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EXHIBIT 10.27
U.S. $150,000,000
SECURED CREDIT AGREEMENT,
dated as of March 14, 1997
among
PROSOURCE RECEIVABLES CORPORATION,
as Borrower,
and
PROSOURCE SERVICES CORPORATION,
as Servicer,
and
VARIOUS FINANCIAL INSTITUTIONS,
as Lenders,
and
THE BANK OF NOVA SCOTIA,
as Issuer, as Swingline Bank and
as Administrative Agent for the Lenders
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TABLE OF CONTENTS
Page
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I DEFINITIONS AND ACCOUNTING TERMS................................. 2
1.1. Defined Terms.............................................. 2
1.2. Use of Defined Terms....................................... 26
1.3. Cross-References........................................... 26
1.4. Accounting and Financial Determinations.................... 26
II COMMITMENTS, BORROWING PROCEDURES AND NOTE....................... 27
2.1. Commitments................................................ 27
2.1.1. Conditions Precedent to Credit
Extensions......................................... 27
2.2. Reduction of Commitment Amounts............................ 28
2.3. Borrowing Procedure........................................ 28
2.4. Continuation and Conversion Elections...................... 29
2.5. Funding.................................................... 29
2.6. Note....................................................... 29
2.7. Swingline Loans............................................ 30
2.7.1. Borrowing Procedures for Swingline
Loans............................................... 30
2.7.2. Swingline Note...................................... 30
2.7.3. Repayment of Swingline Loans........................ 30
2.8. Letter of Credit Issuance Procedures....................... 31
2.8.1. Other Lenders' Participation........................ 32
2.8.2. Disbursements....................................... 32
2.8.3. Reimbursement....................................... 33
2.8.4. Deemed Disbursements................................ 33
2.8.5. Nature of Reimbursement Obligations................. 34
2.9. Extension of Scheduled Maturity Date....................... 35
2.9.1. Request for Extension of Scheduled
Maturity Date....................................... 35
2.9.2. Consent to Extension of Scheduled
Maturity............................................ 35
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES....................... 36
3.1. Repayments and Prepayments................................. 36
3.2. Interest Provisions........................................ 37
3.2.1. Rates............................................... 37
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TABLE OF CONTENTS
(continued)
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3.2.2. Post-Maturity Rates................................. 37
3.2.3. Payment Dates....................................... 38
3.3. Fees....................................................... 38
3.3.1. Commitment Fee...................................... 38
3.3.2. Letter of Credit Fee................................ 39
IV CERTAIN LIBO RATE AND OTHER PROVISIONS........................... 39
4.1. LIBO Rate Lending Unlawful................................. 39
4.2. Deposits Unavailable....................................... 39
4.3. Increased LIBO Rate Loan Costs, etc........................ 40
4.4. Funding Losses............................................. 40
4.5. Increased Capital Costs.................................... 40
4.6. Taxes...................................................... 41
4.7. Payments, Computations, etc................................ 44
4.8. Sharing of Payments........................................ 45
4.9. Setoff..................................................... 45
4.10. Mitigation................................................ 46
4.11. Replacement Lender........................................ 46
4.12. Use of Proceeds........................................... 47
V CONDITIONS TO BORROWING AND ISSUANCE OF LETTERS OF
CREDIT........................................................... 47
5.1. Initial Borrowing.......................................... 47
5.1.1. No Material Adverse Change.......................... 47
5.1.2. Resolutions, etc.................................... 47
5.1.3. Delivery of Notes................................... 48
5.1.4. Security Agreement.................................. 48
5.1.5. Opinions of Counsel................................. 49
5.1.6. Closing Fees, Expenses, etc......................... 49
5.1.7. Organic Documents................................... 49
5.1.8. Purchase Agreement.................................. 49
5.1.9. Fee Letter.......................................... 49
5.1.10. Powers of Attorney................................. 49
5.1.11. Account Agreements................................. 49
5.1.12. Payment of Outstanding Indebtedness,
etc................................................ 50
5.1.13. Originator Credit Facility
Documentation...................................... 50
5.1.14. Borrowing Base Report and Settlement
Statement.......................................... 50
5.1.15. Other Documentation................................ 50
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TABLE OF CONTENTS
(continued)
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5.2. All Credit Extensions...................................... 50
5.2.1. Compliance with Warranties, No
Default, etc........................................ 51
5.2.2. Credit Extension.................................... 51
VI REPRESENTATIONS AND WARRANTIES................................... 51
6.1. Representations and Warranties of Borrower................. 51
6.1.1. Organization, etc................................... 51
6.1.2. Due Authorization, Non-Contravention,
etc................................................. 52
6.1.3. Government Approval, Regulation, etc.
.................................................. 52
6.1.4. Validity, etc....................................... 52
6.1.5. Financial Information............................... 52
6.1.6. No Material Adverse Change.......................... 53
6.1.7. Litigation, Labor Controversies, etc.
.................................................. 53
6.1.8. Subsidiaries........................................ 53
6.1.9. Corporate Names..................................... 53
6.1.10. Taxes.............................................. 53
6.1.11. Pension and Welfare Plans.......................... 53
6.1.12. Capital Stock...................................... 54
6.1.13. Regulations G, T, U and X.......................... 54
6.1.14. Accuracy of Information............................ 54
6.1.15. Eligible Receivables............................... 54
6.1.16. Security Interest.................................. 54
6.1.17. Material Contracts................................. 55
6.1.18. Valid Transfer; Ownership of
Receivables........................................ 55
6.1.19. Principal Place of Business........................ 55
6.1.20. Lock-Box Banks and Lock-Box Accounts.
.................................................. 55
6.1.21. Proceeds........................................... 55
6.2. Representations and Warranties of Servicer................. 55
6.2.1. Organization, etc................................... 55
6.2.2. Due Authorization, Non-Contravention,
etc................................................. 56
6.2.3. Government Approval, Regulation, etc.
.................................................. 56
6.2.4. Validity, etc....................................... 56
6.2.5. Financial Information............................... 56
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TABLE OF CONTENTS
(continued)
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6.2.6. No Material Adverse Change.......................... 57
6.2.7. Litigation, Labor Controversies, etc.
.................................................. 57
6.2.8. Accuracy of Information............................. 57
6.2.9. Eligible Receivables................................ 57
6.2.10. Credit and Collection Policy....................... 57
VII COVENANTS........................................................ 57
7.1. Affirmative Covenants of the Borrower...................... 57
7.1.1. Financial Information, Reports,
Notices, etc........................................ 58
7.1.2. Compliance with Laws, etc........................... 59
7.1.3. Offices, Name Changes, Etc.......................... 60
7.1.4. Collection, Liquidation and Lock-Box
Agreements.......................................... 60
7.1.5. Deposits to Lock-Box Accounts....................... 61
7.1.6. Security Interest, Etc.............................. 61
7.2. Negative Covenants of the Borrower......................... 61
7.2.1. Business Activities................................. 61
7.2.2. Indebtedness........................................ 61
7.2.3. Liens, Etc.......................................... 61
7.2.4. Extension or Amendment of Receivables
.................................................. 62
7.2.5. Financial Condition................................. 62
7.2.6. Restricted Payments, etc............................ 62
7.2.7. Modification of Credit and Collection
Policy.............................................. 63
7.2.8. Mergers, Acquisitions, Sales, etc................... 63
7.2.9. Amendments to Certain Documents..................... 64
7.2.10. Separate Corporate Existence....................... 64
7.3. Affirmative Covenants of the Servicer...................... 67
7.3.1. Compliance with Laws, etc........................... 67
7.3.2. Deposits to Lock-Box Accounts....................... 68
7.4. Negative Covenants of the Servicer......................... 68
7.4.1. Extension or Amendment of Receivables
.................................................. 68
7.4.2. Modification of Credit and Collection
Policy.............................................. 68
7.4.3. Amendments to Certain Documents..................... 68
VIII ADMINISTRATION AND COLLECTION.................................... 68
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TABLE OF CONTENTS
(continued)
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8.1. Designation of the Servicer................................ 68
8.2. Duties of Servicer......................................... 69
8.3. Rights on Servicer Transfer Event.......................... 72
8.4. Responsibilities of the Borrower........................... 73
8.5. Audits..................................................... 73
8.6. Application of Collections................................. 74
8.7. Servicing Fee.............................................. 74
8.8. Servicer Indemnification................................... 74
IX EVENTS OF DEFAULT AND THEIR EFFECT............................... 75
9.1. Events of Default.......................................... 75
9.1.1. Non-Payment of Obligations.......................... 75
9.1.2. Non-Performance of Other Covenants and
Obligations......................................... 75
9.1.3. Breach of Representations and
Warranties.......................................... 75
9.1.4. Default on Originator Indebtedness.................. 75
9.1.5. Bankruptcy, Insolvency, etc......................... 76
9.1.6. Borrowing Base Deficiency........................... 76
9.1.7. Loss Reserve Ratio.................................. 76
9.1.8. Dilution Reserve Ratio.............................. 76
9.1.9. Collectability of Receivables....................... 76
9.1.10. IRS or PBGC Liens.................................. 76
9.1.11. Impairment of Security, etc........................ 76
9.1.12. Change in Control.................................. 76
9.1.13. Purchase and Sale Termination Event................ 76
9.2.1. Action if Bankruptcy................................ 77
9.2.2. Action if Other Event of Default.................... 77
X THE ADMINISTRATIVE AGENT......................................... 77
10.1. Actions................................................... 77
10.2. Funding Reliance, etc..................................... 78
10.3. Exculpation............................................... 78
10.4. Successor................................................. 79
10.5. Loans by Scotiabank....................................... 80
10.6. Credit Decisions.......................................... 80
10.7. Copies, etc............................................... 80
XI SETTLEMENT PROCEDURES............................................ 80
11.1. Settlement Procedures..................................... 80
11.2. Investments of Funds in Certain Accounts.................. 83
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TABLE OF CONTENTS
(continued)
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XII MISCELLANEOUS PROVISIONS........................................ 83
12.1. Waivers, Amendments, etc................................. 83
12.2. Notices.................................................. 85
12.3. Payment of Costs and Expenses............................ 85
12.4. Indemnification.......................................... 86
12.5. Survival................................................. 87
12.6. Severability............................................. 87
12.7. Headings................................................. 87
12.8. Execution in Counterparts, Effectiveness,
etc.......................................................87
12.9. Governing Law; Entire Agreement.......................... 87
12.10. Successors and Assigns................................... 88
12.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes........................ 88
12.11.1. Assignments.............................................. 88
12.11.2. Participations........................................... 90
12.12. Other Transactions....................................... 91
12.13. Execution on Behalf of Corporation....................... 91
12.14. Forum Selection and Consent to Jurisdiction...............91
12.15. Waiver of Jury Trial..................................... 92
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SCHEDULE I - Disclosure Schedule
SCHEDULE II - Credit and Collection Policies
SCHEDULE III - Addresses; Wire Instructions
EXHIBIT A-1 - Form of Note
EXHIBIT A-2 - Form of Swingline Note
EXHIBIT B-1 - Form Borrowing Base Report
EXHIBIT B-2 - Form of Settlement Statement
EXHIBIT C-1 - Form of Borrowing Request
EXHIBIT C-2 - Form of Letter of Credit Issuance Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Lender Assignment Agreement
EXHIBIT F - Forms of Opinions of Counsel to the Borrower
EXHIBIT G - Form of Purchase Agreement
EXHIBIT H - Franchisors
EXHIBIT I - Form of Security Agreement
EXHIBIT J - Form of Power of Attorney
EXHIBIT K - Extension Request
EXHIBIT L - [Reserved]
EXHIBIT M - Form of Collection Account Agreement
EXHIBIT N - Form of Liquidation Account Agreement
EXHIBIT O - Form of Lock-Box Agreement
EXHIBIT P - List of Lock-Box Accounts and Lock-Box Banks
EXHIBIT Q - Franchisor Concentration Limits
EXHIBIT R - Obligor Concentration Limits
EXHIBIT S - Form of Letter of Credit
EXHIBIT T - Corporate Names||
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SECURED CREDIT AGREEMENT
THIS SECURED CREDIT AGREEMENT, dated as of March 14, 1997, is among
PROSOURCE RECEIVABLES CORPORATION, a Delaware corporation (the "Borrower"),
PROSOURCE SERVICES CORPORATION, a Delaware corporation ("ProSource"), as initial
Servicer (the "Servicer"), the various financial institutions as are or may
become parties hereto as Lenders (collectively, the "Lenders"), and THE BANK OF
NOVA SCOTIA ("Scotiabank"), as Lender and as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), as issuer of letters of
credit hereunder (in such capacity, the "Issuer") and as the swingline bank (in
such capacity, the "Swingline Bank").
W I T N E S S E T H:
WHEREAS, the Borrower is a wholly-owned, special purpose subsidiary of
ProSource, formed for the purpose of purchasing all trade receivables originated
or acquired by ProSource;
WHEREAS, the Borrower desires to obtain:
(a) from the Lenders, a Commitment (to include availability for Revolving
Loans and participations in Letters of Credit) pursuant to which borrowings of
Revolving Loans, in a maximum aggregate principal amount (together with all
Swingline Loans and Letter of Credit Outstandings) not to exceed the then
existing Commitment Amount, will be made to the Borrower from time to time prior
to the Commitment Termination Date;
(b) from the Issuer (and participated in by the Lenders), a Commitment
pursuant to which the Issuer will issue Letters of Credit for the account of the
Borrower from time to time prior to the Commitment Termination Date in a maximum
aggregate Stated Amount at any one time outstanding not to exceed $30,000,000
(provided that the aggregate outstanding principal amount of Revolving Loans,
Swingline Loans and Letter of Credit Outstandings at any time shall not exceed
the then existing Commitment Amount); and
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(c) from the Swingline Bank, a Commitment pursuant to which borrowings of
Swingline Loans in an aggregate outstanding principal amount not to exceed
$15,000,000 will be made from time to time prior to the Commitment Termination
Date (provided that the aggregate outstanding principal amount of such Swingline
Loans, Revolving Loans and Letter of Credit Outstandings at any time shall not
exceed the then existing Commitment Amount).
WHEREAS, the Lenders, the Issuer and the Swingline Bank are willing, on
the terms and subject to the conditions hereinafter set forth, to extend such
Commitments, issue (or participate in) such Letters of Credit and make such
Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used by Borrower
to purchase Receivables from ProSource;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms when used in this
Agreement, including the preamble and recitals, shall, except where the context
otherwise requires, have the following meanings:
"Administrative Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Administrative
Agent pursuant to Section 10.4.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power (i)
to vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the election of directors or managing general partners or (ii)
to direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.
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"Agent's Account" means the account from time to time designated in
writing by the Administrative Agent as the "Agent's Account."
"Aggregate Outstanding Amount" shall equal the sum of (i) the aggregate
principal balance of all Loans (including all Swingline Loans) and (ii) the
Letter of Credit Outstandings.
"Agreement" means, on any date, this Secured Credit Agreement as
originally in effect on the Effective Date and as thereafter from time to time
amended, supplemented, amended and restated, or otherwise modified and in effect
on such date.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of
(a) the rate of interest most recently announced by the
Administrative Agent at its Domestic Office as its "prime" or "reference"
rate for United States loans made in the United States; and
(b) the Federal Funds Rate most recently determined by the
Administrative Agent plus 0.50% per annum.
The Alternate Base Rate is not necessarily the lowest rate of interest
determined by the Administrative Agent in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Administrative Agent will give notice promptly to the Borrower
and the Lenders of changes in the Alternate Base Rate.
"Alternate Base Rate Cost Reserve" means the product as of the most recent
Month End Date of (i) the sum of (A) the product of (I) 1.3, multiplied by (II)
the Alternate Base Rate, plus (B) 2.00%, multiplied by (ii) a fraction the
numerator of which is 2 multiplied by the Days Sales Outstanding for the
preceding Fiscal Month and the denominator of which is 365 or, in the case of a
leap year, 366.
"Amortization Day" means any day on or after the Commitment Termination
Date.
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"Annual Transfer Agreement" means an annual transfer agreement between
Borrower and Newco conforming to the requirements therefor set forth in Section
7.2.8 hereof.
"Assignee Lender" is defined in Section 12.11.1.
"Authorized Officer" means, relative to the Borrower and ProSource, those
of its employees or officers whose signatures and incumbency shall have been
certified to the Administrative Agent and the Secured Parties pursuant to
Section 5.1.2.
"Available Commitment Amount" means (a) the Commitment Amount minus (b)
the sum of the Letter of Credit Outstandings and the outstanding principal
balance of all Loans (including all Swingline Loans).
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" is defined in the preamble.
"Borrower Note" means the promissory note of the Borrower payable to the
Originator in connection with the purchase of Receivables under the Purchase
Agreement.
"Borrowing" means the Loans of the same Type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.3.
"Borrowing Base" on any day shall equal the product of (A) the Net
Receivables Pool Balance multiplied by (B) (100% - Total Reserve Percentage).
"Borrowing Request" means a loan request duly executed by an Authorized
Officer of the Borrower, substantially in the form of Exhibit C-1.
"Business Day" means (i) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York; and (ii) relative to any LIBO Rate Loans, any day which is a
Business Day described in
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clause (i) above and which is also a day on which dealings in Dollars are
carried on in the London interbank market.
"Canadian Dollar FX Reserve Percentage" means, at any time, the product of
(a) the FX Factor and (b) a fraction (expressed as a percentage) having (i) a
numerator equal to the aggregate Outstanding Balance of all Eligible Receivables
which were payable in Canadian dollars as of the most recent Month End Date and
(ii) a denominator equal to the aggregate Outstanding Balance of all Eligible
Receivables as of the most recent Month End Date; provided, however, that if the
percentage equivalent of the fraction set forth in clause (b) is less than or
equal to 3.00%, the Canadian Dollar FX Reserve Percentage shall be 0%.
"Carrying Costs" is defined in Section 11.1(b)(i).
"Change in Control" means
(a) the failure of Onex Corporation, a corporation organized under
the laws of Ontario, Canada, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, individually or
collectively, at any time directly or indirectly to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, as amended) on a fully diluted basis a sufficient number of
shares of the capital stock of ProSource, Inc., a Delaware corporation,
having (x) at least 51% of the voting power of all issued and outstanding
shares of voting capital stock of ProSource, Inc. or (y) the right to
exercise voting power for the election of at least a majority of the board
of directors of ProSource, Inc.; or
(b) the failure of the ProSource, Inc. at any time to directly own
beneficially and of record on a fully diluted basis 100% of the issued and
outstanding shares of capital stock of ProSource (whether voting or
non-voting); or
(c) the failure of ProSource at any time to directly or indirectly
own beneficially and of record on a fully diluted basis 100% of the issued
and outstanding shares of capital stock of the Borrower (whether voting or
non-voting).
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"Code" means the Internal Revenue Code of 1986, and the regulations
thereunder, in each case as amended, reformed or otherwise modified from time to
time.
"Collateral" means, collectively, the "Collateral" as defined
in the Security Agreement.
"Collection Account" means that certain bank account numbered 558734
maintained at the First National Bank of Chicago which is in the Borrower's name
and governed by the Collection Account Agreement.
"Collection Account Agreement" means a letter agreement among the
Administrative Agent, the Borrower and the Collection Account Bank,
substantially in the form of Exhibit M, as amended, supplemented, restated or
otherwise modified from time to time.
"Collection Account Bank" means the bank holding the Collection Account.
"Collections" means all payments received (i) by the Borrower, the
Originator or the Servicer with respect to the Pool Receivables, including any
proceeds of the sale or other dispositions of any collateral securing any
thereof, and other payments otherwise applied in the ordinary course of business
to amounts owed under such Pool Receivables and (ii) by the Borrower from the
Originator under Section 3.4 of the Purchase Agreement.
"Commitment" means, as the context may require, (i) a Lender's obligation
(a) to participate in Letters of Credit and (b) to make Revolving Loans, (ii)
the Issuer's obligation to issue Letters of Credit and (iii) the Swingline
Bank's obligation to make Swingline Loans.
"Commitment Amount" means $150,000,000, as such amount may be reduced from
time to time pursuant to Section 2.2.
"Commitment Fee" is defined in Section 3.3.1.
"Commitment Termination Date" means the earliest of
(a) the Scheduled Maturity Date;
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(b) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2;
(c) the date on which any Event of Default of the type described in
Section 9.1.5 occurs; and
(d) the date designated by the Required Lenders in a writing
delivered to the Borrower following the occurrence of any Event of Default
other than the type described in Section 9.1.5.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person;
provided, that the term "Contingent Liability" shall not include guarantees of
payment delivered by ProSource in respect of loans or advances made to employees
of ProSource or its Subsidiaries the proceeds of which are used to purchase
capital stock of ProSource, Inc. where (x) the lender has recourse to such
capital stock and (y) the amount loaned is not in excess of 67% of the fair
market value of such capital stock. The amount of any Person's obligation under
any Contingent Liability shall (subject to any limitation set forth therein) be
deemed to be the outstanding principal amount (or maximum principal amount, if
larger) of the debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion duly executed by an Authorized Officer of the Borrower, substantially
in the form of Exhibit D.
"Contract" means, with respect to any Receivable, any and all contracts,
understandings, instruments, agreements, invoices, notes, or other writings
pursuant to which such Receivable arises or which evidences such Receivable or
under which an Obligor
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becomes or is obligated to make payment in respect of such Receivable.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or
ProSource, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"Covered Taxes" means any Taxes other than franchise or capital taxes,
branch profits taxes and taxes on or measured by net income or net receipts
imposed with respect to any Secured Party by reason of a connection between such
Secured Party and the relevant taxing jurisdiction (other than a connection
arising solely from such Person having executed, delivered or performed its
obligations or received any payment under, or enforced any right in connection
with, this Agreement, a Letter of Credit, the Swingline Note or any Note).
Covered Taxes shall not include Taxes to which, and to the extent that, the
Administrative Agent or the relevant Secured Party, as the case may be, is
subject prior to entering into this Agreement, and which would be imposed upon
the Administrative Agent or such Secured Party, as the case may be, as a result
of a connection between such Person and the relevant taxing authority (other
than a connection arising solely from such Person having executed, delivered,
performed its obligations or received any payment under, or enforced any right
in connection with, this Agreement, a Letter of Credit, the Swingline Note or
any Note).
"Credit Extension" means, as the context may require,
(a) the making of a Revolving Loan by a Lender;
(b) the making of a Swingline Loan by the Swingline Bank; or
(c) the issuance of any Letter of Credit, or the extension of any
Stated Expiry Date of any existing Letter of Credit, by the Issuer.
"Credit and Collection Policy" means those credit and collection policies
and practices relating to the Receivables
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described in Schedule II, as modified in accordance with Section 7.2.7.
"Days Sales Outstanding" for any Fiscal Month equals the product of (a)
the aggregate Outstanding Balance of all Pool Receivables as of the related
Month End Date divided by the Monthly Sales for such Fiscal Month, multiplied by
(b) 30 days.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Default Ratio" means, at any time, a fraction (expressed as a percentage)
having (a) a numerator that is the sum of (i) the aggregate Outstanding Balance
of Pool Receivables that remained outstanding 61 to 90 days after their
respective invoice dates, as determined as of the most recent Month End Date,
plus (ii) the aggregate Outstanding Balance of Pool Receivables that were
written off as uncollectible during the most recently ended Fiscal Month and (b)
a denominator that is the Monthly Sales for the Fiscal Month that occurred two
Fiscal Months prior to the most recently ended Fiscal Month.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid
for more than 60 days past invoice date;
(ii) as to which an Event of Bankruptcy has occurred with
respect to the Obligor thereof or any other Person obligated thereon
or owning any Related Security in respect thereof; or
(iii) which, consistent with the Credit and Collection Policy,
should be written off the Borrower's books as uncollectible.
"Dilution" means, for any period, the aggregate net reduction in the
aggregate Outstanding Balance of all Receivables during such period as a result
of discounts, incorrect ▇▇▇▇▇▇▇▇, setoffs, offsets, credits, rebates,
cooperative advertising expenses, allowances, chargebacks, returned, rejected,
defective or
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repossessed goods, allowances for early payments and any other deductions
unrelated to the inability of the Obligors to pay such Receivables.
"Dilution Horizon Variable" means, at any time, the product of (i) .56
multiplied by (ii) a fraction having (a) a numerator equal to the sum of the
Monthly Sales for the preceding Fiscal Month and (b) a denominator equal to the
Net Receivables Pool Balance as of the most recent Month End Date; provided,
however, that the decimal used in clause (i) above shall be revised following
the recalculation in the accountant's report delivered pursuant to Section
8.2(k) to equal the fraction having (a) a numerator equal to 12 plus the Sample
Dilution Horizon and (b) a denominator equal to 30 days.
"Dilution Ratio" means, at any time, a fraction (expressed as a
percentage) having (a) a numerator equal to the aggregate amount of Dilution on
the Pool Receivables occurring during the most recent Fiscal Month, and (b) a
denominator equal to the Monthly Sales for the preceding Fiscal Month.
"Dilution Reserve Percentage" means, at any time, the greater of (a) 3% or
(b) the Dilution Reserve Ratio.
"Dilution Reserve Ratio" means, at any time, the result (expressed as a
percentage) calculated in accordance with the following formula:
{(2.00 x ADR) + [(HDR-ADR) x (HDR/ADR)]} x DHV
where:
ADR = the average of the Dilution Ratios for the 12
preceding Fiscal Months;
DHV = the Dilution Horizon Variable; and
HDR = the highest Dilution Ratio for any Fiscal Month
within the 12 preceding Fiscal Months.
"Disbursement" is defined in Section 2.8.2.
"Disbursement Date" is defined in Section 2.8.2.
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"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower or ProSource with the written consent of the Required
Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such below its name on Schedule III or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender to each other Person party hereto.
"Due Date Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid
for at least 31 days from the original due date for such payment;
(ii) as to which an Event of Bankruptcy has occurred with
respect to the Obligor thereof or any other Person obligated thereon
or owning any Related Security in respect thereof; or
(iii) which, consistent with the Credit and Collection Policy,
should be written off the Borrower's books as uncollectible.
"Effective Date" means March 14, 1997.
"Eligible Receivable" means, at any time, a Pool Receivable:
(a) the Obligor of which is a resident of the United States or a
resident of a province in Canada that has adopted the PPSA; provided,
however, that a Receivable the Obligor of which is a resident of a country
other than the United States or a province of Canada that has adopted the
PPSA shall be permitted provided that each Receivable is supported by a
letter of credit, in a face amount at least equal to the Outstanding
Balance of such Receivable issued (i) in favor of
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the Borrower, (ii) in a form reasonably acceptable to the Administrative
Agent and (iii) by a financial institution reasonably acceptable to the
Administrative Agent with a short-term unsecured credit rating of at least
"A-1" by S&P and "P-1" by ▇▇▇▇▇'▇, provided that all action reasonably
required by the Administrative Agent has been taken (including delivery of
the original of each letter of credit to the Administrative Agent) to give
the Administrative Agent for the benefit of the Secured Parties a
perfected security interest in such letter of credit and the proceeds
thereof.
(b) the Obligor of which is not an Affiliate of the Originator;
(c) the Obligor of which is not a government or governmental
subdivision or agency unless such Obligor and the related Receivable are
in compliance with the Assignment of Claims Act of 1940 and any similar
state or Canadian statutes;
(d) the Obligor of which is not the Obligor of Due Date Defaulted
Receivables in excess of 50% of the aggregate Outstanding Balance of all
Pool Receivables of such Obligor;
(e) which is not a Defaulted Receivable;
(f) as to which the related Contract requires payment (A) within 30
days of the invoice date or (B) later than 30 days but within 45 days of
the invoice date therefor, but only if the Outstanding Balance of such
Receivable, when taken together with the Outstanding Balance of all other
Pool Receivables having similar payment terms, does not exceed 30% of the
aggregate Outstanding Balance of all Eligible Receivables;
(g) which constitutes an "account" as defined in the U.C.C.;
(h) which is denominated and payable only in Dollars in the United
States or, if the Obligor thereof is a Canadian resident, denominated and
payable in Canadian dollars in Canada or the United States;
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(i) which is not subject to any dispute, offset, counterclaim,
defense or Lien (other than Permitted Liens); provided, however, that the
portion of such Receivable that is not subject to any such dispute,
offset, counterclaim or defense shall constitute an Eligible Receivable;
(j) which arises under a Contract which does not require
the consent of the related Obligor to be sold or assigned;
(k) with respect to which the Administrative Agent has not notified
the Borrower that such Receivable is not acceptable as an Eligible
Receivable hereunder or the related Obligor is not acceptable; provided,
however, that such notice shall be based on the reasonable discretion of
the Administrative Agent based on customary credit criteria for
securitization transactions;
(l) which was generated by the Originator in the ordinary course of
business and was sold to the Borrower pursuant to the Purchase Agreement
or which was generated by ProSource Distribution Services Limited in the
ordinary course of business, sold to the Originator pursuant to a purchase
agreement (which agreement, together with such related documents,
certificates and opinions reasonably requested by the Administrative
Agent, is in form and substance reasonably satisfactory to the
Administrative Agent) and sold to the Borrower pursuant to the Purchase
Agreement (including any Receivable which has been sold subsequently by
the Borrower to Newco pursuant to an Annual Transfer Agreement or which
has been sold subsequently to the Borrower from Newco pursuant to an
Annual Transfer Agreement);
(m) which satisfies all applicable requirements of the Credit and
Collection Policy;
(n) which arises under a Contract that, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the Obligor of such Receivable enforceable
against such Obligor in accordance with its terms;
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(o) which is not subject to any contingent performance requirements
of the Originator or ProSource Distribution Services Limited and which is
not subject to any "▇▇▇▇ and hold" arrangements;
(p) which has not been modified or restructured since its creation,
except to the extent permitted by Section 8.2(c);
(q) with regard to which the representations and warranties of the
Borrower in Section 6.1.18 are true and correct; and
(r) as to which the Administrative Agent, for the benefit of the
Secured Parties, has a valid and enforceable first priority perfected
security interest in the Receivable, the Related Security with respect
thereto and the Collections with respect thereto, in each case free and
clear of any Lien (other than Permitted Liens).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
"Existing Credit Agreement" means the Loan and Security Agreement, dated
as of March 31, 1995, as amended or modified on or prior to the date hereof,
among ProSource, ProSource Canada and BroMar Services, Inc., certain financial
institutions parties thereto, NationsBank of Georgia, N.A., The First National
Bank of Boston and Fleet Capital Corporation, as co-agents, and NationsBank of
Georgia, N.A., as administrative agent.
"Extension Request" means an Extension Request duly executed by an
Authorized Officer of the Borrower pursuant to Section 2.9, substantially in the
form of Exhibit K.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any
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court seeking the liquidation, reorganization, debt arrangement,
dissolution, winding up, or composition or readjustment of debts of such
Person, the appointment of a trustee, receiver, custodian, liquidator,
assignee, sequestrator or the like for such Person or all or substantially
all of its assets, or any similar action with respect to such Person under
any law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person shall
be entered in an involuntary case under the federal bankruptcy laws or
other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in writing its inability to, pay its debts generally as
they become due; or
(c) if a corporation or similar entity, its board of directors shall
vote to implement any of the foregoing.
"Event of Default" is defined in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to:
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York; or
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(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three federal funds brokers of
recognized standing selected by it.
"Fiscal Month" means the period of four or five consecutive weeks
beginning on the first day of a Fiscal Year of the Borrower and ending on the
last Saturday on or before the following January 31 and each period of four or
five consecutive weeks beginning on the Sunday following the end of the
preceding Fiscal Month and ending on the last Saturday on or before the last day
of the next calendar month (or of the same calendar month, if the first day of
the Fiscal Month was also the first day of a calendar month).
"Fiscal Quarter" means the period of three consecutive Fiscal Months
beginning on the first day of a Fiscal Year of the Borrower and each succeeding
consecutive period of three consecutive Fiscal Months.
"Fiscal Year" means each period of 52 or 53 consecutive weeks beginning on
the Sunday following the last Saturday in one calendar year and ending on the
last Saturday in the next calendar year; references to a Fiscal Year with a
number corresponding to any calendar year (e.g., the "1997 Fiscal Year") refer
to the Fiscal Year ending on the last Saturday in such calendar year.
"Franchisor" each franchise/concept listed on Exhibit H, as such Exhibit H
is updated from time to time by the Borrower.
"Franchisor Concentration Limit" for any Franchisor means the percentage
set forth opposite such Franchisor's rating on Exhibit Q.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"FX Factor" means 0.47.
"GAAP" is defined in Section 1.4.
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"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under currency exchange agreements, interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements,
and all other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as capitalized lease
liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of such
Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade payables arising in the ordinary
course of business), and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
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(g) all Contingent Liabilities of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner, except, with respect to any Person other than the Borrower, to
the extent said Indebtedness is by its terms nonrecourse to said Person.
"Indebtedness to be Paid" is defined in Section 5.1.12.
"Indemnified Liabilities" is defined in Section 12.4.
"Indemnified Parties" is defined in Section 12.4.
"Independent Director" is defined in Section 7.2.10(b).
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and shall end on (but exclude) the day which numerically corresponds to such
date one or two months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in either case as
the Borrower may select in its relevant notice pursuant to Section 2.3 or 2.4;
provided, however, that
(a) the Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates occurring on
more than nine different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period shall
end on the Business Day next preceding such numerically corresponding
day); and
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(d) no Interest Period may end later than the Scheduled Maturity
Date.
"IRS" means the Internal Revenue Service of the United States.
"Issuer" means ScotiaBank in its capacity as issuer of the
Letters of Credit.
"Law Change" is defined in Section 4.6(b).
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit E hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 2.1.
"Letter of Credit Fee" is defined in Section 3.3.2.
"Letter of Credit Commitment Subamount" means, on any date, $30,000,000,
as such amount may be reduced from time to time pursuant to Section 2.2.
"Letter of Credit Issuance Request" means a letter of credit request
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit C-2.
"Letter of Credit Outstandings" means, on any date, an amount equal to the
sum of (a) the then aggregate amount which is undrawn and available under all
issued and outstanding Letters of Credit, plus (b) the then aggregate amount of
all unpaid and outstanding Reimbursement Obligations.
"LIBO Rate" means, relative to any Interest Period for any LIBO Rate Loan,
the rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered in the London interbank market as at or
about 11:00 a.m., London, England time, two Business Days prior to the beginning
of such Interest Period for delivery on the first day of such Interest Period,
and in an amount approximately equal to the amount of such
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LIBO Rate Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Administrative Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Administrative Agent two Business Days before, the first day of such
Interest Period.
"LIBOR Cost Reserve" at any time means (a) if the product of 2 multiplied
by the Days Sales Outstanding for the preceding Fiscal Month is greater than 60
days, the product as of the most recent Month End Date of (i) the sum of (A) the
product of (I) 1.5 multiplied by (II) the LIBO Rate (Reserve Adjusted) for a
two-month Interest Period, plus (B) 2.55%, multiplied by (ii) a fraction, the
numerator of which is the product of 2 multiplied by the Days Sales Outstanding
for the preceding Fiscal Month and the denominator of which is 365, or in the
case of a leap year, 366 or (b) in all other cases, the product of (i) the LIBO
Rate (Reserve Adjusted) for a two-month Interest Period, plus 2.55%, multiplied
by (ii) a fraction, the numerator of which is 60 and the denominator of which is
365, or in the case of a leap year, 366.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its name on Schedule III or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such
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Lender to the Borrower and the Administrative Agent, whether or not outside the
United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period, the
reserve percentage (expressed as a decimal) equal to the maximum aggregate
reserve requirements (including all basic, emergency, supplemental, marginal and
other reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements as and when in effect) specified under
regulations issued from time to time by the F.R.S. Board and then applicable to
assets or liabilities consisting of and including "Eurocurrency Liabilities", as
currently defined in Regulation D of the F.R.S. Board, having a term
approximately equal or comparable to such Interest Period.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property, or other priority or preferential
arrangement of any kind or nature whatsoever, to secure payment of a debt or
performance of an obligation.
"Liquidation Account" means that certain bank account numbered ▇▇▇▇▇▇▇
maintained at The First National Bank of Chicago in the Borrower's name and
governed by the Liquidation Account Agreement.
"Liquidation Account Agreement" means a letter agreement among the
Administrative Agent, the Borrower and the Liquidation Account Bank,
substantially in the form of Exhibit N, as amended, supplemented, restated or
otherwise modified from time to time.
"Liquidation Account Bank" means the bank holding the Liquidation Account.
"Loan" means any loan made or deemed made by a Lender hereunder and any
Swingline Loan made by the Swingline Bank hereunder.
"Loan Document" means this Agreement, the Notes, the Swingline Note, the
Security Agreement, the Purchase Agreement, the Fee Letter, the Collection
Account Agreement, the Liquidation Account
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Agreement, the Lock-Box Agreements and each other document or instrument
executed in connection with any of the foregoing, but in any event excluding the
Originator Credit Facility and all documentation relating to the facility
provided therein.
"LOC Collateralization Account" means an interest-bearing account
established and maintained by the Administrative Agent for the deposit of funds
to collateralize Letter of Credit Outstandings.
"Lock-Box Account" means an account maintained at a bank or other
financial institution for the purpose of receiving Collections as listed on
Exhibit P.
"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit O, between the Borrower, the Administrative Agent and each Lock-Box
Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Loss Reserve Percentage" means, on any date, the greater of (i) the Loss
Reserve Ratio and (ii) 12%.
"Loss Reserve Ratio" means, at any time, the product (expressed as a
percentage) of (i) 2.00 multiplied by (ii) the highest three-month rolling
average of the Default Ratio for the preceding 12 Fiscal Months multiplied by
(iii) a fraction having (A) a numerator equal to the sum of (I) the Monthly
Sales for the two preceding Fiscal Months and (II) the product of the Monthly
Sales for the third preceding Fiscal Month and a fraction, the numerator of
which is 12 and the denominator of which is 30, and (B) a denominator equal to
the Net Receivables Pool Balance as of the most recent Month End Date.
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, financial condition, operations,
properties or prospects of any of the Borrower or ProSource and its
Subsidiaries taken as whole;
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(ii) the ability of any of the Borrower or ProSource to perform its
obligations under this Agreement or any other Loan Document to which it is
or becomes a party;
(iii) the enforceability of the Obligations of any of the Borrower
or ProSource under any Loan Document to which it is or becomes a party; or
(iv) the rights and remedies of the Administrative Agent or any
Secured Party under any Loan Document.
The parties hereto understand and agree that the termination of
ProSource's agreement to provide distribution services to Arby's restaurants
effective April 1, 1997 is not and shall not constitute an event that has a
Material Adverse Effect.
"Month End Date" means the last day of any Fiscal Month of the Borrower.
"Monthly Payment Date" means the 20th day of each Fiscal Month or, if any
such day is not a Business Day, the next succeeding Business Day.
"Monthly Sales" means, for any Fiscal Month, the product of (i) the
aggregate amount payable pursuant to invoices giving rise to Pool Receivables
that were generated during such Fiscal Month and (ii) if there are four weeks in
such Fiscal Month, a fraction, the numerator of which is 30 and the denominator
of which is 28 and if there are five weeks in such Fiscal Month, a fraction, the
numerator of which is 30 and the denominator of which is 35.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Net Receivables Pool Balance" means at any time an amount equal to the
aggregate Outstanding Balances of all Eligible Receivables, minus the sum of (a)
the aggregate amount by which the aggregate Outstanding Balances of the Eligible
Receivables of each Obligor exceeds the product of (i) the Obligor Concentration
Limit for such Obligor multiplied by (ii) the aggregate Outstanding Balances of
the Eligible Receivables, plus (b) the aggregate amount by which the aggregate
Outstanding Balances of all Eligible Receivables of each Franchisor exceeds the
product of (i) the
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Franchisor Concentration Limit for such Franchisor multiplied by (ii) the
aggregate Outstanding Balances of all Eligible Receivables, plus (c) the
aggregate amount by which the aggregate Outstanding Balances of all Eligible
Receivables payable in Canadian dollars exceeds the product of (i) 10%
multiplied by (ii) the aggregate Outstanding Balances of all Eligible
Receivables; provided, however, that the sum of amounts set forth in clauses (a)
- (c) shall be calculated by the Servicer in such order as will minimize
duplication.
"Net Worth" means, for any Person at any time, the sum of all amounts
which, in accordance with GAAP, would be included under shareholders' equity on
the most recently available consolidated balance sheet of such Person and its
Subsidiaries.
"Newco" is defined in Section 7.2.8.
"Non-U.S. Person" means any Person that is not a U.S. Person.
"Note" means a promissory note of the Borrower payable to any Lender, in
the form of Exhibit A hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Loans, and also means
all other promissory notes accepted from time to time in substitution therefor
or renewal thereof.
"Obligations" means all monetary obligations of the Borrower arising under
or in connection with this Agreement, the Notes, the Swingline Note and each
other Loan Document.
"Obligor" means each Person obligated to make payments with respect to any
Receivable, including any guarantor thereof.
"Obligor Concentration Limit" for any Obligor means the percentage set
forth opposite such Obligor's rating on Exhibit R.
"Organic Document" means, relative to any Person, as applicable, its
certificate of incorporation, by-laws, certificate of partnership, partnership
agreement, certificate of formation, limited liability agreement and all
shareholder agreements, voting trusts and similar arrangements applicable to any
of such Person's
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partnership interests, limited liability company interests or authorized shares
of capital stock.
"Originator" means ProSource, in its capacity as an originator and
seller/contributor of the Pool Receivables.
"Originator Credit Facility" means the Credit Agreement, dated as of March
14, 1997, among the Originator, certain financial institutions parties thereto
and The Bank of Nova Scotia, as administrative agent.
"Outstanding Balance" means, with respect to any Receivable, the then
unpaid principal balance thereof; provided, however, that if such Receivable is
denominated in Canadian dollars, the Outstanding Balance thereof shall be the
foregoing amount, converted to U.S. Dollars using the applicable exchange rate
published in The Wall Street Journal, Eastern Edition under the column entitled
"Key Currency Cross Rates," on the Business Day prior to the date of
determination.
"Parent Group" is defined in Section 7.2.10(b).
"Participant" is defined in Section 12.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which ProSource or any
corporation, trade or business that is, along with ProSource, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its name on Schedule III hereto or set forth in the Lender Assignment
Agreement, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreement(s)
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executed by such Lender and its Assignee Lender(s) and delivered pursuant to
Section 12.11.
"Permitted Investment" means, at any time:
(a) any direct obligation of (or guaranteed by) the United States
Government (or any agency or instrumentality thereof) maturing not more
than one week after such time;
(b) commercial paper, maturing not more than one week from the date
of issue, which is issued by any Lender or a corporation (other than an
Affiliate of any Obligor) organized under the laws of any state of the
United States or the District of Columbia, in each case rated A-1 by S&P
or P-1 by Moody's;
(c) any certificate of deposit or bankers acceptance, maturing not
more than one week after such time, which is issued by any bank organized
under the laws of the United States (or any State thereof or the District
of Columbia or Canada) which has (x) a credit rating of Aa or better from
Moody's or a comparable rating from S&P and (y) a combined capital and
surplus greater than $100,000,000 (or the Dollar equivalent thereto); or
(d) any repurchase agreement entered into with any Lender or
commercial banking institution of the stature referred to in clause (c)
which
(i) is secured by a fully perfected security interest in any
obligation of the type described in clause (a), and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation
of such commercial banking institution thereunder.
"Permitted Liens" means (i) Liens for taxes, assessments or other
governmental charges or levies not at any time delinquent or thereafter payable
without penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate
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reserves, if any, in accordance with GAAP shall have been set aside on the
applicable Person's books (ii) Liens arising under the Perishable Agricultural
Commodities Act, 1930, as amended, provided no claim or notice has been filed
under such Act with respect to
such Lien.
"Person" means any natural person, corporation, partnership, firm,
association, limited liability company, limited liability partnership, trust,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pool Receivable" means a Receivable acquired by the Borrower from the
Originator pursuant to the Purchase Agreement.
"PPSA" means (a) the personal property security legislation, as amended,
supplemented or replaced from time to time, as in effect in each Province of
Canada (other than Quebec, Newfoundland, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Nova Scotia),
(b) the Quebec Civil Code, as amended, supplemented or replaced from time to
time, as in effect in Quebec, and (c) the Assignment of Book Debts Act, as
amended, supplemented or replaced from time to time, as in effect in each of
Newfoundland, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Nova Scotia.
"ProSource" is defined in the preamble.
"Purchase Agreement" means the Purchase and Sale Agreement, dated as of
March 14, 1997, between the Borrower and the Originator, in substantially the
form of Exhibit G hereto, and any other Purchase and Sale Agreement subsequently
executed and delivered by the Borrower and the Originator, in substantially the
same form as Exhibit G hereto, as such agreements may be amended, supplemented
or otherwise modified from time to time.
"Quarterly Payment Date" means the last day of March, June, September and
December, or, if such day is not a Business Day, the next succeeding Business
Day.
"Receivable" means any right to payment from any Person, whether
constituting an account, chattel paper, an instrument or a
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general intangible (including any right to payment converted to a note),
originated by the Originator or acquired by the Originator from ProSource
Distribution Services Limited, arising from the sale of goods and services by
the Originator (or ProSource Distribution Services Limited), including the right
to payment of any interest or finance charges and other obligations of such
Person with respect thereto.
"Reimbursement Obligation" is defined in Section 2.8.3.
"Related Security" means, with respect to any Receivable: (a) all right,
title and interest in and to all Contracts that relate to such Receivable; (b)
all security interests or liens and property subject thereto from time to time
purporting to secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise; (c) all U.C.C. and PPSA
financing statements covering any collateral securing payment of such
Receivable; (d) all books and records relating to such Receivable; (e) all
guarantees and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Receivable whether pursuant to
the Contract related to such Receivable or otherwise; and (f) all rights and
claims of the Borrower with respect to such Receivable pursuant to the Purchase
Agreement.
"Required Lenders" means, at any time, Lenders holding at least 51% of the
then aggregate outstanding principal amount of the Loans (it being understood
that if any Swingline Loan is outstanding, each Lender shall be deemed to hold
its Percentage thereof), or, if no such principal amount is then outstanding,
Lenders having at least 51% of the Commitments of the Lenders.
"Restricted Payment" is defined in Section 7.2.6.
"Revolving Loans" mean all Loans other than Swingline Loans.
"Sample Dilution Horizon" is defined in Section 8.2(k).
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
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"Scheduled Maturity Date" means March 14, 2002, as such date may be
extended pursuant to Section 2.9.
"Secured Parties" means the Lenders, the Swingline Bank, the Issuer and
the Administrative Agent.
"Security Agreement" means the Security Agreement executed and delivered
by the Borrower substantially in the form of Exhibit I hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Servicer" is defined in Section 8.1.
"Servicer Indemnified Liabilities" is defined in Section 8.8.
"Servicer Indemnified Parties" is defined in Section 8.8.
"Servicer Transfer Event" is defined in Section 8.1(b).
"Servicing Fee" is defined in Section 8.7.
"Servicing Fee Reserve Percentage" at any time means the product
(expressed as a percentage) of (i) a fraction, the numerator of which is the
Outstanding Balance of all Pool Receivables as of the most recent Month End Date
and the denominator of which is the Net Receivables Pool Balance as of the most
recent Month End Date, multiplied by (ii) 1.00%, multiplied by (iii) a fraction,
the numerator of which is 60 and the denominator of which is 365 or, in the case
of a leap year, 366.
"Specified Net Worth Level" shall mean, for any date, the greater of: (a)
the level set forth with respect to such date in Section 7.2.4 of the Originator
Credit Facility and (b) at any time during any Fiscal Quarter of ProSource,
commencing with the second Fiscal Quarter of Fiscal Year 1997, an amount equal
to the sum of (i) $70,000,000, plus (ii) an amount equal to 50% of the sum of
the Net Income (as defined in the Originator Credit Facility on the Effective
Date) for each Fiscal Quarter, commencing with the second Fiscal Quarter of
Fiscal Year 1997 and ending with the last full Fiscal Quarter ending on or prior
to any date of measurement, in which Net Income (as defined in the Originator
Credit Facility on the Effective Date) exceeded $0 plus (iii) an amount equal to
50%
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of the aggregate value of capital contributions made to the equity of ProSource
since the Effective Date (excluding capital contributions made expressly and
solely for the purpose of curing an Event of Default under the Originator Credit
Facility).
"Stated Amount" of each Letter of Credit means the total amount available
to be drawn under such Letter of Credit.
"Stated Expiry Date" is defined in Section 2.8.
"Subsidiary" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"Successor Notice" is defined in Section 8.1(b).
"Swingline Bank" means Scotiabank in its capacity as swingline
lender hereunder.
"Swingline Commitment Subamount" means, on any date, $15,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Swingline Loan" means a Loan made available to the Borrower by the
Swingline Bank pursuant to Section 2.7 hereof.
"Swingline Note" means a promissory note, in substantially the form of
Exhibit A-2, duly executed by the Borrower and payable to the order of the
Swingline Bank in the amount of the Swingline Commitment Subamount, including
any amendment, modification, renewal or replacement of such note.
"Taxes" means any present or future income, excise, stamp or franchise
taxes and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing
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jurisdiction, and in each case any interest, additions to tax, penalties or
additional amounts payable with respect thereto.
"Total Reserve Percentage" at any time equals the sum of (i) the Loss
Reserve Percentage, (ii) Dilution Reserve Percentage, (iii) the Servicing Fee
Reserve Percentage, (iv) the Yield Reserve Percentage and (v) the Canadian
Dollar FX Reserve Percentage.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"United States" or "U.S." means the United States of America, its fifty
states, Puerto Rico and the District of Columbia.
"U.S. Person" means any Person that is a "United States person" within the
meaning of Section 7701(a)(30) of the Code (or any applicable successor
provision).
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
"Yield Reserve Percentage" at any time means the product (expressed as a
percentage) of (i) a fraction, the numerator of which is the Commitment Amount
and the denominator of which is the Net Receivables Pool Balance as of the most
recent Month End Date, multiplied by (ii) the greater at such time of (A) the
LIBOR Cost Reserve and (B) the Alternate Base Rate Cost Reserve.
SECTION 1.2. Use of Defined Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural includes the
singular, words importing one gender include the other gender, references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form, references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement, references to Persons include their permitted successors and assigns,
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
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Unless otherwise defined or the context otherwise requires, terms for which
meanings are provided in this Agreement shall have such meanings when used in
any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article, Section or
Exhibit are references to such Article, Section or Exhibit of this Agreement or
such other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section, Exhibit or definition to any clause are
references to such clause of such Article, Section, Exhibit or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made in accordance with those generally accepted accounting
principles ("GAAP") applied in the preparation of the financial statements
referred to in Section 6.2.5. Unless otherwise expressly provided, all financial
covenants and defined financial terms shall be computed on a consolidated basis
for the Borrower and its Subsidiaries, in each case without duplication. If any
preparation in the financial statements referred to in Section 7.1.1 hereafter
occasioned by the promulgation of rules, regulations, pronouncements and
opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in any results, amounts,
calculations, ratios, standards or terms found in this Agreement or any Loan
Document from those which would be derived or be applicable absent such changes,
the Borrower may reflect such changes in the financial statements and
certificates required to be delivered pursuant to Section 7.1.1, but
computations made to determine compliance with financial covenants, including
Section 7.2.5, shall be made without giving effect to any such changes.
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ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTE
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement from time to time on any Business Day occurring prior to the
Commitment Termination Date: (i) each Lender severally agrees to make Revolving
Loans to the Borrower equal to such Lender's Percentage of the aggregate amount
of the Borrowing requested by the Borrower to be made on such day pursuant to
Section 2.3; (ii) the Swingline Bank agrees to make Swingline Loans in
accordance with Section 2.7 and (iii) the Issuer agrees to issue, and each
Lender agrees to participate in, all letters of credit requested by the Borrower
to be issued on such day by the Issuer (the "Letters of Credit") pursuant to
Section 2.8 . The commitment of each Person described in this Section 2.1 is
herein referred to as its "Commitment". On the terms and subject to the
conditions hereof, the Borrower may from time to time borrow, prepay and
reborrow Loans in whole or in part and/or have the Issuer issue Letters of
Credit, have such Letters of Credit expire or otherwise terminate without having
been drawn upon or, if drawn upon, reimburse the Issuer for each such drawing
and have the Issuer issue new Letters of Credit, all in accordance with the
terms and conditions of this Agreement.
SECTION 2.1.1. Conditions Precedent to Credit Extensions. The Issuer shall
not be required to issue any Letters of Credit, the Swingline Bank shall not be
required to make any Swingline Loan and no Lender shall be required to make any
Revolving Loan, if after giving effect thereto:
(i) the Aggregate Outstanding Amount would exceed the lesser of (A)
the Commitment Amount and (B) the sum of the Borrowing Base and the amount
on deposit in the Liquidation Account (other than amounts on deposit
therein allocated to Carrying Costs) at such time;
(ii) such Lender's Percentage of the Aggregate Outstanding Amount
would exceed such Lender's Percentage of the lesser of (A) the Commitment
Amount and (B) the sum of the Borrowing Base and the amount on deposit in
the Liquidation
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Account (other than amounts on deposit therein allocated to Carrying
Costs) at such time;
(iii) the Letter of Credit Outstandings would exceed the Letter of
Credit Commitment Subamount; or
(iv) the aggregate outstanding principal amount of all Swingline
Loans would exceed the Swingline Commitment Subamount.
SECTION 2.2. Reduction of Commitment Amounts. The Borrower may, from time
to time, on thirty Business Days' prior written notice to the Administrative
Agent voluntarily reduce the Commitment Amount; provided, however, that (a) all
such reductions shall be permanent, any partial reduction of the Commitment
Amount shall be in a minimum amount of $2,500,000 and in an integral multiple of
$100,000 and after giving effect to any partial reduction the remaining
Commitment Amount will not be less than $50,000,000 and (b) in no event shall
the Commitment Amount be reduced below the Aggregate Outstanding Amount. Any
reduction in the Commitment Amount shall result in a corresponding pro-rata
reduction in the Letter of Credit Commitment Subamount and the Swingline
Commitment Subamount.
SECTION 2.3. Borrowing Procedure. The Borrower may from time to time
irrevocably request, by delivering a Borrowing Request to the Administrative
Agent (i) on or before 12:00 noon, New York time, on a Business Day that is not
less than three, nor more than five, Business Days prior to the requested
Borrowing, in the case of LIBO Rate Loans, and (ii) on or before 12:00 noon, New
York time, on a Business Day that is not less than one, nor more than five,
Business Days prior to the requested Borrowing, in the case of Base Rate Loans,
that a Borrowing is to be made in a minimum amount of $1,000,000 and an integral
multiple of $100,000, or in the Available Commitment Amount. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the Type of Loans, and shall be made on the Business Day specified in such
Borrowing Request. On or before 11:00 a.m., New York time, on such Business Day,
each Lender shall deposit with the Administrative Agent immediately available
funds in an amount equal to such Lender's Percentage of the requested Borrowing.
Such deposit will be made to an account which the Administrative Agent
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shall specify from time to time by notice to the Lenders. To the extent such
funds are received from any Lender, and subject to Section 10.2 to the extent
funds are not received from the Lenders, the Administrative Agent shall make
such funds available to the Borrower by wire transfer on the same day to the
accounts the Borrower shall have specified in its Borrowing Request. No Lender's
obligation to make any Loan shall be affected by any other Lender's failure to
make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 12:00
noon, New York time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three, nor more than five, Business Days'
notice that all, or any portion in an aggregate minimum amount of $1,000,000 and
an integral multiple of $100,000 of, Loans be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/ Conversion Notice with respect to any LIBO Rate Loan
at least three Business Days before the last day of the then current Interest
Period with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that (i) each
such conversion or continuation shall be pro rata among the applicable
outstanding Loans of all Lenders, and (ii) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, the Borrower shall not be responsible to
reimburse the Lender for any increased cost, tax or other amount incurred, paid
or payable, or any other loss realized as a result thereof and the obligation of
the Borrower to repay such LIBO Rate Loan shall nevertheless be to such Lender
for the account of such foreign branch, Affiliate or international banking
facility. In addition, the Borrower hereby consents and agrees that, for
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purposes of any determination to be made for purposes of Sections 4.1, 4.2, 4.3
or 4.4, it shall be conclusively assumed that each Lender elected to fund all
LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's interbank
eurodollar market.
SECTION 2.6. Notes. Each Lender's Revolving Loans shall be evidenced by a
Note payable to the order of such Lender, in a maximum principal amount equal to
such Lender's Percentage of the Commitment Amount. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to each Lender's Note (or on any continuation of
such grid), which notations, if made, shall evidence, inter alia, the date of,
the outstanding principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrower absent manifest error; provided, however, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower.
SECTION 2.7. Swingline Loans. Subject to the terms and conditions of the
Agreement, the Swingline Bank agrees to make the Swingline Loans to the Borrower
in accordance with this Section 2.7 up to the amount of the Swingline Commitment
Subamount. Amounts borrowed under this Section 2.7 may be borrowed, repaid and
reborrowed to, but not including, the Commitment Termination Date. All Swingline
Loans shall be made and maintained as Base Rate Loans.
SECTION 2.7.1. Borrowing Procedures for Swingline Loans. The Borrower may
request a Swingline Loan from the Swingline Bank on any Business Day before the
Commitment Termination Date by giving the Swingline Bank written or telephonic
notice by 12:00 noon, New York time, (or such later time as the Borrower and the
Swingline Bank may agree) on the Business Day the proposed Swingline Loan is to
be made, promptly followed (within one Business Day) by the delivery of a
conforming Borrowing Request. Each such notice shall be effective upon receipt
by the Swingline Bank and shall specify the date and amount of borrowing. All
Swingline Loans shall be made as Base Rate Loans and shall not be entitled to be
converted into LIBO Rate Loans. The Swingline Bank shall pay over the requested
amount to the Borrower by no later than its close of business on the requested
date of borrowing. Each Swingline Loan
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shall be made on a Business Day and shall be in the amount of at least $500,000
and in an integral multiple of $100,000. The Swingline Bank shall promptly
notify the Administrative Agent of the making and amount of each Swingline Loan.
The Administrative Agent shall promptly notify each Lender of such request.
SECTION 2.7.2. Swingline Note. The Swingline Loans shall be evidenced by
the Swingline Note payable to the order of the Swingline Bank, in a maximum
principal amount equal to the Swingline Commitment Subamount. The Borrower
hereby irrevocably authorizes the Swingline Bank to make (or cause to be made)
appropriate notations on the grid attached to the Swingline Note (or on any
continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate
applicable to the Swingline Loans evidenced thereby. Such notations shall be
conclusive and binding on the Borrower absent manifest error; provided, however,
that the failure of the Swingline Bank to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower.
SECTION 2.7.3. Repayment of Swingline Loans. If (i) any Swingline Loan
shall be outstanding for more than seven Business Days, (ii) the aggregate
principal balance of outstanding Swingline Loans equals or exceeds $1,000,000,
(iii) any Swingline Loan is or will be outstanding on a date when the Borrower
requests a Revolving Loan, (iv) any Default shall occur and be continuing, or
(v) the Swingline Bank provides notice to the Administrative Agent and the
Lenders, in its discretion, each Lender (including the Swingline Bank in its
capacity as a Lender) irrevocably and unconditionally agrees that it will at the
request of the Swingline Bank make a Revolving Loan (which shall initially be
funded as a Base Rate Loan) in an amount equal to such Lender's Percentage of
the aggregate principal amount of all such Swingline Loans then outstanding on
such date for the purpose of repaying such Swingline Loans. The Lenders shall
deliver the proceeds of such Revolving Loan to the Administrative Agent in
immediately available funds by 11:00 a.m., New York time, on the first Business
Day following receipt of such request for payment to the Swingline Bank in
respect of such Swingline Loan. Upon the making of such payment by a Lender,the
amount so funded by such Lender shall become outstanding under such Lender's
Note and shall no longer be owed under the Swingline Note. Each Lender's
obligation to make
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available its Percentage of the Swingline Loans to be repaid shall be absolute
and unconditional and shall not be affected by any circumstance, including (i)
any set-off, counterclaim, recoupment, defense or other right which such Lender
may have against the Swingline Bank, or anyone else, (ii) the occurrence or
continuance of a Default or the lack of satisfaction of any condition set forth
in Section 5.2, (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or (iv) any other circumstance, happening or event
whatsoever. If for any reason a Lender does not make available its Percentage of
the foregoing Swingline Loan then being repaid, such Lender shall be deemed to
have unconditionally and irrevocably purchased from the Swingline Bank, without
recourse or warranty, an undivided interest and participation in such Swingline
Loan then being repaid, equal to its Percentage of such Swingline Loan.
SECTION 2.8. Letter of Credit Issuance Procedures. By delivering to the
Administrative Agent a Letter of Credit Issuance Request on or before 12:00
noon, New York time, on a Business Day, the Borrower may, from time to time
irrevocably request, on not less than three nor more than ten Business Days'
notice, in the case of an issuance of a Letter of Credit, and not less than
three Business Days' prior notice, in the case of a request for the extension of
the Stated Expiry Date of a Letter of Credit, that the Issuer issue, or extend
the Stated Expiry Date of, as the case may be, an irrevocable Letter of Credit
in such form as may be requested by the Borrower and approved by the Issuer.
Each Letter of Credit shall by its terms be stated to expire on a date (its
"Stated Expiry Date") no later than the earlier to occur of (i) the Scheduled
Maturity Date or (ii) one year from the date of its issuance. The Issuer shall
make available to the beneficiary thereof the original of each Letter of Credit
which it issues hereunder. Notwithstanding any other provision to the contrary,
it is a condition precedent to the issuance of any Letter of Credit by the
Issuer that, as of the date of issuance, no order, judgment or decree of any
court, arbitrator or governmental authority shall purport by its terms to enjoin
or restrain the Issuer from issuing the Letter of Credit and no law, rule or
regulation applicable to the Issuer and no request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction over
the Issuer shall prohibit or request that the Issuer refrain
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from the issuance of letters of credit generally or the issuance of such Letter
of Credit.
SECTION 2.8.1. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) that has a Commitment shall be
deemed to have irrevocably purchased, to the extent of its Percentage, a
participation interest in such Letter of Credit (including any Contingent
Liability and any Reimbursement Obligation with respect thereto), and such
Lender shall, to the extent of its Percentage, be responsible for reimbursing
the Issuer in accordance with Section 2.8.2 for Reimbursement Obligations which
have not been reimbursed by the Borrower prior to 12:00 noon on the Business Day
following the Disbursement Date. In addition, such Lender shall, to the extent
of its Percentage, be entitled to receive a ratable portion of the Letter of
Credit Fees payable pursuant to Section 3.3.2 with respect to each Letter of
Credit and of interest payable pursuant to Section 3.2 with respect to any
Reimbursement Obligation. To the extent that any Lender has reimbursed the
Issuer for a Disbursement as required by this Section, such Lender shall be
entitled to receive its ratable portion of any amounts subsequently received
(from the Borrower or otherwise) in respect of such Disbursement.
SECTION 2.8.2. Disbursements. The Issuer will notify the Borrower, the
Administrative Agent and each Lender promptly of the presentment for payment of
any Letter of Credit issued by the Issuer, together with notice of the date (the
"Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Subject to the terms and provisions of such Letter of Credit
and this Agreement, the Issuer shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. Prior to 12:00 noon, New York time, on
the first Business Day following the Disbursement Date, the Borrower will
reimburse the Administrative Agent, for the account of the Issuer, for all
amounts which the Issuer has disbursed under such Letter of Credit, together
with interest thereon at a rate per annum equal to the rate per annum then in
effect for Base Rate Loans pursuant to Section 3.2 for the period from the
Disbursement Date through the date of such reimbursement. Without limiting in
any way the foregoing and notwithstanding anything to the contrary contained
herein or in any
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separate application for any Letter of Credit, the Borrower hereby acknowledges
and agrees that it shall be obligated to reimburse the Issuer upon each
Disbursement of a Letter of Credit, and it shall be deemed to be the obligor for
purposes of each such Letter of Credit issued hereunder. If the Borrower has not
reimbursed the Issuer for a Disbursement by 12:00 noon, New York time, on the
first Business Day following the Disbursement Date, each Lender shall deposit
with the Administrative Agent, for the account of the Issuer, immediately
available funds in an amount equal to such Lender's Percentage of such
unreimbursed Disbursement on or before 11:00 a.m., New York time, on the second
Business Day following the Disbursement Date. Upon the making of such payment by
a Lender to the Issuer, the amount so paid by such Lender shall become
outstanding under such Lender's Note as a Revolving Loan (and initially treated
as an Base Rate Loan) and shall no longer constitute a Reimbursement Obligation.
SECTION 2.8.3. Reimbursement. The obligation (a "Reimbursement
Obligation") of the Borrower under Section 2.8.2 to reimburse the Issuer with
respect to each Disbursement (including interest thereon), and, upon the failure
of the Borrower to reimburse the Issuer, each Lender's obligation to reimburse
the Issuer, shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower or such Lender, as the case may be, may have or have had against the
Issuer or any such Lender, including any defense based upon the failure of any
Disbursement to conform to the terms of the applicable Letter of Credit (if, in
the Issuer's good faith opinion, such Disbursement is determined to be
appropriate) or any non-application or misapplication by the beneficiary of the
proceeds of such Letter of Credit; provided, however, that after paying in full
its Reimbursement Obligation hereunder, nothing herein shall adversely affect
the right of the Borrower or such Lender, as the case may be, to commence any
proceeding against the Issuer for any wrongful Disbursement made by the Issuer
under a Letter of Credit as a result of acts or omissions constituting gross
negligence or wilful misconduct on the part of such Issuer.
SECTION 2.8.4. Deemed Disbursements. Upon the occurrence and during the
continuation of any Default of the type described in Section 9.1.5 or, upon
written notice from the Administrative Agent
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given at the direction of the Required Lenders, upon the occurrence and during
the continuation of any other Event of Default,
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn
and available under all Letters of Credit issued and outstanding hereunder
shall, without demand upon or notice to the Borrower, be deemed to have
been paid or disbursed by the Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed); and
(b) upon notification by the Administrative Agent to the Borrower of
its obligations under this Section, the Borrower shall be immediately
obligated to reimburse the Issuer for the amount deemed to have been so
paid or disbursed by such Issuer.
Any amounts so payable by the Borrower pursuant to this Section shall be
deposited in immediately available funds with the Administrative Agent and held
in the LOC Collateralization Account as collateral security for the Obligations
in connection with the Letters of Credit issued by the Issuer. At such time when
the Defaults or Events of Default giving rise to the deemed disbursements
hereunder shall have been cured or waived, the Administrative Agent shall return
to the Borrower all amounts then on deposit with the Administrative Agent
pursuant to this Section which have not been applied to the partial satisfaction
of such Obligations.
SECTION 2.8.5. Nature of Reimbursement Obligations. The Borrower and, to
the extent set forth in Section 2.8.1, each Lender shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by the beneficiary thereof.
The Issuer (except to the extent of its own gross negligence or wilful
misconduct) shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it
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should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or the proceeds thereof in whole or in part, which may prove to be invalid
or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise;
or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a Letter
of Credit.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuer or any Lender. In furtherance and
extension and not in limitation or derogation of any of the foregoing, any
action taken or omitted to be taken by an Issuer in good faith (and not
constituting gross negligence or willful misconduct) shall be binding upon the
Borrower and each such Lender, and shall not put such Issuer under any resulting
liability to the Borrower or any such Lender, as the case may be.
SECTION 2.9. Extension of Scheduled Maturity Date. The Scheduled Maturity
Date shall be subject to extension as set forth in this Section 2.9.
SECTION 2.9.1. Request for Extension of Scheduled Maturity Date. Any term
or provision of this Agreement to the contrary notwithstanding, no earlier than
70 days nor later than 45 days prior to the one-year anniversary of the date of
the Effective Date, the Borrower may, by delivery of a duly completed Extension
Request to the Administrative Agent, irrevocably request that each Lender, the
Issuer and the Swingline Bank extend for one additional
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365-day period (such period to commence on the day immediately following the
then existing Scheduled Maturity Date) the Scheduled Maturity Date relating to
such Person's Commitment; provided, that the Scheduled Maturity Date shall not
in any event be extended beyond March 14, 2003 (or if such day is not a Business
Day, the next preceding Business Day). The failure of the Borrower to request
such an extension within the time set forth above shall automatically terminate
the Borrower's rights to request such extension.
SECTION 2.9.2. Consent to Extension of Scheduled Maturity. (a) The
Administrative Agent shall, promptly after receipt of an Extension Request
pursuant to Section 2.9.1, notify each Lender, the Issuer and the Swingline Bank
thereof by providing them a copy of such Extension Request.
(b) Each Lender, the Issuer and the Swingline Bank shall within 20
Business Days of receipt of the notice described in clause (a), notify the
Administrative Agent whether or not it consents to the request of the Borrower
set forth in such Extension Request, such consent to be in the sole discretion
of each Lender, the Issuer and the Swingline Bank. If such Person does not
notify the Administrative Agent of its decision within such 20 Business Days
period, such Person shall be deemed not to have consented to the Borrower's
request for an extension of the Scheduled Maturity Date.
(c) The Scheduled Maturity Date shall be extended for one additional
period of 365 days from the one-year anniversary of the date of the Effective
Date if all the Lenders, the Issuer and the Swingline Bank agree to such
extension. The Administrative Agent shall promptly notify the Borrower whether
the Lenders, the Issuer and the Swingline Bank have consented to an extension of
the Scheduled Maturity Date.
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall
repay in full the unpaid principal amount of each Loan upon the
Scheduled Maturity Date. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Loans; provided, however, that
(i) any such prepayment shall be made pro rata among the Loans
of the same Type and, if applicable, having the same Interest Period
for all Lenders;
(ii) any LIBO Rate Loan that is repaid other than on the last
day of the Interest Period for such Loan shall be subject to Section
4.4;
(iii) all such voluntary prepayments shall require written
notice to the Administrative Agent on or before 11:00 a.m., New York
Time, on the date of such prepayment; and
(iv) all such voluntary partial prepayments shall be in an
aggregate minimum amount of $1,000,000 and an integral multiple of
$100,000;
(b) shall, on each date when the Aggregate Outstanding Amount
exceeds the then Borrowing Base and in accordance with Section
11.1(b)(ii), make a mandatory prepayment of all Loans, up to the amount of
such excess, on such date, in the case of Base Rate Loans, or on the end
of the next Interest Period (or Interest Periods in the case where the
amount of the prepayment exceeds the amount of the next maturing LIBO Rate
Loan), in the case of LIBO Rate Loans; provided, that if after the
prepayment of all Loans any such excess remains, the Borrower shall pay an
amount equal to any such remaining excess to the Administrative Agent to
be held by the Administrative Agent in the LOC Collateralization Account
to collateralize Letter of Credit Outstandings; and
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(c) shall, immediately upon any acceleration of the Loans and other
Obligations pursuant to Section 9.2, repay all Loans and, if necessary,
provide immediately available funds collateral to the Administrative Agent
to be held by the Administrative Agent in the LOC Collateralization
Account to collateralize Letter of Credit Outstandings, unless, pursuant
to Section 9.2.2, only a portion of all Loans or other Obligations is so
accelerated (in which case the portion so accelerated shall be so prepaid
or cash collateralized).
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No prepayment of
principal of any Loans shall cause a reduction in the Commitment Amount.
Although payment of Obligations by the Borrower hereunder may be made out of
funds in the Collection Account and the Liquidation Account in accordance with
Article XI, all Obligations of the Borrower shall be full recourse obligations,
payable out of any of the assets of the Borrower.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan
(including all Swingline Loans), equal to the Alternate Base Rate from
time to time in effect; and
(b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus a margin of .55% per
annum.
All LIBO Rate Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan. Each Swingline Loan
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shall bear interest on the outstanding principal amount thereof, from and
including the date such Swingline Loan is made to but excluding the date it is
repaid, at a rate per annum equal to the Alternate Base Rate for each such day.
SECTION 3.2.2. Post-Maturity Rates. Unless otherwise approved by the
Required Lenders, after the date any principal amount of any Loan or
Reimbursement Obligation is due and payable (whether on the Scheduled Maturity
Date, upon acceleration or otherwise), or after any other Obligation of the
Borrower shall have become due and payable, the Borrower shall pay interest
(after as well as before judgment) on such amounts at a rate per annum equal to
the rate applicable to such Loan or Reimbursement Obligation from time to time
in effect plus a margin of 2% or, in the case of any other Obligations of
Borrower, at a rate per annum equal to the Alternate Base Rate plus a margin of
2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Scheduled Maturity Date;
(b) on the date of any payment or prepayment, in whole or in part,
of the principal outstanding on such Loan (excluding upon the repayment of
a Swingline Loan with the proceeds of a Revolving Loan pursuant to Section
2.7.3);
(c) with respect to Base Rate Loans (including with respect to any
Swingline Loans repaid with the proceeds of a Revolving Loan), on each
Monthly Payment Date occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, the last day of each applicable
Interest Period; and
(e) on that portion of any Loans accelerated pursuant to Section
9.2, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations of the Borrower arising
under this Agreement or any other Loan Document after the date such amount is
due and payable (whether on the Scheduled Maturity Date, upon acceleration or
otherwise) shall be
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payable upon demand. Interest payable on Swingline Loans shall be distributed by
the Administrative Agent to the Swingline Bank and interest payable on Revolving
Loans shall be distributed by the Administrative Agent to the applicable Lenders
in accordance with their Percentages.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender, for the period (including
any portion thereof when any of its Commitments are suspended by reason of the
Borrower's inability to satisfy any condition of Article V) commencing on the
Effective Date and continuing through the Commitment Termination Date, a
commitment fee (the "Commitment Fee") at the rate of 1/4 of 1% per annum on such
Lender's Percentage of the average daily excess of (i) the Commitment Amount
over (ii) the Aggregate Outstanding Amount (other than the principal balance of
Swingline Loans). Such commitment fees shall be payable by the Borrower in
arrears on each Quarterly Payment Date, commencing with the first such day
following the Effective Date, and on the Commitment Termination Date.
SECTION 3.3.2. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent, for the account of each Lender, a facility fee (the
"Letter of Credit Fee") in an amount equal to .55% per annum on such Lender's
Percentage of the Letter of Credit Outstandings, payable in arrears on each
Quarterly Payment Date; provided, however, if any Loans or other Obligations
shall become due and payable under Section 9.2, the Letter of Credit Fee shall
equal 2.55% per annum. The Borrower further agrees to pay to the Issuer an
issuance fee in the amount and on the dates set forth in the Fee Letter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon written notice thereof to the Borrower, the
Administrative Agent and the other Lenders, be
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conclusive and binding on the Borrower) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for such Lender to
make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate
Loan, the obligations of such Lender to make, continue, maintain or convert any
such LIBO Rate Loan shall, upon such determination, forthwith be suspended until
such Lender shall notify the Administrative Agent that the circumstances causing
such suspension no longer exist, and all outstanding LIBO Rate Loans shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto, or sooner if required by such law or
assertion.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that
(a) with respect to any proposed LIBO Rate Loan, Dollar deposits in
the relevant amount and for the relevant Interest Period are not available
in the relevant market; or
(b) by reason of circumstances affecting the relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required
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fully to compensate such Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrower directly to such Lender
within five days of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last day
of the Interest Period applicable thereto, whether pursuant to Section 3.1
or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with
the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects the amount of capital required or
expected to be maintained by any Lender, the Issuer, the Swingline Bank or any
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Person controlling such Person, and such Person determines (in good faith but in
its sole and absolute discretion) that the rate of return on its or such
controlling Person's capital as a consequence of its Commitments or the Loans
made, or Letters of Credit issued or participated in) by such Lender, the Issuer
or the Swingline Bank is reduced to a level below that which it or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Person to the Borrower and the Administrative Agent, the Borrower shall promptly
pay directly to such Person or the Administrative Agent additional amounts
sufficient to compensate such Lender, the Issuer, the Swingline Bank or such
controlling Person for such reduction in rate of return. A statement of such
Lender, the Issuer or the Swingline Bank as to any such additional amount or
amounts (including calculations thereof in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower. In
determining such amount, such Lender, the Issuer or the Swingline Bank may use
any method of averaging and attribution that it (in good faith but in its sole
and absolute discretion) shall deem applicable to its customers generally.
SECTION 4.6. Taxes. (a) All payments by the Borrower of principal of, and
interest on, or other amounts in respect of, the Loans and all other amounts
payable hereunder (including fees) and the Notes, the Letters of Credit and the
Swingline Note shall be made free and clear of and without deduction for any
Taxes, except to the extent that any such withholdings or deductions are
required by applicable law, rule or regulations. In the event that any such
withholdings or deductions are required by applicable law, rule or regulations
in respect of any Taxes (including Taxes on account of any additional amount or
amounts described in clause (a)(iii) below), then the Borrower will
(i) pay directly to the relevant authority the full amount of Taxes
required to be so withheld or deducted;
(ii) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
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(iii) subject to paragraph (c) below, if such Taxes are Covered
Taxes, pay to the Administrative Agent for the account of the applicable
Secured Party such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Secured Party will equal the
full amount such Secured Party would have received had no such withholding
or deduction been required.
In addition, subject to paragraph (c) below, if any Secured Party is required by
law at any time to pay any Covered Taxes or to make any payment on account of
Covered Taxes on, in relation to or calculated by reference to any sum received
or receivable in connection with the Loans, any Swingline Note or any Note or
any other amount payable hereunder or under any Swingline Note or any Note, or
any liability for Covered Taxes in respect of any sum is imposed, levied or
assessed against any Secured Party, then the Borrower will indemnify each such
Secured Party for the full amount of Covered Taxes (including Covered Taxes
attributable to pay payment on account of such indemnification and any interest,
penalties and costs with respect to any such Covered Taxes) actually (or, in the
event such Covered Taxes are directly paid by the Borrower, deemed) paid by such
Secured Party, whether or not such Covered Taxes were correctly or legally
asserted. Such indemnification shall be made within 30 days of the demand of the
Secured Party therefor. If the Borrower pays any Covered Taxes as required by
the first sentence of this paragraph, then the Borrower will promptly forward to
the Administrative Agent an official receipt or duly certified copy of such
official receipt or such other documentation satisfactory to the Administrative
Agent evidencing such payment of Covered Taxes to the relevant taxing authority.
In addition, if the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Secured Party, the required receipts or other required
documentary evidence of its payment of any Taxes, the Borrower shall indemnify
the Secured Parties for any incremental Taxes that may become payable by any
Secured Party as a result of any such failure. For purposes of this Section 4.6,
the transfer by any Secured Party to or for the account of any Secured Party of
any sum received from the Borrower on account of amounts required to be paid by
the Borrower hereunder in respect of Covered Taxes imposed with respect to the
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recipient shall be deemed a payment by the Borrower of such amounts.
(b) Each Secured Party that is an original signatory hereto (and each
Person which becomes a Lender by assignment, transfer or participation pursuant
to Section 12.11 hereof or becomes the Administrative Agent by appointment
pursuant to Section 10.4 hereof) that is a Non-U.S. Person agrees severally (but
not jointly) that, on or prior to the date of the initial Credit Extension (or
such assignment, transfer or appointment, as the case may be) it will in each
case deliver to the Borrower and the Administrative Agent either (A) two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224 (or
applicable successor form) certifying in each case that such Person is entitled
to receive payments under this Agreement and the Notes, Letters of Credit and/or
Swingline Note, as applicable, payable to it without deduction or withholding of
any United States federal income taxes and two duly completed copies of United
States Internal Revenue Service Form W-8 or Form W-9 (or applicable successor
form) or (B) in the case of an assignee Secured Party that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does not comply
with the requirements of clause (A) of this paragraph, a statement to the effect
that such assignee Secured Party is eligible for a complete exemption from
withholding of United States withholding tax under Section 871(h) or Section
881(c) of the Code (including, without limitation, statements that such assignee
Secured Party is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Code)) and two duly completed and signed original copies of Internal Revenue
Service Form W-8. Each Secured Party shall (if not otherwise required to do so
pursuant to clause (B) of this paragraph (b)) deliver to the Borrower two duly
completed and signed original copies of Internal Revenue Service Form W-8 or W-9
entitling such Secured Party to receive a complete exemption from United States
back-up withholding tax.
Each Person who delivers to the Borrower and the Administrative Agent a Form
W-8, W-9, 1001 or 4224, or applicable successor form, pursuant to this clause,
further undertakes to deliver to the Borrower and the Administrative Agent two
further copies of said
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Form W-8, W-9, 1001, 4224, or applicable successor form, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete, unless in any such case any change in law, rule,
regulation, treaty or directive, or in the interpretation or application thereof
(a "Law Change") has occurred prior to the date on which any such delivery would
otherwise be required, which Law Change renders any such form inapplicable or
which would prevent such Person from duly completing and delivering any such
form with respect to it. If a Secured Party who previously has delivered any
Internal Revenue Service Forms referred to above determines that it is unable
subsequently to submit to the Borrower any such Forms, or that it is required to
withdraw or cancel any such Forms, then such Secured Party shall promptly notify
the Borrower of that fact.
(c) The Borrower shall not be obligated to make any payment or
indemnification pursuant to paragraph (a) above in respect of any U.S. Federal
withholding tax imposed in respect of a Non-U.S. Person to the extent that:
(i) the obligation to withhold U.S. Federal withholding tax with
respect to such Non-U.S. Person existed on the date such Non-U.S. Person
became a party to this Agreement; provided, however, that this clause (i)
shall not apply (x) to any such Non-U.S. Person that becomes a Secured
Party after the date hereof following a request of the Borrower that the
transferee of the Secured Party's interest hereunder dispose of such
interest or (y) to the extent that the payment or indemnification to which
such Non-U.S. Person would be entitled (without regard to this clause (i))
does not exceed the payment or indemnification that the Person from whom
such Non-U.S. Person acquired its interest would have been entitled to
receive in the absence of such acquisition; or
(ii) the obligation to make such payment or indemnification would
not have arisen but for a failure by such Non-U.S. Person to comply with
the provisions of paragraph (b) above.
(d) If the Administrative Agent or any Secured Party determines in its
sole discretion (exercised in good faith) that it has received a refund in
respect of Taxes for which such Person has
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received a payment from the Borrower (or which the Borrower paid directly to the
relevant authority) pursuant to clause (a) above, it shall promptly pay such
refund to the Borrower; provided, however, that the Borrower agrees to return
such refund to the Administrative Agent or the applicable Secured Party, as the
case may be, promptly after it receives notice from the applicable Secured Party
that such Secured Party is required to return all or any portion of such refund
to the relevant taxing authority. Each Secured Party may, in its sole discretion
(exercised in good faith), determine the order of utilization of any payments to
any governmental authority in satisfaction of its liability for Taxes. Nothing
in this paragraph (d) shall be construed to require any Secured Party to
disclose any of its tax returns or other confidential or proprietary information
to the Borrower or to conduct its business or to arrange or to alter in any
respect its tax or financial affairs so that it is entitled to receive any
refund of any Taxes.
(e) The agreements in this Section shall survive the termination of this
Agreement and the payment of the Notes, the Swingline Note and all other amounts
payable hereunder.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided herein, all payments by the Borrower pursuant to this Agreement, the
Notes, each Letter of Credit or any other Loan Document shall be made by the
Borrower to the Administrative Agent for the pro rata account of the Lenders
entitled to receive such payment. All such payments required to be made to the
Administrative Agent shall be made, without setoff, deduction or counterclaim,
not later than 11:00 a.m., New York time, on the date due, in same day or
immediately available funds, to such account as the Administrative Agent shall
specify from time to time by written notice to the Borrower. Funds received
after that time shall be deemed to have been received by the Administrative
Agent on the next succeeding Business Day. The Administrative Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Administrative Agent for the account of such Lender.
All interest (including interest on LIBO Rate Loans) and fees shall be computed
on the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days (or, in the case of
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interest on a Base Rate Loan, 365 days or, if appropriate, 366 days). Whenever
any payment to be made shall otherwise be due on a day which is not a Business
Day, such payment shall (except as otherwise required by clause (c) of the
definition of the term "Interest Period") be made on the next succeeding
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan or Reimbursement Obligations (other than
pursuant to the terms of Sections 4.3, 4.4, 4.5 or 4.6 and other than payments
on account of any Swingline Loan) in excess of its pro rata share of payments
then or therewith obtained by all Lenders, such Lender shall notify the
Administrative Agent and purchase from the other Lenders such participations in
Loans made by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Credit Extensions the purchase shall
be rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of (a) the amount of such selling
Lender's required repayment to the purchasing Lender to (b) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 4.8 may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 4.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured claim.
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SECTION 4.9. Setoff. Each Secured Party shall, upon the occurrence and
during the continuance of any Event of Default described in Section 9.1.5 or,
with the consent of the Required Lenders, upon the occurrence and during the
continuance of any other Event of Default, have the right to appropriate and
apply to the payment of the Obligations owing to it (whether or not then due),
and (as security for such Obligations) the Borrower hereby grants to each
Secured Party a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter maintained with
such Secured Party; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8. Each Secured
Party agrees promptly to notify the Borrower and the Administrative Agent after
any such setoff and application made by such Secured Party; provided, however,
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Secured Party under this Section are
in addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.
SECTION 4.10. Mitigation. Each Secured Party agrees that if it makes any
demand for payment under Sections 4.3, 4.4, 4.5, or 4.6, or if any adoption or
change of the type described in Section 4.1 shall occur with respect to it, it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion (exercised in good faith)) to
designate a different lending office if the making of such a designation would
reduce or obviate the need for the Borrower to make payments under Sections 4.3,
4.4, 4.5, or 4.6, or would eliminate or reduce the effect of any adoption or
change described in Section 4.1.
SECTION 4.11. Replacement Lender. In the event that the Borrower becomes
obligated to pay any additional material amounts to any Lender pursuant to
Section 4.3 or 4.5 (which amounts are generally not due or payable to all
Lenders generally under such Sections) or such Lender is not able to make LIBO
Rate Loans pursuant to Section 4.1, as a result of any event or condition
described in any of such Sections, then, unless such Lender has removed or cured
the conditions creating the cause of such obligation to pay such additional
amounts, the Borrower may
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designate a substitute lender (and such Lender agrees to be replaced by such
substitute Lender upon and in accordance with the terms set forth in this
Section) reasonably acceptable to the Administrative Agent (such lender herein
called a "Replacement Lender") to have assigned to it pursuant to Section
12.11.1, and to purchase, such Lender's rights and obligations with respect to
its entire Loans and Commitment hereunder, without recourse to or warranty by,
or expense to, such Lender for a purchase price equal to the outstanding
principal amount payable to such Lender with respect to its Loans and Commitment
hereunder, plus any accrued and unpaid interest and accrued and unpaid fees
owing to such Lender in respect of such Lender's Loans and Commitment. Upon such
assignment and purchase by the Replacement Lender and payment of all other
amounts owing to the Lender being replaced hereunder, and the payment to the
Administrative Agent of the processing fee due to it under Section 12.11.1, such
Lender shall no longer be a party hereto or have any rights or obligations
hereunder, and the Replacement Lender shall succeed to the rights and
obligations of such Lender with respect to its Loans and Commitment hereunder;
provided, that the rights of such replaced Lender pursuant to Sections 4.3, 4.4,
4.5, 4.6, 12.3 and 12.4, and the rights and obligations of such Lender pursuant
to Article X and Sections 12.3 and 12.4, shall survive any assignment described
in this Section.
SECTION 4.12 Use of Proceeds. The Borrower shall apply the proceeds of
each Borrowing to pay in part the purchase price of the Pool Receivables
pursuant to the Purchase Agreement.
ARTICLE V
CONDITIONS TO BORROWING AND ISSUANCE OF LETTERS OF CREDIT
SECTION 5.1. Initial Borrowing or Initial Issuance of a Letter of Credit.
The obligations of the Lenders to fund the initial Borrowing, the obligation of
the Issuer to issue the initial Letter of Credit and the obligation of the
Swingline Bank to fund the initial Swingline Loan shall be subject to the prior
or concurrent satisfaction of each of the conditions precedent set forth in this
Section 5.1.
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SECTION 5.1.1. No Material Adverse Change. No material adverse change in
ProSource's business or financial condition has occurred since June 29, 1996;
provided, however, that no events, facts or circumstances described in
ProSource, Inc.'s filing on the Form S-1 registration statement filed as of
November 7, 1996, shall be considered to be such a material adverse change.
SECTION 5.1.2. Resolutions, etc. The Administrative Agent shall have
received from each of the Borrower and ProSource a certificate, dated the
Effective Date, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes, the Swingline Note and each other Loan Document to
be executed by it; and
(b) the incumbency and signatures of those of its officers
authorized to act with respect to each Loan Document executed by it,
upon which certificate each Secured Party may conclusively rely until it shall
have received a further certificate of the Secretary of the Borrower or
ProSource, as the case may be, canceling or amending such prior certificate.
SECTION 5.1.3. Delivery of Notes. Each Lender shall have received its Note
duly executed and delivered by the Borrower and the Swingline Bank shall have
received the Swingline Note duly executed and delivered by the Borrower.
SECTION 5.1.4. Security Agreement. The Administrative Agent shall have
received executed counterparts of the Security Agreement, dated as of the date
hereof, duly executed by the Borrower, together with
(a) acknowledgment copies of properly filed U.C.C. financing
statements (Form UCC-1), or such other evidence of filing as may be
acceptable to the Administrative Agent, naming the Originator as the
debtor, the Borrower as the secured party and the Administrative Agent as
the assignee of the secured party for the benefit of the Secured Parties,
or
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other similar instruments or documents, filed under the Uniform Commercial
Code of all jurisdictions as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the security interest of the
Borrower;
(b) acknowledgment copies of properly filed U.C.C. financing
statements (Form UCC-1), or such other evidence of filing as may be
acceptable to the Administrative Agent, naming the Borrower as the debtor
and the Administrative Agent as the secured party for the benefit of the
Secured Parties, or other similar instruments or documents, filed under
the U.C.C. of all jurisdictions as may be necessary or, in the opinion of
the Administrative Agent, desirable to perfect the security interest of
the Administrative Agent, for the benefit of the Secured Parties, pursuant
to the Security Agreement;
(c) executed copies of proper U.C.C. Form UCC-3 termination
statements, if any, necessary to release all Liens and other rights of any
Person in any collateral described in the Security Agreement previously
granted by any Person; and
(d) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report certified
by a party acceptable to the Administrative Agent, listing all effective
financing statements which name the Borrower or ProSource (under its
present name and any previous names) as the debtor and which are filed in
the jurisdictions in which filings were made pursuant to clauses (a) and
(b) above, together with copies of such financing statements (none of
which (other than those described in clauses (a) and (b)) shall cover any
Collateral).
SECTION 5.1.5. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the Effective Date and addressed to the Administrative
Agent and all Lenders, from counsel to the Borrower and ProSource substantially
in the forms of Exhibit F and addressing true sale and substantive consolidation
issues, corporate organization and authority, enforceability, no conflict and
the perfection of ownership and security interests in the Collateral.
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SECTION 5.1.6. Closing Fees, Expenses, etc. The Administrative Agent shall
have received for its own account, or for the account of each Lender, as the
case may be, all fees, costs and expenses due and payable pursuant to Sections
3.3 and 12.3, if then invoiced.
SECTION 5.1.7. Organic Documents. The Administrative Agent shall have
received (a) each of the Borrower's and ProSource's certificate of
incorporation, certified by the Secretary of State of the State of such Person's
incorporation, (b) each of the Borrower's and ProSource's by-laws, certified by
its Secretary or Assistant Secretary and (c) good standing certificates or
certificates of corporate existence for each of the Borrower and ProSource from
the State of such Person's incorporation, the State of such Person's principal
place of business and each State where such Person has significant operations.
The Borrower shall have been organized and capitalized in a manner reasonably
satisfactory to the Administrative Agent.
SECTION 5.1.8. Purchase Agreement. The Administrative Agent shall have
received the Purchase Agreement duly executed by the Borrower and ProSource,
together with evidence that all of the conditions precedent to the first
purchase thereunder shall have been satisfied.
SECTION 5.1.9. Fee Letter. The Fee Letter between ProSource and Scotiabank
shall have been duly executed.
SECTION 5.1.10. Powers of Attorney. The Administrative Agent shall have
received powers of attorney, substantially in the form of Exhibit J hereto, duly
executed by each of the Borrower and ProSource.
SECTION 5.1.11. Account Agreements. The Administrative Agent shall have
received copies of the executed (i) Lock-Box Agreements, (ii) Collections
Account Agreement, and (iii) Liquidation Account Agreement.
SECTION 5.1.12. Payment of Outstanding Indebtedness, etc. All Indebtedness
of the Originator identified in Item 5.1.12 ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due
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and payable with respect thereto, shall have been (or, contemporaneously with
the initial Credit Extension hereunder, will be) paid in full by the Originator
from the proceeds of the Originator Credit Facility and/or Loans and the
commitments in respect of such Indebtedness (including under the Existing Credit
Agreement) shall have been terminated, and all Liens securing payment of any
such Indebtedness (including under the Existing Credit Agreement) shall have
been released and the Administrative Agent shall have received all Uniform
Commercial Code Form UCC-3 termination statements or other instruments as may be
suitable or appropriate in connection therewith. The Administrative Agent shall
have received executed copies of "pay-off" letters with respect thereto
(including as to the payment in full of all Indebtedness under the Existing
Credit Agreement) in form and substance satisfactory to the Administrative
Agent.
SECTION 5.1.13. Originator Credit Facility Documentation. The
Administrative Agent shall have received (with copies for each Lender) a fully
executed copy of the documentation evidencing the Originator Credit Facility
certified as true, correct and complete, and all other certificates, documents,
agreements, consents and opinions furnished pursuant or in connection therewith.
SECTION 5.1.14. Borrowing Base Report and Settlement Statement. The
Administrative Agent shall have received, with counterparts for each Lender, an
initial Borrowing Base Report and Settlement Statement from the Borrower, dated
as of a recent date satisfactory to the Administrative Agent, duly executed (and
with all schedules thereto completed) and delivered by an Authorized Officer of
the Borrower.
SECTION 5.1.15. Other Documentation. Such other approvals, opinions or
documents (in form and substance reasonably satisfactory to the Administrative
Agent) as the Administrative Agent may reasonably request (including a letter
from KPMG Peat Marwick acceptable to the Administrative Agent regarding the
performance of agreed upon procedures for the Pool Receivables portfolio).
SECTION 5.2. All Credit Extensions. The obligation of the Issuer to issue
any Letter of Credit, the obligation of the Swingline Bank to fund any Swingline
Loan, and the obligation of
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each Lender to fund any Revolving Loan shall be subject to the satisfaction of
each of the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension the following statements shall
be true and correct:
(a) the representations and warranties set forth in Article VI shall
be true and correct in all material respects with the same effect as if
then made (unless stated to relate solely to an early date, in which case
such representations and warranties shall be true and correct in all
material respects as of such earlier date);
(b) such Credit Extension is permitted by Section 2.1.1; and
(c) no Default shall have then occurred and be continu ing.
SECTION 5.2.2. Credit Extension Request. The Administrative Agent shall
have received a Borrowing Request for such Borrowing, the Issuer shall have a
Letter of Credit Issuance Request for such Letter of Credit, or the Swingline
Bank shall have received a request for a Swingline Loan, as applicable. Each of
(i) the delivery of a Borrowing Request and the acceptance by the Borrower of
the proceeds of such Borrowing, (ii) the delivery of the Letter of Credit
Issuance Request and the issuance of the Letter of Credit, or (iii) the delivery
of a request for a Swingline Loan and the acceptance by the Borrower of the
proceeds of such Swingline Loan, as applicable, shall constitute a
representation and warranty by the Borrower that on such date (both immediately
before and after giving effect to such Borrowing and the application of the
proceeds thereof or issuance of such Letter of Credit) the statements made in
Section 5.2.1 are true and correct.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of Borrower. In order to
induce the Lenders, the Issuer, the Swingline Bank and the Administrative Agent
to enter into this Agreement, to issue Letters of Credit hereunder and to make
Loans (including Swingline Loans) hereunder, Borrower represents and warrants to
the Administrative Agent, the Issuer, the Swingline Bank and each Lender as set
forth in this Section 6.1.
SECTION 6.1.1. Organization, etc. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of its incorporation, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement, each Note, the Swingline Note and
each other Loan Document to which it is a party, to own its property, including
the Pool Receivables, and to conduct its business substantially as currently
conducted by it, except in each case to the extent same could not reasonably be
expected to have a Material Adverse Effect or cause a Default of the type
described in Section 9.1.9 or Section 9.1.11.
SECTION 6.1.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement and each other Loan
Document executed or to be executed by it, are within such Person's powers, have
been duly authorized by all necessary action, and do not (a) contravene such
Person's Organic Documents; (b) contravene or result in a default under any
material contractual restriction, law, rule or governmental regulation or court
decree or order binding on or affecting such Person or its property; or (c)
result in, or require the creation or imposition of, any Lien on any of such
Person's properties, except Liens in favor of the Administrative Agent under the
Security Agreement.
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SECTION 6.1.3. Government Approval, Regulation, etc. Except for filings
contemplated under the Loan Documents, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body or other Person is required for the due execution, delivery or
performance by the Borrower of this Agreement or any other Loan Document to
which it is a party other than those previously obtained or filed. The Borrower
is not an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, or a "holding company," a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
SECTION 6.1.4. Validity, etc. Each Loan Document executed by the Borrower
will, on the due execution and delivery thereof, constitute the legal, valid and
binding obligation of such Person enforceable in accordance with its respective
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
SECTION 6.1.5. Financial Information. The balance sheets of ProSource and
each of its Subsidiaries as of December 30, 1995, and the related statements of
earnings and cash flow of ProSource and each of its Subsidiaries, copies of
which have been furnished to the Administrative Agent, the Issuer, the Swingline
Bank and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 6.1.6. No Material Adverse Change. Since the date of the financial
statements described in Section 6.1.5, no event has occurred that has had a
Material Adverse Effect.
SECTION 6.1.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Borrower, threatened litigation, action, proceeding,
or labor controversy affecting any
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of the Borrower or the Originator or any of their respective Subsidiaries, or
involving any of their respective properties, businesses, assets or revenues,
which could reasonably be expected to have a Material Adverse Effect or cause a
Default of the type described in Section 9.1.9 or Section 9.1.11, except as
disclosed in Item 6.1.7 ("Litigation") of the Disclosure Schedule.
SECTION 6.1.8. Subsidiaries. The Borrower has no Subsidiaries other than
Newco.
SECTION 6.1.9. Corporate Names. The Borrower's complete corporate name is
set forth in the preamble, and the Borrower does not use and has not during the
last four months used any corporate name, trade name, doing-business name or
fictitious name, except as set forth on Exhibit T and except for names first
used after the date of the Agreement and set forth in a notice delivered to the
Administrative Agent.
SECTION 6.1.10. Taxes. The Borrower has filed all federal income tax
returns and all other material and reports required by law to have been filed by
it and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 6.1.11. Pension and Welfare Plans. Except as disclosed in Item
6.1.11 ("Employee Benefit Plans") of the Disclosure Schedule, during the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Credit Extension hereunder, no
steps have been taken to terminate any Pension Plan (other than a standard
termination under Section 4041(b) of ERISA), and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in Item 6.1.11 of the Disclosure Schedule,
none of the Borrower, ProSource or any member of the Controlled Group has any
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other
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than liability for continuation coverage described in Part 6 of Title I of
ERISA.
SECTION 6.1.12. Capital Stock. The authorized capital stock of the
Borrower consists of one thousand (1000) shares of common stock, without par
value, one thousand (1000) shares of which are currently issued and outstanding.
All of such outstanding shares are validly issued, fully paid and nonassessable
and are owned (beneficially and of record) by ProSource.
SECTION 6.1.13. Regulations G, T, U and X. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loans will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, T, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, T, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION 6.1.14. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Administrative Agent, the Issuer, the Swingline Bank or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby taken as a whole is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Administrative Agent,
the Issuer, any Swingline Bank or any Lender will taken as a whole be, true and
accurate in every material respect on the date as of which such information is
dated or certified and as of the date of execution and delivery of this
Agreement by the Administrative Agent, the Issuer, any Swingline Bank and such
Lender, and such information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to make such
information not misleading.
SECTION 6.1.15. Eligible Receivables. Each Receivable included in the
calculation of the Borrowing Base is, at the time of such calculation, an
Eligible Receivable.
SECTION 6.1.16. Security Interest. Upon the filing by the Administrative
Agent of U.C.C. financing statements in the appropriate jurisdictions, showing
the Borrower, as debtor, and the
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Administrative Agent, as secured party, the Administrative Agent, for the
benefit of the Secured Parties, shall have a first priority, perfected security
interest in all of the Collateral free and clear of all other Liens other than
Permitted Liens. No other financing statements covering the Collateral or any
portion thereof is on file in any recording office.
SECTION 6.1.17. Material Contracts. The Borrower is in compliance in all
material respects with all contracts, instruments, orders, laws, rules and
regulations applicable to it or its property, except in each case to the extent
same could not reasonably be expected to have a Material Adverse Effect or cause
a Default of the type described in Section 9.1.9 or Section 9.1.11. The Borrower
has complied in all material respects with the Credit and Collection Policy with
regard to each Pool Receivable.
SECTION 6.1.18. Valid Transfer; Ownership of Receivables. Upon the
assignment of each Pool Receivable to the Borrower pursuant to the Purchase
Agreement and the Annual Transfer Agreement, such Pool Receivable and the
Related Security therefor and the Collections related thereto, will be owned by
the Borrower, free and clear of any Lien, other than the Lien created hereby and
Permitted Liens. Each such Pool Receivable is freely assignable by the Borrower.
SECTION 6.1.19. Principal Place of Business. The chief executive office
(as such term is used in Section 9-103 of the U.C.C.) of each of the Borrower
and the Originator, and the office where the Borrower and the Originator store
the files, records and contracts relating to the Pool Receivables is located at
the address set forth in Item 6.1.19 of the Disclosure Schedule.
SECTION 6.1.20. Lock-Box Banks and Lock-Box Accounts. The names and
addresses of all the Lock-Box Banks, together with the account numbers of the
Lock-Box Accounts of the Borrower at such Lock-Box Banks, are specified in
Exhibit P (or at such other Lock-Box Banks and/or with such other Lock-Box
Accounts as have been notified to the Administrative Agent in accordance
herewith) and all Lock-Box Accounts are subject to Lock-Box Agreements. All
Obligors have been directed to make all payments with respect to each Contract
to a Lock-Box Account.
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SECTION 6.1.21. Proceeds. No proceeds of any Loan will be used for any
purpose that violates any applicable law, rule or regulation.
SECTION 6.2. Representations and Warranties of Servicer. The Servicer
represents and warrants to the Administrative Agent, the Issuer, the Swingline
Bank and each Lender as set forth in this Section 6.2.
SECTION 6.2.1. Organization, etc. The Servicer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of its incorporation, is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its obligations under this Agreement and each other Loan Document to
which it is a party, to own its property and to conduct its business
substantially as currently conducted by it, except in each case to the extent
same could not reasonably be expected to have a Material Adverse Effect or cause
a Default of the type described in Section 9.1.9 or Section 9.1.11.
SECTION 6.2.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Servicer of this Agreement and each other Loan
Document executed or to be executed by it, are within the Servicer's powers,
have been duly authorized by all necessary action, and do not (a) contravene the
Servicer's Organic Documents; (b) contravene or result in a default under any
contractual restriction, law, rule or governmental regulation or court decree or
order binding on or affecting the Servicer or its property; or (c) result in, or
require the creation or imposition of, any Lien on any of the Servicer's
properties.
SECTION 6.2.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Servicer of this Agreement or any other Loan
Document to which it is a party other than those previously obtained or filed.
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SECTION 6.2.4. Validity, etc. Each Loan Document executed by the Servicer
will, on the due execution and delivery thereof, constitute the legal, valid and
binding obligation of the Servicer enforceable in accordance with its respective
terms except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
SECTION 6.2.5. Financial Information. The balance sheets of the Servicer
and each of its Subsidiaries as of December 30, 1995, and the related statements
of earnings and cash flow of the Servicer and each of its Subsidiaries, copies
of which have been furnished to the Administrative Agent, the Issuer, the
Swingline Bank and each Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the consolidated financial condition of
the corporations covered thereby as at the dates thereof and the results of
their operations for the periods then ended.
SECTION 6.2.6. No Material Adverse Change. Since the date of the financial
statements described in Section 6.2.5, no event has occurred that has had a
Material Adverse Effect.
SECTION 6.2.7. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of the Servicer, threatened litigation, action, proceeding,
or labor controversy affecting the Servicer, or involving any of its properties,
businesses, assets or revenues, which could reasonably be expected to have a
Material Adverse Effect or cause a Default of the type described in Section
9.1.9 or Section 9.1.11, except as disclosed in Item 6.2.7 ("Litigation") of the
Disclosure Schedule.
SECTION 6.2.8. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Servicer in
writing to the Administrative Agent, the Issuer, the Swingline Bank or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby taken as a whole is, and all other such factual information
hereafter furnished by or on behalf of the Servicer to the Administrative Agent,
the Issuer, the Swingline Bank or any Lender will taken as
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a whole be, true and accurate in every material respect on the date as of which
such information is dated or certified and as of the date of execution and
delivery of this Agreement by the Administrative Agent, the Issuer, the
Swingline Bank and such Lender, and such information is not, or shall not be, as
the case may be, incomplete by omitting to state any material fact necessary to
make such information not misleading.
SECTION 6.2.9. Eligible Receivables. Each Pool Receivable included in the
calculation of the Borrowing Base is, at the time of such calculation, an
Eligible Receivable.
SECTION 6.2.10. Credit and Collection Policy. The Servicer
has complied in all material respects with the Credit and
Collection Policy with regard to each Pool Receivable.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants of the Borrower. Until all Commitments
have terminated and all Obligations (other than indemnity, reimbursement and
similar obligations in respect of which no claim has been made and no amount
remains outstanding) have been paid in full and no Letter of Credit Outstandings
remain outstanding, the Borrower will perform the obligations set forth in this
Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to each Lender, the Issuer, the
Swingline Bank and the Administrative Agent copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of
ProSource, consolidated balance sheets of ProSource and its Subsidiaries
(including the Borrower) as of the end of such Fiscal Quarter and
consolidated statements of earnings and cash flow of ProSource and its
Subsidiaries (including the Borrower) for such Fiscal Quarter and for the
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period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, certified by an Authorized Officer of
ProSource;
(b) as soon as available and in any event within 90 days after the
end of each Fiscal Year of ProSource, a copy of the annual audited
financial statements for such Fiscal Year for ProSource and its
Subsidiaries (including the Borrower), including therein consolidated
balance sheets of ProSource and its Subsidiaries (including the Borrower)
as of the end of such Fiscal Year and consolidated statements of earnings
and cash flow of ProSource and its Subsidiaries (including the Borrower)
for such Fiscal Year, in each case certified in a manner acceptable to the
Administrative Agent by independent public accountants acceptable to the
Administrative Agent;
(c) as soon as possible and in any event within five days after the
occurrence of a Default, a statement of an Authorized Officer of the
Borrower setting forth details of such Default and the action which has
been taken and is proposed to be taken with respect thereto;
(d) as soon as possible and in any event within five days after the
Borrower obtains knowledge thereof, notice of (w) any litigation,
investigation or proceeding which may exist at any time between the
Servicer or ProSource, on the one hand, and any other Person which, if not
cured or if adversely determined, as the case may be, would have a
Material Adverse Effect or cause a Default hereunder, (x) any litigation
or proceeding to which the Borrower is a party, (y) any litigation or
proceeding relating to any Loan Document, or (z) the occurrence of any
material adverse development with respect to any such litigation,
investigation or proceeding described above;
(e) immediately upon becoming aware of the institution of any steps
by any of ProSource or any other Person to terminate any Pension Plan
(other than a standard termination under Section 4041(b) of ERISA), or the
failure to make a required contribution to any Pension Plan, if such
failure is sufficient to give rise to a Lien under section 302(f) of
ERISA, or the taking of any action with respect to a Pension
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Plan which could result in the requirement that any of the Borrower or
ProSource furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan
which could result in the incurrence by any of the Borrower or ProSource
of any material liability, fine or penalty, or any material increase in
the contingent liability of any of the Borrower or ProSource with respect
to any post-retirement Welfare Plan benefit, notice thereof and copies of
all documentation relating thereto;
(f) on the fourth Business Day after the end of each calendar week,
a Borrowing Base Report, substantially in the form of Exhibit B-1,
executed by an Authorized Officer of the Servicer; provided, however, that
such Borrowing Base Report shall be delivered daily if required to be so
delivered by the Servicer in accordance with Section 8.2(h);
(g) on or prior to the 20th day of each Fiscal Month, a Settlement
Statement substantially in the form of Exhibit B-2, executed by an
Authorized Officer of the Servicer;
(h) at least sixty days prior to any change in the Borrower's or
ProSource's name or any other change requiring the amendment of U.C.C.
financing statements, a notice setting forth such changes and the
effective date thereof;
(i) promptly after becoming aware of the occurrence thereof, notice
of any Material Adverse Effect;
(j) such other information respecting the Pool Receivables, the
condition or operations, financial or otherwise, of the Borrower,
ProSource or any of its Subsidiaries as the Administrative Agent, the
Issuer, the Swingline Bank or any Lender (through the Administrative
Agent) may from time to time reasonably request; and
(k) on or prior to the time set forth in Section 8.2(k) the
accountant's report described therein.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower shall perform all
of its material obligations, if any, under the Contracts and shall comply in all
respects with all applicable
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laws, rules, regulations and orders, except to the extent noncompliance
therewith could not reasonably be expected to have a Material Adverse Effect or
cause a Default of the type described in Section 9.1.9 or Section 9.1.11, such
compliance to include:
(a) the maintenance and preservation of its corporate existence and
qualifications as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 7.1.3. Offices, Name Changes, Etc. The Borrower (i) shall keep its
chief executive office (as such term is used in Section 9-103 of the U.C.C.) and
the office where it keeps its records concerning the Pool Receivables at the
address set forth on Item 6.1.19 of the Disclosure Schedule or, upon at least 30
days' prior written notice of a proposed change to the Administrative Agent, at
any other location in any jurisdiction where all actions reasonably requested by
the Administrative Agent to protect and perfect the security interest of the
Administrative Agent for the benefit of the Secured Parties in the Collateral
have been taken and completed and (ii) shall provide the Administrative Agent
with at least 30 days' written notice prior to making any change in the
Borrower's name or making any other change in the Borrower's identity or
corporate structure (including a merger) which could render any U.C.C. financing
statement filed in connection with this Agreement "seriously misleading" as such
term is used in the U.C.C.; each notice to the Administrative Agent pursuant to
this sentence shall set forth the applicable change and the effective date
thereof. The Borrower (or the Servicer on its behalf) shall maintain and
implement administrative and operating procedures (including an ability to
recreate records evidencing Pool Receivables and related Contracts in the event
of the destruction of the originals thereof) and keep and maintain all
documents, books, records, computer tapes and disks and other information
reasonably necessary or advisable for the collection of all Pool Receivables.
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SECTION 7.1.4. Collection, Liquidation and Lock-Box Agreements. The
Borrower shall not add or terminate any bank as a Collection Account Bank, a
Liquidation Account Bank, a Lock-Box Bank or any account as a Lock-Box Account
from those listed in Exhibit P, or make any change in its instructions to
Obligors regarding payments to be made to the Borrower or ProSource or payments
to be made to any Lock-Box Account (or related post office box), unless the
Administrative Agent shall have consented (which consent shall not be
unreasonably withheld) thereto in writing and the Administrative Agent shall
have received copies of all agreements and documents (including Lock-Box
Agreements) that it may request in connection therewith.
SECTION 7.1.5. Deposits to Lock-Box Accounts. The Borrower shall, or shall
cause the Servicer to, (i) instruct all Obligors to make payments of all Pool
Receivables to one or more Lock-Box Accounts or to post office boxes to which
only Lock-Box Banks have access (and shall instruct the Lock-Box Banks to cause
all items and amounts relating to such Pool Receivables received in such post
office boxes to be removed and deposited into a Lock-Box Account on a daily
basis), and (ii) deposit, or cause to be deposited, any Collections of Pool
Receivables received by it or the Servicer into Lock-Box Accounts not later than
one Business Day after receipt thereof. The Borrower shall not deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account cash or cash proceeds other than Collections of Pool
Receivables.
SECTION 7.1.6. Security Interest, Etc. The Borrower shall, at its expense,
take all action necessary to establish and maintain a valid and enforceable
security interest in the Collateral in favor of the Administrative Agent for the
benefit of the Secured Parties, in each case free and clear of any Lien other
than Permitted Liens.
SECTION 7.2. Negative Covenants of the Borrower. Until all Commitments
have terminated and all Obligations (other than indemnity, reimbursement and
similar obligations in respect of which no claim has been made and no amount
remains outstanding) have been paid in full and no Letter of Credit Outstandings
remain outstanding, the Borrower shall perform the obligations applicable to it
set forth in this Section 7.2.
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SECTION 7.2.1. Business Activities. The Borrower shall not engage in any
business activity, except those described in the first recital and such
activities as may be incidental or related thereto.
SECTION 7.2.2. Indebtedness. The Borrower shall not create, incur, assume
or suffer to exist, or otherwise become or be liable in respect of any
Indebtedness, other than (a) Indebtedness in respect of the Loans and other
Obligations and (b) Indebtedness under the Borrower Note.
SECTION 7.2.3. Liens, Etc. Except in connection with the Annual Transfer
Agreement, the Borrower shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Lien (other
than a Lien in favor of the Administrative Agent for the benefit of the Secured
Parties under the Security Agreement and Permitted Liens) upon or with respect
to, any or all of its right, title or interest in, to or under any item of
Collateral, including any Pool Receivable, any Related Security with respect
thereto, or any Collections with respect thereto, or upon or with respect to any
account to which any Collections are sent.
SECTION 7.2.4. Extension or Amendment of Receivables. The Borrower shall
not extend the maturity or adjust the Outstanding Balance of Eligible
Receivables or otherwise modify the terms of any Eligible Receivable, or amend,
modify or waive any term or condition of any related Contract; provided,
however, that the Servicer shall be permitted to service the Pool Receivables in
accordance with Section 8.2(c).
SECTION 7.2.5. Financial Condition. The Borrower shall not permit its Net
Worth to be less than $10,000,000.
SECTION 7.2.6. Restricted Payments, etc.
(i) General Restriction. Except in accordance with this Section
7.2.6, the Borrower shall not (A) purchase or redeem any shares of its
capital stock, (B) declare or pay any dividend or set aside any funds for
any such purpose, (C) prepay, purchase or redeem any subordinated
Indebtedness of the Borrower, (D) lend or advance any funds to any Person
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or (E) repay any loans or advances to, for or from the Originator. Actions
of the type described in this clause (i) are herein collectively called
"Restricted Payments".
(ii) Types of Permitted Payments. Subject to the limitations set
forth in clause (iii) below, the Borrower may make Restricted Payments so
long as such Restricted Payments are made only to the Originator and only
in one or more of the following ways:
(A) Borrower may make cash payments (including prepayments) on
the Borrower Note in accordance with its terms; and
(B) if no amounts are then outstanding under the Borrower
Note, the Borrower may declare and pay dividends.
(iii) Specific Restrictions. The Borrower may make Restricted
Payments only out of Collections paid or released to the Borrower pursuant
to Article XI. Furthermore, the Borrower shall not pay, make or declare
(A) any dividend if, after giving effect thereto, Borrower's
Net Worth would be less than $10,000,000; or
(B) any Restricted Payment (including any dividend) if, after
giving effect thereto, any Default shall have occurred and be
continuing.
SECTION 7.2.7. Modification of Credit and Collection Policy. The Borrower
shall not materially supplement, change or otherwise modify the Credit and
Collection Policy without the prior written consent of the Administrative Agent.
SECTION 7.2.8. Mergers, Acquisitions, Sales, etc. The Borrower shall not
(i) be a party to any merger or consolidation, or directly or
indirectly purchase or otherwise acquire, whether in one or a series of
transactions, all or substantially all of the assets or any stock of any
class of, or any partnership
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or joint venture interest in, any other Person, or sell, transfer, assign,
convey or lease any of its property or assets other than pursuant to this
Agreement;
(ii) make, incur or suffer to exist an investment in, equity
contribution to, loan, credit or advance to, or payment obligation in
respect of the deferred purchase price of property from, any other Person,
except for obligations incurred pursuant to the Loan Documents and de
minimis payables incurred in connection with the operation of the
Borrower's business in the ordinary course; or
(iii) create any direct or indirect Subsidiary or otherwise acquire
direct or indirect ownership of any equity interests in any other Person
other than Newco;
provided, however, so long as the State of Florida maintains an annual tax on
intangibles under Section 199.032 of the Florida Statutes, the Borrower shall be
permitted to sell its property and assets provided such sale, transfer or
conveyance is made on, and is subject to, the following terms and conditions:
(1) such transfer is to a special purpose wholly-owned bankruptcy
remote corporation ("Newco");
(2) the organizational documents of Newco shall contain provisions
reasonably satisfactory to the Administrative Agent to ensure
that such entity is, and continues to be, a bankruptcy-
remote, special purpose entity;
(3) such transfer is pursuant to an Annual Transfer Agreement
between (i) Newco and (ii) the Borrower, which shall be in
form and substance reasonably acceptable to the Administrative
Agent and shall provide, among other things that upon the
transfer of the Intangibles to Newco, Newco shall issue a
promissory note to the Borrower, in a principal amount equal
to the principal amount of the Intangibles transferred to
Newco from such Person, and Newco shall pledge such
Intangibles (pursuant to a security agreement, in form and
substance
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satisfactory to the Administrative Agent) to the Borrower, to
secure such note;
(4) such transfer shall only occur at the close of business on
December 31 of each year, and such assets shall be reconveyed
to the Borrower, by Newco at the open of business on the first
Business Day after January 1 of the next year in exchange for
the return of the applicable promissory note (and the
extinguishment of the indebtedness evidenced thereby); and
(5) the Administrative Agent has received an opinion or opinions
of counsel, in form and substance satisfactory to the
Administrative Agent and its counsel, to the effect that such
Annual Transfer Agreement, promissory note and security
agreement referred to in (3) above are the legal, valid and
binding obligations of Newco.
SECTION 7.2.9. Amendments to Certain Documents.
(i) The Borrower shall not amend, supplement, amend and restate, or
otherwise modify the Purchase Agreement, the Borrower Note, any other
document executed pursuant to the Purchase Agreement, the Collection
Account Agreement, the Lock-Box Agreements, the Liquidation Account
Agreement or the Borrower's certificate of incorporation or by-laws,
except (A) in accordance with the terms of such document, instrument or
agreement and (B) with the prior written consent of the Administrative
Agent.
(ii) The Borrower shall not enter into or otherwise become bound by
any agreement, instrument, document or other arrangement that restricts
its right to amend, supplement, amend and restate or otherwise modify, or
to extend or renew, or to waive any right under, this Agreement or any
other Loan Document.
SECTION 7.2.10. Separate Corporate Existence. The Borrower hereby
acknowledges that the Administrative Agent, the Issuer, the Swingline Bank and
each Lender are entering into the transactions
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contemplated by this Agreement and the other Loan Documents in reliance upon the
Borrower's identity as a legal entity separate from ProSource and its other
Affiliates. Therefore, from and after the date hereof, the Borrower shall take
all steps specifically required by this Agreement or reasonably required by the
Administrative Agent to continue the Borrower's identity as a separate legal
entity and to make it apparent to third Persons that the Borrower is an entity
with assets and liabilities distinct from those of the Servicer, ProSource and
any other Person, and is not a division of the Servicer, ProSource or any other
Person. Without limiting the generality of the foregoing and in addition to and
consistent with the other covenants set forth herein, the Borrower shall take
such actions as shall be required in order that:
(a) The Borrower shall be a limited purpose corporation whose
primary activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring from ProSource, owning, holding,
granting security interests, or selling interests, in the Pool Receivables
and Related Security, entering into agreements for the servicing and
financing of the Pool Receivables, and conducting such other activities as
it deems necessary or appropriate to carry out its primary activities
including, without limitation, its duties and obligations under the Annual
Transfer Agreement;
(b) Not less than one member of the Borrower's Board of Directors
(an "Independent Director") shall be an individual familiar with
securitization and bankruptcy-remote structures who is not a direct,
indirect or beneficial stockholder, officer, director, employee,
affiliate, associate, customer or supplier of ProSource, any subsidiary of
ProSource other than the Borrower, any parent corporation of which
ProSource is a subsidiary or any Affiliate of ProSource (collectively, the
"Parent Group"). The Borrower's Organic Documents shall provide that its
Board of Directors shall not take any action to cause the commencement of
a voluntary case or other proceeding with respect to the Borrower under
any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law, or the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, or
other similar official for the Borrower, unless in each case the
Independent Directors shall
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approve the taking of such action in writing prior to the taking of such
action. In the event an Independent Director resigns or otherwise ceases
to be a director of the Borrower, there shall be selected a replacement
Independent Director who shall not be an individual within the
proscriptions of the first sentence of this clause (b);
(c) The Borrower's Organic Documents shall provide that no
Independent Director shall at any time serve as a trustee in bankruptcy
for the Borrower, ProSource or any Affiliate thereof. Each Independent
Director shall be paid a reasonable director's fee;
(d) Any employee, consultant or agent of the Borrower will be
compensated from the Borrower's funds for services provided to the
Borrower. The Borrower will engage no agents other than its attorneys,
auditors and other professionals, and a servicer for the Pool Receivables,
which servicer will be fully compensated for its services to the Borrower
by payment of the Servicer's Fee;
(e) The Borrower shall contract with the Servicer to perform for the
Borrower all operations required on a daily basis to service the Pool
Receivables. The Borrower will not incur any material indirect or overhead
expenses for items shared between the Borrower and any member of the
Parent Group. To the extent, if any, that the Borrower and any member of
the Parent Group share items of expenses not reflected in the Servicer's
Fee, such as legal, auditing and other professional services, such
expenses shall be allocated to the extent practical on the basis of actual
use or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being
understood that ProSource shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Loan Documents,
including legal, agency and other fees. Any officer or director of a
member of the Parent Group may be compensated by the Borrower in an amount
determined to reflect the services rendered to the Borrower;
(f) The Borrower's operating expenses will not be paid by any member
of the Parent Group, nor shall the Borrower pay
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any operating expenses of the Parent Group except as described above in
clause (e);
(g) The Borrower shall have its own separate mailing address and
stationery;
(h) The Borrower's books and records shall be maintained separately
from those of any member of the Parent Group;
(i) All financial statements of the Parent Group that are
consolidated to include the Borrower shall contain detailed notes clearly
stating that the Borrower is a separate corporate entity with creditors
who have received security interests in the Borrower's assets and shall be
entitled to be satisfied out of the Borrower's assets prior to equity
holders;
(j) The Borrower's assets shall be maintained in a manner that
facilitates their identification and segregation from those of each member
of the Parent Group;
(k) The Borrower shall strictly observe corporate formalities in its
dealings with each member of the Parent Group, and funds or other assets
of the Borrower will not be commingled with those of any member of the
Parent Group, other than Collections received by ProSource in its capacity
as Servicer. The Borrower shall not maintain joint bank accounts or other
depository accounts to which any member of the Parent Group (other than
ProSource in its capacity as Servicer) has independent access. No funds of
the Borrower shall at any time be pooled with any funds of other members
of the Parent Group;
(l) The Borrower shall pay to ProSource the marginal increase, if
any, of the premium payable with respect to any insurance policy that
covers the Borrower and any member of the Parent Group, but the Borrower
shall not, directly or indirectly, be named or enter into an agreement to
be named as a direct or contingent beneficiary or loss payee under any
such insurance policy covering the property of any member of the Parent
Group; and
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(m) The Borrower shall maintain arm's-length relationships with the
members of the Parent Group. Any Person that renders or otherwise
furnishes services to the Borrower will be compensated by the Borrower at
market rates for such services it renders or otherwise furnishes to the
Borrower. Except as contemplated in the Loan Documents, the Borrower shall
not hold itself out to be responsible for the debts of any member of the
Parent Group or the decisions or actions respecting the daily business and
affairs of any member of the Parent Group.
SECTION 7.3. Affirmative Covenants of the Servicer. Until all Commitments
have terminated and all Obligations (other than indemnity, reimbursement and
similar obligations in respect of which no claim has been made and no amount
remains outstanding) have been paid in full and no Letter of Credit Outstandings
remain outstanding, the Servicer will perform the obligations set forth in this
Section 7.3.
SECTION 7.3.1. Compliance with Laws, etc. The Servicer shall comply in all
respects with all applicable laws, rules, regulations and orders except to the
extent noncompliance therewith could not reasonably be expected to have a
Material Adverse Effect or cause a Default of the type described in Section
9.1.9 or Section 9.1.11, such compliance to include:
(a) the maintenance and preservation of its corporate existence and
qualifications as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 7.3.2. Deposits to Lock-Box Accounts. The Servicer shall not
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Lock-Box Account cash or cash proceeds other than Collections of Pool
Receivables. All funds in the Lock-Box Accounts shall be deposited into the
Collection Account within one Business Day.
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SECTION 7.4. Negative Covenants of the Servicer. Until all Commitments
have terminated and all Obligations (other than indemnity, reimbursement and
similar obligations in respect of which no claim has been made and no amount
remains outstanding) have been paid in full and no Letter of Credit Outstandings
remain outstanding, the Servicer shall perform the obligations applicable to it
set forth in this Section 7.4.
SECTION 7.4.1. Extension or Amendment of Receivables. Except as otherwise
provided in Section 8.2(c), the Servicer shall not extend the maturity or adjust
the Outstanding Balance or otherwise modify the terms of any Pool Receivable, or
amend, modify or waive any term or condition of any related Contract.
SECTION 7.4.2. Modification of Credit and Collection Policy. The Servicer
shall not materially supplement, change or otherwise modify the Credit and
Collection Policy without the prior written consent of the Administrative Agent.
SECTION 7.4.3. Amendments to Certain Documents. Other than the Originator
Credit Facility, the Servicer shall not enter into or otherwise become bound by
any agreement, instrument, document or other arrangement that restricts its
right to amend, supplement, amend and restate or otherwise modify, or to extend
or renew, or to waive any right under, this Agreement or any other Loan
Document.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.1. Designation of the Servicer.
(a) ProSource as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person
designated as the Servicer hereunder (the "Servicer") from time to time in
accordance with this Section 8.1. Until the Administrative Agent or the
Required Lenders give to ProSource a Successor Notice (as defined in
Section 8.1(b)), ProSource is hereby designated as, and hereby agrees to
perform the duties and obligations of, Servicer pursuant to the terms
hereof.
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(b) Successor Notice; Servicer Transfer Events. Upon the Servicer's
receipt of a notice from the Administrative Agent (at the direction of the
Required Lenders) of the designation of a new Servicer (a "Successor
Notice"), the Servicer agrees that it will terminate its activities as
Servicer hereunder in a manner that the Administrative Agent believes will
facilitate the transition of the performance of such activities to the new
Servicer, and the successor Servicer (which may be the Administrative
Agent (or its designee)) shall assume each and all of the Servicer's
obligations to service and administer such Pool Receivables, on the terms
and subject to the conditions herein set forth, and the Servicer shall use
its best efforts to assist the successor Servicer in assuming such
obligations, including by allowing the Administrative Agent (or its
designee) or such successor Servicer access to, and the use by the
Administrative Agent and the successor Servicer of, all licenses, hardware
and software used by the Servicer to service the Pool Receivables. The
Administrative Agent and the Lenders agree not to, and shall not be
entitled to, give ProSource, as initial Servicer, a Successor Notice (i)
unless the Net Worth of ProSource, as initial Servicer, falls below the
Specified Net Worth Level or (ii) until after the occurrence and only
during the continuance of any Event of Default (any occurrence of the
types described in clauses (i) or (ii) being herein called a "Servicer
Transfer Event"), in which case such Successor Notice may be given at any
time in the Administrative Agent's (at the direction of the Required
Lenders) or the Required Lenders' discretion.
(c) Subcontracts. Servicer may, with the prior consent of the
Administrative Agent, which consent shall not be unreasonably withheld,
subcontract with any other Person for servicing, administering or
collecting the Pool Receivables, provided that Servicer shall remain
liable for the performance of the duties and obligations of Servicer
pursuant to the terms hereof.
SECTION 8.2. Duties of Servicer.
(a) Appointment; Duties in General. The Borrower hereby appoints as
its agent the Servicer, as from time to time
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designated pursuant to Section 8.1, to enforce its rights and interests in
and under the Pool Receivables, the Related Security and the related
Contracts. Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with applicable laws, rules and regulations, with
reasonable care and diligence and in accordance with the Credit and
Collection Policy.
(b) Collections; Segregation. The Servicer shall deposit all
Collections received by it into a Lock-Box Account within one Business Day
of receipt. All funds in the Lock-Box Accounts shall be transferred to the
Collection Account within one Business Day of their deposit in such
Lock-Box Account.
(c) Modification of Receivables. The Servicer, may, in accordance
with the Credit and Collection Policy, extend the maturity of, or
otherwise modify or amend, any Pool Receivable as the Servicer may
determine to be appropriate to maximize Collections thereof; provided,
however, that no such extension, modification or amendment shall be
permitted if the Aggregate Outstanding Amount exceeds, or such action
would cause the Aggregate Outstanding Amount to exceed, the sum of the
Borrowing Base and the amount on deposit in the Liquidation Account (other
than amounts on deposit therein allocated to Carrying Costs) and no such
extension, modification or amendment shall alter the aging of such
Receivable in connection with this Agreement (including the status of such
Pool Receivable as a Defaulted Receivable or a Due Date Defaulted
Receivable or the original invoice date for such Receivable).
(d) Documents and Records. The Borrower shall deliver, or cause to
be delivered, to the Servicer, and the Servicer shall hold for the sole
benefit of the Agent for the benefit of the Secured Parties, all
documents, instruments and records (including, without limitation,
computer tapes or disks) that evidence or relate to Pool Receivables.
(e) Certain Duties to the Borrower. Servicer, if other than
ProSource, shall, as soon as practicable upon demand of the Borrower,
deliver to the Borrower copies of all documents,
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instruments and records in its possession that evidence or relate to Pool
Receivables, the Collections thereon, the Lock-Box Accounts, the
Collection Account and the Liquidation Account.
(f) Termination. The Servicer's authorization under this Agreement
shall terminate upon the date after the Commitment Termination Date when
all Obligations have been paid in full and no Letter of Credit
Outstandings exist.
(g) Power of Attorney. The Borrower hereby grants to the Servicer an
irrevocable power of attorney, with full power of substitution, coupled
with an interest, to take in the name of the Borrower all steps which are
necessary or advisable to endorse, negotiate or otherwise realize on any
writing or other right of any kind held or transmitted by the Borrower in
connection with any Pool Receivable.
(h) Borrowing Base Report. On the fourth Business Day next
succeeding the end of each calendar week, the Servicer shall deliver to
the Administrative Agent a Borrowing Base Report, substantially in the
form of Exhibit B-1, executed by an Authorized Officer of the Servicer
containing such compliance calculations and other information as set forth
therein; provided, however, that if ProSource is the Servicer and (i)
ProSource fails to maintain a Net Worth of at least the Specified Net
Worth Level or (ii) a default shall occur in connection with any
outstanding Indebtedness of ProSource in excess of $1,000,000 in the
aggregate, then the Servicer shall be required to deliver the Borrowing
Base Report to the Administrative Agent on each Business Day.
(i) Settlement Statement. On or prior to the 20th day of each Fiscal
Month, the Servicer shall deliver to the Administrative Agent a Settlement
Statement, substantially in the form of Exhibit B-2, containing such
compliance calculations and other information as set forth therein.
(j) Lock-Boxes. Subject to the provisions of Section 8.3 below, the
Servicer shall direct all Obligors to make all payments directly to the
Lock-Boxes (including by
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electronic payments directly to the Lock-Box Accounts or the Collection
Account).
(k) Annual Independent Accountants' Report. The Servicer shall cause
KPMG Peat Marwick or another firm of nationally-recognized independent
certified public accountants, who may also render other services to the
Servicer, to deliver to the Servicer on or before April 30 (or 120 days
after the end of the Servicer's fiscal year, if other than December 31) of
each year, beginning on April 30, 1998, with respect to the twelve months
ended immediately preceding December 31 (or other applicable date) (or
such other period as shall have elapsed from the Effective Date to the
date of such certificate), a statement addressed to the Servicer and the
Administrative Agent, to the effect that such firm has performed certain
agreed upon procedures acceptable to the Administrative Agent (i)
confirming the accuracy of the Settlement Statements and the Borrowing
Base Reports, (ii) calculation of the dollar weighted average of the time
between the invoice date and the date of issuance of the related credit
memo for a sample of Pool Receivables of sufficient size and over a time
period reasonably acceptable to the Administrative Agent (the "Sample
Dilution Horizon") and (iii) certain agreed upon procedures confirming the
Borrower's Net Worth. The Servicer shall deliver a copy of such report,
within 15 days of receipt, to the Administrative Agent and each Lender.
SECTION 8.3. Rights on Servicer Transfer Event. At any time following a
Servicer Transfer Event:
(a) The Administrative Agent may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any
Pool Receivable directly to the Administrative Agent, for the
benefit of the Secured Parties.
(b) The Servicer shall, at the Administrative Agent's request
and at the Servicer's expense, give notice of the Administrative
Agent's security interest to each said Obligor and direct that
payments be made directly to the Administrative Agent.
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(c) The Servicer shall, at the Administrative Agent's request,
assemble all of the documents, instruments and other records
(including computer programs, tapes and disks) which evidence the
Pool Receivables, and the related Contracts and Related Security, or
which are otherwise necessary to collect such Pool Receivables, and
make the same available to the Administrative Agent at a place
selected by the Administrative Agent.
(d) Each of ProSource and the Borrower hereby authorizes the
Administrative Agent, and grants to the Administrative Agent an
irrevocable power of attorney, pursuant to the Power of Attorney, in
the forms of Exhibit J-1 and J-2, to take any and all steps in the
Borrower's or ProSource's name and on behalf of the Borrower and
ProSource, which are necessary or desirable, in the determination of
the Administrative Agent, to collect all amounts due under any and
all Pool Receivables, including endorsing the Borrower's or
ProSource's name on checks and other instruments representing
Collections and enforcing such Pool Receivables and the related
Contracts. The Administration Agent agrees not to exercise such
powers of attorney prior to a Servicer Transfer Event and agrees to
return the powers of attorney to the applicable parties promptly
following the date on which all Commitments have terminated and all
Obligations (other than indemnity, reimbursement and similar
obligations in respect of which no claim has been made and no amount
remains outstanding) have been paid in full and no Letter of Credit
Outstandings remain outstanding. In the event the Administrative
Agent fails to return the applicable foregoing powers of attorney,
the Administrative Agent shall promptly furnish to the Servicer or
the Borrower, as applicable, a loss affidavit and an indemnity in
form and substance reasonably satisfactory to the Servicer or the
Borrower, as the case may be.
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SECTION 8.4. Responsibilities of the Borrower. Anything herein to the
contrary notwithstanding:
(a) Contracts. The Borrower, pursuant to the Purchase Agreement,
shall cause ProSource to perform all of its obligations under the
Contracts related to the Pool Receivables and under the other agreements
related thereto to the same extent as if a security interest had not been
granted to the Administrative Agent under the Security Agreement and the
exercise by the Administrative Agent or its designee of its rights
hereunder or thereunder shall not relieve the Borrower or ProSource from
such obligations.
(b) Limitation of Liability. None of the Administrative Agent, the
Issuer, the Swingline Bank or any Lender shall have any obligation or
liability with respect to any Pool Receivables, the Contracts related
thereto or any other agreements related thereto, nor shall any of them be
obligated to perform any of the obligations of the Borrower or ProSource
thereunder.
SECTION 8.5. Audits. (i) Each of the Borrower and the Servicer shall, from
time to time during regular business hours as requested by the Administrative
Agent upon reasonable prior written notice, permit the Administrative Agent, or
its agents or representatives, (A) to examine and make copies of and abstracts
from all books, records and documents (including computer tapes and disks) in
the possession or under the control of the Borrower or the Servicer relating to
Pool Receivables and the Related Security, including the related Contracts, and
(B) to visit the offices and properties of the Borrower and the Servicer for the
purpose of examining such materials described in clause (A) above, and to
discuss matters relating to Pool Receivables and the Related Security or the
Borrower's or the Servicer's performance hereunder or under the Contracts with
any of the officers or employees of the Borrower or the Servicer having
knowledge of such matters, and (ii) without limiting the foregoing clause (i)
above, from time to time upon reasonable prior written notice, permit certified
public accountants or other auditors acceptable to the Administrative Agent to
conduct, at the Servicer's expense to be paid out of the Servicing Fee, a review
of the books and records relating to the Pool Receivables and Related Security;
provided, however, that
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prior to a Default, the Administrative Agent may and, upon the request of the
Required Lenders shall, conduct not more than one such review per year; provided
further, however, that after the occurrence and during the continuation of a
Default, there shall be no limitation on the number of such reviews that may be
requested and conducted, such reviews to be at the expense of the Servicer to be
paid out of the Servicing Fee.
SECTION 8.6. Application of Collections. Except as otherwise specified by
such Obligor, required by an existing contract (including any Contract) or
required by law, any payment by an Obligor in respect of any indebtedness owed
by it to the Borrower shall be applied, first, as a Collection of any Pool
Receivable then outstanding of such Obligor in the order of the age of such Pool
Receivables, starting with the oldest of such Pool Receivable, and second, only
after full repayment of any Pool Receivables, to any other indebtedness of such
Obligor.
SECTION 8.7. Servicing Fee. The Borrower shall pay to Servicer a fee (the
"Servicing Fee"), for each month equal to (i) 1% times (ii) the aggregate
Outstanding Balance of the Pool Receivables as of the most recent Month End Date
times (iii) one-twelfth; provided, however, that if neither ProSource nor any
Affiliate of ProSource is the Servicer, the monthly Servicing Fee may be
increased to an alternative amount specified by the Administrative Agent and
such Servicer not to exceed 110% of (x) the aggregate reasonable costs and
expenses incurred by such Servicer during such month in connection with the
performance of its obligations hereunder and (y) the other costs and expenses to
be paid out of the Servicing Fee (including the cost of any reviews pursuant to
Section 8.5). Such Servicing Fee shall be paid in arrears on each Monthly
Payment Date.
SECTION 8.8. Servicer Indemnification. The Servicer hereby indemnifies,
exonerates and holds each Secured Party and each of their respective officers,
directors, employees, stockholders and agents (collectively, the "Servicer
Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and reasonable
expenses incurred in connection therewith (irrespective of whether any such
Servicer Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable
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attorneys' fees and disbursements (collectively, the "Servicer Indemnified
Liabilities"), incurred by the Servicer Indemnified Parties or any of them as a
result of, or arising out of, or relating to any inaccurate representation or
warranty of the Servicer (including with respect to the accuracy of information
contained in the Borrowing Base Reports and Settlement Statements), or the
breach by the Servicer of its obligations under any Loan Document, except for
any such Servicer Indemnified Liabilities arising by reason of the relevant
Servicer Indemnified Party's gross negligence or wilful misconduct. If and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Servicer hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Servicer Indemnified Liabilities which is
permissible under applicable law.
ARTICLE IX
EVENTS OF DEFAULT AND THEIR EFFECT
SECTION 9.1. Events of Default. Each of the following events or
occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. Non-Payment of Obligations. The Borrower shall (i) default
in the payment or prepayment when due of any principal of or interest on any
Loan or the payment of any other amount payable by Borrower hereunder (including
any Reimbursement Obligation or any other obligations to deposit immediately
available funds to collateralize Letter of Credit Outstandings) or (ii) fail to
make any deposit required to be made by the Borrower hereunder when due. The
Servicer shall fail (and such failure shall continue unremedied for a period of
three Business Days) to make payments or deposits when due or required by the
Loan Documents.
SECTION 9.1.2. Non-Performance of Other Covenants and Obligations. The
Borrower, the Servicer or the Originator shall default in the due performance
and observance of any other covenant, term or agreement contained herein or in
any other Loan Document executed by it, and such default shall continue
unremedied for a period of 30 days after the earlier to occur of (i) discovery
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of such default by the Borrower, the Servicer or the Originator, as applicable,
and (ii) notice thereof shall have been given to the Borrower, the Servicer or
the Originator, as applicable, by the Administrative Agent, the Issuer, the
Swingline Bank or any Lender.
SECTION 9.1.3. Breach of Representations and Warranties. Any
representation or warranty of the Borrower, the Servicer or the Originator made
hereunder or in any other Loan Document executed by it or any other writing or
certificate furnished by or on behalf of the Borrower, the Servicer or the
Originator to the Administrative Agent, the Issuer, the Swingline Bank or any
Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article V)
is or shall be incorrect when made or deemed made in any material respect.
SECTION 9.1.4. Default on Originator Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace or cure period),
whether by acceleration or otherwise, of any Indebtedness of the Originator
having a principal amount, individually or in the aggregate, in excess of
$1,500,000.
SECTION 9.1.5. Bankruptcy, Insolvency, etc. Any of the Borrower, the
Servicer or the Originator shall become subject to an Event of Bankruptcy.
SECTION 9.1.6. Borrowing Base Deficiency. The Aggregate Outstanding Amount
shall exceed the sum of the Borrowing Base and the amount on deposit in the
Liquidation Account (other than amounts on deposit therein allocated to Carrying
Costs), and such condition shall continue unremedied for one Business Day after
the earlier to occur of (i) discovery of such condition by an Authorized Officer
of the Borrower, and (ii) notice thereof shall have been given to the Borrower
by the Administrative Agent, the Issuer, the Swingline Bank or any Lender.
SECTION 9.1.7. Loss Reserve Ratio. The Loss Reserve Ratio shall exceed
16%.
SECTION 9.1.8. Dilution Reserve Ratio. The Dilution Reserve Ratio shall
exceed 6%.
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SECTION 9.1.9. Collectability of Receivables. Any event or circumstance
occurs which has a material adverse effect on the collectability or
enforceability of a material portion of the Pool Receivables.
SECTION 9.1.10. IRS or PBGC Liens. The IRS or PBGC shall file a notice of
a Lien with respect to the receivables of the Originator or the assets of the
Borrower.
SECTION 9.1.11. Impairment of Security, etc. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of the Borrower or ProSource with respect to
any portion of the Collateral having a value in excess of $500,000; the Borrower
or ProSource shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien securing
any Obligation (including the Lien on the Collateral) shall, with respect to any
portion of the Collateral having a value in excess of $500,000, cease to be a
perfected first priority Lien (other than with respect to Permitted Liens).
SECTION 9.1.12. Change in Control. Any Change in Control shall occur.
SECTION 9.1.13. Purchase and Sale Termination Event. A Purchase and Sale
Termination Event shall have occurred and be continuing under the Purchase
Agreement.
SECTION 9.2. Effects of Events of Default.
SECTION 9.2.1. Action if Bankruptcy. If any Event of Default described in
Section 9.1.5 shall occur, the Commitments (if not theretofore terminated) shall
automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations (including Reimbursement Obligations) of the
Borrower shall automatically be and become immediately due and payable, without
notice or demand and the Borrower shall automatically and immediately be
obligated to deposit with the Administrative Agent in immediately available
funds to be held in the LOC
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Collateralization Account in an amount equal to all Letter of Credit
Outstandings.
SECTION 9.2.2. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in Section 9.1.5) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the Administrative
Agent, upon the direction of the Required Lenders, shall by written notice to
the Borrower declare all or any portion of the outstanding principal amount of
the Loans and other Obligations (including Reimbursement Obligations) of the
Borrower to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans and
other Obligations of the Borrower which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate and
the Borrower shall automatically and immediately be obligated to deposit with
the Administrative Agent in immediately available funds to be held in the LOC
Collateralization Account in an amount equal to all Letter of Credit
Outstandings.
ARTICLE X
THE ADMINISTRATIVE AGENT
SECTION 10.1. Actions. Each Lender hereby appoints Scotiabank as its
Administrative Agent under and for purposes of this Agreement, the Notes and
each other Loan Document. Each Lender authorizes the Administrative Agent to act
on behalf of such Lender under this Agreement, the Notes, the Security Agreement
and each other Loan Document and, in the absence of other written instructions
from the Required Lenders received from time to time by the Administrative Agent
(with respect to which the Administrative Agent agrees that it will comply,
except as otherwise provided in this Section or as otherwise advised by
counsel), to exercise such powers hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto,
including the enforcement of any remedies under the Security Agreement. Each
Lender hereby
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indemnifies (which indemnity shall survive any termination of this Agreement)
the Administrative Agent, pro rata according to such Lender's Percentage, from
and against any and all liabilities, obligations, losses, damages, claims, costs
or expenses of any kind or nature whatsoever which may at any time be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the
Administrative Agent is not reimbursed by the Borrower; provided, however, that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, claims, costs or expenses which are determined by
a court of competent jurisdiction in a final proceeding to have resulted solely
from the Administrative Agent's gross negligence or wilful misconduct. The
Administrative Agent shall not be required to take any action hereunder, under
the Notes or under any other Loan Document, or to prosecute or defend any suit
in respect of this Agreement, the Notes or any other Loan Document, unless it is
indemnified hereunder to its satisfaction. If any indemnity in favor of the
Administrative Agent shall be or become, in the Administrative Agent's
determination, inadequate, the Administrative Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent shall
have been notified by telephone, confirmed in writing, by any Lender by 5:00
p.m., New York time, on the Business Day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to the Borrower to the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing (in the case of the
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Borrower) and (in the case of a Lender) at the Federal Funds Rate (for the first
two Business Days after which such amount has not been repaid, and thereafter at
the interest rate applicable to Loans comprising such Borrowing).
SECTION 10.3. Exculpation. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens purported to be created by any of the Loan
Documents, or the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower or the Servicer of its obligations hereunder or
under any other Loan Document. Any such inquiry which may be made by the
Administrative Agent shall not obligate it to make any further inquiry or to
take any action. The Administrative Agent shall be entitled to rely upon advice
of counsel concerning legal matters and upon any notice, consent, certificate,
statement or writing which the Administrative Agent believes to be genuine and
to have been presented by a proper Person.
SECTION 10.4. Successor. The Administrative Agent may resign as such at
any time upon at least 30 days' prior notice to the Borrower and all Lenders. If
the Administrative Agent at any time shall resign, the Required Lenders may with
the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) appoint another Lender as a successor Administrative Agent which shall
thereupon become the Administrative Agent hereunder. If no successor
Administrative Agent shall have been so appointed by the Required Lenders with
the consent of the Borrower and shall have accepted such appointment within 30
days after the retiring Administrative Agent's giving notice of resignation,
then the retiring Administrative Agent may with the consent of the Borrower
(such consent not to be unreasonably withheld or delayed) appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the
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U.S. (or any State thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall be
entitled to receive from the retiring Administrative Agent such documents of
transfer and assignment as such successor Administrative Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as the Administrative Agent, the provisions of (i) this
Article X shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Administrative Agent under this Agreement and (ii)
Section 12.3 and Section 12.4 shall continue to inure to its benefit.
SECTION 10.5. Loans by Scotiabank. Scotiabank shall have the same rights
and powers with respect to (x) the Credit Extensions made by it or any of its
Affiliates, and (y) the Notes held by it or any of its Affiliates as any other
Lender and may exercise the same as if it were not the Administrative Agent.
Scotiabank and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any Subsidiary or
Affiliate of the Borrower as if Scotiabank were not the Administrative Agent
hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Administrative Agent and each other Lender, and based on
such Lender's review of the financial information of the Borrower, this
Agreement, the other Loan Documents (the terms and provisions of which being
satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitments. Each Lender also acknowledges that it will,
independently of the Administrative Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or
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not exercising from time to time any rights and privileges available to it under
this Agreement or any other Loan Document.
SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
ARTICLE XI
SETTLEMENT PROCEDURES
SECTION 11.1. Settlement Procedures. (a) Collection of the Pool
Receivables shall be administered by the Servicer in accordance with the terms
of this Agreement. The Borrower shall provide to the Servicer on a timely basis
all information needed for such administration.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received by the Borrower or the Servicer, transfer such
Collections from the Lock-Box Accounts and deposit such Collections into the
Collection Account. With respect to such Collections on such day, the Servicer
shall to the extent permitted by the applicable agreement:
(i) transfer from the Collection Account to the Liquidation Account,
out of such Collections, first, an amount equal to the interest accrued
through such day for each Loan and not previously deposited therein and
second, an amount equal to the Servicing Fee, the Commitment Fee, the
Letter of Credit Fees and any costs or expenses set forth in Section 4.3,
4.4, 4.5 or 4.6, in each case accrued through such day and not previously
deposited therein (collectively, the amounts described in clause first and
second are referred to herein as, the "Carrying Costs"); and
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(ii) if such day is not a Amortization Day, remit to the Borrower
the remainder of such Collections for application in accordance with
Section 11.1(h); provided, however, that if on such day the Aggregate
Outstanding Amount exceeds the Borrowing Base (such excess being referred
to herein as a "Borrowing Base Deficiency"), then such remainder of
Collections shall be transferred from the Collection Account to the
Liquidation Account until the sum of the Borrowing Base plus the amount on
deposit in the Liquidation Account (other than amounts on deposit therein
in respect of the Carrying Costs pursuant to clause 11.1(b)(i) above) at
least equals the Aggregate Outstanding Amount; provided, further, that if
on any day (other than an Amortization Day) such Borrowing Base Deficiency
shall no longer exist, the Servicer shall remit to the Borrower any
amounts remaining on deposit in the Liquidation Account that were
deposited therein pursuant to the preceding proviso, which amounts shall
be applied by the Borrower in accordance with Section 11.1(h); and
(iii) if such day is an Amortization Day, transfer to the
Liquidation Account the entire remainder of such Collections.
(c) On each day that any Carrying Costs (other than Servicing Fees) are
payable by the Borrower in accordance with this Agreement, the Servicer shall
transfer from the Liquidation Account to the Agent's Account, out of Collections
deposited in the Liquidation Account in respect of such Carrying Costs pursuant
to Section 11.1(b)(i), the amount of such Carrying Costs that are due and
payable on such day.
(d) On each day that the Borrower is required to repay the Loans in
accordance with Section 3.1 or pay amounts to the Administrative Agent in
connection with Letters of Credit pursuant to the proviso to Section 3.1(b) or
(c) or Section 2.8.4, the Servicer shall transfer from the Liquidation Account
to the Agent's Account, out of Collections deposited in the Liquidation Account
pursuant to Section 11.1(b)(ii) and (b)(iii), the principal amount of the Loans
required to be repaid and the payments to be made to the Agent pursuant to
Section 3.1 (including pursuant to Section 3.1(b) or (c) thereof) and Section
2.8.4.
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(e) On each Amortization Day occurring after the Loans and all Carrying
Costs payable to the Secured Parties have been paid in full, the Servicer shall
transfer to the Agent's Account all amounts in the Liquidation Account, which
remaining amounts shall be held by the Agent for application in accordance with
clauses fourth, fifth and sixth of Section 11.1(g)(ii).
(f) On each day that any Servicing Fees are payable by the Borrower in
accordance with this Agreement, the Servicer shall deposit to its own account
from Collections held on deposit in the Liquidation Account pursuant to Section
11.1(b)(i) in respect of the accrued Servicing Fee, an amount equal to such
accrued Servicing Fee; provided, however, that if an Event of Default has
occurred and is continuing and ProSource or any Affiliate thereof is the
Servicer, the Servicer shall not withdraw any amounts from the Liquidation
Account with respect to accrued Servicing Fees.
(g) Upon receipt of funds deposited in the Agent's Account pursuant to
Sections 11.1(c), 11.1(d), 11.1(e) or 11.1(h) the Administrative Agent shall
cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not an Amortization
Day, first, to the Secured Parties in payment in full of all accrued
interest on the Loans, second, to the Secured Parties in payment of
accrued and unpaid Letter of Credit Fees and Commitment Fees and to cover
all other Carrying Costs payable to the Secured Parties, and third, to the
Secured Parties in payment of the outstanding principal amount of the
Loans; and
(ii) if such distribution occurs on an Amortization Day, first, to
the Secured Parties in payment in full of all accrued interest on the
Loans, second, to the Secured Parties in payment of accrued and unpaid
Letter of Credit Fees, Commitment Fees, and all other Carrying Costs
payable to the Secured Parties, third, to the Secured Parties in payment
the outstanding principal amount of the Loans, fourth, after the
outstanding principal amount of the Loans, accrued interest thereon and
other Carrying Costs payable to the Secured Parties have been paid in
full, remaining amounts, to the extent of the Letter of Credit
Outstandings, shall be
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deposited into the LOC Collateralization Account to collateralize Letter
of Credit Outstandings, fifth, to the Secured Parties for the payment of
all other Obligations of the Borrower hereunder, and sixth, to the
Servicer (if the Servicer is ProSource or any Affiliate thereof) all
accrued and unpaid Servicing Fees and to the Borrower all remaining
amounts.
(h) Borrower shall apply all Collections distributed to it pursuant to
Sections 11.1(b)(ii) and 11.1(g)(ii) in the following order of priority: first,
if Borrower elects, to any voluntary prepayment of the outstanding principal
amount of the Loans pursuant to Section 3.1(a) and the payment of interest
thereon; second, the payment of its expenses (including the Obligations when due
and payable to the Secured Parties); third, to the payment of accrued and unpaid
interest on the Borrower Note; fourth, to the payment of the purchase price of
any Receivables under the Purchase Agreement and the payment of the outstanding
principal amount of the Borrower Note; and fifth, other legal and valid
corporate purposes.
SECTION 11.2. Investments of Funds in Certain Accounts.
(a) Any amounts in the Liquidation Account or the Collection
Account, as the case may be, may be invested by the Liquidation Account
Bank or Collection Account Bank, respectively, at Servicer's direction so
as to insure sufficient availability of funds, in Permitted Investments,
so long as Administrative Agent's interest for the benefit of the Lenders
in such Permitted Investments is perfected and such Permitted Investments
are subject to no Liens other than Permitted Liens and the Lien under the
Loan Documents. Permitted Investments shall be made in the name of the
Borrower. All income received from investments of funds in the Liquidation
Account or the Collection Account shall be treated as Collections and
distributed in accordance with Section 11.1.
(b) Any interest earned on amounts deposited by the Agent in the LOC
Collateralization Account to cash collateralize Letter of Credit
Outstandings shall be used to pay the Letter of Credit Fee when due and
payable.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver shall:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders without the consent of
all Lenders;
(b) modify this Section 12.1, change the definition of "Required
Lenders", release any Collateral (except as otherwise specifically
provided in any Loan Document), change the amount or the date of payment
of the Commitment Fee or the Letter of Credit Fee or extend the Commitment
Termination Date without the consent of all Lenders;
(c) extend the Scheduled Maturity Date (or reduce the principal
amount of or rate of interest on any Loan or Reimbursement Obligation, or
postpone the date of payment of interest on any Loan or Reimbursement
Obligation) without the consent of the Lender making such Loan (it being
understood and agreed, however, that any vote to rescind any acceleration
made pursuant to Section 9.2.2 of amounts owing with respect to the Loans
and other Obligations shall only require the vote of the Required Lenders
and any vote to rescind any acceleration made pursuant to Section 9.2.1 of
amounts owing with respect to the Loans and other Obligations shall
require the consent of all Lenders);
(d) increase the aggregate amount of any Lender's Percentage of any
Commitment Amount, increase the aggregate amount of any Loans required to
be made by a Lender pursuant to its Commitments or reduce any fees
described in Article III payable to any Lender without the consent of such
Lender;
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(e) affect adversely the interests, rights or obligations of the
Administrative Agent in its capacity as the Administrative Agent without
consent of the Administrative Agent;
(f) affect adversely the interests, rights or obligations of the
Swingline Bank in its capacity as Swingline Bank without the consent of
the Swingline Bank; or
(g) affect adversely the interests, rights or obligations of the
Issuer in its capacity as Issuer without the consent of the Issuer.
No failure or delay on the part of the Administrative Agent, the Swingline Bank,
the Issuer or any Lender in exercising any power or right under this Agreement
or any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the
Administrative Agent, the Swingline Bank, the Issuer or any Lender under this
Agreement or any other Loan Document shall, except as may be otherwise stated in
such waiver or approval, be applicable to subsequent transactions. No waiver or
approval hereunder shall require any similar or dissimilar waiver or approval
thereafter to be granted hereunder.
SECTION 12.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its name on Schedule III hereto
or set forth in the Lender Assignment Agreement or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received. Any notice transmitted by facsimile shall be deemed given when
the confirmation of transmission thereof.
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SECTION 12.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable expenses of the Administrative Agent (including the
reasonable fees and out-of-pocket expenses of counsel to the Administrative
Agent and of local counsel, if any, who may be retained by counsel to the
Administrative Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated;
(b) the filing, recording, refiling or rerecording of any Loan
Document and/or any Uniform Commercial Code financing statements relating
thereto and all amendments, supplements, amendments and restatements and
other modifications to any thereof and any and all other documents or
instruments of further assurance required to be filed or recorded or
refiled or rerecorded by the terms hereof or the terms of any other Loan
Document; and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Administrative Agent, the
Issuer, the Swingline Bank and the Lenders harmless from all liability for, any
stamp or other taxes (other than Taxes payable in accordance with Section 4.6)
which may be payable in connection with the execution or delivery of this
Agreement, the Credit Extensions hereunder, or the issuance of the Notes, the
Letters of Credit, the Swingline Note or any other Loan Documents. The Borrower
also agrees to reimburse the Administrative Agent, the Issuer, the Swingline
Bank and each Lender upon demand for all reasonable out-of-pocket expenses
(including reasonable attorneys' fees and legal expenses of counsel to the
Administrative Agent, the Issuer, the Swingline Bank and the Lenders) incurred
by the Administrative Agent, the Issuer, the Swingline Bank or such Lenders in
connection with (x) the negotiation of any restructuring
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or "work-out" with the Borrower, whether or not consummated, of any Obligations
and (y) the enforcement of any Obligations.
SECTION 12.4. Indemnification. In consideration of the execution and
delivery of this Agreement and the extension of the Commitments, the Borrower
hereby indemnifies, exonerates and holds the Administrative Agent, the Issuer,
the Swingline Bank and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and reasonable expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Credit Extension,
including all Indemnified Liabilities arising in connection with the
transactions contemplated by the Loan Documents;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties;
(c) any Receivable or Contract;
(d) any inaccurate representation of any of the Borrower, or the
breach by any of the Borrower of its obligations under any Loan Document;
or
(e) false information conveyed to the Secured Parties by the
Servicer (other than the Administrative Agent and any Servicer appointed
by the Administrative Agent) or ProSource; failure by the Servicer (other
than the Administrative Agent and any Servicer appointed by the
Administrative Agent) to comply with any law; any dispute, claim or offset
of any Obligor; or any product liability or damage suit associated with a
Receivable.
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except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct or to the extent said indemnification shall
constitute credit recourse for the failure of an Obligor to make payments on a
Receivable. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
SECTION 12.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 12.3 and 12.4, and the obligations of the Lenders under
Section 10.1, shall in each case survive any assignment from one Lender to
another (in the case of Sections 12.3 and 12.4) and any termination of this
Agreement, the payment in full of all the Obligations and the termination of all
the Commitments. The representations and warranties made by each of the Borrower
and the Servicer in this Agreement and in each other Loan Document shall survive
the execution and delivery of this Agreement and each such other Loan Document.
SECTION 12.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 12.7. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 12.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower, the Administrative Agent, the Issuer,
the Swingline Bank and each Lender (or notice thereof satisfactory
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to the Administrative Agent) shall have been received by the Administrative
Agent and notice thereof shall have been given by the Administrative Agent to
the Borrower and each Lender.
SECTION 12.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES,
THE SWINGLINE NOTE AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. This Agreement, the Notes, the
Swingline Note and the other Loan Documents constitute the entire understanding
among the parties hereto with respect to the subject matter hereof and thereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 12.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) neither the Borrower nor the Servicer may assign or transfer its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 12.11.
SECTION 12.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its
participations in the Letters of Credit, Loans and Commitments to one or more
other Persons in accordance with this Section 12.11.
SECTION 12.11.1. Assignments. Upon prior notice to the Borrower and the
Administrative Agent, any Lender,
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(a) with the consent of the Borrower and the Administrative Agent
(which consents shall not be unreasonably delayed or withheld) may at any
time assign and delegate to one or more commercial banks or other
financial institutions, and
(b) with notice to the Borrower and the Administrative Agent, but
without the consent of the Borrower or the Administrative Agent, may
assign and delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans,
interest in Letter of Credit Outstandings and Commitments in a minimum aggregate
amount of $10,000,000 (or, if less, the entire remaining amount of such Lender's
Loans, interest in Letter of Credit Outstandings and Commitment); provided,
however, that the assigning Lender must assign a pro-rata portion of each of its
Commitment, Loans and interest in Letters of Credit Outstandings. The Borrower
and the Administrative Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until
(c) notice of such assignment and delegation, together with (i)
payment instructions, (ii) the Internal Revenue Service Forms or other
statements contemplated or required to be delivered pursuant to Section
4.6, if applicable, and (iii) addresses and related information with
respect to such Assignee Lender, shall have been delivered to the Borrower
and the Administrative Agent by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and delivered to the
Borrower and the Administrative Agent a Lender Assignment Agreement,
accepted by the Administrative Agent; and
(e) the processing fees described below shall have been paid.
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From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Administrative Agent has received and accepted an executed Lender Assignment
Agreement, but subject to clause (d) above, the Borrower shall execute and
deliver to the Administrative Agent (for delivery to the relevant Assignee
Lender) a new Note evidencing such Assignee Lender's assigned Loans and
Commitments and, if the assignor Lender has retained Loans and Commitments
hereunder, a replacement Note in the principal amount of the Loans and
Commitments retained by the assignor Lender hereunder (such Note to be in
exchange for, but not in payment of, the Note then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Note. Accrued
interest on that part of each predecessor Note evidenced by a new Note, and
accrued fees, shall be paid as provided in the Lender Assignment Agreement.
Accrued interest on that part of each predecessor Note evidenced by a
replacement Note shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Note and in this Agreement. Such assignor Lender or such Assignee Lender must
also pay a processing fee to the Administrative Agent upon delivery of any
Lender Assignment Agreement in the amount of $3,500. Any attempted assignment
and delegation not made in accordance with this Section 12.11.1 shall be null
and void. Notwithstanding anything to the contrary set forth above, any Lender
may (without requesting the consent of the Borrower or the Administrative Agent)
pledge its Loans to a Federal Reserve Bank in support of borrowings made by such
Lender from such Federal Reserve Bank.
SECTION 12.11.2. Participations. Any Lender may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a
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"Participant") participating interests in any of the participations in Letters
of Credit, Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 12.11 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the performance
of its Commitments and such other obligations;
(c) the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents;
(d) no Participant, unless such Participant is an Affiliate of such
Lender or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in clause (a), (b), (d) or, to the extent requiring the
consent of such Lender, clause (c) of Section 12.1, and
(e) the Borrower shall not be required to pay any amount under any
provision of this Agreement that is greater than the amount which it would
have been required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8 and 4.9, shall be considered a Lender and that
information delivered to a Lender pursuant to the terms of this Agreement may be
furnished to a Participant. Each Lender shall give notice to the Borrower of the
name of any Person to which such Lender has sold a participating interest under
the provisions hereof. Each Participant shall only be indemnified for increased
costs pursuant to Section 4.3, 4.5 or 4.6 if and to the extent that the Lender
which sold such participating interest to such Participant concurrently is
entitled to make, and does make, a claim on the Borrower for such increased
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costs. Any Lender that sells a participating interest in any Loan, Commitment or
other interest to a Participant under this Section 12.11.2 shall indemnify and
hold harmless the Borrower and the Administrative Agent from and against any
taxes, penalties, interest or other costs or losses (including reasonable
attorneys' fees and expenses) incurred or payable by the Borrower or the
Administrative Agent as a result of the failure of the Borrower or the
Administrative Agent to comply with its obligations to deduct or withhold any
Taxes from any payments made pursuant to this Agreement to such Lender or the
Administrative Agent, as the case may be, which Taxes would not have been
incurred or payable if such Participant had been a Non-U.S. Person that was
entitled to deliver to the Borrower, the Administrative Agent or such Lender,
and did in fact so deliver, a duly completed and valid Form 1001 or 4224 (or
applicable successor form) entitling such Participant to receive payments under
this Agreement without deduction or withholding of any United States federal
taxes. Any attempted sale of a participation interest not made in accordance
with this Section 12.11.2 shall be null and void.
SECTION 12.12. Other Transactions. Nothing contained herein shall preclude
the Administrative Agent, the Issuer, the Swingline Bank or any Lender from
engaging in any transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its Affiliates in which
the Borrower or such Affiliate is not restricted hereby from engaging with any
other Person.
SECTION 12.13. Execution on Behalf of Corporation. Any signature by any
Authorized Officer on this Agreement, any Loan Document and any other instrument
and certificate executed or to be executed pursuant to or in connection with
this Agreement or such other Loan Documents is provided only in such Authorized
Officer's capacity as a corporate officer, and not in any way in such Authorized
Officer's personal capacity.
SECTION 12.14. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS,
THE ISSUER, THE SWINGLINE BANK, THE SERVICER OR THE BORROWER IN
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CONNECTION HEREWITH OR THEREWITH SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE BORROWER AND THE SERVICER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT
AND ANY OTHER PROCESS UPON THE BORROWER MAY BE MADE BY MAILING OR DELIVERING A
COPY OF SUCH PROCESS TO THE BORROWER IN CARE OF THE PROCESS AGENT AT THE PROCESS
AGENT'S ABOVE ADDRESS, AND THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND
DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH OF THE
BORROWER AND THE SERVICER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK AT THE RESPECTIVE ADDRESSES FOR NOTICES HEREUNDER. EACH OF
THE BORROWER AND THE SERVICER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT ANY OF THE BORROWER AND THE SERVICER HAS
OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH PERSON HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
SECTION 12.15. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE
LENDERS, THE ISSUER, THE SWINGLINE BANK, THE SERVICER AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED
BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
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DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE
AGENT, THE LENDERS, THE ISSUER, THE SWINGLINE BANK OR THE BORROWER IN CONNECTION
HEREWITH OR THEREWITH. EACH OF THE BORROWER AND THE SERVICER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT,
THE ISSUER, THE SWINGLINE BANK AND THE LENDERS ENTERING INTO THIS AGREEMENT AND
EACH SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PROSOURCE RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Secretary &
Treasurer
PROSOURCE SERVICES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Secretary &
Treasurer
THE BANK OF NOVA SCOTIA, as
Administrative Agent, as Issuer
and as Swingline Bank
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Relationship Manager
S-1 SECURED CREDIT AGREEMENT
▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Relationship Manager
Percentage: 100%
Commitment Amount: $150,000,000.00