Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION (SOUTHERN)
as Lender
and
CHAMPION PARTS, INC.
as Borrower
Dated: February 8, 2001
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated February 8,
2001 is entered into by and between Congress Financial Corporation
(Southern), a Georgia corporation ("Lender") and Champion Parts, Inc.,
an Illinois corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter
into certain financing arrangements with Borrower pursuant to which
Lender may make loans and provide other financial accommodations to
Borrower; and
WHEREAS, Lender is willing to make such loans and
provide such financial accommodations on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings given
therein unless otherwise defined in this Agreement. All references to
the plural herein shall also mean the singular and to the singular shall
also mean the plural. All references to Borrower and Lender pursuant to
the definitions set forth in the recitals hereto, or to any other person
herein, shall include their respective successors and assigns. The
words "hereof", "herein", "hereunder", "this Agreement" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of
Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3. Any accounting term
used herein unless otherwise defined in this Agreement shall have the
meanings customarily given to such term in accordance with GAAP. For
purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or
not earned by performance.
1.2 "Adjusted Tangible Net Worth" shall mean as to any
Person, at any time, in accordance with GAAP (except as otherwise
specifically set forth below), on a consolidated basis for such Person
and its subsidiaries (if any), the amount equal to: (a) the difference
between: (i) the aggregate net book value of all assets of such Person
and its subsidiaries (other than Intangible Assets), calculating the
book value of inventory for this purpose on a first-in-first-out basis,
after deducting from such book values all appropriate reserves in
accordance with GAAP (including all reserves for doubtful receivables,
obsolescence, depreciation and amortization) and (ii) the aggregate
amount of the indebtedness and other liabilities of such Person and its
subsidiaries (including tax and other proper accruals) plus (b)
indebtedness of such Person and its subsidiaries which is subordinated
in right of payment to the full and final payment of all of the
Obligations on terms and conditions acceptable to Lender.
1.3 "Advance Auto" shall mean Advance Stores Company,
Incorporated, a Virginia corporation, and its subsidiaries and
affiliates.
1.4 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Revolving Loans and Letter of
Credit Accommodations which would otherwise be available to Borrower
under the lending formula(s) provided for herein: (a) to reflect events,
conditions, contingencies or risks which, as determined by Lender in good
faith, do or may adversely affect either (i) the Collateral or any other
property which is security for the Obligations or its value, (ii) the
assets, business or prospects of Borrower or any Obligor or (iii) the
security interests and other rights of Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b)
to reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or
misleading in any material respect or (c) in respect of any state of
facts which Lender determines in good faith constitutes an Event of
Default or may, with notice or passage of time or both, constitute an
Event of Default.
1.5 "Auto Zone" shall mean Auto Zone, Inc., a Nevada
corporation.
1.6 "Blocked Accounts" shall have the meaning set forth in
Section 6.3 hereof.
1.7 "Champion Canada" shall mean Champion Parts (Canada),
Ltd., a corporation formed under the laws of Ontario, and a
wholly-owned Subsidiary of Borrower.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as
the same now exists or may from time to time hereafter be amended,
modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.9 "Collateral" shall have the meaning set forth in Section 5
hereof.
1.10 "Core Return and Stock Adjustment Policies" shall mean
the policies of Borrower and its Subsidiaries described on Exhibit C-1
hereto, as amended from time to time with the written consent of Lender,
which consent shall not be unreasonably withheld.
1.11 "Dilution" shall mean, in each case based upon the
experience of the immediately prior six (6) months, the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising, returns, promotions, credits, or other dilution with
respect to the Accounts, by (b) Borrower's gross sales (excluding
extraordinary and non-dilutive items).
1.12 "Dilution Reserve" shall mean, as of any date of
determination, an amount, to the extent positive, equal to the product
of (a) Dilution minus five-hundredths (0.05) multiplied by (b) Eligible
Accounts.
1.13 "Dollars" or "$" shall mean United States dollars.
1.14 "Eligible Accounts" shall mean Accounts created by
Borrower or Champion Canada which are and continue to be acceptable to
Lender based on the criteria set forth below. In general, Accounts
shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by a Loan Party or rendition of services by a
Loan Party in the ordinary course of its business which transactions are
completed in accordance with the terms and provisions contained in any
documents related thereto;
(b) such Accounts are not unpaid more than sixty (60) days after the
original due date or more than ninety (90) days after the date of the
original invoice for them; provided, however, that in connection
with the Accounts of Advance Auto and certain other Account Debtors of a
Loan Party approved by Lender from time to time, such Accounts are not
unpaid more than thirty (30) days after the original due date or one
hundred twenty (120) days after the original invoice date;
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) such Accounts are denominated in Dollars, and (i) the chief
executive office of the account debtor with respect to such Accounts is
located in the United States of America or Canada; provided,
such Accounts owed by Canadian account debtors and included as "Eligible
Accounts" shall not exceed $1,000,000 in the aggregate, or (ii) at
Lender's option, if either: (x) the account debtor has delivered to
Borrower an irrevocable letter of credit issued or confirmed by a bank
satisfactory to Lender, sufficient to cover such Account, in form and
substance satisfactory to Lender and, if required by Lender, the
original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the
proceeds of such letter of credit to Lender, or (y) such Account is
subject to credit insurance payable to Lender issued by an insurer and
on terms and in an amount acceptable to Lender, or (z) such Account is
otherwise acceptable in all respects to Lender (subject to such lending
formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇, ▇▇▇▇ and hold
invoices or retainage invoices, except as to ▇▇▇▇ and hold invoices, if
Lender shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Lender, confirming the
unconditional obligation of the account debtor to take the goods related
thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and
does not engage in transactions which may give rise to, any right of
setoff against such Accounts, except in the ordinary course of business
in connection with the Core Return and Stock Adjustment Policies;
provided, however, Accounts owed by Daimler Chrysler Corporation shall
not be deemed Eligible Accounts until Lender receives satisfactory
evidence of the settlement of any credits in favor of such account
debtor on the books of Borrower or such account debtor;
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto
are not, and were not at the time of the sale thereof, subject to any
liens except those permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or
agent of or affiliated with any Loan Party directly or indirectly
by virtue of family membership, ownership, control, management or
otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if
the account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof,
upon Lender's request, the Federal Assignment of Claims Act of 1940, as
amended or any similar State or local law, if applicable, has been
complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such
Accounts which might result in any material adverse change in any such
account debtor's financial condition;
(m) such Accounts of a single account debtor or its affiliates do
not constitute more than forty (40%) percent of all otherwise
Eligible Accounts (but the portion of the Accounts not in excess of such
percentage may be deemed Eligible Accounts); provided, however, such
Accounts shall be subject to a (i) valid Set-Off Waiver Letter at all
times in the case of (1) Advance Auto and (2) any other single Account
Debtor (other than AutoZone) with Accounts constituting more than ten
(10%) percent of all otherwise Eligible Accounts (but the portion of
such Accounts not in excess of such ten percent amount may be deemed
Eligible Accounts without a Set-Off Waiver Letter), and (b) in the case
of AutoZone, an acknowledgement of the Core Return and Stock Adjustment
Policies;
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the date of the original invoice
for them which constitute more than fifty (50%) percent of the total
Accounts of such account debtor, or for Advance Auto and certain other
Account Debtors of a Loan Party approved by Lender from time to time,
more than thirty (30) days after the original due date or
one hundred twenty (120) days after the original invoice date, which
constitute more than fifty (50%) percent of the total Accounts of such
account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to the Loan Parties does not exceed the credit limit
with respect to such account debtors as determined by Lender from time to
time (but the portion of the Accounts not in excess of such credit limit
may still be deemed Eligible Accounts); and
(p) such Accounts are owed by account debtors deemed creditworthy at
all times by Lender, as reasonably determined by Lender.
General criteria for Eligible Accounts may be established and revised from
time to time by Lender in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.15 "Eligible Inventory" shall mean Inventory consisting of
finished goods held for resale in the ordinary course of the business of
Borrower or Champion Canada and Purchased Parts and Raw Core
Materials for such finished goods which are acceptable to Lender based on
the criteria set forth below. In general, Eligible Inventory shall not
include (a) work-in-process; (b) components which are not part of
finished goods (other than Purchased Parts and Raw Core Materials); (c)
spare parts for equipment; (d) packaging and shipping materials; (e)
supplies used or consumed in a Loan Party's business; (f) Inventory at
premises other than those owned and controlled by a Loan Party, except
if Lender shall have received an agreement in writing from the person in
possession of such Inventory and/or the owner or operator of such
premises in form and substance satisfactory to Lender acknowledging
Lender's first priority security interest in the Inventory, waiving
security interests and claims by such person against the Inventory and
permitting Lender access to, and the right to remain on, the premises so
as to exercise Lender's rights and remedies and otherwise deal with the
Collateral; (g) Inventory subject to a security interest or lien in
favor of any person other than Lender except
those permitted in this Agreement; (h) ▇▇▇▇ and hold goods; (i)
unserviceable, obsolete or slow moving Inventory; (j) Inventory which is
not subject to the first priority, valid and perfected security interest
of Lender; (k) returned (except for Raw Core Materials returned to
Borrower in the ordinary course of business), damaged and/or defective
Inventory; (l) Inventory purchased or sold on consignment; and (m)
Inventory not located in the United States of America or Canada;
provided, the Value of Inventory located in Canada and included as
"Eligible Inventory" shall not exceed $500,000 in the aggregate.
General criteria for Eligible Inventory may be established and revised
from time to time by Lender in good faith. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.
1.16 "Environmental Laws" shall mean all federal, state,
district, local and foreign laws, rules, regulations, ordinances, and
consent decrees relating to health, safety, hazardous substances,
pollution and environmental matters, as now or at any time hereafter in
effect, applicable to Borrower's business and facilities (whether or not
owned by it), including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contamination, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating
to the generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or hazardous, toxic or dangerous substances, materials or
wastes.
1.17 "Equipment" shall mean all of Borrower's now owned
and hereafter acquired equipment, machinery, computers and computer
hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or
hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
1.18 "ERISA" shall mean the United States Employee
Retirement Income Security Act of 1974, as the same now exists or may
hereafter from time to time be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "ERISA Affiliate" shall mean any person required to be
aggregated with Borrower or any of its Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
1.20 "Event of Default" shall mean the occurrence or existence
of any event or condition described in Section 10.1 hereof.
1.21 "Excess Availability" shall mean the amount, as determined
by Lender, calculated at any time, equal to: (a) the lesser of (i)
the amount of the Revolving Loans available to Borrower as of such time
based on the applicable lending formulas multiplied by the Net Amount of
Eligible Accounts and Value of Eligible Inventory, as determined by
Lender, and subject to the sublimits and Availability Reserves from time
to time established by Lender hereunder and (ii) the Maximum Revolving
Credit, minus (b) the sum of: (i) the amount of all then outstanding and
unpaid Obligations (but not including for this purpose the then
outstanding principal amount of the Term Loans), plus (ii) the aggregate
amount of all trade payables of Borrower which are more than sixty (60)
days past due as of such time.
1.22 "Financing Agreements" shall mean, collectively, this
Agreement and all notes, guarantees, security agreements and other
agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with
this Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.23 "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time to
time as set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial
Accounting Standards Board which are applicable to the circumstances as
of the date of determination consistently applied, except that, for
purposes of Section 9.13 hereof, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with
those used in the preparation of the audited financial statements
delivered to Lender prior to the date hereof.
1.24 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of
pollutants or contaminants (including, without limitation, materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including
any other substances, materials or wastes that are or become regulated
under any Environmental Law (including, without limitation any that are
or become classified as hazardous or toxic under any Environmental Law).
1.25 "Information Certificate" shall mean the Information
Certificate of Borrower constituting Exhibit A hereto containing material
information with respect to Borrower, its business and assets provided
by or on behalf of Borrower to Lender in connection with the preparation
of this Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
1.26 "Intangible Assets" shall mean assets that would be
treated as intangibles under GAAP, including, without limitation,
copyrights, trademarks, patents, goodwill, leases and franchises.
1.27 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired raw materials, work in process, finished
goods and all other inventory of whatsoever kind or nature, wherever
located.
1.28 "Leasehold Mortgage" shall mean the Leasehold
Mortgage, dated of even date herewith, by Borrower in favor of Lender
with respect to the Real Property and related assets of Borrower in Hope,
Arkansas.
1.29 "Letter of Credit Accommodations" shall mean the letters
of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Lender for the account of
Borrower or any Obligor or (b) with respect to which Lender has agreed
to indemnify the issuer or guaranteed to the issuer the performance by
Borrower of its obligations to such issuer.
1.30 "Liquidation Value" shall mean the net orderly
liquidation value as set forth in the most recent appraisal delivered to
Lender from time to time pursuant to Section 7.3(d).
1.31 "Loan Party" shall mean, individually, Borrower or
Champion Canada, and "Loan Parties" shall mean both Borrower and
Champion Canada.
1.32 "Loans" shall mean the Revolving Loans and the Term
Loans.
1.33 "Maximum Credit" shall mean the amount of $14,000,000.
1.34 "Maximum Revolving Credit" shall mean the amount of
$11,087,000.
1.35 "Mortgages" shall mean, individually and collectively,
each of the following (as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced): (a) the
Leasehold Mortgage, and (b) the Mortgage, dated of even date herewith, by
Borrower in favor of Lender with respect to the Real Property and related
assets of Borrower in Beech Creek, Pennsylvania.
1.36 "NewCo" shall mean a Subsidiary to be formed by Borrower
after the date hereof for the purpose of facilitating an acquisition.
1.37 "Net Amount of Eligible Accounts" shall mean the gross
amount of Eligible Accounts less, without duplication (a) sales, excise or
similar taxes included in the amount thereof, (b) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed with respect thereto and (c)
the Dilution Reserve.
1.38 "Obligations" shall mean any and all Revolving Loans,
the Term Loans, Letter of Credit Accommodations and all other
obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under this Agreement or otherwise, whether
now existing or hereafter arising, whether arising before, during or
after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Borrower under the United
States Bankruptcy Code or any similar statute (including, without
limitation, the payment of interest and other amounts which would
accrue and become due but for the commencement of such case), whether
direct or indirect, absolute or contingent, joint or several, due or
not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.39 "Obligor" shall mean any guarantor, endorser, acceptor,
surety or other person liable on or with respect to the Obligations or
who is the owner of any property which is security for the Obligations,
other than Borrower.
1.40 "Payment Account" shall have the meaning set forth in
Section 6.3 hereof.
1.41 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), business trust, unincorporated
association, joint stock corporation, trust, joint venture or other
entity or any government or any agency or instrumentality or political
subdivision thereof.
1.42 "Prime Rate" shall mean the rate from time to time
publicly announced by First Union National Bank, or its successors, at
its office in Charlotte, North Carolina, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
1.43 "Purchased Parts" shall mean new raw materials
purchased by Borrower in the ordinary course of its business to be used
in the production of finished goods.
1.44 "Raw Core Materials" shall mean used core units that have
been acquired by the Borrower as a result of sales or trade-ins from its
customers or other persons, which are in rebuildable condition and are
to be refurbished into finished goods of the Borrower, including used
carburetors, diesel fuel injectors, constant velocity drive assemblies,
water pumps, clutches, starters and alternators.
1.45 "Real Property" shall mean all now owned and hereafter
acquired real property of Borrower, including leasehold interests,
together with all buildings, structures, and other improvements located
thereon and all licenses, easements and appurtenances relating thereto,
wherever located, including without limitation, the real property and
related assets more particularly described in the Mortgages and located
in Hope, Arkansas and Beech Creek, Pennsylvania.
1.46 "Records" shall mean all of Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any account debtor, together with the
tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are
stored (including any rights of Borrower with respect to the foregoing
maintained with or by any other person).
1.47 "Revolving Loan Interest Rate" shall mean a rate of three-
quarters of one percent (0.75%) per annum in excess of the Prime Rate.
1.48 "Revolving Loans" shall mean the loans now or hereafter
made by Lender to or for the benefit of Borrower on a revolving basis
(involving advances, repayments and readvances) as set forth in Section
2.1 hereof.
1.49 "Set-Off Waiver Letter" shall mean a letter executed by
an account debtor of Borrower or any Obligor in favor of Lender, pursuant
to which such account debtor (a) waives all rights of set-off and
recoupment against Borrower or such Obligor, other than rights of
set-off in the ordinary course of business pursuant to the Core Return
and Stock Adjustment Policies, and (b) as appropriate, acknowledges the
Core Return and Stock Adjustment Policies, which letter shall be in form
and substance acceptable to Lender in its sole discretion.
1.50 "Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which fifty percent (50%) or more of the total voting
power of shares of stock (or equivalent ownership or controlling interest)
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
1.51 "Term Loan A" shall mean the term loan made by
Lender to Borrower on the closing date as provided in Section 2.3(a).
1.52 "Term Loan B" shall mean the term loan made by Lender
to Borrower on the closing date as provided in Section 2.3(b).
1.53 "Term Loan Interest Rate" shall mean a rate of one
percent (1.0%) per annum in excess of the Prime Rate.
1.54 "Term Loans" shall mean the Term Loan A and Term
Loan B.
1.55 "Value" shall mean, as determined by Lender in good
faith, with respect to Inventory, the lower of (a) cost computed on a
first-in-first-out basis in accordance with GAAP or (b) market value.
1.56 "Western Rebuilders" shall mean Western Rebuilders,
Inc., a California corporation.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to Borrower
from time to time in amounts requested by Borrower up to the amount
equal to the sum of:
(i) eighty-five (85%) percent of the Net Amount of Eligible
Accounts, plus
(ii) the lesser of: (A) the sum of (1) the lesser of (x)
seventy-six (76%) percent of the Value of Eligible
Inventory consisting of finished goods, or (y) 90% of the
Liquidation Value of Eligible Inventory consisting of
finished goods, plus (2) the lesser of (x) twenty-four
(24%) percent of the Value of Eligible Inventory
consisting of Purchased Parts, or (y) 90% of the
Liquidation Value of Eligible Inventory consisting of
Purchased Parts, plus (3) the lowest of (x) thirty-three
(33%) percent of the Value of Eligible Inventory
consisting of Raw Core Materials, (y) 90% of the
Liquidation Value of Eligible Inventory consisting of
Raw Core Materials, or (z) $2,000,000; or (B)
$6,000,000, less
(iii) any Availability Reserves.
(b) Lender may, in its discretion, from time to time,
upon not less than five (5) days prior notice to Borrower, (i) reduce the
lending formula with respect to Eligible Accounts to the extent that
Lender determines in good faith that: (A) the Dilution with respect to
the Accounts for any period (based on the ratio of (1) the aggregate
amount of reductions in Accounts other than as a result of payments in
cash to (2) the aggregate amount of total sales) has increased in any
material respect or may be reasonably anticipated to increase in any
material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the
lending formula(s) with respect to Eligible Inventory to
the extent that Lender determines that: (A) the number of days of the
turnover of the Inventory for any period has changed in any material
respect or (B) the Liquidation Value of the Eligible Inventory, or any
category thereof, has decreased, or (C) the nature and quality of the
Inventory has deteriorated. In determining whether to reduce the
lending formula(s), Lender may consider events, conditions,
contingencies or risks which are also considered in determining Eligible
Accounts, Eligible Inventory or in establishing Availability Reserves.
Additionally, Lender may, in its discretion, take an additional reserve
against the advance amount in connection with Eligible Accounts if
Lender determines that the unapplied credits and chargebacks against
Accounts on Borrower's books are not reconciled in a timely manner on or
after the date hereof.
(c) Except in Lender's discretion, the aggregate
amount of the Loans and the Letter of Credit Accommodations outstanding
at any time shall not exceed the Maximum Credit, and the aggregate amount
of the Revolving Loans and the Letter of Credit Accommodations
outstanding at any time shall not exceed the Maximum Revolving Credit.
In the event that the outstanding amount of any component of the Loans,
or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations, exceed the amounts available under the lending
formulas, the sublimits for Letter of Credit Accommodations set forth in
Section 2.2(c) or the Maximum Credit or Maximum Revolving Credit, as
applicable, such event shall not limit, waive or otherwise affect any
rights of Lender in that circumstance or on any future occasions and
Borrower shall, upon demand by Lender, which may be made at any time or
from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions
contained herein, at the request of Borrower, Lender agrees to provide or
arrange for Letter of Credit Accommodations for the account of Borrower
containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall
constitute additional Revolving Loans to Borrower pursuant to this
Section 2.
(b) In addition to any charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrower shall pay to Lender a letter of credit fee at a
rate equal to two (2.0%) percent per annum on the daily outstanding
balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day
of each succeeding month. Such letter of credit fee shall be calculated
on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrower to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit
Accommodations, the Revolving Loans available to Borrower (subject to
the Maximum Revolving Credit and any Availability Reserves) are equal to
or greater than an amount equal to one hundred (100%) percent of the face
amount thereof and all other commitments and obligations made or incurred
by Lender with respect thereto. Effective on the issuance of each Letter
of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to Borrower shall be reduced by the applicable
amount set forth in this Section 2.2(c).
(d) Except in Lender's discretion, the amount of all
outstanding Letter of Credit Accommodations and all other commitments
and obligations made or incurred by Lender in connection therewith shall
not at any time exceed $1,750,000. At any time an Event of Default exists
or has occurred and is continuing, upon Lender's request, Borrower will
either furnish cash collateral to secure the reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or
furnish cash collateral to Lender for the Letter of Credit
Accommodations, and in either case, the Revolving Loans otherwise
available to Borrower shall not be reduced as provided in Section 2.2(c)
to the extent of such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities,
costs and expenses which Lender may suffer or incur in connection with
any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses,
claims, damages, liabilities, costs and expenses due to any action taken
by any issuer or correspondent with respect to any Letter of Credit
Accommodation. Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be
deemed Borrower's agent. Borrower assumes all risks for, and agrees to
pay, all foreign, Federal, State and local taxes, duties and levies
relating to any goods subject to any Letter of Credit Accommodations or
any documents, drafts or acceptances thereunder. Borrower hereby
releases and holds Lender harmless from and against any acts, waivers,
errors, delays or omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of
Credit Accommodation. The provisions of this Section 2.2(e) shall
survive the payment of Obligations and the termination or non-renewal of
this Agreement.
(f) Nothing contained herein shall be deemed or
construed to grant Borrower any right or authority to pledge the credit
of Lender in any manner. Lender shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other
than Lender unless Lender has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect
to such Letter of Credit Accommodation. Borrower shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit
Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right
and authority to, and Borrower shall not: (i) at any time an Event of
Default exists or has occurred and is continuing, (A) approve or resolve
any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute
any and all applications for steamship or airway guaranties, indemnities
or delivery orders, and (ii) at all times, (A) grant any extensions of
the maturity of, time of payment for, or time of presentation of, any
drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of
the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any
letters of credit included in the Collateral. Lender may take such
actions either in its own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations
granted or undertaken by Borrower to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any Letter
of Credit Accommodation, shall be deemed to have been granted or
undertaken by Borrower to Lender. Any duties or obligations undertaken
by Lender to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in
favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrower to
Lender and to apply in all respects to Borrower.
2.3 Term Loans.
(a) Lender is making a Term Loan A to Borrower in
the original principal amount of $815,000. The Term Loan A is (i)
evidenced by a Term Loan A Promissory Note in such original principal
amount duly executed and delivered by Borrower to Lender concurrently
herewith; (ii) to be repaid, together with interest and other amounts,
in accordance with this Agreement, the Term Loan A Promissory Note, and
the other Financing Agreements and (iii) secured by all of the
Collateral.
(b) Lender is making a Term Loan B to Borrower in
the original principal amount of $2,098,000. The Term Loan B is (i)
evidenced by a Term Loan B Promissory Note in such original principal
amount duly executed and delivered by Borrower to Lender concurrently
herewith; (ii) to be repaid, together with interest and other amounts,
in accordance with this Agreement, the Term Loan B Promissory Note, and
the other Financing Agreements and (iii) secured by all of the
Collateral.
2.4 Availability Reserves.
All Revolving Loans otherwise available to Borrower pursuant to
the lending formulas and subject to the Maximum Revolving Credit and
other applicable limits hereunder shall be subject to Lender's continuing
right to establish and revise Availability Reserves.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest on the
outstanding principal amount of the non-contingent Obligations at the
rate of (i) the Term Loan Interest Rate with respect to the Term Loans,
and (ii) the Revolving Loan Interest Rate with respect to the Revolving
Loans and all other non-contingent Obligations, except that Borrower
shall pay to Lender interest, at Lender's option, without notice, at a
rate of interest which is four percent (4.0%) per annum in excess of the
otherwise applicable interest rate: (i) on the non-contingent Obligations
for the period from and after the date of termination or non-renewal
hereof, or the date of the occurrence of an Event of Default, and for so
long as such Event of Default is continuing as determined by Lender and
until such time as Lender has received full and final payment of all such
Obligations (notwithstanding entry of any judgment against Borrower) and
(ii) on the Revolving Loans at any time outstanding in excess of the
amounts available to Borrower under Section 2 (whether or not such
excess(es), arise or are made with or without Lender's knowledge or
consent and whether made before or after an Event of Default). All
interest accruing hereunder on and after the occurrence of any of the
events referred to in Sections 3.1(a)(i) or 3.1(a)(ii) above shall be
payable on demand.
(b) Interest shall be payable by Borrower to Lender
monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate shall increase or
decrease by an amount equal to each increase or decrease in the Prime
Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last
day of the month in which any such change occurs. In no event shall
charges constituting interest payable by Borrower to Lender exceed the
maximum amount or the rate permitted under any applicable law or
regulation, and if any part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision
shall be deemed amended to conform thereto.
3.2 Closing Fee.
Borrower shall pay to Lender as a closing fee the amount of
$105,000, which shall be fully earned as of and payable on the date
hereof.
3.3 Facility Fee.
Intentionally Omitted.
3.4 Servicing Fee.
Borrower shall pay to Lender monthly a servicing fee in an
amount equal to $2,000 in respect of Lender's services for each month
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
fully earned as of and payable in advance on the date hereof and on
the first day of each month hereafter.
3.5 Unused Line Fee.
Borrower shall pay to Lender monthly an unused line fee at a
rate equal to three-eighths (.375%) of one percent per annum calculated
upon the amount by which the Maximum Revolving Credit exceeds the average
daily principal balance of the outstanding Revolving Loans and Letter of
Credit Accommodations during the immediately preceding month (or part
thereof) while this Agreement is in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall be payable on the
first day of each month in arrears.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations.
Each of the following is a condition precedent to Lender
making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other
documents as Lender may request to evidence and effectuate the
termination by the existing lender or lenders to Borrower and Obligors of
their respective financing arrangements with Borrower and each Obligor
and the termination and release by it or them, as the case may be, of any
interest in and to any assets and properties of Borrower and each Obligor,
duly authorized, executed and delivered by it or each of them, including,
but not limited to, (i) UCC termination statements for all UCC financing
statements previously filed by it or any of them or their predecessors,
as secured party and Borrower or any Obligor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by Borrower or any Obligor in favor of such existing lender
or lenders, in form acceptable for recording in the appropriate
government office;
(b) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first
priority security interests in and liens upon the Collateral and any
other property which is intended to be security for the Obligations
(including all assets of Champion Canada and each of Borrower's other
Subsidiaries (other than Western Rebuilders) and all capital stock owned
by Borrower in each of Borrower's Subsidiaries) or the liability of any
Obligor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall
be satisfactory in form and substance to Lender, and Lender shall have
received all information and copies of all documents, including, without
limitation, records of requisite corporate action and proceedings which
Lender may have requested in connection therewith, such documents where
requested by Lender or its counsel to be certified by appropriate
corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Lender's
latest field examination and no change or event shall have occurred
which would impair the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Lender to enforce the Obligations or realize
upon the Collateral;
(e) Lender shall have received appraisals of the Real
Property, Equipment and Inventory, in form and substance acceptable to
Lender;
(f) Lender shall have received a copy of the management letter
issued to Borrower by its accountants as of the period ending December
31, 1999, in form and substance acceptable to Lender;
(g) Lender shall have completed a field review of the Records
and such other information with respect to the Collateral as Lender may
require to determine the amount of Revolving Loans available
to Borrower, the results of which shall be satisfactory to Lender, not
more than three (3) business days prior to the date hereof;
(h) the Excess Availability as determined by Lender, as of the
date hereof, shall be not less than $1,200,000 after giving effect to
the initial Loans made or to be made and Letter of Credit Accommodations
issued or to be issued in connection with the initial transactions
hereunder;
(i) Lender shall have received environmental audits
of Borrower's plants and the Real Property conducted by an independent
environmental engineering firm acceptable to Lender, and in form, scope
and methodology satisfactory to Lender, confirming (i) Borrower is in
compliance with all material applicable Environmental Laws and (ii) the
absence of any material environmental problems;
(j) Lender shall have received, in form and substance
satisfactory to Lender, a valid and effective title insurance policy
issued by a company and agent acceptable to Lender (i) insuring the
priority, amount and sufficiency of the Mortgages, (ii) insuring against
matters that would be disclosed by surveys and (iii) containing any
legally available endorsements, assurances or affirmative coverage
requested by Lender for protection of its interests;
(k) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and
other agreements from third persons which Lender may deem necessary or
desirable in order to permit, protect and perfect its security interests
in and liens upon the Collateral or to effectuate the provisions or
purposes of this Agreement and the other Financing Agreements, including,
without limitation, a Set-Off Waiver Letter executed by each of Advance
Auto and ▇▇▇▇ Deere and Co., an acknowledgement of the Core Return and
Stock Adjustment Policies by AutoZone, acknowledgements by lessors,
mortgagees and warehousemen of Lender's security interests in the
Collateral, waivers by such persons of any security interests, liens or
other claims by such persons to the Collateral and agreements permitting
Lender access to, and the right to remain on, the premises to exercise
its rights and remedies and otherwise deal with the Collateral;
(l) Lender shall have received evidence of insurance
and loss payee endorsements required hereunder and under the other
Financing Agreements, in form and substance satisfactory to Lender, and
certificates of insurance policies and/or endorsements naming Lender as
loss payee;
(m) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to
Borrower and its Subsidiaries with respect to the Financing Agreements
and such other matters as Lender may request (including an opinion
letter of Canadian counsel to Borrower and Champion Canada and opinion
letters of local counsel to Borrower in each jurisdiction where any
Mortgage is to be recorded);
(n) Lender shall have received a duly executed pledge agreement
in favor of Lender, delivered by Borrower with respect to its equity
interests in each Subsidiary of Borrower;
(o) Lender shall have received a duly executed Guaranty and
Security Agreement delivered by Champion Canada and each other Subsidiary
of Borrower (other than Western Rebuilders) in favor of Lender;
(p) Lender shall have received a report from Borrower of core
return eligibility status by customer, units and dollars, as of the date
hereof; and
(q) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and
delivered to Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to
Borrower, including the initial Loans and Letter of Credit Accommodations
and any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of the making of each such
Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto; and
(b) no Event of Default and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date
of the making of such Loan or providing each such Letter of Credit
Accommodation and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations,
Borrower hereby grants to Lender a continuing security interest in, a
lien upon, and a right of set off against, and hereby assigns to Lender
as security, the following property and interests in property, whether
now owned or hereafter acquired or existing, and wherever located
(collectively, the "Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or
licensee, choses in action and other claims and existing and future
leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, investment property, letters of credit,
bankers' acceptances and guaranties;
5.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter held or
received by or in transit to Lender or its affiliates or at any other
depository or other institution from or for the account of Borrower,
whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation, (a) rights and remedies under
or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (b) rights of
stoppage in transit, replevin, repossession, reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, (c) goods
described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Accounts or other Collateral,
including, without limitation, returned, repossessed and reclaimed goods,
and (d) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Real Property;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against
third parties for loss or damage to or destruction of any or all of the
foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account.
Lender shall maintain one or more loan account(s) on its books
in which shall be recorded (a) all Loans, Letter of Credit Accommodations
and other Obligations and the Collateral, (b) all payments made by or
on behalf of Borrower and (c) all other appropriate debits and credits
as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan
account(s) shall be made in accordance with Lender's customary practices
as in effect from time to time.
6.2 Statements.
Lender shall render to Borrower each month a statement setting
forth the balance in the Borrower's loan account(s) maintained by Lender
for Borrower pursuant to the provisions of this Agreement, including
principal, interest, fees, costs and expenses. Each such statement shall
be subject to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by
Borrower and conclusively binding upon Borrower as an account stated
except to the extent that Lender receives a written notice from Borrower
of any specific exceptions of Borrower thereto within thirty (30) days
after the date such statement has been mailed by Lender. Until such
time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrower.
6.3 Collection of Accounts.
(a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"), as Lender may specify, with such banks
as are acceptable to Lender into which Borrower shall promptly deposit
and direct its account debtors to directly remit all payments on
Accounts and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made,
whether by cash, check or other manner. The banks at which the Blocked
Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or
deposited in the Blocked Accounts are the property of Lender, that the
depository bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the funds
from time to time on deposit therein and that the depository bank will
wire, or otherwise transfer, in immediately available funds, on a daily
basis, all funds received or deposited into the Blocked Accounts to such
bank account of Lender as Lender may from time to time designate for
such purpose ("Payment Account"). Borrower agrees that all payments
made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of Inventory or other
Collateral or otherwise shall be the property of Lender.
(b) For purposes of calculating interest on the
Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) business
day following the date of receipt of immediately available funds by
Lender in the Payment Account. For purposes of calculating the amount
of the Revolving Loans available to Borrower such payments will be
applied (conditional upon final collection) to the Obligations on the
business day of receipt by Lender in the Payment Account, if such
payments are received within sufficient time (in accordance with
Lender's usual and customary practices as in effect from time to time)
to credit Borrower's loan account on such day, and if not, then on the
next business day.
(c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes,
drafts or any other payment relating to and/or proceeds of Accounts or
other Collateral which come into their possession or under their control
and immediately upon receipt thereof, shall deposit or cause the same to
be deposited in the Blocked Accounts, or remit the same or cause the same
to be remitted, in kind, to Lender. In no event shall the same be
commingled with Borrower's own funds. Borrower agrees to reimburse
Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in
the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The
obligation of Borrower to reimburse Lender for such amounts pursuant to
this Section 6.3 shall survive the termination or non-renewal of this
Agreement.
6.4 Payments.
All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from
time to time. Lender may apply payments received or collected from
Borrower or for the account of Borrower (including, without limitation,
the monetary proceeds of collections or of realization upon any
Collateral) to such of the Obligations, whether or not then due, in such
order and manner as Lender determines. At Lender's option, all principal,
interest, fees, costs, expenses and other charges provided for in this
Agreement or the other Financing Agreements may be charged directly to
the loan account(s) of Borrower. Borrower shall make all payments to
Lender on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense,
duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment
of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or
proceeds to any Person for any reason, then the Obligations intended to
be satisfied by such payment or proceeds shall be reinstated and continue
and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Lender. Borrower shall be
liable to pay to Lender, and does hereby indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any
contrary action which may be taken by Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans.
Lender is authorized to make the Loans and provide the Letter
of Credit Accommodations based upon telephonic or other instructions
received from anyone purporting to be an officer of Borrower or other
authorized person or, at the discretion of Lender, if such Loans are
necessary to satisfy any Obligations. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the
requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a business day) and the amount of the
requested Loan. Requests received after 11:00 a.m. Atlanta, Georgia time
on any day shall be deemed to have been made as of the opening of
business on the immediately following business day. All Loans and
Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and
for the benefit of, Borrower when deposited to the credit of Borrower or
otherwise disbursed or established in accordance with the instructions
of Borrower or in accordance with the terms and conditions of this
Agreement.
6.6 Use of Proceeds.
Borrower shall use the initial proceeds of the Loans provided by
Lender to Borrower hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrower
to Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements. All other Loans made
or Letter of Credit Accommodations provided by Lender to Borrower
pursuant to the provisions hereof shall be used by Borrower only for
general operating, working capital and other proper corporate purposes of
Borrower not otherwise prohibited by the terms hereof. None of the
proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a "purpose credit" within
the meaning of Regulation G of the Board of Governors of the Federal
Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
Borrower shall provide Lender with the following documents in a
form satisfactory to Lender: (a) on a daily basis, a schedule of sales
made, credits issued and cash received; (b) on a weekly basis or more
frequently as Lender may request, (i) perpetual inventory reports, and
(ii) inventory reports by location, class and category; (c) on a monthly
basis or more frequently as Lender may request, (i) agings
of accounts payable, (ii) agings of accounts receivable (together with a
reconciliation to the previous month's aging and general ledger), (iii)
reports of core return eligibility status by customer, units and dollars,
with respect to customers representing Borrower's seven (7) largest
customers ranked by sales volume and customers constituting more than
ten percent (10%) of Eligible Accounts as of the date hereof, for the
previous twenty-four (24) or twelve (12) month period, as applicable in
connection with such customer's Core Return and Stock Adjustment Policies
(with an acknowledgment from any such customer if requested by Lender),
and (iv) copies of core bank statements; (d) upon Lender's request, (i)
copies of customer statements and credit memos, remittance advices and
reports, and copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and (iii) copies of purchase orders,
invoices and delivery documents for Inventory and Equipment acquired by
Borrower; and (e) such other reports as to the Collateral as Lender shall
request from time to time; provided, however, that so long as no Event of
Default and no event or condition which, with notice or the passage of
time or both, would constitute an Event of Default, shall exist, Borrower
shall be liable for the cost and expense of no more than four (4)
collateral audits in any twelve (12) month period. If any of Borrower's
records or reports of the Collateral are prepared or maintained by an
accounting service, contractor, shipper or other agent, Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to
deliver such records, reports, and related documents to Lender and to
follow Lender's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Borrower shall notify Lender promptly of: (i)
any material delay in Borrower's performance of any of its obligations to
any account debtor or the assertion of any claims, offsets, defenses or
counterclaims by any account debtor, or any disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all
material adverse information relating to the financial condition of any
account debtor and (iii) any event or circumstance which, to Borrower's
knowledge would cause Lender to consider any then existing Accounts as
no longer constituting Eligible Accounts. No credit, discount, allowance
or extension or agreement for any of the foregoing shall be granted to
any account debtor without Lender's consent, except in the ordinary
course of Borrower's business in accordance with practices and policies
previously disclosed in writing to Lender. So long as no Event of
Default exists or has occurred and is continuing, Borrower shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has
occurred and is continuing, Lender shall, at its option, have the
exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Borrower shall promptly report to Lender any return of
Inventory by an account debtor having a sales price in excess of
$50,000. At any time that Inventory is returned, reclaimed or
repossessed, the related Account shall not be deemed an Eligible Account.
In the event any account debtor returns Inventory when an Event of
Default exists or has occurred and is continuing, Borrower shall, upon
Lender's request, (i) hold the returned Inventory in trust for Lender,
(ii) segregate all returned Inventory from all of its other property,
(iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances
with respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts
shown on any invoice delivered to Lender or schedule thereof delivered to
Lender shall be true and complete, (ii) no payments shall be made thereon
except payments immediately delivered to Lender pursuant to the terms of
this Agreement, (iii) no credit, discount, allowance or extension or
agreement for any of the foregoing shall be granted to any account debtor
except as reported to Lender in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in the
ordinary course of Borrower's business in accordance with practices and
policies previously disclosed to Lender, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance
with the terms of this Agreement, (v) none of the transactions giving
rise thereto will violate any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally
sufficient under such laws and regulations and all such documentation
will be legally enforceable in accordance with its terms.
(d) Lender shall have the right at any time or times,
in Lender's name or in the name of a nominee of Lender, to verify the
validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to
Lender, with appropriate endorsement and assignment, with full recourse
to Borrower, all chattel paper and instruments which Borrower now owns
or may at any time acquire immediately upon Borrower's receipt thereof,
except as Lender may otherwise agree.
(f) Lender may, at any time or times that an Event
of Default exists or has occurred and is continuing, (i) notify any or
all account debtors that the Accounts have been assigned to Lender and
that Lender has a security interest therein and Lender may direct any or
all accounts debtors to make payment of Accounts directly to Lender, (ii)
extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any
other party or parties in any way liable for payment thereof without
affecting any of the Obligations, (iii) demand, collect or enforce
payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or
enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender
may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations
have been assigned to Lender and are payable directly and only to Lender
and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services
giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants.
With respect to the Inventory: (a) Borrower shall at all times
maintain inventory records reasonably satisfactory to Lender, keeping
correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct
a physical count of the Inventory at least once each year, but at any
time or times as Lender may request on or after an Event of Default, and
promptly following such physical inventory shall supply
Lender with a report in the form and with such specificity as may be
reasonably satisfactory to Lender concerning such physical count; (c)
Borrower shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Lender, except for
sales of Inventory in the ordinary course of Borrower's business and
except to move Inventory directly from one location set forth or permitted
herein to another such location; (d) upon Lender's request, Borrower
shall, at its expense, no more than twice in any twelve (12) month period,
but at any time or times as Lender may request on or after an Event of
Default or after any bulk purchase of Inventory or other acquisition
permitted hereunder, deliver or cause to be delivered to Lender written
reports or appraisals as to the Inventory in form, scope and methodology
acceptable to Lender and by an appraiser acceptable to Lender, addressed
to Lender or upon which Lender is expressly permitted to rely; (e)
Borrower shall produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards
of any insurance and in conformity with applicable laws (including, but
not limited to, the requirements of the Federal Fair Labor Standards Act
of 1938, as amended and all rules, regulations and orders related there);
(f) Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the
Inventory; (g) Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or
may obligate Borrower to repurchase such Inventory; (h) Borrower shall
keep the Inventory in good and marketable condition; and (i) Borrower
shall not, without prior written notice to Lender, acquire or
accept any Inventory on consignment or approval, provided, however,
Borrower may accept inventory from Daimler Chrysler Corporation and
American Honda Motor Company, Inc. on consignment so long as
Borrower segregates such consigned inventory from the Inventory of
Borrower and clearly identifies such consigned inventory (and the owner
thereof) to the satisfaction of Lender.
7.4 Equipment Covenants. With respect to the Equipment:
(a) upon Lender's request, Borrower shall, at its expense, at
any time or times as Lender may request on or after an Event of Default,
deliver or cause to be delivered to Lender written reports or appraisals
as to the Equipment in form, scope and methodology acceptable to Lender
and by an appraiser acceptable to Lender; (b) Borrower shall keep the
Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) Borrower shall use the Equipment
with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws;
(d) the Equipment is and shall be used in Borrower's business and not for
personal, family, household or farming use; (e) Borrower shall not remove
any Equipment from the locations set forth or permitted herein, except to
the extent necessary to have any Equipment repaired or maintained in the
ordinary course of the business of Borrower or to move Equipment directly
from one location set forth or permitted herein to another such location
and except for the movement of motor vehicles used by or for the benefit
of Borrower in the ordinary course of business; (f) the Equipment is now
and shall remain personal property and Borrower shall not permit any of
the Equipment to be or become a part of or affixed to real property; and
(g) Borrower assumes all responsibility and liability arising from the
use of the Equipment.
7.5 Power of Attorney.
Borrower hereby irrevocably designates and appoints Lender
(and all persons designated by Lender) as Borrower's true and lawful
attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or event which with notice or
passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or other
proceeds of Inventory or other Collateral, (ii) enforce payment of
Accounts by legal proceedings or otherwise, (iii) exercise all of
Borrower's rights and remedies to collect any Account or other Collateral,
(iv) sell or assign any Account upon such terms, for such amount and at
such time or times as Lender deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release
any Account, (vii) prepare, file and sign Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by Lender, and open
and dispose of all mail addressed to Borrower, and (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement and the other Financing
Agreements and (b) at any time to (i) take control in any manner of any
item of payment or proceeds thereof, (ii) have access to any lockbox or
postal box into which Borrower's mail is deposited, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof and deposit
the same in Lender's account for application to the Obligations, (iv)
endorse Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any
goods pertaining thereto or any other Collateral, (v) sign Borrower's
name on any verification of Accounts and notices thereof to account
debtors and (vi) execute in Borrower's name and file any UCC financing
statements or amendments thereto. Borrower hereby releases Lender and
its officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Lender's own
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.6 Right to Cure.
Lender may, at its option, in order to preserve, protect,
insure or maintain the Collateral and the rights of Lender
with respect thereto (a) cure any default by Borrower under any agreement
with a third party or pay or bond on appeal any judgment entered against
Borrower, (b) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the
Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate. Lender may add
any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender
shall be under no obligation to effect such cure, payment or bonding and
shall not, by doing so, be deemed to have assumed any obligation or
liability of Borrower. Any payment made or other action taken by Lender
under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises.
From time to time as requested by Lender, at the cost and
expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and
after notice to Borrower, or at any time and without notice to Borrower
if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and
all of Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as Lender may request, and
(c) use during normal business hours such of Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is
continuing for the collection of Accounts and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the
following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition
of the making of Loans and providing Letter of Credit Accommodations by
Lender to Borrower:
8.1 Corporate Existence, Power and Authority; Subsidiaries.
Borrower is a corporation duly organized and in good standing
under the laws of its state of incorporation and is duly qualified as a
foreign corporation and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by
it or the ownership of assets makes such qualification necessary, except
for those jurisdictions in which the failure to so qualify would not have
a material adverse effect on Borrower's financial condition, results of
operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement,
the other Financing Agreements and the transactions contemplated
hereunder and thereunder are all within Borrower's corporate powers,
have been duly authorized and are not in contravention of law or the
terms of Borrower's articles of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking
to which Borrower is a party or by which Borrower or its property are
bound. This Agreement and the other Financing Agreements constitute
legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms. Borrower does not have any
Subsidiaries except as set forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change.
All financial statements relating to Borrower which have been or
may hereafter be delivered by Borrower to Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the
results of operation of Borrower as at the dates and for the periods set
forth therein. Except as disclosed in any interim financial statements
furnished by Borrower to Lender prior to the date of this Agreement,
there has been no material adverse change in the assets, liabilities,
properties and condition, financial or otherwise, of Borrower, since the
date of the most recent audited financial statements furnished by
Borrower to Lender prior to the date of this Agreement.
8.3 Chief Executive Office; Collateral Locations.
The chief executive office of Borrower and Borrower's Records
concerning Accounts are located only at the address set forth below and
its only other places of business and the only other locations of
Collateral, if any, are the addresses set forth in the Information
Certificate, subject to the right of Borrower to establish new locations
in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by
Borrower and sets forth the owners and/or operators thereof and to
the best of Borrower's knowledge, the holders of any mortgages on such
locations.
8.4 Priority of Liens; Title to Properties.
The security interests and liens granted to Lender under this
Agreement and the other Financing Agreements constitute valid and
perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 8.4 hereto and
the other liens permitted under Section 9.8 hereof. Borrower has good
and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges
of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 8.4 hereto or permitted under
Section 9.8 hereof.
8.5 Tax Returns.
Borrower has filed, or caused to be filed, in a timely manner
all tax returns, reports and declarations which are required
to be filed by it (without requests for extension except as previously
disclosed in writing to Lender). All information in such tax returns,
reports and declarations is complete and accurate in all material
respects. Borrower has paid or caused to be paid all taxes due and
payable or claimed due and payable in any assessment received by it,
except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and
with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or
not yet due and payable and whether or not disputed.
8.6 Litigation.
Except as set forth on the Information Certificate, there is no
present investigation by any governmental agency pending, or to the best
of Borrower's knowledge threatened, against or affecting Borrower, its
assets or business and there is no action, suit, proceeding or claim by
any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely
determined against Borrower would result in any material adverse change
in the assets, business or prospects of Borrower or would impair the
ability of Borrower to perform its obligations hereunder or under any of
the other Financing Agreements to which it is a party or of Lender to
enforce any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws.
Borrower is not in default in any material respect under, or in
violation in any material respect of any of the terms of, any agreement,
contract, instrument, lease or other commitment to which it is a party or
by which it or any of its assets are bound and Borrower is in compliance
in all material respects with all applicable provisions of laws, rules,
regulations, licenses, permits, approvals and orders of any foreign,
Federal, State or local governmental authority.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto,
Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials,
on or off its premises (whether or not owned by it) in any manner which
at any time violates any applicable Environmental Law or any license,
permit, certificate, approval or similar authorization thereunder and
the operations of Borrower complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals
and similar authorizations thereunder.
(b) Except as set forth on Schedule 8.8 hereto, there
has been no investigation, proceeding, complaint, order, directive,
claim, citation or notice by any governmental authority or any other
person nor is any pending or to the best of Borrower's knowledge
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by Borrower or the release, spill
or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects Borrower or
its business, operations or assets or any properties at which Borrower
has transported, stored or disposed of any Hazardous Materials.
(c) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened
or actual, of any Hazardous Materials or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal
of any Hazardous Materials.
(d) Borrower has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law
and all of such licenses, permits, certificates, approvals or similar
authorizations are valid and in full force and effect.
8.9 Employee Benefits.
(a) Borrower has not engaged in any transaction in
connection with which Borrower or any of its ERISA Affiliates could be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, including any
accumulated funding deficiency described in Section 8.8(c) hereof and any
deficiency with respect to vested accrued benefits described in Section
8.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty
Corporation has been or is expected by Borrower to be incurred with
respect to any employee pension benefit plan of Borrower or any of its
ERISA Affiliates. There has been no reportable event (within the meaning
of Section 4043(b) of ERISA) or any other event or condition with respect
to any employee pension benefit plan of Borrower or any of its ERISA
Affiliates which presents a risk of termination of any such plan by the
Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts
which Borrower or any of its ERISA Affiliates is required under Section
302 of ERISA and Section 412 of the Code to have paid under the terms of
each employee pension benefit plan as contributions to such plan as of
the last day of the most recent fiscal year of such plan ended prior to
the date hereof, and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any employee pension benefit plan,
including any penalty or tax described in Section 8.9(a) hereof and
any deficiency with respect to vested accrued benefits described in
Section 8.9(d) hereof.
(d) As of January 1, 2000, the total present value of
all accrued benefits under all employee pension benefit plans maintained
by Borrower that are subject to Title IV of ERISA did not exceed the
total value of the assets of such plans (including accrued employer
contributions).
(e) Except as set forth on Schedule 8.9(e) hereto, neither
Borrower nor any of its ERISA Affiliates is or has been obligated to
contribute within the last seven years to any "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA that is subject to
Title IV of ERISA. As of the date hereof, neither Borrower nor any of
its ERISA Affiliates has any continuing liability to contribute to any
such multiemployer plans.
8.10 Accuracy and Completeness of Information.
All information furnished by or on behalf of Borrower in writing
to Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including,
without limitation, all information on the Information Certificate is
true and correct in all material respects on the date as of which such
information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of
Borrower, which has not been fully and accurately disclosed to Lender in
writing.
8.11 Survival of Warranties; Cumulative.
All representations and warranties contained in this Agreement
or any of the other Financing Agreements shall survive the execution and
delivery of this Agreement and shall be deemed to have been made again to
Lender on the date of each additional borrowing or other credit
accommodation hereunder and shall be conclusively presumed to have been
relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein
shall be cumulative and in addition to any other representations or
warranties which Borrower shall now or hereafter give, or cause to be
given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
Borrower shall at all times preserve, renew and keep in full,
force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all permits,
licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to
be conducted. Borrower shall give Lender thirty (30) days prior written
notice of any proposed change in its corporate name, which notice shall
set forth the new name and Borrower shall deliver to Lender a copy of the
amendment to the Articles of Incorporation of Borrower providing for the
name change certified by the Secretary of State of the jurisdiction of
incorporation of Borrower as soon as it is available.
9.2 New Collateral Locations.
Borrower may open any new location within the continental United
States provided Borrower (a) gives Lender thirty (30) days prior written
notice of the intended opening of any such new location and (b) executes
and delivers, or causes to be executed and delivered, to Lender such
agreements, documents, and instruments as Lender may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, at all times, comply in all
material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements
of any Federal, State or local governmental authority, including, without
limitation, the Employee Retirement Security Act of 1974, as amended, the
Occupational Safety and Hazard Act of 1970, as amended, the Fair Labor
Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including, without limitation, all of the
Environmental Laws.
(b) Borrower shall establish and maintain, at its
expense, a system to assure and monitor its continued compliance with all
Environmental Laws in all of its operations, which system shall include
annual reviews of such compliance by employees or agents of Borrower
who are familiar with the requirements of the Environmental Laws. Copies
of all environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly furnished, or
caused to be furnished, by Borrower to Lender. Borrower shall take
prompt and appropriate action to respond to any non-compliance with any
of the Environmental Laws and shall regularly report to Lender on such
response.
(c) Borrower shall give both oral and written notice
to Lender immediately upon Borrower's receipt of any notice of, or
Borrower's otherwise obtaining knowledge of, (i) the occurrence of any
event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint,
order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any Environmental Law by Borrower or
(B) the release, spill or discharge, threatened or actual, of any
Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety
matter, which affects Borrower or its business, operations or assets or
any properties at which Borrower transported, stored or disposed of any
Hazardous Materials.
(d) Without limiting the generality of the foregoing,
whenever Lender reasonably determines that there is non-compliance, or
any condition which requires any action by or on behalf of Borrower in
order to avoid any material non-compliance, with any Environmental Law,
Borrower shall, at Lender's request and Borrower's expense: (i) cause an
independent environmental engineer acceptable to Lender to conduct such
tests of the site where Borrower's non-compliance or alleged non-
compliance with such Environmental Laws has occurred as to such non-
compliance and prepare and deliver to Lender a report as to such non-
compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an
estimate of the costs thereof and (ii) provide to Lender a supplemental
report of such engineer whenever the scope of such non-compliance, or
Borrower's response thereto or the estimated costs thereof, shall change
in any material respect. Furthermore, without limiting the generality of
the foregoing and specifically in connection with Borrower's Real
Property located in Beech Creek, Pennsylvania, Borrower (i) shall at all
times establish and maintain a clean-up plan acceptable to Lender and
its consultants, (ii) shall engage a contractor to perform routine
monitoring and progress reporting on the environmental clean-up of such
site, such contractor, reporting and monitoring to be acceptable to
Lender and its consultants, (iii) shall deliver such reports to Lender
(and its consultants) upon completion thereof, and (iv) shall allow
Lender and its consultants to visit such site and meet with such
contractor, upon Lender's request, to evaluate such monitoring and
clean-up plan and the status thereof.
(e) Borrower shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims,
damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to
the use, generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a Hazardous
Material, including, without limitation, the costs of any required or
necessary repair, cleanup or other remedial work with respect to any
property of Borrower and the preparation and implementation of any
closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall
survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 Payment of Taxes and Claims.
Borrower shall duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and with respect to which adequate reserves have
been set aside on its books. Borrower shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements
provided for herein and Borrower agrees to indemnify and hold Lender
harmless with respect to the foregoing, and to repay to Lender on demand
the amount thereof, and until paid by Borrower such amount shall be added
and deemed part of the Loans, provided, that, nothing contained herein
shall be construed to require Borrower to pay any income or franchise
taxes attributable to the income of Lender from any amounts charged or
paid hereunder to Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.
9.5 Insurance.
Borrower shall, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss
or damage and all other insurance of the kinds and in the amounts
customarily insured against or carried by corporations of established
reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as
to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Lender as Lender shall require as proof of
such insurance, and, if Borrower fails to do so, Lender is authorized,
but not required, to obtain such insurance at the expense of Borrower.
All policies shall provide for at least fifteen (15) days prior written
notice to Lender of any cancellation or reduction of coverage and that
Lender may act as attorney for Borrower in obtaining, and at any time an
Event of Default exists or has occurred and is continuing, adjusting,
settling, amending and canceling such insurance. Borrower shall cause
Lender to be named as a loss payee and an additional insured (but without
any liability for any premiums) under such insurance policies and
Borrower shall obtain non-contributory lender's loss payable endorsements
to all insurance policies in form and substance satisfactory to Lender.
Such lender's loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Lender as its interests may appear
and further specify that Lender shall be paid regardless of any act or
omission by Borrower or any of its affiliates. At its option, Lender may
apply any insurance proceeds received by Lender at any time to the cost
of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions
of or in relation to the Collateral and the business of Borrower and its
Subsidiaries (if any) in accordance with GAAP and Borrower shall furnish
or cause to be furnished to Lender: (i) within ninety (90) days after the
end of each fiscal month coinciding with the end of Borrower's fiscal
year, and thirty (30) days after the end of each other fiscal month,
(A) monthly unaudited consolidated financial statements, and, if Borrower
has any Subsidiaries, unaudited consolidating financial statements
(including in each case balance sheets, statements of income and loss and
statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of
Borrower and its Subsidiaries as of the end of and through such fiscal
month, and (B) a completed Compliance Certificate, substantially in the
form of Exhibit C-2 hereto, demonstrating compliance by Borrower with
Section 9.13 hereof as of the last day of the immediately preceding month,
and (ii) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements and, if Borrower has any
Subsidiaries, audited consolidating financial statements of Borrower and
its Subsidiaries (including in each case balance sheets, statements of
income and loss, statements of cash flow and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail,
fairly presenting the financial position and the results of the
operations of Borrower and its Subsidiaries as of the end of and for
such fiscal year, together with the opinion of independent certified
public accountants, which accountants shall be an independent accounting
firm selected by Borrower and reasonably acceptable to Lender, that such
financial statements have been prepared in accordance with GAAP, and
present fairly the results of operations and financial condition of
Borrower and its Subsidiaries as of the end of and for the fiscal year
then ended. Lender confirms that, as of the date hereof, the accounting
firm of BDO ▇▇▇▇▇▇▇, LLP, is acceptable to Lender.
(b) Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding
or claim relating to the Collateral or any other property which is
security for the Obligations or which would result in any material
adverse change in Borrower's business, properties, assets, goodwill or
condition, financial or otherwise and (ii) the occurrence of any Event of
Default or event which, with the passage of time or giving of notice or
both, would constitute an Event of Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports
which Borrower sends to its stockholders generally and copies of all
reports and registration statements which Borrower files with the
Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished
to Lender such budgets, forecasts, projections and other information
respecting the Collateral and the business of Borrower, as Lender may,
from time to time, reasonably request. Lender is hereby authorized to
deliver a copy of any financial statement or any other information
relating to the business of Borrower to any court or other government
agency or to any participant or assignee or prospective participant or
assignee. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Lender, at Borrower's expense,
copies of the financial statements of Borrower and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrower and to disclose to Lender such information as they may have
regarding the business of Borrower. Any documents, schedules, invoices or
other papers delivered to Lender may be destroyed or otherwise disposed
of by Lender one (1) year after the same are delivered to Lender, except
as otherwise designated by Borrower to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.
Borrower shall not, directly or indirectly, (a) merge into or
with or consolidate with any other Person or permit any other Person to
merge into or with or consolidate with it (except that so long as no
Event of Default then exists and Lender receives thirty (30) days prior
written notice (i) so long as Borrower is the surviving entity, a
Subsidiary of Borrower party to a duly executed Guaranty and Security
Agreement in favor of Lender may merge into or with or consolidate with
Borrower, and (ii) Borrower may permit any Subsidiary party to a duly
executed Guaranty and Security Agreement in favor of Lender, to merge
into or with or consolidate with one or more such Subsidiaries, or (b)
sell, assign, lease, transfer, abandon or otherwise dispose of any stock
or indebtedness to any other Person or any of its assets to any other
Person (except for (i) sales of Inventory in the ordinary course of
business, (ii) the disposition of worn-out or obsolete Equipment or
Equipment no longer used in the business of Borrower so long as
(A) if an Event of Default exists or has occurred and is continuing,
any proceeds are paid to Lender and (B) such sales do not involve
Equipment having an aggregate fair market value in excess of $25,000
for all such Equipment disposed of in any fiscal year of Borrower,
and (iii) the sale of Borrower's equity interests in Advance Automotive
Industries, Inc., an Ontario corporation, provided, however that the
proceeds of such sale are used to repay Revolving Loans hereunder and
provided further, however, that so long as no Event of Default then
exists and Borrower has Excess Availability in an amount not less than
$600,000, Borrower may retain proceeds in an amount not to exceed
$840,000 ("Retained Funds") in a bank account subject to a first priority
security interest of Lender, or (c) form or acquire any Subsidiaries
other than NewCo or the Subsidiaries in existence as of the date hereof,
or (d) wind up, liquidate or dissolve, or (e) agree to do any of the
foregoing.
9.8 Encumbrances.
Borrower shall not create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including,
without limitation, the Collateral, except: (a) liens and security
interests of Lender; (b) liens securing the payment of taxes, either not
yet overdue or the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside
on its books; (c) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of
Borrower's business to the extent: (i) such liens secure indebtedness
which is not overdue or (ii) such liens secure indebtedness relating to
claims or liabilities which are fully insured and being defended at the
sole cost and expense and at the sole risk of the insurer or being
contested in good faith by appropriate proceedings diligently pursued and
available to Borrower, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which
adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the
business of Borrower as presently conducted thereon or materially impair
the value of the real property which may be subject thereto; (e) purchase
money security interests in Equipment (including capital leases) and
purchase money mortgages on real estate not to exceed $450,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower other than the
Equipment or real estate so acquired, and the indebtedness secured
thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be; and (f) the security interests and liens
set forth on Schedule 8.4 hereto.
9.9 Indebtedness.
Borrower shall not incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any obligations or
indebtedness, except (a) the Obligations; (b) trade obligations
and normal accruals in the ordinary course of business not yet due and
payable, or with respect to which the Borrower is contesting in good
faith the amount or validity thereof by appropriate proceedings
diligently pursued and available to Borrower, and with respect to which
adequate reserves have been set aside on its books; (c) purchase money
indebtedness (including capital leases) to the extent not incurred or
secured by liens (including capital leases) in violation of any other
provision of this Agreement; and (d) obligations or indebtedness set
forth on the Information Certificate or on Schedule 9.9 hereto;
provided, that, (i) Borrower may only make regularly scheduled payments
of principal and interest in respect of such indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise
to such indebtedness as in effect on the date hereof, (ii) Borrower
shall not, directly or indirectly, (A) amend,modify, alter or change
the terms of such indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, or (B) redeem, retire,
defease, purchase or otherwise acquire such indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (iii)
Borrower shall furnish to Lender all notices or demands in connection
with such indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc.
Borrower shall not, directly or indirectly, make any loans or
advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the stock
or indebtedness or all or a substantial part of the assets or property of
any Person, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of
the foregoing, except: (a) the endorsement of instruments for
collection or deposit in the ordinary course of business; (b) investments
in: (i) short-term direct obligations of the United States Government,
(ii) negotiable certificates of deposit issued by any bank satisfactory
to Lender, payable to the order of the Borrower or to bearer and
delivered to Lender, and (iii) commercial paper rated A1 or P1;
provided, that, as to any of the foregoing, unless waived in writing by
Lender, Borrower shall take such actions as are deemed necessary by
Lender to perfect the security interest of Lender in such investments;
(c) the guarantees, if any, set forth in the Information Certificate;
(d) the acquisition of all or a substantial part of the assets or
property of any Person; provided, that, (i) no Event of Default shall be
continuing at the time of such acquisition or be caused thereby,
(ii) Borrower shall take such actions as are deemed necessary by Lender
to perfect the security interest of Lender in such assets and shall
deliver to Lender the appraisal required by Section 7.3(d) hereof, and
(iii) Borrower shall obtain Lender's prior written consent to such
acquisition, which consent shall not be unreasonably withheld or
delayed, and (e) (i) the investments and capital contributions existing
as of the date hereof in the Subsidiaries of Borrower as of the date
hereof, and (ii) loans or advances by Borrower to its Subsidiaries
(other than NewCo or Western Rebuilders) in the ordinary course of
business, and (iii) in connection with an acquisition, a capital
contribution to NewCo of the Retained Funds referenced in Section
9.7(b)(iii). Borrower shall not make any other loan, advance or
transfer to NewCo except as expressly permitted above. Borrower shall
not make any loan, advance or transfer to Western Rebuilders.
9.11 Dividends and Redemptions.
Borrower shall not, directly or indirectly, declare or pay any
dividends on account of any shares of class of capital stock of Borrower
now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of capital stock (or set aside
or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or
make any other distribution (by reduction of capital or otherwise) in
respect of any such shares or agree to do any of the foregoing, except
as set forth on Schedule 9.11 hereto.
9.12 Transactions with Affiliates.
Borrower shall not enter into any transaction for the purchase,
sale or exchange of property or the rendering of any service to or by any
affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to the Borrower than Borrower would
obtain in a comparable arm's length transaction with an unaffiliated
person.
9.13 Adjusted Tangible Net Worth.
Borrower shall, at all times, maintain Adjusted Tangible Net
Worth of not less than $100,000.
9.14 Costs and Expenses.
Borrower shall pay to Lender on demand all costs, expenses,
filing fees and taxes paid or payable in connection with the preparation,
negotiation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of the Obligations, Lender's rights
in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments,
supplements or consents which may hereafter be contemplated (whether or
not executed) or entered into in respect hereof and thereof, including,
but not limited to: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and
fees, documentary taxes, intangibles taxes and mortgage recording taxes
and fees, if applicable); (b) costs and expenses and fees for
title insurance and other insurance premiums, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees
and search fees; (c) costs and expenses of remitting loan proceeds,
collecting checks and other items of payment, and establishing and
maintaining the Blocked Accounts, together with Lender's customary
charges and fees with respect thereto; (d) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests
and liens of Lender, selling or otherwise realizing upon the Collateral,
and otherwise enforcing the provisions of this Agreement and the other
Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Borrower's
operations, plus a per diem charge at the rate of $750 per person per day
for Lender's examiners in the field and office; and (h) the reasonable
fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing.
9.15 Compliance with ERISA.
Borrower shall not with respect to any "employee pension
benefit plans" maintained by Borrower or any of its ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit plans so
as to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, (ii) allow or suffer to exist any
prohibited transaction involving any of such employee pension benefit
plans or any trust created thereunder which would subject Borrower or
such ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail
to pay to any such employee pension benefit plan any contribution which
it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to
any such employee pension benefit plan, (v) allow or suffer to exist any
occurrence of a reportable event or any other event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the
Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.15, the term "employee
pension benefit plans," "employee benefit plans", "accumulated funding
deficiency" and "reportable event" shall have the respective meanings
assigned to them in ERISA, and the term "prohibited transaction" shall
have the meaning assigned to it in Section 4975 of the Code and ERISA.
9.16 After Acquired Real Property.
If Borrower or any Subsidiary of Borrower (other than NewCo)
hereafter acquires any Real Property, fixtures or any other property that
is of the kind or nature described in the Mortgage and such Real
Property, fixtures or other property at any one location has a fair
market value in an amount equal to or greater than $100,000 (or if an
Event of Default exists, then regardless of the fair market value of such
assets), without limiting any other rights of Lender, or duties or
obligations of Borrower, upon Lender's request, Borrower shall execute
and deliver, or shall cause such Subsidiary to execute and deliver, to
Lender, a mortgage, deed of trust or deed to secure debt, as Lender may
determine, in form and substance substantially similar
to the Mortgage and as to any provisions relating to specific state laws
satisfactory to Lender and in form appropriate for recording in the real
estate records of the jurisdiction in which such Real Property or other
property is located granting to Lender a first and only lien and mortgage
on and security interest in such Real Property, fixtures or other
property (except as Borrower would otherwise be permitted to incur
hereunder or under the Mortgage or as otherwise consented to in writing
by Lender) and such other agreements, documents and instruments as
lender may require in connection therewith.
9.17 Borrower's Leased Premises in Hope, Arkansas.
Borrower shall (i) provide Lender with copies of any and all notices
given or required to be given by Borrower under the Subject Lease (as
defined in the Leasehold Mortgage), including the notice not to extend
the term of the Subject Lease as contemplated by Section 13.1 of the
Leasehold Mortgage, and (ii) at least thirty (30) days prior to the
expiration of the term of the Subject Lease, as such term may be
extended, Borrower shall take all actions necessary to exercise the
Purchase Options (as defined in the Leasehold Mortgage) and as set forth
in Section 13.2 of the Subject Lease and shall reacquire the Project (as
defined in the Subject Lease).
9.18 Further Assurances.
At the request of Lender at any time and from time to time,
Borrower shall, at its expense, duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be
necessary or proper to evidence, perfect, maintain and enforce the
security interests and the priority thereof in the Collateral
and to otherwise effectuate the provisions or purposes of this Agreement
or any of the other Financing Agreements. Lender may at any time and
from time to time request a certificate from an officer of Borrower
representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied.
In the event of such request by Lender, Lender may, at its option, cease
to make any further Loans or provide any further Letter of Credit
Accommodations until Lender has received such certificate and, in
addition, Lender has determined that such conditions are satisfied.
Where permitted by law, Borrower hereby authorizes Lender to execute and
file one or more UCC financing statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default.
The occurrence or existence of any one or more of the following
events are referred to herein individually as an "Event of Default", and
collectively as "Events of Default":
(a) Borrower fails to pay when due any of the Obligations;
(b) (i) Borrower fails to perform, keep or observe
any term, covenant, condition or provision contained in Sections 9.1
(Maintenance of Existence) or 9.16 (After Acquired Real Property) of this
Agreement, and such failure continues for a period of ten (10) days; or
(ii) Borrower fails to perform, keep or observe any term, covenant,
condition or provision contained in Sections 9.2 (New Collateral
Locations), 9.3 (Compliance with Laws), or 9.6 (Financial Statements and
Other Information) of this Agreement, and such failure continues for a
period of three (3) days; provided, however, the ten (10) and three (3)
day periods set forth in the foregoing clauses (i) and (ii) shall not
apply in the case of: (A) any failure to observe any such covenant which
is not capable of being cured at all or within the applicable period or
which has been the subject of a prior failure within the preceding six
(6) month period or (B) an intentional breach of Borrower or any Obligor
of any such covenant; or (iii) Borrower fails to perform, keep or
observe any other term, covenant, condition or provision contained in
this Agreement or any of the other Financing Agreements
(c) any representation, warranty or statement of fact
made by Borrower to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any
material respect;
(d) any Obligor revokes, terminates or fails to
perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of
Lender;
(e) any judgment for the payment of money is
rendered against Borrower or any Obligor in excess of $100,000 in any one
case or $200,000 in the aggregate and shall remain undischarged or
unvacated for a period in excess of thirty (30) days or execution shall
at any time not be effectively stayed, or any judgment other than for the
payment of money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any Obligor or any of their assets;
(f) any Obligor (being a natural person or a general
partner of an Obligor which is a partnership) dies or Borrower or any
Obligor, which is a partnership or corporation, dissolves or suspends or
discontinues doing business;
(g) Borrower or any Obligor becomes insolvent
(however defined or evidenced), makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of
its creditors or principal creditors;
(h) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at law or in equity) is filed against
Borrower or any Obligor or all or any part of its properties and such
petition or application is not dismissed within forty-five (45) days
after the date of its filing or Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted sooner;
(i) a case or proceeding under the bankruptcy laws
of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed by Borrower or
any Obligor or for all or any part of its property;
(j) any default by Borrower or any Obligor under
any agreement, document or instrument relating to any indebtedness for
borrowed money owing to any person other than Lender, or any capitalized
lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in
favor of any person other than Lender, in any case in an amount in
excess of $75,000, which default continues for more than the applicable
cure period, if any, with respect thereto, or any default by Borrower or
any Obligor under any material contract, lease, license or other
obligation to any person other than Lender, which default continues for
more than the applicable cure period, if any, with respect thereto;
(k) the indictment or threatened indictment of
Borrower or any Obligor under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against
Borrower or any Obligor, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of any of
the property of Borrower or such Obligor;
(l) there shall be a material adverse change in the
business, senior management, assets or prospects of Borrower or any
Obligor after the date hereof; or
(m) there shall be an event of default under any of
the other Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by Borrower or any
Obligor, except as such notice or consent is expressly provided for
hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements,
the Uniform Commercial Code or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall
include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of
this Agreement or any of the other Financing Agreements. Lender may, at
any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation, (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided,
that, upon the occurrence of any Event of Default described in Sections
10.1(h) and 10.1(i), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which
any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or
any portion of the Collateral, (iii) require Borrower, at Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on
or in which the same may be located for the purpose of effecting the
sale, foreclosure or other disposition thereof or for any other purpose,
(vi) sell, lease, transfer, assign, deliver or otherwise dispose of any
and all Collateral (including, without limitation, entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or
terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with Lender having the right to purchase the whole or any part
of the Collateral at any such public sale, all of the foregoing being
free from any right or equity of redemption of Borrower, which right or
equity of redemption is hereby expressly waived and released by Borrower
and/or (vii) terminate this Agreement. If any of the Collateral is sold
or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment
therefore is finally collected by Lender. If notice of disposition of
Collateral is required by law, five (5) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral
is to be made, shall be deemed to be reasonable notice thereof and
Borrower waives any other notice. In the event Lender institutes an
action to recover any Collateral or seeks recovery of any Collateral by
way of prejudgment remedy, Borrower waives the posting of any bond which
might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of the Obligations, in
whole or in part and in such order as Lender may elect, whether or not
then due. Borrower shall remain liable to Lender for the payment of any
deficiency with interest at the highest rate provided for herein and all
costs and expenses of collection or enforcement, including attorneys'
fees and legal expenses.
(d) Without limiting the foregoing, from and during
the continuance of an Event of Default or an event which with notice or
passage of time or both would constitute an Event of Default, Lender may,
at its option, without notice, (i) cease making Loans or arranging for
Letter of Credit Accommodations or reduce the lending formulas or amounts
of Revolving Loans and Letter of Credit Accommodations available to
Borrower and/or (ii) terminate any provision of this Agreement providing
for any future Loans or Letter of Credit Accommodations to be made by
Lender to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of
this Agreement and the other Financing Agreements and any dispute arising
out of the relationship between the parties hereto, whether in contract,
tort, equity or otherwise, shall be governed by the internal laws of the
State of Georgia (without giving effect to principles of conflicts of
law).
(b) Borrower and Lender irrevocably consent and
submit to the non-exclusive jurisdiction of a Georgia state court or a
superior court located in ▇▇▇▇▇▇ County, Georgia and the United States
District Court for the Northern District of Georgia and waive any
objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the
other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Lender shall have the right to
bring any action or proceeding against Borrower or its property in the
courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its
address set forth on the signature pages hereof and service so made
shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Lender's option, by service
upon Borrower in any other manner provided under the rules of any such
courts. Within thirty (30) days after such service, Borrower shall
appear in answer to such process, failing which Borrower shall be deemed
in default and judgment may be entered by Lender against Borrower for the
amount of the claim and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER AND LENDER EACH
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by
Borrower in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding
on Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such
litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary
care in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices.
Borrower hereby expressly waives demand, presentment, protest
and notice of protest and notice of dishonor with respect to any and all
instruments and commercial paper, included in or evidencing any of the
Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are
expressly provided for herein. No notice to or demand on Borrower which
Lender may elect to give shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
11.3 Amendments and Waivers.
Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers
and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only
to the extent specifically set forth therein. A waiver by Lender of any
right, power and/or remedy on any one occasion shall not be construed as
a bar to or waiver of any such right, power and/or remedy which Lender
would otherwise have on any future occasion, whether similar in kind or
otherwise.
11.4 Waiver of Counterclaims.
Borrower waives all rights to interpose any claims, deductions,
setoffs or counterclaims of any nature (other then compulsory
counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification.
Borrower shall indemnify and hold Lender, and its directors,
agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or
transaction related or attendant thereto, including, without limitation,
amounts paid in settlement, court costs, and the fees and expenses of
counsel. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion
which it is permitted to pay under applicable law to Lender in
satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and
shall continue in full force and effect for a term ending on the
date three (3) years from the date hereof (the "Renewal Date"), and from
year to year thereafter, unless sooner terminated pursuant to the terms
hereof; provided, that, Lender may, at its option, extend the Renewal
Date to the date four (4) years from the date hereof by giving Borrower
notice at least sixty (60) days prior to the third anniversary of this
Agreement. Lender or Borrower (subject to Lender's right to extend the
Renewal Date as provided above) may terminate this Agreement and the
other Financing Agreements effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the other party
at least sixty (60) days prior written notice; provided, that, this
Agreement and all other Financing Agreements must be terminated
simultaneously. Upon the effective date of termination or non-renewal
of the Financing Agreements, Borrower shall pay to Lender, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to
Lender in such amounts as Lender determines are reasonably necessary to
secure Lender from loss, cost, damage or expense, including attorneys'
fees and legal expenses, in connection with any contingent Obligations,
including issued and outstanding Letter of Credit Accommodations and
checks or other payments provisionally credited to the Obligations
and/or as to which Lender has not yet received final and indefeasible
payment. Such cash collateral shall be remitted by wire transfer in
Federal funds to such bank account of Lender, as Lender may, in its
discretion, designate in writing to Borrower for such purpose. Interest
shall be due until and including the next business day, if the amounts
so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Atlanta, Georgia
time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrower of its
respective duties, obligations and covenants under this Agreement or
the other Financing Agreements until all Obligations have been fully
and finally discharged and paid, and Lender's continuing security
interest in the Collateral and the rights and remedies of Lender
hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and
finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view
of the impracticality and extreme difficulty of ascertaining actual
damages and by mutual agreement of the parties as to a reasonable
calculation of Lender's lost profits as a result thereof, Borrower
agrees to pay to Lender, upon the effective date of such termination, an
early termination fee in the amount set forth below if such termination
is effective in the period indicated:
Amount Period
(i) 3.0% of Maximum Credit after the date hereof but prior
to or on the on (1)year
anniversary of the date hereof
(ii) 1.5% of Maximum Credit after the one (1)year anniversary
of the date hereof but prior
to or on the two (2)year
anniversary of the date hereof
(iii) .75% of Maximum Credit after the two (2)year anniversary
of the date hereof but prior to
the Renewal Date or the then
current term of the Agreement
Such early termination fee shall be presumed to be the
amount of damages sustained by Lender as a result of such early
termination and Borrower agrees that it is reasonable under the
circumstances currently existing. The early termination fee provided
for in this Section 12.1 shall be deemed included in the Obligations.
Notwithstanding the foregoing, Lender hereby agrees to waive payment of
the foregoing early termination fee if this Agreement is terminated prior
to the end of the then current term or renewal term solely as a result of
the refinancing of all Obligations with the proceeds of a new credit
facility provided by First Union National Bank or an affiliate thereof
and no Event of Default then exists hereunder.
12.2 Notices.
All notices, requests and demands hereunder shall be in writing
and (a) made to Lender at its address set forth below and to Borrower at
its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier
service with instructions to deliver the next business day, one
(1) business day after sending; and if by certified mail, return receipt
requested, five (5) days after mailing.
12.3 Partial Invalidity.
If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate
this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall
be construed and enforced only to such extent as shall be permitted by
applicable law.
12.4 Successors.
This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lender, Borrower and their
respective successors and assigns, except that Borrower may not assign
its rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written
consent of Lender. Lender may, after notice to Borrower, assign its
rights and delegate its obligations under this Agreement and the other
Financing Agreements and further may assign, or sell participations in,
all or any part of the Loans, the Letter of Credit Accommodations or any
other interest herein to another financial institution or other person,
in which event, the assignee or participant shall have, to the extent of
such assignment or participation, the same rights and benefits as it
would have if it were Lender hereunder, except as otherwise provided by
the terms of such assignment or participation.
12.5 Entire Agreement.
This Agreement, the other Financing Agreements, any supplements
hereto or thereto, and any instruments or documents delivered or to be
delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other
prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written.
IN WITNESS WHEREOF, Lender and Borrower have
caused these presents to be duly executed as of the day and year first above
written.
LENDER BORROWER
CONGRESS FINANCIAL CORPORATION CHAMPION PARTS, INC.
(Southern)
By:_____________________________ By:___________________________
Title:___________________________ Title:________________________
Address: Chief Executive Office:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
SECTION 1. DEFINITIONS 1
SECTION 2. CREDIT FACILITIES 11
2.1 Revolving Loans. 11
2.2 Letter of Credit Accommodations. 12
2.3 Term Loans. 14
2.4 Availability Reserves. 14
SECTION 3. INTEREST AND FEES 14
3.1 Interest. 14
3.2 Closing Fee. 15
3.3 Facility Fee. 15
3.4 Servicing Fee. 15
3.5 Unused Line Fee. 15
SECTION 4. CONDITIONS PRECEDENT 15
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. 15
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. 18
SECTION 5. GRANT OF SECURITY INTEREST 18
SECTION 6. COLLECTION AND ADMINISTRATION 19
6.1 Borrower's Loan Account. 19
6.2 Statements. 20
6.3 Collection of Accounts. 20
6.4 Payments. 21
6.5 Authorization to Make Loans. 21
6.6 Use of Proceeds. 22
SECTION 7. COLLATERAL REPORTING AND COVENANTS 22
7.1 Collateral Reporting. 22
7.2 Accounts Covenants. 23
7.3 Inventory Covenants. 24
7.4 Equipment Covenants. 25
7.5 Power of Attorney. 26
7.6 Right to Cure. 26
7.7 Access to Premises 27
SECTION 8. REPRESENTATIONS AND WARRANTIES 27
8.1 Corporate Existence, Power and Authority; Subsidiaries. 27
8.2 Financial Statements; No Material Adverse Change. 27
8.3 Chief Executive Office; Collateral Locations. 28
8.4 Priority of Liens; Title to Properties. 28
8.5 Tax Returns. 28
8.6 Litigation. 28
8.7 Compliance with Other Agreements and Applicable Laws. 29
8.8 Environmental Compliance. 29
8.9 Employee Benefits. 29
8.10 Accuracy and Completeness of Information. 30
8.11 Survival of Warranties; Cumulative. 31
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 31
9.1 Maintenance of Existence. 31
9.2 New Collateral Locations. 31
9.3 Compliance with Laws, Regulations, Etc. 31
9.4 Payment of Taxes and Claims. 33
9.5 Insurance. 33
9.6 Financial Statements and Other Information. 34
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. 35
9.8 Encumbrances. 36
9.9 Indebtedness. 36
9.10 Loans, Investments, Guarantees, Etc. 37
9.11 Dividends and Redemptions. 37
9.12 Transactions with Affiliates. 37
9.13 Adjusted Tangible Net Worth. 38
9.14 Costs and Expenses. 38
9.15 Compliance with ERISA 38
9.16 After Acquired Real Property. 39
9.17 Borrower's Leased Premises in Hope, Arkansas. 39
9.18 Further Assurances. 40
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 40
10.1 Events of Default. 40
10.2 Remedies. 42
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW 43
11.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver. 43
11.2 Waiver of Notices. 45
11.3 Amendments and Waivers. 45
11.4 Waiver of Counterclaims. 45
11.5 Indemnification. 45
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS 46
12.1 Term. 46
12.2 Notices. 47
12.3 Partial Invalidity. 47
12.4 Successors. 48
12.5 Entire Agreement. 48
INDEX TO EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Exhibit C-1 Core Return and Stock Adjustment Policies
Exhibit C-2 Compliance Certificate
Schedule 8.4 Existing Liens
Schedule 8.8 Environmental Compliance
Schedule 8.9(e) Contributions to Multiemployer Plans
Schedule 9.9 Permitted Debt
Schedule 9.11 Permitted Dividends and Other Distributions on
Capital Stock