Exhibit 10.32
REVOLVING CREDIT AND SECURITY AGREEMENT
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This REVOLVING CREDIT AND SECURITY AGREEMENT dated March __, 2000, among
ELTRAX SYSTEMS, INC., a Minnesota corporation ("Eltrax"); ELTRAX TECHNOLOGY
SERVICES GROUP, INC., a Georgia corporation ("Technology"); ELTRAX ASP GROUP,
LLC, a Georgia limited liability company ("ASP"); SQUIRREL SYSTEMS, INC., a
Georgia corporation ("Squirrel"); SENERCOMM, INC., a Florida corporation
("Senercomm"); ELTRAX CUSTOMER CARE GROUP, INC., a Georgia corporation
("Customer Care"); ELTRAX INTERNATIONAL, INC., a Pennsylvania corporation
("International"); and ELTRAX HOSPITALITY GROUP, INC., a Georgia corporation
("Hospitality"; Eltrax, Technology, ASP, Squirrel, Senercomm, Customer Care,
International and Hospitality, each a "Borrower" and collectively the
"Borrowers"); the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender"); and
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), as
collateral and administrative agent for Lenders (PNC, together with its
successors and assigns in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree as follows:
SECTION 1. DEFINITIONS.
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1.1 Accounting Terms. As used in this Agreement, any Note, or any
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certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
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however, whenever such accounting terms are used for the purposes of determining
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compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the Fiscal Year ended December 31,
1999.
1.2 General Terms. For purposes of this Agreement the following terms
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shall have the following meanings (terms defined in the singular to have the
same meaning when used in the plural, and vice versa):
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
"Advances" shall mean and include the Revolving Advances, Letters of Credit
and each other advance made by Agent or Lenders pursuant to the terms of this
Agreement or any of the Other Documents to or for the benefit of any Borrower.
"Advance Rates" shall have the meaning set forth in Section 2.1(a) hereof.
"Affiliate" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or the individuals performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this Agreement
and shall include its successors and assigns.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds
Rate in effect on such day plus 1/2 of 1%.
"Applicable Law" shall mean all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant, Loan Document or Material Contract
in question, including all applicable common law and equitable principles; all
provisions of all applicable state, federal and foreign constitutions, statutes,
rules, regulations and orders of governmental bodies; and all orders, judgments
and decrees of all courts and arbitrators.
"Applicable Margin" shall mean a percentage equal to 2.50% with respect to
Revolving Advances that are Eurodollar Rate Loans and 0.50% with respect to
Revolving Advances that are Domestic Rate Loans; provided that, commencing
December 31, 2000, the Applicable Margin shall be increased or (if no Default or
Event of Default exists) decreased, based on the Fixed Charge Coverage Ratio, as
follows:
Applicable Margin For
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Fixed Charge Coverage Ratio Revolving Advances that are Revolving Advances that are made
made or outstanding as or outstanding as Eurodollar Rate
Domestic Rate Loans Loans
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Greater than 1.00:1.00 and 0.75% 2.75%
less than 1.35:100
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Greater than or equal to 0.50% 2.50%
1.35:1.00 and less than
1.70:1.00
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Greater than or equal to 0.25% 2.25%
1.70:1.00
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The Applicable Margin shall be subject to reduction or increase, as applicable
and as set forth in the table above, on a quarterly basis according to the
performance of Borrowers as measured by the Fixed Charge Coverage Ratio for the
immediately preceding four (4) Fiscal Quarters of Borrowers. Except as set
forth in the last sentence hereof, any such increase or reduction in the
Applicable Margin provided for herein shall be effective three (3) Business Days
after receipt by Agent of the applicable financial statements and corresponding
Compliance Certificate. If the financial statements and the Compliance
Certificate of Borrowers setting forth the Fixed Charge Coverage Ratio are not
received by Agent by the date required pursuant to Section 9.8 hereof, the
Applicable Margin shall be determined as if the Fixed Charge Coverage Ratio was
greater than 1.00:1.00 and less than 1.35:1.00 until such time as such financial
statements and Compliance Certificate are received and any Event of Default
resulting from a failure timely to deliver such financial
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statements or Compliance Certificate is waived in writing by Agent and Lenders;
provided, however, that nothing herein shall be deemed to prevent Agent and
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Lenders from charging interest at the Default Rate for so long as an Event of
Default exists. For the final Fiscal Quarter of any Fiscal Year of Borrowers,
Borrowers may provide the unaudited financial statements of Borrowers, subject
only to year-end adjustments, for the purpose of determining the Applicable
Margin; provided, however, that if, upon delivery of the annual audited
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financial statements required to be submitted by Borrowers to Agent pursuant to
Section 9.7 hereof, Borrowers have not met the criteria for reduction of the
Applicable Margin pursuant to the terms hereinabove for the final Fiscal Quarter
of the Fiscal Year of Borrowers then ended, then (a) such Applicable Margin
reduction shall be terminated and, effective on the first day of the month
following receipt by Agent of such audited financial statements, the Applicable
Margin shall be the Applicable Margin that would have been in effect if such
reduction had not been implemented based upon the unaudited financial statements
of Borrowers for the final Fiscal Quarter of the Fiscal Year of Borrowers then
ended, and (b) Borrowers shall pay to Agent, for the benefit of the Lenders, on
the first day of the month following receipt by Agent of such audited financial
statements, an amount equal to the difference between the amount of interest
that would have been paid on the principal amount of the Obligations using the
Applicable Margin determined based upon such audited financial statements and
the amount of interest actually paid during the period in which the reduction of
the Applicable Margin was in effect based upon the unaudited financial
statements for the final Fiscal Quarter of the Fiscal Year of Borrowers then
ended.
"Authority" shall have the meaning set forth in Section 4.19(d).
"Base Rate" shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"Blocked Account" shall have the meaning ascribed to it in Section 4.15(h)
hereof.
"Borrower" or "Borrowers" shall have the meaning set forth in the preamble
to this Agreement and shall extend to all permitted successors and assigns of
such Persons.
"Borrowers on a consolidated basis" shall mean the Borrowers' accounts or
other items as to which such term applies, consolidated in accordance with GAAP.
"Borrowers' Account" shall have the meaning set forth in Section 2.7.
"Borrowing Agent" shall mean Eltrax.
"Borrowing Base Certificate" shall mean a certificate from the President or
Chief Financial Officer of the Borrowing Agent to Agent by which such officer
shall certify to Agent the Formula Amount and calculation thereof as of the date
of the certificate, such certificate to be in form and substance satisfactory to
Agent.
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required by law to be
closed for business in East Brunswick, New Jersey
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and, if the applicable Business Day relates to any Eurodollar Rate Loans, such
day must also be a day on which dealings are carried on in the London Interbank
market.
"Business Interruption Insurance Assignment" shall mean the Collateral
Assignment of Rights Under Business Interruption Insurance Policy to be executed
by each Borrower on or about the Closing Date in favor of Agent, for its benefit
and for the ratable benefit of Lenders, as security for the payment of the
Obligations.
"Capital Expenditures" shall mean expenditures made or liabilities
incurred, including Capitalized Software Expenditures, 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.
"Capitalized Lease Obligation" shall mean any Indebtedness of a Borrower
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Software Expenditures" shall mean all costs of developing or
modifying computer software, or the acquisition costs of purchasing such
software; provided, however, it shall not include costs associated with computer
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software held by any Borrower as Inventory.
"Cash Collateral" shall mean the amount of cash maintained in the Cash
Collateral Account.
"Cash Collateral Account" shall mean a deposit account maintained at PNC
into which O'Reilly shall deposit Cash Collateral that is subject to the
O'Reilly Pledge Agreement.
"Cash Taxes" shall mean, for any period, the actual federal, state and
local taxes of a Person based on income or business activity payable in cash
during such period.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C.(S) 9601 et seq.
"Change of Control" shall mean (a) either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇ ▇.
▇▇▇▇▇▇▇ or ▇'▇▇▇▇▇▇ shall cease to have their current position with any Borrower
as of the Closing Date and a replacement officer satisfactory to Agent has not
been elected within sixty (60) days; (b) other than pursuant to a Permitted
Sale, Eltrax ceases to own all of the Equity Interests of Technology or
Squirrel; (c) other than pursuant to a Permitted Sale, Eltrax ceases to own all
of the Equity Interests of Senercomm, Customer Care, International or
Hospitality, (d) Technology ceases to own all of the Equity Interests of ASP;
(e) other than pursuant to a Permitted Sale, Squirrel ceases to own all of the
Equity Interests of Squirrel Canada; (f) other than pursuant to a Permitted
Sale, International ceases to own all of the Equity Interests of Group and the
Foreign Subsidiaries; or (g) any merger (other than of a Borrower with another
Borrower), consolidation or sale of substantially all of the property or assets
of any Borrower occurs, other than pursuant to a Permitted Sale or a Permitted
Spinoff.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, Liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
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any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon the
Collateral, any Borrower or any of its Affiliates.
"Closing Date" shall mean March 14, 2000, or such other date as may be
agreed to in writing by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean and include all of the following types or items of
property or interests in property of each Borrower:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Subsidiary Stock;
(g) all of each Borrower's right, title and interest in and to (i) its
respective goods and other property including all merchandise returned or
rejected by Customers, relating to or securing any of the Receivables; (ii) all
of each Borrower's rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienholders, including stoppage in transit, setoff,
detinue, replevin, reclamation and repurchase; (iii) all additional amounts due
to any Borrower from any Customer relating to the Receivables; (iv) other
property, including warranty claims, relating to any goods securing this
Agreement; (v) all of each Borrower's contract rights, rights of payment which
have been earned under a contract right, instruments, documents, chattel paper,
warehouse receipts, deposit accounts; (vi) if and when obtained by any Borrower,
all real and personal property of third parties in which such Borrower has been
granted a Lien or security interest as security for the payment or enforcement
of Receivables; and (vii) any other goods, personal property or real property
now owned or hereafter acquired in which any Borrower has expressly granted a
security interest or may in the future grant a security interest to Agent
hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;
(h) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f) or
(g) of this Paragraph; and
(i) all proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h)
in whatever form, including: cash, deposit accounts (whether or not comprised
solely of proceeds), certificates of deposit, insurance proceeds (including
hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.
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"Commitment Percentage" shall mean, on any date for any Lender, the
percentage set forth opposite such Lender's name on the signature pages hereof
or on the signature page of any Commitment Transfer Supplement by which it
became a Lender, as modified from time to time pursuant to the terms of this
Agreement or to give effect to any applicable Commitment Transfer Supplement
executed by such Lender and by which it shall transfer a portion of its
commitments hereunder to a Purchasing Lender.
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit B hereto, properly completed and otherwise in form and substance
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satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Compliance Certificate" shall mean a compliance certificate to be signed
by the chief financial officer of Borrowing Agent, which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrowers with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Section
6.5, 7.5, 7.6, 7.8 and 7.11 hereof.
"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Borrower's
business, including all consents required by Applicable Law.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
"Debt Payments" shall mean and include, for any period of determination all
cash actually expended by Borrowers to make (a) interest payments on any
Advances hereunder, plus (b) payments for all fees, commissions and charges set
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forth herein and with respect to any Advances, plus (c) all payments with
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respect to Capitalized Lease Obligations, plus (d) scheduled principal and
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interest payments with respect to any other Indebtedness for Money Borrowed.
"Default" shall mean an event which, with the giving of notice or passage
of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
"Defaulting Lender" shall have the meaning set forth in Section 2.15(a)
hereof.
"Depository Accounts" shall have the meaning set forth in Section 4.15(h)
hereof.
"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
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"Dollar" and the sign "$" shall mean lawful money of the United States of
America.
"Domestic Rate Loan" shall mean any Advance that bears interest based upon
the Alternate Base Rate.
"Early Termination Date" shall have the meaning set forth in Section 13.1
hereof.
"Earnings Before Interest and Taxes" shall mean for any period the sum of
(i) net income (or loss) of Borrowers on a consolidated basis for such period
(excluding extraordinary gains, plus (ii) all interest expense of Borrowers on a
consolidated basis for such period, plus (iii) all charges against income of
Borrowers on a consolidated basis for such period for federal, state and local
taxes actually paid.
"EBITDA" shall mean for any period, the sum, for Borrowers on a
consolidated basis, of (i) Earnings Before Interest and Taxes for such period,
plus (ii) depreciation expenses for such period, plus (iii) amortization
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expenses for such period.
"Eligible Receivables" shall mean and include with respect to each
Borrower, each Receivable of such Borrower arising in the ordinary course of
such Borrower's business and which Agent, in its sole credit judgment, shall
deem to be an Eligible Receivable, based on such considerations as Agent may
from time to time deem appropriate. A Receivable shall not be deemed eligible
unless such Receivable is subject to Agent's first priority perfected security
interest and no other Lien (other than Permitted Encumbrances), and is evidenced
by an invoice or other documentary evidence satisfactory to Agent. In addition,
no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate of any
Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than ninety (90) days after the original
invoice date;
(c) fifty percent (50%) or more of the Receivables from such Customer are
not deemed Eligible Receivables hereunder. Such percentage may, in Agent's sole
discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this Agreement
with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property or call a meeting of
its creditors, (ii) admit in writing its inability, or be generally unable, to
pay its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States of
America, unless the sale is on letter of credit, guaranty or acceptance terms,
in each case acceptable to Agent in its sole discretion;
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(g) the sale to the Customer is on a ▇▇▇▇-and-hold, guaranteed sale, sale-
and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped and
delivered to and accepted by the Customer or the services giving rise to such
Receivable have not been performed by the applicable Borrower and accepted by
the Customer or the Receivable otherwise does not represent a final sale;
(k) the Receivables of the Customer exceed a credit limit determined by
Agent, in its sole discretion, to the extent such Receivable exceeds such limit;
(l) the Receivable is subject to any offset, deduction, defense, dispute,
or counterclaim, the Customer is also a creditor or supplier of a Borrower or
the Receivable is contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with any Customer for
any deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto;
(n) any return, rejection or repossession of the merchandise has occurred;
(o) such Receivable is not payable to a Borrower; or
(p) such Receivable is not otherwise satisfactory to Agent as determined in
good faith by Agent in the exercise of its discretion in a reasonable manner.
"Environmental Complaint" shall have the meaning set forth in Section
4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local environmental,
land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of any Governmental Body with respect thereto.
"Equipment" shall mean and include, as to each Borrower, all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located, including all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts and accessories and
all replacements and substitutions therefor or accessions thereto.
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"Equity Interest" shall mean the interest of (i) a shareholder in a
corporation, (ii) a partner (whether general or limited) in a partnership
(whether general, limited or limited liability), (iii) a member in a limited
liability company, or (iv) any other Person having any other form of equity
security or ownership interest.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the interest rate per annum determined
by PNC by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest determined by PNC in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) to be the average of the London interbank offered rates
for Dollars quoted by the British Bankers' Association as set forth on Dow ▇▇▇▇▇
Market Service (formerly known as Telerate) (or appropriate successor or, if
British Bankers' Association or its successors ceases to provide such quotes, a
comparable replacement determined by PNC) display page 3750 (or such other
display page on the Dow ▇▇▇▇▇ Service System as may replace display page 3750)
two (2) Business Days prior to the first day of such Interest Period for an
amount comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate may also be expressed by the
following formula:
Eurodollar Rate = The Average of London Interbank offered rates quoted
--------------- by B.B.A. as shown on Dow ▇▇▇▇▇ Market Service
display page 3750 or appropriate successor
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1.00 minus the Reserve Percentage
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of the events set forth
in Section 10 hereof.
"Federal Funds Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three (3) Federal funds brokers of recognized
standing selected by PNC.
"Fiscal Quarter" shall mean one (1) of the four (4) fiscal quarters of
Borrowers and their Subsidiaries for accounting and tax purposes, which end on
March 31, June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" shall mean the fiscal year of Borrowers and their
Subsidiaries for accounting and tax purposes, which ends on December 31 of each
year and, when preceded by the designation of a calendar year (e.g., 1999 Fiscal
Year), means the Fiscal Year of Borrowers and their Subsidiaries ended on
December 31 of such designated calendar year.
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"Fixed Charge Coverage Ratio" shall mean for Borrowers on a consolidated
basis, with respect to any fiscal period, the ratio of (a) EBITDA minus the sum
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of (i) Unfunded Capital Expenditures, and (ii) Cash Taxes to (b) Debt Payments.
"Foreign Subsidiaries" shall mean each of the following corporations, all
of which are wholly-owned by International: (i) Eltrax Hospitality Technologies
PTE Ltd., a corporation organized under the laws of Singapore; (ii) Eltrax
Hospitality Scandinavia AS, a corporation organized under the laws of Norway;
(iii) Eltrax (Australia) Pty. Ltd., a corporation organized under the laws of
Australia; (iv) Eltrax Hospitality Ltd., a corporation organized under the laws
of Hong Kong; and (v) Eltrax Holdings, AG, a corporation organized under the
laws of Switzerland.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"Funded Debt" shall mean all Capitalized Lease Obligations and all other
Indebtedness that would, in accordance with GAAP, constitute long-term debt,
including any Indebtedness with a maturity of more than one (1) year after the
creation thereof and any Indebtedness that is renewable or extendable at the
option of a Borrower for a period of more than one (1) year from the date of
creation of such Indebtedness.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"General Intangibles" shall mean and include, as to each Borrower, all of
such Borrower's general intangibles, whether now owned or hereafter acquired,
including all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to such Borrower to secure payment of any of
the Receivables by a Customer, all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any state or other
political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Group" shall mean Eltrax Group, Inc., a Pennsylvania corporation and
wholly-owned Subsidiary of International.
"Guarantor" shall mean each of O'Reilly and each other Person who may at
any time guarantee payment or performance of the whole or any part of the
Obligations and "Guarantors" means collectively all such Persons.
"Guaranty" shall mean any guaranty of the obligations of Borrowers executed
by a Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders.
"Guaranty Security Documents" shall mean and include (i) a Security
Agreement duly executed by a Guarantor in favor of Agent, in form and content
acceptable to Agent, and by which such Guarantor shall grant a security interest
in favor of Agent, for its benefit and for the ratable benefit of Lenders, in
all of such
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Guarantor's properties as security for the Obligations and such Guarantor's
Guaranty, and (ii) all Lien Perfection Documents requested by Agent.
"Hazardous Discharge" shall have the meaning set forth in Section 4.19(d)
hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act (49 U.S.C. Sections 1801, et seq.), RCRA, or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Hospitality Division" shall mean the business operations of Hospitality,
International, Senercomm and Squirrel.
"Indebtedness" of a Person at a particular date shall mean all obligations
of such Person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, and all indebtedness secured by a Lien on assets
owned by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person. Any indebtedness of such Person
resulting from the acquisition by such Person of any assets subject to any Lien
shall be deemed, for the purposes hereof, to be the equivalent of the creation,
assumption and incurring of the indebtedness secured thereby, whether or not
actually so created, assumed or incurred.
"Individual Formula Amount" shall mean at the date of determination
thereof, with respect to each Borrower an amount equal to: (a) the Receivables
Advance Rate of Eligible Receivables of such Borrower, minus (b) the aggregate
-----
amount of Letters of Credit outstanding of such Borrower, minus (c) such
-----
reserves as Agent may reasonably deem proper and necessary from time to time.
"Ineligible Security" shall mean any security which may not be underwritten
or dealt in by members of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. (S) 24, Seventh).
"Intellectual Property" shall mean property constituting under any
Applicable Law a patent, patent application, copyright, trademark, service ▇▇▇▇,
tradename, mask work, trade secret or license or other right to use any of the
foregoing.
"Intellectual Property Claim" shall mean the assertion by any Person of a
claim (whether asserted in writing, by action, suit or proceeding or otherwise)
that a Borrower's ownership, use, marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property or other property or asset is
violative of any ownership of or right to use any Intellectual Property of such
Person.
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"Interest Period" shall mean the period provided for any Eurodollar Rate
Loan pursuant to Section 2.15(a).
"Interest Rate Agreement" shall mean any forward contracts, future
contracts, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate change agreement or other similar agreement
or arrangement designed to protect Borrower against fluctuations in interest
rates.
"Inventory" shall mean and include, as to each Borrower, all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Investment Property" shall mean and include as to each Borrower, all of
such Borrower's now owned or hereafter acquired securities (whether certificated
of uncertificated), securities entitlements, securities accounts, commodities
contracts and commodities accounts.
"Issuer" shall mean any Person who issues a Letter of Credit and/or accepts
a draft pursuant to the terms hereof.
"Joinder Agreement" shall mean an agreement in the form of Exhibit C
---------
annexed hereto by which a Person that is a wholly-owned Subsidiary of a Borrower
shall become a "Borrower" under, and shall be bound by all the terms of, this
Agreement, but only if and to the extent requested or permitted to do so by
Agent in the exercise of its sole and absolute discretion.
"Lender" and "Lenders" shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in Section 3.2.
"Letters of Credit" shall have the meaning set forth in Section 2.8.
"License Agreement" shall mean any agreement between one or more Borrowers
and a Licensor pursuant to which a Borrower is authorized to use any
Intellectual Property in connection with the manufacturing, marketing, sale or
other distribution of any Inventory of a Borrower.
"Licensor" shall mean any Person from whom any Borrower obtains the right
to use (whether on an exclusive or non-exclusive basis) any Intellectual
Property in connection with one or more Borrower's manufacture, marketing, sale
or other distribution of any Inventory.
"Licensor/Agent Agreement" shall mean an agreement between Agent and a
Licensor, in form and content satisfactory to Agent, by which Agent is given the
unqualified right, vis-a-vis such Licensor, to enforce Agent's Liens with
respect to and to dispose of Borrowers' Inventory with the benefit of any
Intellectual Property applicable thereto, irrespective of Borrowers' default
under any License Agreement with such Licensor.
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"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or preference, priority or other security agreement or preferential
arrangement held or asserted in respect of any asset of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement under the UCC
or comparable law of any jurisdiction.
"Lien Perfection Documents" shall mean all instruments, agreements, filings
and recordings necessary or, in Agent's reasonable determination, desirable to
perfect, maintain or continue the perfection of, or achieve or maintain the
first priority status of any Lien granted to Agent pursuant to any of the Loan
Documents by any Borrower or any Guarantor, including all UCC-1 financing
statements, pledges, assignments, hypothecations, registrations of pledge,
control agreements, notifications, bailment agreements, landlord or mortgagee
waivers, processor waivers, intercreditor agreements, subordination agreements,
chattel mortgage filings or similar instruments, agreements or documents.
"Lien Waiver Agreement" shall mean an agreement which is executed in favor
of Agent by a Person who owns or occupies premises at which any Collateral may
be located from time to time and by which such Person shall waive any Lien that
such Person may ever have with respect to any of the Collateral and shall
authorize Agent from time to time to enter upon the premises to inspect or
remove the Collateral from such premises.
"Loan Documents" shall mean this Agreement and all of the Other Documents.
"Material Adverse Effect" shall mean a material adverse effect upon (a) the
condition, operations, assets, business or prospects of the applicable
Borrowers', taken as a whole, (b) the Borrowers' and Guarantors', taken as a
whole, ability to pay the Obligations in accordance with the terms thereof, (c)
the value of the Collateral, or Agent's Liens on the Collateral or the priority
of any such Lien or (d) the practical realization of the benefits of Agent's and
each Lender's rights and remedies under this Agreement and the Other Documents.
"Material Contract" shall mean an agreement to which a Borrower or a
Guarantor is a party (other than the Loan Documents) (i) which is deemed a
material contract as provided in Regulation S-K promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, or (ii) for which
breach, termination, cancellation, nonperformance or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"Maximum Facility Amount" shall have the meaning set forth in Section 13.1
hereof.
"Maximum Revolving Advance Amount" shall mean $20,000,000.
"Minor Location" shall mean any physical location of a Borrower (in the
United States of America or Canada) with respect to which Agent's Lien on any
Collateral at such location is not perfected or such Borrower has not delivered
all Lien Perfection Documents requested by Agent in writing.
"Monthly Advances" shall have the meaning set forth in Section 3.1 hereof.
-13-
"Money Borrowed" shall mean, as applied to any Person, (i) Indebtedness
arising from the lending of money by any other Person to such Person; (ii)
Indebtedness, whether or not in any such case arising from the lending of money
by another Person to such Person, (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)
Indebtedness that constitutes a Capitalized Lease Obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters of
credit; and (v) Indebtedness of such Person under any guaranty of obligations
that would constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by such Person.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Amount" shall mean, with reference to Eligible Receivables, the face
amount of such Eligible Receivables on any date, less any and all returns,
----
rebates, discounts (which may, at Agent's option, be calculated on shortest
terms), credits, allowances or Charges (including sales, excise or other taxes)
at any time issued, owing, claimed by Customers, granted, outstanding or payable
in connection with, or any interest accrued on the amount of, such Eligible
Receivables at such date.
"Net Cash Flow" shall mean for any Person, with respect to any fiscal
period, the remainder of such Person's (a) EBITDA minus (b) Unfunded Capital
-----
Expenditures minus (c) all interest expense of such Person minus (d) scheduled
----- -----
principal payments made in respect of Indebtedness for Money Borrowed other than
the Advances hereunder.
"Notes" shall mean the Revolving Credit Notes.
"O'Reilly" shall mean ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, an individual resident of the
State of Michigan.
"O'Reilly Guaranty" shall mean that certain Limited Guaranty dated the
Closing Date pursuant to which O'Reilly has guaranteed the payment and
performance by Borrowers of the Obligations.
"O'Reilly Pledge Agreement" shall mean that certain Pledge Agreement dated
the Closing Date pursuant to which O'Reilly shall have granted to Agent a Lien
upon the Cash Collateral Account as security for the payment and performance by
Borrowers of the Obligations and ▇'▇▇▇▇▇▇'▇ obligations under the O'Reilly
Guaranty.
"Obligations" shall mean and include the following, in each case, whether
now in existence or hereafter arising and howsoever the same may be evidenced,
(i) the principal of, and interest and premium, if any, on the Advances; (ii)
all Indebtedness and other obligations of any Borrower to any Lender under any
Interest Rate Agreement, currency or equity swap, future, option, or other
similar agreement or arrangement; (iii) all other Indebtedness, covenants and
duties now or at any time or times hereafter owing by any or all of Borrowers to
Agent or any Lender arising under or pursuant to this Agreement or any of the
other Loan Documents, whether evidenced by any note or other writing, whether
arising from any extension of credit, opening of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several, including all interest, charges, expenses, fees or other sums
chargeable to any or all Borrowers or Guarantors hereunder or under any of the
-14-
other Loan Documents; and (iv) in the case of PNC and its Affiliates, any
indebtedness, liabilities, obligations, covenants and duties arising in
connection with any banking or related transactions, services or functions
provided to any Borrower or Guarantor in connection with any conduct of such
Borrower's or Guarantor's business (excluding extensions of credit giving rise
to any Indebtedness for Money Borrowed not related to this Agreement or any
other Loan Documents).
"Ordinary Course of Business" shall mean the ordinary course of a
Borrower's business as conducted on the Closing Date.
"Organization Documents" shall mean, with respect to any Person, its
charter, certificate or articles of incorporation, bylaws, articles of
organization, operating agreement, members' agreement, partnership agreement,
voting trust or similar agreement or instrument governing the formation or
operation of such Person.
"Other Documents" shall mean the Notes, the Lien Perfection Documents, each
Interest Rate Agreement, each Joinder Agreement, the Guaranties, the Trademark
Security Agreements, the Patent Security Agreement, the Pledge Agreements, each
Lien Waiver Agreement, the O'Reilly Pledge Agreement, each Licensor/Agent
Agreement and any and all other agreements, instruments and documents, including
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or
delivered to Agent or any Lender in respect of the transactions contemplated by
this Agreement.
"Out-of-Formula Condition" shall have the meaning set forth in Section
2.1(c) hereof.
"Out-of-Formula Loan" shall mean a Revolving Advance made when an Out-of-
Formula Condition exists or the amount of any Revolving Advance which, when
funded, results in an Out-of-Formula Condition.
"Parent" of any Person shall mean a corporation or other entity owning,
directly or indirectly at least 50% of the shares of stock or other Equity
Interests having ordinary voting power to elect a majority of the directors of
the Person, or other individuals performing similar functions for any such
Person.
"Participant" shall have the meaning set forth in Section 16.3(b).
"Patent Security Agreement" shall mean the Patent Security Agreement to be
executed by Senercomm in favor of Agent on or before the Closing Date and by
which Senercomm shall collaterally assign and ▇▇▇▇▇ ▇ ▇▇▇▇ to Agent, for its
benefit and for the ratable benefit of Lenders, as security for the Obligations,
in all of Senercomm's right, title and interest in and to all of its patents.
"Payment Office" shall mean initially ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
benefit of Agent and Lenders; (b) Liens for Charges not delinquent or being
Properly Contested, but only if the Lien shall have no effect on the priority of
the Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay
-15-
of enforcement of any such Lien shall be in effect; (c) Liens disclosed in the
financial statements referred to in Section 5.5, the existence of which Agent
has consented to in writing; (d) deposits or pledges to secure obligations under
worker's compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the Ordinary
Course of Business; (f) judgment Liens that have been stayed or bonded and
mechanics', workers', materialmen's or other like Liens arising in the Ordinary
Course of Business with respect to obligations which are not due or which are
being Properly Contested; (g) Liens securing Permitted Purchase Money
Indebtedness; and (h) Liens disclosed on Schedule 1.2.
------------
"Permitted Purchase Money Indebtedness" shall mean Purchase Money
Indebtedness of Borrowers which is incurred after the date of this Agreement and
which is secured by no Lien or only by a Purchase Money Lien, provided the
aggregate amount of Purchase Money Indebtedness outstanding at any time may not
exceed $5,000,000. For the purposes of this definition, the principal amount of
any Purchase Money Indebtedness consisting of capitalized leases shall be
computed as a Capitalized Lease Obligation.
"Permitted Sale" shall mean and include a sale or other disposition by the
Borrowers of all or part of the Hospitality Division in which the Borrowers
receive at least $20,000,000 in cash proceeds and all of the cash from such sale
is concurrently remitted to Agent for application to the Obligations in
accordance with this Agreement, so long as (i) at least fifteen (15) Business
Days prior written notice of the sale is given to Agent; and (ii) no Default or
Event of Default exists at the time, or would result from the consummation, of
such sale.
"Permitted Spinoff" shall mean a transaction in which a Borrower creates a
Subsidiary that is, and all times remains, a wholly-owned Subsidiary of such
Borrower and to which such Borrower transfers all or a part of its assets,
provided that no Default or Event of Default exists at the time of, or after
giving effect to, such transaction; such Borrower provides Agent with not less
than fifteen (15) Business Days prior written notice of its intent to effect
such a transaction (in which written notice such Borrower shall summarize all of
the pertinent terms of the proposed transaction); and concurrently with the
consummation of such transaction such Subsidiary shall, at Agent's option,
either (x) execute and deliver to Agent a Joinder Agreement by which such
Subsidiary shall become a Borrower hereunder and bound by all of the terms
hereof and each of the Other Documents or (y) execute and deliver to Agent, for
its benefit and for the ratable benefit of Lenders, a Guaranty and Guaranty
Security Documents.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA, maintained for employees of Borrowers or any member of the
Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Pledge Agreements" shall mean the Stock Pledge Agreements dated the
Closing Date executed by each of Eltrax, Technology and International in favor
of Agent pursuant to which such companies have pledged to Agent, for the benefit
of itself and Lenders, all of the issued and outstanding Subsidiary Stock.
-16-
"Properly Contested" shall mean in the case of any Indebtedness of a
Borrower or any Guarantor (including any Charges) that is not paid as and when
due or payable by reason of a Borrower's or any Guarantor's bona fide dispute
concerning its liability to pay same or concerning the amount thereof, (i) such
Indebtedness is being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted; (ii) Borrowers or
Guarantor has established appropriate reserves as shall be required in
conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a
Material Adverse Effect and will not result in a forfeiture of any assets of a
Borrower or Guarantor; (iv) no Lien is imposed upon any of a Borrower's or any
Guarantor's assets with respect to such Indebtedness unless such Lien is at all
times junior and subordinate in priority to the Liens in favor of Agent (except
only with respect to property taxes that have priority as a matter of applicable
state law) and enforcement of such Lien is stayed during the period prior to the
final resolution or disposition of such dispute; (v) if the Indebtedness results
from, or is determined by the entry, rendition or issuance against a Borrower or
any Guarantor or any of its assets, of a judgment, writ, order or decree,
execution on such judgment, writ, order or decree is stayed pending a timely
appeal or other judicial review; and (vi) if such contest is abandoned, settled
or determined adversely (in whole or in part) to a Borrower or Guarantor, such
Borrower or Guarantor forthwith pays such Indebtedness and all penalties,
interest and other amounts due in connection therewith.
"Purchase Money Indebtedness" shall mean and include (i) Indebtedness
(other than the Obligations) of Borrowers for the payment of all or any part of
the purchase price of any Equipment, (ii) any Indebtedness (other than the
Obligations) of Borrowers incurred at the time of or within ten (10) days prior
to or after the acquisition of any Equipment for the purpose of financing all or
any part of the purchase price thereof (whether by means of a loan agreement,
capitalized lease or otherwise), and (iii) any renewals, extensions or
refinancings (but not any increases in the principal amounts) thereof
outstanding at the time.
"Purchase Money Lien" shall mean a Lien upon Equipment which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets acquired through the incurrence of the
Purchase Money Indebtedness secured by such Lien and such Lien constitutes a
purchase money security interest under the UCC.
"Purchasing Lender" shall have the meaning set forth in Section 16.3
hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C. (S)
6901 et seq.
"Real Property" shall mean all of each Borrower's right, title and interest
in and to any real property, whether owned or leased by such Borrower.
"Receivables" shall mean and include, as to each Borrower, all of such
Borrower's accounts, contract rights, instruments (including those evidencing
Indebtedness owed to a Borrower by any of its Affiliates), documents, chattel
paper, general intangibles relating to accounts, drafts and acceptances, and all
other forms of obligations owing to such Borrower arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i) hereof.
"Release" shall have the meaning set forth in Section 5.7(c)(i) hereof.
-17-
"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least sixty-six and two-
thirds percent (66 2/3%) of the Advances and, if no Advances are outstanding,
shall mean Lenders holding sixty-six and two-thirds percent (66 2/3%) of the
Commitment Percentages; provided, however, that if any Lender shall be a
-------- -------
Defaulting Lender, then, for so long as such breach continues, the term
"Required Lenders" shall mean Lenders (excluding each Defaulting Lender) holding
at least sixty-six and two-thirds percent (66 2/3%) of the Advances (excluding
Advances held by each Defaulting Lender), and, if no Advances are outstanding,
at least sixty-six and two-thirds percent (66 2/3%) of the Commitment
Percentages (excluding the Commitment Percentages held by a Defaulting Lender).
"Reserve Percentage" shall mean the maximum effective percentage in effect
on any day as prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding.
"Revolving Advances" shall mean Advances made other than Letters of Credit
under this Agreement to or for the benefit of any Borrower.
"Revolving Credit Notes" shall mean, collectively, promissory notes
referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an interest rate per annum equal to
(a) the sum of the Alternate Base Rate plus the Applicable Margin percent with
----
respect to Domestic Rate Loans, and (b) the sum of the Eurodollar Rate plus the
----
Applicable Margin with respect to Eurodollar Rate Loans.
"Section 20 Subsidiary" shall mean the Subsidiary of the bank holding
company controlling PNC, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday of
each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"Solvent" shall mean, with respect 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), (ii) is able to pay
all of its Indebtedness as such Indebtedness matures, (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage, and (iv) is not "insolvent" within
the meaning of Section 101(32) of the Bankruptcy Code.
"Squirrel Canada" shall mean Squirrel Systems of Canada, Ltd., a federal
Canadian corporation and wholly-owned Subsidiary of Squirrel.
"Subsidiary" shall mean a corporation or other entity of whose shares of
stock or other Equity Interests having ordinary voting power (other than stock
or other Equity Interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation, or other
Persons performing similar functions for such entity, are owned, directly or
indirectly, by such Person.
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"Subsidiary Stock" shall mean (i) all of the Equity Interests owned by
Eltrax of Technology, Squirrel, Senercomm, Customer Care, International and
Hospitality, (ii) all of the Equity Interests owned by Technology of ASP and
(iii) all of the Equity Interests owned by International of Group.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Termination Event" shall mean (i) a Reportable Event with respect to any
Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any member of
the Controlled Group from a Plan or Multiemployer Plan during a plan year in
which such entity was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the providing of notice of intent to terminate a Plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the institution
by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any
event or condition (a) which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
any Borrower or any member of the Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the Real
Property or the Leasehold Interests which has been shown to have significant
adverse effect on human health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. (S) 2601 et seq., applicable state law,
or any other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances. "Toxic Substance" includes asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Trademark Security Agreements" shall mean the Trademark Security
Agreements to be executed by each of Senercomm, Eltrax, Technology and ASP in
favor of Agent on or before the Closing Date and by which such companies shall
collaterally assign and ▇▇▇▇▇ ▇ ▇▇▇▇ to Agent, for its benefit and for the
ratable benefit of Lenders, as security for the Obligations, upon all of their
respective right, title and interest in and to all of their trademarks.
"UCC" shall mean the Uniform Commercial Code (or any successor statute) as
adopted and in force in the State of Georgia or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or any
successor statute) of such state.
"Undrawn Availability" shall mean, at any date, an amount equal to (a) the
lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount,
minus (b) the sum of (i) the outstanding amount of Advances plus (ii) all
----- ----
amounts due and owing to Borrowers' trade creditors which are outstanding beyond
normal trade terms , plus (iii) fees and expenses for which Borrowers are liable
----
but which have not been paid or charged to Borrowers' Account.
"Unfunded Capital Expenditures" shall mean, for any period, the Capital
Expenditures, including Capitalized Software Expenditures, of a Person not
financed by a means other than an Advance hereunder.
"Upstream Payment" shall mean a payment or distribution of cash or other
property by a Subsidiary of a Borrower to such Borrower, whether in repayment of
Indebtedness owed by such Subsidiary to such Borrower, to pay dividends on
account of such Borrower's ownership of Equity Interests or otherwise.
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"Value" shall mean, with reference to the value of Inventory, value
determined on the basis of the lower of cost or market of such Inventory, with
the cost thereof calculated on a first-in, first-out basis, determined in
accordance with GAAP.
"Week" shall mean the time period commencing with the opening of business
on a Wednesday and ending on the end of business the following Tuesday.
1.3 UCC Terms. All terms used herein and defined in the UCC as adopted in
---------
the State of Georgia shall have the meaning given therein unless otherwise
defined herein.
1.4 Certain Matters of Construction. The terms "herein," "hereof," and
-------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references herein to the
time of day shall mean the time in New York, New York. Unless otherwise
provided, all references to any instruments or agreements to which Agent is a
party, including references to any of the Other Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof. Whenever the words "including" or "include" shall be used, such words
shall be understood to mean "including, without limitation" or "include, without
limitation." A Default or Event of Default shall be deemed to exist at all
times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or Event of Default is waived
in writing pursuant to this Agreement or, in the case of a Default, is cured
with any period of cure expressly provided for in this Agreement; and an Event
of Default shall "continue" or be "continuing" until such Event of Default has
been waived in writing by Agent. Any Lien referred to in this Agreement or any
of the Other Documents as having been created in favor of Agent, any agreement
entered into by Agent pursuant to this Agreement or any of the Other Documents,
any payment made by or to or funds received by Agent pursuant to or as
contemplated by this Agreement or any of the Other Documents, or any act taken
or admitted to be taken by Agent, shall, unless otherwise expressly provided, be
created, entered into, made or received, or taken or omitted, for the benefit or
account of Agent and Lenders.
SECTION 2. ADVANCES, PAYMENTS
------------------
2.1 Revolving Advances.
------------------
(a) Subject to the terms and conditions set forth in this Agreement,
each Lender, severally and not jointly, will make Revolving Advances to
Borrowers from time to time during the Term in aggregate amounts outstanding at
any time no to exceed such Lender's Commitment Percentage of the lesser of (x)
the Maximum Revolving Advance Amount less the aggregate amount of outstanding
Letters of Credit or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b) hereof
("Advance Rate"), of the Net Amount of Eligible Receivables, plus
----
(ii) the lesser of (a) 95% of the amount of Cash Collateral in the
Cash Collateral Account or (b) $2,660,000, minus
-----
-20-
(iii) the aggregate amount of Letters of Credit outstanding, minus
-----
(iv) such reserves as Agent may reasonably deem proper and necessary
from time to time after giving Borrowing Agent five (5) Business Days prior
written notice of the imposition of such reserves.
The amount derived from the sum of Sections 2.1(a)(y)(i) and (ii) minus
-----
Sections 2.1 (a)(y)(iii) and (iv) at any time and from time to time shall be
referred to as the "Formula Amount." The Revolving Advances shall be evidenced
by secured promissory notes ("Revolving Credit Notes") in favor of each Lender
in substantially in the form attached hereto as Exhibit A. Borrowers and
---------
Lenders agree that, if any event occurs or any condition exists that Agent
determines is likely to have a Material Adverse Effect, or if a Default or Event
of Default exists, Agent shall have the right (exercisable at such time or times
as Agent deems appropriate) to require that separate calculations of the
Individual Formula Amount be made for each Borrower, as well as the right to
limit the use of proceeds of Advances by each Borrower to an amount that does
not exceed such Borrower's Individual Formula Amount.
(b) Discretionary Rights. The Advance Rate may be increased or
--------------------
decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion. Each Borrower consents to any such increases or
decreases and acknowledges that decreasing the Advance Rate or increasing the
reserves may limit or restrict Advances requested by Borrowing Agent. Agent
shall give Borrowing Agent five (5) Business Days prior written notice of its
intention to decrease the Advance Rates.
(c) Out-of-Formula Loans. If the unpaid balance of Revolving Advances
--------------------
outstanding at any time should exceed the Formula Amount at such time (an "Out-
of-Formula Condition"), such Revolving Advances shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits of the Loan Documents. If Agent or Lenders are willing in their sole
and absolute discretion to make Out-of-Formula Loans, such Out-of-Formula Loans
shall be payable on demand and shall bear interest at the Default Rate; provided
--------
that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall
be deemed thereby to have changed the limits of Section 2.1(a) or be obligated
to honor requests for Revolving Advances when an Out-of-Formula Condition exists
or would result therefrom.
(d) Procedure for Revolving Advances Borrowing. Except as otherwise
------------------------------------------
provided in Section 2.15 below, Borrowing Agent on behalf of any Borrower may
notify Agent prior to 11:00 a.m. on a Business Day of a Borrower's request to
incur, on that day, a Revolving Advance hereunder. Should any amount required
to be paid as principal or interest hereunder, or under any of the other Loan
Documents, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.
2.2 Disbursement of Advance Proceeds. All Advances shall be disbursed
--------------------------------
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.1(d) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the Borrowers on the
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day so requested by way of credit to such operating account at PNC, or such
other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or,
with respect to Revolving Advances deemed to have been requested by any
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.
2.3 Maximum Advances. The aggregate balance of Revolving Advances
----------------
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.4 Repayment of Obligations.
------------------------
(a) The Advances and other Obligations shall be due and payable in
full on the last day of the Term subject to earlier prepayment as herein
provided.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day that Agent receives such payments via
wire transfer or electronic depository check. Agent is not, however, required
to credit Borrowers' Account for the amount of any item of payment that is
unsatisfactory to Agent and Agent may charge Borrowers' Account for the amount
of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 1:00 p.m. on the due date therefor in Dollars in
federal funds or other funds immediately available to Agent. Agent and Lenders
shall have the right to effectuate payment on any and all Obligations due and
owing hereunder by charging Borrowers' Account or by making Advances as provided
in Section 2.1 and Section 2.15 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including any deduction for any setoff or counterclaim.
2.5 Repayment of Excess Advances. The aggregate balance of Advances
----------------------------
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.6 Statement of Account. Agent shall maintain, in accordance with its
--------------------
customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
--------
however, the failure by Agent to record the date and amount of any Advance shall
-------
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrowers during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific exceptions thereto within thirty (30)
days after such
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statement is received by Borrowing Agent. The records of Agent with respect to
the Borrowers' Account shall be conclusive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.7 Letters of Credit. Subject to the terms and conditions hereof, Agent
-----------------
shall issue or cause the issuance of standby and documentary letters of credit
("Letters of Credit") on behalf of any Borrower; provided, however, that Agent
-------- -------
will not be required to issue or cause to be issued any Letters of Credit to the
extent that the face amount of such Letters of Credit then cause the sum of (i)
the outstanding Revolving Advances plus (ii) outstanding Letters of Credit to
----
exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount. The maximum amount of Letters of Credit outstanding shall not exceed
$3,000,000 in the aggregate. All disbursements or payments related to Letters
of Credit shall be deemed to be Revolving Advances and shall bear interest at
the Revolving Interest Rate for Domestic Rate Loans. Letters of Credit that have
not been drawn upon shall not bear interest.
2.8 Issuance of Letters of Credit.
-----------------------------
(a) Borrowing Agent, on behalf of Borrowers, may request Agent to
issue or cause the issuance of a Letter of Credit by delivering to Agent at the
Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent; and, such other
certificates, documents and other papers and information as Agent may reasonably
request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable
letter of credit and security agreement, any applicable letter of credit
reimbursement agreement and/or any other applicable agreement, any letter of
credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for
the payment of sight drafts or acceptances of usance drafts when presented for
honor thereunder in accordance with the terms thereof and when accompanied by
the documents described therein and (ii) have an expiry date not later than one
(1) year after such Letter of Credit's date of issuance and in no event later
than sixty (60) days prior to the last day of the Term. Each Letter of Credit
shall be subject to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof adhered to by the Issuer and, to the extent not
inconsistent therewith, the laws of the State of New Jersey.
(c) Agent shall use its reasonable efforts to notify Lenders of the
request by Borrowing Agent for a Letter of Credit hereunder.
(d) Agent shall have absolute discretion whether to accept any draft.
Without in any way limiting Agent's absolute discretion whether to accept any
draft, Borrowing Agent will not present for acceptance any draft, and Agent will
generally not accept any drafts (i) that arise out of transactions involving the
sale of goods by any Borrower not in the ordinary course of its business, (ii)
that involve a sale to an Affiliate of any Borrower, (iii) that involve any
purchase for which Agent has not received all related documents, instruments and
forms requested by Agent, (iv) for which Agent is unable to locate a purchaser
in the ordinary course of business on standard terms, or (v) that is not
eligible for discounting with Federal Reserve Banks pursuant to paragraph 7 of
Section 13 of the Federal Reserve Act.
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2.9 Requirements For Issuance of Letters of Credit.
----------------------------------------------
(a) In connection with the issuance of any Letter of Credit, Borrowers
shall indemnify, save and hold Agent, each Lender and each Issuer harmless from
any loss, cost, expense or liability, including payments made by Agent, any
Lender or any Issuer and expenses and reasonable attorneys' fees incurred by
Agent, any Lender or Issuer arising out of, or in connection with, any Letter of
Credit to be issued or created for any Borrower. Borrowers shall be bound by
Agent's or any Issuer's regulations and good faith interpretations of any Letter
of Credit issued or created for Borrowers' Account, although this interpretation
may be different from its own; and, neither Agent, nor any Lender, nor any
Issuer nor any of their correspondents shall be liable for any error,
negligence, or mistakes, whether of omission or commission, in following
Borrowing Agent's or any Borrower's instructions or those contained in any
Letter of Credit or of any modifications, amendments or supplements thereto or
in issuing or paying any Letter of Credit, except for Agent's, any Lender's, any
Issuer's or such correspondents' willful misconduct or gross negligence.
(b) Borrowing Agent shall authorize and direct any Issuer to name the
applicable Borrower as the "Applicant" or "Account Party" of each Letter of
Credit. If Agent is not the Issuer of any Letter of Credit, Borrower shall
authorize and direct the Issuer to deliver to Agent all instruments, documents,
and other writings and property received by the Issuer pursuant to the Letter of
Credit and to accept and rely upon Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of Credit, the
application therefor or any acceptance therefor.
(c) In connection with all Letters of Credit issued or caused to be
issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in the
name of such Borrower for such purpose; and (iv) to complete in such Borrower's
name or Agent's, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.
(d) Each Lender shall to the extent of the percentage amount equal to
the product of such Lender's Commitment Percentage times the aggregate amount of
all unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of (i) the Maximum Revolving Advance
Amount or (ii) the Formula Amount, and such disbursement is not reimbursed by
Borrowers within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's
proportionate share of such unreimbursed disbursement together with such
Lender's proportionate share of Agent's unreimbursed costs and expenses relating
to such unreimbursed disbursement. Upon receipt by Agent of a repayment from
any Borrower of any amount disbursed by Agent for which Agent had already been
reimbursed by Lenders, Agent shall deliver to each Lender that Lender's pro rata
share of such repayment. Each Lender's participation commitment shall continue
until the last to occur of any of the following events: (A) Agent ceases to be
obligated to issue or cause to be issued Letters of Credit hereunder; (B) no
Letter of
-24-
Credit issued hereunder remains outstanding and uncanceled; or (C) all Persons
(other than the applicable Borrower) have been fully reimbursed for all payments
made under or relating to Letters of Credit.
(e) Upon or after the occurrence of a Default or an Event of Default,
Borrowers will cause cash to be deposited and maintained in an account with
Agent, as cash collateral, in an amount equal to one hundred and five percent
(105%) of the outstanding Letters of Credit, and each Borrower hereby
irrevocably authorizes Agent, in its discretion, on such Borrower's behalf and
in such Borrower's name, to open such an account and to make and maintain
deposits therein, or in an account opened by such Borrower, in the amounts
required to be made by such Borrower, out of the proceeds of Receivables or
other Collateral or out of any other funds of such Borrower coming into any
Lender's possession at any time. Agent will invest such cash collateral (less
applicable reserves) in such short-term money-market items as to which Agent and
such Borrower mutually agree and the net return on such investments shall be
credited to such account and constitute additional cash collateral. No Borrower
may withdraw amounts credited to any such account except upon payment and
performance in full of all Obligations and termination of this Agreement.
2.10 Additional Payments. Any sums expended by Agent or any Lender due to
-------------------
any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document, including any Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers'
Account as a Revolving Advance of a Domestic Rate Loan and added to the
Obligations.
2.11 Manner of Borrowing and Payment.
-------------------------------
(a) Each borrowing of Revolving Advances shall be advanced according
to the Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by Borrowers on account
of the principal of and interest on the Revolving Advances, shall be applied to
the Revolving Advances pro rata according to the applicable Commitment
Percentages of Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by any Borrower on account of principal,
interest and fees shall be made without set off or counterclaim and shall be
made to Agent on behalf of the Lenders to the Payment Office, in each case on or
prior to 1:00 p.m., in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.11(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 p.m. on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make certain
payments as follows: (i) if the aggregate amount of new Revolving Advances made
by Agent during the preceding Week (if any) exceeds the aggregate amount of
repayments applied to outstanding Revolving Advances during such preceding Week,
then each Lender shall provide Agent with funds in an amount equal to its
applicable Commitment Percentage of the difference between (w) such Revolving
Advances and (x) such repayments and (ii) if the aggregate amount of repayments
applied to outstanding Revolving Advances during such Week exceeds the aggregate
amount of new Revolving Advances made during such Week, then Agent shall provide
each Lender with funds in an amount equal to such Lender's applicable Commitment
Percentage of the difference between (y) such repayments and (z) such Revolving
Advances.
-25-
(ii) Each Lender shall be entitled to earn interest at the
applicable Revolving Interest Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall submit
to each Lender a certificate with respect to payments received and Advances made
during the Week immediately preceding such Settlement Date. Such certificate of
Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender's Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefitted Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
--------
however, that if all or any portion of such excess payment or benefits is
-------
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including rights of set-
off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption, make available to Borrowers a corresponding amount. Agent
will promptly notify Borrowers of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive, in the absence of manifest error. If such amount is
not in fact made available to Agent by such Lender within three (3) Business
Days after such Settlement Date, Agent shall be entitled to recover such an
amount, with interest thereon at the rate per annum then applicable to such
Revolving Advances hereunder, on demand from Borrowers; provided, however, that
-------- -------
Agent's right to such recovery shall not prejudice or otherwise adversely affect
Borrowers' rights (if any) against such Lender.
2.12 Mandatory Prepayments. Subject to Section 4.3 hereof, when any
---------------------
Borrower sells or otherwise disposes of any Collateral other than Inventory in
the Ordinary Course of Business, Borrowers shall repay the Advances in an amount
equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable
costs of such sales or other dispositions), such repayments to be made promptly
but in no event more than one (1) Business Day following receipt of such net
proceeds, and until the date of payment, such proceeds shall be held in trust
for Agent. The foregoing shall not be deemed to be implied consent to any such
sale otherwise prohibited by the terms and conditions hereof. Such repayments
shall be applied first, to the Obligations in such
-26-
order as Agent may determine, subject to Borrowers' ability to reborrow
Revolving Advances in accordance with the terms hereof.
2.13 Use of Proceeds. Borrowers shall apply the proceeds of Advances to
---------------
(i) repay existing indebtedness owed to Citizens Bank, (ii) pay fees and
expenses relating to this transaction, (iii) provide for Borrowers' working
capital needs, and (iv) to reimburse Issuer for Letters of Credit.
2.14 Defaulting Lender.
-----------------
(a) Notwithstanding anything to the contrary contained herein, in the
event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or Borrowing Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.15 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the "Non-
Defaulting Lenders") which are not Defaulting Lenders based on their respective
Commitment Percentages, and no Commitment Percentage of any Lender or any pro
rata share of any Advances required to be advanced by any Lender shall be
increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to
Agent or to approve, disapprove, consent to or vote on any matters relating to
this Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders," a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.15, the rights
and obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.15 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
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2.15 Provisions Applicable to Eurodollar Rate Loans.
----------------------------------------------
(a) Notwithstanding the provisions of Section 2.1 above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall
give Agent at least three (3) Business Days prior written notice, specifying (i)
the date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be in a minimum amount of $1,000,000 and integral multiples
of $100,000 in excess thereof, and (iii) the duration of the first Interest
Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one,
two or three months; provided, if an Interest Period would end on a day that is
not a Business Day, it shall end on the next succeeding Business Day unless such
day falls in the next succeeding calendar month in which case the Interest
Period shall end on the next preceding Business Day. No Eurodollar Rate Loan
shall be made available to Borrower during the continuance of a Default or an
Event of Default.
(b) Each Interest Period of a Eurodollar Rate Loan shall commence on
the date such Eurodollar Rate Loan is made and shall end on such date as
Borrowing Agent may elect as set forth in (a)(iii) above provided that the exact
length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.15(a) or by its notice of conversion given to Agent pursuant to
Section 2.15(c), as the case may be. Borrowing Agent shall elect the duration
of each succeeding Interest Period by giving irrevocable written notice to Agent
of such duration not less than three (3) Business Days prior to the last day of
the then current Interest Period applicable to such Eurodollar Rate Loan. If
Agent does not receive timely notice of the Interest Period elected by Borrowing
Agent, Borrowers shall be deemed to have elected to convert to a Domestic Rate
Loan subject to Section 2.15(c) herein below.
(c) Provided that no Event of Default shall have occurred and be
continuing, Borrowing Agent may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any
Business Day with respect to Domestic Rate Loans, convert any such loan into a
loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent not
less than three (3) Business Days' prior written notice to convert from a
Domestic Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's prior
written notice to convert from a Eurodollar Rate Loan to a Domestic Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to any other type of loan, the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than three (3) Eurodollar Rate
Loans, in the aggregate.
(d) Borrowers shall jointly and severally indemnify Agent and Lenders
and hold Agent and Lenders harmless from and against any and all losses or
expenses that Agent and Lenders may sustain or incur as a consequence of any
prepayment, conversion of or any default by Borrowers in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by Borrowers to
complete a borrowing of, a prepayment of or conversion of or to a Eurodollar
Rate Loan after notice thereof has been given, including any interest payable by
Agent or Lenders to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder. A certificate prepared in good faith as to
any additional amounts payable
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pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing
Agent shall be conclusive absent manifest error.
(e) Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this subsection (g), the term "Lender" shall include any Lender and the office
or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar
Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder
shall forthwith be canceled and Borrowers shall, if any affected Eurodollar Rate
Loans are then outstanding, promptly upon request from Agent, either pay all
such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate
Loans into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon
Agent's request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
any interest or other amounts payable by Lenders to lenders of funds obtained by
Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate
prepared in good faith as to any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.
SECTION 3. INTEREST AND FEES.
------------------
3.1 Interest. Interest on Advances shall accrue and be payable monthly, in
--------
arrears on the last day of each month with respect to Domestic Rate Loans and,
with respect to Eurodollar Rate Loans, at the end of each Interest Period or,
for Eurodollar Rate Loans with an Interest Period in excess of three (3) months,
at the earlier of (a) each three (3) months on the anniversary date of the
commencement of such Eurodollar Rate Loan or (b) the end of the Interest Period.
Interest charges shall be computed on the actual principal amount of Advances
outstanding during the month (the "Monthly Advances") at a rate per annum equal
to, with respect to Revolving Advances, the applicable Revolving Interest Rate.
Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is
increased or decreased, the Revolving Interest Rate for Domestic Rate Loans
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect. The Eurodollar Rate shall be adjusted
with respect to Eurodollar Rate Loans without notice or demand of any kind on
the effective date of any change in the Reserve Percentage as of such effective
date. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, (i) the Obligations other than Eurodollar Rate Loans shall
bear interest at the Revolving Interest Rate for Domestic Loans plus two percent
----
(2%) per annum and (ii) Eurodollar Rate Loans shall bear interest at the
Revolving Interest Rate for Eurodollar Rate Loans plus two percent (2.0%) per
----
annum (as applicable, the "Default Rate").
3.2 Letter of Credit Fees. Borrowers shall pay (x) to Agent, for the
---------------------
benefit of Lenders, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by two percent (2.0%) per annum, such fees to be
calculated on the basis of a 360-day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of each month and on the
last day of the Term and (y) to the Issuer, any and all fees and expenses as
agreed upon by the Issuer and the Borrowing Agent in connection with any Letter
of Credit, including in connection with the opening, amendment or renewal of any
such Letter of Credit and any acceptances created thereunder and shall reimburse
Agent for any and all fees and expenses, if any, paid by Agent to the Issuer
(all of the foregoing fees, the "Letter of Credit
-29-
Fees"). All such charges shall be deemed earned in full on the date when the
same are due and payable hereunder and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. Any such charge
in effect at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in the Issuer's prevailing
charges for that type of transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
3.3 Closing and Facility Fees.
-------------------------
(a) Upon the execution of this Agreement, Borrowers shall pay to
Agent, for the ratable benefit of those Lenders who are parties to this
Agreement on the Closing Date, a closing fee of $50,000.
(b) If, for any month during the Term, the average daily unpaid
balance of the Advances for each day of such month does not equal the Maximum
Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable
benefit of Lenders a fee at a rate equal to one-quarter of one percent (0.25%)
per annum on the amount by which the Maximum Revolving Advance Amount exceeds
such average daily unpaid balance. Such fee shall be payable to Agent on the
last day of each month.
3.4 Collateral Evaluation and Monitoring Fee.
----------------------------------------
(a) Borrowers shall pay Agent a collateral evaluation fee equal to
$1,000 per month, commencing on the first day of the month following the Closing
Date and on the first day of each month thereafter during the Term. The
collateral evaluation fee shall be deemed earned in full on the date when same
is due and payable hereunder and shall not be subject to rebate or proration
upon termination of this Agreement for any reason.
(b) Borrowers shall pay to Agent on the first day of each month
following any month in which Agent performs any collateral monitoring - namely
any field examination, collateral analysis or other business analysis, the need
for which is to be determined by Agent and which monitoring is undertaken by
Agent or for Agent's benefit - a collateral monitoring fee in an amount equal to
$750 per day for each person (other than Agent's management personnel) employed
to perform such monitoring and in an amount equal to $750 per day for each
manager of Agent performing such monitoring, plus all costs and disbursements
----
incurred by Agent in the performance of such examination or analysis.
3.5 Computation of Interest and Fees. Interest and fees hereunder shall
--------------------------------
be computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the Revolving
Interest Rate for Domestic Rate Loans during such extension.
3.6 Maximum Charges. In no event whatsoever shall interest and other
---------------
charges charged hereunder exceed the highest rate permissible under Applicable
Law. In the event interest and other charges as computed hereunder would
otherwise exceed the highest rate permitted under Applicable Law, such excess
amount shall be first applied to any unpaid principal balance owed by Borrowers,
and if the then remaining excess amount is greater than the previously unpaid
principal balance, Lenders shall promptly refund such excess amount to Borrowers
and the provisions hereof shall be deemed amended to provide for such
permissible rate.
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3.7 Increased Costs. In the event that any Applicable Law, treaty or
---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Other Document or change the basis of taxation
of payments to Agent or any Lender of principal, fees, interest or any other
amount payable hereunder or under any Other Documents (except for changes in the
rate of tax on the overall net income of Agent or any Lender by the jurisdiction
in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank Eurodollar
market any other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify in good faith the amount of
such additional cost or reduced amount to Borrowers, and such certification
shall be conclusive absent manifest error.
3.8 Basis For Determining Interest Rate Inadequate or Unfair. In the
--------------------------------------------------------
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to Section 2.15 hereof for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to
the date of such proposed borrowing, that its request for such borrowing shall
be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any
Domestic Rate Loan or Eurodollar Rate Loan that was to have been
-31-
converted to an affected type of Eurodollar Rate Loan shall be continued as or
converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent,
no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion,
shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans shall be converted into a Domestic
Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m.
two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan, shall be
converted into an unaffected type of Eurodollar Rate Loan, on the last Business
Day of the then current Interest Period for such affected Eurodollar Rate Loans.
Until such notice has been withdrawn, Lenders shall have no obligation to make
an affected type of Eurodollar Rate Loan or maintain outstanding affected
Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic
Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of
Eurodollar Rate Loan.
3.9 Capital Adequacy.
----------------
(a) In the event that Agent or any Lender shall have determined that
any Applicable Law, rule, regulation or guideline regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term "Lender" shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender) and
the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent's or any Lender's capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrowers shall pay upon demand to Agent or such Lender such
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such Lender may use
any reasonable averaging or attribution methods. The protection of this Section
3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to any Applicable Law
or condition.
(b) A certificate prepared in good faith of Agent or such Lender
setting forth such amount or amounts as shall be necessary to compensate Agent
or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing
Agent shall be conclusive absent manifest error.
SECTION 4. COLLATERAL: GENERAL TERMS
--------------------------
4.1 Security Interest in the Collateral. To secure the prompt payment and
-----------------------------------
performance to Agent and each Lender of the Obligations, each Borrower hereby
assigns, pledges and grants to Agent, for its benefit and the ratable benefit of
Lenders, a continuing security interest in and to all of the Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Each Borrower shall ▇▇▇▇ its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest.
4.2 Perfection of Security Interest. Each Borrower shall take all action
-------------------------------
that may be necessary or desirable, or that Agent may reasonably request, so as
at all times to maintain the validity, perfection,
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enforceability and priority of Agent's security interest in the Collateral and
to enable Agent to protect, exercise or enforce its rights hereunder and in the
Collateral, including (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' Lien Waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering, or causing to be executed or
delivered, Lien Perfection Documents requested by Agent, in each case in form
and substance satisfactory to Agent, relating to the creation, validity,
perfection, maintenance or continuation of Agent's security interest under the
UCC or other Applicable Law. Agent is hereby authorized to file financing
statements signed by Agent instead of Borrower in accordance with Section 9-
402(2) of the UCC. All charges, expenses and fees Agent may incur in doing any
of the foregoing, and any local taxes relating thereto, shall be charged to
Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and added to
the Obligations, or, at Agent's option, shall be paid to Agent for the ratable
benefit of Lenders immediately upon demand.
4.3 Disposition of Collateral. Each Borrower will safeguard and protect
-------------------------
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except (a) the sale of Inventory in the
Ordinary Course of Business, (b) Permitted Spinoffs and Permitted Sales, and (c)
the disposition or transfer of obsolete and worn-out Equipment in the Ordinary
Course of Business during any Fiscal Year having an aggregate fair market value
of not more than $200,000 and only to the extent that (i) the proceeds of any
such disposition are used to acquire replacement Equipment which is subject to
Agent's first priority security interest or (ii) the proceeds of which are
remitted to Agent for application to the Obligations in accordance with this
Agreement.
4.4 Preservation of Collateral. Following the occurrence of a Default or
--------------------------
an Event of Default, in addition to the rights and remedies set forth in Section
11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary
to protect Agent's interest in and to preserve the Collateral, including the
hiring of such security guards or the placing of other security protection
measures as Agent may deem appropriate; (b) may employ and maintain at any of
any Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect Agent's interests in the Collateral; (c) may lease
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Borrower's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any Borrower's owned
or leased property. Each Borrower shall cooperate fully with all of Agent's
efforts to preserve the Collateral and will take such actions to preserve the
Collateral as Agent may direct. All of Agent's expenses of preserving the
Collateral, including any expenses relating to the bonding of a custodian, shall
be charged to Borrowers' Account as a Revolving Advance of a Domestic Rate Loan
and added to the Obligations.
4.5 Ownership of Collateral. With respect to the Collateral, at the time
-----------------------
the Collateral becomes subject to Agent's security interest: (a) each Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority security interest in each and every item of
its respective Collateral to Agent; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by each Borrower or delivered to Agent or
any Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of each Borrower that appear on
such documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (d) each Borrower's Equipment and Inventory
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shall be located as set forth on Schedule 4.5 or at any Minor Location and
------------
shall not be removed from such locations without the prior written consent of
Agent except with respect to the sale of Inventory in the Ordinary Course of
Business and Equipment to the extent permitted in Section 4.3 hereof. In no
event shall (i) the aggregate Value of Collateral at any single Minor Location
exceed $50,000 on any date and (ii) the aggregate Value of all Collateral at all
Minor Locations exceed $500,000 on any date.
4.6 Defense of Agent's and Lenders' Interests. Until (a) payment and
-----------------------------------------
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent's prior written
consent, pledge, sell (except to the extent permitted in Section 4.3 hereof),
assign, transfer, create or suffer to exist a Lien upon or encumber or allow or
suffer to be encumbered in any way except for Permitted Encumbrances, any part
of the Collateral. Each Borrower shall defend Agent's interests in the
Collateral against any and all Persons whatsoever. At any time following demand
by Agent for payment of all Obligations, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including labels, stationery, documents, instruments
and advertising materials. If Agent exercises this right to take possession of
the Collateral, Borrowers shall, upon demand, assemble it in the best manner
possible and make it available to Agent at a place reasonably convenient to
Agent. In addition, with respect to all Collateral, Agent and Lenders shall be
entitled to all of the rights and remedies set forth herein and further provided
by the UCC or other Applicable Law. Each Borrower shall, and Agent may, at its
option, instruct all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into any Borrower's possession, they, and
each of them, shall be held by such Borrower in trust as Agent's trustee, and
such Borrower will immediately deliver them to Agent in their original form
together with any necessary endorsement.
4.7 Books and Records. Each Borrower shall (a) keep proper books of
-----------------
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all Charges and claims; and (c) on a
reasonably current basis set up on its books, from its earnings, allowances
against doubtful Receivables, advances and investments and all other proper
accruals (including by reason of enumeration, accruals for premiums, if any, due
on required payments and accruals for depreciation, obsolescence, or
amortization of properties), which should be set aside from such earnings in
connection with its business. All determinations pursuant to this subsection
shall be made in accordance with, or as required by, GAAP consistently applied
in the opinion of such independent public accountant as shall then be regularly
engaged by Borrowers.
4.8 Financial Disclosure. Each Borrower hereby irrevocably authorizes and
--------------------
directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements, trial balances or other accounting records
of any sort in the accountant's or auditor's possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Borrower, whether
made by such Borrower or otherwise; however, Agent and each Lender will attempt
to obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or such
authorities.
4.9 Compliance with Laws. Each Borrower shall comply with all Applicable
--------------------
Law with respect to its respective Collateral or any part thereof or to the
operation of such Borrower's business the
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non-compliance with which could reasonably be expected to have a Material
Adverse Effect on such Borrower. Each Borrower may, however, contest or dispute
any acts, rules, regulations, orders and directions of those bodies or officials
in any reasonable manner, provided that such contest or dispute is pursued
diligently, in good faith and by appropriate proceedings, any related Lien has
not attached to any Collateral or been stayed and sufficient reserves are
established to the reasonable satisfaction of Agent to protect Agent's Lien on
or security interest in the Collateral. The Collateral and other assets of
Borrowers at all times shall be maintained in accordance with the requirements
of all insurance carriers which provide insurance with respect to the Collateral
and such other assets of Borrowers so that such insurance shall remain in full
force and effect.
4.10 Inspection of Premises. At all reasonable times Agent and each
----------------------
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower's books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of each
Borrower's business. Agent, any Lender and their agents may enter upon any of
Borrower's premises at any time during business hours and at any other
reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of such
Borrower's business.
4.11 Insurance. Each Borrower shall bear the full risk of any loss of any
---------
nature whatsoever with respect to the Collateral. At each Borrower's own cost
and expense in amounts and with carriers acceptable to Agent, each Borrower
shall (a) keep all its properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to such Borrower's
including business interruption insurance; (b) maintain a bond in such amounts
as is customary in the case of companies engaged in businesses similar to such
Borrower insuring against larceny, embezzlement or other criminal
misappropriation of insured's officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of such
Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of
all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (c) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein are hereby directed by Agent and the
applicable Borrower to make payment for such loss to Agent and not to such
Borrower and Agent jointly. If any insurance losses are paid by check, draft or
other instrument payable to any Borrower and Agent jointly, Agent may endorse
such Borrower's name thereon and do such other things as Agent may deem
advisable to reduce the same to cash. When any Event of Default exists, Agent
is hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above. All loss recoveries received by Agent
upon any such insurance may be applied to the Obligations, in such order as
Agent in its sole discretion shall determine. Any surplus shall be paid by
Agent to Borrowers or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrowers to Agent, on demand.
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4.12 Failure to Pay Insurance. If any Borrower fails to obtain insurance
------------------------
as hereinabove provided, or to keep the same in force, Agent, if Agent so
elects, may obtain such insurance and pay the premium therefor on behalf of
Borrower, and charge Borrowers' Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13 Payment of Taxes. Each Borrower will pay, when due, all Charges
----------------
lawfully levied or assessed upon such Borrower or any of the Collateral
including real and personal property taxes, assessments and charges and all
franchise, income, employment, social security benefits, withholding, and sales
taxes. If any tax by any governmental authority is or may be imposed on or as a
result of any transaction between any Borrower and Agent or any Lender which
Agent or any Lender may be required to withhold or pay or if any Charges remain
unpaid after the date fixed for their payment, or if any claim shall be made
which, in Agent's or any Lender's opinion, may possibly create a valid Lien on
the Collateral, Agent may without notice to Borrowers pay the Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. The amount of any payment by Agent under this Section 4.13 shall be
charged to Borrowers' Account as a Revolving Advance and added to the
Obligations and, until Borrowers shall furnish Agent with an indemnity therefor
(or supply Agent with evidence satisfactory to Agent that due provision for the
payment thereof has been made), Agent may hold without interest any balance
standing to Borrowers' credit and Agent shall retain its security interest in
any and all Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Each Borrower shall at all times
--------------------------------
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so.
4.15 Receivables.
-----------
(a) Nature of Receivables. Each of the Receivables shall be a bona
---------------------
fide and valid account representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of each
---------------------
Borrower's knowledge, as of the date each Receivable is created, is and will be
Solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
Solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.
(c) Locations of Borrowers. Each Borrower's chief executive office is
----------------------
located at the addresses set forth on Schedule 4.15(c) hereto. Until written
----------------
notice is given to Agent by Borrowing Agent of any other office at which any
Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office; provided, however, Squirrel may maintain such
-------- -------
records at the offices of Squirrel Canada in Vancouver, British Columbia,
Canada.
-36-
(d) Collection of Receivables. Until any Borrower's authority to do
-------------------------
so is terminated by Agent (which notice Agent may give at any time following the
occurrence of a Default or an Event of Default), each Borrower will, at such
Borrower's sole cost and expense, but on Agent's and Lenders' behalf and for
Agent's and Lenders' account, collect as Agent's property and in trust for Agent
all amounts received on Receivables, and shall not commingle such collections
with any Borrower's funds in which Agent does not have a lien or use the same
except to pay Obligations. Each Borrower shall, upon request, deliver to Agent,
or deposit in the Blocked Account, in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e) Notification of Assignment of Receivables. At any time that a
-----------------------------------------
Default or an Event of Default exists, Agent shall have the right to send notice
of the assignment of, and Agent's security interest in, the Receivables to any
and all Customers or any third party holding or otherwise concerned with any of
the Collateral and the sole right to collect the Receivables, take possession of
the Collateral, or both. Agent's actual collection expenses, including
stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrowers' Account and added to the Obligations. Agent may, at
any time or times, send verification of Receivables to any Customer.
(f) Power of Agent to Act on Borrowers' Behalf. Agent shall have the
------------------------------------------
right to receive, endorse, assign and/or deliver in the name of Agent or any
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as such Borrower's
attorney with power (i) to endorse such Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign such Borrower's name on any invoice or ▇▇▇▇ of lading
relating to any of the Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) to send verifications of Receivables to any
Customer; (iv) to sign such Borrower's name on all financing statements or any
other documents or instruments deemed necessary or appropriate by Agent to
preserve, protect, or perfect Agent's interest in the Collateral and to file
same; (v) to demand payment of the Receivables at any time following the
occurrence of an Event of Default; (vi) to enforce payment of the Receivables by
legal proceedings or otherwise at any time following the occurrence of an Event
of Default; (vii) to exercise all of Borrowers' rights and remedies with respect
to the collection of the Receivables and any other Collateral at any time
following the occurrence of an Event of Default; (viii) to settle, adjust,
compromise, extend or renew the Receivables; (ix) to settle, adjust or
compromise any legal proceedings brought to collect Receivables at any time
following the occurrence of an Event of Default; (x) to prepare, file and sign
such Borrower's name on a proof of claim in bankruptcy or similar document
against any Customer; (xi) to prepare, file and sign such Borrower's name on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Receivables; and (xii) to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee
are hereby ratified and approved, and said attorney or designee shall not be
liable for any acts of omission or commission nor for any error of judgment or
mistake of fact or of law, unless done maliciously or with gross (not mere)
negligence; this power being coupled with an interest is irrevocable while any
of the Obligations remain unpaid. Agent shall have the right, at any time
following the occurrence of an Event of Default or Default, to change the
address for delivery of mail addressed to any Borrower to such address as Agent
may designate and to receive, open and dispose of all mail addressed to any
Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement,
-37-
collection or payment of any of the Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom other than on account of
Agent's or such Lender's gross negligence or willful misconduct. Following the
occurrence of a Default or an Event of Default Agent may, without notice or
consent from any Borrower, ▇▇▇ upon or otherwise collect, extend the time of
payment of, compromise or settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or insurance applicable thereto
and/or release any obligor thereof. Agent is authorized and empowered to accept
following the occurrence of an Event of Default or Default] the return of the
goods represented by any of the Receivables, without notice to or consent by any
Borrower, all without discharging or in any way affecting any Borrower's
liability hereunder.
(h) Establishment of Cash Management System. All proceeds of
---------------------------------------
Collateral shall, at the direction of Agent, be deposited by Borrowers into a
lockbox account, dominion account or other "blocked account" ("Blocked Account")
as Agent may require pursuant to an arrangement with such bank or banks as may
be selected by Borrowers and be acceptable to Agent. Borrowers shall issue to
any such bank, an irrevocable letter of instruction directing said bank to
transfer such funds so deposited to Agent, either to any account maintained by
Agent at said bank or by wire transfer to appropriate account(s) of Agent. All
funds deposited in such Blocked Account shall immediately become the property of
Agent and Borrowers shall obtain the agreement by such bank to waive any offset
rights against the funds so deposited. Neither Agent nor any Lender assumes any
responsibility for such Blocked Account, including any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and Borrowers shall deposit all proceeds of Collateral or cause same to be
deposited, in kind, in such Depository Accounts of Agent.
(i) Adjustments. No Borrower will, without Agent's consent,
-----------
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
Ordinary Course of Business.
4.16 Inventory. To the extent Inventory held for sale or lease has been
---------
produced by any Borrower, it has been and will be produced by such Borrower in
accordance with the Federal Fair Labor Standards Act of 1938 and all rules,
regulations and orders thereunder. Borrowers shall promptly notify Agent in
writing if any Borrower enters into any License Agreement other than as set
forth on Schedule 4.16.
-------------
4.17 Maintenance of Equipment. The Equipment shall be maintained in good
------------------------
operating condition and repair (reasonable wear and tear excepted) 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. No
Borrower shall use or operate the Equipment in violation of any Applicable Law.
Each Borrower shall have the right to sell Equipment to the extent set forth in
Section 4.3 hereof.
4.18 Exculpation of Liability. Nothing herein contained shall be
------------------------
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Borrower's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Borrower of any of
the terms and conditions thereof.
-38-
4.19 Environmental Matters.
---------------------
(a) Borrowers shall ensure that the Real Property remains in
compliance with all Environmental Laws and they shall not place or permit to be
placed any Hazardous Substances on any Real Property except to the extent
permitted by Applicable Law.
(b) Borrowers shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
(c) Borrowers shall (i) employ in connection with the use of the Real
Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrowers shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrowers in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives notice of any
Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Borrower is aware giving rise to
the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Real Property
and the Collateral and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
(e) Borrowers shall promptly forward to Agent copies of any request
for information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Borrower
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrowers shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that any Borrower is required to file under any Environmental Laws.
Such information is to be provided solely to allow Agent to protect Agent's
security interest in the Real Property and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Borrower shall fail to comply with
any of the requirements
-39-
of any Environmental Laws, Agent on behalf of Lenders may, but without the
obligation to do so, for the sole purpose of protecting Agent's interest in
Collateral: (A) give such notices or (B) enter onto the Real Property (or
authorize third parties to enter onto the Real Property) and take such actions
as Agent (or such third parties as directed by Agent) deems reasonably necessary
or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by Agent and Lenders (or such third parties) in the exercise
of any such rights, including any sums paid in connection with any judicial or
administrative investigation or proceedings, fines and penalties, together with
interest thereon from the date expended at the Default Rate for Domestic Rate
Loans constituting Revolving Advances shall be paid upon demand by Borrowers,
and until paid shall be added to and become a part of the Obligations secured by
the Liens created by the terms of this Agreement or any other agreement between
Agent, any Lender and any Borrower.
(g) Promptly after any Borrower's discovery of a Hazardous Discharge
or upon the written request of Agent from time to time, Borrowers shall provide
Agent, at Borrowers' expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $100,000, Agent shall have the right to require Borrowers
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.
(h) Borrowers shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney's fees, suffered or incurred by
Agent or Lenders under or on account of any Environmental Laws, including the
assertion of any Lien thereunder, with respect to any Hazardous Discharge, the
presence of any Hazardous Substances affecting the Real Property, whether or not
the same originates or emerges from the Real Property or any contiguous real
estate, including any loss of value of the Real Property as a result of the
foregoing except to the extent such loss, liability, damage and expense is
attributable to any Hazardous Discharge resulting from actions on the part of
Agent or any Lender. Borrowers' obligations under this Section 4.19 shall arise
upon the discovery of the presence of any Hazardous Substances at the Real
Property, whether or not any federal, state, or local environmental agency has
taken or threatened any action in connection with the presence of any Hazardous
Substances. Borrowers' obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of each Borrower's right, title and
interest in and to its owned and leased premises.
4.20 Financing Statements. Except as respects the financing statements
--------------------
filed by Agent and the financing statements described on Schedule 1.2, no
------------
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
-------------------------------
Each Borrower represents and warrants as follows:
-40-
5.1 Authority. Each Borrower has full power, authority and legal right to
---------
enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. This Agreement and the Other
Documents constitute the legal, valid and binding obligation of each Borrower
enforceable in accordance with their terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights in general. The execution, delivery and performance
of this Agreement and of the Other Documents (a) are within such Borrower's
corporate powers, have been duly authorized, are not in contravention of any
Applicable Law or the terms of such Borrower's Organization Documents relating
to such Borrower's formation or to the conduct of such Borrower's business or of
any material agreement or undertaking to which such Borrower is a party or by
which such Borrower is bound, and (b) will not conflict with nor result in any
breach in any of the provisions of or constitute a default under or result in
the creation of any Lien except Permitted Encumbrances upon any asset of such
Borrower under the provisions of any agreement, Organization Documents or other
instrument to which such Borrower is a party or by which it or its property may
be bound.
5.2 Formation and Qualification.
---------------------------
(a) Each Borrower is duly organized and in good standing under the
laws of the state listed on Schedule 5.2(a) and is qualified to do business and
---------------
is in good standing in the states listed on Schedule 5.2(a) which constitute all
---------------
states in which qualification and good standing are necessary for such Borrower
to conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect. Each Borrower
has delivered to Agent true and complete copies of its Organization Documents
and will promptly notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on Schedule
--------
5.2(b).
------
5.3 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties of such Borrower contained in this Agreement and the Other Documents
shall be true at the time of such Borrower's execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
5.4 Tax Returns. Each Borrower's federal tax identification number is set
-----------
forth on Schedule 5.4. Each Borrower has filed all federal, state and local tax
------------
returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable, except as set forth on Schedule 5.4. Federal, state and local income
------------
tax returns of each Borrower have been examined and reported upon by the
appropriate taxing authority or closed by applicable statute and satisfied for
all Fiscal Years prior to and including the Fiscal Year ending March 31, 1996.
The provision for taxes on the books of each Borrower are adequate for all years
not closed by applicable statutes, and for its current Fiscal Year, and no
Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.
5.5 Financial Statements. The consolidated and consolidating balance
--------------------
sheets of the Borrowers, their Subsidiaries and such other Persons described
therein as of December 31, 1999, and the related statements of income, changes
in stockholder's equity, and changes in cash flow for the period ended on such
date, all accompanied by reports thereon containing opinions without
qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP,
consistently applied (except for changes in application in which such
accountants concur and present fairly the financial position of the Borrowers
and their Subsidiaries at such date and the results of their operations for
-41-
such period. Since December 31, 1999 there has been no change in the condition,
financial or otherwise, of Borrowers or their Subsidiaries as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, equipment and Real Property owned by Borrowers and their
Subsidiaries, except changes in the Ordinary Course of Business, none of which
individually or in the aggregate has been materially adverse.
5.6 Corporate Name. Except as set forth on Schedule 5.6, no Borrower has
-------------- ------------
been known by any other corporate name in the past five (5) years or sells
Inventory under any other name, nor has any Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.
5.7 O.S.H.A. and Environmental Compliance.
-------------------------------------
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders of non-
compliance issued to any Borrower or relating to its business, assets, property,
leaseholds or Equipment under any such laws, rules or regulations.
(b) Each Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.
(c) (i) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any real property owned or leased by any
Borrower; (ii) there are no underground storage tanks or polychlorinated
biphenyls on any real property owned or leased by any Borrower; (iii) no real
property owned or leased by any Borrower has ever been used as a treatment,
storage or disposal facility of Hazardous Waste; and (iv) no Hazardous
Substances are present on the Real Property or any premises leased by Borrower,
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business of
any Borrower or of its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
-----------------------------------------------------------
(a) Each Borrower is and will at all time remain Solvent.
(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any
---------------
pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect on such Borrower,
and (ii) any liabilities or Indebtedness for Money Borrowed other than the
Obligations.
(c) No Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(c) hereto.
---------------
Except as set forth in Schedule 5.8(c), (i) no Plan has incurred any
---------------
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and each Borrower and each
member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code
-42-
and the trust related thereto is exempt from federal income tax under Section
501(a) of the Code, (iii) no Borrower nor any member of the Controlled Group has
incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due which are unpaid, (iv) no
Plan has been terminated by the plan administrator thereof nor by the PBGC, and
there is no occurrence which would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan, (v) at this time, the current value of
the assets of each Plan exceeds the present value of the accrued benefits and
other liabilities of such Plan and no Borrower nor any member of the Controlled
Group knows of any facts or circumstances which would materially change the
value of such assets and accrued benefits and other liabilities, (vi) no
Borrower nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) no Borrower nor any member of a Controlled Group has incurred
any liability for any excise tax arising under Section 4972 or 4980B of the
Code, and no fact exists which could give rise to any such liability, (viii) no
Borrower nor any member of the Controlled Group nor any fiduciary of, nor any
trustee to, any Plan, has engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which
would constitute or result in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) each Borrower and each member of the Controlled
Group has made all contributions due and payable with respect to each Plan, (x)
there exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period contained in 29 CFR 2615.3 has not been waived,
(xi) no Borrower nor any member of the Controlled Group has any fiduciary
responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of any Borrower and any
member of the Controlled Group, and (xii) no Borrower nor any member of the
Controlled Group has withdrawn, completely or partially, from any Multiemployer
Plan so as to incur liability under the Multiemployer Pension Plan Amendments
Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All registered patents,
--------------------------------------------
patent applications, trademarks, trademark applications, service marks, service
▇▇▇▇ applications, copyrights, copyright applications, design rights,
tradenames, assumed names, trade secrets and licenses owned or utilized by any
Borrower are set forth on Schedule 5.9, are valid and have been duly registered
------------
or filed with all appropriate governmental authorities and constitute all of the
intellectual property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of any
such patent, trademark, copyright, design right, tradename, trade secret or
license and no Borrower is aware of any grounds for any challenge, except as set
forth in Schedule 5.9 hereto. Each Borrower possesses all intellectual property
------------
rights necessary for the operation of its business. Each patent, patent
application, patent license, trademark, trademark application, trademark
license, service ▇▇▇▇, service ▇▇▇▇ application, service ▇▇▇▇ license,
copyright, design right, copyright application and copyright license owned or
held by any Borrower and all trade secrets used by any Borrower consist of
original material or property developed by such Borrower or was lawfully
acquired by such Borrower from the proper and lawful owner thereof. Each of
such items that is used in the Ordinary Course of Business of a Borrower has
been maintained so as to preserve the value thereof from the date of creation or
acquisition thereof. With respect to all software used by any Borrower, such
Borrower owns such software and is not the licensee of any such software that is
material to such Borrower's business operations pursuant to any license
agreement except as set forth on Schedule 5.9 hereto. With respect to all
------------
computer hardware used by any Borrower, such Borrower is the owner of all such
computer equipment free and clear of any Lien (other than a Lien in favor of
Agent) that is material to such Borrower's business operations except as
provided on Schedule 5.9 hereto.
------------
5.10 Licenses and Permits. Except as set forth in Schedule 5.10, each
-------------------- -------------
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any Applicable Law or
regulation for the operation of its business in each jurisdiction wherein it is
now
-43-
conducting or proposes to conduct business and where the failure to procure such
licenses or permits could have a Material Adverse Effect on such Borrower.
5.11 Default of Indebtedness. No Borrower is in default in the payment of
-----------------------
the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. No Borrower is in default in the payment or performance
----------
of any of its contractual obligations and no Default has occurred.
5.13 No Burdensome Restrictions. No Borrower is party to any contract or
--------------------------
agreement the performance of which could have a Material Adverse Effect on such
Borrower. No Borrower has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
5.14 No Labor Disputes. No Borrower is involved in any labor dispute;
-----------------
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
-------------
5.15 Margin Regulations. No Borrower is engaged, nor will it engage,
------------------
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
5.16 Investment Company Act. No Borrower is an "investment company"
----------------------
registered or required to be registered under the Investment Company Act of
1940, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by any Borrower in
----------
this Agreement, in any other Loan Document or in any financial statement,
report, certificate or any other document furnished in connection herewith
contains any untrue statement of fact or omits to state any fact necessary to
make the statements herein or therein not misleading. There is no fact known to
Borrowers or which reasonably should be known to Borrowers which Borrowers have
not disclosed to Agent in writing with respect to the transactions contemplated
by this Agreement which could reasonably be expected to have a Material Adverse
Effect on the Borrowers.
5.18 Swaps. No Borrower is a party to, nor will it be a party to, any
-----
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
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5.19 Conflicting Agreements. No provision of any mortgage, indenture,
----------------------
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.20 Application of Certain Laws and Regulations. No Borrower nor any
-------------------------------------------
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including statutes or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility services.
5.21 Business and Property of Borrowers. Upon and after the Closing Date,
----------------------------------
Borrowers do not propose to engage in any business other than the offering of
technology services and related activities to multiple industries and activities
necessary to conduct the foregoing. On the Closing Date, each Borrower will own
all the property and possess all of the rights and Consents necessary for the
conduct of the business of such Borrower.
5.22 Year 2000. Borrowers and their respective Subsidiaries have reviewed
---------
the areas within their business and operations which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the risk that certain computer applications used by Borrowers or their
respective Subsidiaries (or any of their respective material suppliers,
customers or vendors) may be unable to recognize and perform properly date-
sensitive functions involving dates prior to and after December 31, 1999 (the
"Year 2000 Problem"). The Year 2000 Problem will not have a Material Adverse
Effect on Borrowers.
5.23 Section 20 Subsidiaries. Borrowers do not intend to use and shall
-----------------------
not use any portions of the proceeds of the Advances, directly or indirectly, to
purchase during the underwriting period, or for thirty (30) days thereafter,
Ineligible Securities being underwritten by a Section 20 Subsidiary.
5.24 Compliance with Laws. No Borrower is in violation of any Applicable
--------------------
Law in any respect which could reasonably be expected to have a Material Adverse
Effect on Borrower, nor is Borrower in violation of any order of any
Governmental Body or arbitration board or other tribunal.
SECTION 6. AFFIRMATIVE COVENANTS.
----------------------
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1 Payment of Fees. Pay to Agent on demand all usual and customary fees
---------------
and expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Account or
Depository Accounts as provided for in Section 4.15(h). Agent may, without
making demand, charge Borrowers' Account for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
-----------------------------------------------------------
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including all licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all actions necessary to
enforce and protect the validity of any Intellectual Property right or other
right included in the Collateral; (b) keep in
-45-
full force and effect its existence and comply in all material respects with all
Applicable Laws governing the conduct of its business where the failure to do so
could reasonably be expected to have a Material Adverse Effect; and (c) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
rights, licenses, leases, powers and franchises under the laws of the United
States or any political subdivision thereof.
6.3 Violations. Promptly notify Agent in writing of any violation of any
----------
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to any Borrower which could reasonably be expected to have a
Material Adverse Effect.
6.4 Government Receivables. Take all steps necessary to protect Agent's
----------------------
interest in the Collateral under the Federal Assignment of Claims Act or other
Applicable Law and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between any
Borrower and the United States, any state or any department, agency or
instrumentality of any of them.
6.5 Net Cash Flow. Cause to maintained at the end of each period shown
-------------
below, at least the corresponding amount of Net Cash Flow for the Borrowers on a
consolidated basis:
Period Minimum Net Cash Flow
------ ---------------------
Fiscal Quarter ending -$3,260,000
March 31, 2000
Two Fiscal Quarters ending -$4,841,000
June 30, 2000
Three Fiscal Quarters ending -$5,711,000
September 30, 2000
Four Fiscal Quarters ending -$5,600,000
December 31, 2000
Four Fiscal Quarters ending -$2,800,000
March 31, 2001
Four Fiscal Quarters ending -$1,000,000
June 30, 2001
Four Fiscal Quarters ending $ 0
September 30, 2001
Four Fiscal Quarters ending $ 250,000
December 31, 2001
Four Fiscal Quarters ending $ 500,000
March 31, 2002
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Four Fiscal Quarters ending $ 750,000
June 30, 2002 and on the last
day of each Fiscal Quarter
thereafter
6.6 Execution of Supplemental Instruments. Execute and deliver to Agent
-------------------------------------
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may reasonably request, in order
that the full intent of this Agreement may be carried into effect.
6.7 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
-----------------------
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and Indebtedness of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested and diligently in good faith by
appropriate proceedings and each Borrower shall have provided for such reserves
as Agent may reasonably deem proper and necessary, subject at all times to any
applicable subordination arrangement in favor of Lenders.
6.8 Standards of Financial Statements. Cause all financial statements
---------------------------------
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
6.9 License Agreements. Keep each License Agreement to which it is a
------------------
party in full force and effect for so long as any Borrower has any Inventory,
the manufacture, sale or distribution of which is in any manner governed by or
subject to such License Agreement.
6.10 Undrawn Availability. After the Closing Date, Borrowers shall have
--------------------
Undrawn Availability at all times of at least $1,000,000.
6.11 Covenant Adjustments. Upon the consummation of either a Permitted
--------------------
Sale or the sale of additional Equity Interests of Eltrax that result in at
least $10,000,000 of net cash proceeds to the Borrowers, Borrowers shall deliver
new financial projections to Agent within 14 days of such sale and the parties
hereto shall agree upon revisions to the definition of "Applicable Margin" and
to Section 6.5 to become effective 21 days after the delivery of the projections
to Agent.
SECTION 7. NEGATIVE COVENANTS.
-------------------
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
-----------------------------------------------------
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(a) Enter into any merger, consolidation or other reorganization with
or into any other Person (other than another Borrower), or acquire all or a
substantial portion of the assets or Equity Interests of any Person, or permit
any other Person to consolidate with or merge with it.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets to any Person other than another Borrower, except (i) sales
by a Borrower of its Inventory in the Ordinary Course of Business, (ii) sales
and other dispositions of Equipment of a Borrower to the extent expressly
permitted by this Agreement, (iii) Permitted Sales, (iv) Permitted Spinoffs, and
(v) any other dispositions of assets expressly authorized by this Agreement.
7.2 Creation of Liens. Create or suffer to exist any Lien or transfer
-----------------
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person by
----------
assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders), except the endorsement of checks in the Ordinary Course of Business.
7.4 Investments. Purchase or acquire obligations or Equity Interests of,
-----------
or any other interest in, any Person, except (a) obligations issued or
guaranteed by the United States of America or any agency thereof, (b) commercial
paper with maturities of not more than 180 days and a published rating of not
less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers' acceptances having maturities of not more than 180 days and
repurchase agreements backed by United States government securities of a
commercial bank if (i) such bank has a combined capital and surplus of at least
$500,000,000, or (ii) its debt obligations, or those of a holding company of
which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, and (d) U.S. money market
funds that invest solely in obligations issued or guaranteed by the United
States of America or an agency thereof.
7.5 Loans. Make advances, loans or extensions of credit to any Person,
-----
including any Parent, Subsidiary or Affiliate except (i) the extension of
commercial trade credit in connection with the sale of Inventory in the Ordinary
Course of its Business; (ii) loans or advances of money made by one Borrower to
another Borrower or to a Guarantor, provided that any instrument given to
evidence any such loan or advance is promptly pledged to Agent as security for
the Obligations; and (iii) loans to its employees in the Ordinary Course of
Business not to exceed $250,000 in the aggregate at any time outstanding for all
such advances.
7.6 Capital Expenditures. Contract for, purchase or make (i) any
--------------------
Capitalized Software Expenditures or commitment for Capitalized Software
Expenditures in any Fiscal Year in an amount in excess of $4,000,000 or (ii) any
Capital Expenditures (other than Capitalized Software Expenditures) or
commitment for Capital Expenditures (other than Capitalized Software
Expenditures) in any Fiscal Year in an amount in excess of $5,500,000.
7.7 Dividends. Declare, pay or make any dividend or distribution on any
---------
shares of the Equity Interests of any Borrower (other than Upstream Payments or
dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Borrower.
-48-
7.8 Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders; (ii) Permitted Purchase Money Debt and Indebtedness incurred for
Capital Expenditures permitted under Section 7.6 hereof; and (iii) Indebtedness
in existence on the Closing Date and due to Persons other than Lenders that is
described on Schedule 5.8(b).
---------------
7.9 Nature of Business. Substantially change the nature of the business
------------------
in which it is presently engaged, or, except as specifically permitted hereby,
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10 Transactions with Affiliates. Directly or indirectly, purchase,
----------------------------
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions disclosed in the
Ordinary Course of Business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate.
7.11 Leases. Enter as lessee into any lease arrangement for real or
------
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $2,750,000 in any one Fiscal Year in the aggregate for all
Borrowers.
7.12 Subsidiaries.
------------
(a) Form any Subsidiary other than pursuant to a Permitted Spinoff.
(b) Enter into any partnership, joint venture or similar arrangement
with any Person; or own less than all of the Equity Interests of any Subsidiary
that is a Borrower or Guarantor.
7.13 Fiscal Year and Accounting Changes. Change its Fiscal Year from
----------------------------------
ending on December 31, permit any Subsidiary to have a fiscal year that is
different from the Fiscal Year or make any change (i) in accounting treatment
and reporting practices except as required by GAAP or (ii) in tax reporting
treatment except as required by Applicable Law.
7.14 Pledge of Credit. Now or hereafter pledge Agent's or any Lender's
----------------
credit on any purchases or for any purpose whatsoever or use any portion of any
Advance in or for any business other than such Borrower's business as conducted
on the date of this Agreement.
7.15 Amendment of Organization Documents. Amend, modify or waive any
-----------------------------------
material term or provision of its Organization Documents except as required by
Applicable Law.
7.16 Compliance with ERISA. (i) (x) Maintain, or permit any member of the
---------------------
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Plan, other than those Plans disclosed on Schedule 5.8(c), (ii) engage, or
---------------
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction," as that term is defined in Section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency," as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate,
-49-
any Plan where such event could result in any liability of any Borrower or any
member of the Controlled Group or the imposition of a Lien on the property of
any Borrower or any member of the Controlled Group pursuant to Section 4068 of
ERISA, (v) assume, or permit any member of the Controlled Group to assume, any
obligation to contribute to any Multiemployer Plan not disclosed on Schedule
--------
5.8(c), (vi) incur, or permit any member of the Controlled Group to incur, any
------
withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify
Agent of the occurrence of any Termination Event, (viii) fail to comply, or
permit a member of the Controlled Group to fail to comply, with the requirements
of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail
to meet, or permit any member of the Controlled Group to fail to meet, all
minimum funding requirements under ERISA or the Code or postpone or delay or
allow any member of the Controlled Group to postpone or delay any funding
requirement with respect of any Plan.
7.17 Prepayment of Indebtedness. At any time, directly or indirectly,
--------------------------
prepay any Indebtedness (other than the Obligations), or repurchase, redeem,
retire or otherwise acquire any Indebtedness of any Borrower.
7.18 Upstream Payments. Create or suffer to exist any encumbrance or
-----------------
restriction on the ability of any Borrower or a Subsidiary of any Borrower to
make any Upstream Payment, except for encumbrances or restrictions (i) pursuant
to any of the Other Documents and (ii) existing under Applicable Law.
7.19 Tax Consolidation. File or consent to the filing of any consolidated
-----------------
income tax return with any Person other than a Subsidiary.
7.20 Conduct of Business. Engage in any business other than the business
-------------------
engaged by it on the Closing Date and any business or activities that are
substantially similar, related or incidental thereto.
SECTION 8. CONDITIONS PRECEDENT.
---------------------
8.1 Conditions to Initial Advances. The agreement of Lenders to make the
------------------------------
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Other Documents. Agent shall have received each of the Other
---------------
Documents duly executed and delivered by an authorized officer of each of the
parties thereto, including each Borrower;
(b) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any UCC financing statement) required by this Agreement, or any Other Document
or under Applicable Law or reasonably requested by the Agent to be filed,
registered or recorded in order to create, in favor of Agent, a perfected
security interest in or Lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrowers. Agent shall have received a
----------------------------------
copy of the resolutions in form and substance reasonably satisfactory to Agent,
of the Board of Directors of each Borrower authorizing (i) the execution,
delivery and performance of this Agreement, the Notes, any related agreements
and each of the other Loan Documents and (ii) the granting by each Borrower of
the security interests in and Liens upon the Collateral in each case certified
by the Secretary or an Assistant Secretary of each Borrower
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as of the Closing Date; and, such certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;
(d) Incumbency Certificates of Borrowers. Agent shall have received a
------------------------------------
certificate of the Secretary or an Assistant Secretary of each Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary;
(e) Organization Documents. Agent shall have received a copy of the
----------------------
Organization Documents of each Borrower, and all amendments thereto, certified
by the Secretary of State or other appropriate official of its jurisdiction of
organization together with copies of the By-Laws of each Borrower and all
agreements of each Borrower's shareholders certified as accurate and complete by
the Secretary of each Borrower;
(f) Good Standing Certificates. Agent shall have received good
--------------------------
standing certificates for each Borrower dated not more than thirty (30) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) Legal Opinion. Agent shall have received favorable legal opinions
-------------
of Borrowers' counsel (qualified to practice in the State of Georgia) in form
and substance satisfactory to Agent, which shall cover such matters incident to
the transactions contemplated by this Agreement and the other Loan Documents as
Agent may require, and each Borrower hereby authorizes and directs each such
counsel to deliver such opinions to Agent;
(h) No Litigation. No litigation, investigation or proceeding before
-------------
or by any arbitrator or Governmental Body shall be continuing or threatened
against any Borrower or against the officers or directors of any Borrower (A) in
connection with any of the Loan Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and no injunction, writ, restraining order or other order of any
nature materially adverse to any Borrower or the conduct of its business or
inconsistent with the due consummation of the transactions contemplated hereby
shall have been issued by any Governmental Body;
(i) Collateral Examination. Agent shall have completed Collateral
----------------------
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles and Equipment of each Borrower and all books and records in
connection therewith;
(j) Fees. Agent shall have received all fees payable to Agent and
----
Lenders on or prior to the Closing Date pursuant to Section 3 hereof;
(k) Pledge Agreements, Trademark Security Agreements, Patent Security
-----------------------------------------------------------------
Agreement and Other Documents. Agent shall have received the executed O'Reilly
-----------------------------
Guaranty, O'Reilly Pledge Agreement, Pledge Agreements, Trademark Security
Agreements, Patent Security Agreement and all Other Documents, each in form and
substance satisfactory to Agent and Lenders;
-51-
(l) Insurance. Agent shall have received in form and substance
---------
satisfactory to Agent, (i) certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and (ii) certified copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;
(m) Payment Instructions. Agent shall have received written
--------------------
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(n) Blocked Accounts. Agent shall have received duly executed
----------------
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable in all respects to Agent for the collection
and servicing of the Receivables and other proceeds of Collateral;
(o) Consents. Agent shall have received any and all Consents
--------
necessary to permit the effectuation of the transactions contemplated by any of
the Loan Documents; and, Agent shall have received such Consents and waivers of
such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(p) No Adverse Material Change. Since December 31, 1999, there shall
--------------------------
not have occurred any event, condition or state of facts which could reasonably
be expected to have a Material Adverse Effect and no representations made or
information supplied to Agent shall have been proven to be inaccurate or
misleading in any material respect;
(q) Leasehold Agreements. Agent shall have received Lien Waivers
--------------------
satisfactory to Agent with respect to all premises leased by any Borrower at
which any Inventory or Equipment is located;
(r) Contract Review. Agent shall have reviewed all Material Contracts
---------------
of Borrowers and all other leases, union contracts, labor contracts, vendor
supply contracts, license agreements and distributorship agreements which Agent
or its counsel deems necessary and such contracts and agreements shall be
satisfactory in all respects to Agent and its counsel;
(s) Closing Certificate. Agent shall have received a closing
-------------------
certificate signed by the Chief Financial Officer or Treasurer of each Borrower
dated as of the date hereof, stating that (i) all representations and warranties
set forth in this Agreement and the other Loan Documents 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 the Other Documents and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(t) Borrowing Base. Agent shall have received evidence from Borrowers
--------------
that the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
Borrowers on the Closing Date;
(u) Undrawn Availability. After giving effect to the initial Advances
--------------------
hereunder, Borrowers shall have Undrawn Availability on the Closing Date of at
least $2,500,000;
(v) No Labor Disputes. Agent shall have received assurances
-----------------
satisfactory to it that there are no threats of strikes or work stoppages by any
employees, or organization of employees, of any Borrower or any Guarantor, which
Agent reasonably determines may have a Material Adverse Effect;
-52-
(w) Cash Collateral. O'Reilly shall cause at least $2,800,000 of Cash
---------------
Collateral to be deposited in the Cash Collateral Account; and
(x) Other. All corporate and other proceedings, and all documents,
-----
instruments and other legal matters in connection with this Agreement shall be
satisfactory in form and substance to Agent and its counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
--------------------------
Advance requested to be made on any date (including the initial Advance) is
subject to the satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Borrower in or pursuant to this Agreement and any of the
Other Documents to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any of the Other Documents all be true and correct in all material respects on
and as of such date as if made on and as of such date;
(b) No Default. No Event of Default or Default shall have occurred
----------
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that Lenders, in
-------- -------
their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default;
(c) Borrowing Base Certificates; Maximum Advances. Agent shall have
---------------------------------------------
received each Borrowing Base Certificate required by the terms of this Agreement
or otherwise requested by Agent, and, in the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof;
(d) No Litigation. No action, proceeding, investigation, regulation
-------------
or legislation shall have been instituted, threatened or proposed before any
court or Governmental 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 any of
the Other Documents or the consummation of the transactions contemplated hereby
or thereby; and
(e) No Material Adverse Effect. No event shall have occurred and no
--------------------------
condition shall exist which has or could be reasonably expected to have a
Material Adverse Effect.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
SECTION 9. INFORMATION AS TO BORROWERS.
----------------------------
Each Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 Disclosure of Material Matters. Immediately upon learning thereof,
------------------------------
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including
-53-
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material amount of goods or claims or disputes asserted by any Customer or
other obligor.
9.2 Schedules. Deliver to Agent on or before the fifteenth (15th) day of
---------
each month as and for the prior month (a) accounts receivable agings, (b)
accounts payable schedules, (c) Inventory reports, and (d) a Borrowing Base
Certificate (which shall be calculated as of the last day of the prior month and
which shall not be binding upon Agent or restrictive of Agent's rights under
this Agreement). In addition, each Borrower will deliver to Agent at such
intervals as Agent may reasonably require: (i) confirmatory assignment
schedules, (ii) copies of Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents and/or information
regarding the Collateral as Agent may reasonably require including trial
balances and test verifications. Agent shall have the right to confirm and
verify all Receivables by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to protect its
interests hereunder. The items to be provided under this Section are to be in
form satisfactory to Agent and executed by each Borrower and delivered to Agent
from time to time solely for Agent's convenience in maintaining records of the
Collateral, and any Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's Lien with respect
to the Collateral.
9.3 Environmental Reports. At Agent's request, furnish Agent,
---------------------
concurrently with the delivery of the financial statements referred to in
Sections 9.7 and 9.8, with a certificate signed by the Chief Financial Officer
of Borrowing Agent, on behalf of each Borrower stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
Environmental Laws and laws relating to occupational safety and health. To the
extent any Borrower is not in compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action such Borrower will implement in order to achieve full
compliance.
9.4 Litigation. Promptly notify Agent in writing of any litigation, suit
----------
or administrative proceeding affecting any Borrower, whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which in any
such case could reasonably be expected to have a Material Adverse Effect on any
Borrower.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
--------------------
occurrence of (a) any Default or Event of Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (c) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of the Code, could subject any
Borrower to a tax imposed by Section 4971 of the Code; (d) each and every
default by any Borrower which might result in the acceleration of the maturity
of any Indebtedness, including the names and addresses of the holders of such
Indebtedness with respect to which there is a default existing or with respect
to which the maturity has been or could be accelerated, and the amount of such
Indebtedness; and (e) any other development in the business or affairs of any
Borrower which could reasonably be expected to have a Material Adverse Effect;
in each case describing the nature thereof and the action Borrowers propose to
take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
----------------------
Receivables arise out of contracts between any Borrower and any Governmental
Body.
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9.7 Annual Financial Statements. Furnish Agent within ninety (90) days
---------------------------
after the end of each Fiscal Year of Borrowers, financial statements of
Borrowers on a consolidating and consolidated basis including statements of
income and stockholders' equity and cash flow from the beginning of the current
Fiscal Year to the end of such Fiscal Year and the balance sheet as at the end
of such Fiscal Year, all prepared in accordance with GAAP applied on a basis
consistent with prior practices, and in reasonable detail and reported upon
without qualification by an independent certified public accounting firm
selected by Borrowers and satisfactory to Agent (the "Accountants"). The report
of the Accountants shall be accompanied by a statement of the Accountants
certifying that (i) they have caused the Loan Agreement to be reviewed, (ii) in
making the examination upon which such report was based either no information
came to their attention which to their knowledge constituted an Event of Default
or a Default under this Agreement or any related agreement or, if such
information came to their attention, specifying any such Default or Event of
Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
6.5, 7.5, 7.6 and 7.11 hereof. In addition, the reports shall be accompanied by
a Compliance Certificate.
9.8 Quarterly Financial Statements. Furnish Agent within forty-five (45)
------------------------------
days after the end of each Fiscal Quarter, an unaudited balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited statements of
income and stockholders' equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
Fiscal Year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The reports shall be
accompanied by a Compliance Certificate.
9.9 Monthly Financial Statements. Furnish Agent within thirty (30) days
----------------------------
after the end of each month, an unaudited balance sheet of Borrowers on a
consolidated and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
Fiscal Year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The reports shall be
accompanied by a Compliance Certificate.
9.10 Other Reports. Furnish Agent as soon as available, but in any event
-------------
within ten (10) days after the issuance thereof, with copies of such financial
statements, reports and returns as each Borrower shall send to its stockholders.
9.11 Additional Information. Furnish Agent with such additional
----------------------
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by Borrowers including, and
without the necessity of any request by Agent, (a) copies of all environmental
audits and reviews, (b) at least thirty (30) days prior thereto, notice of any
Borrower's opening of any new office or place of business or any Borrower's
closing of any existing office or place of business other than a Minor Location
permitted under Section 4.5, and (c) promptly upon any Borrower's learning
thereof, notice of any labor dispute to which any Borrower may become a party,
any strikes or walkouts relating to any of its plants or other facilities, and
the expiration of any labor contract to which any Borrower is a party or by
which any Borrower is bound.
9.12 Projected Operating Budget. Furnish Agent, no later than thirty (30)
--------------------------
days prior to the beginning of each Borrower's Fiscal Years commencing with
Fiscal Year 2001, a month by month projected
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operating budget and cash flow of Borrowers on a consolidated and consolidating
basis for such Fiscal Year (including an income statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), such
projections to be accompanied by a certificate signed by the President or Chief
Financial Officer of each Borrower to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past
budgets and financial statements and that such officer has no reason to question
the reasonableness of any material assumptions on which such projections were
prepared.
9.13 Variances From Operating Budget. Furnish Agent, concurrently with
-------------------------------
the delivery of the financial statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all material variances from
budgets submitted by Borrowers pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt notice of
-------------------------------
(i) any lapse or other termination of any Consent issued to any Borrower by any
Governmental Body or any other Person that is material to the operation of any
Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are requested by Lender, and
(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Borrower.
9.15 ERISA Notices and Requests. Furnish Agent with immediate written
--------------------------
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any
Borrower or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice; (viii) any Borrower or any member of the Controlled Group shall fail to
make a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment; (ix) any
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
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9.16 Additional Documents. Execute and deliver to Agent, upon request,
--------------------
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
SECTION 10. EVENTS OF DEFAULT.
------------------
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1 failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or in any Other Document when due;
10.2 any representation or warranty made or deemed made by any Borrower in
this Agreement or any Other Document or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
10.3 failure by any Borrower to (i) furnish financial information when due
or when requested, or (ii) permit the inspection of its books or records;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property;
10.5 except as otherwise provided for in Sections 10.1 and 10.3, failure
or neglect of any Borrower to perform, keep or observe any term, provision,
condition, covenant herein contained, or contained in any other agreement or
arrangement, now or hereafter entered into between any Borrower and Agent or any
Lender except for a failure or neglect of Borrower to perform, keep or observe
any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9,
4.11, 4.14, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within twenty (20)
days from the occurrence of such failure or neglect;
10.6 any judgment or judgments are rendered against any Borrower or any
Guarantor for an aggregate amount in excess of $250,000 if such judgment results
in the imposition of any Lien upon any of the Collateral, there shall be any
period of twenty (20) consecutive days during which such judgment is not
satisfied, stayed pending appeal or otherwise discharged, or the holder of such
judgment shall commence enforcement proceedings with respect thereto;
10.7 any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated or declared a bankrupt or insolvent,
(v) file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty
(30) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
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10.8 any Borrower or Guarantor shall admit in writing its inability, or be
generally unable, to pay its debts as they become due, cease operations of its
present business or cease to be Solvent;
10.9 any Subsidiary of any Borrower, or any Guarantor, shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10 any change in any Borrower's condition or affairs (financial or
otherwise) which, in Agent's reasonable opinion, has a Material Adverse Effect;
10.11 any Lien created hereunder or provided for hereby or under any Other
Document for any reason ceases to be or is not a valid and perfected Lien having
a first priority interest;
10.12 a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur that has or could reasonably be
expected to have a Material Adverse Effect and which is not cured within any
applicable grace period;
10.13 termination or breach of any Guaranty executed and delivered to
Agent in connection with the Obligations or, if any Guarantor attempts to
terminate or challenges the validity of or its liability under, any such
Guaranty or similar agreement;
10.14 any Change of Control shall occur;
10.15 any material provision of this Agreement or any of the Other
Documents shall, for any reason, cease to be valid and binding on any Borrower,
or any Borrower shall so claim in writing to Agent;
10.16 (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any
Borrower, the failure to continue of which results in a Material Adverse
Effect,, or (B) commence proceedings to suspend, revoke, terminate or adversely
modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (C)
schedule or conduct a hearing on the renewal of any such license, permit,
trademark, tradename or patent necessary for the continuation of Borrowers'
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect on any Borrower;
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10.17 any material portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower which
is the owner of any material portion of the Collateral shall have become the
subject matter of litigation which might, in the reasonable opinion of Agent,
upon final determination, result in impairment or loss of the security provided
by this Agreement or the Other Documents;
10.18 the operations of any Borrower's computer facilities are interrupted
at any time for more than forty-eight (48) hours during any period of five (5)
consecutive days, unless such Borrower shall (i) be entitled to receive for such
period of interruption, proceeds of business interruption insurance sufficient
to assure that its per diem cash needs during such period is at least equal to
its average per diem cash needs for the consecutive three (3) month period
immediately preceding the initial date of interruption and (ii) receive such
proceeds in the amount described in clause (i) preceding not later than thirty
(30) days following the initial date of any such interruption; provided,
however, that notwithstanding the provisions of clauses (i) and (ii) of this
section, an Event of Default shall be deemed to have occurred if such Borrower
shall be receiving the proceeds of business interruption insurance for a period
of thirty (30) consecutive days; or
10.19 an event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, could reasonably be expected to have a
Material Adverse Effect on any Borrower.
SECTION 11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
-------------------------------------------
11.1 Rights and Remedies. Upon or after (i) the occurrence of an Event of
-------------------
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; (ii) an occurrence of any of the other Events of Default
and at any time thereafter (such default not having previously been cured), at
the option of Required Lenders all Obligations shall be immediately due and
payable and Lenders shall have the right to terminate this Agreement and to
terminate the obligation of Lenders to make Advances; and (iii) a filing of a
petition against any Borrower in any involuntary case under any state or federal
bankruptcy laws, the obligation of Lenders to make Advances hereunder shall be
terminated other than as may be required by an appropriate order of the
bankruptcy court having jurisdiction over any Borrower. Upon or after the
occurrence of any Event of Default, Agent shall have the right to exercise any
and all other rights and remedies provided for herein, under the UCC and at law
or equity generally, including the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process. Agent may enter any of Borrower's premises or
other premises without legal process and without incurring liability to any
Borrower therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Borrowers to make
the Collateral available to Agent at a convenient place. With or without having
the Collateral at the time or place of sale, Agent may sell the Collateral, or
any part thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as Agent may elect. Except as to that part of the
Collateral which is perishable or threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Agent shall give Borrowers
reasonable notification of such sale or sales, it being agreed that in all
events written notice mailed to Borrowers at least five (5) days prior to such
sale or sales is reasonable notification. At any public sale Agent or any
Lender may bid for and become the purchaser, and Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral
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sold absolutely free from any claim or right of whatsoever kind, including any
equity of redemption and such right and equity are hereby expressly waived and
released by each Borrower. In connection with the exercise of the foregoing
remedies, Agent is granted permission to use all of each Borrower's trademarks,
trade styles, trade names, patents, patent applications, licenses, franchises
and other proprietary rights which are used in connection with (a) Inventory for
the purpose of marketing, advertising for sale and disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied as
follows: first, to the reasonable costs, expenses and attorneys' fees and
expenses incurred by Agent for collection and for acquisition, completion,
protection, removal, storage, sale and delivery of the Collateral; second, to
interest due upon any of the Obligations and any fees payable under this
Agreement; and, third, to the principal of the Obligations. If any deficiency
shall arise, Borrowers shall remain liable to Agent and Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole
------------------
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3 Setoff. In addition to any other rights which Agent or any Lender
------
may have under Applicable Law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply any Borrower's
property held by Agent and such Lender to reduce the Obligations.
11.4 Rights and Remedies not Exclusive. The enumeration of the foregoing
---------------------------------
rights and remedies is not intended to be exhaustive and the exercise of any
right or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
SECTION 12. WAIVERS AND JUDICIAL PROCEEDINGS.
---------------------------------
12.1 Waiver of Notice. Each Borrower hereby waives notice of non-payment
----------------
of any of the Receivables, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Collateral received or delivered, or any
other action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
-----
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
-----------
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
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OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 13. EFFECTIVE DATE AND TERMINATION.
-------------------------------
13.1 Term. This Agreement, which shall inure to the benefit of and shall
----
be binding upon respective successors and permitted assigns of each Borrower,
Agent and each Lender, shall become effective on the date hereof and shall
continue in full force and effect until March 14, 2003 (the "Term") unless
sooner terminated as herein provided. Borrowers may terminate this Agreement at
any time upon ninety (90) days prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last
day of the Term (the date of such prepayment hereinafter referred to as the
"Early Termination Date") and the Loan Documents are terminated, Borrowers shall
pay to Agent for the benefit of Lenders an early termination fee in an amount
equal to (x) two percent (2.0%) of the Maximum Revolving Amount if the Early
Termination Date occurs on or after the Closing Date to and including the date
immediately preceding the first anniversary of the Closing Date, and (y) one
percent (1.0%) of the Maximum Revolving Amount if the Early Termination Date
occurs on or after the first anniversary of the Closing Date to and including
the date immediately preceding the second anniversary of the Closing Date, and
(z) one-half percent (0.5%) of the Maximum Revolving Amount if the Early
Termination Date occurs on or after the second anniversary of the Closing Date
to and including the date immediately preceding the third anniversary of the
Closing Date.
13.2 Termination. The termination of the Agreement shall not affect any
-----------
Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been paid or performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders
with an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, each Borrower waives any rights which it may have under Section 9-
404(1) of the UCC to demand the filing of termination statements with respect to
the Collateral, and Agent shall not be required to send such termination
statements to each Borrower, or to file them with any filing office, unless and
until this Agreement shall have been terminated in accordance with its terms and
all Obligations paid in full in immediately available funds. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until all Obligations are paid or performed in
full.
SECTION 14. REGARDING AGENT.
----------------
14.1 Appointment. Each Lender hereby designates PNC to act as Agent for
-----------
such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of each of the Loan Documents and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in Sections 3.3(a) and
3.4), charges
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and collections (without giving effect to any collection days) received pursuant
to this Agreement, for its benefit and the ratable benefit of Lenders. Agent may
perform any of its duties hereunder by or through its agents or employees. As to
any matters not expressly provided for by this Agreement (including collection
of the Notes) Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding; provided, however,
-------- -------
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
14.2 Nature of Duties. Agent shall have no duties or responsibilities
----------------
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, any of the Loan Documents or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of any of the Loan Documents or for any failure of any Borrower to
perform its obligations hereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, any of the Loan Documents, or
to inspect the properties, books or records of any Borrower. The duties of
Agent as respects the Advances to Borrowers shall be mechanical and
administrative in nature; Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement except as expressly set forth
herein.
14.3 Lack of Reliance on Agent and Resignation.
-----------------------------------------
(a) Independently and without reliance upon Agent or any other Lender,
each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower in
connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of each Borrower. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before making of the Advances or at any time or times thereafter
except as shall be provided by any Borrower pursuant to the terms hereof. Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document,
certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents, or of the financial condition of any
Borrower, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement,
the Notes, the Other Documents or the financial condition of any Borrower, or
the existence of any Event of Default or any Default.
(b) Agent may resign on sixty (60) days written notice to each of
Lenders and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent reasonably satisfactory to Borrowers. Any
such successor Agent shall succeed to the rights, powers and duties of Agent,
and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's
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rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent. After any Agent's
resignation as Agent, the provisions of this Section 14 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
14.4 Certain Rights of Agent. If Agent shall request instructions from
-----------------------
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
--------
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, however, that, unless and until Agent shall have received
-------- -------
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and
---------------
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided, however, that, Lenders shall not be liable for any
-------- -------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the obligation of
--------------------------------
Agent to lend under this Agreement, the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein; and the term "Lender" or any similar term
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity as a Lender. Agent may engage in business with any Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
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14.9 Delivery of Documents. To the extent Agent receives financial
---------------------
statements required under Sections 9.7, 9.8, and 9.9 from any Borrower pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.
14.10 Borrowers' Undertaking to Agent. Without prejudice to their
-------------------------------
respective obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower's obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
SECTION 15. CO-BORROWER PROVISIONS.
-----------------------
15.1 Borrowing Agency Provisions.
---------------------------
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be
its attorney and agent and in such capacity to borrow, sign and endorse notes,
and execute and deliver all instruments, documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or
Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility
with a borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request, and neither Agent nor any
Lender shall incur any liability to any Borrower as a result thereof. In order
to utilize the financial powers of each Borrower in the most efficient and
economical manner, and in order to facilitate the financing of each Borrower's
needs, Lenders will, at the request of the Borrowing Agent, make Advances and
other financial accommodations to all Borrowers on a combined basis and in
accordance with the provisions set forth in this Agreement. Borrowers
acknowledge that their business is a mutual and collective enterprise and
Borrowers believe that the consolidation of all Advances and other financial
accommodations under this Agreement will enhance the aggregate borrowing powers
of each Borrower and ease the administration of their loan relationship with
Lenders, all to the mutual advantage of Borrowers. Agent's and Lenders'
willingness to extend credit to Borrowers pursuant to the terms hereof and to
administer each Borrower's portion of the Collateral therefor, on a combined
basis as more fully set forth in this Agreement, is done solely as an
accommodation to Borrowers, at their request and in furtherance of their mutual
and collective enterprise. To induce Agent and Lenders to do so and in
consideration thereof, each Borrower hereby indemnifies Agent and each Lender
and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted
against Agent or any Lender by any Person arising from or incurred by reason of
the handling of the financing arrangements of Borrowers as provided herein,
reliance by Agent or any Lender on any request or instruction from Borrowing
Agent or any other action taken by Agent or any Lender with respect to this
Section 15.1 except due to willful misconduct or gross (not mere) negligence by
the indemnified party.
(c) All Obligations shall be joint and several, and each Borrower
shall make payment upon the maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the part of each Borrower shall
in no way be affected by any extensions, renewals and forbearance granted to
Agent or any Lender to any Borrower, failure of Agent or any Lender to give any
Borrower notice of borrowing or
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any other notice, any failure of Agent or any Lender to pursue or preserve its
rights against any Borrower, the release by Agent or any Lender of any
Collateral now or thereafter acquired from any Borrower, and such agreement by
each Borrower to pay upon any notice issued pursuant thereto is unconditional
and unaffected by prior recourse by Agent or any Lender to the other Borrowers
or any Collateral for such Borrower's Obligations or the lack thereof.
(d) Each Borrower's joint and several liability hereunder with respect
to the Advances and other Obligations shall, to the fullest extent permitted by
Applicable Law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of any of the Obligations or of any
promissory note or other document evidencing all or any part of the Obligations,
(ii) the absence of any attempt to collect any of the Obligations from any other
Borrower or Guarantor or any Collateral or other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance or granting of any indulgence by Agent or any Lender with
respect to any of the Obligations or any instrument or agreement evidencing or
securing the payment of any of the Obligations, or any other agreement now or
hereafter executed by any other Borrower and delivered to Agent or any Lender,
(iv) the failure by Lender to take any steps to perfect or maintain the
perfected status of its security interest in or Lien upon, or to preserve its
rights to, any of the Collateral or other security for the payment or
performance of any of the Obligations, or Agent's or any Lender's release of any
Collateral or of its Liens upon any Collateral, (v) Agent's or any Lenders'
election, in any proceeding instituted under the Bankruptcy Code, for the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by any other Borrower, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the release or compromise, in
whole or in part, of the liability of any Borrower or Guarantor for the payment
of any of the Obligations, (viii) any amendment or modification of any of the
Loan Documents or waiver of any Default or Event of Default thereunder, (ix) any
increase in the amount of the Obligations beyond any limits imposed herein or in
the amount of any interest, fees or other charges payable in connection
therewith, or any decrease in the same, (x) the disallowance of all or any
portion of Lender's claims for the repayment of any of the Obligations under
Section 502 of the Bankruptcy Code, or (xi) any other circumstance that might
constitute a legal or equitable discharge or defense of any Borrower and
Guarantor. At any time an Event of Default exists, Lender may proceed directly
and at once, without notice to any Borrower or Guarantor, against any or all of
Borrowers or Guarantors to collect and recover all or any part of the
Obligations, without first proceeding against any other Borrower or Guarantor or
against any Collateral or other security for the payment or performance of any
of the Obligations, and each Borrower waives any provision that might otherwise
require Agent or any Lender under Applicable Law to pursue or exhaust its
remedies against any Collateral or any other Borrower or Guarantor before
pursuing such Borrower. Each Borrower consents and agrees that Agent and any
Lender shall be under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of any
Borrower or Guarantor or against or in payment of any or all of the Obligations.
(e) Each Borrower is unconditionally obligated to repay the
Obligations as a joint and several obligor under this Agreement. If, as of any
date, the aggregate amount of payments made by a Borrower on account of the
Obligations and proceeds of such Borrower's Collateral that are applied to the
Obligations exceeds the aggregate amount of Advances actually used by such
Borrower in its business (such excess amount being referred to as an
"Accommodation Payment"), then each of the other Borrowers shall be obligated to
make contribution to such Borrower (the "Paying Borrower") in an amount equal to
(A) the product derived by multiplying the sum of each Accommodation Payment of
each Borrower by the Allocable Percentage of the Borrower from whom contribution
is sought minus (B) the amount, if any, of the then outstanding Accommodation
-----
Payment of such Contributing Borrower (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such
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Contributing Borrower by way of contribution hereunder, and to be decreased by
any amounts theretofore received by such Contributing Borrower by way of
contribution hereunder); provided, however, that a Paying Borrower's recovery
-------- -------
of contribution hereunder from the other Borrowers shall be limited to that
amount paid by the Paying Borrower in excess of its Allocable Percentage of
all Accommodation Payments then outstanding of all Borrowers. As used herein,
the term "Allocable Percentage" shall mean, on any date of determinations
thereof, a fraction the denominator of which shall be equal to the number of
Borrowers who are parties to this Agreement on such date and the numerator of
which shall be 1; provided, however, that such percentages shall be modified in
-------- -------
the event that contribution from a Borrower is not possible by reason of
insolvency, bankruptcy or otherwise by reducing such Borrower's Allocable
Percentage equitably and by adjusting the Allocable Percentage of the other
Borrowers proportionately so that the Allocable Percentages of all Borrowers at
all times equals 100%.
15.2 Subordination. Each Borrower expressly subordinates and postpones
-------------
the exercise of any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim that such Borrower may now or
hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to
the other Borrowers' property (including any property which is Collateral for
the Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.
SECTION 16. MISCELLANEOUS.
--------------
16.1 Governing Law; Process. This Agreement shall be governed by and
----------------------
construed in accordance with the laws of the State of Georgia applied to
contracts to be performed wholly within the State of Georgia. Any judicial
proceeding brought by or against any Borrower with respect to any of the
Obligations, this Agreement or any related agreement may be brought in any court
of competent jurisdiction in the State of Georgia, United States of America,
and, by execution and delivery of this Agreement, each Borrower accepts for
itself and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent's and/or any Lender's option, by service upon
Borrowing Agent which each Borrower irrevocably appoints as such Borrower's
agent for the purpose of accepting service within the State of Georgia. Nothing
herein shall affect the right to serve process in any manner permitted by
Applicable Law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any
Borrower against Agent or any Lender involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the County of ▇▇▇▇, State of Georgia.
16.2 Entire Understanding.
--------------------
(a) This Agreement and the documents executed concurrently herewith
contain the entire understanding between each Borrower, Agent and each Lender
and supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations, warranties or
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guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by each Borrower's, Agent's and each Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
(b) The Required Lenders, Agent with the consent in writing of the
Required Lenders, and Borrowers may, subject to the provisions of this Section
16.2(b), from time to time enter into written supplemental agreements to this
Agreement or any of the Other Documents executed by Borrowers, for the purpose
of adding or deleting any provisions or otherwise changing, varying or waiving
in any manner the rights of Lenders, Agent or Borrowers thereunder or the
conditions, provisions or terms thereof of waiving any covenant, obligation or
Event of Default thereunder, but only to the extent specified in such written
agreements; provided, however, that no such supplemental agreement shall,
without the consent of all Lenders:
(i) increase the Commitment Percentage or maximum dollar
commitment of any Lender;
(ii) extend the maturity of any Note or the due date for any
amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Borrowers to Lenders pursuant to this Agreement;
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b);
(iv) release any Collateral during any calendar year (other than
in accordance with the provisions of this Agreement) having an aggregate
value in excess of $500,000;
(v) change the rights and duties of Agent;
(vi) permit any Out-of-Formula Loan to be made if after giving
effect thereto the total of Revolving Advances outstanding hereunder would
exceed the Formula Amount for more than sixty (60) consecutive Business
Days or exceed $1,000,000; or
(vii) increase the Advance Rate above the Advance Rate in effect
on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within five (5) Business Days of delivery of such request, such
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Lender shall be deemed to have consented to matter that was the subject of the
request. In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such consent is denied, then PNC may, at its option,
require such Lender to assign its interest in the Advances to PNC or to another
Lender or to any other Person designated by the Agent (the "Designated Lender"),
for a price equal to the then outstanding principal amount thereof plus accrued
and unpaid interest and fees due such Lender, which interest and fees shall be
paid when collected from Borrower. In the event PNC elects to require any Lender
to assign its interest to PNC or to the Designated Lender, PNC will so notify
such Lender in writing within forty-five (45) days following such Lender's
denial, and such Lender will assign its interest to PNC or the Designated Lender
no later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated
Lender, as appropriate, and Agent.
16.3 Successors and Assigns; Participations; New Lenders.
---------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
Borrowers, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Participant"). Each Participant may exercise all rights of payment (including
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Participant were the
direct holder thereof provided that Borrowers shall not be required to pay to
any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Participant had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrowers be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Participant. Each Borrower hereby grants to any
Participant a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Participant as security for the
Participant's interest in the Advances.
(c) Any Lender may with the consent of Agent (which shall not be
unreasonably withheld or delayed) sell, assign or transfer all or any part of
its rights under the Loan Documents to one or more additional banks or financial
institutions (each a "Purchasing Lender"), and one or more Purchasing Lenders
may commit to make Advances hereunder, in minimum amounts of not less than
$5,000,000, pursuant to a Commitment Transfer Supplement, executed by an
Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording, from and
after the transfer effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder with a Commitment Percentage as
set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Commitment Transfer Supplement creating a
novation for that purpose. Such Commitment Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement and the Other Documents.
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Borrowers hereby consent to the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrowers shall
execute and deliver such further documents and do such further reasonable acts
and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment
Transfer Supplement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances owing to each Lender from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and Borrowers, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein
for the purposes of this Agreement. The Register shall be available for
inspection by Borrowers or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Borrowers authorize each Lender to disclose to any Participant or
Purchasing Lender and any prospective Participant or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrowers which
has been delivered to such Lender by or on behalf of Borrowers pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrowers.
16.4 Application of Payments. Agent shall have the continuing and
-----------------------
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5 Indemnity. Each Borrower shall indemnify Agent, each Lender and each
---------
of their respective officers, directors, Affiliates, employees and agents from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against Agent or any Lender in any
litigation, proceeding or investigation instituted or conducted by any
Governmental Body or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, any of
the Loan Documents, whether or not Agent or any Lender is a party thereto,
except to the extent that any of the foregoing arises out of the willful
misconduct or gross negligence of the party being indemnified.
16.6 Notice. Any notice or request hereunder may be given to any Borrower
------
or to Agent or any Lender at their respective addresses set forth below or at
such other address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice or request hereunder
shall be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, (d) telex or telegram, subsequently
confirmed by registered or certified mail, or (e) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with electronic confirmation of its receipt.
Any notice or other communication required or permitted pursuant to this
Agreement shall be deemed given (a) when personally delivered to any officer of
the party to
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whom it is addressed, (b) on the earlier of actual receipt thereof or three (3)
days following posting thereof in the U.S. Mail by certified or registered mail,
postage prepaid, or (c) upon actual receipt thereof when sent by a recognized
overnight delivery service or (d) upon actual receipt thereof when sent by
telecopier to the number set forth below with electronic confirmation of its
receipt, in each case addressed to each party at its address set forth below or
at such other address as has been furnished in writing by a party to the other
by like notice:
(A) If to Agent or PNC Bank, National Association
PNC at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Parker, Hudson, Rainer & ▇▇▇▇▇ LLP
1500 Marquis Two Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to a Lender other than Agent, as specified on the signature pages
hereof
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(C) If to Borrowing Agent
or any Borrower, at: Eltrax Systems, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Jaffe, Raitt, Heuer & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
16.7 Survival. The obligations of Borrowers under Sections 2.14(e), 3.7,
--------
3.8, 3.9, 4.19(h), 14.7 and 16.5 shall survive termination of this Agreement and
the Other Documents and payment in full of the Obligations. The obligations of
Lenders under Section 14.7 shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.
16.8 Severability. If any part of this Agreement is contrary to,
------------
prohibited by, or deemed invalid under Applicable Laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9 Expenses. All costs and expenses including reasonable attorneys'
--------
fees (including the allocated costs of in house counsel) and disbursements
incurred by Agent, Agent on behalf of Lenders, and Lenders (a) in all efforts
made to enforce payment of any Obligation or effect collection of any
Collateral, (b) in connection with the entering into, modification, amendment,
administration and enforcement of this Agreement or any consents or waivers
hereunder and all related agreements, documents and instruments, (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Borrower, or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, may be charged to Borrowers' Account and shall be part of
the Obligations.
16.10 Injunctive Relief. Each Borrower recognizes that, in the event any
-----------------
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
16.11 Consequential Damages. Neither Agent nor any Lender, nor any agent
---------------------
or attorney for any of them, shall be liable to any Borrower for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
-71-
16.12 Captions. The captions at various places in this Agreement are
--------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13 Counterparts; Telecopied Signatures. This Agreement may be executed
-----------------------------------
in any number of and by different parties hereto on separate counterparts, all
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14 Construction. The parties acknowledge that each party and its
------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15 Confidentiality; Sharing Information.
------------------------------------
(a) Agent, each Lender and each Participant shall hold all non-public
information obtained by Agent, such Lender or such Participant pursuant to the
requirements of this Agreement in accordance with Agent's, such Lender's and
such Participant's customary procedures for handling confidential information of
this nature; provided, however, Agent, each Lender and each Participant may
-------- -------
disclose such confidential information (a) to its examiners, affiliates, outside
auditors, counsel and other professional advisors, (b) to Agent, any Lender or
to any prospective Participants and Purchasing Lenders, and (c) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further that (i) unless specifically prohibited by
Applicable Law or court order, Agent, each Lender and each Participant shall use
its best efforts prior to disclosure thereof, to notify the applicable Borrower
of the applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Participant by such Governmental Body) or (B) pursuant to legal process and (ii)
in no event shall Agent, any Lender or any Participant be obligated to return
any materials furnished by any Borrower other than those documents and
instruments in possession of Agent or any Lender in order to perfect its Lien on
the Collateral once the Obligations have been paid in full and this Agreement
has been terminated.
(b) Borrower acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Borrower hereby authorizes each Lender to share any information
delivered to such Lender by such Borrower and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provision of Section 16.15 as if it were a
Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of the Loan Agreement.
16.16 Publicity. Each Borrower and each Lender hereby authorizes Agent to
---------
make appropriate announcements of the financial arrangement entered into among
Borrowers, Agent and Lenders, including
-72-
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem
appropriate.
Each of the parties has executed and delivered this Agreement in Atlanta,
Georgia as of the day and year first above written.
ATTEST: ELTRAX SYSTEMS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
---------------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Secretary ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Chairman
of the Board
[CORPORATE SEAL]
900 Circle 75 Parkway, Suite 1700
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST: ELTRAX TECHNOLOGY SERVICES
GROUP, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST: ELTRAX ASP GROUP, LLC
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
[Signatures continued on following page]
-73-
ATTEST: SQUIRREL SYSTEMS, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST: SENERCOMM, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST: ELTRAX CUSTOMER CARE GROUP, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
[Signatures continued on following page]
-74-
ATTEST: ELTRAX INTERNATIONAL, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST: ELTRAX HOSPITALITY GROUP, INC.
/s/ Clunet ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
---------------------------------- ------------------------------
Clunet ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
Treasurer
[CORPORATE SEAL]
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice President
----------------------------
Commitment Percentage: 100%
-75-
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇'▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is the Chairman of the Board of ELTRAX SYSTEMS, INC., the corporation described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of ELTRAX TECHNOLOGY SERVICES GROUP, INC., the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
-76-
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of ELTRAX ASP GROUP, LLC, the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of SQUIRREL SYSTEMS, INC., the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of SENERCOMM, INC., the corporation described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the board of directors of said corporation, and that he
signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
-77-
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of ELTRAX CUSTOMER CARE GROUP, INC., the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of ELTRAX INTERNATIONAL, INC., the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, III, to me known, who, being by me duly sworn, did depose and say that
he is the Treasurer of ELTRAX HOSPITALITY GROUP, INC., the corporation described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
-------------------------------
NOTARY PUBLIC
-78-
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of March, 2000, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of PNC BANK, NATIONAL
ASSOCIATION, the national banking association described in and which executed
the foregoing instrument and that he signed his name thereto by on behalf of
said association.
-------------------------------
NOTARY PUBLIC
-79-
Exhibit A
Form of Revolving Credit Notes
------------------------------
REVOLVING CREDIT NOTE
$
---------- ------------------------
[Atlanta, Georgia]
This Revolving Credit Note is executed and delivered under and pursuant to
the terms of that certain Revolving Credit and Security Agreement dated
__________, 2000 (as amended, restated, supplemented or modified from time to
time, the "Loan Agreement") by and among ELTRAX SYSTEMS, INC., a Minnesota
corporation ("Eltrax"); ELTRAX TECHNOLOGY SERVICES GROUP, INC., a Georgia
corporation ("Technology"); ELTRAX ASP GROUP, LLC, a Georgia limited liability
company ("ASP"); SQUIRREL SYSTEMS, INC., a Georgia corporation ("Squirrel");
SENERCOMM, INC., a Florida corporation ("Senercomm"); ELTRAX CUSTOMER CARE
GROUP, INC., a Georgia corporation ("Customer Care"); ELTRAX INTERNATIONAL,
INC., a Pennsylvania corporation ("International"); and ELTRAX HOSPITALITY
GROUP, INC., a Georgia corporation ("Hospitality"; Eltrax, Technology, ASP,
Squirrel, Senercomm, Customer Care, International and Hospitality, each a
"Borrower" and collectively "Borrowers"); PNC BANK, NATIONAL ASSOCIATION
("PNC"), the various financial institutions named therein or which hereafter
become a party thereto, (together with PNC collectively, "Lenders") and PNC as
agent for Lenders (together with its successors in such capacity, "Agent").
Capitalized terms not otherwise defined herein shall have the meanings provided
in the Loan Agreement.
FOR VALUE RECEIVED, Borrowers hereby jointly and severally promise to pay
to the order of ____________________ ("________"), at the office of Agent
located at _____________, __________, __________, ____________ _____ or at such
other place as Agent may from time to time designate to Borrowers in writing:
(i) the principal sum of ______________ AND __/100 DOLLARS ($__________)
or, if different, from such amount, the unpaid principal balance of _______'s
Commitment Percentage of the Revolving Advances as may be due and owing under
the Loan Agreement, payable in accordance with the provisions of the Loan
Agreement, subject to acceleration upon the occurrence of an Event of Default
under the Loan Agreement or earlier termination of the Loan Agreement pursuant
to the terms thereof; and
(ii) interest on the principal amount of this Note from time to time
outstanding until such principal amount is paid in full at the applicable
Revolving Interest Rate in accordance with the provisions of the Loan Agreement.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, interest shall be payable at the Default Rate. In no
event, however, shall interest exceed the maximum interest rate permitted by
law.
This Note is one of the Revolving Credit Notes referred to in the Loan
Agreement and is secured by the liens granted pursuant to the Loan Agreement and
the Other Documents, is entitled to the benefits of
Exhibit A - Page 1
the Loan Agreement and the Other Documents and is subject to all of the
agreements, terms and conditions therein contained.
This Note is subject to mandatory prepayment and may be voluntarily
prepaid, in whole or in part, on the terms and conditions set forth in the Loan
Agreement.
If an Event of Default under Section 10.7 of the Loan Agreement shall
occur, then this Note shall immediately become due and payable, without notice,
together with reasonable attorneys' fees if the collection hereof is collected
by or through an attorney at law. If any other Event of Default shall occur
under the Loan Agreement or any of the Loan Documents, which is not cured within
any applicable grace period, then this Note may, as provided in the Loan
Agreement, be declared to be immediately due and payable, without notice,
together with reasonable attorneys' fees, if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof.
This Note shall be construed and enforced in accordance with the internal
laws of the State of Georgia and is intended to take effect as a sealed
instrument under Georgia law.
Each Borrower expressly waives any presentment, demand, protest, notice of
protest, or notice of any kind except as expressly provided in the Loan
Agreement.
SIGNED, SEALED AND DELIVERED in Atlanta, Georgia.
ATTEST: ELTRAX SYSTEMS, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
ATTEST: ELTRAX TECHNOLOGY SERVICES
GROUP, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
Exhibit A - Page 2
ATTEST: ELTRAX ASP GROUP, LLC
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
ATTEST: SQUIRREL SYSTEMS, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
ATTEST: SENERCOMM, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
ATTEST: ELTRAX CUSTOMER CARE GROUP, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
Exhibit A - Page 3
ATTEST: ELTRAX INTERNATIONAL, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
ATTEST: ELTRAX HOSPITALITY GROUP, INC.
------------------------ By:
, Secretary ----------------------------
----------------- Name:
--------------------------
[CORPORATE SEAL] Title:
-------------------------
Exhibit A - Page 4
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX SYSTEMS, INC., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX TECHNOLOGY SERVICES
GROUP, INC., the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
board of directors of said corporation, and that he signed his name thereto by
like order.
------------------------------
NOTARY PUBLIC
Exhibit A - Page 5
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX ASP GROUP, LLC, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC STATE OF GEORGIA
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of SQUIRREL SYSTEMS, INC., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of SENERCOMM, INC., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
------------------------------
NOTARY PUBLIC
Exhibit A - Page 6
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX CUSTOMER CARE GROUP,
INC., the corporation described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the board
of directors of said corporation, and that he signed his name thereto by like
order.
------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX INTERNATIONAL, INC.,
the corporation described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the board of
directors of said corporation, and that he signed his name thereto by like
order.
------------------------------
NOTARY PUBLIC
STATE OF GEORGIA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
On this _____ day of __________, 20___, before me personally came
______________________________, to me known, who, being by me duly sworn, did
depose and say that he is the __________________ of ELTRAX HOSPITALITY GROUP,
INC., the corporation described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the board
of directors of said corporation, and that he signed his name thereto by like
order.
------------------------------
NOTARY PUBLIC
Exhibit A - Page 7
Exhibit B
Form of Commitment Transfer Supplement
--------------------------------------
COMMITMENT TRANSFER SUPPLEMENT
This COMMITMENT TRANSFER SUPPLEMENT, dated as of __________, _______, among
___________________________ (the "Transferor Lender"), the Purchasing Lender
executing this Commitment Transfer Supplement (the "Purchasing Lender"), and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), as agent for the Lenders (as defined below)
under the Loan Agreement (as defined below).
W I T N E S S E T H:
--------------------
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 16.3 of the Revolving Credit and Security
Agreement dated March __, 2000 (as from time to time amended, supplemented or
otherwise modified in accordance with the terms thereof, the "Loan Agreement")
among ELTRAX SYSTEMS, INC., a Minnesota corporation ("Eltrax"); ELTRAX
TECHNOLOGY SERVICES GROUP, INC., a Georgia corporation ("Technology"); ELTRAX
ASP GROUP, LLC, a Georgia limited liability company ("ASP"); SQUIRREL SYSTEMS,
INC., a Georgia corporation ("Squirrel"); SENERCOMM, INC., a Florida corporation
("Senercomm"); ELTRAX CUSTOMER CARE GROUP, INC., a Georgia corporation
("Customer Care"); ELTRAX INTERNATIONAL, INC., a Pennsylvania corporation
("International"); and ELTRAX HOSPITALITY GROUP, INC., a Georgia corporation
("Hospitality"; Eltrax, Technology, ASP, Squirrel, Senercomm, Customer Care,
International and Hospitality, each a "Borrower" and collectively "Borrowers");
PNC and the various other financial institutions (collectively, the "Lenders")
and PNC as agent for Lenders (in such capacity, "Agent") named in or which
hereafter become a party to the Loan Agreement;
WHEREAS, each Purchasing Lender wishes to become a Lender party to the Loan
Agreement; and
WHEREAS, the Transferor Lender is selling and assigning to each Purchasing
Lender, rights, obligations and commitments under the Loan Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. All capitalized terms used herein which are not defined shall have the
meanings given to them in the Loan Agreement.
2. Upon receipt by the Agent of four counterparts of this Commitment
Transfer Supplement, to each of which is attached a fully completed Schedule I,
----------
and each of which has been executed by the Transferor Lender and Agent, Agent
will transmit to Transferor Lender and each Purchasing Lender a Transfer
Effective Notice, substantially in the form of Schedule II to this Commitment
-----------
Transfer Supplement (a "Transfer Effective Notice"). Such Transfer Effective
Notice shall set forth, inter alia, the date on which the transfer effected by
this Commitment Transfer Supplement shall become effective (the "Transfer
Effective Date"), which date shall not be earlier than the first Business Day
following the date such Transfer Effective Notice is received. From
Exhibit B - Page 1
and after the Transfer Effective Date, each Purchasing Lender shall be a Lender
party to the Loan Agreement for all purposes thereof.
3. At or before 12:00 Noon (East Brunswick, New Jersey time) on the
Transfer Effective Date, each Purchasing Lender shall pay to Transferor Lender,
in immediately available funds, an amount equal to the purchase price, as agreed
between Transferor Lender and such Purchasing Lender (the "Purchase Price"), of
the portion of the Advances being purchased by such Purchasing Lender (such
Purchasing Lender's "Purchased Percentage") of the outstanding Advances and
other amounts owing to the Transferor Lender under the Loan Agreement and the
Revolving Credit Note. Effective upon receipt by Transferor Lender of the
Purchase Price from a Purchasing Lender, Transferor Lender hereby irrevocably
sells, assigns and transfers to such Purchasing Lender, without recourse,
representation or warranty, and each Purchasing Lender hereby irrevocably
purchases, takes and assumes from Transferor Lender, such Purchasing Lender's
Purchased Percentage of the Advances and other amounts owing to the Transferor
Lender under the Loan Agreement and the Revolving Credit Note together with all
instruments, documents and collateral security pertaining thereto.
4. Transferor Lender has made arrangements with each Purchasing Lender
with respect to (i) the portion, if any, to be paid, and the date or dates for
payment, by Transferor Lender to such Purchasing Lender of any fees heretofore
received by Transferor Lender pursuant to the Loan Agreement prior to the
Transfer Effective Date and (ii) the portion, if any, to be paid, and the date
or dates for payment, by such Purchasing Lender to Transferor Lender of fees or
interest received by such Purchasing Lender pursuant to the Loan Agreement from
and after the Transfer Effective Date.
5. (a) All principal payments that would otherwise by payable from and
after the Transfer Effective Date to or for the account of Transferor Lender
pursuant to the Loan Agreement and the Revolving Credit Note shall, instead, be
payable to or for the account of Transferor Lender and Purchasing Lender, as the
case may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue
for the account of Transferor Lender from and after the Transfer Effective Date
pursuant to the Loan Agreement and the Revolving Credit Note shall, instead,
accrue for the account of, and be payable to, Transferor Lender and Purchasing
Lender, as the case may be, in accordance with their respective interests as
reflected in this Commitment Transfer Supplement. In the event that any amount
of interest, fees or other amounts accruing prior to the Transfer Effective Date
was included in the Purchase Price paid by any Purchasing Lender, Transferor
Lender and each Purchasing Lender will make appropriate arrangements for payment
by Transferor Lender to such Purchasing Lender of such amount upon receipt
thereof from Borrowers.
6. Concurrently with the execution and delivery hereof, Transferor Lender
will provide to each Purchasing Lender conformed copies of the Loan Agreement
and all related documents delivered to Transferor Lender.
7. Each of the parties to this Commitment Transfer Supplement agrees that
at any time and from time to time upon the written request of any other party,
it will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Commitment Transfer Supplement.
Exhibit B - Page 2
8. By executing and delivering this Commitment Transfer Supplement,
Transferor Lender and each Purchasing Lender confirm to and agree with each
other and Agent and Lenders as follows: (i) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned hereby free and clear of any adverse claim, Transferor Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement, the Revolving Credit Note or any
other instrument or document furnished pursuant thereto; (ii) Transferor Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of Borrowers or the performance or observance by
Borrowers of any of the Obligations under the Loan Agreement, the Revolving
Credit Note or any other instrument or document furnished pursuant hereto; (iii)
each Purchasing Lender confirms that is has received a copy of the Loan
Agreement, together with copies of such financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Commitment Transfer Supplement; (iv)
each Purchasing Lender will, independently and without reliance upon Agent,
Transferor Lender or any other Lenders and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Agreement; (v)
each Purchasing Lender appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement as are
delegated to the Agent by the terms thereof; (vi) each Purchasing Lender agrees
that is will perform all of its respective obligations as set forth in the Loan
Agreement to be performed by each as a Lender; and (vii) each Purchasing Lender
represents and warrants to Transferor Lender, Lenders, Agent and Borrowers that
it is either (x) entitled to the benefits of an income tax treaty with the
United States of America that provides for an exemption from the United State
withholding tax on interest and other payments made by Borrowers under the Loan
Agreement and the Other Documents or (y) is engaged in trade or business within
the United States of America.
9. Schedule I hereto sets forth the revised Commitment Percentages of
----------
Transferor Lender and the Commitment Percentage of each Purchasing Lender as
well as administrative information with respect to each Purchasing Lender.
10. This Commitment Transfer Supplement shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Transfer
Supplement to be executed by their respective duly authorized officers on the
date set forth above.
,
-------------------------------------
as Transferor Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit B - Page 3
,
------------------------------------
as a Purchasing Lender
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit B - Page 4
SCHEDULE I TO COMMITMENT TRANSFER SUPPLEMENT
LIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS
-------------------------------------------------------------
[Transferor Lender] Revised Commitment Amount $_________________
Revised Commitment Percentage: _____%
[Purchasing Lender] Commitment Amount $_________________
Commitment Percentage: _____%
Addresses for Notices
---------------------
-----------------------------
-----------------------------
-----------------------------
Attention:
Telephone:
Telecopier:
Exhibit B - Page 5
SCHEDULE II TO COMMITMENT TRANSFER SUPPLEMENT
[Form of Transfer Effective Notice]
To: _______________________, as Transferor Lender and __________________,
as Purchasing Lender:
The undersigned, as Agent under the Revolving Credit and Security Agreement
dated _______ __, 2000 (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "Loan Agreement") among
_________________________, a corporation organized under the laws of the State
of _______, _________________________, a corporation organized under the laws of
the State of _______, _________________________, a corporation organized under
the laws of the State of _______ (collectively, the "Borrowers"), the various
other financial institutions (collectively, the "Lenders") and PNC BANK,
NATIONAL ASSOCIATION, as a Lender and as agent for Lenders, acknowledges receipt
of four (4) executed counterparts of a completed Commitment Transfer Supplement
in the form attached hereto. [Note: Attach copy of Commitment Transfer
Supplement.] Terms defined in such Commitment Transfer Supplement are used
herein as therein defined.
Pursuant to such Commitment Transfer Supplement, you are advised that the
Transfer Effective Date will be [Insert date of Transfer Effective Notice.]
PNC BANK, NATIONAL ASSOCIATION,
as Agent
By:
---------------------------------
Title:
--------------------------
ACCEPTED FOR RECORDATION
IN REGISTER:
Exhibit B - Page 6
Exhibit C
JOINDER AGREEMENT AND SUPPLEMENT
TO REVOLVING CREDIT AND SECURITY AGREEMENT
------------------------------------------
THIS JOINDER AGREEMENT AND SUPPLEMENT TO REVOLVING CREDIT AND SECURITY
AGREEMENT ("Joinder Agreement"), being Supplement No. _____, dated as of
__________________, _____, to that certain Revolving Credit and Security
Agreement dated March __, 2000 (as at any time amended, the "Loan Agreement")
among ELTRAX SYSTEMS, INC., a Minnesota corporation ("Eltrax"); ELTRAX
TECHNOLOGY SERVICES GROUP, INC., a Georgia corporation ("Technology"); ELTRAX
ASP GROUP, LLC, a Georgia limited liability company ("ASP"); SQUIRREL SYSTEMS,
INC., a Georgia corporation ("Squirrel"); SENERCOMM, INC., a Florida corporation
("Senercomm"); ELTRAX CUSTOMER CARE GROUP, INC., a Georgia corporation
("Customer Care"); ELTRAX INTERNATIONAL, INC., a Pennsylvania corporation
("International"); and ELTRAX HOSPITALITY GROUP, INC., a Georgia corporation [;
and ________________________] (collectively, the "Existing Borrowers"); the
various financial institutions listed on the signature pages thereof and their
respective successors and permitted assigns which become "Lenders" as provided
therein; and PNC BANK, NATIONAL ASSOCIATION, a national banking association, in
its capacity as collateral and administrative agent for the Lenders (together
with its successors in such capacity, "Agent"). Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings ascribed to them in the
Loan Agreement. The terms "herein," "hereof" and "hereunder" and other words of
similar import refer to this Joinder Agreement as a whole and not to any
particular section, paragraph or subdivision; all references to any Person shall
mean and include the successors and permitted assigns of such Person; all
references to any of the Loan Documents shall include any and all amendments or
modifications thereto and any and all restatements, extensions or renewals
thereof; and wherever the word "including" shall appear in this Joinder
Agreement, such word shall be understood to mean "including, without
limitation."
Lenders have been making Revolving Advances and other extensions of credit
to Existing Borrowers pursuant to the terms of the Loan Agreement and the Other
Loan Documents. Pursuant to the Loan Agreement, each wholly-owned Subsidiary of
Borrower that was not in existence on the Closing Date is required, if so
requested by Agent, to become a party to and be bound by all of the terms of the
Loan Agreement and the other Loan Documents as if such Subsidiary had been an
original signatory and party to the Loan Agreement and Other Documents to which
the Existing Borrowers are parties. The undersigned, _______________________, a
_____________________ corporation ("New Borrower") is a wholly-owned Subsidiary
of _________________________ and is executing this Joinder Agreement, at Agent's
request and with Agent's consent, in accordance with the requirements of the
Loan Agreement, in order to induce Agent and Lenders to continue extending
credit to or for the benefit of the Existing Borrowers as well as New Borrower
based upon not only the Eligible Receivables and Eligible Inventory of the
Existing Borrowers but also the Eligible Receivables and Eligible Inventory of
New Borrower.
NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid and other good and
valuable consideration, receipt whereof is severally acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
Exhibit C - Page 1
1. By its signature below, New Borrower hereby agrees that it is a
"Borrower" under and bound by and subject to all of the provisions of the Loan
Agreement and Other Documents to which the Existing Borrowers are parties, with
the same force and effect as if New Borrower were an original signatory thereto,
and New Borrower hereby agrees to abide by and perform all of its obligations as
a "Borrower" under the Loan Agreement and the Other Documents. Each reference
to "Borrowers" in the Loan Agreement and other Loan Documents shall be
understood to mean and include New Borrower as well as the Existing Borrowers.
The terms of the Loan Agreement are hereby incorporated into this Joinder
Agreement by reference.
2. New Borrower acknowledges and agrees that it is and shall be jointly
and severally liable with the Existing Borrowers for all Revolving Advances and
other Obligations outstanding on the date hereof and shall be jointly and
severally liable with all Existing Borrowers (together with each other Person
who becomes a Borrower on or after the date hereof) for all Revolving Advances
and other Obligations at any time or times outstanding hereafter. New Borrower
hereby appoints and designates Borrowing Agent as its representative for all
purposes under the Loan Agreement, including the making of requests for
Revolving Advances and other extensions of credit pursuant to the terms of the
Loan Agreement and receiving notices and other communications to Borrowers from
Agent or any Lenders.
3. To secure the prompt payment and performance to Agent and Lenders of
all of the Obligations, New Borrower hereby grants to Agent, for the benefit of
Agent and for the ratable benefit of Lenders, a continuing security interest in
and Lien upon all of New Borrower's assets that are included within the
definition of "Collateral" under the Loan Agreement and any of the Other
Documents. Concurrently with its execution of this Joinder Agreement, New
Borrower shall execute and deliver to Agent all Lien Perfection Documents
requested by Agent.
4. New Borrower represents and warrants to Agent and Lenders that New
Borrower is a wholly-owned Subsidiary of _____________________________ and is
engaged in substantially the same business as the Existing Borrowers and
operates with the Existing Borrowers in a joint and common enterprise; this
Joinder Agreement has been duly authorized, executed and delivered by New
Borrower and constitutes a legal, valid and binding obligation of New Borrower
enforceable against it in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity); and the Schedules annexed hereto contain
true, accurate and complete information with respect to New Borrower and the
matters covered by the provisions of Section 5 of the Loan Agreement and such
Schedules shall be deemed to supplement and become a part of the Schedules
annexed to the Loan Agreement.
5. Except as otherwise expressly provided in this Joinder Agreement,
nothing herein shall be deemed to amend or modify any provision of any of the
Loan Documents, each of which shall remain in full force and effect. This
Joinder Agreement is not intended to be, nor shall it be construed to create, a
novation or accord and satisfaction. If any provision in or obligation under
this Joinder Agreement shall be invalid, illegal or otherwise unenforceable in
any jurisdiction, then the validity, legality and enforceability of the
remaining provisions or obligations shall not in any way be affected or impaired
thereby.
6. New Borrower, jointly and severally with the Existing Borrowers,
agrees to reimburse Agent and Lenders for their respective out-of-pocket
expenses in connection with the preparation, execution and delivery of this
Joinder Agreement, including the fees, disbursements and other charges of
counsel for Agent and Lenders.
Exhibit C - Page 2
7. This Joinder Agreement, together with the Loan Documents and all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement among the parties with respect to the subject matter thereof. Each of
the Schedules as attached hereto is incorporated into this Joinder Agreement and
by this reference made a part hereof and a part of the Loan Agreement.
8. This Joinder 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 an original, but all of such counterparts
shall constitute but one and the same instrument.
9. This Joinder Agreement shall be effective when accepted by Agent (New
Borrower hereby waiving notice of such acceptance) and thereupon shall be deemed
to be a contract governed by and construed and enforced in accordance with the
internal laws of the State of Georgia.
IN WITNESS WHEREOF, New Borrower and Agent have duly executed this Joinder
Agreement, under seal as of the day and year first written above.
NEW BORROWER:
------------
ATTEST: ------------------------------------
----------------------------- By:
Title: ----------------------------
Title:
[Corporate Seal] -------------------------
AGENT:
-----
PNC BANK, NATIONAL ASSOCIATION
By:
---------------------------------
Title:
------------------------
Exhibit C - Page 3