during any fiscal year of the such Borrower, and (ii)
Parent and/or any Affiliate in excess of Seven Hundred Fifty
Thousand Dollars ($750,000), in the aggregate outstanding at any
one time during any fiscal year of Borrowers.
28
EX-10.37
8.2.3 Total Indebtedness. Create, incur, assume, or
suffer to exist, or permit any Subsidiary of any Borrower to
create, incur or suffer to exist, any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Indebtedness of any Subsidiary of Borrowers to
Borrowers;
(iii) accounts payable to trade creditors and
obligations and accruals for current operating expenses (other than
for Money Borrowed) which are not aged more than one hundred twenty
(120) days from billing date or more than thirty (30) days from due
date, in each case incurred in the ordinary course of business and
paid within such time period, unless the same are being actively
contested in good faith and by appropriate and lawful proceedings;
and Borrowers or such Subsidiary shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrowers or such Subsidiary and their
independent accountants;
(iv) Obligations to pay Rentals permitted by
subsection 8.2.9;
(v) Permitted Purchase Money Indebtedness;
(vi) contingent liabilities arising out of (A)
guarantees permitted under subsection 8.2.6 or as otherwise
permitted in this Agreement, (B) endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary
course of business and (C) payments under lease agreements,
employment agreements and other agreements entered into in the
ordinary course of business upon fair and reasonable terms;
(vii) Indebtedness owing by Borrowers, or any of
them, or any Subsidiary of any Borrower to the Parent or to any
other Affiliate in respect of intercompany advances or charges,
provided such advances or charges are made and incurred in the
ordinary course of business pursuant to and consistent with prior
practices of the Parent or any Affiliate of the Parent and so long
as the interest rate corresponding to any such indebtedness does
not exceed 8% per annum;
(viii) Indebtedness which is secured by real
Property;
(ix) Subordinated Debt;
(x) Indebtedness and other obligations of
Borrowers, or any of them, under those certain asset purchase
agreements between (i) Masonry Supply, Inc. and MSI/Eagle Supply,
Inc. dated as of October 22, 1998 and (ii) JEH Company and
JEH/Eagle Supply, Inc. f/k/a/ JEH Acquisition Corp. dated as of
July 8, 1997; and
29
EX-10.37
(xi) Indebtedness not included in paragraphs (i)
through (x) above, or not otherwise specifically permitted under
this Agreement, which does not exceed at any time, in the
aggregate, the sum of Two Million Dollars ($2,000,000).
8.2.4 Affiliate Transactions. Enter into, or be a
party to, or permit any Subsidiary of any Borrower to enter into or
be a party to, any transaction with any Affiliate of Borrowers,
except: (i) in the ordinary course of Borrowers' or such
Subsidiary's business and on terms no less favorable to Borrowers
or such Subsidiary than Borrowers or such Subsidiary could obtain
in a comparable arm's length transaction with a Person not an
Affiliate of Borrowers or such Subsidiary; (ii) as otherwise
specifically permitted in this Agreement, in the other Loan
Documents or in any waiver of the terms of this covenant agreed to
in writing by Lender (which waiver will not be unreasonably
withheld or delayed) and (iii) for charges, credits, advances,
distributions, allocations and/or accruals of intercompany
management fees up to Two Million Four Hundred Thousand Dollars
($2,400,000) per each fiscal year during the term of the Agreement,
rent, interest and other intercompany transactions by and between
Borrowers or any Subsidiary of Borrowers, on the one hand, and an
Affiliate of or Parent of Borrowers, on the other hand, in fact or
in substance not inconsistent with past practices of Parent and
their Affiliates.
8.2.5 Limitation on Liens. Create or suffer to
exist, or permit any Subsidiary of any Borrower to create or suffer
to exist, any Lien upon any of their Property (exclusive of real
Property) income or profits, whether now owned or hereafter
acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the Provisions of ERISA) not yet due, or being
contested in the manner described in subsection 7.1.14 hereto, but
only if in Lender's judgment such Lien does not adversely affect
Lender's rights or the priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of
Borrowers' businesses by operation of law or regulation, but only
if payment in respect of any such Lien is not at the time required
and such Liens do not, in the aggregate, materially detract from
the value of the Property (exclusive of real Property) of Borrowers
or materially impair the use thereof in the operation of such
Borrowers' businesses;
(iv) Purchase Money Liens securing Permitted
Purchase Money Indebtedness;
(v) Liens securing Indebtedness permitted under
Section 8.2.3(viii);
(vi) such other Liens as appear on Exhibit 8.2.5
hereto; and
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EX-10.37
(vii) such other Liens as Lender may hereafter
approve in writing.
8.2.6 Guarantees. Guaranty, indemnify, or otherwise
agree to become liable for the payment or performance by any other
Person of any Indebtedness or other liabilities or obligations of
such Person, except:
(i) as otherwise described under subsection 8.2.3
(vi)(B); and
(ii) for the guaranty by Borrowers of an Affiliate's
payment or performance obligations arising under any instrument or
agreement in respect of Indebtedness for which such Affiliate is
liable and which Indebtedness is secured by a mortgage or deed of
trust in favor of the holder of such Indebtedness against real
Property, the title to or ownership of which is in such Affiliate;
provided that, (A) Borrowers, or any of them, are the tenant in
possession of such real Property and (B) maximum liability of
Borrowers under all such guarantees does not exceed Two Million
Five Hundred Thousand Dollars ($2,500,000) in the aggregate at any
one time outstanding.
8.2.7 Disposition of Assets. Sell or otherwise
dispose of any of, or permit any Subsidiary of any Borrower to sell
or otherwise dispose of any of, its Property (exclusive of real
Property), including any disposition of Property (exclusive of real
Property) as part of a sale and leaseback transaction, to or in
favor of any Person, except, in each case, for so long as no Event
of Default exists hereunder: (i) sales of Inventory and sales of
other Property which does not constitute Collateral, in each case
in the ordinary course of business; (ii) a transfer of Property to
Borrowers by a Subsidiary of Borrowers, (iii) transfers of Property
(other than Collateral) by Borrowers to (A) any Affiliate,
including the Parent, in satisfaction of indebtedness and (B) the
Parent as a dividend, so long as, in each case, such transfer is
made in the ordinary course of business or pursuant to and
consistent with prior practices of any Affiliate, including Parent,
so long as such dividends are otherwise permitted by this
Agreement, or (iv) other dispositions expressly authorized by this
Agreement.
8.2.8 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any
customer on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale
on approval or consignment basis, or any sale on a repurchase or
return basis.
8.2.9 Leases. Become, or permit any of their
Subsidiaries to become, a lessee under any operating lease (other
than a lease under which Borrowers or any of their Subsidiaries are
lessor) of Property if the aggregate Rentals payable during any
current or future period of twelve (12) consecutive months under
the lease in question and all other leases under which Borrowers or
any of their Subsidiaries are then lessee would exceed Four Million
Dollars ($4,000,000); provided, however, that not more than an
additional aggregate sum of Two Million ($2,000,000) may be payable
during any current or future period of twelve (12) consecutive
months for Rentals payable (a) under operating leases and (b)
pursuant to Capitalized Lease Obligations, in each case entered
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EX-10.37
into or incurred, as the case may be, on or after the Closing Date
with respect to Property consisting of Equipment. The term
"Rentals" means, as of the date of determination, all payments
which the lessee is required to make by the terms of any lease,
exclusive of occupancy costs.
8.2.10 Capital Expenditures. Make Capital
Expenditures (other than payments on Capitalized Lease Obligations)
which, as to Borrowers and/or any of their Subsidiaries exceed One
Million Five Hundred Thousand Dollars ($1,500,000), in the
aggregate, during any fiscal year of Borrowers or be obligated for
Capitalized Lease Obligations in excess of One Million Five Hundred
Thousand Dollars ($1,500,000) during any fiscal year of Borrowers
or any of their Subsidiaries.
8.2.11 Distributions. Declare or make, or permit any
Subsidiary of any Borrower to declare or make, any Distributions
unless otherwise expressly permitted by this Agreement.
8.2.12 Stock of Borrowers and/or Subsidiaries. Issue,
or permit any of their Subsidiaries to issue, any additional
shares of their capital stock except director's qualifying shares
and except in respect to stock options to Borrowers' directors or
management, or in conjunction with an initial public offering.
8.2.13 Restricted Investment. Make or have, or permit
any Subsidiary of Borrowers to make or have, any Restricted
Investment.
8.2.14 Tax Consolidation. File or consent to the
filing of any consolidated income tax return with any Person other
than Parent or a Subsidiary of Borrowers.
8.2.15 Subordinated Debt. Make any payments of
Subordinated Debt in violation of the corresponding subordination
agreement(s).
8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations
to Lender, Borrowers covenant and agree that unless otherwise
consented to by Lender in writing, they shall:
8.3.1 Minimum Adjusted Tangible Net Worth. Maintain
at all times a Net Worth of not less than an amount equal to 80% of
the actual Net Worth as shown on the Effective Date Balance Sheet.
8.3.2 Cash Flow. Achieve Cash Flow of not less than
the amount shown below for the period corresponding thereto:
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EX-10.37
Period Amount
---------------------------------------------------------------
12 month periods ending June 30, 2000, $300,000
September 30, 2000, December 31, 2000
and March 31, 2001
12 month periods ending June 30, 2001, $400,000
September 30, 2001, December 31, 2001
and March 31, 2001
12 month periods ending June 30, 2002, $500,000
September 30, 2002, December 31, 2002
and March 31, 2003
12 month periods ending June 30, 2003, $600,000
September 30, 2003, December 31, 2003
and March 31, 2004 (to the extent
the Original Term is so extended)
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any
of the other Loan Documents, and without affecting in any manner
the rights of Lender under the other sections of this Agreement,
Lender shall not be required to make any Loan under this Agreement
unless and until each of the following conditions has been and
continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and
substance satisfactory to Lender and its counsel, a duly executed
copy of this Agreement and the other Loan Documents, together with
such additional documents, instruments, opinions and certificates
as Lender and its counsel shall require in connection therewith
from time to time, all in form and substance satisfactory to Lender
and its counsel, including without limitation, the following:
(a) Certificates of Insurance with respect to Borrowers'
casualty and liability insurance policies, together with loss
payable endorsements on Lender's standard form of Lender Loss Payee
naming Lender as lender loss payee;
(b) Certified copies of (i) resolutions of Borrowers'
and Parent's respective board of directors authorizing the
execution and delivery of this Agreement and the Loan Documents (as
applicable) and the performance of all transactions contemplated
hereby and thereby, (ii) Borrowers' and Parent's by-laws, and (iii)
incumbency certificates of Borrowers and Parent;
33
EX-10.37
(c) A copy of the Articles or Certificates of
Incorporation of Borrowers and Parent, and all amendments thereto,
certified by an officer of such Borrower or by the Secretary of
State or other appropriate official of their respective
jurisdiction of incorporation;
(d) Good standing certificates for Borrowers and Parent,
issued by the Secretary of State or other appropriate official of
Borrowers' and Parent's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrowers' businesses activities
or the ownership of their Properties necessitates qualification;
(e) A closing certificate signed by the Chief Executive
Officers of Borrowers dated as of the date hereof, stating that (i)
the representations and warranties set forth in Section 7 hereof
are true and correct on and as of such date, (ii) Borrowers are, on
such date, in compliance with all the terms and provisions set
forth in this Agreement and (iii) on such date no Default or Event
of Default has occurred or is continuing;
(f) The Security Documents duly executed, accepted and
acknowledged by or on behalf of each of the signatories thereto;
(g) The Other Agreements duly executed and delivered by
Borrowers;
(h) The favorable, written opinion of Carlton, Fields,
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇ P.A., counsel to Borrowers and
Parent, as to the transactions contemplated by this Agreement and
any of the other Loan Documents;
(i) An initial Borrowing Base Certificate from
Borrowers;
(j) Appropriate arrangements for payment of all fees and
expenses owing hereunder;
(k) Landlord Waivers for each of Borrowers' locations as
listed on Exhibit 6.1 hereto;
(l) Surety Agreement from Parent;
(m) UCC-1 Financing Statements;
(n) Assignment of Key-Man Life Insurance Policy on the
life of ▇▇▇▇ ▇. ▇▇▇▇▇▇ in an amount equal to at least $2,000,000;
(o) Duly executed subordination agreements with respect
to the Subordinated Debt from Masonry Supply, Inc., and JEH Company
in favor of Lender;
34
EX-10.37
(p) Such other documents, instruments and agreements as
Lender shall reasonably request in connection with the foregoing
matters.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent
set forth in the other Loan Documents, shall have been satisfied or
waived by Lender in writing.
9.4 Adjusted Availability. Lender shall have determined that
immediately after giving effect to (i) the making of the initial
Loans requested to be made on the Closing Date and (ii) the payment
or reimbursement by Borrowers to Lender for all fees and costs
incurred or payable in connection with the transactions
contemplated hereby and due on the Closing Date, Adjusted
Availability shall not be less than Four Million Dollars
($4,000,000), where Adjusted Availability shall mean the excess, if
any, of Availability over that portion, if any, of Borrowers' trade
accounts payable outstanding on the Closing Date which remains
unpaid beyond the due date of the relevant account payable.
9.5 No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body
to enjoin, restrain or prohibit, or to obtain damages in respect
of, or which is related to or arises out of, this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrowers, or any of
them, shall: (i) fail to make any payment of interest, fees,
expenses or principal under the Acquisition Term Loan, the
Equipment Term Loan or other Obligations (except those described in
clause (ii) hereof) payable under this Agreement on the due date
thereof and such failure shall continue without cure for three (3)
days, provided that such three (3) day cure period shall not be
applicable if such payments are due and payable due to maturity, or
on demand or acceleration following an Event of Default; or (ii)
fail to make any payment of principal under the Revolving Credit
Loans on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
10.1.2 Misrepresentations. Any representation,
warranty or other statement made or furnished to Lender by or on
behalf of Borrowers, any Subsidiary of Borrowers or Guarantor in
this Agreement, any of the other Loan Documents or any instrument,
certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any
35
EX-10.37
material respect when made or furnished or when reaffirmed pursuant
to Section 7.2 hereof.
10.1.3 Breach of Specific Covenants. Borrowers, or
any of them, shall fail or neglect to perform, keep or observe any
covenant contained in Sections 5.2, 6.1, 6.4, 8.1.1, 8.1.2, 8.2
(other than subsection 8.2.5, but only to the extent set forth in
subsection 10.1.4) or 8.3 hereof, on the date that Borrowers are
required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Borrowers, or any
of them, shall fail or neglect to keep or observe (i) any covenant
contained in subsection 8.2.5 (ii) or (iii), to the extent any Lien
referred to therein and which Borrowers have suffered to exist has
been created or arises without Borrowers' knowledge or consent or
(ii) any other covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1
hereof) and in either case the breach of such covenant is not cured
to Lender's satisfaction within twenty (20) days after the sooner
to occur of Borrowers' receipt of notice of such breach from Lender
or the date on which such failure or neglect first becomes known to
any officer of Borrowers.
10.1.5 Default Under Security Documents/Other
Agreements. Any event of default shall occur under, or Borrowers,
or any of them, shall default in the performance or observance of
any covenant, condition or agreement contained in, any of the
Security Documents or the Other Agreements and such default shall
continue beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default
or event of default which is continuing on the part of Borrowers,
or any of them, under any agreement, document or instrument to
which Borrowers are a party or by which Borrowers or any of their
Property is bound, creating or relating to any Indebtedness (other
than the Obligations) if the payment or maturity of such
Indebtedness is accelerated in consequence of such event of
default or demand for payment of such Indebtedness is made.
10.1.7 Uninsured Losses. Any loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to
such deductibles as Lender shall have permitted) by insurance shall
have occurred, and such loss, theft, damage or destruction shall
have a material adverse effect on Borrowers' financial condition,
Property or business prospects.
10.1.8 Adverse Changes. There shall occur any
material adverse change in the financial condition, Property or
business prospects of Borrowers.
10.1.9 Insolvency and Related Proceedings. Borrowers,
or any of them, or any Guarantor shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or similar
fiduciary, or shall make an assignment for the benefit of
creditors, or any petition for an order for relief shall be filed
by or against Borrowers, any Subsidiary of Borrowers or any
Guarantor under the Bankruptcy Code (if against Borrowers, any
Subsidiary of Borrowers or any Guarantor, the continuation of such
36
EX-10.37
proceeding for more than sixty (60) days), or Borrowers or any
Guarantor shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally.
10.1.10 Business Disruption. There shall occur a
cessation of a substantial part of the businesses of Borrowers, or
any of them, or any Subsidiary of Borrowers for a period which
significantly affects Borrowers' or such Subsidiary's capacity to
continue their businesses, on a profitable basis; or Borrowers or
any Subsidiary of Borrowers shall suffer the loss or revocation of
any license or permit now held or hereafter acquired by Borrowers
or such Subsidiary which is necessary to the continued or lawful
operation of their business; or Borrowers or any Subsidiary shall
be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any
material part of their business affairs.
10.1.11 Change of Ownership; etc. The Parent or the
shareholders of Parent as of the Closing Date shall cease to own or
control, beneficially and of record, all of the issued and
outstanding capital stock of Borrowers, or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
cease to own or control beneficially, at least fifteen percent
(15%) of the issued and outstanding capital stock of the Parent or
Borrowers, or ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall cease to own or control
beneficially, at least fifteen percent (15%) of the issued and
outstanding capital stock of the Parent or Borrowers, or both
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall cease to be
actively engaged in the senior management of Borrowers' business
affairs or upon any sale or transfer permitted hereunder by the
Parent of the issued and outstanding capital stock of Borrowers,
the Parent shall fail to then deliver to Lender a writing executed
by the Parent confirming the continuing effectiveness of the
Guaranty Agreement executed by it in favor of the Lender, which
writing shall contain a reaffirmation by the Parent of its
continuing liability under the Surety Agreement in accordance with
its terms.
10.1.12 ERISA. A Reportable Event shall occur which
Lender, in its sole discretion, shall determine in good faith
constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any Plan,
or if any Plan shall be terminated or any such trustee shall be
requested or appointed, or if Borrowers, any Subsidiary of
Borrowers or any Guarantor are in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer
Plan resulting from Borrowers', such Subsidiary's or such
Guarantor's complete or partial withdrawal from such Plan.
10.1.13 Challenge to Agreement. Any Borrower, any
Subsidiary of any Borrower or any Guarantor, or any Affiliate of
any of them, shall challenge or contest in any action, suit or
proceeding the validity or enforceability of this Agreement, or any
of the other Loan Documents, the legality or enforceability of any
of the Obligations or the perfection or priority of any Lien
granted to Lender.
37
EX-10.37
10.1.14 Repudiation of or Default Under Surety
Agreement. Any Guarantor shall revoke or attempt to revoke the
Surety Agreement signed by such Guarantor, or shall repudiate such
Guarantor's liability thereunder or shall be in default under the
terms thereof.
10.1.15 Criminal Forfeiture. Any Borrower, any
Subsidiary of any Borrower or any Guarantor shall be criminally
indicted or convicted under any law that could lead to a forfeiture
of any Property of such Borrower, any Subsidiary of such Borrower
or any Guarantor.
10.1.16 Judgments. Any money judgment, writ of
attachment or similar process, singly, or in the aggregate, in each
case in excess of Two Hundred Fifty Thousand Dollars ($250,000), is
filed against Borrowers, or any of them, any Subsidiary of any
Borrower or any Guarantor, or any of their respective Property and
such judgment, writ of attachment or similar process is not
satisfied, bonded to the satisfaction of Lender or stayed, in each
case within 45 days of such filing.
10.2 Acceleration of the Obligations. Without in any way
limiting the right of Lender to demand payment of any portion of
the Obligations payable on demand in accordance with Section 3.2
hereof, upon or at any time after the occurrence of an Event of
Default, all or any portion of the Obligations shall, at the option
of Lender and without presentment, demand protest or further notice
by Lender, become at once due and payable, and Borrowers shall
forthwith pay to Lender the full amount of such Obligations,
provided, that upon the occurrence of an Event of Default specified
in subsection 10.1.9 hereof, all of the Obligations shall become
automatically due and payable without declaration, notice or demand
by Lender.
10.3 Other Remedies. Upon and after the occurrence of an
Event of Default, Lender shall have and may exercise from time to
time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured
party under the Code or under other applicable law, and all other
legal and equitable rights to which Lender may be entitled, all of
which rights and remedies shall be cumulative and shall be in
addition to any other rights or remedies contained in this
Agreement or any of the other Loan Documents, and none of which
shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrowers to assemble the
Collateral, at Borrowers' expense, and make it available to Lender
at a place designated by Lender which is reasonably convenient to
both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on
said premises until sold (and if said premises be the Property of
Borrowers, Borrowers agree not to charge Lender for storage
thereof).
10.3.3 The right to sell or otherwise dispose of all
or any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale or
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EX-10.37
sales, with such notice as may be required by law, in lots or in
bulk, for cash or on credit, all as Lender, in its sole discretion,
may deem advisable. Borrowers agree that ten (10) days written
notice to Borrowers of any public or private sale or other
disposition of Collateral shall be reasonable notice thereof, and
such sale shall be at such locations as Lender may designate in
said notice. Lender shall have the right to conduct such sales on
Borrowers' premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of
the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds
realized from the sale of any Collateral may be applied, after
allowing one (1) Business Day for collection, first to the costs,
expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan
Documents and in collecting, retaking, completing, protecting,
removing, storing, advertising for sale, selling and delivering any
Collateral; second to the interest due upon any of the Obligations;
and third, to the principal of the Obligations. If any deficiency
shall arise, Borrowers shall remain liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other
right to use, without charge, Borrowers' labels, patents,
copyrights, rights of use of any name, trade secrets, tradenames,
trademarks and advertising matter, or any Property of a similar
nature, as it pertains to the Collateral, in advertising for sale
and selling any Collateral, and Borrowers' rights under all
licenses and all franchise agreements shall inure to Lender's
benefit.
10.4 Remedies Cumulative; No Waiver. All covenants,
conditions, provisions, warranties, guaranties, indemnities, and
other undertakings of Borrowers contained in this Agreement and the
other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule
or in any Surety Agreement given to Lender or contained in any
other agreement between Lender and Borrowers, heretofore,
concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrowers herein contained.
The failure or delay of Lender to require strict performance by
Borrowers of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under
any of the aforesaid agreements or other documents or security or
Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and all other Obligations owing or to
become owing from Borrowers to Lender shall have been fully
satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrowers contained in this
Agreement or any of the other Loan Documents and no Event of
Default by Borrowers under this Agreement or any other Loan
Documents shall be deemed to have been suspended or waived by
Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrowers.
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EX-10.37
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Each Borrower hereby irrevocably
designates, makes, constitutes and appoints Lender (and all Persons
designated by Lender) as such Borrower's true and lawful attorney
(and agent-in-fact), coupled with an interest, solely for the
purposes set forth below, and Lender, or Lender's agent, may,
without notice to such Borrower and in either Borrower's or
Lender's name, but at the cost and expense of such Borrower:
11.1.1 At such time or times upon or after the
occurrence of a Default or an Event of Default as Lender or said
agent, in its sole discretion, may determine, endorse such
Borrower's name on any checks, notes, acceptances, drafts, money
orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under
Lender's control.
11.1.2 At such time or times upon or after the
occurrence of an Event of Default as Lender or its agent in its
sole discretion may determine: (i) demand payment of the Accounts
from the Account Debtors, enforce payment of the Accounts by legal
proceedings or otherwise, and generally exercise all of such
Borrower's rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release
any of the Accounts or other Collateral or any legal proceedings
brought to collect any of the Accounts or other Collateral; (iii)
sell or assign any of the Accounts and other Collateral upon such
terms, for such amounts and at such time or times as Lender deems
advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign
such Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien,
assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to such Borrower and to notify postal
authorities to change the address for delivery thereof to such
address as Lender may designate; (vii) endorse the names of such
Borrower upon any of the items of payment or proceeds relating to
any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the names of such
Borrower upon any chattel paper, document, instrument, invoice,
freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement
relating to the Accounts, Inventory and any other Collateral; (ix)
use such Borrower's stationery and sign the names of such Borrower
to verifications of the Accounts and notices thereof to Account
Debtors, (x) use the information recorded on or contained in any
data processing equipment and computer hardware and software
relating to the Accounts, Inventory, and any other Collateral; (xi)
make and adjust claims under policies of insurance, and (xii) do
all other acts and things necessary, in Lender's determination, to
fulfill such Borrower's obligations under this Agreement.
11.2 Indemnity. Borrowers hereby agree to indemnify Lender
and hold Lender harmless from and against any liability, loss,
damage, suit, action or proceeding ever suffered or incurred by
Lender (including reasonable attorneys fees and legal expenses) as
the result of Borrowers' failure, or alleged failure, to observe,
perform or discharge Borrowers' duties hereunder. In addition,
Borrowers shall defend Lender against and save it harmless from all
claims of any Person with respect to the Collateral. Without
40
EX-10.37
limiting the generality of the foregoing, these indemnities shall
extend to any claims asserted against Lender by any Person under
any Environmental Laws or similar laws by reason of Borrowers' or
any other Person's failure to comply with laws applicable to solid
or hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the
obligation of Borrowers under this Section 11.2 shall survive the
payment in full of the Obligations and the termination of this
Agreement.
11.3 Modification of Agreement; Sale of Interest. This
Agreement may not be modified, altered or amended except by an
agreement in writing signed by Borrowers and Lender. Borrowers may
not sell, assign or transfer any interest in this Agreement, any of
the other Loan Documents, or any of the Obligations, or any portion
thereof, including, without limitation, Borrowers' rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
Borrowers hereby consent to Lender's participation, sale,
assignment, transfer or other disposition, at any time or times
hereafter, of this Agreement and any of the other Loan Documents,
or of any portion hereof or thereof, including, without limitation,
Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the
assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender"
hereunder, and Lender shall be relieved of all obligations
hereunder upon any such assignments. Borrowers agree that they
will use their best efforts to assist and cooperate with Lender in
any manner reasonably requested by Lender to effect the sale of
participations in or assignments of any of the Loan Documents or
any portion thereof or interest therein, including, without
limitation, assisting in the preparation of appropriate disclosure
documents. Borrowers further agree that Lender may disclose credit
information regarding Borrowers and their Subsidiaries to any
potential participant or assignee.
11.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other
Agreements and the Security Documents shall be binding upon and
inure to the benefit of the successors and assigns of Borrowers and
Lender permitted under Section 11.3 hereof.
11.6 Cumulative Effect, Conflict of Terms. The provisions of
the Other Agreements and the Security Documents are hereby made
coextensive with the provisions of this Agreement. Except as
otherwise provided in Section 3.2 hereof and except as otherwise
provided in any of the other Loan Documents by specific reference
to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern
and control.
41
EX-10.37
11.7 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same
instrument.
11.8 Notice. Except as otherwise provided herein, all
notices, requests and demands to or upon a party hereto, to be
effective, shall be in writing and shall be sent by certified or
registered mail, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless
otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered immediately when delivered
against receipt, five (5) days after deposit in the mail, postage
prepaid, or one (1) Business Day after deposit with an overnight
courier or in the case of facsimile notice, when sent, addressed as
follows:
If to Lender: Fleet Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: The Northeast Loan Administration
Manager
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Facsimile No.: 215-569-5555
If to Borrowers: JEH/Eagle Supply, Inc. and Eagle Supply, Inc.
c/o Eagle Supply Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Executive Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Eagle Supply Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Executive Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
42
EX-10.37
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
One Harbour Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by
notice given in accordance with this Section 11.8, provided,
however, that any notice, request or demand to or upon Lender
pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be effective
until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required
to be obtained under this Agreement, any of the Other Agreements or
any of the Security Documents as a condition to any action,
inaction condition or event, Lender shall be authorized to give or
withhold such sole and absolute discretion and to condition its
consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
11.10 Credit Inquiries. Borrowers hereby authorize and
permit Lender to respond to usual and customary credit inquiries
from third parties concerning Borrowers or any of their
Subsidiaries.
11.11 Time of Essence. Time is of the essence of this
Agreement, the Other Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan
Documents, together with all other instruments, agreements and
certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to
the subject matter hereof and thereof and supersede all prior
agreements, understandings and inducements, whether express or
implied, oral or written.
11.13 Interpretation. No provision of this Agreement or
any of the other Loan Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS
BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO
HAVE BEEN MADE IN PHILADELPHIA, PENNSYLVANIA. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS
OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE
FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH
43
EX-10.37
COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK AS PART OF
THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWERS OR LENDER, BORROWERS HEREBY CONSENT AND AGREE THAT THE
SUPREME COURT OF THE STATE OF NEW YORK, SITTING IN NEW YORK COUNTY,
OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS AND
LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWERS EXPRESSLY SUBMIT AND
CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWERS HEREBY WAIVE ANY
OBJECTION WHICH BORROWERS MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY, SUCH COURT. BORROWERS HEREBY WAIVE PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY
SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF BORROWERS' ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
11.15 WAIVERS BY BORROWERS. BORROWERS WAIVE (i) THE RIGHT
TO TRIAL BY JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
LENDER ON WHICH BORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFY AND CONFIRM WHATEVER LENDER MAY DO IN THIS REGARD; (iii)
NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR
ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE
44
EX-10.37
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v)
NOTICE OF ACCEPTANCE HEREOF. BORROWERS ACKNOWLEDGE THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING
INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. BORROWERS WARRANT
AND REPRESENT THAT THEY HAVE REVIEWED THE FOREGOING WAIVERS WITH
THEIR LEGAL COUNSEL AND HAVE KNOWINGLY AND VOLUNTARILY WAIVED THEIR
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
11.16 Parties to Act in a Commercially Reasonable Manner.
Each party hereto agrees to act at all times in their dealings with
the other party hereto in a commercially reasonable manner.
SECTION 12. SPECIAL INTER-BORROWER AND PARENT PROVISIONS
12.1 Certain Borrower and Parent Acknowledgments and
Agreements.
12.1.1 Each Borrower and Parent acknowledge that it
will enjoy significant benefits from the business conducted by the
other Borrower because of, inter alia, their combined ability to
bargain with other Persons including without limitation their
ability to receive the Total Credit Facility on favorable terms
granted by this Agreement and other Loan Documents which would not
have been available to an individual Borrower acting alone. Each
Borrower and Parent has determined that it is in its best interest
to procure the Total Credit Facility which each Borrower may
utilize directly and which receive the credit support of the other
Borrower as contemplated by this Agreement and the other Loan
Documents.
12.1.2 The Lender has advised the Borrowers that it is
unwilling to enter into this Agreement and the other Loan Documents
and make available the Total Credit Facility extended hereby to any
Borrower unless each Borrower and Parent agree, among other things,
to be jointly and severally liable for the due and proper payment
of the Obligations of Borrowers under this Agreement and other Loan
Documents. Each Borrower and Parent has determined that it is in
its best interest and in pursuit of its purposes that it so induce
the Lender to extend credit pursuant to this Agreement and the
other documents executed in connection herewith (i) because of the
desirability to Borrowers of the Total Credit Facility, the
interest rates and the modes of borrowing available hereunder, (ii)
because each Borrower may engage in transactions jointly with the
other Borrowers and (iii) because each Borrower may require, from
time to time, access to funds under this Agreement for the purposes
herein set forth.
12.1.3 Each Borrower and Parent has determined that it
has and, after giving effect to the transactions contemplated by
this Agreement and the other Loan Documents (including, without
limitation, the inter-Borrower arrangement set forth in this
Section 12.1) will have, assets having a fair saleable value in
excess of the amount required to pay its probable liability on its
45
EX-10.37
existing debts as they fall due for payment and that the sum of its
debts is not and will not then be greater than all of its Property
at a fair valuation, that such Borrower and Parent has, and will
have, access to adequate capital for the conduct of its business
and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature and that the value of the
benefits to be derived by such Borrower and Parent from the access
to funds under this Agreement (including, without limitation, the
inter-Borrower arrangement set forth in this Section 10.1) is
reasonably equivalent to the obligations undertaken pursuant
hereto.
12.1.4 Parent (on behalf of each Borrower) shall
maintain records specifying (a) all Obligations incurred by each
Borrower, (b) the date of such incurrence, (c) the date and amount
of any payments made in respect of such Obligations and (d) all
inter-Borrower obligations pursuant to this Section 12. Parent
shall make copies of such records available to the Lender, upon
request.
12.2 Maximum Amount Of Joint and Several Liability. To the
extent that applicable law otherwise would render the full amount
of the joint and several obligations of any Borrower and Parent
hereunder and under the other Loan Documents invalid or
unenforceable, such Borrower's and Parent's obligations hereunder
and under the other Loan Documents shall be limited to the maximum
amount which does not result in such invalidity or
unenforceability, provided, however, that each Borrower's and
Parent's obligations hereunder and under the other Loan Documents
shall be presumptively valid and enforceable to their fullest
extent in accordance with the terms hereof or thereof, as if this
Section 12.2 were not a part of this Agreement.
12.3 Authorization of Parent by Borrowers.
12.3.1 Each of the Borrowers hereby irrevocably
authorizes Parent to give notices, make requests, make payments,
receive payments and notices, give receipts and execute agreements,
make agreements or take any other action whatever on behalf of such
Borrower under and with respect to any Loan Document and each
Borrower shall be bound thereby. This authorization is coupled
with an interest and shall be irrevocable, and the Lender may rely
on any notice, request, information supplied by Parent, every
document executed by Parent every agreement made by Parent or other
action taken by Parent in respect of the Borrowers or any thereof
as if the same were supplied, made or taken by any or all
Borrowers. Without limiting the generality of the foregoing, the
failure of one or more Borrowers to join in the execution of any
writing in connection herewith shall not, unless the context
clearly requires, relieve any such Borrower from obligations in
respect of such writing.
12.3.2 The Borrowers and Parent acknowledge that the
credit provided hereunder is on terms more favorable than any
Borrower acting alone would receive and that each Borrower benefits
directly and indirectly from all Advances hereunder. Each of the
Borrowers and Parent, shall be jointly and severally liable for all
Obligations, regardless of, inter alia, which Borrower requested
(or received the proceeds of) a particular Advance.
46
EX-10.37
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the day and year specified at the
beginning of this Agreement.
BORROWERS:
Attest: JEH/EAGLE SUPPLY, INC.
By:_______________________ By: ____________________________
Secretary
[Corporate Seal] Title:__________________________
Attest: EAGLE SUPPLY, INC.
By:______________________ By: ____________________________
Secretary
[Corporate Seal] Title: _________________________
LENDER:
FLEET CAPITAL CORPORATION
By: ___________________________
Title: ________________________
AGREED TO AND ACKNOWLEDGED,
INTENDING TO BE LEGALLY BOUND:
PARENT:
Attest: EAGLE SUPPLY GROUP, INC.
By:_______________________ By: ____________________________
Secretary
[Corporate Seal] Title:__________________________
47
EX-10.37
TABLE OF CONTENTS
-----------------
SECTION 1. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . .2
1.1 Revolving Credit Loans.. . . . . . . . . . . . . . . .2
1.2 Equipment Term Loan. . . . . . . . . . . . . . . . . .2
1.3 Acquisition Term Loan. . . . . . . . . . . . . . . . .3
SECTION 2. INTEREST, FEES AND CHARGES. . . . . . . . . . . . . . . . .3
2.1 Interest.. . . . . . . . . . . . . . . . . . . . . . .3
2.2 Collateral Monitoring Fee. . . . . . . . . . . . . . .5
2.3 Unused Availability Fee. . . . . . . . . . . . . . . .5
2.4 Audit and Appraisal Fees . . . . . . . . . . . . . . .5
2.5 Capital Adequacy Change. . . . . . . . . . . . . . . .6
2.6 Reimbursement of Expenses. . . . . . . . . . . . . . .7
2.7 Bank Charges . . . . . . . . . . . . . . . . . . . . .7
2.8 [Intentionally Omitted . . . . . . . . . . . . . . . .8
2.9 Confirmation of Existing Indebtedness. . . . . . . . .8
SECTION 3. LOAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . .8
3.1 Manner of Borrowing Revolving Credit Loans . . . . . .8
3.2 Payments . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Prepayments. . . . . . . . . . . . . . . . . . . . . 12
3.4 Application of Payments and Collections. . . . . . . 13
3.5 All Loans to Constitute One Obligation . . . . . . . 13
3.6 Loan Account . . . . . . . . . . . . . . . . . . . . 13
3.7 Statements of Account. . . . . . . . . . . . . . . . 14
SECTION 4. TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . 14
4.1 Term of Agreement. . . . . . . . . . . . . . . . . . 14
4.2 Termination. . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. SECURITY INTERESTS. . . . . . . . . . . . . . . . . . . . 15
5.1 Security Interest in Collateral. . . . . . . . . . . 15
5.2 Lien Perfection; Further Assurances. . . . . . . . . 16
5.3 Key Man Life Insurance . . . . . . . . . . . . . . . 16
SECTION 6. COLLATERAL ADMINISTRATION . . . . . . . . . . . . . . . . 16
6.1 Location of Collateral . . . . . . . . . . . . . . . 16
6.2 Insurance of Collateral. . . . . . . . . . . . . . . 16
6.3 Protection of Collateral . . . . . . . . . . . . . . 17
6.4 Administration of Accounts.. . . . . . . . . . . . . 17
6.5 Administration of Inventory. . . . . . . . . . . . . 19
6.6 Records and Schedules of Equipment . . . . . . . . . 19
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EX-10.37
6.7 Payment of Charges . . . . . . . . . . . . . . . . . 19
SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 20
7.1 General Representations and Warranties . . . . . . . 20
7.2 Continuous Nature of Representations and Warranties. 26
7.3 Survival of Representations and Warranties . . . . . 26
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS. . . . . . . . . . . . 26
8.1 Affirmative Covenants. . . . . . . . . . . . . . . . 26
8.2 Negative Covenants . . . . . . . . . . . . . . . . . 29
8.3 Specific Financial Covenants.. . . . . . . . . . . . 33
SECTION 9. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 34
9.1 Documentation. . . . . . . . . . . . . . . . . . . . 34
9.2 No Default . . . . . . . . . . . . . . . . . . . . . 35
9.3 Other Loan Documents . . . . . . . . . . . . . . . . 35
9.4 Adjusted Availability. . . . . . . . . . . . . . . . 35
9.5 No Litigation. . . . . . . . . . . . . . . . . . . . 36
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT . . . . .36
10.1 Events of Default. . . . . . . . . . . . . . . . . . 36
10.2 Acceleration of the Obligations. . . . . . . . . . . 39
10.3 Other Remedies . . . . . . . . . . . . . . . . . . . 39
10.4 Remedies Cumulative; No Waiver . . . . . . . . . . . 40
SECTION 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Power of Attorney. . . . . . . . . . . . . . . . . . 40
11.2 Indemnity. . . . . . . . . . . . . . . . . . . . . . 41
11.3 Modification of Agreement; Sale of Interest. . . . . 42
11.4 Severability . . . . . . . . . . . . . . . . . . . . 42
11.5 Successors and Assigns . . . . . . . . . . . . . . . 42
11.6 Cumulative Effect, Conflict of Terms . . . . . . . . 42
11.7 Execution in Counterparts. . . . . . . . . . . . . . 42
11.8 Notice . . . . . . . . . . . . . . . . . . . . . . . 43
11.9 Lender's Consent . . . . . . . . . . . . . . . . . . 44
11.10 Credit Inquiries . . . . . . . . . . . . . . . . . . 44
11.12 Entire Agreement . . . . . . . . . . . . . . . . . . 44
11.13 Interpretation . . . . . . . . . . . . . . . . . . . 44
11.14 GOVERNING LAW; CONSENT TO FORUM. . . . . . . . . . . 44
11.15 WAIVERS BY . . . . . . . . . . . . . . . . . . . . . 45
11.16 Parties to Act in a Commercially
Reasonable Manner. . . . . . . . . . . . . . . . . . 46
SECTION 12. SPECIAL INTER-BORROWER AND PARENT PROVISIONS . . . . . . . 46
ii
EX-10.37
12.1 Certain Borrower and Parent Acknowledgments and
Agreements . . . . . . . . . . . . . . . . . . . . . 46
12.2 Maximum Amount Of Joint and Several Liability. . . . 47
12.3 Authorization of Parent by Borrowers . . . . . . . . 47
iii
EX-10.37
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended, Restated and Consolidated Loan and
Security Agreement dated as of June20, 2000, by and among Fleet
Capital Corporation, JEH/Eagle Supply, Inc. and Eagle Supply,
Inc., the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the
plural and vice versa):
Account Debtor - any Person who is or may become obligated
under or on account of an Account.
Accounts - all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created
or acquired by any Borrower or in which any Borrower now has or
hereafter acquires any interest.
Acquisition Term Base Rate - a per annum rate equal to the
sum of the Base Rate plus 75 basis points.
Acquisition Term Base Rate Loan - that portion of the
Acquisition Term Loan that bears interest at the Term Base Rate.
Acquisition Term LIBOR Rate - a per annum rate equal to the
sum of the LIBOR Rate plus 275 basis points.
Acquisition Term LIBOR Rate Loan - that portion of the
Acquisition Term Loan (as designated by Borrower) on which
interest accrues at the Term LIBOR Rate.
Acquisition Term Loan - the Loan described in subsection 1.3
of the Agreement.
Acquisition Term Note - the amended, restated and
consolidated secured promissory note to be executed by Borrowers
on or about the Closing Date in favor of Lender to evidence
Borrowers' obligation to repay the Acquisition Term Loan, which
shall be in the form of Exhibit A-1 to the Agreement.
Adjusted Availability - as defined in Section 9.4 of the
Agreement.
Adjusted Net Earnings From Operations - with respect to any
fiscal period, means the net earnings (or loss) after provision
for income taxes for such fiscal period of Borrower, as reflected
on the financial statement of Borrower supplied to Lender pursuant
to subsection 8.1.2 of the Agreement, but excluding:
(i) any gain or loss arising from the sale of capital
assets;
(ii) any gain arising from any write-up of assets;
EX-10.37 - Appendix A
(iii) earnings of any Subsidiary of Borrower accrued prior to
the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the
assets of which have been acquired in any manner by Borrower,
realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of Borrower) in which Borrower has an ownership
interest unless such net earnings shall have actually been
received by Borrower in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of
Borrower which for any reason is unavailable for payment of
dividends to Borrower;
(vii) the earnings of any Person to which any assets of
Borrower shall have been sold, transferred or disposed of, or into
which Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date
of such transaction;
(viii) any gain arising from the acquisition of any
Securities of Borrower; and
(ix) any gain arising from extraordinary or non-recurring
items.
Affiliate - a Person (other than a Subsidiary or Masonry
Supply, Inc., ▇▇▇▇ ▇▇▇▇▇▇, his wife, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and his wife,
and any Persons affiliated with the foregoing): (i) which
directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, a
Person; or (ii) which beneficially owns or holds 5% or more of any
class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by a Person or a Subsidiary of a
Person.
Agreement - the Amended, Restated and Consolidated Loan and
Security Agreement referred to in the first sentence of this
Appendix A, all Exhibits thereto and this Appendix A.
Applicable Inventory Sublimit - an amount equal to
$20,000,000.
Asset Purchase Agreement - collectively and separately, that
certain Asset Purchase Agreement dated as of October 22, 1998
between Masonry Supply, Inc., as seller, and MSI/Eagle Supply,
Inc., as purchaser and that certain Asset Purchase Agreement dated
July 8, 1997 between JEH Company, as seller, and JEH/Eagle Supply,
Inc. f/k/a JEH Acquisition Corp., as purchaser.
Availability - the amount of money which Borrower is entitled
to borrow from time to time as Revolving Credit Loans, such amount
being the difference derived when the sum of the principal amount
of Revolving Credit Loans then outstanding (including any amounts
2
EX-10.37 - Appendix A
which Lender may have paid for the account of Borrower pursuant to
any of the Loan Documents and which have not been reimbursed by
Borrower) and any established reserves, is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater
than the Borrowing Base, Availability is 0.
Bank - Fleet National Bank or such other institution as
Lender may hereafter designate
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether
or not such rate is the lowest rate charged by Bank to its most
preferred borrowers; and, if such prime rate for commercial loans
is discontinued by Bank as a standard, a comparable reference rate
designated by Bank as a substitute therefor shall be the Base
Rate.
Base Rate Loans - collectively, the Revolving Credit Base
Rate Loans, the Equipment Term Base Rate Loan and Acquisition Term
Base Rate Loan.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) The Revolving Credit Limit; or
(ii) an amount equal to:
(a) up to eighty percent (80%) of the net amount of
Eligible Accounts outstanding at such date;
PLUS
(b) (without duplication) up to seventy percent (70%)
of the net amount of the ▇▇▇▇▇ Brothers Accounts, so long as the
value of the Accounts with respect to such entity which are unpaid
for more than sixty (60) days after the due date ("Delinquent
Accounts") does not increase by more than 20% from the value of
the Delinquent Accounts corresponding to such entity as of the
Closing Date;
PLUS
(c) an amount equal to the lesser of (1) the
Applicable Inventory Sublimit or (2) up to sixty percent (60%) of
the value of the Prime Eligible Inventory.
MINUS
(d) without duplication, the amount of any reserves
and any amounts which Lender shall have paid pursuant to any of
the Loan Documents for the account of Borrower and which have not
been reimbursed by Borrower.
3
EX-10.37 - Appendix A
For purposes hereof, the net amount of Eligible
Accounts at any time shall be the face amount of such Eligible
Accounts less any and all returns, rebates, discounts (which may,
at Lender's option, be calculated on shortest terms), credits,
allowances or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable
in connection with such Accounts at such time.
Borrowing Base Certificate - that certificate signed by the
chief financial officer of Borrower showing the status of
Borrower's Accounts and Inventory, outstanding Revolving Credit
Loans and other information, in the form of Exhibit A-2 to the
Agreement.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York
or is a day on which banking institutions located in such state
are closed.
Capital Adequacy Amount, Capital Adequacy Demand and Capital
Adequacy Rules -each as defined in Section 2.6 of the Agreement.
Capital Expenditures - cash expenditures made for the
acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of
more than one year, including the total principal portion of
Capitalized Lease Obligations excluding expenditures for the
replacement of any assets leased under a Capitalized Lease
Obligation in connection with a casualty or loss thereof.
Capitalized Lease Obligation - any Indebtedness represented
by obligations under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
Cash Flow - with respect to any period measured, an amount
equal to Adjusted Net Earnings from Operations, inclusive of
intercompany charges (or credits) between Borrower and Parent or
any Affiliate, as shown on the financial statements of Borrower
required to be delivered pursuant to subsection 8.1.2(i) of the
Agreement, plus (i) depreciation and amortization expenses which
were deducted in determining such income (or loss) for such period
and (ii) loss arising from the sale of Property which was deducted
in determining such income (or loss) for such period, minus (a)
gain arising from the sale of Property which was included in
determining such income (or loss) for such period, (b) capital
expenditures (net of Indebtedness incurred to finance such
expenditures) for such period, (c) Distributions paid in cash
during such period (to the extent permitted by the Agreement), (d)
scheduled principal payments made during such period in respect of
Indebtedness, (e) without duplication, payments made or to be made
by Borrower, with respect to the period(s) being measured, to
Masonry Supply, Inc. or its designee pursuant to the applicable
Asset Purchase Agreement, and (f) without duplication, payments
made or to be made by Borrower, with respect to the period(s)
being measured, to JEH Company or its designee pursuant to the
applicable Asset Purchase Agreement, all as determined in
accordance with GAAP.
4
EX-10.37 - Appendix A
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied and the
initial Loan is made under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in
the State of New York, as from time to time in effect.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property
and interests in Property that now or hereafter secure the payment
and performance of any of the Obligations.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Continuation - as defined in subsection 3.1.4 of the
Agreement.
Conversion - as defined in subsection 3.1.4 of the Agreement.
Current Assets - at any date means the amount at which all of
the current assets of a Person would be properly classified as
current assets shown on a balance sheet at such date in accordance
with GAAP.
Default - an event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both,
become an Event of Default.
Default Rate - as defined in subsection 2.1.3 of the
Agreement.
Deposit Accounts - all now existing or hereafter acquired or
arising deposit accounts, investment accounts, commercial paper,
and certificates of deposit of every nature, wherever located and
all documents and records associated therewith.
Distributions - in respect of any corporation means and
includes (i) the payment of any dividends or other distributions
on capital stock of the corporation (except distributions in such
stock) and (ii) the redemption or acquisition of Securities unless
made contemporaneously from the net proceeds of the sale of such
Securities.
Dominion Account - a special blocked account owned and
established by Borrower pursuant to the Agreement at a bank
selected by Borrower, but acceptable to Lender in its reasonable
discretion, and over which Lender shall have sole and exclusive
access and control for withdrawal purposes.
Effective Date Balance Sheet - the audited combined balance
sheets of Borrowers dated June 30, 1999 prepared by Deloitte and
Touche, LLP.
5
EX-10.37 - Appendix A
Eligible Account - an Account arising in the ordinary course
of any Borrower's business from the sale of goods or rendition of
services which Lender, in its sole credit judgment, deems to be an
Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person controlled
by an Affiliate of Borrower; or
(ii) it is unpaid for more than sixty (60) days after the
original due date calculated pursuant to the payment terms
reflected on the invoice or is outstanding more than ninety (90)
days from the invoice date; or
(iii) fifty percent (50%) or more of the Accounts from the
Account Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor exceed
fifteen percent (15%) of the net amount of all Eligible Accounts,
to the extent of such excess; or
(v) any covenant, representation or warranty contained in
the Agreement with respect to such Account has been breached; or
(vi) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with
respect to such Account, or the Account Debtor has made any claim
with respect to any other Account due from such Account Debtor to
Borrower, or the Account otherwise is or may become subject to any
right of setoff by the Account Debtor; or
(vii) the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in
an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets
or affairs; or
(viii) it arises from a sale to an Account Debtor outside
the United States, unless the sale is on letter of credit,
guaranty or acceptance terms, in each case acceptable to Lender in
its sole discretion; or
(ix) it arises from a sale to the Account Debtor on a
▇▇▇▇-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
6
EX-10.37 - Appendix A
(x) Lender believes, in its reasonable judgment, that
collection of such Account is insecure or that payment thereof is
doubtful or will be delayed by reason of the Account Debtor's
financial condition; or
(xi) the Account Debtor is the United States of America or
any department, agency or instrumentality thereof, unless the
Borrower assigns its right to payment of such Account to Lender,
in a manner satisfactory to Lender, so as to comply with the
Assignment of Claims Act of 1940 (31 U.S.C. ?203 et seq., as
amended); or
(xii) the Account is not at all times subject to Lender's
duly perfected, first priority security interest or if it is
subject to a Lien other than a Permitted Lien; or
(xiii) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by
the Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale; or
(xiv) the total unpaid Accounts of the Account Debtor exceed
a credit limit determined by Lender, in its reasonable discretion,
to the extent such Account exceeds such limit; or
(xv) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xvi) Borrower has made any agreement with the Account Debtor
for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt
payment and which discounts or allowances are reflected in the
calculation of the face value of each invoice related to such
Account; or
(xvii) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof; or
(xviii) such Account includes finance charges, late
charges or similar type charges or fees, to the extent of such
charges and fees.
Eligible Inventory - such Inventory of Borrower (other than
packaging materials and supplies) which Lender, in its sole credit
judgment, deems to be Eligible Inventory. Without limiting the
generality of the foregoing, no Inventory shall be Eligible
Inventory if:
(i) it does not consist of finished goods that are, in
Lender's opinion, readily marketable in their current form; or
(ii) it is not in good, new and saleable condition; or
7
EX-10.37 - Appendix A
(iii) it is obsolete or unmerchantable or remains unsold and
on Borrower's books and records for more than one year; or
(iv) it does not meet all standards imposed by any
governmental agency or authority; or
(v) it does not conform in all respects to the warranties
and representations set forth in the Agreement,
(vi) it is not at all times subject to Lender's duly
perfected, first priority Lien and no other Lien except a
Permitted Lien; or
(vii) it is not situated at a location in compliance with the
Agreement or is in transit.
Environmental Laws - all federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to health, safety and
environmental matters.
Equipment - all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description
owned or used in Borrower's operations in which such Borrower has
an interest, whether now owned or hereafter acquired by Borrower
and wherever located, and all parts, accessories and special tools
and all increases and accessions thereto and substitutions and
replacements therefor.
Equipment Term Base Rate - a per annum rate equal to the sum
of the Base Rate plus 50 basis points.
Equipment Term Base Rate Loan - that portion of the Equipment
Term Loan that bears interest of the Term Base Rate.
Equipment Term LIBOR Rate - a per annum rate equal to the sum
of the LIBOR Rate plus 250 basis points.
Equipment Term LIBOR Rate Loan - that portion of the
Equipment Term Loan (as designated by Borrower) on which interest
accrues at the Equipment Term LIBOR Rate.
Equipment Term Loan - the Loan described in subsection 1.2 of
the Agreement.
Equipment Term Note - the amended, restated and consolidated
secured promissory note to be executed by Borrowers on or about
the Closing Date in favor of Lender to evidence Borrowers'
obligation to repay the Equipment Term Loan, which shall be in the
form of Exhibit A-3 to the Agreement.
8
EX-10.37 - Appendix A
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time
promulgated thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
Excess Cash Flow - with respect to any fiscal year, an amount
equal to Adjusted Net Earnings from Operations, inclusive of
intercompany charges (or credits) between Borrower and Parent or
any Affiliate, as shown on the financial statements of Borrower
required to be delivered pursuant to subsection 8.1.2(i) of the
Agreement, plus (i) depreciation and amortization expenses which
were deducted in determining such income (or loss) for such fiscal
year and (ii) loss arising from the sale of Property which was
deducted in determining such income (or loss) for such fiscal year
and (iii) accrued management fee expenses owed to the Parent and
accrued interest expense on any Indebtedness owed by Borrower to
Parent, minus (a) gain arising from the sale of Property which was
included in determining such income (or loss) for such fiscal
year, (b) capital expenditures (net of Indebtedness incurred to
finance such expenditures) for such fiscal year, (c) Distributions
paid in cash during such fiscal year (to the extent permitted),
and (d) scheduled principal payments made during such fiscal year
in respect of Indebtedness, all calculated prior to, and
specifically excluding, any contingent payments made, or to be
made, in cash to Masonry Supply, Inc. or its designee(s), pursuant
to the applicable Asset Purchase Agreement, all as determined in
accordance with GAAP.
Excess Cash Flow Payments - Section 3.3.3.
Existing Loan Documents - That certain Loan and Security
Agreement, as amended from time to time, between MSI/Eagle Supply,
Inc. and Lender, dated as of October 22, 1998, and that certain
Revolving Credit Note and Term Note in favor of Lender, each dated
as of October 22, 1998; that certain Loan and Security Agreement,
as amended from time to time, between JEH Acquisition Corp. and
Lender, dated as of July 8, 1997 and, that certain Term Note,
Equipment Note and Revolving Credit Note, each dated as of July 8,
1997; and that certain Loan and Security Agreement, as amended
from time to time, between Eagle Supply, Inc. and Lender, dated as
of December 23, 1994 and that certain Equipment Note, dated May 4,
1998 from Eagle Supply, Inc. in favor of Lender; and the Surety
Agreements from Parent in favor of Lender each dated as of March
17, 1998, as same may have been amended.
GAAP - generally accepted accounting principles in the United
States of America in effect from time to time.
General Intangibles - collectively, all personal Property of
Borrower other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or
acquired by any Borrower including without limitation, all of
Borrower's existing and future rights (including indemnification
rights), claims, privileges and benefits in, to and under the
Asset Purchase Agreement.
9
EX-10.37 - Appendix A
Guarantor - Parent and any other Person who may hereafter
guarantee payment or performance of the whole or any part of the
Obligations pursuant to a Surety Agreement.
Indebtedness - as applied to a Person means, without
duplication
(i) all items, which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the date as
of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed, and
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
(iv) in the case of Borrowers, without duplication, the
Obligations and each Borrower's obligations under and pursuant to
the applicable Asset Purchase Agreement.
Interest Period - for any LIBOR Rate Loan the period
commencing on the date of the borrowing thereof and ending on the
last day of the period selected by Borrower pursuant to the
provisions contained herein. The duration of each such Interest
Period shall be for 30, 60 or 90 days, in each case as Borrower
may select, pursuant to an appropriate notice of borrowing, notice
of Continuation or notice of Conversion; provided, however, that
Borrower may not select any Interest Period that ends after the
last day of the Original Term, or if the Agreement is renewed in
accordance with the terms of Section 4.1, the last day of the
Renewal Term then in effect. Whenever the last day of any
Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be
extended so as to occur on the next succeeding Business Day;
provided, however, if such extension would cause the last day of
such Interest Period to occur during the next following calendar
month, the last day of such Interest Period shall occur on the
next preceding Business Day.
Inventory - all of each Borrowers' Inventory, whether now
owned or hereafter acquired, including, without limitation, all
goods intended for sale or lease by a Borrower, or for display or
demonstration; all work in process; all raw materials and other
materials and supplies of every nature and description used or
which might be used in connection with the manufacture, printing,
packing, shipping, advertising, selling, leasing or furnishing of
such goods or otherwise used or consumed in any Borrower's
business; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter
acquired by a Borrower.
Investment Property - as defined in the Code.
LIBOR Rate - shall mean, with respect to the Interest Period
applicable to the borrowing of a LIBOR Rate Loan, the rate
obtained (rounded upwards to the nearest 1/100 of 1%) by dividing
10
EX-10.37 - Appendix A
(i) the rate of interest per annum offered to the Bank in the
London interbank foreign currency deposits market as of
approximately 9:00 A.M. (Eastern time) two (2) Business Days prior
to the commencement of such Interest Period for U.S. dollar
deposits of amounts in immediately available funds comparable to
the principal amount of the LIBOR Rate Loan for which the LIBOR
Rate is being determined with maturities comparable to the
Interest Period for which such LIBOR Rate will apply, by (ii) a
percentage equal to 1 minus the stated Reserve (expressed as a
decimal), if any, required to be maintained against "Eurocurrency
Liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System as from time to time shall
be in effect (or against any other category of liabilities, which
includes deposits, by reference to which the interest rate on
LIBOR Rate Loans is determined or any category of extension of
credit on other assets, which includes loans by a non-U.S. office
of Bank or Lender to U.S. residents). In the absence of manifest
error, each determination by Lender of the applicable LIBOR Rate
shall be deemed conclusive.
LIBOR Rate Loans - collectively, the Revolving Credit LIBOR
Rate Loans, the Equipment Term LIBOR Rate Loan and the Acquisition
Term LIBOR Rate Loan.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract.
The term "Lien" shall also include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose(s) of the Agreement, Borrower
shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - collectively, the Revolving Credit Loans, the
Equipment Term Loan, the Acquisition Term Loan, and all other
loans and advances of any kind made by Lender pursuant to the
Agreement.
London Business Day - Any Business Day on which banks in
London, England are open for business.
Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness,
whether or not in any such case arising from the lending by any
Person of money to Borrower, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (B)
which constitutes obligations evidenced by bonds, debentures,
notes or similar instruments, or (C) upon which interest charges
are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii)
reimbursement obligations with respect to letters of credit or
11
EX-10.37 - Appendix A
guaranties of letters of credit and (iv) Indebtedness of Borrower
under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Worth - at any date, means with respect to any Person, an
amount equal to assets minus liabilities, as shown on a balance
sheet at such date prepared in accordance with GAAP.
NonPrime Eligible Inventory - An amount equal to twenty
percent (20%) of the value of Eligible Inventory calculated on the
basis of the lower of cost or market value, calculated on a first
in, first-out basis.
Notes - collectively, the Amended, Restated and Consolidated
Revolving Credit Note, the Amended, Restated and Consolidated
Equipment Term Note and the Amended, Restated and Consolidated
Acquisition Term Note.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees, costs, expenses and other charges thereon, owing,
arising, due or payable from Borrowers, or any of them, to Lender
of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under
the Agreement or any of the other Loan Documents or otherwise
whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising and however
acquired (including without limitation, all interest whether
accruing before or after the filing of a voluntary or involuntary
bankruptcy or other insolvency proceeding and whether or not such
interest is an allowable claim in such proceeding). The term
includes without limitation, all interest charges, fees, expenses,
attorneys' fees, and any other sums chargeable to Borrowers, or
any of them, under any of the Loan Documents.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed or delivered by Borrower,
any Subsidiary of Borrower or any other third party and delivered
to Lender in respect of the transactions contemplated by the
Agreement and the Existing Loan Documents, as each may be amended,
modified, renewed, extended, replaced, restated or substituted
from time to time.
Overadvance - the amount, if any, by which the aggregate
outstanding principal amount the Loans exceeds the Borrowing Base.
12
EX-10.37 - Appendix A
Parent - Eagle Supply Group, Inc., a Delaware corporation
and the owner, beneficially and of record, of one hundred percent
(100%) of the issued and outstanding shares of capital stock of
Eagle Supply, Inc. and JEH/Eagle Supply, Inc.
Participating Lender - each Person who shall be granted the
right by Lender to participate in any of the Loans described in
the Agreement and who shall have entered into a participation
agreement in form and substance satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of a Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with
the principal amount of all other such Purchase Money Indebtedness
and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed Three Million Dollars.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business
trust, or unincorporated organization, or a government or agency
or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of a Borrower(s) that is covered by Title IV of
ERISA.
Prime Eligible Inventory - the value of Eligible Inventory
minus the NonPrime Eligible Inventory calculated on the basis of
the lower of cost or market value, calculated on a first-in,
first-out basis.
Projections - Borrowers' forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements,
(c) cash flow statements, and (d) capitalization statements, all
prepared on a consistent basis with Borrowers' historical
financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all
or any part of the purchase price of any real Property or
Equipment, (ii) any Indebtedness (other than the Obligations)
incurred at the time of or within ten (10) days prior to or after
the acquisition of any real Property or Equipment for the purpose
of financing all or any part of the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not
any increases in the principal amounts thereof outstanding at the
time.
13
EX-10.37 - Appendix A
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all
times be confined solely to the fixed assets the purchase price of
which was financed through the incurrence of the Purchase Money
Indebtedness secured by such Lien.
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.
Rentals - as defined in subsection 8.2.9 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Reserve - For any day, that reserve (expressed as a decimal)
which is in effect (whether or not actually incurred) with respect
to Bank on such day, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor or any other banking
authority to which Bank is subject including any board or
governmental or administrative agency of the United States or any
other jurisdiction to which Bank is subject), for determining the
maximum reserve requirement (including without limitation any
basic, supplemental, marginal or emergency reserves) for
Eurocurrency liabilities as defined in Regulation D.
Reserve Percentage - For Bank 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 Lender
is subject, including any board or governmental or administrative
agency of the United States or any other jurisdiction to which
Bank 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 Rate Loan subject to an LIBOR Rate. The
LIBOR Rate shall be adjusted automatically on and as of the
effective day of any change in the Reserve Percentage.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property
except the following:
(i) investments otherwise permitted by this Agreement or
investments in one or more Subsidiaries of Borrower to the extent
existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and its
Subsidiaries;
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EX-10.37 - Appendix A
(iv) investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature
within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or trust
company organized under the laws of the United States or any state
thereof having capital surplus and undivided profits aggregating
at least $100,000,000; and
(vi) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more
than 270 days from the date of creation thereof.
Revolving Credit Base Rate - a per annum rate equal to the
Base Rate .
Revolving Credit Base Rate Loan - that portion of the
Revolving Credit Loans that bears interest at the Revolving Credit
Base Rate.
Revolving Credit Facility - the credit facility established
for Borrower by Lender under and pursuant to the terms of this
Agreement under which Revolving Credit Loans may be made from time
to time.
Revolving Credit LIBOR Rate - a per annum rate equal to the
sum of the LIBOR Rate plus 200 basis points.
Revolving Credit LIBOR Rate Loan - that portion of the
Revolving Credit Loans on which interest accrues at the Revolving
Credit LIBOR Rate.
Revolving Credit Limit - an amount equal to the amount of the
Total Credit Facility minus the outstanding balance of the
Acquisition Term Loan and the Equipment Term Loan.
Revolving Credit Loan - a Loan made by Lender as provided in
Section 1.1 of the Agreement.
Revolving Credit Note - the amended, restated and
consolidated secured promissory note to be executed by Borrower on
the Closing Date in favor of Lender to evidence Borrower's
obligation to repay the Revolving Credit Loans, which shall be in
the form of Exhibit A-4 to the Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(l) of
the Securities Act of 1933, as amended.
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EX-10.37 - Appendix A
Security Documents - each Surety Agreement and all other
instruments and agreements now or at any time hereafter securing
the whole or any part of the Obligations, as each may be amended,
modified, renewed, extended, replaced, restated or substituted
from time to time.
Solvent - as to any Person, such Person (i) owns Property
whose fair saleable value is greater than the amount required to
pay all of such Person's Indebtedness (including contingent
debts), (ii) is able to pay all of its Indebtedness as such
Indebtedness matures and (iii) has capital sufficient to carry on
its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower which by its
terms, or by the terms of the agreement pursuant to which such
Indebtedness is issued, is subordinated to the Obligations in a
manner satisfactory to Lender, including without limitation, the
Indebtedness of JEH/Eagle Supply, Inc. to JEH Company which is
subordinated to the Obligations pursuant to a certain
subordination agreement dated July 8, 1997 from JEH Company to
Lender.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of
the Voting Stock at the time of determination.
Surety Agreement - a Surety Agreement executed by a Guarantor
in form and substance satisfactory to Lender.
Total Credit Facility - Forty Four Million Nine Hundred
Seventy Five Thousand Dollars ($44,975,000).
Treasury Rate - with respect to the Term Loan, the average
coupon equivalent yield, in the secondary market, that Lender
could obtain by purchasing United States Treasury Securities in an
amount approximately equal to the Term Loan, maturing on the
scheduled maturity date of the Term Loan.
Type - with respect to any Loan, whether such Loan, or
portion thereof, is a Base Rate Loan or a LIBOR Rate Loan.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
Other Terms. All other terms contained in the Agreement
shall have, when the context so indicates, the meanings provided
for by the Code to the extent the same are used or defined
therein.
Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer
to the Agreement as a whole and not to any particular section,
paragraph or subdivision. Any pronoun used shall be deemed to
cover all genders. Terms used in the singular shall include the
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EX-10.37 - Appendix A
plural where the context may require and vice versa. The section
titles, table of contents and list of exhibits appear as a matter
of convenience only and shall not affect the interpretation of the
Agreement. All references to statutes and related regulations
shall include any amendments of same and any successor statutes
and regulations. All references to any of the Loan Documents
shall include any and all modifications thereto and any and all
extensions or renewals thereof.
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EX-10.37 - Appendix A