EXHIBIT 10.19
TERM LOAN, GUARANTY AND SECURITY AGREEMENT
AMONG
PERFORMANCE HOLDINGS, INC.
SPAR PERFORMANCE GROUP, INC.
and
SPAR INCENTIVE MARKETING, INC.
DATED AS OF: June 30, 2002
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Table of Contents
Provision Heading Page
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Exhibit A Form of $2,500,000 Term Promissory Note
Exhibit B Form of $3,500,000 Term Promissory Note
Exhibit C Addresses for Notices and Service
Exhibit D Schedule of Targeted Adjusted Cash Flows
Exhibit E Form of Financial Covenants Compliance Certificate
Schedule 1.01 Material Adverse Effect
Schedule 3.03 Certain Required Consents, Etc.
Schedule 3.05 Certain Conflicts, Etc.
Schedule 3.06 Litigation
Schedule 3.08(b) Certain Existing Defaults and Adverse Agreements
Schedule 3.10(a) Existing Indebtedness
Schedule 3.10(b) Existing Guaranties and other Credit Support
Schedule 3.10(c) Existing ERISA Plans
Schedule 3.11 Existing Subsidiaries, Partnerships, Ventures and Other
Investments
Schedule 3.12(b) Existing Liens and Encumbrances
Schedule 3.12(d) Insurance Policies
Schedule 3.12(e) Other Locations of Collateral
Schedule 3.12(f) Existing Employee Contracts and Arrangements
Schedule 3.12(g) Certain General Intangibles
Schedule 3.14(a) Machinery, Equipment and other Fixed Assets
Schedule 3.14(b) Real Estate Leases
Schedule 3.14(c) Real Estate Owned
Schedule 3.14(d) Equipment and other Personal Property Leases
Schedule 3.15 Intellectual Properties
Schedule 3.17 Pledged Securities
Schedule 3.19 Loan Party Securities
Schedule 6.11(b) Permitted Bonuses
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INTRODUCTION
THIS TERM LOAN, GUARANTY AND SECURITY AGREEMENT, dated as of June 30,
2002, is by and among PERFORMANCE HOLDINGS, INC., a Delaware corporation
currently having an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrower"), SPAR PERFORMANCE GROUP, INC., a Delaware corporation currently
having an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("SPG"), and SPAR
INCENTIVE MARKETING, INC., a Delaware Corporation currently having an address at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Lender").
RECITALS
The Borrower has entered into the Stock Purchase Agreement and other
Stock Purchase Documents (as "Stock Purchase Agreement", "Stock Purchase
Documents" and the other terms, words and phrases used in these Recitals are
defined in Article I hereof) in order to purchase all of the outstanding SPG
Stock from the Lender pursuant to the Stock Purchase Documents for the benefit
of the Borrower's and SPG's employees as further provided in the ESOP Related
Documents. The Borrower has entered into this Agreement and issued the Term
Notes in order to fund such purchase of the SPG Stock.
The Borrower has agreed to collateralize these Loans with all of its
assets and properties. In order to further induce the Lender to make those Loans
and enter into this Agreement, (a) the Borrower has agreed to guaranty the
Senior Loan Obligations and to secure those obligations with a pledge of all of
its assets and properties, and (b) SPG has agreed to guaranty (i) the
Obligations pursuant to its guaranty contained in this Agreement, and (ii) the
Senior Loan Obligations pursuant to the Senior Loan Guaranty, which each will be
secured by a pledge of all of SPG's assets and properties.
Immediately following the closings contemplated in this Agreement and
the Stock Purchase Agreement, the Borrower will established the ESOP Trust
pursuant to the ESOP Related Documents), will issue and contribute 1,000,000
shares of its common stock to for the benefit of the employees of the Borrower
and SPG as further provided in the ESOP Related Documents, and will repurchase
all of its shares of common stock not owned by the ESOP Trust.
Accordingly, the Borrower, SPG and the Lender have entered into this
Agreement in order to provide for (among other things) the making and repayment
of the Loans, SPG's guaranty of the Obligations, the collateralization of the
Obligations of the Borrower and Guarantor and the documentation of the various
representations of and agreements with the Borrower, all upon the terms and
provisions and subject to the conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing, the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration (the receipt
and adequacy of which is hereby acknowledged by the Borrower), the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following capitalized terms and non-capitalized words and phrases shall have the
meanings respectively assigned to them below:
"Accounts Receivable" shall mean all of the referenced Person's
accounts (as defined in the UCC) and other rights to receive payments for any
inventory, goods or other products, assets or properties sold, leased or
otherwise disposed of or for services rendered, whether or not earned by
performance, recognized by the referenced Person or recorded on its books and
records, and irrespective of whether any may not be characterized as or
constitute an account (as defined in the UCC) or may be characterized as or also
constitute a chattel paper, chose-in-action, contract right, general intangible,
instrument, invoice, letter of credit right, note, payment intangible or other
collateral type in any document, by any Person or under any Applicable Law, in
each case whether now existing or hereafter acquired, created, executed,
modified or otherwise existing (including, without limitation, during the
pendency of any Bankruptcy Proceeding).
"Additional Term Loan" shall have the meaning assigned to it in
Section 2.02(b) hereof.
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"Adjusted Capital Expenditures" of the Borrower and its subsidiaries
for any referenced Computation Period shall mean the aggregate capital
expenditures of the Borrower and its subsidiaries for such Computation Period,
each as determined in accordance with GAAP consistently applied.
"Adjusted Cash Flow" shall mean, as at any date of determination,
Adjusted EBITDA for the Computation Period ending at such date, plus (a) the sum
of all extraordinary gains and ESOP contributions deducted during the
Computation Period ending at such date, minus (b) the sum of all (i) cash
interest payments on all Indebtedness, (ii) permitted capital expenditures,
(iii) actual ESOP contributions, but not more than the ESOP Maximum
Contribution, and (iv) principal payments on the Term Loans made during the
Computation Period ending at such date.
"Adjusted Current Assets" shall mean, as at any date of determination,
the current assets of the Borrower and its subsidiaries at such date, each as
determined in accordance with GAAP consistently applied.
"Adjusted Current Liabilities" shall mean, as at any date of
determination, the current liabilities of the Borrower and its subsidiaries at
such date as determined in accordance with GAAP consistently applied, including
(without limitation) the current portion of all Adjusted Debt of the Borrower
and its subsidiaries at such date.
"Adjusted Debt" shall mean, as at any date of determination, the sum
of the aggregate amount of all Indebtedness and Credit Support of the Borrower
and its subsidiaries at such date determined in accordance with the definitions
thereof, which Indebtedness shall include the unadvanced amount of all letters
of credit as if fully advanced at such date, and which Credit Support shall
equal the amount of the Indebtedness thereby supported (including the unadvanced
amount of all letters of credit as if fully advanced) at such date, in each case
irrespective of any other treatment under GAAP.
"Adjusted Debt Service Ratio" shall mean, as at any date of
determination, the ratio of (a) the Adjusted EBITDA of the Borrower and its
subsidiaries for the Computation Period ending at such date, to (b) the Adjusted
Debt Service and Adjusted Lease Service of the Borrower and its subsidiaries for
the Computation Period ending at such date.
"Adjusted Debt Service" shall mean, as at any date of determination,
the sum of all payments of principal and interest on Indebtedness of the
Borrower and its subsidiaries (including, without limitation, all commissions,
discounts and other fees and charges owed with respect to any and all
commitments, lines of credit, banker's acceptances, letters of credit, and
interest rate protection, foreign currency exchange, or other interest or
exchange rate swap or hedging agreements or arrangements, and the interest and
principal components of capitalized leases) paid or payable during the
Computation Period ending at such date.
"Adjusted Debt to EBITDA Ratio" shall mean, as at any date of
determination, the ratio of (a) the Adjusted Debt of the Borrower and its
subsidiaries at such date, to (b) the Adjusted EBITDA of the Borrower and its
subsidiaries at such date.
"Adjusted Debt to Equity Ratio" shall mean, as at any date of
determination, the ratio of (a) the Adjusted Debt of the Borrower and its
subsidiaries at such date, to (b) the Adjusted Net Worth of the Borrower and its
subsidiaries at such date.
"Adjusted EBITDA" of the Borrower and its subsidiaries for any
referenced Computation Period shall mean the aggregate earnings of the Borrower
and its subsidiaries before interest, income and franchise taxes, amortization
and depreciation for such Computation Period, excluding extraordinary items,
each as determined in accordance with GAAP consistently applied.
"Adjusted Lease Service" shall mean, as at any date of determination,
the sum of all rent, additional rent and other amounts on each lease of Real
Estate or Equipment or other personal property by the Borrower and its
subsidiaries (including, without limitation, all assessments, commissions and
fees) paid or payable during the Computation Period ending at such date.
"Adjusted Leverage Ratio" shall mean, as at any date of determination,
the ratio of (a) the Adjusted Liabilities of the Borrower and its subsidiaries
at such date, to (b) the Adjusted Net Worth of the Borrower and its subsidiaries
at such date.
"Adjusted Liabilities" shall mean, as at any date of determination,
the sum of (i) the aggregate amount of all Adjusted Debt of the Borrower and its
subsidiaries at such date, and (ii) the aggregate amount of all other
liabilities of the Borrower and its subsidiaries at such date, each as
determined
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in accordance with GAAP consistently applied, except that Adjusted Debt shall be
determined in accordance with the definition thereof.
"Adjusted Net Worth" shall mean, as at any date of determination, (a)
the aggregate book value of all assets and properties of the Borrower and its
subsidiaries at such date, minus the Adjusted Liabilities of the Borrower and
its subsidiaries at such date, each as determined in accordance with GAAP
consistently applied, except that Adjusted Liabilities shall be determined in
accordance with the definition thereof.
"Adjusted Quick Assets" shall mean, as at any date of determination,
the quick assets (consisting of cash, marketable securities and Accounts
Receivable) of the Borrower and its subsidiaries at such date, each as
determined in accordance with GAAP consistently applied.
"Adjusted Quick Ratio" shall mean, as at any date of determination,
the ratio of (a) the Adjusted Current Assets of the Borrower and its
subsidiaries at such date, to (b) the Adjusted Current Liabilities of the
Borrower and its subsidiaries at such date (excluding from current liabilities
for this purpose the current portion of long term Adjusted Debt).
"Affiliate" of a referenced Person shall mean (a) any other Person
controlling, controlled by or under common control with such referenced Person,
(b) any other Person beneficially owning or controlling ten percent (10%) or
more of the outstanding voting securities or rights or of the interest in the
capital, distributions or profits of the referenced Person, provided that the
Lender shall not under any circumstance be deemed an Affiliate of the Borrower
or any of its subsidiaries as a result of any securities pledge or otherwise,
(c) any other Person operating the business or substantially all of the property
of the referenced Person, or vice versa, or (d) any director, officer, manager
or other executive of or partner, member or joint venturer in the referenced
Person or such other Person. If the referenced Person is an individual, then the
term "Affiliate" also shall include members of the immediate family (including
parents, spouse and children) of such individual and any "Affiliate" of one or
more of those family members. The terms "control", "controlling", "controlled"
and the like shall mean the direct or indirect possession of the power to direct
or cause the direction of the management or policies of a Person or the
disposition of its assets or properties, whether through ownership, by contract,
arrangement or understanding, or otherwise.
"Agreement" shall mean this Term Loan, Guaranty and Security
Agreement, together with all schedules and exhibits hereto, as the same may be
supplemented, modified, amended, restated or replaced from time to time in the
manner provided herein.
"Alternate Base Rate" shall mean a fluctuating annual rate of interest
in effect from time to time that for any day shall be equal to the highest of:
(i) the highest applicable rate of interest for such day under the Senior
Loan Documents plus six percent per annum; and
(ii) the Federal Funds Rate for such day plus ten percent per annum.
"Applicable Law" shall mean any applicable law, including (without
limitation) any: (a) federal, state, territorial, county, municipal or other
governmental or quasi-governmental law, statute, ordinance, rule, regulation,
requirement or use or disposal classification or restriction, whether domestic
or foreign; (b) judicial, administrative or other governmental or
quasi-governmental order, injunction, writ, judgment, decree, ruling,
interpretation, finding or other directive, whether domestic or foreign; (c)
common law or other legal or quasi-legal precedent; (d) arbitrator's, mediator's
or referee's decision, finding, award or recommendation; or (e) charter, rule,
regulation or other organizational or governance document of any national
securities exchange or market or other self-regulatory or governing body or
organization.
"Authority" shall mean any governmental or quasi-governmental
authority, including (without limitation) any federal, state, territorial,
county, municipal or other government or governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign,
or any national securities exchange or market or other self-regulatory or
governing body or organization.
"Bankruptcy Law" shall mean the United States Bankruptcy Code, as
amended, or any other present or future Applicable Law respecting bankruptcy,
reorganization, insolvency, readjustment of debts, relief of debtors,
dissolution or liquidation, any corresponding Applicable Law of any State or
foreign jurisdiction, or any succeeding Applicable Law, and the rules and
regulations promulgated thereunder; in
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each case as the same may have been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.
"Bankruptcy Proceeding" shall mean the filing or submission of any
petition or other document for relief, bankruptcy, insolvency, receivership or
other remedy, or the existence of any case, action, suit, or proceeding, whether
voluntary or involuntary, under any Bankruptcy Law, including (without
limitation) any event referenced in Section 8.01(h) or 8.01(i) hereof.
"Books and Records", "Books" and "Records" each shall mean all of the
referenced Person's books and records, including (without limitation) any and
all (i) corporate, partnership or limited liability company books and minutes or
other records of proceedings, stock, partner or membership books and transfer
ledgers, (ii) other instruments, indentures, agreements, charters, by-laws,
certificates or other documents or statutory equivalents respecting the
referenced Person or its organization, governance or operation, (iii) financial
books, ledgers, bills and other invoices, canceled checks and check registers,
and other receipt, disbursement or financial records and data, (iv) customer and
vendor lists, rent rolls, and computer and other data bases, (v) bills of sale,
contracts, invoices, and other evidence of sales, leases or other dispositions
and purchases, leases or other acquisitions, (vi) tax returns, registrations,
reports and other filings with Authorities, (vii) leases, contracts and other
agreements, (viii) insurance policies, (ix) correspondence, memoranda, notes,
files and folders, and (x) other documents, papers, data and other collections
of information; in each case whether on paper, film or other tangible copy,
stored on disc or tape, in computer memory or other electronic storage or in
some other storage medium, whether transmitted or received by email, internet or
other transmission method or medium, and whether or not in the possession of
such Person or a third party service provider, and as each has been and
hereafter may be supplemented, renewed, extended, modified, amended, restated or
replaced from time to time, and in each case whether now existing or hereafter
acquired, created, executed, modified or otherwise existing (including, without
limitation, during the pendency of any Bankruptcy Proceeding).
"Borrower" shall have the meaning assigned to it in the Introduction,
above.
"Borrower's Contribution Agreement" shall mean the letter agreement
between the Borrower and the Seller dated as of June 30, 2002, as the same may
be supplemented, modified, amended, restated or replaced from time to time in
the manner provided therein.
"Borrower's Obligations" shall mean any and all (i) Loans (including
future advances), together with accrued and unpaid interest thereon, (ii) other
amounts to be paid and all other obligations to be performed or otherwise
satisfied by the Borrower under any Note or any other Loan Instrument (whether
individually, jointly, severally or otherwise), (iii) any amounts to be paid and
obligations to be performed or otherwise satisfied by the Borrower under any
Stock Purchase Document (whether individually, jointly, severally or otherwise),
and (iv) overdrafts of the Borrower honored by the Lender (in its sole and
absolute discretion) and other indebtedness, liabilities or obligations (whether
under any note, guaranty or other instrument or document or otherwise) now or
hereafter owed to the Lender by the Borrower (whether individually, jointly,
severally or otherwise); in each case including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding.
"Borrower's Redemption Agreement" shall mean the letter agreement
between the Borrower and its sole shareholder (prior to the contribution to the
ESOP Trust contemplated under the Borrower's Contribution Agreement) dated as of
June 30, 2002, as the same may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein.
"Business Day" shall mean any day during which the Senior Lender is
open for business in New York, New York, other than any Saturday, Sunday or
other applicable legal holiday.
"Collateral" shall have the meaning assigned to it in Section 7.01
hereof.
"Computation Period" shall mean any period of twelve consecutive
fiscal months of the Borrower and its subsidiaries (including any fiscal year).
"Confidentiality Agreement" shall mean the Confidentiality and
Non-Compete Agreement among the Borrower, SPG, and the Lender dated as of June
30, 2002, as the same may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein.
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"Credit Support" shall respectively mean any and all agreements,
arrangements and obligations whereby the referenced Person directly or
indirectly has guarantied, assumed or otherwise become liable or responsible for
the Indebtedness or other obligation of any other Person, whether contingent or
otherwise, and whether or not recourse is limited to specified amounts or any
asset or property of the referenced Person, including (without limitation) (a)
any guaranty or other assurance of payment or performance of any obligation of
any other Person, (b) any indemnification, hold harmless or similar agreement,
arrangement or obligation respecting any obligation of any other Person, (c) any
pledge, hypothecation or other encumbrance, or any loan or other availability,
of any asset or property of the referenced Person in respect of any obligation
of any other Person, or (d) any agreement, arrangement or other obligation (i)
to purchase, repurchase or otherwise acquire any obligation of any other Person,
(ii) to purchase, repurchase, sell, lease or otherwise provide any securities or
other assets and properties in connection with any obligation of any other
Person, (iii) to provide any discounts, services or other accommodations in
connection with any obligation of any other Person, (iv) to make any capital
contribution, advance or loan in connection with the obligation of any other
Person or (v) to otherwise enhance, support, repay or discharge any obligation
of any other Person; excluding, however, any endorsement of a negotiable
instrument for collection or deposit in the ordinary course of the referenced
Person's business. The amount of an item of Credit Support shall be equal to the
maximum amount of Indebtedness thereby supported irrespective of any other
treatment under GAAP.
"Default" shall mean any event that, with or without the giving or
receipt of notice, the acquisition of knowledge or the passage of time (or any
combination thereof), would constitute an Event of Default.
"Effective Date" shall have the meaning assigned to it in Section 9.10
hereof.
"Environmental Claim" shall mean: (a) any responsibility, liability or
unlawful act or omission under any Environmental Law (whether alleged or
otherwise); (b) any tortious act or omission or breach of contract pertaining to
any Environmental Substance (whether alleged or otherwise); or (c) any other
violation or claim under any Environmental Law or in respect of any
Environmental Substance (whether alleged or otherwise).
"Environmental Law" and "Environmental Laws" shall respectively mean
any one or more of the Applicable Laws pertaining to: (a) any emission,
discharge, release, runoff, disposal or presence in the environment of any
Environmental Substance; (b) any cleanup, containment, manufacturing, treatment,
handling, transportation, storage or sale of or other activity pertaining to any
Environmental Substance; or (c) any other peril to public or occupational health
or safety or to the environment that may be posed by an Environmental Substance.
"Environmental Substance" shall mean any toxic substance, hazardous
material, contaminant, waste, pollutant or other similar product or substance
that may pose a threat to public or occupational health or safety or to the
environment.
"Equipment" shall mean any and all equipment, goods and other tangible
personal assets and properties of the Borrower, wherever located, including
(without limitation) any and all accessions, accessories, additions,
communications and computer hardware (including all network, control, routing,
storage, printing and display devices), equipment, Fixtures, furnishings, goods,
machinery, manuals, materials, parts, replacements, supplies, tools and
vehicles, whether or not located upon or affixed to any of the foregoing, in
each case whether now existing or hereafter acquired, created, installed,
modified or otherwise existing (including, without limitation, during the
pendency of any Bankruptcy Proceeding).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any corresponding or succeeding provisions of Applicable
Law, and the rules and regulations promulgated thereunder; in each case as the
same may have been and hereafter may be supplemented, modified, amended,
restated or replaced from time to time.
"ERISA Affiliate" and "ERISA Affiliates" shall respectively mean any
one or more of any trade, business, Person or persons that together with the
Borrower would be deemed to be a single employer within the meaning of Section
4001 of ERISA.
"ERISA Effect" shall mean any material and adverse effect on (a) any
Plan, (b) the assets and properties of any Plan or (c) any funding or other
liability of any one or more of the Borrower or any ERISA Affiliate in respect
of any Plan (individually or in the aggregate).
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"ERISA Event" shall mean any (a) "accumulated funding deficiency"
(whether or not waived), "prohibited transaction", "reportable event" (other
than any event for which the 30-day notice requirement has been waived by
regulation), "disqualification", "partial withdrawal" or "withdrawal", "partial
termination" or "termination", "insolvency", "reorganization", or the imposition
of any "penalty" or "withdrawal liability" in respect of any Plan under (and as
such words and phrases are defined in) ERISA or the Tax Code, as applicable, (b)
any other violation of ERISA, the Tax Code or any other Applicable Law in
respect of any Plan (whether alleged or otherwise), (c) supplement or amendment
to or modification or restatement of any Plan that could have or has had an
ERISA Effect, or (d) imposition, increase or other adverse change in any funding
obligation or other liability of any one or more of the Borrower or any ERISA
Affiliate in respect of any Plan or to the Pension Benefit Guaranty Corporation
(individually or in the aggregate).
"ESOP Maximum Contribution" shall mean for any Computation Period the
minimum amount required under ERISA and the Code for ESOP Plan compliance.
"ESOP Plan" shall mean the Performance Holdings, Inc. Employee Stock
Ownership Plan established by the Borrower pursuant to the ESOP Plan
Declaration.
"ESOP Plan Declaration" shall mean the document entitled Performance
Holdings, Inc. Employee Stock Ownership Plan dated as of July 1, 2002, together
with all schedules and exhibits thereto, as the same may be supplemented,
modified, amended, restated or replaced from time to time in the manner provided
therein.
"ESOP Related Document" and "ESOP Related Documents" shall
respectively mean any one or more of the ESOP Plan Declaration, the ESOP Trust
Agreement, the ESOP Trustee Indemnity Agreement and the ESOP Trustee Retention
Agreement, the Borrower's Contribution Agreement, the Borrower's Redemption
Agreement, and the various assignments, agreements, instruments and other
documents executed by the requisite Person(s) pursuant to or in connection with
any of the foregoing and accepted or delivered by the ESOP Trustee or Borrower,
as applicable (whether prior to, on or from time to time after the Effective
Date)and any and all waivers, consents, agreements, reports, statements,
certificates, schedules and other documents executed by the requisite Person(s)
pursuant to or in connection with any of the foregoing and accepted or delivered
by the ESOP Trustee or Borrower, as applicable (whether prior to, on or from
time to time after the Effective Date), as each may have been and hereafter may
be supplemented, modified, amended, restated or replaced from time to time in
the manner provided therein.
"ESOP Trustee Retention Agreement" shall mean the retention letter
agreement between the Borrower and the ESOP Trustee dated as of July 1, 2002,
together with all schedules and exhibits thereto, as the same may be
supplemented, modified, amended, restated or replaced from time to time in the
manner provided therein.
"ESOP Trust" shall mean the Performance Holdings, Inc. Employee Stock
Ownership Trust (under which the ESOP Trustee is the trustee) established
pursuant to the ESOP Plan Declaration and the ESOP Trust Agreement.
"ESOP Trust Agreement" shall mean the Trust Agreement between the
Borrower and the ESOP Trustee dated as of July 1, 2002, together with all
schedules and exhibits thereto, as the same may be supplemented, modified,
amended, restated or replaced from time to time in the manner provided therein.
"ESOP Trustee" shall mean GREATBANC TRUST COMPANY, and its successors,
permitted assigns and legal representatives, not in its corporate capacity, but
in its capacity as trustee under the ESOP Trust.
"ESOP Trustee Indemnity Agreement" shall mean the Indemnification
Agreement between the Borrower and the ESOP Trustee dated as of July 1, 2002,
together with all schedules and exhibits thereto, as the same may be
supplemented, modified, amended, restated or replaced from time to time in the
manner provided therein.
"event" shall include (without limitation) any event, occurrence,
circumstance, condition or state of facts.
"Event of Default" shall have the meaning assigned to it in Section
8.01 hereof.
"Fixture" shall mean any fixture as defined in the UCC.
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"GAAP" shall mean generally accepted accounting principles in the
United States of America consistent with those applied in the preparation of the
financial statements referred to in Section 3.07 hereof.
"Guarantor" and "Guarantors" shall respectively mean any one or more
of SPG and any other subsidiary of the Borrower executing an assumption of the
Guarantor's obligations hereunder as contemplated in Section 5.11 hereof.
"Guarantors' Obligations" shall mean any and all of (i) each
Guarantor's joint, several, absolute, unconditional and irrevocable guaranty of
the payment and performance of the Borrower's Obligations and the support
thereof with security interests in the Collateral, (ii) the other amounts to be
paid and all other obligations to be performed or otherwise satisfied by any
Guarantor under this Agreement or any other Loan Instrument (whether
individually, jointly, severally or otherwise), (iii) any amounts to be paid and
obligations to be performed or otherwise satisfied by any Guarantor under any
Stock Purchase Document (whether individually, jointly, severally or otherwise),
and (iv) overdrafts of any Guarantor honored by the Lender (in its sole and
absolute discretion) and other indebtedness, liabilities or obligations (whether
under any note, guaranty or other instrument or document or otherwise) now or
hereafter owed to the Lender by any Guarantor (whether individually, jointly,
severally or otherwise); in each case including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding.
"hereunder", "herein", "hereof" and other words and phrases of like
import shall refer to each and every term and provision of this Agreement.
"High Yield Rate" shall mean a fixed rate of interest per annum
established with respect to each year the Loans are outstanding, which interest
rate (a) shall be equal to 12% per annum through December 31, 2003, and (b) for
2004 and each year thereafter shall be equal to the higher of the median or mean
as of July 1, 2002 of the rates per annum reported as the high yield junk bond
interest rates in the Wall Street Journal (or similar publication or service if
the Wall Street Journal no longer reports such rate) on the immediately
preceding December 31 (or on the closest business day preceding December 31 on
which it reports such rate if December 31 is not a business day or such rate is
reported earlier in the month).
"Holdings Stock Plan" shall mean the any stock option plan, phantom
stock plan or the like of Performance Holdings, Inc., as approved by the Lender
in its sole discretion, as the same may be adopted and thereafter supplemented,
modified, amended, restated or replaced from time to time in the manner provided
therein.
"Holdings Warrant" shall have the meaning assigned to it in the
Revolving Credit Agreement.
"Improvements" shall mean all land development, construction and other
improvements to Real Estate, whether planned, authorized, under construction or
completed, and whether or not enhancing the value of the referenced Real Estate,
including (without limitation) all demolitions, excavations, fills and other
site work, roads and sidewalks, water, sewer and utility lines, buildings and
other structures, and all fixtures, furnishings and Equipment located on or used
in connection with the referenced Real Estate, whether or not affixed thereto.
"Indebtedness" of any referenced Person shall mean any and all
obligations of the referenced Person: (a) for borrowed money, however evidenced;
(b) evidenced by any promissory note, bond, debenture or other similar written
obligation to pay money; (c) for the deferred purchase price of any asset,
property or service; (d) under any interest rate protection, foreign currency
exchange, or other interest or exchange rate swap or hedging agreement or
arrangement; (e) in respect of any letter of credit or banker's acceptance; (f)
to reimburse or compensate any other Person respecting any provisional or other
temporary credit in advance of collection for deposits of any checks,
instruments or other documents made by the referenced Person or any of its
Affiliates; (g) as lessee under leases that have been capitalized or should be
capitalized under GAAP; (h) respecting loans or advances from any subsidiary or
other Affiliate; (i) respecting any preferred stock issued by the referenced
Person bearing any mandatory dividend, interest or other return, or subject to
any repurchase or redemption, that is payable in cash or any other property
(other than as payable only with common stock or like preferred stock); (j)
respecting unfunded accrued benefits under plans covered by Title IV of ERISA
and unfunded accrued post-retirement benefits under any "welfare benefit plan"
(as defined in ERISA); or (k) respecting other items treated as liabilities
under GAAP; provided, however, that Indebtedness shall not include any trade
liability owed by the referenced Person to any other Person that arose from the
purchase or sale from such other Person of goods or services by the
SPAR ESOP Term Loan Agreement
-7-
referenced Person in the ordinary course of its business and is treated (in its
entirety) as a current accounts payable under GAAP. In the event the referenced
Person is a corporation with one or more subsidiaries, the term "Indebtedness"
shall mean the Indebtedness of all of them consolidated in accordance with GAAP
consistently applied as of the date of calculation. Except as otherwise provided
in the financial covenant definitions, the amount of an item of Indebtedness
shall include all unused availability under lines of credit and commitments as
if fully advanced irrespective of any other treatment under GAAP.
"Initial Term Loan" shall have the meaning assigned to it in Section
2.02(a) hereof.
"Intellectual Property" shall mean (a) any and all copyrights and
copyrighted materials, logos, patents, service marks, trademarks, trade names,
domain names, computer programs and other , know how and other intellectual
properties of the referenced Person, including (without limitation) any and all
applications, invention disclosures and pending items, any and all designs,
discoveries, formulae, ideas, inventions, products, programs, software and
firmware (whether in source code, object code or otherwise, and including
(without limitation) all "shrink-wrap" licenses that accompanied any item of
Equipment or software when obtained), specifications, styles, techniques, and
other trade secrets and works of authorship for the current and intended
business, products and prospects, any and all license royalties and other
payment intangibles, the proceeds of infringement suits and other proceeds, the
right to ▇▇▇ for past, present and future infringement, all rights corresponding
thereto throughout the world, and all reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, and, in the case of
trademarks, the good will of the business to which each of them relates,
including (without limitation) the name "Performance Holdings, Inc." and any and
all derivatives thereof; (b) any and all proprietary or confidential information
or trade secrets pertaining to any of the assets, business, finances,
liabilities, operations, procedures or prospects of the Borrower, including
(without limitation) any and all accounting standards, policies and variances,
advertisements and other promotional materials (whether or not copyrighted),
analyses and methodologies, bids, books and records, business, claims and
controversies, correspondence, costs, credit, customer lists, identities,
contacts and other information, data, debt, disbursements, discs, tapes and
other media, documents, expenses, financial information, forecasts,
instructions, interpretations, invoices, leases, ledgers, licenses, litigation
and other proceedings, loans, manuals, materials, methods, orders, payables,
payroll, personnel, policies, presentations, prices, products, programs,
proposals, prospects, receipts, registrations, reports, services, software,
source code, strategies, suppliers, systems, targets, taxes, techniques, terms,
trade secrets, and qualifications; and (c) any and all Books and Records
evidencing or pertaining to any of the foregoing; in each case whether now
existing or hereafter acquired, licensed, created, executed, modified or
otherwise existing (including, without limitation, during the pendency of any
Bankruptcy Proceeding), and irrespective of whether any patent, copyright,
trademark or other right or protection has been or can be sought, issued or
obtained in connection therewith.
"Inventory" shall mean any and all inventory and other goods,
merchandise and other items held by the referenced Person (or on its behalf) for
manufacture, sale, lease or other delivery or consumption, wherever located,
whether raw materials, supplies, parts or other components, work-in-progress,
finished goods, returned goods or otherwise, in each case whether now existing
or hereafter acquired, created, modified, finished or otherwise existing
(including, without limitation, during the pendency of any Bankruptcy
Proceeding).
"Investment" shall mean, with respect to any referenced Person, (a)
any stock, warrant, option, put, call, bond, debenture, commercial paper,
governmental obligation, note, certificate of deposit, partnership interest
(general or limited), limited liability company membership or interest or trust
interest, any commodity or future , any commodity, future, swap, ceiling,
collar, straddle or other hedge or protection, any foreign currency or other
money, any bank, brokerage, deposit, securities, trading or other account, any
other security, investment property, financial asset, investment or interest,
any other obligation or right to acquire or benefit from any such item, (b) any
direct or indirect capital or other equity contribution to any other Person made
or committed to by the referenced Person, (c) any purchase by the referenced
Person of all or substantially all of the assets and properties of any other
Person or any discrete division or other business unit of such other Person, (d)
any agreement or arrangement by or with the referenced Person for the purpose of
entering into any partnership or joint venture with or providing funds or credit
to or for the benefit of any other Person, (e) any direct or indirect loan,
advance or Credit Support by the referenced Person to or for the benefit of any
other Person (including interest), each related governing document, and any
right, power, privilege, remedies or interest under, in or with respect to any
of the foregoing items in this subsection, or (f) any security entitlement or
other right, power, privilege, remedy or interest (whether under any governing
document or other related contract, instrument, agreement or document or
otherwise) of the referenced Person under, in or with respect to any of the
foregoing items in this definition, in each case whether now existing or
hereafter acquired, created, executed, modified or otherwise existing
(including, without limitation, during the pendency of any Bankruptcy
Proceeding), excluding, however, any (i) current trade liability (other than any
Indebtedness) owed to the referenced Person by any other Person that arose from
the
SPAR ESOP Term Loan Agreement
-8-
purchase or sale from the referenced Person of goods or services in the ordinary
course of its business, or (ii) for the purposes of Articles III, V and VI of
this Agreement only, prepayment of expenses (A) where such expenses are being
incurred by the referenced Person in the ordinary course of its business, (B)
such expenses are of a type customarily prepaid, and (C) such prepayment is in a
commercially reasonable amount for a commercially reasonable period. The amount
of any Investment shall be the original cost of such Investment, plus the cost
of all additions thereto, and minus the amount of any return of capital or
principal to the extent such return is in cash with respect to such Investment,
without, however, any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, or any corresponding or succeeding provisions of any
Applicable Law in any foreign jurisdiction, and the rules and regulations
promulgated thereunder, in each case as the same may have been and hereafter may
be supplemented, modified, amended or restated from time to time.
"Lender" shall have the meaning assigned to it in the Introduction,
above.
"Lien" and "Liens" shall respectively refer to any one or more of the
following to which the referenced or relevant Person is a party or by which the
referenced or relevant Person, any of its assets or properties or any other
referenced assets or properties may be bound or subject: (a) any assignment,
pledge, mortgage, hypothecation or security interest (irrespective of whether
the referenced Person is personally obligated with respect to any obligation
thereby secured); (b) any filed financing statement (other than as secured
party); (c) any consignment, finance lease, conditional sale contract or other
title retention agreement; (d) any assignment, pledge or other transfer,
restriction or encumbrance of any right to receive any income or other
distributions or proceeds; (e) any sale/leaseback transaction in which the
referenced Person is the seller/lessee; (f) any lien, charge, claim or other
encumbrance arising under any Applicable Law, whether in favor of an Authority
or otherwise, including (without limitation) liens for taxes, assessments and
other governmental charges and liens of mechanics, carriers, warehouses,
suppliers and laborers; (g) any restrictive covenant, lease, license, right of
use, possession or first refusal, infringement, community property or other
joint ownership interest, limitation or restriction on use or transfer,
exception to title, or other limitation or restriction on the extent, exercise
or enforcement of any right or interest respecting any asset or property; (h)
with respect to any Real Estate, any easement, right-of-way, servitude,
encroachment, restrictive covenant, reservation, or other exception to title;
(i) any counterclaim, setoff, right of recoupment, abatement, reduction,
community property right or other claim or determination, including (without
limitation) any right of set off or other claim against assets in the possession
of the claimant (whether or not intended as collateral); (j) any other lien,
encumbrance or adverse right or claim of any nature in, to or against any asset
or property, or (k) any covenant or agreement with any other Person to a
"Negative Pledge" (i.e., that the referenced or relevant Person will not (A) do
or permit any one or more of the things specified in the preceding clauses of
this definition or (B) sell, lease, sublease, transfer, exchange, abandon or
otherwise dispose of, surrender management, physical possession or control of,
physically alter or relocate all or any portion of its assets or properties).
"Loan" and "Loans" shall respectively mean the principal amounts
outstanding from time to time (including future advances) respecting any and all
of (i) [Intentionally Omitted], (ii) the Term Loans, and (iii) the other amounts
advanced from time to time to or on behalf of the Borrower by the Lender or its
designee pursuant to this Agreement or any other Loan Instrument (including,
without limitation, during the pendency of any Bankruptcy Proceeding).
"Loan Instrument" and "Loan Instruments" shall respectively mean any
one or more of this Agreement, the Notes, any other security agreement,
guaranty, hypothecation or other instrument, agreement or document with or
issued or given by the Borrower or any Surety in direct or indirect support (in
whole or in part) of any of the Borrower's Obligations or Surety's Obligations
(as hereinafter defined), the various mortgages, assignments, agreements,
guaranties, instruments and other documents creating, evidencing, perfecting,
governing or supporting any of the Obligations or any Surety's Obligations or
any interest of the Lender in any collateral securing or intended to secure any
of the Obligations or Surety's Obligations, and all waivers, consents,
agreements, reports, statements, certificates, schedules and other documents
executed by the requisite Person(s) pursuant to or in connection with any of the
foregoing and accepted or delivered by the Lender (whether prior to, on or from
time to time after the Effective Date), as each may be supplemented, modified,
amended, restated or replaced from time to time in the manner provided therein.
"Loan Party" and "Loan Parties" shall respectively mean any one or
more of the Borrower and the Guarantors.
"Margin Stock" shall mean any "margin stock" as defined in any
applicable Margin Stock Regulations.
SPAR ESOP Term Loan Agreement
-9-
"Margin Stock Regulations" shall mean Regulation T, U and/or X of the
Board of Governors of the Federal Reserve System, as applicable, , or any
corresponding or succeeding provisions of Applicable Law, and the rules and
regulations promulgated thereunder; in each case as the same may have been and
hereafter may be supplemented, modified, amended, restated or replaced from time
to time.
"Material Adverse Effect" shall mean any material and adverse effect,
whether individually or in the aggregate, upon (a) the assets, business, income,
operations, properties or condition, financial or otherwise, of Holdings or any
of its subsidiaries, other than as would be reasonably likely to result from the
events specified in Schedule 1.01 hereto (but subject to any conditions or
limits noted therein), (b) the ability of the Borrower to make payment as and
when due of all or any part of the Obligations, or (c) the Collateral or its
value or the validity, enforceability, perfection or priority of any security
interest of the Lender in any Collateral.
"Material Document" shall mean any ESOP Related Document, Stock
Purchase Document, Organizational Document, Custody Document or other material
instrument, indenture, agreement, document, arrangement or other obligation: (a)
to which the Borrower or any Surety is or may be a party; (b) by which the
Borrower, any Surety or any of the Collateral is or may be bound or subject; or
(c) by which any of the other material assets and properties of the Borrower or
any Surety is or may be bound or subject; in each case whether now existing or
hereafter existing, acquired or created, and irrespective of whether reduced to
writing, and as each has been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.
"Maturity Date" shall mean the earliest of (a) the Term Maturity Date
with respect to the Term Loan and related Obligations, and (b) with respect to
all Loans and other Obligations the date on which the maturity of the
Obligations shall have been accelerated or deemed accelerated pursuant to
Section 8.02 hereof or Applicable Law.
"mortgage" shall mean any mortgage, deed or trust, assignment or rents
or leases or other security deed or security interest in Real Estate.
"Note" and "Notes" shall respectively mean any one or more of the Term
Notes.
"Obligations" as of any date shall mean any and all of the obligations
of the Borrower's Obligations and Guarantors' Obligations.
"Organizational Document" shall mean any articles or certificate of
incorporation, charter, by-laws, limited liability company certificate or
agreement, partnership certificate or agreement, or other instrument, agreement
or document or any statutory equivalent in whole or in part respecting the
organization, governance, power or authority of the referenced Person, or of any
direct or indirect general partner, manager, trustee or similar principal of the
referenced Person that is not a natural Person, as applicable, including
(without limitation) (i) the Certificate of Incorporation or By-Laws of the
Borrower; (ii) any resolution with continuing effect adopted by the Board of
Directors, the management or other applicable committee of directors, the
managers, or the shareholders or members of a referenced Person, or of any
direct or indirect general partner, manager, trustee or similar principal of the
referenced Person, that is a corporation, limited liability company or similar
entity, or (iii) any agreement, trust or arrangement among any of its equity
holders respecting the securities issued by or any of the beneficiaries of the
referenced Person, or of any direct or indirect general partner, manager,
trustee or similar principal of the referenced Person, that is not a natural
Person; in each case as and when executed, adopted, filed or otherwise
effectuated (as applicable) from time to time (whether before, as of or after
the date hereof), and irrespective of whether reduced to writing, and as each
has been and hereafter may be supplemented, renewed, extended, modified,
amended, restated or replaced from time to time.
"Other Taxes" shall have the meaning assigned to it in Section 2.09
hereof.
"Permitted Investments" shall mean: (a) certificates of deposit,
commercial paper or other market rate instruments with final maturities of 7
days or less issued by and normal business banking accounts with (i) the Lender,
(ii) the Senior Lender, (iii) any commercial bank that is organized under the
laws of the United States or any state thereof, has total capital and surplus in
excess of $1,000,000,000, or (iv) the holding company of any such bank or any
subsidiary of such holding company; (b) securities or other obligations with
final maturities of 7 days or less from the date of acquisition issued or
unconditionally guarantied by the government of the United States of America or
any agency or instrumentality thereof (but only to the extent backed by the full
faith and credit of the United States of America); and (d) investments in money
market funds having net assets in excess of $1,000,000,000 that invest, and that
are restricted by their respective charters to invest, solely in investments of
the type described in the immediately preceding
SPAR ESOP Term Loan Agreement
-10-
subsections (a), (b), and (c) of this definition; provided, however, that any
such item shall only constitute a Permitted Investment as and to the extent held
by the Lender, its designee or a financial institution approved by the Lender
pursuant and subject to a control agreement in form and substance acceptable to
the Lender.
"Permitted Lien" for a referenced Person shall mean any of the
following: (a) statutory liens incurred in the ordinary course of the referenced
Person's business (i) for taxes, assessments or other governmental charges,
levies or claims, (ii) of mechanics, carriers, warehouses, suppliers and
laborers, (iii) respecting worker's compensation, unemployment insurance,
statutory obligations or social security legislation, or (iv) required by law as
a condition precedent to the transaction of the referenced Person's business or
the exercise of any of the privileges or licenses by the referenced Person
subject to such Lien, in each case so long as (1) the underlying obligations are
not then required to be paid under Section 5.06 hereof, (2) any reserve has been
established and any bond or insurance has been obtained as required by that
Section, and (3) no such underlying obligation exceeds $10,000 individually or
in the aggregate with other such underlying obligations; (b) liens incurred in
respect of judgments and awards discharged within 30 days from the making
thereof so long as the underlying obligation does not exceed $10,000
individually or in the aggregate with other such underlying obligations; (c) in
the case of Real Estate other than Collateral, easements, rights-of-way,
restrictions, covenants and other agreements of record and other similar charges
or encumbrances not interfering with the ordinary conduct of the business of the
referenced Person; (d) in the case of personal assets and properties other than
Collateral, any deposits made or other security interests incurred in the
ordinary course of the referenced Person's business to secure the performance of
its tenders, bids, leases (other than capitalized leases), contracts (other than
for Indebtedness or guaranties or other Credit Support), and similar obligations
arising as a result of progress payments under government contracts; (e) the
security interests or liens (including leases treated as security interests or
liens) encumbering Equipment purchased or property leased by the referenced
Person with financings permitted by Section 6.02(a)(iii) hereof so long as they
respectively secure only the corresponding purchase money Indebtedness or
capitalized lease obligations; (f) the Liens granted from time to time to the
Lender (whether or not assigned to the Senior Lender); and (g) currently
existing Liens that (A) are disclosed in Schedule 3.12(b) hereto, (B) do not
secure Indebtedness (including purchase money obligations), and (C) secure
underlying obligations that do not exceed $10,000 individually or in the
aggregate with other such underlying obligations, but those Liens shall not be
increased, renewed or extended or extended to other Indebtedness unless
otherwise permitted by the terms and provisions of this Agreement.
"Permitted Option" shall have the meaning assigned to it in Section
6.07(a) hereof.
"Person" shall include (without limitation) any manner of association,
business trust, company, corporation, estate, governmental or other Authority,
group (including one under Section 13(d)(3) of the Securities Exchange Act),
joint venture, limited liability company, natural person (i.e., human being),
partnership, syndicate, trust or other entity.
"Plan" and "Plans" shall have the meanings respectively assigned to
them in Section 3.10(c) hereof.
"Products" shall have the meaning assigned to it in the definition of
Eligible Billed Receivables.
"Pro Forma Effect" shall mean the effect(s) any action or other event
proposed by or on behalf of the Borrower (if it were to happen as proposed)
could have on (a) the assets, business, operations, properties or condition,
financial or otherwise, of the Borrower, (b) the ability of the Borrower to make
payment, or to otherwise perform or satisfy, of all or any part of the
Obligations as and when due, or (c) the Collateral, including (without
limitation) the effect(s) of including any proposed sale or disposition, new or
altered Indebtedness or other obligation (and the payments required thereunder),
payment or other action or event in a pro forma recalculation of (among other
things) the various financial measurements and covenants set forth in this
Agreement for or as at the end of the applicable computation or reporting period
then most recently ended (based on the then most recently required compliance
calculations and any and all subsequent pro forma calculations on a cumulative
basis with respect to other action(s) or event(s), if and to the extent they
occurred or continue to be proposed).
"Real Estate" shall include (without limitation) (a) all land,
leasehold interests, easements, licenses, rights-of-way or use, appurtenances
and other rights and interests in real property, (b) all buildings and other
structures and Improvements, (c) all fixtures, furnishings, Equipment and other
personal property (including, without limitation, leasehold interests in such
personal property and mobile homes of the type usually installed on a developed
site) located on or used in connection therewith, whether or not affixed
thereto, (d) all leases and subleases thereof, and (e) all rents, profits and
other income, payments and
SPAR ESOP Term Loan Agreement
-11-
proceeds with respect to any and all of the foregoing; provided, however, that
"Real Estate" shall not include mortgages or interests therein.
"Representative" and "Representatives" shall respectively mean any or
all of: (a) in the case of any referenced Person (including, without limitation,
the Lender), such referenced Person's Affiliates, directors, officers,
employees, attorneys, agents and other representatives; and (b) in addition in
the case of the Lender or any other financial institution, such referenced
Person's participants, correspondents, confirming banks, custodians and
designees and their respective Affiliates, directors, officers, employees,
attorneys, agents and other representatives. "Revolving Credit Loan" and
"Revolving Credit Loans" shall have the meanings respectively assigned to them
in the Revolving Credit Agreement.
"Revolving Credit Agreement" shall mean the Revolving Credit, Guaranty
and Security Agreement among Holdings (as borrower), the Borrower (as a
guarantor) and the Lender dated as of June 30, 2002, together with all schedules
and exhibits thereto, as the same may be supplemented, modified, amended,
restated or replaced from time to time in the manner provided therein.
"Revolving Credit Documents" shall mean the Revolving Credit
Agreement, the Revolving Credit Notes, any other security agreement, guaranty,
hypothecation or other instrument, agreement or document with or issued or given
by Holdings, the Borrower or any Surety in direct or indirect support (in whole
or in part) of any of the "Borrower's Obligations" or "Surety's Obligations" (as
defined in the Revolving Credit Agreement), the various mortgages, assignments,
agreements, guaranties, instruments and other documents creating, evidencing,
perfecting, governing or supporting any of such Borrower's Obligations or such
Surety's Obligations, and all waivers, consents, agreements, reports,
statements, certificates, schedules and other documents executed by the
requisite Person(s) pursuant to or in connection with any of the foregoing and
accepted or delivered by the Lender (whether prior to, on or from time to time
after the "Effective Date" under and as defined in the Revolving Credit
Agreement), as each may be supplemented, modified, amended, restated or replaced
from time to time in the manner provided therein..
"Revolving Credit Note" and "Revolving Credit Notes" shall have the
meanings respectively assigned to them in the Revolving Credit Agreement.
"Rule 144" shall mean Rule 144, as promulgated under the Securities
Act or any corresponding or succeeding provisions of Applicable Law; in each
case as the same may have been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.
"securities" of any Person shall mean any and all equity securities
and debt securities, general or limited partnership interests, limited liability
company memberships or interests, investment contracts, and any other instrument
or interest commonly understood to be a security issued by that Person.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any corresponding provisions of any Applicable Law in any state or foreign
jurisdiction, or any corresponding or succeeding provisions of Applicable Law,
and the rules and regulations promulgated thereunder; in each case as the same
may have been and hereafter may be supplemented, modified, amended, restated or
replaced from time to time.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any corresponding provisions of any Applicable Law in any
state or foreign jurisdiction, or any corresponding or succeeding provisions of
Applicable Law, and the rules and regulations promulgated thereunder; in each
case as the same may have been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.
"Senior Borrower" and "Senior Borrowers" shall respectively mean any
one or more of the borrowers under the Senior Loan Documents, and the
successors, assigns and legal representatives of each, and any and all
additional or replacement borrower(s) under any Senior Loan Document. The Senior
Borrowers currently include SGRP and most of its subsidiaries (including the
Lender).
"Senior Lender" shall mean IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
its successors, assigns and legal representatives, and any and all additional or
replacement lender(s) under any restated or replacement Senior Loan Document.
"Senior Loan" and "Senior Loans" shall respectively mean the principal
amounts outstanding from time to time (including future advances) respecting any
and all of advances, loans, letter of credit
SPAR ESOP Term Loan Agreement
-12-
advances and the other amounts advanced from time to time to or on behalf of one
or more of the Senior Borrowers by the Senior Lender thereunder or its designee
pursuant to any Senior Loan Document (including, without limitation, during the
pendency of any Bankruptcy Proceeding).
"Senior Loan Agreement" the Second Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of September 22, 1999, among
the Senior Borrowers and the Senior Lender, together with all schedules and
exhibits thereto, as each may have been and hereafter may be supplemented,
modified, amended, restated or replaced from time to time in the manner provided
therein.
"Senior Loan Document" and "Senior Loan Documents" shall respectively
mean any one or more of the Senior Loan Agreement, each and every note, letter
of credit application, security agreement, guaranty, hypothecation or other
instrument, agreement or document with or issued or given by any borrower or
surety thereunder in direct or indirect support (in whole or in part) of any of
the Senior Loan Obligations or related surety's obligations, the various
mortgages, assignments, agreements, guaranties, instruments and other documents
creating, evidencing, perfecting, governing or supporting any of the Senior Loan
Obligations or any related surety's obligations or any interest of the Senior
Lender in any collateral securing or intended to secure any of the Senior Loan
Obligations or related surety's obligations, and all waivers, consents,
agreements, reports, statements, certificates, schedules and other documents
executed by the requisite Person(s) pursuant to or in connection with any of the
foregoing and accepted or delivered by the Senior Lender (whether prior to, on
or from time to time after the Effective Date), as each may have been and
hereafter may be supplemented, modified, amended, restated or replaced from time
to time in the manner provided therein.
"Senior Loan Obligations" as of any date shall mean any and all of the
obligations of the Senior Borrowers (i) to repay the balance of the Senior Loans
then outstanding (including future advances), including accrued and unpaid
interest thereon, (ii) to pay or otherwise perform or satisfy all of the other
amounts to be paid and obligations to be performed or otherwise satisfied by any
Senior Borrower under any Senior Loan Document (whether individually, jointly,
severally or otherwise), (iii) to pay or otherwise perform or satisfy all of the
other amounts to be paid and obligations to be performed or otherwise satisfied
by any Senior Borrower under any interest rate protection, foreign currency
exchange, or other interest or exchange rate swap or hedging agreement or
arrangement (whether individually, jointly, severally or otherwise) with the
Senior Lender or any of its Affiliates, and (iv) to pay or otherwise satisfy any
and all overdrafts of any Senior Borrower honored by the Senior Lender (in its
sole and absolute discretion) and other indebtedness, liabilities or obligations
(whether under any note, guaranty or other instrument or document or otherwise)
now or hereafter owed to the Senior Lender by any Senior Borrower (whether
individually, jointly, severally or otherwise), together with accrued and unpaid
interest thereon; in each case including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding.
"SGRP" shall mean SPAR Group, Inc., a Delaware corporation and
ultimate parent of the Lender.
"SPAR eTraining Agreement" shall mean that certain SPG Agreement among
SPG and SGRP dated as of January 11, 2002, together with all schedules and
exhibits thereto, including, without limitation, the "SPAR Standard Terms and
Provisions Exhibit" and the "SPAR Supplemental Terms and Provisions Exhibit", as
the same may be supplemented, modified, amended, restated or replaced from time
to time in the manner provided therein.
"SPG" shall mean SPAR Performance Group, a Delaware corporation
currently having an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
wholly-owned subsidiary of the Borrower.
"SPG Stock" shall mean the shares of common stock issued by SPG.
"STMI" shall mean SPAR Trademarks, Inc., a Delaware corporation and
indirect subsidiary of SGRP.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
between the Borrower and the Lender dated as of June 30, 2002, together with all
schedules and exhibits thereto, as the same may be supplemented, modified,
amended, restated or replaced from time to time in the manner provided therein.
"Stock Purchase Document" and "Stock Purchase Documents" shall
respectively mean any one or more of the Stock Purchase Agreement, the SPAR
eTraining Agreement, the Trademark Agreement,
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the Confidentiality Agreement, and the various assignments, agreements,
instruments and other documents executed by the requisite Person(s) pursuant to
or in connection with any of the foregoing and accepted or delivered by the
Lender (whether prior to, on or from time to time after the Effective Date)and
any and all waivers, consents, agreements, reports, statements, certificates,
schedules and other documents executed by the requisite Person(s) pursuant to or
in connection with any of the foregoing and accepted or delivered by the Lender
(whether prior to, on or from time to time after the Effective Date), as each
may have been and hereafter may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein.
"Subordinated Right" and "Subordinated Rights" shall respectively mean
for each Guarantor any and all: (a) advances, loans, indebtedness and other
similar amounts (including interest) directly or indirectly owed to such
Guarantor by the Borrower, any other Guarantor or any Surety (whether
individually, jointly, severally or otherwise); (b) subrogation, contribution,
reimbursement, restitution and other similar rights of such Guarantor against or
in respect of (i) the Borrower, any other Guarantor or any Surety, or (ii) any
of their respective assets and properties, whether resulting from any payment
made by such Guarantor or otherwise; and (c) security interests or other liens
or encumbrances securing, or guaranties or other credit support securing for,
any such advances, loans, indebtedness, amounts or rights; in each case whether
now or hereafter existing, acquired or created.
"subsidiary" shall mean any corporation or other entity in respect of
which a Person at the time shall own directly, or indirectly (through one or
more corporations, nominees or other persons or otherwise), at least one-half of
the aggregate voting interests of such corporation or other entity, whether
owned or held (i) of record or beneficially or (ii) individually, jointly or
otherwise.
"Surety" and "Sureties" shall respectively mean any one or more of any
Guarantor or other co-obligor, indemnitor, guarantor, pledgor or surety of or
other Person providing Credit Support for any of the Obligations or any Surety's
Obligations, whether or not disclosed to the Borrower or any other Surety.
"Surety's Adverse Effect" shall mean any material and adverse effect,
whether individually or in the aggregate, upon (a) the assets, business,
operations, properties or condition, financial or otherwise, of any Surety, (b)
the ability of any Surety to pay or otherwise satisfy (as and when due) any of
its obligations under any of the Loan Instruments, or (c) any collateral
provided by any Surety or its value or the validity, enforceability, perfection
or priority of any security interest of the Lender in any collateral provided by
any Surety.
"Surety's Obligations" shall mean any and all: (a) "Guarantor's
Obligations" or "Guarantors' Obligations" under (and as defined in) any
Guaranty, as applicable; and (b) other Credit Support and obligations of any
other Surety under any Loan Instrument.
"Tax Code" shall mean the United States Internal Revenue Code of 1986,
as amended, any corresponding Applicable Law of any State or foreign
jurisdiction, or any corresponding or succeeding provisions of Applicable Law,
in each case as the same may have been and hereafter may be supplemented,
modified, amended, restated or replaced from time to time.
"Taxes" shall have the meaning assigned to it in Section 2.09 hereof.
"Term Loan" and "Term Loans" shall respectively mean the principal
amounts outstanding from time to time (including future advances) respecting any
and all of (i) the Initial Term Loan and (ii) each Additional Term Loan (if
any).
"Term Maturity Date" shall mean the first to occur of (a) June 30,
2007, with respect to the Term Loans and related Obligations and (b) the date on
which the maturity of the Obligations shall have been accelerated or deemed
accelerated pursuant to Section 8.02 hereof or Applicable Law.
"Term Note" and "Term Notes" shall respectively mean any one or more
of the separate Term Promissory Notes issued by the Borrower to the Lender (i)
to evidence the Initial Term Loan (as referenced in Section 2.03(b) hereof) and
dated as of the date hereof and (ii) to evidence the Additional Term Loan (as
referenced in Section 2.03(c) hereof) and dated as of the date hereof, in each
case as the same may be issued pursuant hereto and thereafter modified, amended,
restated or replaced from time to time in the manner provided therein.
SPAR ESOP Term Loan Agreement
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"Trademark Agreement" shall mean the Trademark License Agreement
between SPG and STMI dated as of June 30, 2002, together with all schedules and
exhibits thereto, as the same may be supplemented, modified, amended, restated
or replaced from time to time in the manner provided therein.
"UCC" shall mean the Uniform Commercial Code of the State of New York,
or any corresponding or succeeding provisions of Applicable Law of the State of
New York, or any corresponding or succeeding provisions of Applicable Law, in
each case as the same may have been and hereafter may be supplemented, modified,
amended, restated or replaced from time to time.
Section 1.02. Certain Definitions in Other Loan Instruments.
Capitalized terms used and not otherwise defined in this Agreement shall have
the meanings respectively assigned to them in the other applicable Loan
Instruments.
Section 1.03. UCC Definitions. The following terms shall have the
meanings respectively assigned to them in the UCC: "chattel paper"; "commercial
tort claim"; "deposit account"; "equipment"; "farm product"; "financial asset";
"fixture"; "general intangibles"; "goods"; "instrument"; "inventory";
"investment property"; "letter of credit rights"; "payment intangible";
"proceeds"; "products"; "securities account"; "security entitlement"; and
"software". The term "document of title" shall mean a "document" as defined in
the UCC.
Section 1.04. Singular and Plural Terms. Each definition in this
Agreement or any other Loan Instrument using a singular capitalized term or
other word or phrase also shall apply to the plural form of such term, word or
phrase, and vice versa, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and vice versa, in each case as the
context may permit or require.
Section 1.05. Pronouns. Each use in this Agreement or any other Loan
Instrument of a neuter pronoun shall be deemed to include references to the
masculine and feminine variations thereof, and vice versa, and a singular
pronoun shall be deemed to include a reference to the plural variation thereof,
and vice versa, in each case as the context may permit or require.
Section 1.06. Including. The term "including" shall mean "including
(without limitation)", whether or not so stated. The terms "including",
"including, but not limited to", "including (without limitation)" and similar
phrases (i) mean that the items specifically listed after such term are examples
of the provision preceding such term and are not intended to be all inclusive,
(ii) shall not in any way limit (or be deemed or construed to limit) the
generality of the provision preceding such term, and (iii) shall not in any way
preclude (or be deemed or construed to preclude) any other applicable item
encompassed by the provision preceding such term.
Section 1.07. Section and Other Headings. The table of contents and
section and other headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
Section 1.08. Amended Documents. The inclusion in this Agreement and
the other Loan Instruments of supplements, modifications, amendments,
restatements, replacements and the like in the definitions of Material Document,
Organizational Document, ESOP Related Documents, Stock Purchase Documents, or
other term for any instrument, agreement or document (other than a Loan
Instrument) or group thereof shall not, and shall not be deemed or construed to,
(a) limit or otherwise modify or affect any term or provision of this Agreement
or any other Loan Instrument requiring notice to or the consent of the specified
parties thereunder to any supplement, modification, amendment, restatement or
replacement of any such item, or (b) be permission for or acceptance of any of
the foregoing by the parties required under any such term or provision.
ARTICLE II
AMOUNTS AND TERMS OF THE OBLIGATIONS
Section 2.01. [INTENTIONALLY OMITTED]
Section 2.02. The Term Loans. (a) On the Effective Date the Lender
made a term loan to the Borrower of $2,500,000 (the "Initial Term Loan"), which
at the Borrower's direction was retained by the Lender and applied to fund the
Borrower's payment of a corresponding amount of the cash purchase price under
the Stock Purchase Agreement, which direction, retention and application are
hereby acknowledged, confirmed and ratified in all respects by the Borrower.
(b) On the Effective Date the Lender made an additional term loan to
the Borrower of $3,500,000 (the "Additional Term Loan"), which at the Borrower's
direction was retained by the Lender and applied to fund the Borrower's payment
of a corresponding amount of the cash purchase price under the
SPAR ESOP Term Loan Agreement
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Stock Purchase Agreement, which direction, retention and application are hereby
acknowledged, confirmed and ratified in all respects by the Borrower.
(c) The Borrower may not reborrow portions of the Term Loans
previously repaid by it.
Section 2.03. The Notes. (a) [INTENTIONALLY OMITTED]
(b) The obligation of the Borrower to repay the Initial Term Loan,
together with interest thereon (including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding), shall be evidenced by a Term Promissory Note issued by the Borrower
to the Lender in the aggregate principal amount of $2,5000,000.00 in the form of
Exhibit A hereto and dated as of the date hereof.
(c) The obligation of the Borrower to repay the Additional Term Loan,
together with interest thereon (including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding), shall be evidenced by a Term Promissory Note issued by the Borrower
to the Lender in the aggregate principal amount of the $3,500,000.00 in the form
of Exhibit B hereto and dated as of the date hereof.
Section 2.04. Interest; Additional Interest. (a) Except as otherwise
provided in this Section, the Loans shall bear interest (computed on the basis
of the actual number of days elapsed and a year of 360 days) on the unpaid
principal balance of those Loans outstanding from time to time, from (and
including) the Effective Date to (and including) the date such principal balance
of such Loans is repaid in full (including, without limitation, any and all
interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding), at a fluctuating rate that shall be equal to the High Yield Rate
per annum, which rate shall change with each corresponding change in the High
Yield Rate (as determined annually in accordance with the definition thereof).
Interest on those Loans shall be payable by the Borrower in arrears: (x) prior
to the Maturity Date, on the last Business Day of each calendar month; (y) in
full on the Maturity Date; and (z) on demand after the Maturity Date.
(b) Any payment of principal, interest or other amount that is not
paid when due under this Agreement or any other Loan Instrument, and all of the
Loans during the continuance of any Event of Default, shall, to the extent
permitted by Applicable Law, bear interest (computed on the basis of the actual
number of days elapsed and a year of 360 days), until the overdue amount is paid
in full (with interest) or such Event of Default is no longer continuing, as
applicable (including, without limitation, any and all interest, fees and other
amounts accrued, accruing or otherwise applicable during the pendency of any
Bankruptcy Proceeding, irrespective of whether such interest, fees and other
amounts are allowed or allowable as claims in any such proceeding), at a
fluctuating annual rate equal to the sum of (i) the higher of (A) the High Yield
Rate per annum or (B) the Alternate Base Rate per annum, plus (ii) four percent
(4.00%) per annum (which fluctuating annual rate under this subsection shall
change from time to time simultaneously with each change in the High Yield Rate
or Alternate Base Rate), which interest rate shall be payable by the Borrower
with respect to such amount(s) instead of the rate (if any) established by
subsection (b) of this Section with respect thereto, and which interest
amount(s) shall be payable upon demand (including, without limitation, any and
all interest, fees and other amounts accrued, accruing or otherwise applicable
during the pendency of any Bankruptcy Proceeding, irrespective of whether such
interest, fees and other amounts are allowed or allowable as claims in any such
proceeding), subject, however, to the maximum rate permitted by Applicable Law
as provided in Section 2.11 hereof.
Section 2.05. Increased Costs, Capital Adequacy. (a) In addition to
the payment of principal, interest and fees as stated in this Article, if there
shall be any increase in the direct or indirect costs to the Lender of lending,
funding or maintaining any Loan, or any reduction in any amount received or to
be received by the Lender hereunder, due to:
(i) the introduction of or any change in any Applicable Law or the
interpretation or administration thereof, including (without
limitation) the imposition, modification or application of, or
increase in, (A) any reserve, capital adequacy, special deposit,
assessment or similar requirements, (B) any requirement to withhold or
deduct from any amount payable to the Lender any taxes, levies,
imposts, duties, fees, deductions, withholdings or charges of a
similar nature (other than federal, state and local income and
franchise taxes imposed upon the Lender), or any interest thereon or
any penalties with respect thereto, imposed, levied, collected,
assessed, withheld or deducted by any Authority, including
subdivisions and
SPAR ESOP Term Loan Agreement
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taxing authorities thereof, or (C) any other restriction or condition
affecting a Loan, the interest rate applicable thereto or this
Agreement or any other Loan Instrument;
(ii) the compliance by the Lender with any regulation, guideline or request
or change therein from any central Lender or other Authority (whether
or not having the force of law);
(iii) the repayment, prepayment or other reduction, in whole or in part, of
any Loan prior to the natural expiration of the applicable Interest
Period, whether as a result of miscalculation, change in circumstance,
consent of the Lender, acceleration of the Obligations or otherwise;
(iv) the failure by the Borrower to pay the accrued and unpaid interest on
or repay the outstanding principal balance of any Loan, or any portion
thereof, when required by the terms and provisions of this Agreement;
or
(v) any increase in the Lender's cost of funds under the Senior Loan
Documents, including (without limitation) any increase in interest
rates or fees or any reimbursement to the Senior Lender of the kinds
described in clauses (i) through (iv) of this subsection;
then the Borrower from time to time, upon demand by the Lender, shall pay to the
Lender additional amounts sufficient to indemnify the Lender against and
reimburse it for such increased costs and reduced receipts (but only to the
extent such increased cost or reduced receipt has not already been included in
the calculation of any interest rate or fee or otherwise reimbursed under any
other subsection of this Section), including (without limitation) amounts
sufficient to compensate the Lender for any breakage or other costs and any
decrease in margin or other return incurred in connection with the repayment,
prepayment or other reduction of any Loan and the liquidation or redeployment of
the affected deposits or other funding arrangements, in each case including,
without limitation, any and all amounts accrued, accruing or otherwise
applicable during the pendency of any Bankruptcy Proceeding (irrespective of
whether such interest, fees and other amounts are allowed or allowable as claims
in any such proceeding). In the event the Senior Lender requires the payment of
any similar amount under the Senior Loan Documents, the Lender may demand that
the Borrower pay to the Lender or its Affiliate additional amounts sufficient to
compensate it for the portion of such amount proportional to the ratio of the
Loans to the Senior Loans. A certificate as to the amount of such increased
costs and reduced receipts submitted to the Borrower by the Lender shall be
conclusive as to the existence and amount thereof absent manifest error. If the
Lender has not received payment for such amounts within five (5) Business Days
of the date of such certificate, the Lender may apply all or a portion of the
next succeeding payment or prepayment made by the Borrower, whether intended by
the Borrower to be interest, principal or otherwise, first to the reduction of
the amounts of such increased costs and reduced receipts.
(b) In addition to the payment of interest or fees under this
Agreement, if the Lender or any of its Affiliates determines or has determined
that (i) compliance with any existing or future Applicable Law, including
(without limitation) any regulation, guideline or request from any central bank
or other Authority (whether or not having the force of law), or any change
therein or in the interpretation or administration thereof, affects or would
affect the amount of capital required or expected to be maintained by the Lender
or its Affiliate (taking into account its policies with respect to capital
adequacy and desired rate of return on capital), and (ii) the amount of such
capital is increased by or based upon any commitment or funding to the Borrower
or any other obligation of the Lender or its Affiliates under or related to this
Agreement or any other Loan Instrument (using such averaging, attribution and
allocation methods as the Lender may reasonably deem appropriate), then the
Borrower from time to time, upon demand by the Lender, shall pay to the Lender
or its Affiliate additional amounts sufficient to compensate it for those
circumstances, in each case including, without limitation, any and all amounts
accrued, accruing or otherwise applicable during the pendency of any Bankruptcy
Proceeding (irrespective of whether such amounts are allowed or allowable as
claims in any such proceeding). In the event the Senior Lender requires the
payment of any similar amount under the Senior Loan Documents, the Lender may
demand that the Borrower pay to the Lender or its Affiliate additional amounts
sufficient to compensate it for the portion of such amount proportional to the
ratio of the Loans to the Senior Loans. A certificate as to the amount of such
compensation submitted to the Borrower by the Lender shall be conclusive as to
the existence and amount thereof absent manifest error. If the Lender has not
received payment for such amounts within five (5) Business Days of the date of
such certificate, the Lender may apply all or a portion of the next succeeding
payment or prepayment made by the Borrower, whether intended by the Borrower to
be interest, principal or otherwise, first to the reduction of such billed
amount.
(c) In addition to the payment of increased costs and reduced receipts
as provided in this Section (but without duplication of such amounts), as well
as the payment of principal, interest and fees as stated elsewhere herein, the
Borrower acknowledges and agrees that: in extending the Loans (rather than
SPAR ESOP Term Loan Agreement
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receiving a cash payment under the Stock Purchase Agreement) the Lender will be
carrying a corresponding higher level of loans under the Senior Loan Documents;
and accordingly, from time to time, upon demand by the Lender, the Borrower
shall pay to the Lender or its Affiliate additional amounts sufficient to
compensate it for its pro rata share (based on the ratio of the then outstanding
balance of the Loans to the then outstanding balance of the loans under the
Senior Loan Documents) of any and all fees, costs, reimbursements, expenses or
other amounts (other than principal and interest and without duplication of the
amounts covered by subsections (a) and (b) of this Section) owed by any Senior
Borrower under the Senior Loan Documents, in each case including, without
limitation, any and all amounts accrued, accruing or otherwise applicable during
the pendency of any Bankruptcy Proceeding (irrespective of whether such amounts
are allowed or allowable as claims in any such proceeding).
Section 2.06. Voluntary and Mandatory Payments. (a) The Borrower may
voluntarily prepay the Term Loans, whether in full at any time or in part from
time to time in integral multiples of $10,000 in an amount that is not less than
$100,000, in either case without premium or penalty, by giving the Lender a
signed notice of its election, or by giving the Lender notice of its election
both by telephone and telecopy of a signed notice; provided, however, that the
Borrower may not prepay any portion of the Initial Term Loan prior to repayment
of the Additional Term Loan in full. Notice of such prepayment election (i)
shall be delivered to the Lender at least three Business Days prior to the
requested prepayment date (unless the Lender permits a shorter notice period in
its sole and absolute discretion)and (ii) shall be irrevocable once given. The
Borrower shall repay the Loans on the date and in the amount specified in such
notice of prepayment election.
(b) Each voluntary or mandatory prepayment of the Term Loans shall be
accompanied by payment in full of all interest accrued to the date of
prepayment.
(c) Each voluntary and mandatory prepayment (e.g., other than a
scheduled installment of the Initial Term Loan) made on the Term Loans shall be
applied first to reduce any unpaid or unreimbursed fees and expenses of the
Lender under the Loan Instruments and Revolving Credit Documents until paid in
full, then to reduce any accrued and unpaid interest until paid in full, then to
reduce the Additional Term Loan until repaid in full, thereafter to the Initial
Term Loan to reduce the installment (if any) and final payments due under
subsection (d) of this Section in the inverse order of their respective due
dates, and thereafter in accordance with Section 2.08(d) hereof.
(d) The Borrower shall repay the Initial Term Loan (i) in quarterly
installments of (A) $25,000 each on the last Business Day of each calendar
quarter, commencing with the quarter ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) $50,000 each on
the last Business Day of each calendar quarter, commencing with the quarter
ending March 31, 2004, (C) $100,000 each on the last Business Day of each
calendar quarter, commencing with the quarter ending March 31, 2005, and (D)
$200,000 each on the last Business Day of each calendar quarter, commencing with
the quarter ending March 31, 2006; (ii) in an installment of $250,000 on March
31, 2007; and (iii) in an installment of $750,000 on June 30, 2007.
(e) The Borrower shall make a mandatory prepayment of the Term Loans
on the 15th day of each February of each year, commencing on February 15, 2004,
with respect to the fiscal year ended December 31, 2003, equal to:
(i) 40% of the amount of Adjusted Cash Flow for the immediately preceding
fiscal year, irrespective of amount; and in addition;
(ii) 35% of the amount of Adjusted Cash Flow for the immediately preceding
fiscal year in excess of the targeted Adjusted Cash Flow for such
fiscal year in Exhibit D hereto;
in each case applied as provided in subsection (c) of this Section.
(f) The Borrower shall repay the principal balance then outstanding
under the Term Loans in full on the Maturity Date.
(g) The Borrower shall make an additional mandatory prepayment of the
Loans promptly, but in any event within three Business Days, following each
receipt of net cash proceeds by the Borrower in an amount equal to the net cash
proceeds received in connection with (1) any voluntary sale, lease, transfer,
assignment, liquidation or other disposition of (A) any equity interest in the
Borrower or (B) any Collateral other than Inventory as expressly permitted by
Section 7.03(a) hereof or (2) any involuntary transfer, assignment,
discontinuation, liquidation, condemnation, destruction or other disposition of
any Collateral, in each case applied first to reduce any unpaid or unreimbursed
fees and expenses of the Lender under the Revolving Credit Documents until paid
in full, then to reduce any accrued and unpaid interest
SPAR ESOP Term Loan Agreement
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under the Revolving Credit Documents until paid in full, then to reduce the
Revolving Credit Loans until paid in full, and thereafter as provided in
subsection (c) of this Section; provided, however, that the first $10,000 in the
aggregate of net cash proceeds received by the Borrower in connection with any
such asset disposition within any fiscal year shall be excluded for the purpose
of determining such additional mandatory prepayments; and provided further that
nothing in this subsection is intended, or shall be deemed or construed, to
authorize or permit any sale or other disposition of any Collateral in violation
of any term or provision of this Agreement or any other Loan Instrument. To the
extent applicable and not already reflected, the Borrower may in determining
such net cash proceeds deduct reasonable and usual costs of voluntary
disposition (other than payments to Affiliates), and real property and transfer
taxes paid or currently payable in respect to the transaction, as well as the
principal amount of any permitted purchase money indebtedness required to be
repaid from the proceeds of any disposition of the underlying collateral. The
Borrower shall give the Lender prompt notice of any occurrence that could result
or has resulted in any of the events described above involving net cash proceeds
in excess of $1,000, which notice shall specify the terms thereof, and upon the
request of the Lender the Borrower shall give the Lender copies of all related
documentation as it becomes available to the Borrower.
(h) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Instrument, the Borrower acknowledges and agrees
that any reimbursable amount or expense or other advance that is not described
elsewhere in this Section and for which no due date or time period for payment
is specified in this Agreement or any other Loan Instrument, together with
interest thereon as provided in Section 2.04 hereof, shall be due and payable on
demand, and that the representations, warranties, covenants and other terms and
provisions of this Agreement and the other Loan Instruments set forth herein and
therein are not intended and shall not be deemed or construed to limit the
demand nature of the obligations of the Borrower in respect of such other
amount, expense or advance hereunder and thereunder, without, however, in any
way limiting the applicability of the terms and provisions of this Agreement and
the other Loan Instruments in respect of any collateral or any of the other
Loans or other Obligations of the Borrower.
(i) The Obligations then outstanding shall be due and payable in full
on the Maturity Date, and to the extent arising thereafter shall be due and
payable on demand, in each case notwithstanding anything in this Article to the
contrary.
Section 2.07. [Intentionally Omitted]
Section 2.08. Payments and Applications. (a) All payments of
principal, interest, fees and other amounts due the Lender pursuant to this
Agreement and the other Loan Instruments shall be made in U.S. Dollars in
immediately available funds by 12:30 P.M. (New York City time) on the date
payment is due to the Lender at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as otherwise provided in subsection (b) of this Section, or as
otherwise instructed by the Lender. All advances and payments made pursuant to
this Agreement and the other Loan Instruments may be recorded by the Lender on
its books and records, and such books and records shall be conclusive as to the
existence and amounts thereof absent manifest error. The Lender in its sole and
absolute discretion at any time and from time to time (whether prior to any
transfer or production of any Note or otherwise) may endorse or otherwise list
(in whole or in part) on any Note or on any schedule thereto prepared by the
Lender the date, amount, type and/or other pertinent characteristic of any
advance or other Loan or any interest rate or Interest Period applicable thereto
and/or all payments of principal on any Loan or other Obligation.
(b) The parties intend that payments of the Obligations will be made
through the wire transfer of immediately available funds to the Lender to such
account as the Lender from time to time may direct by written notice to the
Borrower, as and when such Obligations become due. The Obligations shall be
deemed to have been paid or repaid only to the extent of the immediately
available funds actually received from any Loan Party and applied to the
Obligations notwithstanding any internal procedure of the Lender to the
contrary.
(c) Should any payment become due and payable on other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day,
and, in the case of any payment of principal, interest shall be payable thereon
at the rate per annum specified in this Agreement during such extension.
(d) Except as otherwise provided in this Agreement, so long as no
Event of Default or Default is then continuing, any funds received by the Lender
from or on behalf of any Loan Party (whether pursuant to any of the terms and
provisions of this Agreement or any other Loan Instrument) shall be applied to
the following items in the manner and order reasonably designated by the
Borrower to the extent permitted by Applicable Law; provided, however, that
absent such designation or during the continuance of any such Event of Default
or Default, those funds (including the net cash proceeds from any Collateral)
instead may
SPAR ESOP Term Loan Agreement
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be applied by the Lender to the following items in such order and manner as may
be determined by the Lender in its sole and absolute discretion to the extent
permitted by Applicable Law:
(i) the payment to or reimbursement of the Lender for any fees and
expenses for which it is entitled to be paid or reimbursed pursuant to
any of the provisions of this Agreement and the other Loan
Instruments;
(ii) the payment of accrued and unpaid interest on the Term Loans;
(iii) the payment of due and unpaid principal on the Term Loans;
(iv) the establishment or maintenance of any cash collateral required or
permitted under any Loan Instrument;
(v) the payment in full of all other Obligations under this Agreement and
the other Loan Instruments; and
(vi) the payment in full of all "Obligations" under (and as defined in) the
Revolving Credit Agreement;
provided, however, that (A) collections on the Accounts Receivable shall be
applied as provided in the Revolving Credit Agreement, and (B) in the event of a
foreclosure upon the Collateral granted by SPG, the proceeds thereof shall be
applied first as provided in the Revolving Credit Agreement.
Section 2.09. Taxes. Any and all payments made by any Loan Party under
this Agreement or any other Loan Instrument shall be made free and clear of and
without any reduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and any and all liabilities and obligations
with respect thereto, excluding, however, such taxes as are imposed on the
Lender by the jurisdiction of its organization or its lending office engaged in
the Loans (or any political subdivision thereof) with respect to the income or
franchise of the Lender (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter collectively referred to
as the "Taxes"). In addition, the Loan Parties shall (on a joint and several
basis) pay, as and when due, any and all present or future stamp or documentary
taxes or other excise or property taxes, charges or similar levies that may
arise from any execution, delivery, performance, existence or registration of
this Agreement or any other Loan Instrument or any payment made hereunder or
thereunder (collectively, "Other Taxes"). If any Loan Party shall be required by
Applicable Law to deduct any Taxes or Other Taxes from or in respect of any sum
payable to the Lender under this Agreement or any other Loan Instrument, (i) the
sum payable shall be increased as may be necessary so that, after making all
required deductions, the Lender shall receive an amount equal to the sum the
Lender would have received if no such deductions had been made, (ii) the Loan
Party shall make such deductions, and (iii) the Loan Party shall pay the full
amount deducted to the relevant taxation Authority or other Authority in
accordance with Applicable Law. Within 30 days after the date of any payment of
Taxes or Other Taxes by a Loan Party, the Loan Party will furnish to the Lender
the original or a certified copy of a receipt evidencing payment or other
documentation reasonably satisfactory to the Lender evidencing payment. The Loan
Parties will furnish to the Lender, upon the Lender's request from time to time,
an officer's certificate stating that, to the knowledge of the signer, all Taxes
and Other Taxes that are or have become due have been paid. The Loan Parties
shall (on a joint and several basis) indemnify and reimburse the Lender on
demand (payable within 30 days of written demand) for the full amount of Taxes
or Other Taxes paid by the Lender (as the case may be) and any and all claims,
liabilities, losses and expenses (including, without limitation, penalties,
interest, and attorneys and other professional expenses, disbursements and fees)
of the Lender arising therefrom or related directly or indirectly thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted. In
the event the Senior Lender requires the payment of any similar amount under the
Senior Loan Documents, the Lender may demand that the Borrower pay to the Lender
or its Affiliate additional amounts sufficient to compensate it for the portion
of such amount proportional to the ratio of the Loans to the Senior Loans.
Section 2.10. Lost or Damaged Notes. In the event of the loss, theft
or destruction of a Note, the Borrower shall execute and deliver an identical
new Note to the Lender in substitution therefor upon the receipt by the Borrower
of (i) notice from the Lender confirming such event and (ii) if requested by the
Borrower, an indemnity agreement from the Lender in such form and substance as
may be acceptable to the Lender and reasonably acceptable to the Borrower. In
the event of the mutilation of or other damage to a Note, the Borrower shall
execute and deliver an identical new Note to the Lender in substitution
therefor, following which the Lender will return the mutilated or damaged Note
to the Borrower.
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Section 2.11. Maximum Interest Rate. It is the intention of the Lender
and the Borrower that the interest (as defined under Applicable Law) on the
Loans that may be charged to, collected from or received from the Borrower shall
not exceed the maximum rate permissible under Applicable Law. Accordingly,
anything in this Agreement, any Note or any other Loan Instrument to the
contrary notwithstanding, in the event any interest (as so defined) is charged
to, collected from or received from the Borrower by the Lender pursuant hereto
or thereto in excess of such maximum lawful rate, then the excess of such
payment over that maximum shall be applied to the reduction of the outstanding
principal balance of the Loans and the other Obligations (without any prepayment
premium or penalty), and any portion of such excess payment remaining after
payment and satisfaction in full of the Obligations shall be returned by the
Lender to the Borrower.
Section 2.12. Guaranty of Payment and Expenses. Each Guarantor (on a
joint and several basis with the other Guarantors) hereby absolutely,
unconditionally and irrevocably guaranties to the Lender the full and punctual
payment and satisfaction of the Borrower's Obligations as and when due, whether
at stated maturity, by acceleration or otherwise, and agrees to pay and satisfy
in full any and all expenses that may be paid or incurred by the Lender in the
collection of all or any portion of the Borrower's Obligations or the exercise
or enforcement of any one or more of the other rights, powers, privileges,
remedies and interests of the Lender under this Agreement or any other Loan
Instrument, irrespective of the manner or success of any such collection,
exercise or enforcement, and whether or not such expenses constitute part of the
Borrower's Obligations. The Lender in its sole and absolute discretion shall be
entitled to demand payment of the Borrower's Obligations (in whole at any time,
or in part from time to time) from the Guarantors (or any of them) under this
Agreement upon the occurrence and during the continuance of any Event of
Default. If the Lender makes such a demand: (a) any and all principal, interest
and other Borrower's Obligations outstanding or accrued under any Note and/or
any other Loan Instrument shall be deemed to be immediately due and payable in
full (or for the item(s) in the amount(s) demanded if a partial demand was
made), all without presentment, protest, demand or notice of any kind, all of
which are expressly waived by each Guarantor (and in the case of a partial
demand, without in any way affecting any of the Guarantors' Obligations with
respect to the balance of the Borrower's Obligations not demanded); and (b) each
Guarantor (on a joint and several basis with the other Guarantors) shall
immediately pay to the Lender the amount demanded in full.
Section 2.13. Continuing Guaranty and Agreement, Payment in Accordance
with Terms, Etc. Each Guarantor covenants and agrees that: (a) its guaranty
hereunder is a continuing guaranty of the full and timely payment and
satisfaction of the Borrower's Obligations, and not guarantying collectibility
only, and the security interests granted by it hereunder are continuing security
interests securing the full and timely payment and satisfaction of the
Borrower's Obligations or the Guarantors' Obligations, and not securing
collectibility only, in each case whether the Borrower's Obligations or the
Guarantors' Obligations are now or hereafter existing, acquired or created, and
irrespective of the fact that from time to time under the terms and provisions
of the Loan Instruments monies may be advanced, repaid and readvanced and the
outstanding balance of the Loans may be zero; (b) the Mortgagor's Guaranty may
not be revoked or terminated by any Guarantor until such time as the Borrower's
Obligations and the Guarantors' Obligations shall have been fully paid and
satisfied; (c) none of the Borrower's Obligations or the Guarantors' Obligations
shall be deemed to have been otherwise fully paid and satisfied so long as any
Loan Instrument (other than the Mortgagor's Guaranty) shall have any continuing
force or effect; and (d) the Borrower's Obligations and the Guarantors'
Obligations will be paid and satisfied in full in accordance with the terms and
provisions of the Loan Instruments without regard to any applicable law now or
hereafter in effect in any jurisdiction, including (without limitation) any
applicable law that might in any manner affect any of those terms and provisions
or any of the rights, powers, privileges, remedies and interests of the Lender
with respect thereto, or that might cause or permit to be invoked any alteration
in the time, amount or manner of payment of any of the Borrower's Obligations,
the Guarantors' Obligations or any Surety's Obligations by the Borrower, any
Guarantor, any Surety or any other person (other than the Lender).
Section 2.14. Agreement Absolute, Survival of Representations, Etc.
Each of the collateral grants, guaranties and other payment obligations,
representations and warranties (as of the date(s) made or deemed made),
covenants, waivers and other agreements of each Guarantor (whether individual,
joint, several or otherwise) contained in this Agreement and the other Loan
Instruments: (a) shall be absolute, irrevocable and unconditional, irrespective
of (among other things) the validity, legality, binding effect or enforceability
of any of the other terms and provisions of this Agreement or any other Loan
Instrument or any other event described in this Section; (b) shall survive the
execution and delivery of this Agreement and the other Loan Instruments, and any
and all advances, repayments and readvances of any or all of the monies to be
lent hereunder and thereunder; (c) shall remain and continue in full force and
effect without regard (i) to whether the Loans or other Borrower's Obligations,
Guarantors' Obligations or Surety's Obligations are now or hereafter existing,
acquired or created, and irrespective of the fact that from time to time under
the terms and provisions of the Loan Instruments monies may be advanced, repaid
and readvanced and the
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outstanding balance of the Loans may be zero, (ii) to any extension or change in
the time, manner, place and other terms and provisions of payment or performance
of any one or more of the Loans or other Borrower's Obligations, any Guarantors'
Obligations or any Surety's Obligations, (iii) to any waiver, modification,
extension, renewal, consolidation, spreading, amendment or restatement of any
term or provision of this Agreement or any other Loan Instrument (except as and
to the extent expressly modified by the terms and provisions of any such waiver,
modification, extension, renewal, consolidation, spreading, amendment or
restatement), (iv) to any acceptance by the Lender of (A) any partial or late
payment, which shall not constitute a satisfaction or waiver of the full amount
then due or the resulting Default or Event of Default, or (B) any payment during
the continuance of any Default or Event of Default, which shall not constitute a
waiver or cure thereof; and the Lender may accept or reject any such payment
without affecting any of its rights, powers, privileges, remedies and other
interests under this Agreement, the other Loan Instruments and applicable law;
(v) to any full, partial or non-exercise of any of the rights, powers,
privileges, remedies and interests of the Lender under any Loan Instrument or
applicable law, against the Borrower, any Surety or any other Person or with
respect to any of the Borrower's Obligations, Guarantors' Obligations, any
Surety's Obligations, any other obligations or any collateral or security
interest therein, which exercise or enforcement may be delayed, discontinued or
otherwise not pursued or exhausted for any or no reason whatsoever, or which may
be waived, omitted or otherwise not exercised or enforced (whether intentionally
or otherwise), (vi) to any surrender, repossession, sequestration, foreclosure,
conveyance or assignment (by deed in lieu or otherwise), sale, lease or other
realization, dealing, liquidation or disposition respecting any collateral or
setoff respecting any account or other asset in accordance with the Loan
Instruments or applicable law (except as and to the extent the Borrower's
Obligations have been permanently reduced by the application of the net proceeds
thereof), (vii) to the perfected or non-perfected status or priority of any
mortgage or other security interest in any such collateral, which may be held
without recordation, filing or other perfection (whether intentionally or
otherwise), (viii) to any release, settlement, adjustment, subordination or
impairment of all or any part of the Borrower's Obligations, Guarantors'
Obligations, any Surety's Obligations, any other obligations or any collateral
or any security interest therein, whether intentionally or otherwise (except as
and to the extent expressly modified by the terms and provisions of any such
release, settlement or adjustment), (ix) to any extension, stay, moratorium or
statute of limitations or similar time constraint under any applicable law, (x)
to any investigation, analysis or evaluation by the Lender or its designees of
the assets, business, operations, properties or condition (financial or
otherwise) of the Borrower, any Guarantor, any other Surety, or any other
person, (xi) to any application to any obligations of the Borrower, any
Guarantor or any other Surety other than any Borrower's Obligations, Guarantors'
Obligations or Surety's Obligations of (A) any payments from such person not
specifically designated for application to the Borrower's Obligations,
Guarantors' Obligations or Surety's Obligations or (B) any proceeds of
collateral from such person other than from the Collateral, (xii) to any sale,
conveyance, assignment, participation or other transfer by the Lender (in whole
or in part) to any other person of any one or more of this Agreement and the
other Loan Instruments or any one or more of the rights, powers, privileges,
remedies or interests of the Lender herein or therein, (xiii) to any act or
omission on the part of the Lender or any other person, or (xiv) to any other
event or circumstance that otherwise might constitute a legal or equitable
counterclaim, defense or discharge of a borrower, co-obligor, indemnitor,
guarantor, pledgor or surety; in each case in such manner and order, upon such
terms and provisions and subject to such conditions as the Lender may deem
necessary or desirable in its sole and absolute discretion, and without notice
to or further assent from the Borrower, any Guarantor, any other Surety, or any
other person (except for such notices as may be expressly required to be given
to such party under the applicable Loan Instrument); (d) shall not be subject to
any defense, counterclaim, setoff, right of recoupment, abatement, reduction or
other claim or determination that may have against the Lender, any Surety or any
other person; (e) shall not be diminished or qualified by the death, disability,
dissolution, reorganization, insolvency, bankruptcy, custodianship or
receivership of the Borrower, any Guarantor, any other Surety, or any other
person, or the inability of any of them to pay their respective debts or perform
or otherwise satisfy their respective obligations as they become due for any
reason whatsoever; and (f) shall remain and continue in full force and effect
without regard to any of the foregoing acts, circumstances or events (i) until
all of the Borrower's Obligations and Guarantors' Obligations have been fully
paid and satisfied and (ii) thereafter with respect to any and all events
occurring prior to such payment and satisfaction and any and all resulting
claims, liabilities, losses and expenses (including, without limitation, the
attorneys' disbursements, expenses and fees), whenever incurred or asserted.
Notwithstanding the foregoing in this Section, however, each Guarantor retains
the defense of indefeasible payment to the extent actually paid.
Section 2.15. Subordination of Indebtedness, Subrogation and
Contribution Rights, Etc. Each Guarantor covenants and agrees that until the
Borrower's Obligations and Guarantors' Obligations have been fully paid and
satisfied, any and all Subordinated Rights of such Guarantor shall be
subordinate and inferior in priority and dignity to the Borrower's Obligations
and Guarantors' Obligations and shall not be entitled to any payment or
satisfaction (in whole or in part) until, all of the Borrower's Obligations and
Guarantors' Obligations have been fully paid and satisfied. Until such time (if
ever) as the Borrower's Obligations and Guarantors' Obligations have been fully
paid and satisfied: (A) no Guarantor shall seek any
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payment or exercise or enforce any right, power, privilege, remedy or interest
that such Guarantor may have with respect to any Subordinated Right and (B) any
payment, asset or property delivered to or for the benefit of any Guarantor in
respect of any Subordinated Right shall be accepted in trust for the benefit of
the Lender and shall be promptly paid or delivered to the Lender to be credited
and applied to the payment and satisfaction of the Borrower's Obligations and
Guarantors' Obligations, whether contingent, matured or unmatured, or to be held
by the Lender as additional collateral, as the Lender may elect in its sole and
absolute discretion. Each Guarantor hereby acknowledges and agrees that pursuant
to this Agreement such Guarantor has granted to the Lender a continuing security
interest in and to any and all Subordinated Rights of such Guarantor, together
with the proceeds thereof and all payments and other distributions with respect
thereto. In addition to the rights, powers, privileges, remedies and interest
accorded to the Lender by this Agreement or applicable law, the Lender may
exercise any voting, consent, enforcement or other right, power, privilege,
remedy or interest pertaining to any Subordinated Right to the same extent as if
the Lender were the outright owner thereof.
Section 2.16. Waiver of Impairment of Subrogation and Other Rights.
Each Guarantor acknowledges and agrees that: (a) the amounts (if any) that
potentially could be realized by such Guarantor (or any other Guarantor), as
well as the enforceability, practicality or value of any right, power,
privilege, remedy or interest of such Guarantor (or any other Guarantor), under
or in respect of any Subordinated Right may be substantially reduced or limited
or completely eliminated by any one or more of the following (either
individually or in the aggregate): (i) the delay inherent in the subordination
of those rights under this Agreement, (ii) payments by the Borrower, any
Guarantor, any Surety or any other person to the Lender or any other person,
(iii) any foreclosure, sale, lease or other liquidation or disposition or
realization respecting any collateral, (iv) any action or inaction by the Lender
or any other person authorized or waived by the Borrower, any Guarantor or any
other authorized person, whether under this Agreement or otherwise, or
contemplated, permitted or provided for under this Agreement, any other Loan
Instrument or applicable law, (v) the exercise or enforcement by the Lender of
any one or more of the Lender's rights, powers privileges, remedies and
interests of the Lender under any Loan Instrument or applicable law, or (vi) any
adverse change (however material) in the assets, business, operations,
properties, or condition (financial or otherwise) of the Borrower, any
Guarantor, any Surety or any other person arising out of or related directly or
indirectly to any of the foregoing; (b) the Lender is not acting as an agent,
trustee or other representative (regarding collateral or otherwise) with respect
to any Subordinated Right; (c) the Lender may exercise or enforce any of the
Lender's rights, powers, privileges, remedies or interests under the Loan
Instruments or applicable law without any consideration of or regard to any
Subordinated Right or any direct or indirect adverse effect thereupon (however
material); (d) no Guarantor shall be entitled to any payment or other asset or
property (or any part thereof) delivered to or otherwise realized by the Lender
on account of the Borrower's Obligations, Guarantors' Obligations or Surety's
Obligations or to any accounting thereof; (e) none of the foregoing (whether
individually or in the aggregate) shall (i) release, limit or otherwise affect
the liability of any Guarantor to the Lender under this Agreement or any other
Loan Instrument, or (ii) give rise to any action, claim, counterclaim, right of
setoff or recoupment, defense, or other remedy on the part of the Borrower, any
Guarantor, any Surety or any other person, irrespective of frequency, direct or
indirect effect, materiality or direct or indirect consequences; and (f) no
Guarantor shall raise any, and each Guarantor hereby expressly waives and
releases each and every, such action, claim, counterclaim, right of setoff, or
recoupment, defense, or other remedy.
Section 2.17. Bankruptcy. In the event the Lender is not permitted or
is otherwise unable (because of the pendency of any Bankruptcy Proceeding or
other proceeding) to accelerate or demand payment of any of the Borrower's
Obligations or Guarantors' Obligations, but otherwise would have been permitted
to do so at such time pursuant to any Loan Instrument, the Lender may demand
payment in full, may proceed against any of the Collateral and may exercise and
enforce the Lender's other rights, powers, privileges, remedies and interests
under this Agreement or any other Loan Instrument to which any Guarantor is a
party as if the Borrower's Obligations and/or Guarantors' Obligations had been
duly accelerated and payment had been duly demanded, and no Guarantor shall
raise, and each Guarantor hereby expressly waives and releases, any claim or
defense with respect to such deemed acceleration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and the other Loan
Instruments to which it is a party and to make and continue the Loans to the
Loan Parties, the Loan Parties jointly and severally represent and warrant to
the Lender as follows in each Section of this Article:
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Section 3.01. Organization, Powers, Etc. Each Loan Party: (a) is duly
organized, validly existing and in good standing under the laws of its state of
incorporation, which state is correctly set forth in the Introduction hereto
(i.e., first paragraph of this Agreement); (b) has the power and authority to
carry on its business as now conducted and to own or hold under lease the assets
and properties it purports to own or hold under lease; (c) is duly qualified,
licensed or registered to transact its business and in good standing in every
jurisdiction in which it purports to or carries on its business or holds under
lease any of its assets and properties; (d) has the power and authority to
execute and deliver this Agreement and each of the other Loan Instruments to
which it is or will be a party and to perform all of its obligations hereunder
and thereunder; and (e) has its executive office and principal place of business
at the address set forth in the Introduction, which has been so since its
organization.
Section 3.02. Separate Legal Entity, Etc. (a) The full, complete and
correct legal name of each Loan Party is set forth in the Introduction hereto
(i.e., first paragraph of this Agreement) and on the signature page hereto, and
has never been changed and is and has been the only name ever used by such Loan
Party. Each Loan Party has at all times: (i) done business exclusively under its
own name and employer and taxpayer identification numbers, held itself out to
the public as a legal entity separate and distinct from any other Person (and
not as a department or division of someone else), and corrected any
misunderstandings known to it regarding the separate identity of each Loan
Party; (ii) used its own separate stationery, invoices and checks; (iii) used
its own logos and trademarks and not shared any common logo or trademark with
any other Person; (iv) observed all corporate or equivalent formalities for
maintaining its status as a valid separate entity; (v) maintained its records,
books of account, bank accounts and other assets and properties separate and
apart from those of any other Person and not commingle any of them with those of
any other Person; (vi) promptly corrected any other Person's misunderstanding as
to (A) the identity of such Loan Party or any Affiliate with whom such other
Person is transacting business, or (B) such Loan Party's alleged responsibility
for the Indebtedness or other obligations of any other Person; (vii) allocated
fairly and reasonably any overhead expenses that are shared with each relevant
Affiliate, including paying for office space and services performed by any
employee of an Affiliate or vice versa; and (viii) maintained a sufficient
number of employees or independent contractors in light of its business
operations.
(b) No Loan Party has at any time: (i) engaged in any business or
activity other than the ownership and operation and maintenance of its incentive
marketing business, and activities incidental thereto; (ii) acquired or owned
any assets other than the securities of such subsidiaries and such assets as may
be incidental thereto; (iii) merged into or with or consolidated with any Person
or entity or changed its legal structure; and (iv) entered into any agreement or
arrangement that would not have been permitted after the date hereof under
Section 6.11 hereof.
Section 3.03. Consents, Etc. Except as already obtained and listed on
Schedule 3.03 hereto, no consent, approval or authorization of, or registration,
declaration or filing with, any Authority or other Person (including, without
limitation, the shareholders of any Loan Party) is required as a condition
precedent, concurrent or subsequent to or in connection with the due and valid
execution, delivery and performance by any Loan Party of this Agreement or any
other Loan Instrument to which such Loan Party is or will be a party or the
legality, validity, binding effect or enforceability of any of their respective
representations, warranties, covenants and other terms and provisions. Each
franchise, license, certificate, authorization, approval or consent from any
Authority necessary to the present conduct of the business and operations of
each Loan Party, or required for the acquisition, ownership, improvement,
operation or maintenance by each Loan Party of any portion of the assets and
properties it now owns, operates or maintains, has been obtained and validly
granted, is in full force and effect and constitutes valid and sufficient
authorization therefor.
Section 3.04. No Restriction on Borrowing Ability, Etc. (a) No Loan
Party is regulated by or otherwise subject to any Applicable Law that directly
or indirectly limits or otherwise restricts or governs its ability to incur,
continue or repay Indebtedness, to provide Credit Support or to grant security
interests or other Liens in or to any of its assets and properties as security
for the Indebtedness of itself or others or its Credit Support for others.
Without limiting the generality of the foregoing:
(b) Except as expressly permitted by Section 6.09 hereof, no part of
the proceeds of the Loans will be used to purchase or carry any Margin Stock, to
extend credit to any other Person for the purpose of purchasing or carrying any
Margin Stock or in any way or for any purpose that otherwise violates or is
inconsistent with any applicable Margin Stock Regulations. No Loan Party is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
(c) No Loan Party is an "investment company", an "affiliated person",
"promoter" or "principal underwriter" of an "investment company" or "controlled"
by an "investment company" (as such
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terms are defined in the Investment Company Act). None of the transactions
contemplated by this Agreement and the other Loan Instruments (including the
making of the Loans and the permitted use of the proceeds thereof) will violate
any provision of the Investment Company Act.
(d) No Loan Party is a "holding company" or an "Affiliate" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or any corresponding provisions
of any Applicable Law in any foreign jurisdiction, and as the same may have been
and hereafter may be supplemented, modified, amended or restated from time to
time, and the rules and regulations promulgated thereunder, or any corresponding
or succeeding provisions of Applicable Law.
(e) No Loan Party is an "employee benefit plan" governed by (and as
defined in) ERISA, and none of the assets or properties of the Borrower
constitutes or will constitute "plan assets" governed by (and as defined in)
ERISA.
(f) No Loan Party is a "foreign Person" under (and as defined in)
ss.1455(f)(3) of the Tax Code or any successor provision.
Section 3.05. Authorization, Conflicts and Validity. Except as set
forth in Schedule 3.05 hereto, the execution and delivery by each Loan Party of
this Agreement and each of the other Loan Instruments to which it is or will be
a party and the performance by each Loan Party of all of its obligations
hereunder and thereunder: (a) have been duly authorized by all requisite
corporate action; (b) will not violate or be in conflict with any term or
provision of (i) any Applicable Law (including, without limitation, any
applicable usury or similar law), (ii) any judgment, order, writ, injunction,
decree or consent of any court or other judicial Authority, or (iii) any
Organizational Document of each Loan Party or any Surety; (c) will not violate,
be in conflict with, result in a breach of or constitute a default (with or
without the giving or receipt of notice, the acquisition of knowledge or the
passage of time or any combination thereof) under any term or provision of any
Organizational Document or other Material Document; and (d) except as
specifically contemplated by this Agreement or any other Loan Instrument, will
not result in the creation or imposition of any Lien of any nature upon any of
its assets and properties. This Agreement and each Note are, and the other Loan
Instruments to which each Loan Party is or will be a party when executed and
delivered will be, legal, valid and binding obligations of such Loan Party,
enforceable in accordance with their respective terms and provisions, except as
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization and other laws affecting the rights or remedies of creditors
generally and (b) rules of equity affecting the enforcement of obligations
generally (whether at law or in equity).
Section 3.06. Litigation. Except as set forth in Schedule 3.06 hereto,
there are no actions, suits, investigations or proceedings (whether or not
purportedly on behalf of any one or more of the Loan Parties or any Surety)
pending or, to the best knowledge of the Loan Parties, threatened or
contemplated at law, in equity, in arbitration or by or before any other
Authority involving or affecting: (a) any Loan Party or any Surety that, if
adversely determined, could have a Material Adverse Effect or Surety's Adverse
Effect; (b) any alleged criminal act or activity on the part of any Loan Party
or (to the knowledge of the Loan Parties) any of its representatives; (c) any
ESOP Related Document, Stock Purchase Document, or any Organizational Document
of any Loan Party or any Surety; (d) any Material Document (other than
Collateral) that, if adversely determined, could have a Material Adverse Effect
or Surety's Adverse Effect; (e) any Environmental Claim respecting any Loan
Party or any part of the Collateral; (f) the Obligations; (g) any part of the
Collateral; or (h) any of the transactions contemplated in this Agreement and
the other Loan Instruments; nor, to the best knowledge of the Loan Parties, is
there any reasonable basis for the institution of any such action, suit,
investigation or proceeding. None of the Loan Parties nor any Surety is in
default with respect to any judgment, order, writ, injunction, decree or consent
of any court or other judicial Authority, which default could have or has had a
Material Adverse Effect or Surety's Adverse Effect.
Section 3.07. Financial Statements, No Material Adverse Change,
Solvency, Etc. (a) The Borrower heretofore has provided to the Lender the
balance sheet of SPG as at December 31, 2001, and the related statements of
earnings, shareholders' equity, and cash flow for the fiscal year ended on that
date, as part of SGRP's consolidated financial statements audited and reported
upon by Ernst & Young, independent certified public accountants. Those financial
statements and reports of the Borrower and the related notes and schedules, as
well as those related to later periods (whenever delivered), (i) were prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, and (ii) are complete,
accurate and a fair presentation of the financial condition of the Borrower as
of the date thereof and the results of its operations for the period covered
thereby (subject in the case of interim statements to normal year-end audit
adjustments).
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(b) The Borrower heretofore has provided to the Lender the pro forma
consolidated and consolidating balance sheet of the Borrower as at June 30,
2002, and the related pro forma consolidated and consolidating statements of
earnings, shareholders' equity, and cash flow for the six-month period ended on
that date. Those financial statements and reports of the Borrower and its
subsidiaries and the related notes and schedules, as well as those related to
later periods (whenever delivered), (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, (ii) fully reflect
all of the Accounts Receivable, trade payables and other assets and liabilities
of the Borrower and its subsidiaries, (iii) are complete, accurate and a fair
presentation of the financial condition of the Borrower and its subsidiaries as
of the date thereof and the results of its operations for the period covered
thereby (subject in the case of interim statements to normal year-end audit
adjustments), provided that statements relating to or incorporating the period
January 1, 2002, through June 30, 2002, have been or will have been prepared on
a pro forma basis to reflect the pro forma balance sheet of the Borrower and its
subsidiaries as at June 30, 2002, immediately after the conclusion of the
closing under this Agreement and the Stock Purchase Agreement and to include the
results of operations for SPG for such periods, and (iv) have been separately
certified to the Lender by the chief executive officer and chief financial
officer (or controller or other most senior accounting officer or employee if
there is no chief financial officer) of the Borrower as satisfying clauses (i),
(ii) and (iii) of this subsection.
(c) The Borrower heretofore has provided to the Lender the separate
actual balance sheets of the Borrower and SPG as at May 31, 2002 (immediately
preceding the Borrower's purchase of the SPG Stock), and SPG's related
statements of earnings, shareholders' equity, and cash flow for the six-month
period ended on that date. Those financial statements and reports and the
related notes and schedules, as well as those related to later periods (whenever
delivered), (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, (ii) fully reflect all of the Accounts
Receivable, trade payables and other assets and liabilities of the Borrower and
SPG, respectively, (iii) are complete, accurate and a fair presentation of the
financial condition of the Borrower and SPG, respectively, as of the date
thereof and in the case of SPG the results of its operations for the period
covered thereby (subject in the case of interim statements to normal year-end
audit adjustments), and (iv) have been separately certified to the Lender by the
chief executive officer and chief financial officer (or controller or other most
senior accounting officer or employee if there is no chief financial officer) of
the Borrower as satisfying clauses (i), (ii) and (iii) of this subsection;
(d) Since December 31, 2001, no event or events have occurred that
individually or in the aggregate could have or has had a Material Adverse
Effect.
(e) After giving effect to the direct and indirect Indebtedness and
other liabilities and obligations of each Loan Party arising under this
Agreement and the other Loan Instruments, whether absolute or contingent
(treating all guaranties, pledges and other contingent credit support and all
unused availability under lines of credit and commitments as fully funded
indebtedness in the maximum amount thereof), the Loan Parties taken as a whole:
(i) are solvent (i.e., the aggregate fair value of their assets exceeds the sum
of their liabilities); (ii) have adequate working capital; and (iii) are able to
pay their debts as they mature.
(f) No Loan Party is or has ever been the subject of any Bankruptcy
Proceeding, and no Loan Party is currently taking or considering or planning to
take, and has not ever taken or considered or planned to take, any action under
any Bankruptcy Law or any of the other actions specified in Section 8.01(h)
hereof, and to the knowledge of each Loan Party no other Person is currently
considering or planning, or has ever considered or planned, to take any of those
actions.
Section 3.08. Document Delivery; Absence of Defaults and Certain
Agreements. (a) Each Loan Party has delivered to the Lender and its counsel
true, complete and correct copies of each Organizational Document of each Loan
Party and each Surety, ESOP Related Document, and Stock Purchase Document, and
Material Document, together with all supplements, modifications and amendments
thereto and restatements and replacements thereof.
(b) Except as set forth in Schedule 3.08(b) hereto, no act or event
has occurred and is continuing that violates, is in conflict with, results in a
breach of or constitutes a default (with or without the giving or receipt of
notice, the acquisition of knowledge or the passage of time or any combination
thereof) under any term or provision of (i) this Agreement or any other Loan
Instrument, (ii) any ESOP Related Document, or Stock Purchase Document; (d) or
other Material Document, or (iii) any Organizational Document of any Loan Party
or any Surety. No Loan Party nor any Surety is a party to any instrument,
indenture, agreement, document, arrangement or other obligation, or subject to
any charter or other restriction, that could have or has had a Material Adverse
Effect or Surety's Adverse Effect.
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Section 3.09. Payment of Taxes and Debts, Compliance with Applicable
Law, Etc.. (a) Each Loan Party: (i) has filed all required tax returns with the
appropriate taxing authorities respecting its operations, assets and properties;
and (ii) has paid or caused to be paid all taxes shown on those returns to the
extent due, which with respect to federal income taxes and returns is to the
knowledge of the Loan Parties prior to June 30, 2002; except in either case to
the extent that (A) extensions of time to make such filing have been duly
granted by the appropriate taxing authorities and those extensions have not
expired, or (B) payment is not yet required pursuant to Section 5.06 hereof.
(b) Each Loan Party is current in its payment of debts and performance
of obligations (other than taxes) except to the extent payment or performance is
not yet required pursuant to Section 5.06 hereof.
(c) Each Loan Party is in compliance with and conforms to all
Environmental Laws and other Applicable Law, and has so complied and conformed
since its organization.
Section 3.10. Indebtedness, Guaranties, ERISA Plans, Etc. (a) Schedule
3.10(a) hereto (as and if updated pursuant to Section 5.02 hereof) contains a
complete and accurate list of all direct and indirect Indebtedness of each Loan
Party (whether individual, joint, several or otherwise), including commitments,
lines of credit and other credit availabilities, identifying with respect to
each the respective parties, amounts and maturities, excluding, however, the
Loans.
(b) Schedule 3.10(b) hereto (as and if updated pursuant to Section
5.02 hereof) contains a complete and accurate list of all guaranties and other
Credit Support by each Loan Party (whether individual, joint, several or
otherwise), identifying with respect to each the respective parties to such
Credit Support and parties, amounts and maturities of the underlying
obligations.
(c) Schedule 3.10(c) contains a complete and accurate list of all
"employee pension benefit plans" and "employee welfare benefit plans" (as
defined in ERISA) established, funded or maintained by any Loan Party or any
ERISA Affiliate, whether currently or since its organization, or to which any
Loan Party or any ERISA Affiliate is required to contribute (as each may be
supplemented, modified, amended, restated or replaced from time to time pursuant
to ERISA or the Tax Code, as applicable, a "Plan", and collectively, the
"Plans"). Except as set forth in that schedule: (i) each Plan is in full force
and effect and has been (or is expected to be) determined to be duly qualified
under ERISA and the Tax Code, as applicable; (ii) no ERISA Event is currently
continuing, and none has occurred since its organization; (iii) each report,
statement or other document has been timely prepared and delivered in accordance
with, and conforms in form and substance to the requirements of, ERISA and the
Tax Code; (iv) each Plan complies with ERISA, the Tax Code and all other
Applicable Law in all other respects; (v) the present value of all accrued
benefits under each Plan subject to Title IV of ERISA does not, and did not as
of the last annual valuation date, exceed the value of the assets of such Plan
allocable to such accrued benefits (which benefit value shall be determined
either on an ongoing basis, using the Plan's reasonable actuarial assumptions,
or on a termination basis, using the assumptions employed by the Pension Benefit
Guaranty Corporation in connection with plan terminations, as applicable); (vi)
there are no actions, suits, investigations or proceedings (whether or not
purportedly on behalf of any fiduciary, sponsor, participant or beneficiary)
pending, or to the best knowledge of the Loan Parties, threatened or
contemplated at law, in equity, in arbitration or by or before any Authority
involving or affecting any Plan or any assets and properties of a Plan that, if
adversely determined, could have an ERISA Effect; (vii) there are no facts or
circumstances that might give rise to any liability of or claim against any Loan
Party, any Surety or the Collateral under Title IV of ERISA; and (viii) none of
the Plans is, and no Loan Party or any ERISA Affiliate in the past established,
funded, maintained, contributed or was required to contribute to, any
"multi-employer plan" (as defined in ERISA). The present value of all accrued
post-retirement benefits under each "employee welfare benefit plan" (as defined
in ERISA) to which one or more of the Loan Parties and their ERISA Affiliates is
required to contribute does not in the aggregate exceed the assets of such plan
allocable to such benefits (determined using the actuarial and other assumptions
required under FAS106).
Section 3.11. Subsidiaries, Other Ventures, Loans and Other
Investments. Schedule 3.11 hereto contains a complete and accurate list of: (a)
all of the subsidiaries of each Loan Party or any of its subsidiaries, including
with respect to each subsidiary (i) its state of incorporation, (ii) all
jurisdictions (if any) in which the subsidiary is qualified to do business as a
foreign corporation, (iii) the name of the owner and the number of shares of
capital stock of the subsidiary owned, specifying whether owned beneficially
and/or of record, and if that is less than all of the outstanding shares issued
by the subsidiary, stating the total outstandings, and (iv) all related funding
commitments and obligations of any Loan Party and/or any other subsidiary of any
Loan Party to contribute capital or other funds to such subsidiary; (b) all
partnerships and other ventures in which any Loan Party or any of its
subsidiaries is a member or venturer, including with respect to each such
partnership or venture (i) its jurisdiction of organization and any other
jurisdiction in
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which it is qualified to do business as a foreign entity, (ii) the name of the
owner and the percentage and type of interest in such partnership or venture
owned, specifying whether owned beneficially and/or of record, (iii) all related
funding commitments and obligations of any Loan Party and/or any subsidiary of
any Loan Party to contribute capital or other funds to such venture, and (iv)
the names and addresses of the other members or venturers; (c) any and all loans
or advances from any Loan Party to any Surety or to any of the Affiliate of any
Loan Party, identifying with respect to each the respective parties, amounts and
maturities; and (d) all other Investments of any Loan Party other than Permitted
Investments.
Section 3.12. Assets, Liens and Collateral. (a) The Loan Parties are
the holders and severally are the legal and beneficial owners of, and have good
title to the Collateral, which constitutes all of the assets and properties of
the Loan Parties (i) reflected on the most recent report or financial statement
furnished to the Lender or (ii) subsequently acquired; excluding, however, such
assets and properties as may have been sold or otherwise disposed of (1) in the
ordinary course of business prior to the date of this Agreement or (2) as
permitted by this Agreement after the date hereof. Each Loan Party has full
corporate power and authority and the unconditional right to grant to the Lender
the mortgages and other security interests respecting the Collateral
contemplated in this Agreement and the other Loan Instruments. The Lender has
received legal, valid, binding, enforceable and perfected security interests in
and to the Collateral pursuant to this Agreement and the other Loan Instruments.
(b) No part of the Collateral is subject to any Lien or any adverse
claim of any kind whatsoever, except (A) those in favor of the Lender, (B) those
permitted by Section 6.04 hereof (if any) and (C) those described in Schedule
3.12(b) annexed hereto.
(c) There are no claims of third parties that would prevent any
assignee or purchaser of all or any portion of the Collateral from receiving any
payments, distributions and proceeds with respect thereto, if any, without any
defense, counterclaim, setoff, right of recoupment, abatement or other claim or
determination whatsoever.
(d) All of the Collateral has been and currently is operated, insured
and maintained as respectively required by Sections 5.05, 5.07 and 5.08 hereof.
Each Loan Party currently is, and since the Effective Date has been, insured as
required by Section 5.07 hereof, and was insured in a comparable manner since
its organization. No fact, circumstance or other event currently exists or has
occurred that (i) could violate or has violated any term or provision of any
insurance policy, (ii) could permit or has permitted any insurer to cancel or
refuse to renew (upon similar terms) any such insurance policy, or (iii) could
prevent or has prevented any Loan Party from obtaining a similar insurance
policy on similar terms. Schedule 3.12(d) hereto contains a complete and
accurate list of all insurance policies, contracts and arrangements of any Loan
Party with, individually or jointly, any other Loan Party.
(e) The Loan Parties have full possession and control of the
Collateral, and all of the Collateral is located (or in the case of accounts and
general intangibles are deemed to be located) at the addresses of the Loan
Parties set forth in the Introduction, except (i) that certain items may be
physically located at the other locations listed in Schedule 3.12(e) hereto,
which schedule contains a complete and accurate description of each other
location and the items located there, (ii) for items physically held by the
Lender or its designee, and (iii) for items physically held for the benefit and
at the direction of the Loan Parties by the persons identified in that schedule.
(f) Schedule 3.12(f) hereto contains a complete and accurate list of
all employee contracts and arrangements of any Loan Party (with individually or
jointly with any other Loan Party). All employees of each Loan Party have signed
confidentiality and non-compete agreements appropriate to their respective
levels of access.
(g) Each note, stock certificate, security, financial asset,
investment property,, instrument, agreement, account, document or intangible of
any Loan Party included in the Collateral: (i) was duly executed and delivered
in a written instrument or document and to the best knowledge of the Loan
Parties contains no forgeries or unauthorized signatures; (ii) is legal, valid,
binding and enforceable against the signer in accordance with its terms and
provisions; (iii) does not violate or conflict with any provision of Applicable
Law; (iv) has not been amended or modified in any respect or prepaid; (v) except
as set forth in Schedule 3.12(g) hereto, fully reflects all agreements and
understandings with the signer with respect thereto; (vi) is assignable, and has
been duly assigned to the Lender in accordance with the terms and provisions
hereof and thereof; and (vii) is maintained at the chief executive office of the
Loan Parties (or at such other office as may have been specified in a notice to
the Lender) in a file and location that would be readily identifiable by anyone
examining the books and records of the Loan Parties, except (A) that certain
items may be physically located at the other locations listed in Schedule
3.12(e) hereto, which schedule contains a complete and accurate description of
each other location and the items located there, (B) for items physically
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held by the Lender or its designee, and (C) for items physically held for the
benefit and at the direction of the Loan Parties by the Person identified in
that schedule.
(h) To the best knowledge of the Loan Parties, there is no existing,
proposed or contemplated plan, study or effort by any governmental Authority or
other Person that in any way affects or could affect the continued authorization
of the present or contemplated ownership, financing, construction, use or
operation of any part of the Collateral, or that could result or has resulted in
any tax or other charge being levied or assessed against, or in the creation of
any Lien upon, any part of the Collateral.
Section 3.13. Environmental Compliance. The procurement, storage,
containment, presence, manufacture, distribution, removal and disposition of all
Environmental Substances by or on behalf of any Loan Party and the use and
operation of all assets and properties owned, leased or used by or on behalf of
any Loan Party (including, without limitation, machinery, Equipment, Real Estate
and Improvements), as now or previously existing (whenever created), as
conducted by or for any Loan Party, or as contemplated, are in full compliance
with and conform to all Environmental Laws and other Applicable Law. Without
limiting the generality of the foregoing: (i) all permits, licenses,
authorizations, consents or approvals of authorities necessary or desirable for
such activities have been obtained and they are in full force and effect; (ii)
no part of those activities or the Collateral is in violation of any
Environmental Law or other Applicable Law and (iii) no notice has been served
upon any Loan Party (other than a notice subsequently withdrawn or with regard
to a violation subsequently cured) from any governmental Authority or other
Person claiming, nor does there currently exist, any violation of any
Environmental Law or other Applicable Law in connection with any of those
activities or the Collateral.
Section 3.14. Machinery, Equipment and Real Estate. (a) The machinery,
Equipment and other fixed assets owned or leased by each Loan Party are in good
working order and condition (ordinary wear and tear and retirement excepted),
all of the machinery, Equipment and other fixed assets owned or leased by each
Loan Party are used or usable in the current conduct of its business, and each
of the Loan Parties has all of the machinery, Equipment and other fixed assets
necessary for the current conduct of its business. Schedule 3.14(a) contains a
complete and accurate copy of SPG's fixed asset schedule as of the date hereof;
provided that if SPG does not have such a schedule, Schedule 3.14(a) shall
consist of a complete and accurate list of all items of machinery, Equipment and
other fixed assets owned or leased by each Loan Party having individual book
values in excess of $10,000 as of the date hereof.
(b) (i) No Loan Party leases any interest in or has any license or
other agreement to use any Real Estate other than its leasehold interests under
the leases and licenses under the agreements listed in Schedule 3.14(b) hereto
(as the same may have been or hereafter may be supplemented, modified, amended,
restated or replaced from time to time in the manner provided therein, each a
"Lease" and collectively the "Leases"); (ii) each Loan Party is the tenant and
user under each Lease, and each Loan Party has furnished to the Lender copies of
each Lease, certified to be true, complete and correct by each Loan Party; (iii)
each Lease contains the entire agreement of the parties thereto in respect of
those premises and their use by each Loan Party; (iv) except as set forth in
Schedule 3.08(b) hereto, each Loan Party is in full compliance under each Lease,
no default or event that (with or without the giving or receipt of notice, the
acquisition of knowledge or the passage of time or any combination thereof)
would constitute a default has occurred and is continuing under any Lease, and
each Lease is in full force and effect; (v) each Loan Party has the right to
quiet use and enjoyment of those premises to the extent respectively
contemplated in the Lease; and (vi) no Lease provides for termination on account
of or is otherwise affected by any employee strike, lockout or other work
stoppage.
(c) Schedule 3.14(c) contains a complete and accurate description of
all of the Real Estate owned by each Loan Party, which to the extent applicable
includes lot, block and section or other identifying numbers; and each Loan
Party has good and marketable fee title thereto. All portions of the
Improvements, if any, to the Property have been, are being or will be
constructed and completed within the perimeter of the land owned or leased by
each Loan Party and in accordance with: (i) all zoning ordinances and other
Applicable Law; (ii) the requirements of governmental authorities having
jurisdiction, including all land use and construction licenses, permits and
approvals relating to the Improvements; (iii) accepted standards of good
materials and workmanship; (iv) the plans and specifications for such work as
furnished to the Lender and to the authorities having jurisdiction, if any; and
(v) all covenants, conditions, restrictions and agreements of any kind or nature
affecting the Improvements, including the applicable contracts and construction
loan agreements and instruments. To the best knowledge of each Loan Party there
are no design or structural defects in any part of the Improvements. The
Property and Improvements are, or are capable of being, connected to and
serviced by water, sewage disposal, gas, electric, transportation and
communication facilities that are adequate for the intended use of the
Improvements. There is no existing, or to the best knowledge of each Loan Party,
proposed or contemplated eminent domain proceeding or public Improvement that
would affect the Property or the Improvements in any way, including (without
limitation)
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any plan that would widen, modify or realign any street, highway, park,
wetlands, preserve or other public or utility easement or other right of access
or enjoyment, whether public or private.
(d) Schedule 3.14(d) hereto contains a complete and accurate list of
all equipment and other personal property leases, contracts and arrangements of
any Loan Party (with individually or jointly with any other Loan Party),
identifying with respect to each the lessor, term and monthly payment.
Section 3.15. Intellectual Properties. Schedule 3.15 contains a
complete and accurate list of all Intellectual Properties licensed to or owned
or otherwise used by each Loan Party, which indicates the relevant jurisdiction
of registration and the extent of each Loan Party's interest in each such item.
Except as set forth in Schedule 3.15 hereto, each of the Intellectual Properties
owned by any Loan Party and each of the Intellectual Properties licensed to any
Loan Party: (i) is subsisting and has not been determined to be invalid or
unenforceable by any Authority; (ii) to the best knowledge of each Loan Party is
legal, valid, binding and enforceable; (iii) is not and has not been the subject
of any claim of infringement or other adverse claim; (iv) has been maintained
and used in accordance with all Applicable Law; and (v) is assignable, and has
been duly collaterally assigned, to the Lender in accordance with the terms and
provisions hereof and thereof. Each Loan Party has all of the Intellectual
Properties necessary for the current conduct of its business.
Section 3.16. Accounts Receivable. (a) Each account receivable of each
Loan Party arose in the ordinary course of business in a bona fide arm's-length
transaction, has been fully reflected on its books and records in accordance
with GAAP consistently applied, and is represented by a written invoice or other
written document that: (i) was duly executed and delivered and to the best
knowledge of the Loan Parties contains no forgeries or unauthorized signatures;
(ii) is legal, valid, binding and enforceable against the customer in accordance
with its terms and provisions; (iii) does not violate or conflict with any
provision of Applicable Law; (iv) has not been amended or modified in any
respect; (v) fully reflects all agreements and understandings with the customer
with respect thereto; (vi) is assignable, and has been duly assigned to the
Lender in accordance with the terms and provisions hereof; and (vii) is
maintained at the chief executive office of the Loan Parties (or at such other
office as may have been specified in a notice to the Lender) in a file and
location that would be readily identifiable by anyone examining the Loan Party's
Accounts Receivable . The reserves for uncollectible accounts established by the
Loan Parties are adequate in the 'judgment of the Loan Parties to fully cover
current and future uncollectible Accounts Receivable.
(b) Each Account Receivable booked by any Loan Party is a receivable
for which a final or permitted interim invoice has been issued unless it is
booked separately as an unbilled receivable. Amounts booked as unbilled
receivables are a good faith estimate and a fair approximation of the amount to
be billed. No Account Receivable (whether billed or unbilled) has been booked by
any Loan Party as a receivable (whether billed or unbilled) where: (i) delivery
has not been completed of the invoiced program(s), product(s) or service(s),
except for invoiced program deposits; or (ii) the customer is an affiliate of
any Loan Party or any Surety.
Section 3.17. Pledged Securities. (a) Schedule 3.17 hereto contains a
complete and accurate list of all Investments currently owned of record and/or
beneficially by each Loan Party (whether individually, jointly or otherwise),
identifying with respect to each the issuer, certificate or other identifying
number(s), type and amount(s) and, if held by a clearing corporation, custodian
or other financial intermediary, the account(s), account number(s), account
holder(s) and name(s) and address(es) of the relevant office(s). Each of those
Investments is owned beneficially and of record by the applicable Loan Party, is
assignable, and has been duly assigned and transferred as collateral to the
Lender.
(b) Each of those Investments was acquired in a transaction in
compliance with and registered under or exempt from registration under the
Securities Act and other Applicable Law, and in the case of such exempt
acquisitions has been held for at least one year following full payment
therefor. Except for the normal restrictions on public offerings and the like
under the Securities Act, none of those Investments: (i) is subject to any
warrant, option, put, call or other right to acquire, redeem, sell, transfer or
encumber it (other than such call and redemption rights as may be intrinsic to
such securities where issued by a Person not Affiliated with any Loan Party or
any Surety); (ii) is governed by or otherwise subject to any shareholders
agreement, voting trust or similar agreement or arrangement; and (iii) is
limited or otherwise restricted in any way respecting assignability,
transferability or any voting, dividend, distribution or other ownership right
(whether or not reflected on the face of the certificate, in any Organizational
Document, or otherwise). To the best knowledge of the Loan Parties, each of
those Investments was duly authorized and validly issued, is fully paid and
non-assessable, and is not and will not be subject to any preemptive or similar
right or restriction.
Section 3.18. The Loan Parties' Independent Investment Decision, Etc.
Each Loan Party hereby acknowledges and agrees that: (a) each Loan Party (i) is
a sophisticated and knowledgeable investor,
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both generally and with respect to each item of Collateral, (ii) has received
directly from each holder or issuer of Collateral (which for the purpose of this
Section shall be deemed not to include the Lender), reviewed, and evaluated all
financial and other information necessary or prudent to make the Loan Party's
investment decision, and will continue to do so, and (iii) has made, and will
continue to make, independent investment selections and decisions respecting the
Collateral without reliance upon or regard to any evaluation or investigation by
the Lender of any Collateral or any holder or issuer of any Collateral; (b)
neither the Lender nor any of its Representatives has, and none of them shall be
deemed or construed to have, (i) made any representation, warranty or guaranty,
(ii) offered or furnished any recommendation, advice, analysis or information,
or (iii) undertaken or assumed any liability, responsibility or other obligation
whatsoever respecting any Collateral or any holder or issuer of any Collateral,
whether oral or otherwise, and whether express or implied, including (without
limitation) anything with respect to any existing or future (A) existence,
enforceability, genuineness, value or condition of any Collateral or (B) assets,
business, financial condition, investments, prospects, reputation, or strategies
of any holder or issuer of Collateral or any other Person; (c) neither the
Lender nor any of its Representatives shall have any liability, obligation or
responsibility whatsoever for any acts or omissions of any issuer or holder of
Collateral or any other Person or any failure by anyone to perform any of its
obligations under or with respect to any of the Collateral; and (d) neither the
Lender nor any of its representatives has, or shall be deemed or construed to
have, any agreement, duty or obligation to inform any Loan Party of any matter
relating to any of the Collateral or any holder or issuer of any of the
Collateral or to furnish to any Loan Party any information pertaining thereto.
Section 3.19. Loan Party Securities, Etc. (a) The Borrower is
authorized to issue 2,000,000 shares of common stock with a par value of
$0.00001 per share, of which 1 share is currently issued and outstanding. The
Borrower's Contribution Agreement requires that, immediately after the closing
of the Stock Purchase Agreement and the advance of the Term Loans, the Borrower
issue and contribute 1,000,000 shares of the Borrower's capital stock to the
ESOP Trust, and the Borrower's Redemption Agreement requires that Holdings
redeem (immediately after such ESOP Trust contribution) all shares of its
capital stock held by its shareholders other than the ESOP Trust, and thereafter
the ESOP Trust is the record and beneficial owner of all of the Borrower's
issued and outstanding capital stock. Except for the Permitted Options and
Holdings Warrant, there are no other outstanding securities issued by the
Borrower or any warrant, option or other right to acquire from the Borrower any
securities issued by it. Except for the normal restrictions on public offerings
and the like under the Securities Act, except for the Permitted Options, except
as otherwise provided in its Organizational Documents or the ESOP Related
Documents, except as otherwise provided in the Revolving Credit Agreement and
this Agreement, and except as otherwise set forth in Schedule 3.19 hereto, none
of those outstanding securities: (i) is subject to any warrant, option, put,
call or other right to acquire, redeem, sell, transfer or encumber it; (ii) is
governed by or otherwise subject to any shareholders agreement, voting trust or
similar agreement or arrangement; and (iii) is limited or otherwise restricted
in any way respecting assignability, transferability or any voting, dividend,
distribution or other ownership right (whether or not reflected on the face of
the certificate, in any Organizational Document, or otherwise). Except as
otherwise set forth in Schedule 3.19 hereto, each of those outstanding
securities was duly authorized and validly issued, is fully paid and
non-assessable, and is not and will not be subject to any preemptive or similar
right or restriction. Each of those outstanding securities was acquired from the
issuer in a transaction in compliance with and exempt from registration under
the Securities Act and other Applicable Law.
(b) SPG is authorized to issue 2,500 shares of common stock with no
par value, of which 72 shares are currently issued and outstanding. The Borrower
is the record and beneficial owner of all of the outstanding stock issued by
each Guarantor. There are no other outstanding securities issued by any
Guarantor or any warrant, option or other right to acquire from any Guarantor
any securities issued by it. Except for the normal restrictions on public
offerings and the like under the Securities Act, except the pledge of any and
all such securities under the Loan Instruments, and except as otherwise set
forth in Schedule 3.19 hereto, none of those outstanding securities: (i) is
subject to any warrant, option, put, call or other right to acquire, redeem,
sell, transfer or encumber it; (ii) is governed by or otherwise subject to any
shareholders agreement, voting trust or similar agreement or arrangement; and
(iii) is limited or otherwise restricted in any way respecting assignability,
transferability or any voting, dividend, distribution or other ownership right
(whether or not reflected on the face of the certificate, in any Organizational
Document, or otherwise). Except as otherwise set forth in Schedule 3.19 hereto,
each of those outstanding securities was duly authorized and validly issued, is
fully paid and non-assessable, and is not and will not be subject to any
preemptive or similar right or restriction. Each of those outstanding securities
was acquired from the issuer (or from the Lender in the case of the SPG Stock)
in a transaction in compliance with and exempt from registration under the
Securities Act and other Applicable Law.
Section 3.20. Relationship of the Loan Parties and Guarantors. The
Loan Parties are engaged as an integrated group in the business of owning,
developing, operating and selling their incentive marketing business and of
providing the required services and other facilities for those integrated
operations.
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The Loan Parties are seeking the Loans for the purpose of funding the
acquisition of the SPG Stock by the Borrower, which will permit the contribution
of the Borrower's stock to the ESOP Trust (and indirectly such business) for the
benefit of all of the employees of the Loan Parties. Each of the Loan Parties
expects to derive financial and other benefit, directly or indirectly, in return
for undertaking their respective obligations under this Agreement, and the other
Loan Instruments, both individually and as a member of the integrated group.
Section 3.21. No Misrepresentation by the Loan Parties. No
representation or warranty of any Loan Party made or contained in this Agreement
or any other Loan Instrument (whether with respect to any Loan Party or
otherwise) and no report, statement, certificate, schedule or other document or
information furnished or to be furnished by or on behalf of any Loan Party in
connection with the transactions contemplated by this Agreement and the other
Loan Instruments (whether with respect to any Loan Party or otherwise) contains
or will contain a misstatement of a material fact or omits or will omit to state
a material fact required to be stated therein in order to make it, in the light
of the circumstances under which made, not misleading.
Section 3.22. No Misrepresentation by any Surety. No representation or
warranty of any Surety made or contained in the Guaranty or any other Loan
Instrument (whether with respect to any Surety or otherwise) and no report,
statement, certificate, schedule or other document or information furnished or
to be furnished by or on behalf of any Surety in connection with the
transactions contemplated by this Agreement, the Guaranty and the other Loan
Instruments (whether with respect to any Surety or otherwise) contains or will
contain a misstatement of a material fact or omits or will omit to state a
material fact required to be stated therein in order to make it, in the light of
the circumstances under which made, not misleading.
ARTICLE IV
CONDITIONS TO LENDING
The obligation of the Lender to make the Term Loan hereunder is
subject to the satisfaction in full of all of the conditions precedent set forth
in and the other terms and provisions of each of the Sections of this Article,
unless the Lender (in its sole and absolute discretion) shall consent otherwise
in writing:
Section 4.01. Representations and Warranties. (a) On the Effective
Date, both prior to and after giving effect to any applicable advance (whether
through any Pro Forma Effect or otherwise), each of the representations,
warranties, acknowledgements and certifications of each of the Loan Parties and
the Sureties set forth in this Agreement and the other Loan Instruments shall be
true and correct in all respects on and as of that date with the same effect as
though those representations and warranties had been made on and as of such
Effective Date.
Section 4.02. No Default. On the Effective Date, both prior to and
after giving effect (whether through any Pro Forma Effect or otherwise) to any
requested Term Loan advance, no Default and no Event of Default shall have
occurred and be continuing.
Section 4.03. No Material Adverse Effect. On the Effective Date, both
prior to and after giving effect (whether through any Pro Forma Effect or
otherwise) to any requested Term Loan advance, no event or events have occurred
that individually or in the aggregate could have, or since the date of this
Agreement has had, a Material Adverse Effect.
Section 4.04. Loan Parties' Bringdown; Financial Covenant Compliance
Certificate. On the Effective Date, the Loan Parties shall have delivered to the
Lender a financial covenant compliance certificate in the form of Exhibit E
hereto, dated that date and signed by an executive officer of the Loan Parties.
By each request for a Term Loan advance, the Loan Parties shall be deemed to
have delivered to the Lender a bringdown certificate (clauses (_) through (_) of
such form) dated the date of such advance. The Lender in its sole and absolute
discretion may accept the certificate of the officer of the Loan Parties
delivered (or deemed to be delivered) pursuant to this Section as evidence of
the satisfaction of the conditions precedent specified in Sections 4.01, 4.02
and 4.03 hereof without in any way waiving or limiting any of the Lender's
rights, powers, privileges, remedies and interests under any term or provision
of this Agreement or any other Loan Instrument.
Section 4.05. Delivery of the Loan Instruments, Collateral and Fees.
(a) On or before the Effective Date, the Lender or its designee shall have
received delivery of: (i) the Notes provided for in Section 2.03 hereof, duly
executed by the Loan Parties; and (ii) payment of the disbursements, fees and
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expenses of Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Lender, and of
any local or special counsel retained by them or the Lender.
(b) On or before the Effective Date, the Lender or its designee shall
have received delivery of: (i) the insurance policies and endorsements required
by Section 5.07 hereof; and (ii) the other instruments and documents required by
this Agreement or any other Loan Instrument or listed in the final version of
the Checklist of Closing Documents delivered to the Loan Parties on or before
the Effective Date, which instruments and documents shall have been duly
executed by the appropriate parties.
(c) Each of the foregoing instruments and documents shall be in such
form and substance as may be acceptable to the Lender.
Section 4.06. Additional Conditions Precedent. On or before the
Effective Date, the Lender shall have received:
(a) certified copies of all (i) material documents, and (ii) organizational
and governing documents and (if applicable) authorizing resolutions for
each Loan Party and each Surety, in each case as amended to date, and a
satisfactory review of each of them by the Lender and its counsel;
(b) the approval by the Senior Lender (as and to the extent it deems it
necessary or desirable) of the ESOP Related Documents, the Stock Purchase
Documents, the Holdings Stock Plan, the Revolving Credit Documents and
the Loan Instruments;
(c) satisfactory (i) pro forma consolidated and consolidating financial
statements for the Borrower and its subsidiaries as at the date of the
most recent balance sheet delivered pursuant to the preceding paragraph,
adjusted to give effect to the consummation of the transactions
contemplated hereby as if such transactions had occurred on such date,
and (ii) consolidated and consolidating financial projections and
operating budgets for the Borrower and its subsidiaries for the
forthcoming [five and one half] fiscal years (commencing with respect to
the fiscal quarter beginning July 1, 2002), including (without
limitation) balance sheets and the related statements of earnings,
shareholders' equity and cash flow for such periods, all certified by the
chief executive officer, chief financial officer (or controller or other
most senior accounting officer or employee if there is no chief financial
officer) and other executive officers of each Loan Party as (i) having
been prepared in accordance with GAAP consistently applied, and (ii) a
fair estimate of the financial condition of each Loan Party as of such
date and the reasonably likely results of operations for the periods
covered thereby;
(d) evidence satisfactory to the Lender that the Collateral is owned by the
pledging parties free and clear of all security interests, liens and
other claims and encumbrances;
(e) a favorable fairness opinion respecting the Borrower and its subsidiaries
from an independent appraiser acceptable to the Lender reflecting (among
other things) the fairness to the shareholders of the Borrower of the
transactions contemplated by the ESOP Related Documents, the Stock
Purchase Documents, the Revolving Credit Documents, and the Loan
Instruments;
(f) evidence satisfactory to the Lender that there has not occurred any
Material Adverse Effect since December 31, 2001;
(g) evidence satisfactory to the Lender that, except as set forth in Schedule
3.06 hereto, there is no action, suit, investigation, proceeding or other
claim pending or threatened respecting any Loan Party, any Surety or any
collateral to be pledged by any of them;
(h) execution and delivery of the Stock Purchase Documents, the Borrower's
Contribution Agreement, the Borrower's Redemption Agreement and the
Revolving Credit Documents; and
(i) a certificate from the chief executive officer, chief financial officer
(or controller or other most senior accounting officer or employee if
there is no chief financial officer) and other executive officers
certifying that (i) each has read this Agreement and other Loan
Instruments and the financial statements referenced in Section 3.07
hereof, (ii) each has made an examination sufficient in the opinion of
the signer(s) to make informed statements in such certificate that the
financial statements and other information furnished to the Lender
pursuant hereto and representations and warranties of any Loan Party set
forth in this Agreement and the other Loan Instruments are true and
correct in all respects.
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Section 4.07. Organizational Documents. On or before the Effective
Date, the Loan Parties shall have furnished to the Lender the following
certificates and other documents with respect to each Loan Party: (a) a copy of
its certificate of incorporation and all modifications, amendments and
restatements thereof, certified as of a recent date by the Secretary of State of
its state of incorporation; (b) a copy of its by-laws, together with all
modifications, amendments and restatements thereof, certified as of a recent
date by its Secretary; (c) a certificate of the Secretary of State of its state
of incorporation, dated as of a recent date, as to its existence and good
standing; (d) a certificate of its Secretary or an Assistant Secretary, dated
the Effective Date, as to the due authorization of the negotiation, execution,
delivery and performance by it of this Agreement and each of the other Loan
Instruments to which it is or becomes a party (with the appropriate resolutions
adopted by its directors and shareholders attached thereto and reflecting among
other things the appointment of the ESOP Trustee and approval of the Stock
Purchase Documents, Loan Instruments, and ESOP Related Documents to which is or
becomes a party and the transactions contemplated thereunder) and the incumbency
and signatures of its officers and directors who are authorized to execute any
instrument, agreement or other document in connection with the transactions
contemplated by this Agreement and the other Loan Instruments; (e) copies of all
agreements and trusts respecting securities of its issue or related rights,
together with all modifications, amendments and restatements thereof, certified
as of a recent date by its Secretary; and (f) such Organizational Documents and
additional supporting documents and other information with respect to the
Collateral or the organization, operations and affairs of each Loan Party and
those of its subsidiaries, partnerships and other ventures as the Lender may
request.
Section 4.08. Acceptable Documents. All certificates and other
documents provided to the Lender pursuant to this Article shall be in such form
and substance as may be acceptable to the Lender and its counsel.
ARTICLE V
AFFIRMATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that each
will comply in all respects on a timely basis (except as otherwise expressly
provided) and at its own expense with each, and will not cause, suffer or permit
any violation of any, of the terms and provisions of each Section in this
Article, from the date hereof and until the Obligations have been fully paid and
satisfied, unless the Lender (in its sole and absolute discretion) shall consent
otherwise in writing (as provided in Section 9.15 hereof):
Section 5.01. Required Notices. The Loan Parties shall give, or cause
to be given, immediate written notice to the Lender of any of the following, but
without in any way authorizing or approving any event requiring the consent of
the Lender hereunder: (a) any change in the name (whether change in legal name,
use of other name or otherwise), name(s) of controlling equity owner(s), the
state or other jurisdiction of incorporation or other organization or the
location of the chief executive office of any Loan Party or any Surety;
(b) the institution or, to the best knowledge of the Loan Parties, the threat
or contemplation of, or any adverse determination or change in, any
action, suit, investigation or proceeding (whether or not purportedly on
behalf of any Loan Party or any Surety) at law, in equity, in arbitration
or by or before any other Authority involving or affecting (i) any Loan
Party or any Surety that, if adversely determined, could have a Material
Adverse Effect or Surety's Adverse Effect, (ii) any alleged criminal act
or activity on the part of any Loan Party or any of its representatives,
(iii) any ESOP Related Document, Stock Purchase Document, or any
Organizational Document of any Loan Party or any Surety; (iv) any
Material Document, (v) any Environmental Claim respecting any Loan Party
or any part of the Collateral, (vi) any Plan or any assets and properties
of a Plan that, if adversely determined, could have an ERISA Effect,
(vii) any part of the Collateral, (viii) any of the Obligations, or (ix)
any of the transactions contemplated in this Agreement and the other Loan
Instruments;
(c) the occurrence of any ERISA Event;
(d) the occurrence of any act or event that violates, is in conflict with,
results in a breach of or constitutes a default (with or without the
giving or receipt of notice, the acquisition of knowledge or the passage
of time or any combination thereof) under any term or provision of: (i)
any ESOP Related Document, Stock Purchase Document, or any Organizational
Document of any Loan Party or any Surety; or (ii) any Material Document;
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(e) any labor dispute to which any of the Loan Parties may become a party,
any strikes or walkouts relating to any of its offices, plants or other
facilities, or the expiration of any labor contract;
(f) any change in location or change in the status of the Collateral other
than as expressly permitted in Section 7.03 or 7.09 hereof;
(g) any attachment, confiscation, detention, levy, requisition, seizure or
other taking of any part of the Collateral, whether through process of
law or otherwise, the filing or other imposition of any Lien known to any
Loan Party against any part of the Collateral (other than as expressly
permitted by Section 6.04 hereof), or any destruction or other loss of or
any damage to any part of the Collateral; or
(h) to the extent not otherwise enumerated in this Section, the occurrence of
any other act or event that (i) has resulted or could result in any
Default or Event of Default, or (ii) has had or could have a Material
Adverse Effect or a Surety's Adverse Effect.
Section 5.02. Accounts and Reports. The Loan Parties shall maintain a
standard system of accounting in accordance with GAAP consistently applied, and
the Loan Parties shall provide to the Lender the following:
(a) as soon as available and in any event within 45 days after the end of
each fiscal year of the Borrower, commencing with the fiscal year ended
December 31, 2002, a consolidated and consolidating balance sheet of the
Borrower and its subsidiaries as at the end of that fiscal year and the
related consolidated and consolidating statements of earnings,
shareholders' equity and cash flow for such fiscal year, all with
accompanying notes, in reasonable detail and stating in comparative form
the figures as at the end of and for the previous fiscal year, prepared
in accordance with GAAP consistently applied, and audited and reported
upon by Ernst & Young or other independent certified public accountants
of recognized standing regularly retained by the Borrower to audit its
books and approved by the Lender;
(b) concurrently with the delivery of the financial statements described in
subsection (a) above, the annual auditor's report prepared by those
independent certified public accountants, and concurrently with the
delivery of the financial statements described in subsections (a) above
and (c) below, a letter to the Lender signed by the Borrower's
accountants to the effect that, having read this Agreement, (i) the
compliance calculations of the Loan Parties delivered under subsection
(d)(i) of this Section were correct and (ii) nothing came to their
attention during the course of their regular examination that caused them
to believe any Event of Default or Default had occurred and had not
theretofore been reported and remedied, or if any such Event of Default
or Default had occurred and was continuing or was not previously
reported, specifying the facts with respect thereto;
(c) as soon as available, and in any event within 15 days after the end of
each month (including December) of each fiscal year of the Borrower
(commencing with the month ending July 31, 2002), a consolidated and
consolidating balance sheet of the Borrower and its subsidiaries as at
the end of such month and the related consolidated and consolidating
statements of earnings, shareholders' equity and cash flow for the period
from the beginning of such fiscal year to the end of such month,
unaudited but certified by the chief executive officer and chief
financial officer (or controller or other most senior accounting officer
or employee if there is no chief financial officer) of the Borrower as
(i) prepared in accordance with GAAP consistently applied, (ii) fully
reflecting all of the Accounts Receivable, trade payables and other
liabilities of the Borrower and its subsidiaries, and (iii) complete,
accurate and a fair presentation of the financial condition of the
Borrower and its subsidiaries as of such date and the results of
operations for the period covered thereby, subject to normal year-end
audit adjustments, and in the case of quarterly statements audited or
reviewed by such independent certified public accountants to the extent
deemed necessary by SGRP's auditors in connection with the SPAR Group
annual audit or quarterly review;
(d) concurrently with the delivery of the documents described in subsection
(c), above, (i) a certificate in the form of Exhibit E hereto setting
forth the calculations of and establishing compliance with (among other
things) the financial covenants set forth in Section 6.01, 6.02, 6.03 and
6.08 of this Agreement for the Computation Period just ended, as well as
the calculation of any prepayment required under Section 2.06(f) and
2.06(h) hereof and a bringdown of the Loan Parties' representations and
warranties, (ii) a certificate respecting the completeness and accuracy
of the attached aging summaries of the consolidated and consolidating
receivables and payables of the Borrower and its subsidiaries as at the
end of the month just ended, and (iii) a certificate listing any changes
in Indebtedness, Credit Support and corresponding information for each
Loan Party of the
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types required to be scheduled under any of Sections 3.10(a) and 3.10(b)
hereof since the delivery of Schedules 3.10(a) and 3.10(b) (as and if
previously modified by all supplements thereto delivered to the Lender
under this clause) in the same form as Schedules 3.10(a) and 3.10(b)
hereto, in each case with such certificate being dated as of the last day
of the relevant reporting period and signed by the chief executive
officer and chief financial officer (or controller or other most senior
accounting officer or employee if there is no chief financial officer) of
the Loan Parties and further certifying each has read this Agreement and
made an examination sufficient in the opinion of the signer(s) to make
informed statements in such certificate;
(e) as soon as available, and in any event within 30 days prior to the
commencement of each fiscal year, a consolidated and consolidating annual
budget and projections for the Borrower and its subsidiaries for the
forthcoming fiscal year (commencing with respect to the fiscal year
beginning January 1, 2003) certified by the chief executive officer and
chief financial officer (or controller or other most senior accounting
officer or employee if there is no chief financial officer) of the Loan
Parties;
(f) as soon as available, and in any event not more than five Business Days
after receipt, a copy of any annual management letter issued by any
accountant or auditor to any Loan Party;
(g) on or before each anniversary of the date of this Agreement, an
independent insurance broker's certificate stating (i) that the insurance
required by Section 5.07 of this Agreement is in full force and effect,
(ii) that all premiums under those policies have been paid to the extent
due through the date of the certificate, and (iii) the amounts and due
dates of premiums due within the following 12-month period; and, as soon
as received, copies of all insurance policies, endorsements and
certificates received from time to time by any Loan Party;
(h) promptly, and in any event not more than five Business Days, following
execution, but without in any way authorizing or approving any such
action requiring the consent of the Lender hereunder, copies of all loan,
security and other instruments, agreements and documents respecting
Indebtedness of any Loan Party in excess of $10,000, individually or in
the aggregate, including commitments, lines of credit and other credit
availabilities, and of all guaranties and other Credit Support by any
Loan Party respecting any Indebtedness or other obligation of any other
Person in excess of $10,000, individually or in the aggregate, except
those to which the Lender also is a party;
(i) as soon as available, and in any event not more than five Business Days
after receipt, a copy of any notice or other communication alleging any
nonpayment or other breach or default, or any foreclosure or other action
respecting any part of its assets and properties, received respecting any
of the Indebtedness of any Loan Party (other than the Obligations), or
any demand or other request for payment under any guaranty or other
Credit Support by any Loan Party respecting any Indebtedness or other
obligation of any other Person, including any received from any Person
acting on behalf of the holder or beneficiary thereof, provided that the
no Loan Party shall wait for such copies to become available to give any
notice required under the circumstances by any other provision hereof;
(j) as soon as available, and in any event not more than five Business Days
after receipt, a copy of any summons or complaint, or any other notice of
any action, suit, investigation or proceeding, involving or affecting any
Loan Party where the damages sought exceed, or if unspecified reasonably
could exceed, $10,000 individually or in the aggregate;
(k) as soon as available, a copy of any notice or other communication
alleging the invalidity, non-binding effect or unenforceability of, any
error or other defect in, any omission from, or any nonpayment or other
breach or default under any ESOP Related Document, Stock Purchase
Document, or any Organizational Document of any Loan Party or any Surety,
or any note, stock certificate, security, financial asset, investment
property, instrument, agreement, account, document or intangible of any
Loan Party included in the Collateral, provided that no Loan Party shall
wait for such copies to become available to give any notice required
under the circumstances by any other provision hereof;
(l) as soon as available, and in any event not less than 15 days prior to
adoption, but without in any way authorizing or approving any such action
requiring the consent of the Lender hereunder, copies of each proposed
modification, waiver, amendment or termination of any of the terms and
provisions of any ESOP Related Document, Stock Purchase Document, or any
Revolving Credit Document of any Loan Party or any Surety, or any note,
stock certificate, security, financial asset, investment property,
instrument, agreement, account (other than account writeoffs of $10,000
or less in the aggregate for any customer in any year), document or
intangible of the Loan Parties included in the Collateral;
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-▇▇-
(▇) as soon as available, and in any event not less than 30 days prior to
adoption, but without in any way authorizing or approving any such action
requiring the consent of the Lender hereunder, copies of each proposed
modification, waiver, amendment or termination of any of the terms and
provisions of any Organizational Document respecting any Loan Party or
any Surety or any agreement between the shareholders of any Loan Party or
any Surety; promptly following adoption, copies of each of the foregoing
certified as to the accuracy thereof by the Secretary of State or the
Secretary or similar official of the Loan Parties or Surety, as
applicable; and promptly following request, such other supporting
documents of the kind specified in Section 4.06 hereof as the Lender from
time to time may request;
(n) as soon as possible, and in any event not more than five Business Days
after filing, copies of all tax returns, informational statements and
reports filed by any Loan Party with the Internal Revenue Service of the
United States of America;
(o) promptly upon the request of the Lender, copies of each notice, report,
statement or other document or communication, whether periodic or
otherwise, concerning the occurrence, existence or correction of any
ERISA Event in any respect, any responsive communication on the part of
any Loan Party or any of its ERISA Affiliates, or any preliminary or
final determination of any Authority in respect thereof, provided that no
Loan Party shall wait for such request or copies to become available to
give any notice required by any other provision hereof; and
(p) contemporaneously with each submission or filing, a copy of any report,
registration statement, proxy statement, financial statement, notice or
other document, whether periodic or otherwise: (i) submitted to the
shareholders of any Loan Party in their capacities as shareholders; or
(ii) submitted to or filed by any Loan Party with any governmental or
self-regulatory Authority involving or affecting (A) any Loan Party, (B)
the Obligations, (C) any part of the Collateral or (D) any of the
transactions contemplated in this Agreement or the other Loan
Instruments, provided that no Loan Party shall wait for such copies to
become available to give any notice required under the circumstances by
any other provision of Section 5.01 hereof;
together with such supplements to any of the aforementioned documents and
additional accounts, reports, certificates, statements, documents and
information as the Lender from time to time may request, each in such form and
substance as may be acceptable to the Lender.
Section 5.03. Access to Premises, Records and Collateral. At all
reasonable times and as often as the Lender reasonably may request, each Loan
Party shall permit representatives designated by the Lender to (a) have complete
and unrestricted access to the premises of each Loan Party, the books and
records of each Loan Party and the Collateral, provided that so long as no
Default or Event of Default is then continuing, the Lender shall give each Loan
Party at least one Business Day's prior notice (which may be given by telephone)
prior to any such visit, (b) make copies of, or excerpts from, those books and
records, and (c) discuss the Collateral or the accounts, assets, business,
operations, properties or condition, financial or otherwise, of the each Loan
Party with its officers, directors, employees, accountants and agents.
Section 5.04. Good Standing, Qualifications, Powers, Separate Legal
Existence, Organizational Documents, Etc. (a) Each Loan Party shall do, or cause
to be done, all things, or proceed with due diligence with any actions or
courses of action, that may be necessary (i) to maintain its due organization,
valid existence and good standing under the laws of its state of incorporation,
and (ii) to preserve and keep in full force and effect all foreign and other
qualifications, licenses and registrations required in those jurisdictions in
which each Loan Party conducts business or has any assets or properties.
(b) Except for its agreements under the Loan Instruments and Stock
Purchase Documents, each Loan Party shall at all times maintain its full and
unrestricted right, power and authority, and shall not, and shall not cause,
suffer or permit anyone else to, take or fail to take any action (with respect
to itself or otherwise), or offer, commit or enter into to any agreement or
arrangement, that would, or could, in any way restrict, limit, make subject to
third-party approval or otherwise impair its right, power or authority, (A) to
carry on its business as now conducted or (B) to execute or deliver this
Agreement or any other Loan Instrument to which it is or becomes a party or any
supplement, modification or amendment thereto or restatement or replacement
thereof from time to time in the manner provided therein, or (C) to perform any
of its obligations hereunder or thereunder.
(c) No Loan Party shall at any time cause, suffer or permit any change
in its name (whether a change in legal name, use of other name or otherwise),
the state or other jurisdiction of its incorporation or other organization or
the location of its chief executive office.
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(d) Each Loan Party shall at all times: (i) do business exclusively
under its own name(s) and employer and taxpayer identification numbers, hold
itself out to the public as a legal entity separate and distinct from any other
Person (and not as a department or division of someone else), and correct any
misunderstandings known to it regarding the separate identity of each Loan
Party; (ii) use its own separate stationery, invoices and checks; (iii) use its
own logos and trademarks and (other than as permitted by the Trademark
Agreement) not share any common logo or trademark with any other Person; (iv)
observe all corporate or equivalent formalities for maintaining its status as a
valid separate entity; (v) maintain its records, books of account, bank accounts
(other than as required by the Loan Instruments) and other assets and properties
separate and apart from those of any other Person and not commingle any of them
with those of any other Person; (vi) promptly correct any other Person's
misunderstanding as to (A) the identity of any Loan Party or any Affiliate with
whom such other Person is transacting business, or (B) each Loan Party's alleged
responsibility for the Indebtedness or other obligations of any other Person;
(vii) allocate fairly and reasonably any overhead expenses that are shared with
an Affiliate, including paying for office space and services performed by any
employee of an Affiliate or vice versa; and (viii) maintain a sufficient number
of employees or independent contractors in light of its contemplated business
operations. (e) No Loan Party shall cause, suffer or permit any supplement,
modification or amendment to, or any waiver of any term or provision of, any of
its Organizational Documents without the prior written consent of the Lender,
which consent will not be unreasonably withheld if the same will not adversely
affect any of the rights, powers, privileges, remedies and interests of the
Lender under this Agreement or any other Loan Instrument.
Section 5.05. Compliance with Applicable Law; Operations. Each Loan
Party shall promptly and fully comply with, conform to and obey any and all
Applicable Law now or hereafter in effect, other than to the extent the
noncompliance therewith or violation thereof could not have a Material Adverse
Effect. In any event, the each Loan Party shall procure, store, contain,
manufacture, distribute, remove and dispose of all Environmental Substances and
use and operate all assets and properties (including, without limitation,
machinery, Equipment, Real Estate and Improvements) in full compliance with and
conformity to all Environmental Laws and other Applicable Law in all respects,
including (without limitation) all applicable permits, licenses, and other
authorizations, consents or approvals of Authorities.
Section 5.06. Payment of Debts, Taxes, Etc. Each Loan Party shall (a)
pay, or cause to be paid, all of its Indebtedness and other liabilities and
lawful claims (whether for services, labor, materials, supplies or otherwise) as
and when due, (b) perform, or cause to be performed, all of its obligations
promptly and in accordance with the respective terms and provisions thereof, and
(c) promptly pay and discharge, or cause to be paid and discharged, all taxes,
assessments and other governmental charges and levies imposed upon any of the
Loan Parties, upon their respective income or receipts or upon any of their
respective assets and properties on or before the last day on which the same may
be paid without penalty; provided, however, that it shall not constitute a
breach of this Section if any Loan Party fails to perform any such obligation or
to pay any such Indebtedness or other liability (except for the Obligations),
tax, assessment, or governmental or other charge, levy or claim (i) that (A) is
being delayed, in the case of trade payables (but not other obligations), in
accordance with the normal payment practices of the Loan Party, but not beyond
any demand in payment therefor, or (B) is being contested in good faith and by
proper proceedings diligently pursued, (ii) if the effect of such failure to pay
or perform will not (A) cause or permit the acceleration of the maturity of any
other Indebtedness or obligation of any Loan Party (i.e., other than the one
being contested) or (B) subject any part of the assets and properties of any
Loan Party to attachment, levy or forfeiture, (iii) for which the Loan Party has
obtained a bond or insurance, or established a reserve, in such amount as may be
required by GAAP and that in the judgment of the Lender is adequate and
satisfactory, and (iv) so long as the aggregate amount of such unpaid overdue
items for all of the Loan Parties does not at any time exceed $10,000.
Section 5.07. Insurance. Each Loan Party shall maintain or cause to be
maintained, at its own expense, insurance in form, substance and amounts
(including deductibles) acceptable to the Lender (i) adequate to insure all
assets and properties of the Loan Parties, which assets and properties are of a
character usually insured by persons engaged in the same or similar business,
against loss or damage resulting from fire, flood, hurricanes or other risks
included in an extended coverage policy, (ii) against ESOP liability (as and to
the extent the same is available), public liability, directors and officers
liability and other tort claims that may be incurred by or asserted against the
Loan Parties or any of their Representatives, (iii) as may be required by the
other Loan Instruments or Applicable Law and (iv) as may be reasonably requested
by the Lender, all with adequate, financially sound and reputable insurers
acceptable to the Lender, and all naming the Lender as an additional insured and
loss payee under a standard mortgagee's endorsement as the Lender's interest may
appear. In the event the Lender receives any insurance proceeds respecting any
loss, damage or destruction of any insured Collateral, the Lender at its option
may (1) hold and disburse the proceeds (or a portion thereof) to fund the costs
of such repair, rebuilding or replacement as the Loan Parties may elect
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(subject to such conditions as the Lender may establish), or (2) apply the
proceeds (or any remaining balance) first to reduce any unpaid or unreimbursed
fees and expenses of the Lender under the Revolving Credit Documents until paid
in full, then to reduce any accrued and unpaid interest under the Revolving
Credit Documents until paid in full, then to reduce the Revolving Credit Loans
until paid in full, then to reduce any unpaid or unreimbursed fees and expenses
of the Lender under the Loan Instruments until paid in full, then to reduce any
accrued and unpaid interest under the Loan Instruments until paid in full, then
to reduce the Additional Term Loan until repaid in full, thereafter to the
Initial Term Loan to reduce the installment (if any) and final payments due
under subsection (d) of this Section in the inverse order of their respective
due dates, and thereafter in accordance with Section 2.08(d) hereof. In the
event any Loan Party receives any insurance proceeds (other than disbursements
from the Lender), the Loan Party shall accept and hold those funds in trust for
the benefit of the Lender and shall promptly pay or deliver those proceeds to
the Lender for application as provided above.
Section 5.08. Maintenance of Assets, Intellectual Properties, Etc. (a)
Each Loan Party shall maintain or cause to be maintained all of its assets and
properties in good working order and condition (ordinary wear and tear and
retirement excepted), making all necessary repairs thereto and renewals and
replacements thereof. Each Loan Party shall perform all servicing, repairs,
overhauls, replacements, modifications, improvements and tests, or shall cause
them to be performed, (i) with personnel duly qualified for the applicable task,
(ii) in accordance and compliance with the manuals and service bulletins of the
applicable manufacturer(s) and (iii) with suitable replacement, substitute or
additional parts or components (A) in good operating condition, (B) of
equivalent or better performance, durability, utility and value than the item
replaced, (C) owned solely by such Loan Party, and (D) free of any Lien other
than any Permitted Lien.
(b) Each Loan Party shall maintain or cause to be maintained, at its
own expense, all of its Intellectual Property rights, registrations and
applications, including (without limitation) the diligent pursuit of all
applications, the payment of all maintenance, license or other fees and
expenses, and the vigorous prosecution of suits and proceedings to enforce those
rights and applications and to object or oppose the conflicting rights or
applications of any other Person, except in each case where the applicable Loan
Party decides in good faith that a particular item is of negligible economic
value to the business of such Loan Party or where the cost of doing so would be
reasonably likely to exceed the economic value of such item, such Loan Party
notifies the Lender of such decision and the Lender does not object thereto.
Each Loan Party (i) shall continue to use each trademark and trade name of the
Loan Parties in its business and on its goods, (ii) shall use the appropriate
symbol of registration with each use of a trademark or trade name by the Loan
Parties, (iii) shall not reduce the quality of existing goods or services
bearing a trademark or trade name of the Loan Parties or use any such trademark
or trade name with any other goods or services of less than comparable quality,
and (iv) shall not take, or cause suffer, suffer or permit anyone else to take,
any action that may invalidate the registration of any trademark or trade name,
except in each case where the applicable Loan Party decides in good faith that a
particular item is of negligible economic value to the business of such Loan
Party or where the cost of doing so would be reasonably likely to exceed the
economic value of such item, such Loan Party notifies the Lender of such
decision and the Lender does not object thereto. The Loan Parties shall seek or
cause to be sought, at its own expense, (i) patent applications and patents
respecting all unpatented but patentable inventions made or obtained by the Loan
Parties, (ii) trademark applications and registered trademarks on registrable
but unregistered trademarks developed, used or obtained by the Loan Parties, and
(iii) trade name applications and registered trade names on registrable but
unregistered trade names developed, used or obtained by the Loan Parties, except
in each case where the applicable Loan Party decides in good faith that a
particular item is of negligible economic value to the business of such Loan
Party or where the cost of doing so would be reasonably likely to exceed the
economic value of such item, such Loan Party notifies the Lender of such
decision and the Lender does not object thereto.
Section 5.09. Preservation and Defense of Collateral, Etc. Each Loan
Party shall maintain, enforce, preserve and defend in all respects: (a) any and
all of the rights, powers, privileges, remedies and interests of the Loan Party
and the Lender under or with respect to each note, stock certificate, security,
financial asset or other account, chattel paper, commercial tort claim, deposit
account, document of title, general intangible, instrument, investment property,
letter of credit, letter-of-credit-right, oil, gas or mineral before extraction,
money or other intangible included in the Collateral and each of the
Organizational Documents and other instruments and documents relating thereto;
and (b) all of the right, title and interest of any Loan Party and the Lender in
and to each and every part of the Collateral against all manner of claims and
demands; in each case on a timely basis to the full extent permitted by
Applicable Law. In the event any of the Collateral is attached or levied or any
Lien is imposed on any of the Collateral (other than a Permitted Lien), then
(without limiting the generality of the preceding sentence) the Loan Parties
shall pay, discharge or bond the underlying obligation and cause the release of
such Collateral therefrom within five days of any attachment or levy or thirty
days of the imposition of any Lien, but in any case before the claimant may
defeat the right of the relevant Loan Party to bond, contest or redeem.
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Section 5.10. Margin Stock Regulation Compliance. (a) From time to
time at the request of the Lender, and in any event prior to (i) using any
proceeds of any of the Loans and other credit from the Lender directly or
indirectly secured by any Margin Stock to directly or indirectly purchase or
carry any Margin Stock, or (ii) making any permitted substitution or withdrawal
of Collateral if before or after such substitution or withdrawal any such loan
or other credit is or would be directly or indirectly secured by any Margin
Stock, in each case as determined by the Lender (in its sole and absolute
discretion), each Loan Party will provide to the Lender duly completed and
executed statements on Federal Reserve Form U-1 and any other statement that the
Lender may deem to be necessary or desirable under any applicable Margin Stock
Regulations.
(b) If at any time the Lender determines (in its sole and absolute
discretion) that (i) any of the Loans or other Obligations or other credit
extended by the Lender (A) are being or have been directly or indirectly used to
purchase or carry any Margin Stock and (B) are directly or indirectly secured by
any Margin Stock, and (ii) the aggregate value of the Margin Stock and other
assets and properties directly and indirectly securing them (computed and
discounted in accordance with applicable Borrowing Base criteria, Margin Stock
Regulations and policies of the Lender then in effect) is insufficient to fully
cover the outstanding Loans and other included credit from the Lender, then
immediately after receipt of notice from the Lender the relevant Loan Party
shall repay the Loans in such amount(s) as the Lender may have requested in such
notice in order to comply with any applicable Margin Stock Regulations. This
Section imposes a continuing test, and the Lender at any time and from time to
time may demand such payment and delivery whenever such a deficiency is
determined by the Lender (in its sole and absolute discretion).
Section 5.11. Additional Subsidiary Guarantor. Without in any way
authorizing or approving any such action requiring the consent of the Lender
hereunder under Section 6.07 hereof, as soon as practicable, and in any event
within thirty days following formation or acquisition, each Loan Party shall
cause each newly formed or acquired corporation, venture or other Person meeting
the definition of "subsidiary" of the Loan Parties to execute and deliver to the
Lender an assumption of the obligations of a Guarantor and Loan Party hereunder,
which (a) shall be accomplished by such Person's written assumption of this
Agreement and the other Loan Documents to which any Guarantor is a party in form
and substance acceptable to the Lender and (b) shall not require any notice to
or the consent of any other Loan Party. Such assumption shall be a Loan
Instrument hereunder and an amendment of this Agreement, but shall not require
the signature of any other Loan Party.
Section 5.12. Management and Board of Directors, Etc. (a) No Person
shall be hired or made any binding offer for any position with any Loan Party as
a director, chief executive officer, chief operating officer, chief financial or
accounting officer, controller or any other position performing a substantially
similar function without first obtaining the prior written approval of the
Lender, which approval shall not be unreasonably withheld.
(b) For so long as the Loans are outstanding, each Loan Party shall
(i) cause [a] designee of the Lender to be elected as a director of the Loan
Party and each of its subsidiaries, and (ii) not cause, suffer or permit the
Board of Directors of the Loan Parties or any of its subsidiaries to have more
than [three] directors. The Lender's designee[s] shall be covered by the Loan
Parties' D&O policy, which policy shall be provide SGRP's policies will not be
taken into account in any way in defending or indemnifying such designee[s] and
otherwise shall satisfy the requirements of Section 5.07 hereof.
ARTICLE VI
NEGATIVE COVENANTS
The Loan Parties jointly and severally covenant and agree that they
will comply in all respects with each, and will not cause, suffer or permit any
violation of any, of the terms and provisions of each Section in this Article,
from the date hereof until the Obligations have been fully paid and satisfied,
unless the Lender (in its sole and absolute discretion) shall consent otherwise
in writing (as provided in Section 9.15 hereof):
Section 6.01. Certain Financial Requirements. The financial
measurements used in the following covenants: (i) shall be determined in
accordance with GAAP (as of the date of calculation) consistently applied except
to the extent otherwise specified by a particular definition or covenant; (ii)
shall be computed for the Loan Parties and all of its subsidiaries (if any) on a
consolidated basis in accordance with GAAP except to the extent otherwise
specified in a particular definition or provision; and (iii) shall refer to the
corresponding items in the financial statements of the Loan Parties and its
subsidiaries (if any) for the relevant periods except to the extent otherwise
specified or defined herein. (The Loan Parties and the Lender covenant and agree
to reset in good faith the financial covenants set forth in this Section, as
well as the
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corresponding provisions of the financial covenants compliance certificate
required by Section 5.02(d) hereof, from time to time with each change in GAAP
so as to maintain the integrity and intent of such covenants.)
(a) The consolidated Selling, General and Administrative Expenses of
the Borrower and its subsidiaries (inclusive of sales commission but excluding
tax deductible pension payments to the ESOP Trust) shall not exceed 24% of their
total consolidated revenue in any fiscal quarter.
(b) The Adjusted Net Worth of the Loan Parties and their subsidiaries
shall not be less than: (i) $(900,000) at December 31, 2002, or at any time
thereafter through March 30, 2003; (ii) $(1,150,000) at March 31, 2003, or at
any time thereafter through June 29, 2003; (iii) $(680,000) at June 30, 2003, or
at any time thereafter through September 29, 2003; (iv) $(670,000) at September
30, 2003, or at any time thereafter through December 30, 2003; (v) $(780,000) at
December 31, 2003, or at any time thereafter through March 30, 2004; (vi)
$(580,000) at March 31, 2004, or at any time thereafter through June 29, 2004;
(vii) $(380,000) at June 30, 2004, or at any time thereafter through September
29, 2004; (viii) $(180,000) at September 30, 2004, or at any time thereafter
through December 30, 2004, (ix) $0 at December 31, 2004, or at any time
thereafter through March 30, 2005; (x) $475,000 at March 31, 2005, or at any
time thereafter through June 29, 2005; (xi) $950,000 at June 30, 2005, or at any
time thereafter through September 29, 2005; (xii) $1,425,000 at September 30,
2005, or at any time thereafter through December 30, 2005, (xiii) $1,900,000 at
December 31, 2005, or at any time thereafter through March 30, 2006; (xiv)
$2,700,000 at March 31, 2006, or at any time thereafter through June 29, 2006;
(xv) $3,500,000 at June 30, 2006, or at any time thereafter through September
29, 2006; (xvi) $4,300,000 at September 30, 2006, or at any time thereafter
through December 30, 2006, (xvii) $5,100,000 at December 31, 2006, or at any
time thereafter through March 30, 2007; and (xviii) $6,300,000 at March 31,
2007, or at any time thereafter.
(c) The Adjusted EBITDA of the Borrower and its subsidiaries shall not
be less than: (i) $(400,000) for the six consecutive fiscal months ended
December 31, 2002; (ii) $(30,000) for the three consecutive fiscal months ended
March 31, 2003; (ii) $700,000 for the six consecutive fiscal months ended June
30, 2003; (iv) $970,000 for the nine consecutive fiscal months ended September
30, 2003; (vi) $1,090,000 for for the Computation Period ended December 31,
2003; (vii) $350,000 for the three consecutive fiscal months ended March 31,
2004; (viii) $700,000 for the six consecutive fiscal months ended June 30, 2004;
(ix)$1,050,000 for the nine consecutive fiscal months ended September 30, 2004;
(x) $1,400,000 for the Computation Period ended December 31, 2004; (xi) $580,000
for the three consecutive fiscal months ended March 31, 2005; (xii) $1,160,000
for the six consecutive fiscal months ended June 30, 2005; (xiii)$1,740,000 for
the nine consecutive fiscal months ended September 30, 2005; (xiv) $2,300,000
for the Computation Period ended December 31, 2005; (xv) $850,000 for the three
consecutive fiscal months ended March 31, 2006; (xvi) $1,700,000 for the six
consecutive fiscal months ended June 30, 2005; (xvii) $2,550,000 for the nine
consecutive fiscal months ended September 30, 2005; (xviii) $3,400,000 for the
Computation Period ended December 31, 2006; (xix) $1,250,000 for the three
consecutive fiscal months ended March 31, 2007 or for any fiscal quarter
thereafter.
(d) The Adjusted Debt Service Ratio of the Borrower and its
subsidiaries shall not be less than: (i) (1.37):1.00 for the six consecutive
fiscal months ended December 31, 2002; (ii) (10.77):1.00 for the three
consecutive fiscal months ended March 31, 2003; (iii) .80:1.00 for the three
consecutive fiscal months ended June 30, 2003; (iv) 1.45:1.00 for the three
consecutive fiscal months ended September 30, 2003; (v) 2.39:1.00 for the three
consecutive fiscal months ended December 31, 2003; (vi) 1.45:1.00 for the
Computation Period ended December 31, 2003 and any quarter thereafter through
September 30, 2004; (vii) 1.09:1.00 for the Computation Period ended December
31, 2004 and any quarter thereafter through September 30, 2005; (viii) .84:1.00
for the Computation Period ended December 31, 2005 and any quarter thereafter
through September 30, 2006; (ix) .73:1.00 for the Computation Period ended
December 31, 2006; and (x) .63:1.00 for the three consecutive fiscal months
ended March 31, 2007, or at the end of any fiscal quarter thereafter.
(e) The Adjusted Debt to EBITDA Ratio of the Borrower and its
subsidiaries shall not exceed: (i) 4.92:1:00 at December 31, 2003 and any
quarter thereafter through September 30, 2004; (ii) 3.31:1:00 at December 31,
2004 and any quarter thereafter through September 30, 2005; (iii) 1.48:1.00 at
December 31, 2005 and any quarter thereafter through September 30, 2006; and
(iv) .41:1.00 at December 31, 2006 or at the end of any fiscal quarter
thereafter. The Adjusted Capital Expenditures of the Loan Parties and their
subsidiaries shall not exceed $65,000 in any fiscal year.
(f) The Adjusted Lease Service of the Borrower and its subsidiaries
for the referenced Computation Period shall not exceed $100,000 in any fiscal
quarter.
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(g) The Loan Parties shall not cause or permit any change of their
fiscal year from a calendar year of each year without the prior written consent
of the Lender.
Section 6.02. Indebtedness. (a) No Loan Party shall directly or
indirectly create, incur, assume, permit to exist, increase, renew or extend any
Indebtedness on its part, including commitments, lines of credit and other
credit availabilities, or apply for or offer, commit or agree to do any of the
foregoing, excluding, however:
(i) Indebtedness owed to the Lender under any of the Loan Instruments;
(ii) Indebtedness under the Revolving Credit Agreement;
(iii) purchase money Indebtedness incurred in the purchase of Equipment in the
ordinary course of business so long as each is secured only by the
Equipment purchased, and obligations constituting Indebtedness under
generally accepted accounting principles arising under capitalized leases
entered into in the ordinary course of business, in each case so long as
(A) the aggregate amount of all such purchase money Indebtedness and
capitalized lease amounts does not at any time exceed $65,000 during the
18 month period ended December 31, 2003, $130,000 during 2004, or
$195,000 thereafter, and (B) no Default or Event of Default then exists
or could result therefrom (whether through any Pro Forma Effect or
otherwise), provided that the Loan Parties may continue such purchase
money Indebtedness and capital lease obligations within those limits, but
without any increase, renewal or extension, once incurred as so
permitted; and
(iv) the continuation of the Indebtedness listed in Schedule 3.10(a) hereto,
excluding, however, any increase therein or renewal or extension thereof
or the continuation of any Indebtedness being retired with the proceeds
of the Loans.
(b) No Loan Party shall prepay, acquire or otherwise satisfy, in whole
or in part, any of its Indebtedness prior to when due, except (i) for
Indebtedness owed to the Lender under any of the Loan Instruments, (ii) for
Indebtedness permitted under Section 6.02(a)(iii) hereof so long as no Default
or Event of Default then exists or could result therefrom (whether through any
Pro Forma Effect or otherwise), or (iv) as permitted by agreement or consent of
the Lender.
Section 6.03. Guaranties and other Credit Support. No Loan Party shall
directly or indirectly make, create, incur, assume, permit to exist, increase,
renew or extend any guaranty or other Credit Support on its part of any
Indebtedness or other obligation of any other Person, or offer, commit or agree
to do so, excluding, however: (a) any guaranty of or other Credit Support for
Indebtedness or other obligations owed to the Lender; (b) the Credit Support
under the Revolving Credit Agreement; and (c) the continuation of those
guaranties and other Credit Support listed in Schedule 3.10(b) hereto,
excluding, however, any increase therein or renewal or extension thereof.
Section 6.04. Liens and Encumbrances. No Loan Party shall directly or
indirectly make, create, incur, assume or permit to exist any Lien of any nature
in, to or against any part of the Collateral, or offer, commit or agree to or
cause or assist the inception or continuation of any of such Lien; excluding,
however, any Permitted Lien to the extent otherwise not prohibited by this
Agreement.
Section 6.05. Sale or Disposition of Collateral, Etc. No Loan Party
shall directly or indirectly: (a) sell, lease, sublease, transfer, exchange,
abandon or otherwise dispose of, surrender management, physical possession or
control of, physically alter or relocate all or any portion of the Collateral,
other than as expressly permitted by Section 7.03 hereof; (b) cause, suffer or
permit any supplement, modification or amendment to, or any waiver of any term
or provision or any termination of, any material note, stock certificate,
security, financial asset, investment property, instrument, agreement, account,
document or intangible of any Loan Party included in the Collateral, other than
as expressly permitted by Section 7.03 hereof; or (c) offer, commit or agree to
or cause or assist the inception or continuation of any of the foregoing.
Section 6.06. Investments, Loans, Advances, Etc. No Loan Party shall
directly or indirectly purchase or otherwise acquire or hold any Investment or
make any Investment in or for the benefit of any other Person, or offer, commit
or agree to do so, except for: (a) securities received in connection with past
contributions to or Investments in the subsidiaries and ventures listed in
Schedule 3.11 hereto; (b) the continuation of the existing Investments listed on
Schedule 3.11 hereto; (c) the Permitted Investments; (d) any guaranty or other
Credit Support permitted under Section 6.03 hereof; and (e) any collateral
account established under this Agreement or any other Loan Instrument; and (f)
any loans or advances of salary to any officer or employee of any Loan Party or
any of its subsidiaries in the ordinary course of its business that
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in the aggregate do not at any time exceed (i) 5% of that Person's regular
annual salary, and (ii) $10,000 for all such officers and employees, excluding,
however, usual and customary draws in the ordinary course of business by any
non-salaried salesperson against his or her reasonably expected commissions over
the next succeeding twelve months.
Section 6.07. Certain Fundamental Changes. No Loan Party shall
directly or indirectly effect, enter into or offer, commit or agree to: (a)
award, grant or issue any option to any Person to purchase any shares of the
Borrower's capital stock, phantom stock or similar right, or offer or agree to
do so, other than (A) an option or right that (i) is exercisable at or set to a
price equal to the fair market value thereof at the time of issuance, (ii) does
not vest (in whole or in part) before the Term Loans have been repaid in full,
(iii) has been awarded, granted or issued pursuant to the approved form of
Holdings Stock Plan, (iv) is in form and substance acceptable to the Lender in
its sole discretion, and (v) is otherwise acceptable, and is being awarded,
granted or issued to a Person who is acceptable, to the Lender in its sole and
absolute discretion (each a "Permitted Option") and (B) the Holdings Warrant;
(b) any issuance, sale, transfer, pledge or other disposition or encumbrance of
any capital stock, partnership or membership interests or other equity
securities issued by any Loan Party (other than pursuant to the Permitted
Options and Holdings Warrant), the registration of such securities for sale or
resale under Applicable Law, or the issuance of any option (other than a
Permitted Option), warrant (other than the Holdings Warrant) or other right to
acquire any such securities; (c) any capital reorganization or reclassification
of the capital stock, partnership or membership interests or other securities
issued by any Loan Party; (d) any transaction in which the capital stock,
partnership or membership interests or other securities issued by any Loan Party
prior to the transaction would be changed into or exchanged for different
securities, whether of that or any other Person, or for any other assets or
properties (other than as such transactions may be permitted by Section 6.08
hereof); (e) any sale, lease, assignment, conveyance, spin-off or other transfer
or disposition of all or any substantial part of the business or assets and
properties of any Loan Party; (f) any merger, consolidation, reincorporation or
reorganization in a different jurisdiction, dissolution, liquidation or winding
up of any Loan Party; (g) the acquisition or establishment of any new subsidiary
or joint venture by any Loan Party; (h) the acquisition by any Loan Party of all
or substantially all of the assets and properties of any other Person or any
discrete division or other business unit thereof; or (i) any material change in
the character of the business of any Loan Party as conducted on the date of this
Agreement or any adverse change in the method by which that business is
conducted.
Section 6.08. Distributions to Shareholders. No Loan Party shall
directly or indirectly: (a) declare or make any dividend, payment or other
distribution of cash, assets or property with respect to any equity securities
issued by any Loan Party, whether now existing or hereafter outstanding; (b)
redeem, purchase or otherwise acquire any securities issued by any Loan Party or
any option or other right to acquire any such securities; (c) covenant or
otherwise arrange with any Person (other than the Lender in any Loan Instrument)
to directly or indirectly limit or otherwise restrict any dividend, advance or
other payment or distribution (whether of cash or otherwise); or (d) offer,
commit or agree to do any of the foregoing; excluding, however, (i) the
redemptions pursuant to the Borrower's Redemption Agreement, (ii) distributions
by any Guarantor to the Borrower to permit the Borrower to pay the Obligations,
and (iii) so long as no Default or Event of Default then exists or could result
therefrom (whether through any Pro Forma Effect or otherwise) distributions by
any Guarantor to the Borrower to fund, and the Borrower's use of such funds to
either (A) redeem its common stock from the ESOP Plan, or (B) make contributions
to the ESOP Trust to fund its redemptions of the Borrower's stock, in each case
to the extent required under the ESOP Related Documents in connection with the
termination of participants.
Section 6.09. Use of Loans. (a) No Loan Party shall directly or
indirectly use any portion of the Loans, or cause, assist, suffer or permit the
use of any portion of the Loans, in whole or in part, other than use of the Term
Loans for the funding of the SPG Stock purchase.
(b) No part of the proceeds of the Loans or other credit from the
Lender shall be used at any time directly or indirectly to purchase or carry any
Margin Stock or otherwise in any way or for any purpose that violates or is
inconsistent with any applicable Margin Stock Regulations.
Section 6.10. ERISA Plans. (a) Except for the Plans, no Loan Party
shall, and no Loan Party shall cause, suffer or permit any of its ERISA
Affiliates to, directly or indirectly establish, maintain, participate in,
contribute to or permit to exist any "employee pension benefit plan" or
"employee welfare benefit plan" (as defined in ERISA) for any employees of any
Loan Party or any ERISA Affiliate; provided, however, that any Loan Party or any
ERISA Affiliate from time to time may establish any such plan in accordance with
Applicable Law (including ERISA and the Tax Code) with the prior written consent
of the Lender. The Loan Parties shall use their best efforts to obtain or
continue the qualification of each Plan under ERISA and the Tax Code, as
applicable, shall prepare and deliver each report, statement or other document
required by ERISA and the Tax Code within the periods specified therein and
conforming in form
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and substance to the provisions thereof, and shall administer each Plan in all
respects in accordance with ERISA, the Tax Code and all other Applicable Law, as
applicable; and shall use their best efforts to cause its ERISA Affiliates to do
each of the foregoing. In any event, no Loan Party shall cause, suffer or permit
any of its ERISA Affiliates to: (i) incur, continue or fail to correct in any
respect any ERISA Event; (ii) fail to file with the appropriate Authority any
required notice or report respecting any Plan as and when due; (iii) fail to
respond in a timely fashion to any notice or other communication respecting any
Plan from any Authority; (iv) increase or adversely modify any funding
obligation or other liability of any one or more of the Loan Parties or any
ERISA Affiliate (individually or in the aggregate) under any Plan (whether
through amendment or termination) without the prior written consent of the
Lender (which will not be withheld unreasonably); (v) permit the present value
of all accrued benefits under each Plan subject to Title IV of ERISA to exceed
the value of the assets of such Plan allocable to such accrued benefits (which
benefit value shall be determined either on an ongoing basis, using the Plan's
reasonable actuarial assumptions, or on a termination basis, using the
assumptions employed by the Pension Benefit Guaranty Corporation in connection
with plan terminations, as applicable); or (vi) enter into any "employee welfare
benefit plan" (as defined in ERISA) to which one or more of the Loan Parties and
its ERISA Affiliates is required to contribute.
(b) No Loan Party shall, and no Loan Party shall cause, suffer or
permit any of its subsidiaries to, directly or indirectly contribute to or for
the benefit of the Plans or its participants thereunder more than the ESOP
Maximum Contribution in the aggregate in any fiscal year.
Section 6.11. Transactions with Affiliates, Etc.. (a) No Loan Party
shall directly or indirectly enter into any transaction with, or use any asset
or property of, any Affiliate of any Loan Party (including, without limitation,
the lease, purchase, sale or exchange of any asset or property, any advance or
loan, the provision of any services, or any allocation of administrative
salaries, expenses and other general overhead), other than in the ordinary
course and pursuant to the reasonable requirements of the business of any Loan
Party and upon fair and reasonable terms and provisions no less favorable to any
Loan Party than it would have been reasonably likely to have obtained in a
comparable arm's-length transaction with a Person who is not an Affiliate of any
Loan Party.
(b) The Loan Parties shall not (individually or in the aggregate): (i)
pay or accrue to or for the benefit of any Person aggregate compensation in
excess of $250,000 in any year other than (A) permitted sales commissions, and
(B) any bonus due to the officers of SPG listed in Schedule 6.11(b) hereto under
their bonus formulas in effect on the date hereof (as summarized in such
schedule) (a "Permitted Bonus"); (ii) pay or accrue to or for the benefit of any
Person any sales commission in excess of 17% of the actual gross profits (before
internal labor allocations) from that persons eligible sales; or (iii) enter
into any new employment agreement or extend or renew any existing employment
agreement. In addition, all officers and employees of the Loan Parties as of the
date hereof, and from time to time hereafter as Persons enter into such
positions or change levels of access, shall execute and deliver to Lender the
appropriate non-compete and confidentiality agreements with the Loan Parties in
the form agreed to by the Loan Parties and the Lender.
Section 6.12. Execution and Modification of the ESOP Related
Documents, Etc. (a) No Loan Party shall enter into any new ESOP Related
Document, enter into or cause, suffer or permit any supplement to or any waiver
(of its rights), modification, amendment or restatement of any ESOP Related
Document existing on the date hereof or hereafter approved by the Lender, or
commit or agree to do any of the foregoing, without the prior written consent of
the Lender. The inclusion of supplements, modifications, restatements and the
like in the various definitions of the ESOP Related Documents is not intended,
and shall not be deemed or construed, to be permission for or acceptance of any
of the foregoing by the Lender, which will not be unreasonably withheld to the
extent such change is required under ERISA or the Code.
(b) No Loan Party shall remove or replace, or consent to any change in, the ESOP
Trustee, or commit or agree to do so, without the prior written consent of the
Lender, which will not be unreasonably withheld to the extent such change is to
an institutional trustee that is not an Affiliate of the Borrower or the Lender.
Section 6.13. Execution and Modification of the Stock Purchase
Documents, Etc. No Loan Party shall enter into any new Stock Purchase Document,
enter into or cause, suffer or permit any supplement to or any waiver (of its
rights), modification, amendment or restatement of any Stock Purchase Document
existing on the date hereof or hereafter approved by the Lender, or commit or
agree to do any of the foregoing, without the prior written consent of the
Lender. The inclusion of supplements, modifications, restatements and the like
in the various definitions of the Stock Purchase Documents is not intended, and
shall not be deemed or construed, to be permission for or acceptance of any of
the foregoing by the Lender.
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Section 6.14. Execution and Modification of the Revolving Credit
Documents, Etc. No Loan Party shall enter into any new Revolving Credit
Document, enter into or cause, suffer or permit any supplement to or any waiver
(of its rights), modification, amendment or restatement of any Revolving Credit
Document existing on the date hereof or hereafter approved by the Lender, or
commit or agree to do any of the foregoing, without the prior written consent of
the Lender. The inclusion of supplements, modifications, restatements and the
like in the various definitions of the Revolving Credit Documents is not
intended, and shall not be deemed or construed, to be permission for or
acceptance of any of the foregoing by the Lender.
Section 6.15. Execution and Modification of the Holdings Stock Plan.
No Loan Party shall enter into any new stock option plan, phantom stock plan or
the like, no Loan party shall award, grant or issue any stock option, phantom
stock or similar right other than the issuance of Permitted Options by the
Borrower, and the Borrower shall not enter into or cause, suffer or permit any
supplement to or any waiver (of its rights), modification, amendment or
restatement of any Permitted Option approved by the Lender or the Holdings Stock
Plan, or commit or agree to do any of the foregoing, without the prior written
consent of the Lender. The inclusion of supplements, modifications, restatements
and the like in the various definitions of the Holdings Stock Plan is not
intended, and shall not be deemed or construed, to be permission for or
acceptance of any of the foregoing by the Lender.
Section 6.16. Certain Accounts. No Loan Party will render any invoice
that: (i) is expressly conditional, permits returns or restricts collection
rights or assignments in any respect; (ii) permits payment (A) more than 30 days
after the invoice date, (B) in any currency other than United States Dollars, or
(C) at any location outside the United States; or (iii) provides for the
underlying obligation to be evidenced by chattel paper or any note or other
instrument; provided, however, that a Loan Party may do so if and only to the
extent specifically authorized in advance to do so by the Lender in writing in
its sole and absolute discretion.
ARTICLE VII
COLLATERAL
Section 7.01. Grant of Security Interest. Each Loan Party hereby
pledges, assigns, conveys, mortgages, transfers and delivers to the Lender, and
grants to the Lender a continuing security interest in and to, all of the assets
and properties of the Loan Party, including (without limitation) each of the
following, in each case whether now or hereafter existing, acquired or created
and wherever located:
(a) any and all Accounts Receivable of the Loan Party;
(b) any and all Inventory of the Loan Party, wherever located, including any
and all raw materials, work-in-progress and finished goods;
(c) any and all of the Real Estate of the Loan Party, any and all Fixtures
and Improvements thereto, and any and all interests therein, wherever
located;
(d) any and all Equipment and other tangible personal assets and properties
of the Loan Party, wherever located, including (without limitation) any
and all accessions, accessories, additions, Equipment, Fixtures,
furnishings, goods, Inventory, machinery, materials, parts, replacements,
supplies, tools and vehicles, whether or not located upon or affixed to
any of the foregoing;
(e) any and all of the Intellectual Property of the Loan Party;
(f) any and all (i) Investments of the Loan Party, including (without
limitation) the SPG Stock in the case of the Borrower, (ii) any and all
dividends, interest and distributions on, under or related to any of the
foregoing items (whether cash, stock or otherwise) and splits and
reclassifications thereof, (iii) any and all options, warrants and other
rights to acquire any such Investments, and (iv) any and all security
entitlements and other rights, powers, privileges, remedies and interests
of the referenced Person in, to and under any and all the foregoing and
any and all Organizational Documents and Custody Documents pertaining
thereto;
(g) any and all (i) advances, loans, and other Indebtedness and amounts
(including interest) directly or indirectly owed to the Loan Party by any
Surety, (ii) subrogation, contribution and other similar rights of the
Loan Party against or in respect of any Surety, or any of its assets and
properties, whether resulting from any payment made by the Loan Party or
otherwise, and (iii) Liens or Credit Support securing any such advances,
loans, Indebtedness, amounts or rights;
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(h) any and all other accounts, instruments, chattel paper, documents of
title and trust receipts (and the goods covered thereby, wherever
located), letter of credit rights, financial assets, investment property,
security entitlements, deposit accounts, contract rights, warranties,
casualty and other insurance policies and rights, commercial tort claims
and other litigation claims and rights, tradenames, software, payment
intangibles, and other general intangibles of the Loan Party, and any and
all computer programming data and other books and records of the Loan
Party; and
(i) any and all deposit accounts and other deposits of the Loan Party
(whether general or special, time or demand, provisional or final, or
individual or joint) maintained with the Lender or any of its Affiliates,
custodians, participants or designees; any and all Indebtedness and other
amounts and obligations at any time owing by the Lender or any of its
Affiliates or participants to or for the credit, account or benefit of
the Loan Party; and any and all assets and properties of the Loan Party
in the possession, custody or control of the Lender, or any of the
Lender's Affiliates, custodians, participants or designees, including
(without limitation) other monies, certificates of deposit, securities,
instruments of debt or credit, documents of title and trust receipts (and
the goods covered thereby, wherever located), and other instruments and
documents;
in each case whether any of the foregoing items is now or hereafter owned
beneficially or of record and whether now or hereafter owned individually,
jointly or otherwise, together with the products and proceeds thereof, all
collections, payments and other distributions and realizations with respect
thereto, any and all other rights, powers, privileges, remedies and interests of
the Loan Party therein, thereto or thereunder, and any and all renewals,
substitutions, modifications and extensions of any and all of the items in the
foregoing subsections (the foregoing items will be referred to collectively as
the "Collateral"), as security for the timely and full payment and satisfaction
of the Obligations as and when due. However, items released in writing by the
Lender from time to time from the lien of this Agreement and the other Loan
Instruments shall no longer be considered to be "Collateral" hereunder.
Section 7.02. Collateral Documentation. (a) The Loan Parties shall
deliver to the Lender on or before the Effective Date and thereafter
concurrently with each item becoming Collateral such assignments, pledges,
deeds, mortgages, financing statements, attornments, estoppels, waivers,
consents, recognitions, bailments, legal opinions and other instruments,
documents and agreements as the Lender from time to time may request to further
evidence, confirm, effect or perfect any mortgage or other security interest
granted or required to be granted under this Agreement or any other Loan
Instrument, each in such form and substance as may be acceptable to the Lender.
(b) Without in any way limiting the right, power or authority of the
Lender under the UCC or other Applicable Law, each Loan Party hereby irrevocably
authorizes the Lender in its sole and absolute discretion, at any time and from
time to time: (i) to file without the review, approval or signature of the Loan
Party any and all financing statements, modifications and continuations in
respect of the Collateral, the Loan Party, any other or additional debtor or the
transactions contemplated by this Agreement or any other Loan Instrument in such
jurisdictions as the Lender deems necessary or desirable; (ii) to sign any such
statement, modification or continuation on behalf of the Loan Party if the
Lender deems such signature necessary or desirable under Applicable Law; and
(iii) to file a carbon, photographic or other reproduction of any financing
statement or modification if the Lender deems such filing necessary or desirable
under Applicable Law; provided that so long as no Event of Default is then
continuing, if possible the Lender shall endeavor to accord the Loan Party an
opportunity to review any proposed financing statement or modification (but not
continuation), but if the Loan Party has not reviewed it within a reasonable
period of time (not to exceed 30 days from the date sent), the Lender at any
time thereafter may exercise its authority under this Agreement and Applicable
Law to file such proposed financing statement or modification; and provided
further that the failure to send any such copy for review or signature shall not
affect the validity or enforceability of any such signature or filing by the
Lender. Without in any way limiting the foregoing, each Loan Party hereby
acknowledges and agrees that, prior to the execution of this Agreement, the Loan
Party reviewed the initial UCC financing statements respecting the Collateral
prepared by the Lender and authorized the Lender to file them (i.e., "prefile")
in such jurisdictions as the Lender deemed necessary or desirable, and the Loan
Party hereby confirms and ratifies the authority of the Lender to make each such
filing. The Lender shall endeavor to send a copy of any such filing to each Loan
Party; provided, however, that the failure to send that copy shall not affect
the validity or enforceability of any such filing. The Lender shall not be
liable for any mistake in or failure to file any financing statement,
modification, continuation or other perfection document.
(c) The Lender from time to time may request that items of Collateral
be legended or otherwise marked from time to time to reflect the Lender's
security interests therein, and each Loan Party shall promptly ▇▇▇▇ each
requested item in a prominent location with such legend as the Lender may
direct, which may be affixed directly or on a permanently attached plaque of
customary size. No Loan Party shall,
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and no Loan Party shall cause, suffer or permit anyone else to, alter, cover,
deface or remove any such legend without the prior written consent of the
Lender, except that such legend may be removed from items released by the Lender
in writing from time to time from the security interests created under this
Agreement and the other Loan Instruments as provided herein or therein.
Section 7.03. Rights of the Borrower to the Collateral. Subject to the
terms and provisions of this Agreement and until such time as the Lender shall
give notice to the Loan Parties to the contrary during the continuance of any
Event of Default or Default, without regard to whether any other action has been
taken by the Lender under this Agreement or any other Loan Instrument, each Loan
Party shall have the right to do the things expressly permitted by any
subsection of this Section notwithstanding the restrictions contained in Section
6.05 hereof (but shall not have such right after such notice has been given to
the extent specified in such notice):
(a) Each Loan Party shall have the full power and authority in the
ordinary course of business with reasonable business prudence (i) to use in its
business any item of Collateral (other than instruments, securities and other
general intangibles in the possession of the Lender), (ii) to sell, lease or use
any Inventory, (iii) to relocate finished goods Inventory to one or more public
warehouses from which the Loan Party has obtained recognition and access
agreements acceptable to the Lender, (iv) to maintain, repair, replace and
retire Equipment in accordance with Section 5.08(a) hereof (subject to the
provisions of Section 2.06(g) hereof), (v) to sell or otherwise voluntarily
dispose of any unused Equipment or other goods (subject to the provisions of
Section 2.06(g) hereof, (vi) except as otherwise provided herein, to hire and
fire officers and other employees, and to waive, release, supplement, modify,
amend, restate or replace any of the Loan Party 's contracts with officers and
other employees, (vi) to exercise in good faith any and all voting, waiver or
consensual rights and powers relating or pertaining to the Collateral covered by
Section 6.05(b) hereof or any part thereof, or waive, release, supplement,
modify, amend, restate or replace any term or provision thereof, (vii) to
diligently service and collect the proceeds of any Accounts Receivable or
Investment, which may include such discounts, reductions and settlements as may
be usual and customary and consistent with its past practice, (viii) to use in
its business the cash proceeds from such Inventory and Accounts Receivable, and
(ix) to deposit, withdraw and use in its business funds and other cash
equivalents constituting Collateral under Section 7.01(i) hereof; provided,
however, that such power is not authorized and shall not be exercised to the
extent such exercise could in any way (individually or in conjunction with other
such actions contemplated or taken by the Loan Party) (A) adversely affect the
business or operations of the Loan Party or the value of the Collateral, (B)
diminish any of the rights, powers, privileges, remedies or interests of the
Loan Party in any item of the Collateral (other than through such permitted
sales, replacements and retirements, use of cash proceeds or withdrawals), (C)
conflict with or prejudice the continued perfection of any security interest of
the Lender, or (D) result in any Event of Default or Default (whether through
any Pro Forma Effect or otherwise).
(b) Each Loan Party shall be entitled to exercise in good faith any
and all voting, waiver or consensual rights and powers relating or pertaining to
the Collateral or any part thereof for any purpose not inconsistent with the
terms of this Agreement; provided, however, that each Loan Party shall not be
permitted to exercise or refrain from exercising any such right or power if such
exercise or nonexercise could (A) have an adverse effect on the value of the
Collateral or any part thereof in the sole judgment of the Lender or (B) result
in any Default or Event of Default; and provided further that each Loan Party
shall give the Lender at least five (5) Business Days' prior written notice of
the manner in which the Loan Party intends to exercise or not exercise any such
right or power that could have such an effect, together with any reasons
therefor, except that notice need not be given with respect to any re-election
of directors.
Section 7.04. Performance by the Lender. In the event any Loan Party
fails to pay or otherwise perform or satisfy any of its obligations to others or
under or in respect of any of the Collateral or any ESOP Related Document as
required by this Agreement or any other Loan Instrument, the Lender shall have
the right in its sole and absolute discretion (but shall be under no duty or
obligation) to make any such payment or cause the performance or satisfaction of
any other such obligation, including (without limitation) the payment of any
tax, claim or insurance premium, the maintenance or defense of any part of the
Collateral or the purchase or discharge of any Lien on any part of the
Collateral. The Lender will endeavor to give the Loan Parties prior notice
(which may be by telephone or telecopy) of any such payment or action; provided,
however, that the failure to give such notice or any time to perform shall not
affect the validity of the payment or action or the reimbursement obligations of
the Loan Parties' with respect thereto. The Loan Parties shall pay or reimburse
on demand any and all amounts advanced or expenses incurred by the Lender or its
designee under this subsection, which shall constitute additional Loans under
(and secured by) this Agreement and shall bear interest at the rate applicable
to the Loans. No payment made or action taken by the Lender or its designee
shall be deemed or construed to be a waiver, cure or satisfaction of the
underlying default, which default shall be deemed to be continuing until such
time (if ever) as the Loan Parties have, prior to the Maturity Date, (i) resumed
the payment, performance and satisfaction required by this Agreement
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and the other Loan Instruments and (ii) repaid all Loans advanced for such
payments and actions, together with interest thereon, and paid all others to
whom the Lender has requested direct payment respecting such payments and
actions.
Section 7.05. Litigation Respecting Collateral. (a) In the event that
any action, suit or other proceeding (whether or not purportedly on behalf of
any Loan Party) at law, in equity, in arbitration or before any other Authority
involving or affecting the Collateral (a "Proceeding") is contemplated by any
Loan Party or is otherwise commenced by or against any party hereto, the Loan
Parties shall give the Lender immediate notice thereof. Within twenty Business
Days after its receipt of such notice, the Lender shall notify the Loan Parties
that either (i) the Lender will join in the Proceeding, (ii) a specified
designee of the Lender will join in the Proceeding, or (iii) the Loan Parties
may prosecute the Proceeding without the participation of the Lender or its
designee, which Proceeding in any event shall be conducted in accordance with
the provisions of subsection (b) of this Section. In the event the Lender fails
to respond to such notice of the Proceeding within that period, the Lender shall
be deemed to have elected alternative (iii) above, and the Loan Parties shall
prosecute the proceeding accordingly, without, however, waiving any other right,
power, privilege, remedy or interest of the Lender under this Agreement, the
other Loan Instruments and Applicable Law.
(b) If any Loan Party elects to commence a Proceeding or a Proceeding
has otherwise commenced by or against any party hereto, the Loan Parties shall
cause the same to be prosecuted (A) in such a manner that all the rights of the
Lender are preserved and protected to the fullest extent reasonably possible and
(B) with counsel to that Loan Party that is acceptable to and represents both
that Loan Party and the Lender. Subject to compliance by the Loan Parties with
the foregoing, (x) the Lender (if named as a party by someone other than the
Borrower or any Surety) shall join in the Proceeding and take any other action
reasonably requested by counsel to that Loan Party to facilitate the prosecution
thereof, all at the sole cost and expense of that Loan Party, and (y) the
Proceeding may be prosecuted by that Loan Party in such manner as that Loan
Party and its counsel reasonably deem appropriate. In any event, if the Lender
determines at any time during the pendency of a Proceeding (after consultation
with counsel to the Lender) that the interests of the Lender are at variance
with the interests of any Loan Party, the Lender may appoint its own counsel
(whose expenses, disbursements and fees shall be paid for by that Loan Party) to
represent the Lender in the Proceeding, and the Loan Parties and its counsel
shall cooperate with the Lender and its counsel to the fullest extent possible
in that Proceeding.
(c) Each Loan Party acknowledges that pursuant to Section 7.01 hereof
it granted to the Lender a senior security interest in and to, among other
things, all such Proceedings by or for the benefit of the Loan Party, whether
related to any of the enumerated Collateral or otherwise.
Section 7.06. Power of Attorney. With respect to the various assets
and properties included or required to be included in the Collateral hereunder,
each Loan Party hereby irrevocably makes, constitutes and appoints the Lender
and the Lender's executive officers (Vice President or above), and each of them,
with full power of substitution, as the true and lawful attorney-in-fact of the
Loan Party, with full power and authority from time to time in the name, place
and stead of the Loan Party to: (a) do any of the things specified in Section
7.07(b) hereof in the name of the Loan Party, utilizing the Loan Party 's
letterhead (or an approximation thereof) to the extent the Lender may deem
necessary or desirable; (b) pay any Indebtedness or other liability or perform
any other obligation required to be paid or performed under this Agreement or
any other Loan Instrument by any Loan Party, any Surety or any other Person
(other than the Lender); (c) prepare and execute on behalf of each Loan Party
any mortgage, financing statement or other evidence of a security interest
contemplated by this Agreement, or any modification, refiling, continuation or
extension thereof; (d) take any other action contemplated by this Agreement or
any other Loan Instrument; and (e) sign, execute, acknowledge, swear to, verify,
deliver, file, record and publish any one or more of the foregoing; provided,
however, that the above-named attorneys-in-fact may exercise the powers set
forth in subsections (a), (b), and (d) of this Section only following the
Lender's written notice pursuant to Section 7.07 of this Agreement and during
the continuance of the subject Event of Default, whether or not any reference to
this Power of Attorney is made in that notice, and without regard to whether any
other action has been taken by the Lender under this Agreement or any other Loan
Instrument. This Power of Attorney is hereby declared to be irrevocable, with
full power of substitution and coupled with an interest. This Power of Attorney
shall survive the dissolution, reorganization or bankruptcy of any Loan Party
and shall extend to and be binding upon the successors, assigns, heirs and legal
representatives of each Loan Party. This Power of Attorney may be exercised (i)
by any one of the above-named attorneys-in-fact, or by any substitute designated
by any of those attorneys-in-fact, and (ii) by signing for any Loan Party
individually on any document or instrument or by listing two or more of the
persons, including the Loan Parties, for whom any document or instrument is
being signed and signing once, with a single signature by the attorney-in-fact
or substitute being effective to exercise the Powers of Attorney of all persons
so listed. A facsimile signature shall be
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effective if so affixed. The Lender shall not be liable for any failure to
collect or enforce the payment of any of those assets and properties.
Section 7.07. Rights of the Lender to the Collateral, Deficiencies,
Etc. If any Event of Default shall have occurred and is then continuing, the
Lender may take (and/or may cause one or more of its designees to take) any or
all of the following actions, after giving the Loan Parties prior written
notice, or in the case of subsection (e) of this Section after giving the Loan
Parties at least three (3) Business Days' prior written notice (which notice
period each Loan Party acknowledges and agrees to be adequate and reasonable),
with a single such notice being sufficient to entitle the Lender from time to
time thereafter to take any one or more of the actions described below:
(a) prohibit any Loan Party from taking any action respecting any Collateral
otherwise permitted by this Agreement and the other Loan Instruments;
(b) (i) notify each of the account debtors, obligors, issuers, securities
intermediaries, financial institutions, custodians, lessees or lessors,
mortgagors, and other parties under or with respect to or interested in
any item of the Collateral of the security interest of the Lender therein
(without limiting the right of the Lender to do so at other times as
permitted by this Agreement or any other Loan Instrument) or of any
action proposed to be taken with respect thereto, and direct one or more
of those parties to make all payments, distributions and proceeds with
respect thereto otherwise payable to any Loan Party directly to the
Lender or its order until notified by the Lender that all the Obligations
have been fully paid and satisfied, (ii) demand, collect, receive and
retain any and all payments, distributions and proceeds of any kind with
respect to any and all of the Collateral, demand and direct other
performance, enforce payment or other performance by legal proceedings as
permitted by law, and give receipts, releases and acquittances in
connection therewith, (iii) take possession or control of, and execute or
endorse (to the Lender or otherwise) and negotiate, present or otherwise
collect, any item of Collateral and any one or more notes, checks,
drafts, bills of exchange, money orders, invoices, freight bills, bills
of lading or other instruments, agreements or documents received in
payment for or under or on account of any Collateral, (iv) receive, open
and dispose of all mail and other deliveries to any Loan Party, take over
any Loan Party's post office boxes and request postal authorities and
others to change the delivery address(es) for any Loan Party or make
other arrangements with such authorities as the Lender may deem necessary
or desirable in order to receive any Loan Party's mail and other
deliveries, (v) negotiate, settle, adjust, compromise, discharge,
release, extend or renew any account, instrument, payment intangible or
other agreement, right or claim of any Loan Party included in the
Collateral, whether as an inducement to prompt payment or performance and
whether or not meritorious, customary or in the ordinary course of
business, and commence, prosecute, defend, settle, abandon or withdraw
any claims, suits or proceedings pertaining to or arising out of any
Collateral, (vi) prepare, file and sign any Loan Party's name on any
proof of claim in bankruptcy, notice of Lien, assignment or satisfaction
of Lien or similar document in any action or proceeding by, against or
otherwise involving to any obligor under any Collateral, (vii) use or
disclose in any way any of the information contained in any Loan Party's
Books and Records, and (viii) exercise and enforce all of the any Loan
Party's other rights, powers, privileges, remedies and interests with
respect to the Accounts Receivable, other accounts, instruments,
documents of title, chattel paper, financial assets, investment property,
payment intangibles and general intangibles and other assets and
properties included in the Collateral, whether against ;
(c) direct the Loan Parties or any other holder of Collateral to assemble and
deliver such Collateral to the Lender or its designee at such time(s) and
place(s) as the Lender from time to time may specify, all without any
risk or expense to the Lender; and enter any premises where any item of
Collateral may be located, with or without permission or process of law
but without breach of the peace, and seize and remove such Collateral or
remain upon such premises and use or dispose of such Collateral as
contemplated under this Agreement and the other Loan Instruments;
(d) request the judicial appointment of a receiver respecting the Collateral
(excluding funds in the possession of the Lender and such other
Collateral as the Lender may specify in its request) in any action, suit
or proceeding in which claims are asserted against the Collateral by the
Lender or its designee, irrespective of the solvency of any Loan Party or
any other Person or the adequacy of any collateral, and without notice to
or the approval of the Loan Party, which receiver shall have the power to
manufacture, operate, sell, lease or rent such items of Collateral
pending the sale of all of the Collateral and to collect the rent, issues
and profits therefrom, together with such other powers as may have been
requested by the Lender, and shall apply the amounts received (net of all
proper charges and expenses) to the Obligations as provided in this
Agreement;
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(e) take any action with respect to the offer, sale, lease or other
disposition, and delivery of the whole of, or from time to time any one
or more items of, the Collateral, including, without limitation: (i) to
sell, assign, lease or otherwise dispose of the whole of, or from time to
time any part of, the Collateral, or offer, commit or agree to do so, in
any established market or at any broker's board, private sale or public
auction or sale (with or without demand on any Loan Party or any
advertisement or other notice of the time, place or terms of sale) for
cash, credit or any other asset or property, for immediate or future
delivery, and for such consideration and upon such terms and subject to
such conditions as the Lender in its sole and absolute discretion may
determine, and the Lender may purchase (the consideration for which may
consist in whole or in part of cancellation of Indebtedness) or any other
Person may purchase the whole or any one or more items of the Collateral,
and all items purchased shall be free and clear of any and all rights,
powers, privileges, remedies and interests of the Loan Parties (whether
individual, joint, several or otherwise), which each Loan Party has
expressly waived pursuant to Section 7.08 hereof; (ii) to postpone or
adjourn any such auction, sale or other disposition, to cause the same to
be postponed or adjourned from time to time to a subsequent time and
place, or to abandon or cause the abandonment of the same, all without
any advertisement or other notice thereof; and (iii) to carry out any
agreement to sell any item or items of the Collateral in accordance with
the terms and provisions of such agreement, notwithstanding that, after
the Lender shall have entered into such an agreement, all the Obligations
may have been paid and satisfied in full;
(f) exercise any voting, consent, enforcement or other right, power,
privilege, remedy or interest of any Loan Party pertaining to any item of
Collateral to the same extent as if the Lender were the outright owner
thereof, provided that the Lender shall not be entitled to exercise any
of the voting rights of any Loan Party pertaining to any equity interest
in another Person unless and until the Lender has given specific written
notice to the Loan Parties, apart from the notice first referred to in
this subsection, of the Lender's election to exercise one or more, or
all, such voting rights;
(g) take possession of and thereafter deal with or use from time to time all
or any part of the Collateral in all respects as if the Lender were the
outright owner thereof, which shall include (without limitation) the
right to manufacture, operate, sell, lease or rent items of Collateral,
as well as to sell parts of the Collateral pending the sale of all of the
Collateral, and to collect the rent, issues and profits therefrom;
(h) transfer or cause the transfer of the ownership of all or any part of the
Collateral to its own name or any designee and have such transfer
recorded in any jurisdiction(s) and publicized in any manner deemed
appropriate by the Lender; and
(i) in addition to, and not by way of limitation of, any of the rights
specified above, exercise or enforce any and all rights, powers,
privileges, remedies and interests afforded to the Lender under this
Agreement, the other Loan Instruments and any and all provisions of
Applicable Law (including, without limitation, the UCC), whether as a
secured party or mortgagee, whether in possession or control of
collateral or otherwise.
Each Loan Party acknowledges and agrees that the term "default" as used in the
UCC includes (without limitation) any Default or Event of Default.
Section7.08. Certain Acknowledgments and Waivers by the Loan Parties.
(a) Each Loan Party acknowledges and agrees that the rights, powers, privileges,
remedies and interests granted to or conferred upon the Lender in respect of any
of the Collateral by this Agreement, the other Loan Instruments (in certain
cases) and Applicable Law are purely discretionary and shall not, and shall not
be deemed or construed to, impose upon the Lender any duty or other obligation
(i) to sell, foreclose or otherwise realize upon any of the Collateral, (ii) to
protect, preserve, process, prepare, repair or improve any of the Collateral,
whether or not in the possession or control of the Lender or any of its
designees, (iii) to perform or satisfy any obligation under or respecting any of
the Collateral or any Loan Party, (iv) to make any representation or warranty or
assume any liability or obligation in its liquidation or disposition of any
Collateral, (v) to mitigate or otherwise reduce any damage or other loss, or
(vi) to otherwise exercise or enforce any such right, power, privilege, remedy
or interest. Any sale, foreclosure or other realization upon any of the
Collateral, or any other exercise or enforcement of any such right, power,
privilege, remedy or interest, if undertaken by the Lender in its sole and
absolute discretion, may be delayed, discontinued or otherwise not pursued or
exhausted for any reason whatsoever (whether intentionally or otherwise).
(b) Each Loan Party acknowledges and agrees that: (i) the Lender may
be unable to effect a public sale of certain of the Collateral by reason of
certain prohibitions contained in the Securities Act, and may be otherwise
delayed or adversely affected in effecting any sale by reason of present or
future
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restrictions thereon imposed by governmental Authorities ("Affected
Collateral"), and a ready market may not exist for Affected Collateral that is
not traded as such on a national securities exchange or quoted on an automated
quotation system; (ii) as a consequence of such prohibitions and restrictions
the Lender may be deem it necessary or desirable (A) to resort to one or more
private sales to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire Affected Collateral for their own account, for
investment and not with a view to the distribution or resale thereof, (B) to
seek regulatory approval of any proposed sale or sales, or (C) to limit the
amount of Affected Collateral sold to any Person or group: (iii) private sales
so made may be at prices and upon terms less favorable to the Loan Parties than
if such Affected Collateral was sold either at public sales or at private sales
not subject to such restrictions; (iv) the Lender has no obligation to delay the
sale of any Affected Collateral for the period of time necessary to permit any
Loan Party or any other Person to register or otherwise qualify them under or
exempt them from any applicable restriction, even if any Loan Party or other
Person would agree to register or otherwise qualify or exempt such Affected
Collateral so as to permit a public sale under the Securities Act or applicable
state law; and (v) the use of private sales made under the foregoing
circumstances to dispose of Affected Collateral shall be deemed to be
dispositions in a commercially reasonable manner.
(c) Without limiting the generality of the foregoing, each Loan Party
hereby irrevocably, unconditionally and expressly waives forever (to the fullest
extent permitted by Applicable Law) each and every claim or defense, and each
Loan Party agrees that it will not assert or pursue (by action, suit,
counterclaim or otherwise) any claim or defense, respecting, and each Loan Party
acknowledges and agrees that it would not be commercially unreasonable for the
Lender to make or effect, (i) any settlement or compromise with any obligor or
other third party under any Account Receivable, account, note, instrument,
agreement, document or general intangible included in the Collateral,
irrespective of any reduction in the potential proceeds therefrom, (ii) the
selection or order of disposition of any Collateral (which may be at random or
in any order(s) the Lender may select in its sole and absolute discretion),
(iii) any disposition of any Collateral in its then current condition, in each
case without any processing, preparation, repair, or improvement, any
registration, qualification or other approval or change therein, or any other
beneficial action respecting any Collateral, any of which the Lender in its
discretion may (but shall not be required to) undertake and which if so
undertaken may be delayed, discontinued or otherwise not pursued or exhausted by
the Lender in its discretion for any or no reason whatsoever (whether
intentionally or otherwise), (iv) any private sale or other disposition of any
Collateral in a commercially reasonable manner, whether or not any public market
exists, or any sale, redemption or other disposition of any Collateral in
accordance with the applicable Collateral Acknowledgment, Custody Document or
Organizational Document, (v) the choice or timing of any disposition date (which
the Lender may select in its sole and absolute discretion), irrespective of
whether greater proceeds or other amounts would be realizable on a different
date, (vi) the choice of whether to sell, lease, license or otherwise dispose of
any Collateral (which the Lender may select in its discretion), irrespective of
whether greater proceeds or other amounts would be realizable (immediately or
otherwise) with a different form of disposition, (vii) any sale or other
disposition of Collateral irrespective of (A) the amount of the proceeds or
other amounts received, whether such amounts are the maximum possible, and
whether such amounts are adequate to satisfy the Obligations, or (B) any other
term or condition of any disposition of any Collateral, including (without
limitation) any disposition by the Lender "as is" or with limited or no
representations or warranties from the Lender respecting title, infringement,
interference, merchantability, fitness for a particular purpose or other
condition, circumstance or event, , (viii) any sale or other disposition of
Collateral to the first Person to receive an offer or make a bid, (ix) the
selection of any purchaser or other acquiror of any Collateral, or (x) any
action or inaction in the event of any default by any purchaser or other
acquiror of any Collateral. Neither the Lender nor any of its representatives
shall incur any liability in connection with any sale of or other action taken
respecting any Collateral in accordance with the provisions of this Agreement,
any other Loan Instrument or Applicable Law.
(d) Each Loan Party hereby unconditionally, irrevocably and expressly
waives forever the applicability of each and every Applicable Law pertaining to
notice (other than notices required by this Agreement or any other Loan
Instrument), appraisal, valuation, stay, extension, moratorium, marshaling of
assets, exemption and equity of redemption and similar provisions respecting
collateral or its disposition that are or may be in conflict with the terms and
provisions of this Agreement and the other Loan Instruments now or at any time
in the future to the extent waiver is not limited under Applicable Law.
(e) Notwithstanding anything herein to the contrary, each Loan Party
shall remain liable under each note, instrument, agreement, account, document or
similar general intangible of the Loan Party (each a "Pledged Agreement") or
other item of Collateral to observe and perform all the terms, provisions,
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms thereof. Neither the Lender nor any of its
Representatives shall have any duty, obligation or liability under any Pledged
Agreement or any other Collateral by reason of or arising out of this Agreement,
the security interests granted hereunder or the receipt by the Lender or any of
its Affiliates or designees of any payment relating to any Account Receivable,
Pledged Agreement or other item of Collateral, nor shall the Lender or
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any of its Representatives be obligated in any manner to perform any of the
obligations of any Loan Party or any other party under or pursuant to any
Account Receivable, Pledged Agreement or other item of Collateral, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Account Receivable, Pledged Agreement or other item of Collateral, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
Section 7.09. Application of Proceeds; Liability for Deficiencies. (a)
The Lender shall collect the cash proceeds received from any sale or other
disposition of Collateral, and, after deducting all costs and expenses incurred
by the Lender and any Person designated by the Lender to take any of the actions
enumerated in this Article or under Applicable Law in connection with such
collection and sale or disposition (including attorneys' disbursements, expenses
and fees), the Lender shall apply the same in accordance with the terms and
provisions of this Agreement unless the Lender shall elect (in its sole and
absolute discretion) to retain the same as additional or substitute Collateral.
In the event any funds remain after satisfaction in full of the Obligations,
then the remainder shall be returned to each Loan Party, subject, however, to
any other rights or interests the Lender may have therein under any other
instrument, agreement or document or Applicable Law.
(b) If the amount of all proceeds received with respect to and in
liquidation of the Collateral that shall be applied to payment of the
Obligations shall be insufficient to pay and satisfy all of the Obligations in
full, each Loan Party acknowledges and agrees that it shall remain liable for
any deficiency (i.e., any Obligations remaining unpaid), together with interest
thereon and costs of collection thereof (including attorneys' disbursements,
expenses and fees), in accordance with the terms and provisions of this
Agreement and the other Loan Instruments.
Section 7.10. Partial Releases. The Lender from time to time shall
release portions of the Collateral from the liens and security interests granted
under this Agreement and the other Loan Instruments qualifying for release under
(and subject to the terms and conditions of) subsection [(a) or (b)] of this
Section, shall execute and deliver the documentation reasonably required to
effect each such release (in such form and substance as may be acceptable to the
Lender), all upon the terms and provisions and subject to the conditions of the
subsections of this Section, in each case subject to receipt of evidence and
documentation in such form and substance as may be acceptable to the Lender that
those terms and conditions have been satisfied; provided that no Default or
Event of Default then exists or could result therefrom (whether through any Pro
Forma Effect or otherwise), unless, after giving effect to the consummation of
the transaction for which the release was requested and the application of the
net cash proceeds thereof, if any, toward the prepayment of the Obligations, the
default or other event shall cease to exist. Any and all actions under this
Section shall be without any recourse to or representation or warranty by the
Lender and shall be at the sole cost and expense of the Loan Parties.
(a) In the event of any sale or other disposition of any Collateral
expressly permitted under Section 7.03(a) hereof or any other term or provision
of this Agreement or any other Loan Instrument, the Lender will release that
item, subject to receipt by the Lender of any payment or prepayment from any
Loan Party required by this Agreement or any other Loan Instrument.
(b) In the event any debtor under any indenture, agreement, note,
instrument or account receivable pledged to the Lender pursuant to this
Agreement shall have paid all amounts due thereunder in full and shall have
complied with all other terms and conditions thereof, the Lender will release
that item and if requested return the applicable instruments and other documents
to the applicable Loan Party or its designee, subject to receipt by the Lender
of any payment or prepayment from the Loan Parties required by this Agreement or
any other Loan Instrument.
Section 7.11. Termination of Security Interests. The security
interests granted to the Lender hereunder shall terminate when the Obligations
shall have been fully paid and satisfied. Upon such complete payment and
satisfaction: the Lender shall reassign, release and/or deliver to the Loan
Parties all Collateral then held by or at the direction of the Lender under the
Loan Instruments; and, if requested by the Loan Parties, the Lender shall
execute and deliver to the Loan Parties for filing in each office in which any
financing statement, mortgage, or lease, or assignment thereof, relating to the
Collateral, or any part thereof, shall have been filed, a termination statement
under the UCC or an appropriate satisfaction, release, reconveyance or
reassignment releasing the Lender's interest therein, and any other instrument
or document that the Loan Parties deem reasonably necessary to evidence the
termination of the Lender's security interest, each in such form and substance
as may be acceptable to the Lender. Any and all actions under this Section shall
be without any recourse to or representation or warranty by the Lender and shall
be at the sole cost and expense of the Loan Parties.
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ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. Events of Default. Each of the following events shall
constitute a default under this Agreement (each an "Event of Default"):
(a) any representation, warranty, acknowledgement or certification made in
this Agreement or any other Loan Instrument shall prove to have been
false or misleading in any material respect when made (or deemed made);
or any report, statement, certificate, schedule or other document or
information furnished (whether prior to, on or after the Effective Date)
in connection with this Agreement or any of the other Loan Instruments
shall prove to have been false or misleading in any material respect when
furnished (or deemed furnished);
(b) any default, whether in whole or in part, shall occur in the payment of
the principal of, the interest on or any other amount respecting: (i) the
Loans or any of the other Obligations; (ii) any other Indebtedness of any
Loan Party or any Surety to the Lender or any of its Affiliates; or (iii)
any guaranty or other Credit Support from any Loan Party or any Surety to
the Lender or any of its Affiliates respecting any Indebtedness of any
other Person;
(c) any default, whether in whole or in part, shall occur in the payment or
satisfaction of any amount required under Section 2.06(h) of this
Agreement, and such default shall continue (after the earlier of notice
thereof to or knowledge thereof by any Loan Party) for a period of three
(3) Business Days;
(d) any default, whether in whole or in part, shall occur in the due
observance or performance of any covenant, term or provision to be
performed under Article VI of this Agreement (other than under Section
6.10 or 6.11 hereof) or the Confidentiality Agreement, and such default
shall continue after the earlier of notice thereof to or knowledge
thereof by any Loan Party;
(e) any default, whether in whole or in part, shall occur in the due
observance or performance of any other covenant, term or provision to be
performed under this Agreement and the other Loan Instruments, any Stock
Purchase Document or any ESOP Related Document by any Loan Party, any
Surety or any other party thereto (other than the Lender), which default
is not described in any other subsection of this Section, and such
default shall continue for a period of ten (10) days after the earlier of
notice thereof to or knowledge thereof by the Borrower; provided,
however, that if such default is capable of being cured and if the
Borrower, any Surety or such other party shall have commenced to cure
such default within such period and shall proceed continuously in good
faith and with due diligence to cure such default, then such period
instead shall be thirty (30) days;
(f) any Event of Default, whether in whole or in part, shall occur under the
Revolving Credit Agreement;
(g) any payment default shall occur and continue beyond any applicable grace
period under any instrument or agreement (other than a Loan Instrument)
respecting any Indebtedness of any Loan Party or any Surety or any
Indebtedness of any other Person covered (in whole or in part) by any
guaranty or other Credit Support from any Loan Party or any Surety; or
any default, whether in whole or in part, shall occur in the due
observance or performance of any term or provision of any instrument or
agreement (other than a Loan Instrument) respecting any Indebtedness of
any Loan Party or any Surety, or any guaranty or other Credit Support
from any Loan Party or any Surety respecting any Indebtedness or other
obligations of any other Person, that shall cause or permit acceleration
of any such Indebtedness or demand for payment or any additional interest
or other amount under any such Indebtedness or Credit Support, which
default is not described in any other subsection of this Section, unless
payment shall be made or action shall be taken within five (5) Business
Days after such default in an amount or manner sufficient to cure it and
the Lender receives confirmation of such cure from the lender thereunder,
provided that such payment or action will not result in a breach of any
term or provision of this Agreement and the other Loan Instruments;
(h) any Loan Party or any Surety shall (i) fail to, be unable to or otherwise
not generally pay its debts as they become due, (ii) conceal, remove or
transfer any of its assets and properties in violation or evasion of any
bankruptcy, fraudulent conveyance or similar Applicable Law, (iii) make
an assignment for the benefit of its creditors, (iv) petition or apply
for or consent to the appointment of a receiver, trustee, assignee,
custodian, sequestrator, liquidator or similar official for itself or any
of its
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assets and properties, (v) commence a voluntary case for relief as a
debtor under any Bankruptcy Law, (vi) file with or otherwise submit to
any governmental Authority any petition, answer or other document seeking
(A) reorganization, (B) an arrangement with creditors or (C) to take
advantage of any other present or future Applicable Law respecting
bankruptcy, reorganization, insolvency, readjustment of debts, relief of
debtors, dissolution or liquidation, (vii) file or otherwise submit any
answer or other document admitting or failing to contest the material
allegations of a petition or other document filed or otherwise submitted
against it in any proceeding under any such Applicable Law, (viii) be
adjudicated a bankrupt or insolvent, or (ix) take any action for the
purpose of effecting any of the foregoing;
(i) any petition shall be filed or case, proceeding or other action shall be
commenced against any Loan Party or any Surety for the purpose of
effecting, or an order, judgment or decree shall be entered by any court
of competent jurisdiction approving (in whole or in part), anything
specified in subsection (h) of this Section, or any receiver, trustee,
assignee, custodian, sequestrator, liquidator or other official shall be
appointed with respect to any Loan Party or any Surety, or shall be
appointed to take or shall otherwise acquire possession or control of all
or a substantial part of the assets and properties of any Loan Party or
any Surety, and any of the foregoing involuntary actions shall not be
vigorously contested in good faith by such party and shall continue
unstayed and in effect for any period of 30 days;
(j) one or more final judgments for the payment of money in excess of an
aggregate of $10,000 shall be rendered against any Loan Party or any
Surety (other than fully insured losses) and the same shall remain
undischarged for a period of 30 days during which levy and execution
shall not be effectively stayed or contested in good faith;
(k) any ERISA Event shall occur, or any action, suit, investigation or
proceeding involving or affecting any Plan or any assets or properties of
any Plan shall be adversely determined; any fiduciary or sponsor of, or
participant in, any Plan shall take or commit any of the actions
specified in subsection (h) of this Section in respect of the Plan or all
or substantially all of its assets and properties; or any action, suit or
proceeding shall otherwise be commenced against any Plan or any of its
fiduciaries, sponsors or participants for the purpose of effecting, or
any order, judgment or decree shall be entered by any court of competent
jurisdiction approving (in whole or in part), anything specified in
subsection (h) of this Section in respect of any Plan or all or
substantially all of its assets and properties, or any receiver, trustee,
assignor, custodian, sequestrator, liquidator or other official shall be
appointed with respect to any Plan or all or a substantial part of its
assets and properties, or shall be appointed to take or shall otherwise
acquire possession or control of all or a substantial part of the assets
and properties of any Plan, and any of the foregoing shall continue
unstayed and in effect for any period of 30 days;
(l) any seizure, levy, attachment, distraint, loss, destruction, termination,
foreclosure or other material loss, destruction, termination, foreclosure
or other material impairment, deterioration or diminution, in whole or in
part, shall occur with respect to all or any part of (i) the Collateral
or any collateral granted by any Surety (other than fully insured
casualty losses to the extent the Lender has a perfected first priority
security interest in and actually receives all insurance proceeds with
respect thereto to the extent required by this Agreement and the other
Loan Instruments), or (ii) the Lender's perfected security interest
therein, or any Loan Party or any Surety shall do or fail to do or
resist, or cause, suffer or permit anyone else to do, anything that would
so affect any such collateral or security interest;
(m) any Loan Instrument (in whole or in part) at any time and for any reason
whatsoever (i) shall cease to be in full force and effect, (ii) shall be
declared null and void, (iii) shall be contested or otherwise challenged
as to its validity or enforceability by any Loan Party or any Surety or
(iv) shall be the subject of any denial by any Loan Party or any Surety
of any liability or obligation of such party thereunder;
(n) any Loan Party or any Surety shall be or become the subject of or a party
to any criminal indictment or conviction;
(o) a change shall occur in the identity or control of the ESOP Trustee
unless replaced by an institutional trustee that (i) is not an Affiliate
of the Borrower or the Lender and (ii) has been approved in advance of
such change in writing by the Lender, which approval will not be withheld
unreasonably;
(p) any Loan Party or any of its subsidiaries shall cease to be or be
qualified to be a subchapter "S" corporation under the Tax Code;
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(q) the failure of the Borrower to issue 1,000,000 shares of its capital
stock to the ESOP Trust immediately after the closing of the sale of the
SPG Stock under the Stock Purchase Agreement, or the failure of the
Borrower to redeem (immediately after its delivery of the Term Notes and
such issuance to the ESOP Trust) its capital stock from its
shareholder(s) other than the ESOP Trust;
(r) any Person shall be or become a record holder of any of the capital stock
issued by the Borrower other than (i) the ESOP Trust, (ii) the employees
of the Borrower or SPG as expressly permitted under the ESOP Plan, (iii)
the employees of the Borrower or SPG pursuant to the exercise of any
Permitted Option in accordance with its terms; or (iv) the holder(s) of
the Holdings Warrant;
(s) any Person other than the Borrower shall be or become a record or
beneficial owner of any capital stock issued by SPG or any other
Guarantor, or a change shall occur in the control of any Surety, whether
by a change in ownership or otherwise;
(t) if either of ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇ shall cease to actively function
and continue in their current positions with any Loan Party unless
replaced within 30 days thereof by a Person approved by the Lender in
writing, which approval shall not be unreasonably withheld; or
(u) there shall occur any event or events that (individually or in the
aggregate with any other event(s)) could have or has had a Material
Adverse Effect or Surety's Adverse Effect, as determined by the Lender in
the exercise of its reasonable judgment, and the Lender shall have given
the Loan Parties notice of such determination.
Section 8.02. Remedies upon Default. Upon the occurrence or at any
time thereafter during the continuance of any Event of Default, the Lender, upon
notice to the Loan Parties, shall be entitled, without limiting its ability to
do so at other times (each Loan Party hereby acknowledging that certain
Obligations are payable on demand as provided in Article II hereof
notwithstanding anything in this Section or in Section 8.01 to the contrary):
(a) to declare the Loans and all other Obligations to be immediately due and
payable, whether principal, interest or otherwise, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
each Loan Party, notwithstanding anything contained in this Agreement, any Note
or any of the other Loan Instruments to the contrary; and (b) to exercise or
enforce any one or more of the Lender's rights, powers, privileges, remedies and
interests under this Agreement, each Note, the Guaranty, the other Loan
Instruments and Applicable Law; provided, however, that in the event of the
occurrence of any of the Events of Default respecting each Loan Party set forth
in subsections (h) and (i) of Section 8.01, then simultaneously with that event,
and without the necessity of any notice or other action by the Lender, the Loans
and all of the other Obligations shall be accelerated and immediately due and
payable as stated above.
Section 8.03. Enforcement, Etc. The Lender, in its sole and absolute
discretion, may proceed to exercise or enforce any right, power, privilege,
remedy or interest that the Lender may have under this Agreement, any other Loan
Instrument or Applicable Law: (a) at law, in equity, in rem or in any other
forum available under Applicable Law; (b) without notice except as otherwise
expressly provided herein; (c) without pursuing, exhausting or otherwise
exercising or enforcing any other right, power, privilege, remedy or interest
that the Lender may have against or in respect of any Loan Party, the
Collateral, any Surety, or any other co-obligor, guarantor, surety, pledgor,
collateral or other Person or thing; and (d) without regard to any act or
omission of the Lender or any other Person. The Lender may institute one or more
proceedings (which may be separate proceedings) with respect to this Agreement
and each of the other Loan Instruments in such order and at such times as the
Lender may elect in its sole and absolute discretion. This Agreement and the
other Loan Instruments may be enforced without possession of any Note or its
production in any action, suit or proceeding. This Agreement and the other Loan
Instruments may be enforced with respect to any Loan Party without the presence
or participation of any Surety or any co-obligor (joint or several), guarantor,
pledgor or surety, whether through lack of jurisdiction, venue or service or
otherwise, and no Loan Party will raise, and each Loan Party hereby expressly
waives, any objection or defense respecting the need for any such presence or
participation.
Section 8.04. Equitable Relief. Each Loan Party acknowledges and
agrees that it may be impossible to measure in money the damage to the Lender in
the event of a breach of or default under any of the terms and provisions of
Sections 6.04, 6.05, 6.07, 6.08, 6.11, 6.12, 7.03, 7.05, and 7.07(a) of this
Agreement, and that, in the event of any such breach or default, the Lender, in
addition to all other rights, powers, privileges and remedies that it may have,
shall be entitled to injunctive relief, specific performance or such other
equitable relief as the Lender may request to exercise or otherwise enforce any
of the terms and provisions of those Sections and to enjoin or otherwise
restrain any act prohibited thereby, and no Loan Party will raise and hereby
expressly waives any objection or defense that there is an adequate remedy
available at law.
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Section 8.05. Reinstatement. In the event any payment of or any
application of any amount, asset or property to any of the Obligations, or any
part thereof, at any time is rescinded or must otherwise be restored or returned
by the Lender upon the insolvency, bankruptcy or reorganization of any Loan
Party, any Surety or any other Person, whether by order of any court, by any
settlement approved by any court, or otherwise, then the terms and provisions of
this Agreement shall continue to apply, or shall be reinstated if not then in
effect, as the case may be, with respect to the Obligations so rescinded,
restored or returned, all as though such payment or application had never been
made.
Section 8.06. Waivers of Notice, Etc. Except for any written notice or
demand expressly required under this Agreement or any other Loan Instrument
under the circumstances, each Loan Party hereby expressly waives: (a) notice of
acceptance of this Agreement or any other Loan Instrument; (b) notice of any
action taken or omitted in reliance hereon; (c) presentment; (d) demand for
payment; (e) protest or notice of protest; (f) notice of any nonpayment or other
event that constitutes, or with or without the giving or receipt of notice, the
acquisition of knowledge or the passage of time (or any combination thereof)
would constitute, any nonpayment, nonperformance, misrepresentation or other
breach or default under this Agreement or any other Loan Instrument; (g) notice
of any material and adverse effect, whether individually or in the aggregate,
upon (i) the assets, business, operations, properties or condition (financial or
otherwise) of any Loan Party, any Surety or any other Person, (ii) the ability
of any of them to pay or otherwise satisfy (as and when due) any of their
respective obligations under any of the Loan Instruments, or (iii) any
collateral securing the obligations of any of them under the Loan Instruments or
its value or the validity, enforceability, perfection or priority of any
security interest of the Lender therein; or (h) any other proof, notice or
demand of any kind whatsoever with respect to any or all of the Obligations or
Surety's Obligations or promptness in making any claim or demand under this
Agreement or any other Loan Instrument. No act or omission of any kind in
connection with any of the foregoing shall in any way impair or otherwise affect
the legality, validity, binding effect or enforceability of any term or
provision of this Agreement or any other Loan Instrument or any of the
Obligations or Surety's Obligations.
Section 8.07. Consent to Jurisdiction, Waiver of Personal Service,
Etc. Each Loan Party hereby consents and agrees that the Supreme Court of the
State of New York for the County of Westchester and the United States District
Court for the Southern District of New York (Westchester Division) each shall
have personal jurisdiction and proper venue with respect to any dispute between
the Lender and the Loan Party under any Loan Instrument; provided that the
foregoing consent shall not deprive the Lender of the right in its sole and
absolute discretion to voluntarily commence or participate in any action, suit
or proceeding in any other court having jurisdiction and venue over any Loan
Party. In any dispute with the Lender, no Loan Party will raise, and each Loan
Party hereby expressly waives, any objection or defense to any such jurisdiction
as an inconvenient forum. Without in any way limiting the preceding consents to
jurisdiction and venue, the parties agree to submit to the jurisdiction of such
New York courts in accordance with Section 5-1402 of the General Obligations Law
of the State of New York or any corresponding or succeeding provisions thereof.
Each Loan Party hereby expressly waives personal service of any summons,
complaint or other process, which may be delivered by any of the means permitted
for notices under Section 9.01 hereof. In addition to (and without limitation
of) any such delivery or any other delivery permitted under Applicable Law, each
Loan Party agrees to execute an deliver to the Lender a Designation of Agent for
Service appointing CT CORPORATION SYSTEM as the agent of the Loan Party for
service in the State of New York, which the Loan Party hereby irrevocably
authorizes the Lender to date with such date (if undated) and file with the
appropriate Authority at such time as the Lender in its sole and absolute
discretion may elect. Within thirty (30) days after service of process, each
Loan Party agrees to appear or answer any summons or complaint of the Lender,
and should that Loan Party fail to appear or answer within said thirty-day
period, that Loan Party shall be deemed in default under that action and
judgment may be requested by the Lender and entered in favor of the Lender
against that Loan Party for the relief demanded in any complaint so served. Each
Loan Party acknowledges and agrees that a final judgment in any such action,
suit or proceeding shall be conclusive and binding upon that Loan Party and may
be enforced against that Loan Party or any of its assets or properties in any
other appropriate jurisdiction selected by the Lender (in its sole and absolute
discretion) by an action, suit or proceeding in such other jurisdiction. To the
extent that that Loan Party may be entitled to immunity (whether by reason of
sovereignty or otherwise) from suit in any jurisdiction, from the jurisdiction
of any court or from any other legal process, each Loan Party hereby irrevocably
waives such immunity.
Section 8.08. Waiver of Setoff, Special Damages, Etc. (a) Each Loan
Party hereby expressly waives, and agrees that it will not exercise, any and all
rights of setoff, recoupment, abatement or reduction or other claims or
counterclaims respecting any payment due (whether as scheduled or required, upon
acceleration or as sought in any action, suit or proceeding by the Lender) under
this Agreement, any other Loan Instrument, any Stock Purchase Document` or any
other agreement, facility or relationship with the Lender that may now or
hereafter be accorded to the Loan Party under Applicable Law or otherwise. To
the extent not required as a compulsory counterclaim in any related ongoing
proceeding, each Loan Party (i)
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shall pursue separate exercise and enforcement of any right, power, privilege,
remedy or interest retained (and not waived) by the Loan Party under this
Agreement, the other Loan Instruments, any other agreement, facility or
relationship with the Lender and Applicable Law, and (ii) shall not seek to
exercise or enforce any such right, power, privilege, remedy or interest in any
proceeding instituted by the Lender under or in respect of any Loan Instrument,
whether through joinder, consolidation, setoff, recoupment, abatement,
reduction, counterclaim, defense or otherwise.
(b) In any dispute with the Lender, each Loan Party covenants and
agrees that it will not seek, recover or retain any, and each Loan Party hereby
expressly waives any and all, special, exemplary, punitive, statutory and/or
consequential damages (whether through action, suit, counterclaim or otherwise
and whether in contract, tort, strict liability or otherwise) to the extent
waiver is not limited under Applicable Law.
Section 8.09. Relationship of the Borrower and the Lender, Etc. (a)
Each Loan Party represents, warrants, acknowledges and agrees that: (i) the
Lender is acting solely in the capacity of lender respecting this Agreement, the
other Loan Instruments, and the Collateral; (ii) the sole relationship of each
Loan Party with the Lender is that of debtor and creditor, respectively, and no
term or provision of this Agreement or any other Loan Instrument is intended to
create, nor shall any such term or provision be deemed or construed to have
created, any joint venture, partnership, trust, agency or other fiduciary or
advisory relationship with any Loan Party, any of its subsidiaries, any Surety
or any of their respective Affiliates; (iii) Each Loan Party is experienced in
the ownership, operation and financing of its current and contemplated business,
assets and properties; (iv) Each Loan Party and each Surety has independently
and fully reviewed and evaluated the Loan Instruments, the transactions
contemplated thereunder and the potential effects of such transactions on the
assets, business, operations, properties and condition (financial or otherwise)
of each of the Loan Parties and the subsidiaries and Affiliates of any Loan
Party (if any), which review and evaluation was made together with counsel and
(to the extent deemed prudent by the Loan Party) financial and other advisors to
each Loan Party and each Surety; and (v) neither Loan Party nor any Surety is
relying upon (A) the expertise, business acumen or advice of the Lender in
connection with any aspect of the ownership, operation or financing of its
business, assets or properties or its condition (financial or otherwise), or (B)
any oral or written advice, analysis or assurance of any kind whatsoever from
the Lender.
(b) Each Loan Party acknowledges and agrees that the Lender, its
Affiliates and its representatives may be providing debt financing, equity
capital or other services (including merchandising, research, financial advisory
or other services) to other companies or persons in respect of which the Loan
Party or a Surety may have conflicting interests regarding the transactions
described herein and otherwise. Neither the Lender nor any of its Affiliates
will use or disclose to third parties confidential information obtained from any
Loan Party or any Surety by virtue of the transactions contemplated by the Loan
Instruments or its other relationships with any Loan Party in connection with
the performance by it of services for other companies or persons, and neither
the Lender nor any of its Affiliates will furnish any such information to other
companies or persons. Each Loan Party also acknowledges and agrees that neither
the Lender nor any of its Affiliates or representatives has any obligation to
use in connection with the transactions contemplated by any Loan Instrument, or
to advise any Loan Party or any Surety of, or furnish to any Loan Party or any
Surety, any confidential or other information obtained by the Lender or any of
their Affiliates or representatives from or with respect to other transactions,
companies or persons.
(c) By accepting or approving any certificate, statement, report or
other document or information required to be given to the Lender (whether as a
required notice or report, for approval or otherwise), or any alleged
performance of anything required to be observed, performed or fulfilled by any
Loan Party or any Surety, pursuant to this Agreement and the other Loan
Instruments, neither the Lender nor any of its Representatives shall have, or
shall be deemed or construed to have, made any representation or warranty to or
agreement with any Loan Party or any Surety with respect thereto (other than as
expressly provided therein) or affirmed the sufficiency, the legality,
enforceability, effectiveness or financial impact or other effect thereof.
Section 8.10. Lender's Right of Setoff, Etc. Upon the occurrence and
during the continuance of any Event of Default, the Lender hereby is authorized
at any time and from time to time, without notice to any Loan Party (any such
notice being hereby expressly waived by each Loan Party), to set off and apply,
directly or through any of its Affiliates, custodians, participants and
designees, any and all deposits (whether general or special, time or demand,
provisional or final, or individual or joint) and other assets and properties at
any time held in the possession, custody or control of the Lender or any of its
Affiliates, custodians, participants and designees, and any Indebtedness or
other amount or obligation (including, without limitation, any obligation under
any interest rate protection, foreign currency exchange, or other interest rate
or exchange rate swap or hedging agreement or arrangement) at any time owing by
the Lender or any of its Affiliates or participants, to or for the credit,
account or benefit of any Loan Party
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against any and all of the Obligations now or hereafter existing under this
Agreement or the other Loan Instruments, whether or not the Lender shall have
declared a default, accelerated the obligations or made any demand or taken any
other action under this Agreement or any other Loan Instrument, and although
such obligations may be contingent or unmatured. Each Loan Party acknowledges
that pursuant to Section 7.01 hereof it granted to the Lender a senior security
interest in and to, among other things, all such deposits, assets, properties
and Indebtedness in the possession of each of the Affiliates, custodians,
participants and designees of the Lender, and each Loan Party hereby authorizes
each such Person to so set off and apply such amounts at such times and in such
manner as the Lender may direct pursuant to this Section, in each case to the
fullest extent possible as if the Person making the setoff were a direct
creditor of the Loan Party in the full amount of the Obligations. The Lender
shall notify the Loan Parties after any such setoff and application; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. In debiting any such account, the Obligations shall
be deemed to have been paid or repaid only to the extent of the funds actually
available in that account notwithstanding any internal procedure of the Lender
or any of its Affiliates, custodians, participants and designees to the
contrary. The rights of the Lender under this Section are in addition to and
without limitation of any other rights, powers, privileges, remedies and other
interests (including, without limitation, other rights of setoff and security
interests) that the Lender may have under this Agreement, the other Loan
Instruments and Applicable Law.
Section 8.11. Reliance. The Lender shall be entitled to rely upon any
notice, consent, certificate, affidavit, statement, paper, document, writing or
other communication (which to the extent permitted hereunder may be by telecopy
or telephone) reasonably believed by the Lender to be genuine and to have been
signed, sent or made by the proper Person or persons, and upon opinions and
advice of legal counsel (including counsel for the Loan Parties), independent
public accountants and other experts selected by the Lender. The Lender shall be
entitled to rely, and in entering into this Agreement and the other Loan
Instruments in fact has relied, upon the representations, warranties and other
information respecting each Loan Party and each Surety contained in this
Agreement and the other Loan Instruments notwithstanding any investigation,
analysis or evaluation that may have been made or from time to time may be made
by the Lender or its designees of all or any part of the assets, business,
operations, properties or condition (financial or otherwise) of any Loan Party,
any Surety or any other Person.
Section 8.12. Exculpation and Indemnification. The Lender and its
participants, Affiliates and designees, and their respective shareholders,
partners, members, directors, officers, managers, employees, attorneys and
agents (together with the Lender, each an "indemnitee"), shall not incur any
liability for any acts or omissions (and each Loan Party hereby expressly waives
any and all related claims and actions against each indemnitee), and each
indemnitee shall be indemnified, reimbursed and held harmless by any Loan Party
on demand, and (at the request of the Lender) defended at the expense of any
Loan Party with counsel selected by the Lender, from and against any and all
claims, liabilities, losses and expenses (including, without limitation, the
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any indemnitee, in each case
arising out of or related directly or indirectly to this Agreement, any other
Loan Instrument, any of the Collateral, any of the Loans or the application of
any proceeds thereof, any ERISA violation or claim, or any Environmental Claim,
except to the extent occasioned by the indemnitee's own acts or omissions
breaching a duty owed to any Loan Party and amounting to gross negligence or
willful misconduct as finally determined pursuant to Applicable Law by a
governmental Authority having jurisdiction. The preceding general exculpation
and indemnification is not intended (and shall not be deemed or construed) to in
any way qualify, condition, diminish, restrict, limit or otherwise affect any
(and is in addition to each) other release, waiver, consent, acknowledgment,
agreement or other term or provision of this Agreement or any other Loan
Instrument.
Section 8.13. Sole Discretion of the Lender. Wherever pursuant to this
Agreement (a) the Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to the Lender, or
(c) any other decision or determination is to be made by the Lender, the
decision of the Lender to approve, disapprove or make such determination shall
be in the sole and absolute discretion of the Lender, except as may be otherwise
expressly and specifically provided in this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices, Etc. Except as otherwise expressly provided,
any notice, request, demand or other communication permitted or required to be
given under this Agreement or any other Loan Instrument shall be in writing,
shall be signed by the party giving it, shall be sent by one of the following
means to the addressee at the address set forth in [Exhibit C] hereto (or at
such other address as shall be
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designated hereunder by notice to the other parties and persons receiving
copies, effective upon actual receipt) and shall be deemed conclusively to have
been given: (i) on the first Business Day following the day timely deposited for
next Business Day delivery with Federal Express (or other equivalent national
overnight courier) or United States Express Mail for overnight delivery, in
either case designated for next Business Day delivery and with the cost of such
delivery prepaid or for the account of the sender; (ii) on the fifth Business
Day following the day duly sent by certified or registered United States mail,
postage prepaid and return receipt requested; or (iii) when otherwise actually
received by the addressee on a Business Day (or on the next Business Day if
received after the close of normal business hours or on any non-Business Day).
If a certificate, signed notice or other signed item is expressly required by
another provision of this Agreement or any other Loan Instrument, a manually
signed original must be delivered by the party giving it; any other notice,
request, demand or other communication instead may be sent by telecopy, with the
cost of transmission prepaid or for the account of the sender, and shall (except
as otherwise specified in this Agreement or any other Loan Instrument) be deemed
conclusively to have been given on the first Business Day following the day duly
sent. Refusal to accept delivery of any item shall be deemed to be receipt of
such item by the refusing party. Copies of notices to persons specified in
Exhibit C hereto (if any) may be sent by regular first-class mail, postage
prepaid, to such persons, but any failure or delay in sending copies shall not
affect the validity of any such notice, request, demand or other communication
so given to a party.
Section 9.02. Expenses of the Lender. Each Loan Party shall pay or
reimburse on demand any and all costs and expenses incurred by the Lender,
whether directly or indirectly, in connection with (a) the preparation,
execution and delivery of the Lender's term sheet or commitment letter, (b) any
syndication of this facility, (c) the preparation, execution and closing of this
Agreement and the other Loan Instruments, and all waivers, releases, discharges,
satisfactions, modifications and amendments thereof and approvals and consents
with respect thereto, (d) all payments made and actions taken thereunder in the
name or on behalf of any Loan Party, any Surety or any other guarantor, surety
or pledgor under any Loan Instrument, (e) all periodic collateral audits and
other evaluations and the ongoing monitoring of the Accounts Receivable,
Inventory and other Collateral (including, without limitation, the per diem fees
and expenses of the Lender and its designees in performing such audits and other
evaluations), (f) all searches (whether respecting financing statements, unpaid
taxes and other liens or otherwise), surveys and appraisals, title examinations
and insurance, surety bond premiums, mortgage recording, documentary, transfer,
intangible, note or other similar taxes and revenue stamps, and all filings and
recordings, and (g) the administration, maintenance, enforcement and
adjudication of this Agreement, the other Loan Instruments and the Lender's
rights, powers, privileges, remedies and other interests thereunder and under
Applicable Law, in each case including (without limitation) the disbursements,
expenses and fees of counsel to the Lender (including, without limitation, the
allocated costs of in-house counsel), currently Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ LLP, and the disbursements, expenses and fees of any local or special
counsel retained by the Lender or its counsel.
Section 9.03. Further Assurances. Each Loan Party agrees to do such
further acts and things and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Lender from time to time
reasonably may request in connection with the administration, maintenance,
enforcement or adjudication of this Agreement and the other Loan Instruments in
order (a) to evidence, confirm, perfect or protect any security interest or
other Lien granted or required to have been granted under this Agreement and the
other Loan Instruments, (b) to give the Lender or its designee confirmation and
assurance of the Lender's rights, powers, privileges, remedies and interests
under this Agreement, the other Loan Instruments and Applicable Law, (c) to
better enable the Lender to exercise any such right, power, privilege or remedy,
or (d) to otherwise effectuate the purpose and the terms and provisions of this
Agreement and the other Loan Instruments, each in such form and substance as may
be acceptable to the Lender. The Lender shall execute and deliver to each Loan
Party such documents (in form and substance acceptable to the Lender) as any
Loan Party reasonably may request in order to effectuate the purpose and terms
and provisions of this Agreement.
Section 9.04. Interpretation. The parties acknowledge and agree that:
each party and its counsel have reviewed and negotiated the terms and provisions
of this Agreement (excluding schedules) and have contributed to its revision;
the normal rule of construction, to the effect that any ambiguities are resolved
against the drafting party, shall not be employed in the interpretation of it;
and its terms and provisions shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
Section 9.05. Provisions of the Notes and Collateral Loan Instruments.
The Notes and the various Loan Instruments creating or evidencing the Lender's
interest in the Collateral are each subject to the covenants and other terms and
provisions contained in this Agreement to the same extent and effect as if fully
set forth therein; and in the event that any term or provision of those
instruments and documents conflicts or is inconsistent with any term or
provision of this Agreement, the term or provision of this Agreement shall
control and be given effect.
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Section 9.06. Governing Law. This Agreement and the other Loan
Instruments: (a) have been executed and delivered in the State of New York; and
(b) shall be governed by and construed in accordance with the Applicable Law
pertaining in the State of New York (other than those conflict of law provisions
that would defer to the substantive laws of another jurisdiction). Without in
any way limiting the preceding choice of law, the parties elect to be governed
by New York law in accordance with, and are relying (at least in part) on,
Section 5-1401 of the General Obligations Law of the State of New York.
Section 9.07. Severability. In the event that any term or provision of
this Agreement or any other Loan Instrument shall be finally determined to be
superseded, invalid, illegal or otherwise unenforceable pursuant to Applicable
Law by an Authority having jurisdiction and venue, that determination shall not
impair or otherwise affect the validity, legality or enforceability (a) by or
before that Authority of the remaining terms and provisions of this Agreement
and the other Loan Instruments, which shall be enforced as if the unenforceable
term or provision were deleted, or (b) by or before any other Authority of any
of the terms and provisions of this Agreement and the other Loan Instruments.
Section 9.08. Survival of Representations, Etc. Each of the payment
obligations, collateral grants, representations and warranties (as of the
date(s) made or deemed made), covenants, waivers and other agreements of the
Loan Parties contained in this Agreement and the other Loan Instruments: (a)
shall be absolute, irrevocable and unconditional, irrespective of (among other
things) the validity, legality, binding effect or enforceability of any of the
other terms and provisions of this Agreement or any other Loan Instrument or any
other act, event or circumstance described in this Section; (b) shall survive
the execution and delivery of this Agreement and the other Loan Instruments, and
any and all advances, repayments and readvances of any or all of the monies to
be lent hereunder and thereunder; (c) shall remain and continue in full force
and effect without regard (i) to whether the Loans or other Obligations are now
or hereafter existing, acquired or created, and irrespective of the fact that
from time to time under the terms and provisions of the Loan Instruments monies
may be advanced, repaid and readvanced and the outstanding balance of the Loans
may be zero, (ii) to any extension or change in the time, manner, place and
other terms and provisions of payment or performance of any one or more of the
Loans or other Obligations or any Surety's Obligations, (iii) to any waiver,
modification, extension, renewal, consolidation, spreading, amendment or
restatement of any other term or provision of any Loan Instrument (except as and
to the extent expressly modified by the terms and provisions of any such waiver,
modification, extension, renewal, consolidation, spreading, amendment or
restatement), (iv) to any acceptance by the Lender of (A) any partial or late
payment, which shall not constitute a satisfaction or waiver of the full amount
then due or the resulting Default or Event of Default, or (B) any payment during
the continuance of a Default or Event of Default, which shall not constitute a
waiver or cure thereof; and the Lender may accept or reject any such payment
without affecting any of its rights, powers, privileges, remedies and other
interests under this Agreement, the other Loan Instruments and Applicable Law;
(v) to any full, partial or non-exercise of any of the rights, powers,
privileges, remedies and interests of the Lender under any Loan Instrument or
Applicable Law, against any Loan Party, any Surety or any other Person or with
respect to any of the Obligations, any Surety's Obligations, any other
obligations or any collateral or security interest therein, which exercise or
enforcement may be delayed, discontinued or otherwise not pursued or exhausted
for any or no reason whatsoever, or which may be waived, omitted or otherwise
not exercised or enforced (whether intentionally or otherwise), (vi) to any
surrender, repossession, sequestration, foreclosure, conveyance or assignment
(by deed in lieu or otherwise), sale, lease or other realization, dealing,
liquidation or disposition respecting any collateral or setoff respecting any
account or other asset in accordance with the Loan Instruments or Applicable Law
(except as and to the extent the Obligations have been permanently reduced by
the application of the net proceeds thereof), (vii) to the perfected or
non-perfected status or priority of any mortgage or other security interest in
any such collateral, which may be held without recordation, filing or other
perfection (whether intentionally or otherwise), (viii) to any release,
settlement, adjustment, subordination or impairment of all or any part of the
Obligations, any Surety's Obligations, any other obligations or any collateral
or any security interest therein, whether intentionally or otherwise (except as
and to the extent expressly modified by the terms and provisions of any such
release, settlement or adjustment), (ix) to any extension, stay, moratorium or
statute of limitations or similar time constraint under any Applicable Law, (x)
to any investigation, analysis or evaluation by the Lender or its designees of
the assets, business, operations, properties or condition (financial or
otherwise) of any Loan Party, any Surety or any other Person, (xi) to any
application to any obligations of any Loan Party or any Surety other than any
Obligations or Surety's Obligations of (A) any payments from such Person not
specifically designated for application to the Obligations or Surety's
Obligations or (B) any proceeds of collateral from such Person other than from
the Collateral, (xii) to any sale, conveyance, assignment, participation or
other transfer by the Lender (in whole or in part) to any other Person of any
one or more of this Agreement and the other Loan Instruments or any one or more
of the rights, powers, privileges, remedies or interests of the Lender herein or
therein, (xiii) to any act or omission on the part of the Lender or any other
Person or (xiv) to any other act, event, or circumstance that otherwise might
constitute a legal or equitable counterclaim, defense or discharge of a Loan
Party, co-obligor, indemnitor, guarantor, pledgor or surety; in each case in
such manner and order,
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upon such terms and provisions and subject to such conditions as the Lender may
deem necessary or desirable in its sole and absolute discretion, and without
notice to or further assent from the Borrower, the Guarantor or any other Surety
(except for such notices as may be expressly required to be given to such party
under the applicable Loan Instrument); (d) shall not be subject to any defense,
counterclaim, setoff, right of recoupment, abatement, reduction or other claim
or determination that any Loan Party may have against any Surety, the Lender or
any other Person; (e) shall not be diminished or qualified by the death,
disability, dissolution, reorganization, insolvency, bankruptcy, custodianship
or receivership of any Loan Party, any Surety or any other Person, or the
inability of any of them to pay its debts or perform or otherwise satisfy its
obligations as they become due for any reason whatsoever; and (f) shall remain
and continue in full force and effect without regard to any of the foregoing
acts, events or circumstances (A) until all of the Obligations have been fully
paid and satisfied and (B) thereafter with respect to acts, events or
circumstances occurring prior to such payment and satisfaction.
Section 9.09. Counterparts. This Agreement or any other Loan
Instrument may be executed in two or more counterpart copies of the entire
document or of signature pages to the document, each of which may be executed by
one or more of the parties hereto or thereto, but all of which, when taken
together, shall constitute a single agreement binding upon all of the parties
hereto or thereto (as the case may be).
Section 9.10. Effective Date. This Agreement shall be effective on the
date (the "Effective Date") as of which (a) this Agreement shall be executed by
all the parties hereto and delivered to the Lender and (b) all the conditions
precedent required to have been satisfied on or before the Effective Date
pursuant to Article IV hereof shall have been satisfied or waived (whether
temporarily or otherwise) in writing by the Lender. The Lender shall notify the
Loan Parties of the Effective Date if other than the date of the closing of this
Agreement; provided, however, that the failure to give such notice shall not
alter the Effective Date.
Section 9.11. Successors and Assigns; Assignment. Whenever in this
Agreement or any other Loan Instrument reference is made to any party, such
reference shall be deemed to include the successors, assigns, heirs and legal
representatives of such party, and, without limiting the generality of the
foregoing, all representations, warranties, covenants and other agreements made
by or on behalf of any Loan Party in this Agreement and the other Loan
Instruments shall inure to the benefit of the successors and assigns of the
Lender; provided, however, that nothing herein shall be deemed to authorize or
permit any Loan Party to assign any of its rights or obligations under this
Agreement or any other Loan Instrument to any other Person (whether or not an
Affiliate of any Loan Party), and each Loan Party covenants and agrees that it
shall not make any such assignment. The Lender from time to time: (a) may assign
or sell a participation interest in all or any portion(s) of the rights, powers,
privileges, remedies and interests of and/or the loans and other obligations
owed to the Lender under this Agreement or any other Loan Instrument (i) to any
Affiliate of the Lender or to any Federal Reserve Lender (as collateral or
otherwise), or (ii) to any other Person; (b) may furnish and disclose financial
statements, documents and other information pertaining to any Loan Party or any
Surety to any potential assignee or participant permitted hereunder; and (c) may
take any and all other actions that the Lender may determine (in its sole and
absolute discretion) to be necessary or appropriate in connection with any such
assignment or participation; in each case without notice to or consent of any
Loan Party or any other Person. Without in any way limiting the foregoing, each
Loan Party acknowledges and agrees that (A) the Lender may assign any and all of
the rights, powers, privileges, remedies and interests of and/or the loans and
other obligations owed to the Lender under this Agreement or any other Loan
Instrument to the Senior Lender pursuant to the Senior Loan Documents, (B) the
Senior Lender shall be entitled to exercise or enforce any of the rights,
powers, privileges, remedies and interests of and/or the loans and other
obligations owed to the Lender under this Agreement or any other Loan Instrument
in accordance with the Loan Instruments, the Senior Loan Documents and/or
Applicable Law, (C) the Senior Lender shall not be responsible or liable for any
of the acts, omissions, duties, liabilities or obligations of the Lender
hereunder, including (without limitation) any application of or failure to apply
payments or proceeds as contemplated under any Loan Instrument or Revolving
Credit Document, and (D) in no event shall the Senior Lender be obligated or
liable in any manner to the Borrower or any Surety to return any cash Collateral
obtained pursuant to Section 2.06(a) of the Revolving Credit Agreement to the
Borrower to the extent received by the Senior Lender in payment of the Lender's
obligations.
Section 9.12. No Third Party Rights. The representations, warranties
and other terms and provisions of this Agreement and the other Loan Instruments
are for the exclusive benefit of the parties hereto, and, except as otherwise
expressly provided herein or therein, no other Person, including creditors of
any party hereto, shall have any right or claim against any party by reason of
any of those terms and provisions or be entitled to enforce any of those terms
and provisions against any party.
SPAR ESOP Term Loan Agreement
-61-
Section 9.13. No Waiver by Action, Etc. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision of
this Agreement or any other Loan Instrument shall be effective only in the
specific instance and for the specific purpose for which given and shall not be
deemed, regardless of frequency given, to be a further or continuing waiver or
consent. The failure or delay of a party at any time or times to require
performance of, or to exercise its rights with respect to, any representation,
warranty, covenant or other term or provision of this Agreement or other Loan
Instrument in no manner (except as otherwise expressly provided herein) shall
affect its right at a later time to enforce any such provision. No notice to or
demand on any Loan Party or any Surety in any case shall entitle such party to
any other or further notice or demand in the same, similar or other
circumstances. The acceptance by the Lender of (a) any partial or late payment
shall not constitute a satisfaction or waiver of the full amount then due or the
resulting Event of Default or (b) any payment during the continuance of an Event
of Default shall not constitute a waiver or cure thereof; and the Lender may
accept or reject any such payment without affecting any of its rights, powers,
privileges, remedies and other interests under this Agreement, the other Loan
Instruments and Applicable Law. All representations, warranties, covenants and
agreements of each Loan Party and all rights, powers, privileges, remedies and
other interests of the Lender hereunder are cumulative and not alternatives, and
they are in addition to and shall not limit (except as otherwise expressly
provided herein) any other right, power, privilege, remedy or other interest of
the Lender under this Agreement, any other Loan Instrument or Applicable Law.
[END OF PAGE]
SPAR ESOP Term Loan Agreement
-62-
Section 9.14. Waiver of Jury Trial. In any action, suit or proceeding
in any jurisdiction arising out of or related directly or indirectly to this
Agreement or any other Loan Instrument, whether brought by the Lender against
any Loan Party, or any Loan Party against the Lender, each Loan Party and the
Lender each hereby expressly and irrevocably waives trial by jury.
Section 9.15. Modification, Amendment, Etc. Except as otherwise
expressly provided in a particular Loan Instrument with respect thereto and
except as otherwise provided or permitted under applicable law with respect to
any UCC financing statement, modification, continuation or the like, each and
every supplement or amendment to or modification or restatement of this
Agreement or any other Loan Instrument (other than a UCC financing statement)
shall be in writing and signed by all of the parties hereto or the respective
parties thereto, as the case may be, and each and every waiver of, or consent to
any departure from, any representation, warranty, covenant or other term or
provision of this Agreement or any other Loan Instrument (other than a UCC
financing statement) shall be in writing and signed by each affected party
hereto or thereto, respectively.
Section 9.16. Entire Agreement. This Agreement and the other Loan
Instruments contain the entire agreement of the parties and supersede all other
representations, warranties, agreements and understandings (including, without
limitation, all previous discussion letters and term sheets from the Lender),
oral or otherwise, among the parties with respect to the matters contained
herein and therein.
SPAR ESOP Term Loan Agreement
-63-
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
PERFORMANCE HOLDINGS, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
SPAR PERFORMANCE GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SPAR INCENTIVE MARKETING, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
SPAR ESOP Term Loan Agreement
-▇▇-
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: SS.:
COUNTY OF NEW YORK )
On this 30th day of June in the year 2002 before me, the undersigned,
a Notary Public in and for said State, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity as CEO and
that by his/her signature on the instrument, the Person upon behalf of which the
individual acted (i.e., PERFORMANCE HOLDINGS, INC.) executed the instrument.
(Signature and office of individual taking acknowledgment.)
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 30th day of June in the year 2002 before me, the undersigned,
a Notary Public in and for said State, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity as
President, and that by his/her signature on the instrument, the Person upon
behalf of which the individual acted (i.e., SPAR PERFORMANCE GROUP, INC.)
executed the instrument.
(Signature and office of individual taking acknowledgment.)
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 30th day of June in the year 2002 before me, the undersigned,
a Notary Public in and for said State, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her capacity as CEO, and
that by his/her signature on the instrument, the Person upon behalf of which the
individual acted (i.e., SPAR INCENTIVE MARKETING, INC.) executed the instrument.
(Signature and office of individual taking acknowledgment.)
SPAR ESOP Term Loan Agreement
-65-
EXHIBIT A
to
TERM LOAN, GUARANTY AND SECURITY AGREEMENT
with
PERFORMANCE HOLDINGS, INC.
TERM PROMISSORY NOTE
$2,500,000.00 Tarrytown, New York
Dated as of June 30, 2002
FOR VALUE RECEIVED, PERFORMANCE HOLDINGS, INC. (the "Borrower"),
promises to pay to the order of SPAR INCENTIVE MARKETING, INC. (the "Lender"),
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
may be designated in writing by the holder of this Note, the principal sum of
TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000), or so much thereof as
may be advanced and outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement, all as provided in that certain Term
Loan, Guaranty and Security Agreement among the Borrower, SPG and the Lender
dated as of June 30, 2002 (as the same may be supplemented, modified, amended,
restated or replaced from time to time in the manner provided therein, the "Loan
Agreement"). Capitalized terms used and not otherwise defined in this Note shall
have the meanings respectively assigned to them in the Loan Agreement.
This Note is the Initial Term Note and one of the Notes referred to in
the Loan Agreement. Principal and interest shall be due and payable as provided
in the Loan Agreement, and all of the terms and provisions of the Loan
Agreement, including (without limitation) provision for prepayment and
acceleration of maturity, are incorporated herein by reference and made a part
hereof. This Note is secured by certain collateral pledged by the Borrower
pursuant to the Loan Agreement and the other Loan Instruments.
Presentment for payment, notice of dishonor, protest, notice of
protest and all similar notices are hereby expressly waived by the Borrower.
This Note has been made and delivered in the County of Westchester, State of New
York, where all advances and repayments shall be made (except as otherwise
provided in the Loan Agreement). This Note shall be governed by and construed in
accordance with the Applicable Law pertaining in the State of New York (other
than those that would defer to the substantive laws of another jurisdiction).
This Note is a Loan Instrument and shall be governed by and construed in
accordance with the applicable terms and provisions of the Loan Agreement. Each
and every supplement, modification or amendment to this Note shall be in writing
and signed by the Borrower and the Lender, each and every waiver of, or consent
to any departure from, any term or provision of this Note shall be in writing
and signed by the Lender, and each and every restatement or replacement of this
Note shall be in writing, shall be signed by the Borrower and shall require the
written consent of the Lender.
PERFORMANCE HOLDINGS, INC.
By:________________________________________
[Borrower's Signer's Name],
[Borrower's Signer's Title]
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-▇-
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: SS.:
COUNTY OF NEW YORK )
On this _____ day of __________ in the year ____ before me, the
undersigned, a Notary Public in and for said State, personally appeared
[BORROWER'S SIGNER'S NAME], personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity as [BORROWER'S SIGNER'S TITLE], and that by his/her signature
on the instrument, the Person upon behalf of which the individual acted (i.e.,
PERFORMANCE HOLDINGS, INC.) executed the instrument.
(Signature and office of individual taking acknowledgment.)
SPAR ESOP Term Loan Agreement
-2-
EXHIBIT B
to
TERM LOAN, GUARANTY AND SECURITY AGREEMENT
with
PERFORMANCE HOLDINGS, INC.
TERM PROMISSORY NOTE
$3,500,000.00 Tarrytown, New York
Dated as of June 30, 2002
FOR VALUE RECEIVED, PERFORMANCE HOLDINGS, INC. (the "Borrower"),
promises to pay to the order of SPAR INCENTIVE MARKETING, INC. (the "Lender"),
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
may be designated in writing by the holder of this Note, the principal sum of
THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00), or so much thereof
as may be advanced and outstanding, with interest thereon, to be computed on
each advance from the date of its disbursement, all as provided in that certain
Term Loan, Guaranty and Security Agreement among the Borrower, SPG and the
Lender dated as of June 30, 2002 (as the same may be supplemented, modified,
amended, restated or replaced from time to time in the manner provided therein,
the "Loan Agreement"). Capitalized terms used and not otherwise defined in this
Note shall have the meanings respectively assigned to them in the Loan
Agreement.
This Note is the Additional Term Note and one of the Notes referred to
in the Loan Agreement. Principal and interest shall be due and payable as
provided in the Loan Agreement, and all of the terms and provisions of the Loan
Agreement, including (without limitation) provision for prepayment and
acceleration of maturity, are incorporated herein by reference and made a part
hereof. This Note is secured by certain collateral pledged by the Borrower
pursuant to the Loan Agreement and the other Loan Instruments.
Presentment for payment, notice of dishonor, protest, notice of
protest and all similar notices are hereby expressly waived by the Borrower.
This Note has been made and delivered in the County of Westchester, State of New
York, where all advances and repayments shall be made (except as otherwise
provided in the Loan Agreement). This Note shall be governed by and construed in
accordance with the Applicable Law pertaining in the State of New York (other
than those that would defer to the substantive laws of another jurisdiction).
This Note is a Loan Instrument and shall be governed by and construed in
accordance with the applicable terms and provisions of the Loan Agreement. Each
and every supplement, modification or amendment to this Note shall be in writing
and signed by the Borrower and the Lender, each and every waiver of, or consent
to any departure from, any term or provision of this Note shall be in writing
and signed by the Lender, and each and every restatement or replacement of this
Note shall be in writing, shall be signed by the Borrower and shall require the
written consent of the Lender.
PERFORMANCE HOLDINGS, INC.
By:________________________________________
[Borrower's Signer's Name],
[Borrower's Signer's Title]
SPAR ESOP Term Loan Agreement
▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: SS.:
COUNTY OF NEW YORK )
On this _____ day of __________ in the year ____ before me, the
undersigned, a Notary Public in and for said State, personally appeared
[BORROWER'S SIGNER'S NAME], personally known to me or proved to me on the basis
of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her capacity as [BORROWER'S SIGNER'S TITLE], and that by his/her signature
on the instrument, the Person upon behalf of which the individual acted (i.e.,
PERFORMANCE HOLDINGS, INC.) executed the instrument.
(Signature and office of individual taking acknowledgment.)
SPAR ESOP Term Loan Agreement
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ AND SECURITY AGREEMENT
with
PERFORMANCE HOLDINGS, INC.
ADDRESSES FOR NOTICE AND SERVICE
I. Address for Notices and Service to the Loan Parties:
PERFORMANCE HOLDINGS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Telephone: ( ) ___-____
Telecopy: ( ) ___-____
E-Mail`: __________@____
With a copy of notices from the Lender under Section 7.07 or 8.02 to:
________________________
________________________
________________________
Attention: ___________
Telephone: ( ) ___-____
Telecopy: ( ) ___-____
E-Mail: __________@_________
II. Address for notices to the Lender:
SPAR INCENTIVE MARKETING, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy of any default notice or other notice under Section 5.01
to:
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
SPAR ESOP Term Loan Agreement
C-1
EXHIBIT D
to
TERM LOAN, GUARANTY AND SECURITY AGREEMENT
with
PERFORMANCE HOLDINGS, INC.
TARGETED ADJUSTED CASH FLOW
(TO BE COMPLETED)
SPAR ESOP Term Loan Agreement
F-1
EXHIBIT D
to
TERM LOAN, GUARANTY AND SECURITY AGREEMENT
with
PERFORMANCE HOLDINGS, INC.
FINANCIAL COVENANTS COMPLIANCE CERTIFICATE
RESPECTING
PERFORMANCE HOLDINGS, INC.
[MONTH AND DATE], 200_
Pursuant to the Term Loan, Guaranty and Security Agreement dated as of
June 30, 2002 (as the same may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein, the "Loan
Agreement"), I, [PRINT NAME] , the [PRINT TITLE] of PERFORMANCE HOLDINGS, INC.
(the "Loan Party"), hereby certify to SPAR INCENTIVE MARKETING, INC. (the
"Lender"), as of the date hereof that:
(a) The Adjusted Net Worth of The Borrower and its subsidiaries as at
________ ___, 200__ (the "Reporting Date"), was not less than the minimum
required for such date ($____) by Section 6.01(b) of the Loan Agreement, with
compliance calculated as follows:
(i) Aggregate amount of all assets and properties on the Reporting Date
$_________
(ii) Minus the Adjusted Liabilities of the Loan Parties and their
Subsidiaries as at the Reporting Date: [$_________]
(The Adjusted Debt of the Loan Parties and their Subsidiaries
as at the Reporting Date included in the above was $________)
(iii) Adjusted Net Worth (actual) as at the Reporting Date $_________
(b) The Adjusted EBITDA of The Borrower and its subsidiaries for the Computation
Period ending on the Reporting Date was not less than the minimum required for
such date ($ ) by Section 6.01(c) of the Loan Agreement, with compliance
calculated as follows:
(i) Net Income (or Loss) of The Borrower and its subsidiaries for such
period $_________
(ii) Plus the sum of the following adjustments to the extent included in
determining such income:
(A) Consolidated extraordinary or unusual loss(es) $_________
(B) Consolidated interest expense $_________
(C) Total federal, state, local and foreign income and franchise taxes
accrued during such period $_________
(D) Consolidated Depreciation $_________
(E) Consolidated Amortization $_________
(iii) Total Additions to Income: (the sum of items (ii)(A) through (ii)(E))
$_________
(iv) Minus: Extraordinary or unusual gain(s) included in determining such
income [$_________]
(v) Adjusted EBITDA (item (i) plus item (iii) minus item (iv)) $_________
SPAR ESOP Term Loan Agreement
F-2
(c) The Adjusted Debt Service Ratio of The Borrower and its
subsidiaries for the Computation Period ending on the Reporting Date was not
less than the minimum required for such date ( :1.00) by Section 6.01(d) of the
Loan Agreement, with compliance calculated as follows:
(i) Adjusted EBITDA for such period (from (b)(iv) above): $_________
(ii) Adjusted Debt Service for such period, consisting of the sum of the
following:
(A) Interest expense (from (b)(ii)(B) above): $_________
(B) Principal payments on Indebtedness for such period: $_________
(C) Consolidated capitalized lease payments for such period $_________ (to
the extent not already included in (A) or (B))
(D) All other payments with respect to Indebtedness during such period,
including (without limitation) all commissions, discounts and other
fees and charges owed with respect to any and all commitments, lines
of credit, banker's acceptances, letters of credit, and interest rate
protection, foreign currency exchange, or other interest or exchange
rate swap or hedging agreements or arrangements (to the extent not
already included in (A), (B) or (C)) $_________
(iii) Total Adjusted Debt Service (the sum of (ii)(A) through (ii)(D))
$_________
(iv) Adjusted Lease Service for such period $_________
(v) Adjusted Debt Lease Service for such period (the sum of (iii) and
(iv)) $_________
(vi) Adjusted Debt Service Ratio (the ratio of (i) to (v) ) ______:1.00
(d) The Adjusted Debt to EBITDA Ratio of The Borrower and its
subsidiaries for the Computation Period ending on the Reporting Date was not
less than the minimum required for such date ( :1.00) by Section 6.01(e) of the
Loan Agreement, with compliance calculated as follows:
(i) Adjusted Debt at the end of such period for such period (from (a)(iii)
above): $_________
(ii) Adjusted EBITDA for such period (from (b)(v) above): $_________
(iii) Adjusted Debt to EBITDA Ratio (the ratio of (i) to (ii)) ______:1.00
(e) The Adjusted Capital Expenditures of The Borrower and its
subsidiaries for the fiscal quarter ended on such Reporting Date was $_______
____, which did not exceed the maximum permitted for such quarter ($_____) by
Section 6.01(f) of the Loan Agreement.
(f) The Adjusted Lease Service of The Borrower and its subsidiaries
for the fiscal quarter ended on such Reporting Date was $_______ ____, which did
not exceed the maximum permitted for such quarter ($ ) by Section 6.01(g) of the
Loan Agreement.
(g) The consolidated Selling, General and Administrative Expenses of
The Borrower and its subsidiaries (inclusive of sales commission but excluding
tax deductible pension payments to the ESOP Trust) for the fiscal quarter ended
on such Reporting Date was ______% of their total consolidated revenue for such
quarter, which did not exceed the maximum permitted for such quarter ( %) by
Section 6.01(a) of the Loan Agreement.
(h) The Borrower and its subsidiaries incurred consolidated purchase
money Indebtedness in the purchase of Equipment and capitalized leases
constituting Indebtedness that aggregated $ during the _______ month period
ended on the Reporting Date, which did not exceed the maximum permitted for such
period ($________) by Section 6.02(a)(iii) of the Loan Agreement.
SPAR ESOP Term Loan Agreement
F-3
(i) Each of the representations, warranties, acknowledgements and
certifications of each of the Loan Parties and each Surety set forth in the Loan
Agreement and other Loan Instruments are true and correct in all material
respects with the same effect as though those representations and warranties had
been made on and as of the date hereof.
(j) No Default or Event of Default has occurred and is continuing,
excluding, however, those events subject to an express written waiver or consent
from the Lender, if any.
(k) No event or events have occurred that individually or in the
aggregate could have, or since the date of the Agreement has had, a Material
Adverse Effect.
(l) The information set forth in the Secretary's or Officer's
Certificate most recently delivered to the Lender respecting (among other
things) the authorizing resolutions, organizational and governing documents and
the incumbency of the officers of each of the Loan Parties and each Surety is
true and complete as if those certificates had been delivered on and as of the
date hereof.
(m) There are no actions, suits or proceedings pending or, to the best
knowledge of the undersigned, threatened or contemplated by any Person for the
liquidation or dissolution of any Loan Party or Surety or otherwise threatening
their respective existences or challenging or calling into question the power or
authority of any Loan Party or Surety to execute or deliver any Loan Instrument
to which it is or will be a party or to perform any of its obligations
thereunder.
(n) The Obligations of the Borrower under the Loan Agreement, Notes
and other Loan Instruments and the obligations of each other Loan Party and
Surety under its Loan Instruments (i) are not subject to any defense,
counterclaim, setoff, right of recoupment, abatement, reduction or other claim
or determination against the Lender or any other Person and (ii) remain and are
currently in full force and effect, enforceable against them in accordance with
their respective terms and provisions.
Capitalized terms and non-capitalized words and phrases used and not
otherwise defined in this Certificate shall have the meanings respectively
assigned to them in the Loan Agreement, except that certain terms refer to the
applicable captions or headings of the financial statements and reports of The
Borrower and its subsidiaries. This Certificate may be relied upon by the
successors, assigns and participants of the Lender and by counsel to the Lender
in giving any opinion or advice requested of such counsel.
------------------------------------
(SIGNATURE)
DATE SIGNED: ____________ __, 200__
SPAR ESOP Term Loan Agreement
F-4