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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
THE CHASE MANHATTAN BANK
(AS LENDER AND AS AGENT)
WITH
LET'S TALK CELLULAR & WIRELESS, INC.
TELEPHONE WAREHOUSE, INC.
CELLULAR WAREHOUSE, INC.
NATIONAL CELLULAR, INCORPORATED
CELLULAR USA
▇▇▇▇▇▇▇ ENTERPRISES, INC.
(EACH A BORROWER AND, JOINTLY AND SEVERALLY, THE BORROWERS)
April 2, 1998
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TABLE OF CONTENTS
I. DEFINITIONS........................................................................................1
1.1. ACCOUNTING TERMS..........................................................................1
1.2. GENERAL TERMS.............................................................................1
1.3. UNIFORM COMMERCIAL CODE TERMS............................................................20
1.4. CERTAIN MATTERS OF CONSTRUCTION..........................................................20
II. ADVANCES, PAYMENTS................................................................................20
2.1. REVOLVING ADVANCES.......................................................................20
2.2. PROCEDURE FOR REVOLVING ADVANCE BORROWING................................................21
2.3. DISBURSEMENT OF ADVANCE PROCEEDS.........................................................23
2.4. TERM LOAN................................................................................24
2.5. REPAYMENT OF ADVANCES....................................................................25
2.6. REPAYMENT OF EXCESS ADVANCES.............................................................25
2.7. STATEMENT OF ACCOUNT.....................................................................25
2.8. ADDITIONAL PAYMENTS......................................................................26
2.9. MANNER OF BORROWING AND PAYMENT..........................................................26
2.10. MANDATORY AND OPTIONAL PREPAYMENTS.......................................................28
(a) MANDATORY PREPAYMENT.....................................................................28
(b) OPTIONAL PREPAYMENTS.....................................................................29
2.12. DEFAULTING LENDER........................................................................30
III. INTEREST AND FEES.................................................................................31
3.1. INTEREST.................................................................................31
3.2. UNUSED LINE FEE..........................................................................31
3.3. FEE LETTER...............................................................................31
3.4. FIELD EXAMINATION EXPENSES...............................................................31
3.5. COMPUTATION OF INTEREST AND FEES.........................................................32
3.6. MAXIMUM CHARGES..........................................................................32
3.7. INCREASED COSTS..........................................................................32
3.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR.................................33
3.9. CAPITAL ADEQUACY.........................................................................33
IV. COLLATERAL: GENERAL TERMS........................................................................34
4.1. SECURITY INTEREST IN THE COLLATERAL......................................................34
4.2. PERFECTION OF SECURITY INTEREST..........................................................34
4.3. DISPOSITION OF COLLATERAL................................................................35
4.4. PRESERVATION OF COLLATERAL...............................................................35
4.5. OWNERSHIP OF COLLATERAL..................................................................35
4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS................................................35
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4.7. BOOKS AND RECORDS........................................................................36
4.8. FINANCIAL DISCLOSURE.....................................................................36
4.9. COMPLIANCE WITH LAWS.....................................................................36
4.10. INSPECTION OF PREMISES; APPRAISAL........................................................37
4.11. INSURANCE................................................................................37
4.12. FAILURE TO PAY INSURANCE.................................................................38
4.13. PAYMENT OF TAXES.........................................................................38
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS.........................................................39
4.15. RECEIVABLES..............................................................................39
(a) NATURE OF RECEIVABLES...........................................................39
(b) SOLVENCY OF CUSTOMERS...........................................................39
(c) LOCATIONS OF BORROWERS..........................................................39
(d) COLLECTION OF RECEIVABLES.......................................................39
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES.......................................40
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF......................................40
(g) NO LIABILITY....................................................................41
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT............................41
(i) ADJUSTMENTS.....................................................................41
4.16. INVENTORY................................................................................42
4.17. MAINTENANCE OF EQUIPMENT.................................................................42
4.18. EXCULPATION OF LIABILITY.................................................................42
4.19. FINANCING STATEMENTS.....................................................................42
V. REPRESENTATIONS AND WARRANTIES....................................................................42
5.1. AUTHORITY................................................................................42
5.2. FORMATION AND QUALIFICATION..............................................................43
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................................43
5.4. TAX RETURNS..............................................................................43
5.5. FINANCIAL STATEMENTS.....................................................................43
5.6. CORPORATE NAME...........................................................................44
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE....................................................44
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT..............................45
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.............................................47
5.10. LICENSES AND PERMITS.....................................................................47
5.11. DEFAULT OF INDEBTEDNESS..................................................................47
5.12. NO DEFAULT...............................................................................47
5.13. NO BURDENSOME RESTRICTIONS...............................................................47
5.14. NO LABOR DISPUTES........................................................................47
5.15. MARGIN REGULATIONS.......................................................................47
5.16. INVESTMENT COMPANY ACT...................................................................47
5.17. DISCLOSURE...............................................................................47
5.18. DELIVERY OF ACQUISITION AGREEMENT........................................................47
5.19. SWAPS....................................................................................48
5.20. CONFLICTING AGREEMENTS...................................................................48
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5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS..............................................48
5.22. BUSINESS AND PROPERTY OF BORROWERS.......................................................48
VI. AFFIRMATIVE COVENANTS.............................................................................48
6.1. PAYMENT OF FEES..........................................................................48
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS..............................48
6.3. VIOLATIONS...............................................................................49
6.4. GOVERNMENT RECEIVABLES...................................................................49
6.5. EXECUTION OF SUPPLEMENTAL INSTRUMENTS....................................................49
6.6. PAYMENT OF INDEBTEDNESS..................................................................49
6.7. STANDARDS OF FINANCIAL STATEMENTS........................................................49
6.8. SUBSIDIARY GUARANTY AND SECURITY AGREEMENT...............................................49
6.9. LANDLORD WAIVERS.........................................................................50
6.10. INTEREST RATE PROTECTION.................................................................50
6.11. ENVIRONMENTAL MATTERS....................................................................50
6.12. EVIDENCE OF RENTAL PAYMENTS..............................................................52
VII. NEGATIVE COVENANTS................................................................................52
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS....................................52
7.2. CREATION OF LIENS........................................................................52
7.3. GUARANTEES...............................................................................52
7.4. INVESTMENTS..............................................................................52
7.5. LOANS....................................................................................53
7.6. CAPITAL EXPENDITURES.....................................................................53
7.7. DIVIDENDS; MANAGEMENT FEES...............................................................53
7.8. INDEBTEDNESS.............................................................................53
7.9. NATURE OF BUSINESS.......................................................................53
7.10. TRANSACTIONS WITH AFFILIATES.............................................................53
7.11. INTENTIONALLY OMITTED....................................................................53
7.12. SUBSIDIARIES.............................................................................53
7.13. FISCAL YEAR AND ACCOUNTING CHANGES.......................................................54
7.14. PLEDGE OF CREDIT.........................................................................54
7.15. AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS..........................................54
7.16. COMPLIANCE WITH ERISA....................................................................54
7.17. PREPAYMENT OF INDEBTEDNESS...............................................................54
7.18. OTHER AGREEMENTS.........................................................................54
7.19. FIXED CHARGE COVERAGE RATIO..............................................................54
7.20. MINIMUM EBITDA...........................................................................55
7.21. LEVERAGE RATIO...........................................................................55
7.22. INTEREST COVERAGE RATIO..................................................................55
7.23. ▇▇▇▇▇▇▇▇ NOTE............................................................................55
VIII. CONDITIONS PRECEDENT..............................................................................55
8.1. CONDITIONS TO INITIAL ADVANCES...........................................................55
(a) NOTES...........................................................................55
(b) FILINGS, REGISTRATIONS AND RECORDINGS...........................................55
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(c) CORPORATE PROCEEDINGS OF BORROWERS..............................................56
(d) INCUMBENCY CERTIFICATES OF BORROWERS............................................56
(e) CERTIFICATES....................................................................56
(f) GOOD STANDING CERTIFICATES......................................................56
(g) LEGAL OPINION...................................................................56
(h) NO LITIGATION...................................................................56
(i) FINANCIAL CONDITION CERTIFICATES................................................57
(j) COLLATERAL EXAMINATION; APPRAISALS..............................................57
(k) FEES............................................................................57
(l) FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS............................57
(m) ACQUISITION DOCUMENTS...........................................................57
(n) GUARANTY; GUARANTOR SECURITY AGREEMENT; PLEDGE AGREEMENT; OTHER DOCUMENTS.......57
(o) INSURANCE.......................................................................57
(p) UNDRAWN AVAILABILITY; BORROWING BASE............................................58
(q) PAYMENT INSTRUCTIONS............................................................58
(r) BLOCKED ACCOUNTS................................................................58
(s) CONSENTS........................................................................58
(t) NO ADVERSE MATERIAL CHANGE......................................................58
(u) LEASEHOLD AGREEMENTS............................................................58
(v) CONTRACT REVIEW.................................................................58
(w) CLOSING CERTIFICATE.............................................................58
(x) CUSTOMERS AND SUPPLIERS.........................................................59
(y) CASH MANAGEMENT.................................................................59
(z) SCHEDULE OF AFFILIATES AND SUBSIDIARIES.........................................59
(aa) OTHER...........................................................................59
8.2. CONDITIONS TO EACH ADVANCE...............................................................59
(a) REPRESENTATIONS AND WARRANTIES..................................................59
(b) NO DEFAULT......................................................................59
(c) MAXIMUM ADVANCES................................................................59
IX. INFORMATION AS TO BORROWERS.......................................................................59
9.1. DISCLOSURE OF MATERIAL MATTERS...........................................................60
9.2. SCHEDULES................................................................................60
9.3. ENVIRONMENTAL REPORTS....................................................................60
9.4. LITIGATION...............................................................................60
9.5. MATERIAL OCCURRENCES.....................................................................60
9.6. GOVERNMENT RECEIVABLES...................................................................61
9.7. ANNUAL FINANCIAL STATEMENTS..............................................................61
9.8. QUARTERLY FINANCIAL STATEMENTS...........................................................61
9.9. MONTHLY FINANCIAL STATEMENTS.............................................................62
9.10. OTHER REPORTS............................................................................62
9.11. ADDITIONAL INFORMATION...................................................................62
9.12. PROJECTED OPERATING BUDGET...............................................................62
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9.13. VARIANCES FROM OPERATING BUDGET..........................................................63
9.14. NOTICE OF SUITS, ADVERSE EVENTS..........................................................63
9.15. ERISA NOTICES AND REQUESTS...............................................................63
9.16. ADDITIONAL DOCUMENTS.....................................................................64
9.17 SEC FILINGS..............................................................................64
X. EVENTS OF DEFAULT.................................................................................64
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT........................................................66
11.1. RIGHTS AND REMEDIES......................................................................66
11.2. AGENT'S DISCRETION.......................................................................67
11.3. SETOFF...................................................................................67
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE........................................................67
XII WAIVERS AND JUDICIAL PROCEEDINGS..................................................................68
12.1. WAIVER OF NOTICE.........................................................................68
12.2. DELAY....................................................................................68
12.3. JURY WAIVER..............................................................................68
XIII. EFFECTIVE DATE AND TERMINATION....................................................................68
13.1. TERM.....................................................................................68
13.2. TERMINATION..............................................................................68
XIV. REGARDING AGENT...................................................................................69
14.1. APPOINTMENT..............................................................................69
14.2. NATURE OF DUTIES.........................................................................69
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION................................................70
14.4. CERTAIN RIGHTS OF AGENT..................................................................70
14.5. RELIANCE.................................................................................71
14.6. NOTICE OF DEFAULT........................................................................71
14.7. INDEMNIFICATION..........................................................................71
14.8. AGENT IN ITS INDIVIDUAL CAPACITY.........................................................71
14.9. DELIVERY OF DOCUMENTS....................................................................71
14.10. BORROWERS' UNDERTAKING TO AGENT..........................................................71
XV. BORROWING AGENCY..................................................................................72
15.1. BORROWING AGENCY PROVISIONS..............................................................72
15.2. WAIVER OF SUBROGATION....................................................................72
XVI. MISCELLANEOUS.....................................................................................73
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16.1. GOVERNING LAW............................................................................73
16.2. ENTIRE UNDERSTANDING.....................................................................73
16.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS......................................74
16.4. APPLICATION OF PAYMENTS..................................................................76
16.5. INDEMNITY................................................................................76
16.6. NOTICE...................................................................................76
16.7. SURVIVAL.................................................................................77
16.8. SEVERABILITY.............................................................................77
16.9. EXPENSES.................................................................................77
16.10. INJUNCTIVE RELIEF........................................................................78
16.11. CONSEQUENTIAL DAMAGES....................................................................78
16.12. CAPTIONS.................................................................................78
16.13. COUNTERPARTS; TELECOPIED SIGNATURES......................................................78
16.14. CONSTRUCTION.............................................................................78
16.15. CONFIDENTIALITY..........................................................................78
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SCHEDULES AND EXHIBITS
EXHIBITS
Exhibit 1.2(A) Form of Borrowing Base Certificate
Exhibit 2.1 Form of Revolving Credit Note
Exhibit 2.4(a) Form of Term Note
Exhibit 5.5(b) Monthly Profit and Loss Statements, Balance Sheets and
Cash Flow Projections
Exhibit 8.1(i) Form of Financial Condition Certificate
Exhibit 16.3 Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1.2(A) Financing Statements
Schedule 1.2(B) Liens
Schedule 1.2(C) Subsidiary Stock
Schedule 4.5 Collateral Locations
Schedule 4.15(c) Locations of Borrower
Schedule 5.2(a) Formation and Qualification
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Numbers
Schedule 5.6(a) Corporate Names
Schedule 5.6(b) Prior Consolidations, Mergers, etc.
Schedule 5.8(b) Litigation
Schedule 5.9 Patents, Trademarks, Copyrights and Licenses
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
Schedule 6.11 Real Property
Schedule 7.3 Guarantees
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LOAN AND SECURITY AGREEMENT
Loan and Security Agreement dated as of April 2, 1998 among LET'S TALK
CELLULAR & WIRELESS, INC., a corporation organized under the laws of the State
of Florida ("LTC"), TELEPHONE WAREHOUSE, INC., a corporation organized under the
laws of the State of Texas ("TWI"), CELLULAR WAREHOUSE INC., a corporation
organized under the laws of the State of Georgia ("CWI"), NATIONAL CELLULAR,
INCORPORATED, a corporation organized under the laws of the State of Texas
("NCI"), CELLULAR USA, a corporation organized under the laws of the State of
Nevada ("USA") and ▇▇▇▇▇▇▇ ENTERPRISES, INC., a corporation organized under the
laws of the State of Georgia ("SEI") (LTC, TWI, CWI, NCI, USA and SEI, each a
Borrower and, jointly and severally, the "Borrowers"), the undersigned financial
institutions and the various financial institutions which, in accordance with
Section 16.3(c), become Purchasing Lenders (collectively, the "Lenders" and
individually a "Lender") and THE CHASE MANHATTAN BANK ("Chase"), a corporation
organized under the laws of the State of New York, as agent for the Lenders
(Chase, in such capacity, the "Agent").
BACKGROUND
Pursuant to the terms of the Acquisition Agreement (as herein defined),
LTC is purchasing the stock of CWI and SEI. LTC has requested that Agent and
Lenders finance the cash portion of the purchase price of such acquisition, as
well as provide for a line of credit to the Borrowers. Agent and Lenders are
willing to provide such financing, establish a revolving credit facility for
Borrowers of up to $11,000,000 and make a term loan to Borrowers of $24,000,000
on the terms and conditions set forth below.
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, each Borrower, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. ACCOUNTING TERMS. As used in this Agreement, the Notes or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; PROVIDED,
HOWEVER, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of the audited
financial statements of Borrowers for the fiscal year ended July 31, 1997.
1.2. GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
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"ACQUISITION AGREEMENT" shall mean the Stock Purchase
Agreement including all exhibits and schedules thereto dated as of February 1,
1998 between Seller and LTC, as buyer, as amended by an Amended and Restated
Stock Purchase Agreement including all exhibits and schedules thereto dated as
of March 1, 1998.
"ADVANCES" shall mean and include the Revolving Advances and
the Term Loan.
"ADVANCE RATES" shall have the meaning set forth in Section
2.1 hereof.
"AFFILIATE" of any Person shall mean (a) any Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect,
(x) to vote 5% or more of the securities having ordinary voting power for the
election of directors of such Person, or (y) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"AGENT" shall have the meaning set forth in the preamble to
this Agreement and shall include its successors and assigns.
"AGREEMENT" shall mean this Loan and Security Agreement, as
amended, supplemented or modified from time to time.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1%, or (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. If for any reason Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any
reason, including, the inability or failure of Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"APPRAISER" shall mean an independent appraisal company
acceptable to Agent.
"APPLICABLE MARGIN" shall mean initially, .75% with respect to
Domestic Rate Loans and 2.50% with respect to Eurodollar Rate Loans, and
thereafter for any fiscal quarter commencing with the fiscal quarter ending July
31, 1998 shall be determined by the Leverage Ratio at the end of the most recent
fiscal quarter with respect to the four fiscal quarters then ended and shall be
subject to adjustment from time to time as set forth in Section 3.1. If any
Borrower shall complete a Permitted Acquisition, the EBITDA of such Permitted
Acquisition
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shall be included on a proforma basis for the four (4) fiscal quarters then
being tested when calculating the Leverage Ratio for the purposes of determining
the Applicable Margin. The Applicable Margin with respect to Eurodollar Rate
Loans and Domestic Rate Loans, as the case may be, shall be the percentage set
forth below as corresponds to the applicable ratio set forth below:
LEVERAGE DOMESTIC EURODOLLAR
RATIO RATE MARGIN RATE MARGIN
----- ----------- -----------
Equal to or greater than 1.00% 2.75%
1.75 to 1.00
Equal to or greater than 1.50 to 1.00 .75% 2.50%
but less than 1.74 to 1.00
Equal to or greater than 1.25 to 1.00 .50% 2.25%
but less than 1.49 to 1.00
Less than 1.25 to 1.00 .25% 2.00%
"ASSESSMENT RATE" shall mean the annual assessment rate (net
of refunds and rounded upwards, if necessary, to the next 1/16 of 1%) estimated
by Agent (in good faith, but in no event in excess of statutory or regulatory
maximums) to be payable by Agent to the Federal Deposit Insurance Corporation
(or any successor) for insurance by such corporation (or such successor) of time
deposits made in Dollars at Agent's domestic offices during the current calendar
year.
"AUTHORITY" shall have the meaning set forth in Section
6.11(d).
"BASE CD RATE" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate.
"▇▇▇▇ SOUTH" shall mean ▇▇▇▇ South Cellular Corp.
"BLOCKED ACCOUNTS" shall have the meaning set forth in Section
4.15(h).
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"BORROWER" or "BORROWERS" shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted successors and
assigns of such Persons.
"BORROWER'S ACCOUNT" shall have the meaning set forth in
Section 2.7.
"BORROWERS ON A CONSOLIDATED BASIS" shall mean the
consolidation in accordance with GAAP of the accounts or other items of
Borrowers and their Subsidiaries.
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"BORROWING AGENT" shall mean LTC.
"BORROWING BASE CERTIFICATE" shall mean a certificate duly
executed by an authorized officer of Borrowing Agent appropriately completed and
in substantially the form of EXHIBIT 1.2(A).
"BUSINESS DAY" shall mean with respect to Eurodollar Rate
Loans, any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with respect to Domestic Rate Loans, any day other than a day on
which commercial banks in New York are authorized or required by law to close.
"CAPITAL STOCK" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"CHANGE OF CONTROL" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
who, at the time of the execution of this Agreement, does not own 5% or more of
Capital Stock of a Borrower, becomes the ultimate "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of Voting Stock representing more than 50%
of the total voting power of the Voting Stock of such Borrower on a fully
diluted basis, (ii) the current officers, directors and/or employees of HIG do
not constitute at least two (2) members of the board of directors of LTC, or
(iii) the merger or consolidation of any Borrower with or into another Person,
or the merger or consolidation of another Person with and into any Borrower,
with the effect that, immediately after such transaction, the stockholders of
such Borrower immediately prior to such transaction hold less than 50% of the
Voting Stock of the Person surviving such merger or consolidation.
"CHARGES" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments, liens, claims and charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority, domestic
or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund), upon the Collateral, any
Borrower or any of their Affiliates.
"CLOSING DATE" shall mean April 2, 1998 or such other date as
may be agreed to by the parties hereto.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated thereunder.
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"COLLATERAL" shall mean and include:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Subsidiary Stock;
(f) all Real Property;
(g) all of each Borrower's right, title and
interest in and to (i) its respective goods and other property including, but
not limited to all merchandise returned or rejected by Customers, relating to or
securing any of the Receivables; (ii) all of such Borrower's rights as a
consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to such Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims,
relating to any goods securing this Agreement; (v) all of such Borrower's
contract rights, rights of payment which have been earned under a contract
right, instruments, documents, chattel paper, warehouse receipts, deposit
accounts, money, securities and investment property; (vi) if and when obtained
by such Borrower, all real and personal property of third parties in which such
Borrower has been granted a lien or security interest as security for the
payment or enforcement of Receivables; and (vii) any other goods, personal
property or real property now owned or hereafter acquired in which such Borrower
has expressly granted a security interest or may in the future grant a security
interest to Agent hereunder, or in any amendment or supplement hereto or
thereto, or under any other agreement between Agent and such Borrower;
(h) all of each Borrower's ledger sheets, ledger
cards, files, correspondence, records, books of account, business papers,
computers (whether owned by such Borrower or in which it has an interest),
computer software, computer programs (owned by such Borrower), tapes, disks and
documents relating to (a), (b), (c), (d), (e), (f) or (g) of this Paragraph; and
(i) all proceeds and products of (a), (b), (c),
(d), (e), (f), (g) and (h) in whatever form, including, but not limited to:
cash, deposit accounts (whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of
money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.
"COLLATERAL ASSIGNMENT" shall mean collectively, (i) the
collateral assignment of rights executed by LTC and Seller in favor of Agent
pursuant to which the rights of LTC under
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the Acquisition Agreement are assigned to Agent and (ii) the collateral
assignment of rights in favor of Agent of each of Borrowers' supply agreements.
"COMMITMENT PERCENTAGE" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(b)
hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the
form of EXHIBIT 16.3 hereto, properly completed and otherwise in form and
substance satisfactory to Agent by which the Purchasing Lender purchases and
assumes a portion of the obligation of Lenders to make Advances under this
Agreement.
"CONSENTS" shall mean all filings and all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties, domestic or foreign, necessary to carry on
any Borrower's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"CONTRACT RATE" shall mean, as applicable, (a) so long as no
Event of Default shall have occurred (i) an interest rate per annum equal to (x)
the sum of the Alternate Base Rate plus the Applicable Margin with respect to
Domestic Rate Loans or (y) the sum of the Eurodollar Rate plus the Applicable
Margin with respect to Eurodollar Rate Loans or (b) following the occurrence and
during the continuance of an Event of Default, the Default Rate.
"CONTROLLED GROUP" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.
"CURRENT ASSETS" at a particular date, shall mean all cash,
cash equivalents, accounts and inventory of Borrowers on a Consolidated Basis
and all other items which would, in conformity with GAAP, be included under
current assets on a balance sheet of Borrower as at such date; PROVIDED,
HOWEVER, that such amounts shall not include (a) any amounts for any
Indebtedness owing by an Affiliate of a Borrower, unless such Indebtedness arose
in connection with the sale of goods or rendition of services in the ordinary
course of business on an arm's length basis and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by an
Affiliate of a Borrower, or (c) the cash surrender value of any life insurance
policy.
"CURRENT LIABILITIES" at a particular date, shall mean all
amounts which would, in conformity with GAAP, be included under current
liabilities on a balance sheet of Borrowers on a Consolidated Basis, as at such
date, but in any event including, without limitation, the amounts of (a) all
Indebtedness of any Borrower payable on demand, or, at the option of the Person
to whom such Indebtedness is owed, not more than twelve (12) months after such
date, (b) any payments in respect of any Indebtedness of any Borrower (whether
installment, serial maturity, sinking fund payment or otherwise) required to be
made not more than twelve (12) months after such date, (c) all reserves in
respect of liabilities or Indebtedness payable on demand or, at the option of
the Person to whom such Indebtedness is owed, not
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more than twelve (12) months after such date, the validity of which is not
contested at such date, (d) all accounts payable (whether current or past due)
and (e) all accruals for federal or other taxes measured by income payable
within a twelve (12) month period.
"CUSTOMER" shall mean and include the account debtor with
respect to any Receivable and/or the purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into any
contract or other arrangement with any Borrower, pursuant to which such Borrower
is to deliver any personal property or perform any services.
"DEFAULT" shall mean an event which, with the giving of notice
or passage of time or both, would constitute an Event of Default.
"DEFAULT RATE" shall mean an interest rate per annum equal to
the sum of (i) the Alternate Base Rate PLUS (ii) the highest Applicable Margin
with respect to Domestic Rate Loans PLUS (iii) two percent (2%) per annum.
"DEFAULTING LENDER" shall have the meaning set forth in
Section 2.16(a) hereof.
"DEPOSITORY ACCOUNTS" shall have the meaning set forth in
Section 4.15(h) hereof.
"DOLLARS" and the sign "$" shall mean lawful money of the
United States of America.
"DOMESTIC RATE LOAN" shall mean any Advance that bears
interest based upon the Alternate Base Rate.
"EARNINGS BEFORE INTEREST AND TAXES" shall mean for any period
the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for
such period, PLUS (ii) all interest expense of Borrowers on a Consolidated Basis
for such period, PLUS (iii) all charges against the income of Borrowers on a
Consolidated Basis for such period for federal, state and local taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings
Before Interest and Taxes of Borrowers on a Consolidated Basis for such period,
PLUS (ii) depreciation expenses of Borrowers on a Consolidated Basis for such
period, PLUS (iii) amortization expenses of Borrowers on a Consolidated Basis
for such period.
"EBITDAR" shall mean for any period the sum of EBITDA PLUS
rent expenses of Borrowers on a Consolidated Basis for such period.
"ELIGIBLE INVENTORY" with respect to each Borrower shall mean
and include finished goods Inventory (and shall exclude raw materials, work in
process, labels, materials and supplies), valued at the lower of cost or market
value, determined on a first-in-first-out basis, which is not, in Agent's
reasonable opinion exercised in good faith and in a commercially reasonable
manner, obsolete, slow moving, unmerchantable, returned, damaged, to be used for
promotional purposes or goods which are not first quality and which Agent, in
its reasonable
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discretion exercised in good faith and in a commercially reasonable manner,
shall not deem ineligible Inventory, based on such considerations as Agent may
from time to time deem appropriate including, without limitation, whether the
Inventory is located in a facility in the United States that is owned or leased
by a Borrower, subject to a perfected, first priority security interest in favor
of Agent and whether the Inventory conforms to all standards imposed by any
governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. No Inventory shall be
deemed Eligible Inventory unless (i) it is located at a facility owned or leased
by a Borrower and (ii) if it is located at a Primary Location and Agent has
received executed landlord, mortgagee or warehousing agreements with respect to
such facility in form and substance satisfactory to Agent.
"ELIGIBLE RECEIVABLES" shall mean and include with respect to
each Borrower each Receivable of a Borrower arising in the ordinary course of
such Borrower's business and which Agent, in its reasonable credit judgment
exercised in good faith and in a commercially reasonable manner, shall deem to
be an Eligible Receivable, based on such considerations as Agent may from time
to time reasonably deem appropriate. A Receivable shall not be deemed eligible
unless such Receivable is subject to Agent's first priority perfected security
interest and no other Lien (other than Permitted Encumbrances), and is evidenced
by an invoice, ▇▇▇▇ of lading or other documentary evidence reasonably
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it arises out of a sale made by any Borrower to an
Affiliate of any Borrower or to a Person controlled by an Affiliate of any
Borrower;
(b) it is due or unpaid more than ninety (90) days after the
original invoice date;
(c) as respects a particular Customer, fifty percent (50%) or
more of the Receivables from the applicable Customer are not deemed Eligible
Receivables as a result of the criteria set forth in clause (b) above;
(d) (i) the Receivables of the Customer (other than ▇▇▇▇
South) exceed thirty-five percent (35%) of all Receivables or (ii) the
Receivables of ▇▇▇▇ South exceed (x) forty percent (40%) of all Receivables from
the Closing Date through July 31, 1999, and (y) thereafter, thirty five percent
(35%) of all Receivables, in each case to the extent such Receivables exceed
such limit;
(e) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(f) the Customer is an individual, a creditor or supplier of
any Borrower, or the Customer has disputed any liability to or with respect to a
Borrower (but only to the extent of such dispute), or the Customer has any right
of offset, deduction, defense, dispute, chargeback or counterclaim with respect
to such Receivable (but only to the extent of any such claim), or the Receivable
otherwise is subject to any right of setoff in whole or in part by the Customer;
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(g) the Customer shall (i) apply for, suffer, or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property
or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business, (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition
which is filed against it in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any of the foregoing;
(h) the sale is to a Customer outside the United States of
America, unless the sale is on letter of credit, guaranty or acceptance, in each
case acceptable to Agent in its reasonable discretion exercised in good faith;
(i) the sale to the Customer is on a ▇▇▇▇-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(j) the Customer is the United States of America, any state or
any department, agency or instrumentality of any of them, unless the applicable
Borrower effectuates an assignment of its right to payment of such Receivable to
Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 ET SEQ. and 41 U.S.C. Sub-Section 15 ET SEQ.) or has otherwise
complied with other applicable statutes or ordinances;
(k) the goods giving rise to such Receivable have not been
shipped and delivered to and accepted by the Customer or the services giving
rise to such Receivable have not been performed by the applicable Borrower and
accepted by the Customer or the Receivable otherwise does not represent a final
sale;
(l) the applicable Borrower has made any agreement with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(m) shipment of the merchandise or the rendition of services
has not been completed;
(n) any return, rejection or repossession of the merchandise
has occurred; or
(o) such Receivable is not payable to a Borrower.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
Section 6.11(d) hereof.
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"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"EQUIPMENT" shall mean and include as to each Borrower all of
such Borrower's goods (excluding Inventory) whether now owned or hereafter
acquired and wherever located including, without limitation, all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or
accessions thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder.
"EURODOLLAR RATE LOAN" shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.
"EURODOLLAR RATE" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher 1/100 of one (1%) percent)
equal to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus
the aggregate of the rates (expressed as a decimal) of reserve requirements
current on the day that is two Business Days prior to the beginning of the
Interest Period (including without limitation basic, supplemental, marginal and
emergency reserves) under any regulation promulgated by the Board of Governors
of the Federal Reserve System (or any other governmental authority having
jurisdiction over Chase) as in effect from time to time, dealing with reserve
requirements prescribed for Eurocurrency funding including any reserve
requirements with respect to "Eurocurrency liabilities" under Regulation D of
the Board of Governors of the Federal Reserve System.
"EVENT OF DEFAULT" shall mean the occurrence and continuance
of any of the events set forth in Article X hereof.
"EXCESS CASH FLOW" shall mean for any fiscal year (a) the sum
of (i) net income of Borrowers on a Consolidated Basis for such fiscal year,
plus (ii) depreciation expenses of Borrowers on a Consolidated Basis for such
fiscal year, plus (iii) amortization expenses of Borrowers on a Consolidated
Basis for such fiscal year, plus (iv) all non-cash charges to the net income of
Borrowers on a Consolidated Basis for such fiscal year minus (b) (i) permitted
capital expenditures actually made by Borrowers on a Consolidated Basis during
such fiscal year (excluding Indebtedness incurred to finance such expenditures),
minus (ii) regularly scheduled principal payments made on the Term Loan made by
Borrowers on a Consolidated Basis during such fiscal year, minus (iii)
capitalized lease payments permitted pursuant to Section 7.6 and 7.11 hereof and
actually made by Borrowers on a Consolidated Basis in such fiscal year, minus
(iv) cash actually spent by Borrowers on a Consolidated Basis in connection with
Permitted
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Acquisitions during such fiscal year and (v) plus decreases and/or minus
increases in Working Capital for such fiscal year, as the case may be.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by Agent
from three Federal funds brokers of recognized standing selected by it.
"FEE LETTER" shall mean the fee letter dated February 18, 1998
between LTC, HIG and Agent.
"FIXED CHARGE COVERAGE RATIO" for any period shall mean the
ratio of (i) (a) EBITDAR for such period minus (b) capital expenditures made by
Borrowers on a Consolidated Basis during such period minus (c) all taxes paid by
Borrowers on a Consolidated Basis during such period to (ii) (a) scheduled
payments of principal and interest with respect to all Indebtedness of Borrowers
on a Consolidated Basis plus (b) rent payments actually made by Borrowers on a
Consolidated Basis during such period.
"FORMULA AMOUNT" shall have the meaning set forth in Section
2.1(a).
"FUNDED INDEBTEDNESS" shall mean with respect to any Person as
of the date of determination thereof, all Indebtedness (other than Indebtedness
relating to operating leases) of such Person and its Subsidiaries on a
consolidated basis outstanding at such time which by its terms matures more than
one year after the date of calculation, and any such Indebtedness maturing
within one year from such date of calculation which is renewable or extendable
at the option of the obligor to a date more than one year from such date and
including in any event the Revolving Advances.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GENERAL INTANGIBLES" shall mean and include as to each
Borrower all of such Borrower's general intangibles, whether now owned or
hereafter acquired including, without limitation, all choses in action, causes
of action, corporate or other business records, inventions, designs, patents,
equipment formulations, manufacturing procedures, quality control procedures,
trademarks, service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to such Borrower to secure payment of any of
the Receivables by a Customer, all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
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"GOVERNMENTAL BODY" shall mean any nation or government, any
state or other political subdivision thereof or any entity exercising the
legislative, judicial, regulatory or administrative functions of or pertaining
to a government.
"GUARANTOR" shall mean each Person who executes and delivers a
Guaranty to Agent for the benefit of Lenders.
"GUARANTOR SECURITY AGREEMENT" shall mean each security
agreement executed by a Guarantor granting Agent a security interest in all of
such Guarantor's personal property for the benefit of Lenders.
"GUARANTY OR GUARANTIES" shall mean individually and
collectively, the guaranties of the obligations of Borrowers executed by a
Guarantor in favor of Agent for the benefit of Lenders.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in
Section 6.11(d) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, methane, hazardous materials,
Hazardous Wastes, hazardous or toxic substances or related materials as defined
in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, ET SEQ.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in
the regulations adopted pursuant thereto.
"HAZARDOUS WASTES" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"HIG" shall mean HIG Capital Management, Inc.
"INDEBTEDNESS" shall mean, with respect to any Person, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such Person for the deferred
purchase price of property of services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such Person's business, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person and all Capitalized Lease Obligations, (e) all
payment obligations of such Person with respect to interest rate or currency
protection agreements, all obligations of such Person as an account party under
any letter of credit or in respect of bankers' acceptance, (g) all obligations
of any third party secured by property or assets of such Person (regardless of
whether or not such Person is liable for repayment of such obligations, (h) all
guarantees of such Person and (i) the redemption price of all redeemable
preferred stock of such Person but only to the extent that such stock is
redeemable
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at the option of the holder or requires sinking fund or similar payments at any
time prior to the Termination Date.
"INTEREST COVERAGE RATIO" for any period shall mean the ratio
of (i)(a) EBITDA for such period MINUS (b) capital expenditures made by
Borrowers on a Consolidated Basis during such period to (ii) cash interest
payments made by Borrowers on a Consolidated Basis during such period.
"INTEREST PERIOD" shall mean the period provided for any
Eurodollar Rate Loan pursuant to Section 2.2(b).
"INVENTORY" shall mean and include as to each Borrower all of
such Borrower's now owned or hereafter acquired goods, merchandise and other
personal property, wherever located, to be furnished under any contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Borrower's business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.
"INVENTORY ADVANCE RATE" shall have the meaning set forth in
Section 2.1(y)(ii) hereof.
"▇▇▇▇▇▇▇▇ NOTE" shall mean the promissory note dated as of
June 27, 1997 issued by Let's Talk Cellular, Inc. to Texas Cellular Partners,
L.P. in the original principal sum of $3,585,000.
"LENDER" AND "LENDERS" shall have the meaning ascribed to such
term in the preamble to this Agreement and shall include each Person which is a
transferee, successor or assign of any Lender.
"LEVERAGE RATIO" for any period shall mean the ratio of (a)
Funded Indebtedness at the end of such period to (b) EBITDA for such period.
"LIBOR" shall mean, with respect to any Eurodollar Rate Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which dollar deposits
approximately equal in principal amount to the Eurodollar Rate Loan of the Agent
and for a maturity equal to the applicable Interest Period are offered in
immediately available funds to the London branch of the Agent by leading banks
in the London interbank market for Eurodollars at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the first day of such Interest
Period.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), Charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including, without limitation, any
conditional sale or other title retention agreement, any lease having
substantially
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the same economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement and
the Other Documents.
"MANDATORY RESERVE" shall have the meaning set forth in
Section 2.10(a) hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (i) the condition, operations, assets, business or prospects of the
applicable Person or Persons, (ii) any Borrower's ability to pay the Obligations
in accordance with the terms thereof, (iii) the value of the Collateral, or the
Liens on the Collateral or the priority of any such Lien, or (iv) the practical
realization of the benefits of Agent's and Lenders' rights and remedies under
this Agreement and the Other Documents.
"MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $13,500,000.
"MONTHLY LEASE PAYMENT" for any Primary Lease shall mean, for
any calendar month, the installment of the rent required to be paid under such
Primary Lease, plus any amount with respect to taxes required to be paid under
such Primary Lease plus any other charge, payment or reimbursement required to
be paid under such Primary Lease.
"MORTGAGES" shall mean any mortgages in favor of Agent on the
Real Property together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as
defined in Sections 3(37) and 4001 (a)(3) of ERISA.
"NET PROCEEDS" shall mean the aggregate gross proceeds
received by any Borrower or any Subsidiary of any Borrower in respect of (a) the
sale of Capital Stock in a Public Offering, (b) any sale or disposition of any
property or assets of such Borrower, or (c) any cash payments received in
respect of promissory notes delivered to such Borrower or such Subsidiary in
respect of any sale or disposition of property or assets of such Borrower; in
each case net of (without duplication) (A) the amount required to repay any
Permitted Encumbrance (other than Advances) secured by a Lien on any assets of
the such Borrower or a Subsidiary of such Borrower that are collateral for any
such Indebtedness, (B) the reasonable expenses (including legal fees and
brokers' and underwriters' commissions, lenders fees or credit enhancement fees,
in any case, paid to third parties or, to the extent specifically permitted
hereby, Affiliates) incurred in effecting such issuance or sale and (C) any
taxes reasonably attributable to such issuance or sale.
"NET WORTH" at a particular date, shall mean all amounts which
would be included under shareholders' equity on a balance sheet of Borrowers on
a Consolidated Basis determined in accordance with GAAP as at such date.
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"NOTE RESERVE" shall mean $2,000,000.
"NOTES" shall mean collectively, the Term Note and the
Revolving Credit Note.
"OBLIGATIONS" shall mean and include any and all of Borrowers'
Indebtedness and/or liabilities to Agent or the Lenders of every kind, nature
and description, direct or indirect, secured or unsecured, joint, several, joint
and several, absolute or contingent, due or to become due, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, relating
to any and all of any Borrower's Indebtedness and/or liabilities under this
Agreement, the Other Documents or under any other agreement between Agent or the
Lenders and any Borrower and all obligations of any Borrower to Agent or the
Lenders to perform acts or refrain from taking any action.
"OTHER DOCUMENTS" shall mean the Mortgages, the Notes, the
Guaranties, the Guarantor Security Agreements, the Collateral Assignment, the
Pledge Agreement, the Questionnaire and any and all other agreements,
instruments and documents, including, without limitation, guaranties, pledges,
powers of attorney, consents, and all other writings heretofore, now or
hereafter executed by any Borrower and/or delivered to Agent or any Lender in
respect of the transactions contemplated by this Agreement.
"PARENT" of any Person shall mean a corporation or other
entity owning, directly or indirectly at least 50% of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"PARTICIPANT" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Advances and who shall have
entered into a participation agreement in form and substance satisfactory to
such Lender.
"PAYMENT OFFICE" shall mean initially ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Agent, if any, which
it may designate by notice to Borrowing Agent and each Lender to be the Payment
Office.
"PERMITTED ACQUISITION" shall have the meaning set forth in
Section 7.1(a) hereof.
"PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of
Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or
other governmental charges not delinquent, or, being contested in good faith and
by appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; PROVIDED, THAT, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing; (d) deposits or
pledges to secure obligations under worker's compensation, social security or
similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary
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course of any Borrower's business; (f) judgment Liens that have been stayed or
bonded and mechanics', warehousemans', workers', materialmen's or other like
Liens arising in the ordinary course of any Borrower's business with respect to
obligations which are not due or which are being contested in good faith by the
applicable Borrower; (g) Liens placed upon fixed assets hereafter acquired to
secure a portion of the purchase price thereof, provided that (x) any such lien
shall not encumber any other property of Borrowers and (y) the aggregate amount
of Indebtedness secured by such Liens incurred as a result of such purchases
during any fiscal year shall not exceed the amount provided for in Section 7.6
and 7.8; and (h) Liens disclosed on SCHEDULE 1.2(B).
"PERSON" shall mean any individual, sole proprietorship,
partnership, corporation, business trust, joint stock company, trust,
unincorporated organization, association, limited liability company,
institution, public benefit corporation, joint venture, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"PLAN" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement dated the
Closing Date by and between LTC and Agent, pursuant to which LTC shall pledge to
Agent all Subsidiary Stock.
"PRIMARY LEASES" shall mean each real property lease entered
into by a Borrower for a Primary Location and for each leased location of the
Borrower where the applicable landlord has a Lien in any Collateral that is
senior to the Lien granted to Agent hereunder (the "Mall Locations"). At such
time as Agent has received, in form and substance satisfactory to Agent in its
sole discretion, (i) a landlord waiver for any Primary Location, the lease for
such location shall no longer constitute a "Primary Lease" and (ii) UCC-3
termination statements or a subordination agreement with respect to any Liens
for any Mall Location, the lease for such Mall Location shall no longer
constitute a "Primary Lease".
"PRIMARY LOCATION" shall mean any location which is used by
any Borrower as a distribution center or a warehouse or any location where any
Borrower keeps books and records.
"PRIME RATE" shall mean the prime commercial lending rate of
Chase as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by Chase as a
means of pricing some loans to its customers and is neither tied to any external
rate of interest or index nor does it necessarily reflect the lowest rate of
interest actually charged by Chase to any particular class or category of
customers of Chase.
"PRO FORMA BALANCE SHEET" shall have the meaning set forth in
Section 5.5(a) hereof.
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"PRO FORMA FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 5.5(b) hereof.
"PROJECTIONS" shall have the meaning set forth in Section
5.5(b) hereof.
"PURCHASE PERIOD" shall have the meaning set forth in Section
2.10(a) hereof.
"PURCHASING LENDER" shall have the meaning set forth in
Section 16.3(c) hereof.
"PUBLIC OFFERING" shall mean any sale after the Closing Date
by any Borrower or any Subsidiary of any Borrower through a public offering of
its Capital Stock pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended.
"QUESTIONNAIRE" shall mean the Documentation Information
Questionnaire and the responses thereto provided by Borrowers and delivered to
Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act,
42 U.S.C. ▇▇.▇▇. 6901 ET SEQ., as same may be amended from time to time.
"REAL PROPERTY" shall mean all of Borrowers' right, title and
interest in and to the owned and leased premises identified on SCHEDULE 6.11
hereto.
"RECEIVABLES" shall mean and include as to each Borrower all
of such Borrower's accounts, contract rights, instruments (including those
evidencing indebtedness owed to Borrowers by their Affiliates), documents,
chattel paper, general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations owing to such Borrower arising out of or in
connection with the sale or lease of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to the Agent hereunder.
"RECEIVABLES ADVANCE RATE" shall have the meaning set forth in
Section 2.1(y)(i) hereof.
"RELEASE" shall have the meaning set forth in Section
5.7(c)(i) hereof.
"RENT RESERVE" shall mean, in the aggregate, an amount equal
to three (3) Monthly Lease Payments for all Primary Leases.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(b) of ERISA or of the regulations promulgated thereunder.
"REQUIRED LENDERS" shall mean Lenders holding at least
fifty-one percent (51%) of the Advances then outstanding or if no such Advances
are outstanding, Lenders whose Commitment Percentages aggregate more than
fifty-one percent (51%) of the aggregate Commitment Percentages.
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"RESERVE PERCENTAGE" shall mean a fraction (expressed as a
decimal), the numerator of which is one and the denominator of which is one
minus the aggregate of the reserve percentages (expressed as a decimal)
established at the time of calculation by the Board of Governors of the Federal
Reserve System (or any other governmental authority having jurisdiction over the
Bank) for negotiable certificates of deposit in amounts comparable to the amount
of such Domestic Rate Loan, with a maturity comparable to the Interest Period
therefor, including, without limitation, Regulation D promulgated by the Board
of Governors of the Federal Reserve System.
"REVOLVING ADVANCE COMMITMENT PERIOD" shall mean the period
from and including the Closing Date to but not including the Revolving Advance
Termination Date.
"REVOLVING ADVANCE TERMINATION DATE" shall mean April 1,
2002.
"REVOLVING ADVANCES" shall mean Advances made other than the
Term Loan.
"REVOLVING CREDIT NOTE" shall mean the promissory note
referred to in Section 2.1 hereof.
"SELLER" shall mean collectively, the shareholders of CWI and
SEI listed on the signature pages of the Acquisition Agreement.
"SETTLEMENT DATE" shall mean the Closing Date and thereafter
Wednesday of each week unless such day is not a Business Day in which case it
shall be the next succeeding Business Day.
"STATUTORY RESERVES" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the maximum reserve percentage (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal, established
by the Board and any other banking authority to which Agent is subject with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBSIDIARY" shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"SUBSIDIARY STOCK" shall mean all of the issued and
outstanding shares of stock owned by Borrowers of each of their Subsidiaries
identified on SCHEDULE 1.2(C) hereto.
"TANGIBLE NET WORTH" shall mean, at a particular date, (a) the
aggregate amount of all assets of Borrowers on a Consolidated Basis as may be
properly classified as such in
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accordance with GAAP consistently applied excluding such other assets as are
properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of the Borrowers on a Consolidated Basis.
"TERM LOAN" shall mean the Advances made pursuant to Section
2.4(a) hereof.
"TERM LOAN TERMINATION DATE" shall mean April 1, 2004.
"TERM NOTE" shall mean the promissory note described in
Section 2.4(a) hereof.
"TERMINATION DATE" shall have the meaning set forth in Section
13.1 hereof.
"TERMINATION EVENT" shall mean (i) a Reportable Event with
respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower
or any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Borrower or any member of the Controlled Group
from a Multiemployer Plan.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
succeeding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate shall not be so
reported on such day or such next succeeding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day shall not be a Business Day, on the
next succeeding Business Day) by Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"TOXIC SUBSTANCE" shall mean and include any material present
on the Real Property which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. ▇▇.▇▇. 2601 ET SEQ., applicable state law, or any
other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances. "Toxic Substance" includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"TRANSACTIONS" shall have the meaning set forth in Section
5.5(a) hereof.
"TRANSFEREE" shall have the meaning set forth in Section
15.3(b) hereof.
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"UNDRAWN AVAILABILITY" at a particular date with respect to
all Borrowers shall mean an amount equal to (a) the lesser of (i) the Formula
Amount or (ii) the Maximum Revolving Advance Amount, MINUS (b) all accruals,
outstanding fees, interest or other amounts owed to Agent or Lenders, MINUS (c)
the outstanding amount of Advances (other than the Term Loan).
"VOTING STOCK" shall mean, with respect to any Person, capital
stock of any class or kind ordinarily having the power to vote for the election
of directors, managers or other voting members of the governing body of such
Person.
"WEEK" shall mean the time period commencing with a Wednesday
and ending on the following Tuesday.
"WORKING CAPITAL" at a particular date, shall mean the excess,
if any, of Current Assets (other than cash and cash equivalents) over Current
Liabilities (other than the current portion of long term Indebtedness) at such
date.
1.3. UNIFORM COMMERCIAL CODE TERMS. All terms used herein and defined
in the Uniform Commercial Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.
1.4. CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and VICE VERSA. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements to which Agent is a party, including, without
limitation, references to any of the Other Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
II. ADVANCES, PAYMENTS.
2.1. REVOLVING ADVANCES. Subject to the terms and conditions set forth
in this Agreement, each Lender, severally and not jointly, will make Revolving
Advances to Borrowers during the Revolving Advance Commitment Period in
aggregate amounts outstanding at any time not greater than such Lender's
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount
or (y) an amount equal to the sum of:
(i) up to 85% ("Receivables Advance Rate") of
Eligible Receivables, PLUS
(ii) up to the lesser of (A) 50% ("Inventory Advance
Rate") of the value of the Eligible Inventory (the Receivables
Advance Rate and the Inventory Advance Rate shall be referred
to collectively, as the "Advance Rates") or (B) $6,000,000 in
the aggregate at any one time, MINUS
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(iii) such reserves as Agent in its good faith
judgment may reasonably deem proper and necessary from time to
time in its reasonable discretion, including, without
limitation, the Rent Reserve and the Note Reserve.
The sum of the amounts derived from Sections 2.1(y)(i) and (ii) minus
(iii) at any time and from time to time shall be referred to as the "Formula
Amount". The Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, "Revolving Credit Note") substantially in the
form attached hereto as EXHIBIT 2.1.
2.2. PROCEDURE FOR REVOLVING ADVANCE BORROWING.
(a) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 11:00 a.m. on a Business Day of a Borrower's request to incur, on that
day, a Revolving Advance hereunder. Should any amount required to be paid as
interest hereunder, or as fees or other charges under this Agreement or any
other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the
date such payment is due, in the amount required to pay in full such interest,
fee, charge or Obligation under this Agreement or any other agreement with Agent
or Lenders, and such request shall be irrevocable. Agent and Lenders will not
make any Advance pursuant to any notice unless Agent has received the most
recent Borrowing Base Certificate required under Section 9.2 hereof.
(b) Notwithstanding the provisions of (a) above, in the event
any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall
give Agent at least three (3) Business Days' prior written notice; specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be in a minimum amount of $500,000 and integral multiples of
$100,000 in excess thereof, and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two,
three or six months (each such period an "Interest Period"). No Advance shall be
made as a Eurodollar Rate Loan for the first sixty (60) days following the
Closing Date unless the Advances have been syndicated to Chase's satisfaction
and the new Lenders have funded the Advances. Thereafter, no Advance shall be
made as a Eurodollar Rate Loan having an Interest Period greater than one (1)
month until the earlier of (x) one hundred twenty one (121) days following the
Closing Date and (y) the date on which the Advances have been syndicated to
Chase's satisfaction and the new Lenders have funded the Advances.
(c) Each Interest Period of a Eurodollar Rate Loan shall
commence on the date such Eurodollar Rate Loan is made and shall end on such
date as Borrowing Agent may elect as set forth in (b)(iii) above provided that:
(i) any Interest Period which would otherwise end on a
day which is not a Business Day shall be the next preceding or succeeding
Business Day as is Chase's custom in the market to which such Eurodollar Rate
Loan relates;
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(ii) no Interest Period shall end after the last day of (1)
the Revolving Advance Termination Date, with respect to Revolving Advances or
(2) the Term Loan Termination Date, with respect to the Term Loan;
(iii) any Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to clause (i) above) end on the
last day of such calendar month; and
(iv) no Borrower nor Borrowing Agent may select an Interest
Period with respect to any portion of the Term Loan which extends beyond an
installment payment date for the Term Loan unless after giving effect to such
election, the portion of the Term Loan not subject to the Interest Periods
ending after such installment payment date is equal to or greater than the
principal due on such installment payment date.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrowing Agent,
Borrowers shall be deemed to have elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and
be continuing, a Borrower may, on the last Business Day of the then current
Interest Period applicable to any outstanding Eurodollar Rate Loan or Domestic
Rate Loan convert any such loan into a loan of another type in the same
aggregate principal amount provided that any conversion of a Eurodollar Rate
Loan shall be made only on the last Business Day of the then current Interest
Period applicable to such Eurodollar Rate Loan. If a Borrower desires to convert
a loan, Borrowing Agent shall give Agent not less than three (3) Business Days'
prior written notice, specifying the date of such conversion, the loans to be
converted and if the conversion is from a Domestic Rate Loan to any other type
of loan, the duration of the first Interest Period therefor. After giving effect
to each such conversion, there shall not be outstanding more than five (5)
Eurodollar Rate Loans, in the aggregate.
(e) At its option and upon three (3) Business Days' prior
written notice, any Borrower may prepay any Eurodollar Rate Loan in whole with
accrued interest on the principal being prepaid to the date of such repayment.
In the event that any prepayment of a Eurodollar Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, such Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof. A certificate as to
any additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to such Borrower shall be conclusive absent manifest error.
(f) Each Borrower shall indemnify Agent and Lenders and hold
Agent and Lenders harmless from and against any and all losses or expenses that
Agent and Lenders may
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sustain or incur as a consequence of any prepayment, conversion of or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including (but not limited to) any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder.
(g) Notwithstanding any other provision hereof, if any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of the Lenders to make Eurodollar Rate
Loans hereunder shall forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from
Agent, convert such affected Eurodollar Rate Loans into loans of another type.
If any such payment or conversion of any Eurodollar Rate Loan is made on a day
that is not applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent,
upon Agent's request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of such payment or conversion, including
(but not limited to) any interest or other amounts payable by Lenders to lenders
of funds obtained by Lenders in order to make or maintain such Eurodollar Rate
Loan. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by such Lender to Borrowing Agent shall be
conclusive absent manifest error.
2.3. DISBURSEMENT OF ADVANCE PROCEEDS. (a) All Advances shall be
disbursed from whichever office or other place Agent may designate from time to
time and, together with any and all other Obligations of Borrowers to Agent or
Lenders, shall be charged to the applicable Borrower's Account on Agent's books.
During the Revolving Advance Commitment Period, Borrowers may use the Revolving
Advances by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions of this Agreement. The proceeds of each Revolving Advance
requested by Borrowers or deemed to have been requested by Borrowers under
Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the
extent the Lenders make such Revolving Advances, be made available to the
applicable Borrower on the day so requested by way of credit to such Borrower's
operating account at Chase or such other bank as Borrowing Agent may designate
following notification to Agent, in immediately available federal funds or other
immediately available funds or, with respect to Revolving Advances deemed to
have been requested by any Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.
(b) If on any day on which a check issued by a Borrower is
presented for payment against any controlled disbursement account with Chase,
then to the extent of any Undrawn Availability then existing, and provided that
no Event of Default shall have occurred and be continuing, Agent shall credit
said account in an amount sufficient to permit Agent to honor such check,
irrespective of the satisfaction, as of such date, of the conditions set forth
in
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Article II hereof. Each credit by Agent to said account pursuant to this section
shall be deemed to constitute a Revolving Advance for a Domestic Rate Loan under
this Agreement.
2.4. TERM LOAN. Subject to the terms and conditions of this Agreement,
each Lender, severally and not jointly, will make a Term Loan to Borrowers in
the sum equal to such Lender's Commitment Percentage of $21,500,000. The Term
Loan shall be advanced on the Closing Date, and shall be, with respect to
principal, payable in consecutive quarterly installments as follows, with the
remaining unpaid principal balance due and payable in full on the Term Loan
Termination Date subject to acceleration upon the occurrence of an Event of
Default or earlier termination of this Agreement:
PAYMENT DATE AMOUNT
------------ ------
July 31, 1998 $ 375,000
October 31, 1998 $ 375,000
January 31, 1999 $ 375,000
April 30, 1999 $ 375,000
July 31, 1999 $ 750,000
October 31, 1999 $ 750,000
January 31, 2000 $ 750,000
April 30, 2000 $ 750,000
July 31, 2000 $1,000,000
October 31, 2000 $1,000,000
January 31, 2001 $1,000,000
April 30, 2001 $1,000,000
July 31, 2001 $1,000,000
October 31, 2001 $1,000,000
January 31, 2002 $1,000,000
April 30, 2002 $1,000,000
July 31, 2002 $1,250,000
October 31, 2002 $1,250,000
January 31, 2003 $1,250,000
April 30, 2003 $1,250,000
July 31, 2003 $1,250,000
October 31, 2003 $ 916,666.66
January 31, 2004 $ 916,666.67
April __, 2004 $ 916,666.67
The Term Loan shall otherwise be evidenced by and subject to the terms and
conditions set forth in one or more secured promissory notes (collectively,
"Term Note") attached hereto as EXHIBIT 2.4(A).
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2.5. REPAYMENT OF ADVANCES.
(a) The Revolving Advances shall be due and payable in full on
the Revolving Advance Termination Date subject to earlier prepayment as herein
provided. The Term Loan shall be due and payable as provided in Section 2.4(a)
hereof and in the Term Note.
(b) Each Borrower recognizes that the amounts evidenced by
checks, notes, drafts or any other items of payment relating to and/or proceeds
of Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit the applicable
Borrower's Account as of the Business Day on which Agent receives those checks,
notes, drafts or other items of payment, such Borrower agrees that, in computing
the charges under this Agreement, all items of payment shall be deemed applied
by Agent on account of the Obligations two (2) Business Days after confirmation
to Agent by the Blocked Account bank or the Depositary Account bank (as provided
for in Section 4.15(h) hereof) that such items of payment have been collected in
good funds and finally credited to Agent's account, provided, however, that if
Chase is the Blocked Account Bank, all items of payment shall be deemed applied
by Agent on account of the Obligations two (2) Business Days after such items
have been collected in good funds. Agent is not required to credit such
Borrower's Account for the amount of any item of payment which is unsatisfactory
to Agent and Agent may charge such Borrower's Account for the amount of any item
of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts
payable hereunder, or under any of the related agreements shall be made to Agent
at the Payment Office not later than 1:00 P.M. (New York Time) on the due date
therefor in lawful money of the United States of America in federal funds or
other funds immediately available to Agent. Agent shall have the right to
effectuate payment on any and all Obligations due and owing hereunder by
charging the applicable Borrower's Account or by making Advances as provided in
Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other
amounts payable hereunder, or under any Other Documents, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.6. REPAYMENT OF EXCESS ADVANCES. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.7. STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with its
customary procedures, loan accounts in the name of each Borrower (each, a
"Borrower's Account") in which shall be recorded the date and amount of each
Advance made by Lenders and the date and amount of each payment in respect
thereof; PROVIDED, HOWEVER, the failure by Agent to record the date and amount
of any Advance or payment shall not adversely affect Agent or any Lender. For
each month, Agent shall send to Borrowing Agent a statement showing the
accounting for the Advances made, payments made or credited in respect thereof,
and other transactions between Lenders and Borrowers, during such month. The
monthly statements shall be deemed correct
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and binding upon Borrowers in the absence of manifest error and shall constitute
an account stated between Lenders and Borrowers. The records of Agent with
respect to the loan account shall be PRIMA FACIE evidence of the amounts of
Advances and other charges thereto and of payments applicable thereto.
2.8. ADDITIONAL PAYMENTS. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document including, without limitation, any Borrower's
obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to the applicable Borrower's Account as a Revolving Advance and added to
the Obligations. Agent shall promptly give notice to Borrowing Agent upon
charging any Borrower's Account under this Section 2.8.
2.9. MANNER OF BORROWING AND PAYMENT.
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of the Lenders. The Term Loan shall be
advanced according to the Commitment Percentages of the Lenders.
(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Credit Note, shall be
applied to the Revolving Advances, pro rata according to the Commitment
Percentages of the Lenders. Each payment (including each prepayment) by
Borrowers on account of the principal of and interest on the Term Note, shall be
applied to that portion of the Term Loan evidenced by the Term Note pro rata
according to the Commitment Percentages of the Lenders. Except as expressly
provided herein, all payments (including prepayments) to be made by Borrowers on
account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to Agent on behalf of the Lenders to the Payment
Office, in each case on or prior to 1:00 P.M., New York time, in Dollars and in
immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.9(a) and (b) hereof, commencing with the first Business Day following
the Closing Date, each borrowing of Revolving Advances shall be advanced by
Agent and each payment by any Borrower on account of Revolving Advances shall be
applied first to those Revolving Advances made by Agent. On or before 1:00 P.M.,
New York time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and the Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with its Commitment Percentage of the difference between (y) such
repayments and (z) such Revolving Advances
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(ii) Each Lender shall be entitled to earn interest at the
Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Transferee (a "benefited Lender") shall
at any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits
of such Collateral or proceeds ratably with each of the Lenders; PROVIDED,
HOWEVER, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its applicable Commitment Percentage of the Advances
available to Agent, Agent may (but shall not be obligated to) assume that such
Lender shall make such amount available to Agent and, in reliance upon such
assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowers of its receipt of any such notice from a Lender. If
such amount is made available to Agent on a date after a Settlement Date, such
Lender shall pay to Agent on demand an amount equal to the product of (i) the
daily average Federal Funds Rate (computed on the basis of a year of 360 days)
during such period as quoted by Agent, times (ii) such amount, times (iii) the
number of days from and including such Settlement Date to the date on which such
amount becomes immediately available to Agent. A certificate of Agent submitted
to any Lender with respect to any amounts owing under this paragraph (e) shall
be conclusive, in the absence of manifest error. If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Revolving
Advances hereunder, on demand from Borrowers; PROVIDED, HOWEVER, that Agent's
right to such recovery shall not prejudice or otherwise adversely affect
Borrowers' rights (if any) against such Lender.
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2.10. MANDATORY AND OPTIONAL PREPAYMENTS.
(a) MANDATORY PREPAYMENT.
(i) When any Borrower sells or otherwise disposes of any
Collateral having a fair market value in excess of $100,000 individually, or in
the aggregate for all Borrowers, in any fiscal year (other than Inventory in the
ordinary course of business), Borrowers shall repay the Advances to the extent
the aggregate Net Proceeds for all such sales in any fiscal year exceeds
$100,000 in an amount equal to such Net Proceeds in excess of $100,000. Such
repayments shall be made promptly but in no event more than one (1) Business Day
following receipt of such Net Proceeds, and until the date of payment, such Net
Proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied first, pro-rata to the
outstanding principal installments of the Term Loan and second, to the remaining
Advances in such order as Agent may determine, subject to Borrowers' ability to
reborrow Revolving Advances in accordance with the terms hereof. Notwithstanding
the foregoing, unless and until an Event of Default has occurred and is
continuing, Borrowers may sell or otherwise dispose of Collateral (excluding for
purposes of this sentence Inventory in the ordinary course of business) having a
fair market value in excess of $100,000 in the aggregate in any fiscal year and
utilize such Net Proceeds solely to acquire replacement Collateral without
making a mandatory prepayment hereunder so long as (a) the acquired Collateral
is purchased by Borrowers within one hundred eighty (180) days of the sale of
the Collateral (the "Purchase Period"), (b) the proceeds of such sale are
remitted to Agent and applied by Agent to reduce the outstanding amount of
Revolving Advances in accordance with the first sentence of this subsection
2.10(a)(i), (c) a reserve equal to the amount of such proceeds shall be
established by Agent (the "Mandatory Reserve"), which reserve shall continue
until the earlier to occur of (i) the date when payment for such replacement
Collateral is made and the other conditions set forth in this subsection 2.10(i)
are met to the reasonable satisfaction of Agent or (ii) the expiration of the
Purchase Period, (d) the acquired Collateral shall be deemed to be acceptable
Collateral by Agent in its reasonable discretion and (e) the acquired Collateral
shall be subject to Agent's first priority security interest created hereunder.
If Borrowers fail to meet the conditions set forth in clauses (a) through and
including (e) above, Borrowers hereby authorize Agent and Lenders to make a
Revolving Advance in an amount equal to the applicable Mandatory Reserve to be
applied as a prepayment of the Term Loan, in the manner set forth above.
Immediately, thereafter, the applicable Mandatory Reserve shall be reduced to
$0. If Borrowers meet the conditions set forth in clauses (a) through and
including (e) above to the reasonable satisfaction of Agent, Agent shall, upon
Borrowing Agent's request, make a Revolving Advance to the applicable Borrower
in the amount of the applicable Mandatory Reserve to be used by the applicable
Borrower to (i) purchase the replacement Collateral and (ii) be applied as a
prepayment of the Term Loan, in the manner set forth above to the extent the
purchase price of the replacement Collateral is less than the amount of such
Revolving Advance and the applicable Mandatory Reserve shall be reduced.
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(ii) Borrowers shall prepay the outstanding amount of the
Advances in an amount equal to 75% of Excess Cash Flow for each fiscal year
commencing on or after July 31, 1998 payable upon delivery of the financial
statements to Agent referred to in and required by Section 9.7 for such fiscal
year but in any event not later than ninety (90) days after the end of each such
fiscal year, which amount shall be applied first, to the outstanding principal
installments of the Term Loan in the inverse order of the maturities thereof
and, second, to the remaining Advances in such order as Agent may determine
subject to Borrowers' ability to reborrow Revolving Advances in accordance with
the terms hereof. In the event that the financial statement is not so delivered,
then a calculation based upon estimated amounts shall be made by Agent upon
which calculation Borrowers shall make the prepayment required by this Section
2.10(b), subject to adjustment when the financial statement is delivered to
Agent as required hereby. The calculation made by Agent shall not be deemed a
waiver of any rights Agent or Lenders may have as a result of the failure by
Borrowers to deliver such financial statement.
(iii) Upon the completion of a Public Offering, Borrowers
shall repay the Advances in an amount equal to fifty percent (50%) of the Net
Proceeds of such Public Offering, such repayments to be made promptly but in no
event more then one (1) Business Day following receipt of such Net Proceeds, and
until the date of payment, such Net Proceeds shall be held in trust for Agent.
Such repayment shall be applied first, pro rata to the outstanding principal
installments of the Term Loan and second, to the remaining Advances in such
order as Agent may determine, subject to Borrowers' ability to reborrow
Revolving Advances in accordance with the terms hereof.
(b) OPTIONAL PREPAYMENTS.
(i) Borrowers, upon three (3) days prior written notice to
Agent, may, at any time and from time to time, prepay the Term Loan in whole or
in part. Any such prepayments shall be in a minimum principal amount equal to
the lesser of (A) $100,000, or integral multiples of $100,000 in excess thereof
and (B) the aggregate unpaid principal amount of the Term Loan.
(ii) Borrowers, upon three (3) days prior written notice to
Agent, may, at any time and from time to time, permanently reduce the Maximum
Revolving Advance Amount. Such reductions shall be in a minimum principal amount
of $100,000 or integral multiples of $100,000 in excess thereof.
2.11. USE OF PROCEEDS. Borrowers shall apply the proceeds of the Term
Loan to (i) repay existing indebtedness owed to NationsCredit Commercial Corp.,
(ii) pay a portion of the purchase price under the Acquisition Agreement and
(iii) pay fees and expenses relating to the Transactions. Borrowers shall apply
the proceeds of Revolving Advances to (i) repay existing indebtedness owed to
NationsCredit Commercial Corp., (ii) pay fees and expenses relating to the
Transactions, (iii) repay the subordinated note in the original principal amount
of $2,000,000 in favor of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and (iv) provide for its working
capital needs and general corporate purposes
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2.12. DEFAULTING LENDER.
(a) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
portion of any Advance or (y) notifies either Agent or Borrowing Agent that it
does not intend to make available its portion of any Advance (if the actual
refusal would constitute a breach by such Lender of its obligations under this
Agreement) (each, a "Lender Default"), all rights and obligations hereunder of
such Lender (a "Defaulting Lender") as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.12 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement and the Other Documents. All amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition
of "Required Lenders", a Defaulting Lender shall be deemed not to be a Lender
and not to have Advances outstanding.
(d) Other than as expressly set forth in this Section 2.12,
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.12 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to
the satisfaction of Agent the breach which caused a Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
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III. INTEREST AND FEES.
3.1. INTEREST. Interest on Advances shall be payable in arrears on the
last day of each quarter in arrears with respect to Domestic Rate Loans and,
with respect to Eurodollar Rate Loans subject to the limitations set forth in
Section 2.2(b), at the end of each Interest Period or, for Eurodollar Rate Loans
with an Interest Period in excess of three months, at the earlier of (a) each
three months on the anniversary date of the commencement of such Eurodollar Rate
Loan or (b) the end of the Interest Period. Interest charges shall be computed
on the actual principal of Advances outstanding during the quarter at a rate per
annum equal to the Contract Rate. Whenever, subsequent to the date of this
Agreement, the Alternate Base Rate is increased or decreased, the Contract Rate
for Domestic Rate Loans shall be similarly changed without notice or demand of
any kind by an amount equal to the amount of such change in the Alternate Base
Rate during the time such change or changes remain in effect. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, the
Obligations shall bear interest at the Default Rate. So long as no Default or
Event of Default shall have occurred and be continuing, the Applicable Margin
shall be increased or decreased, as the case may be, as of the fifth day after
receipt of the financial statements delivered pursuant to Section 9.8 hereof,
commencing with fiscal quarter ending July 31, 1998, based upon the Leverage
Ratio with respect to the four (4) fiscal quarters then ended as reported upon
in the applicable financial statements; PROVIDED, HOWEVER, if such statements
are not timely delivered, the Applicable Margin shall be the highest percentage
set forth in the definition of "Applicable Margin" until the time of delivery.
3.2. UNUSED LINE FEE. If, for any quarter during the Revolving Advance
Commitment Period, the average daily unpaid balance of Revolving Advances for
each day of such quarter does not equal the Maximum Revolving Advance Amount,
then Borrowers shall pay to Agent a fee for the ratable benefit of Lenders at a
per annum rate equal to three-eighths of one percent (.375%) on the amount by
which the Maximum Revolving Advance Amount exceeds such average daily unpaid
balance. Such fee shall be payable quarterly in arrears on the last day of each
calendar quarter, commencing with April 30, 1998 and on the last day of each
July, October, January and April thereafter.
3.3. FEE LETTER. Borrowers shall pay to Agent the fees set forth in the
Fee Letter at the times and on the terms and conditions set forth therein.
3.4. FIELD EXAMINATION EXPENSES. Borrowers shall pay to Agent on the
first day of each month following any month in which Agent performs any
collateral monitoring - namely any field examination, collateral analysis or
other business analysis, the need for which is to be determined by Agent and
which monitoring is undertaken by Agent or for Agent's and Lenders' benefit - a
collateral monitoring fee in an amount equal to $650 per day for each person
employed to perform such monitoring, plus all costs and disbursements incurred
by Agent in the performance of such examination or analysis; provided, however,
so long as no Default or Event of Default has occurred, Borrowers shall not be
obligated to reimburse Agent for more than (i) two collateral monitorings for
the period from the Closing Date though the first anniversary of the Closing
Date and (ii) one collateral monitoring in any year thereafter.
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3.5. COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
Contract Rate for Domestic Rate Loans during such extension.
3.6. MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event Agent or any Lender has received interest and other charges
hereunder in excess of the highest rate applicable hereto, such excess amount
shall be first applied to any unpaid principal balance owed by Borrowers, and if
the then remaining excess amount is greater than the previously unpaid principal
balance, the Lenders shall promptly refund such excess amount to Borrowers and
the provisions hereof shall be deemed amended to provide for such permissible
rate.
3.7. INCREASED COSTS. In the event that any applicable law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Eurodollar Rate Loan or change
the basis of taxation of payments to Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any
Lender by the jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement, any Other
Documents or any Eurodollar Rate Loan; and the result of any of the foregoing is
to increase the cost to Agent or any Lender of making, renewing or maintaining
its Advances hereunder by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal, interest
or otherwise) in respect of any of the Advances by an amount that Agent or such
Lender deems to be material, then, in any case Borrowers shall promptly pay
Agent or such Lender, upon its demand, such additional amount as will compensate
Agent or such Lender for such additional cost or such reduction, as the case may
be, provided that the foregoing shall not apply to increased costs which are
reflected in the Eurodollar Rate, as the case may be. Agent or such Lender shall
certify the amount of such additional cost or reduced amount to Borrowers, and
such certification shall be conclusive absent manifest error.
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3.8. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the
Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest
Period;
(b) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank Eurodollar market,
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan;
(c) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank eurodollar market
with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate
Loan or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate
Loan, Agent shall give Borrowing Agent prompt written, telephonic or telegraphic
notice of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing
Agent shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be cancelled or made as an unaffected type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans
shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall
notify Agent, no later than 10:00 a.m. (New York City time) two (2) Business
Days prior to the last Business Day of the then current Interest Period
applicable to such affected Eurodollar Rate Loan, such affected Eurodollar Rate
Loan shall be converted into an unaffected type of Eurodollar Rate Loan on the
last Business Day of the then current Interest Period for such affected
Eurodollar Rate Loans. Until such notice has been withdrawn, the Lenders shall
have no obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and no Borrower shall have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
3.9. CAPITAL ADEQUACY.
(a) In the event that Agent or any Lender shall have
determined that any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender and
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the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent or any Lender's capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's and each Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrowers shall pay upon demand to Agent or such Lender such
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such Lender may use
any reasonable averaging or attribution methods. The protection of this Section
3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the applicable law,
regulation or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
IV. COLLATERAL: GENERAL TERMS
4.1. SECURITY INTEREST IN THE COLLATERAL. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Borrower
hereby assigns, pledges and grants to Agent for the ratable benefit of each
Lender a continuing security interest in and to all of its Collateral, whether
now owned or existing or hereafter acquired or arising and wheresoever located.
Each Borrower shall ▇▇▇▇ its books and records as may be necessary or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest.
4.2. PERFECTION OF SECURITY INTEREST. Each Borrower shall take all
action that may be necessary or desirable, or that Agent may request, so as at
all times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers for the
Primary Locations, (iii) delivering to Agent, endorsed or accompanied by such
instruments of assignment as Agent may specify, and stamping or marking, in such
manner as Agent may specify, any and all chattel paper, instruments, letters of
credits and advices thereof and documents evidencing or forming a part of the
Collateral, (iv) entering into warehousing, lockbox and other custodial
arrangements satisfactory to Agent, and (v) executing and delivering financing
statements, instruments of pledge, mortgages, notices and assignments, in each
case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent's security interest
under the Uniform Commercial Code or other applicable law. Agent is hereby
authorized to file financing statements signed by Agent instead of Borrowers in
accordance with Section 9-402(2) of the Uniform Commercial Code as adopted in
the State of New York. All charges, expenses and fees Agent may incur in doing
any of the foregoing, and any local taxes
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relating thereto, shall be charged to the applicable Borrower's Account as a
Revolving Advance and added to the Obligations, or, at Agent's option, shall be
paid to Agent for the ratable benefit of the Lenders immediately upon demand.
4.3. DISPOSITION OF COLLATERAL. Each Borrower will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business and (b) as permitted in Section 2.10(a) hereof.
4.4. PRESERVATION OF COLLATERAL. Following the occurrence and during
the continuance of an Event of Default, in addition to the rights and remedies
set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as
Agent deems necessary to protect Agent's interest in and to preserve the
Collateral; (b) may employ and maintain at any Borrower's premises a custodian
who shall have full authority to do all acts necessary to protect Agent's
interests in the Collateral; (c) may lease warehouse facilities to which Agent
may move all or part of the Collateral; (d) may use any Borrower's owned or
leased lifts, hoists, trucks and other facilities or equipment for handling or
removing the Collateral; and (e) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any Borrower's owned or leased property. Each Borrower
shall cooperate fully with all of Agent's efforts to preserve the Collateral and
will take such actions to preserve the Collateral as Agent may direct. All of
Agent's expenses of preserving the Collateral, including any expenses relating
to the bonding of a custodian, shall be charged to the applicable Borrower's
Account as a Revolving Advance and added to the Obligations.
4.5. OWNERSHIP OF COLLATERAL. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of its respective Collateral to Agent; and, except for Permitted
Encumbrances the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (d) each
Borrower's Equipment and Inventory shall be located as set forth on SCHEDULE 4.5
and shall not be removed from such location(s) without the prior written consent
of Agent except with respect to the sale of Inventory in the ordinary course of
business and Equipment to the extent permitted in Section 4.3 hereof.
4.6. DEFENSE OF AGENT'S AND LENDERS' INTERESTS. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business and
Equipment to the extent permitted in Section 4.3 hereof), assign, transfer,
create or suffer to exist a Lien upon or encumber or allow or suffer to be
encumbered in any way except for Permitted Encumbrances, any part of the
Collateral. Each Borrower shall defend Agent's interests in the Collateral
against any and all Persons whatsoever. At any time following a
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Default and demand by Agent for payment of all Obligations, Agent shall have the
right to take possession of the indicia of the Collateral and the Collateral in
whatever physical form contained. If Agent exercises this right to take
possession of the Collateral, Borrowers shall, upon demand, assemble it in the
best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and the
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the Uniform Commercial Code or other applicable law. Each
Borrower shall, and Agent may, at its option, instruct all suppliers, carriers,
forwarders, warehouses or others receiving or holding cash, checks, Inventory,
documents or instruments in which Agent holds a security interest to deliver
same to Agent and/or subject to Agent's order and if they shall come into any
Borrower's possession, they, and each of them, shall be held by such Borrower in
trust as Agent's trustee, and such Borrower will immediately deliver them to
Agent in their original form together with any necessary endorsement.
4.7. BOOKS AND RECORDS. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrowers and who shall
be acceptable to Agent in its reasonable discretion.
4.8. FINANCIAL DISCLOSURE. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
prior to the Term Loan Termination Date to exhibit and deliver to Agent and each
Lender copies of any of the Borrower's financial statements, trial balances or
other accounting records of any sort in the accountant's or auditor's possession
accompanied by such accounting or auditing firm's management letter, and to
disclose to Agent and each Lender any information such accountants may have
concerning such Borrower's financial status and business operations. Each
Borrower hereby authorizes all federal, state and municipal authorities to
furnish to Agent and each Lender copies of reports or examinations relating to
such Borrower, whether made by such Borrower or otherwise; however, Agent and
each Lender will attempt to obtain such information or materials directly from
such Borrower prior to obtaining such information or materials from such
accountants or such authorities.
4.9. COMPLIANCE WITH LAWS. Each Borrower shall comply with all acts,
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to its respective Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect. Each Borrower may,
however, contest or dispute any acts, rules, regulations, orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien is
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inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of Agent to protect Agent's Lien on or security interest in the
Collateral. The assets of Borrowers at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the Collateral so that such insurance shall remain in
full force and effect.
4.10. INSPECTION OF PREMISES; APPRAISAL. Upon notice to Borrowing
Agent, at all reasonable times Agent and any Lender shall have full access to
and the right to audit, check, inspect and make abstracts and copies from each
Borrower's books, records, audits, correspondence and all other papers relating
to the Collateral and the operation of each Borrower's business. Agent and any
Lender (with Agent's prior written consent) and their agents may enter upon any
Borrower's premises at any time during business hours and at any other
reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of such
Borrower's business. Upon an Event of Default, Agent shall have the right in its
discretion to hire an Appraiser at Borrowers' cost and expense to conduct
appraisals of the Inventory.
4.11. INSURANCE. Each Borrower shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Borrower's own
cost and expense in amounts and with carriers acceptable to Agent, each Borrower
shall (a) keep all its insurable properties and properties in which such
Borrower has an interest insured against the hazards of fire, flood, sprinkler
leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in the case of companies engaged
in businesses similar to such Borrower including, without limitation, business
interruption insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to such Borrower insuring
against larceny, embezzlement or other criminal misappropriation of insured's
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets; (c) maintain public and product liability insurance against claims for
personal injury, death or property damage suffered by others; (d) maintain all
such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business;
(e) maintain liability insurance in favor of such Borrower's officers and
directors in an amount satisfactory to Agent; (f) furnish Agent with (i) copies
of all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee for the benefit of Lenders as
its interests may appear with respect to all insurance coverage referred to in
clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall
be payable to Agent, (B) no such insurance shall be affected by any act or
neglect of the insured or owner of the property described in such policy, and
(C) that such policy and loss payable clauses may not be cancelled, amended or
terminated unless at least thirty (30) days' prior written notice is given to
Agent. In the event of any loss thereunder, the carriers named therein hereby
are directed by Agent and the applicable Borrower to make payment for such loss
to Agent (in its capacity as Agent hereunder) and not to such Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to any Borrower and Agent jointly, Agent may endorse such Borrower's
name thereon and do such
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other things as Agent may deem advisable to reduce the same to cash. Agent is
hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above. All loss recoveries received by Agent
upon any such insurance may be applied to the Obligations, first, pro-rata to
the outstanding principal installments of the Term Loan, and second, to the
remaining Advances in such order as Agent in its reasonable discretion shall
determine. Any surplus shall be paid by Agent to Borrowers or applied as may be
otherwise required by law. Anything hereinabove to the contrary notwithstanding,
and subject to the fulfillment of the conditions set forth below, Agent shall
remit to Borrowers insurance proceeds received by Agent during any fiscal year
under insurance policies procured and maintained by Borrowers which insure
Borrowers' insurable properties to the extent such insurance proceeds do not
exceed $250,000 in the aggregate during such fiscal year. In the event the
amount of insurance proceeds received by Agent for any occurrence exceeds
$250,000 then Agent shall not be obligated to remit the insurance proceeds to
Borrowers unless Borrowers shall provide Agent with evidence reasonably
satisfactory to Agent that the insurance proceeds will be used by Borrowers to
repair, replace or restore the insured property which was the subject of the
insurable loss. In the event Borrowers have previously received (or, after
giving effect to any proposed remittance by Agent to Borrowers would receive)
insurance proceeds which equal or exceed $250,000 in the aggregate during any
fiscal year, then Agent may, in its sole discretion, either remit the insurance
proceeds to Borrowers upon Borrowers providing Agent with evidence reasonably
satisfactory to Agent that the insurance proceeds will be used by Borrowers to
repair, replace or restore the insured property which was the subject of the
insurable loss, or apply the proceeds to the Obligations, as aforesaid. The
agreement of Agent to remit insurance proceeds in the manner above provided
shall be subject in each instance to satisfaction of each of the following
conditions: (x) No Event of Default or Default shall then have occurred, and (y)
Borrowers shall use such insurance proceeds to repair, replace or restore the
insurable property which was the subject of the insurable loss and for no other
purpose.
4.12. FAILURE TO PAY INSURANCE. If any Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor for such
Borrower's Account, and charge such Borrower's Account therefor and such
expenses so paid shall be part of the Obligations.
4.13. PAYMENT OF TAXES. Each Borrower will pay and will cause each of
their Subsidiaries to pay, when due, all taxes, assessments and other Charges
lawfully levied or assessed upon such Borrower or any of the Collateral
including, without limitation, real and personal property taxes, assessments and
charges and all franchise, income, employment, social security benefits,
withholding, and sales taxes and each Borrower shall have the right, subject to
the provisions of this Section 4.13, to contest or dispute any charges. If any
Charge by any governmental authority is or may be imposed on or as a result of
any transaction between any Borrower and Agent or any Lender which Agent or any
Lender may be required to withhold or pay or if any Charges remain unpaid after
the date fixed for their payment, or if any claim shall be made which, in
Agent's or any Lender's opinion, may possibly create a valid Lien on the
Collateral, Agent may without notice to Borrowers pay the Charges and each
Borrower hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. Agent will not pay any Charges to the extent that any Borrower has
contested or disputed those Charges in good
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faith, by expeditious protest, administrative or judicial appeal or similar
proceeding provided that any related Lien is stayed and sufficient reserves are
established to the reasonable satisfaction of Agent to protect Agent's security
interest in or Lien on the Collateral. The amount of any payment by Agent under
this Section 4.13 shall be charged to the applicable Borrower's Account as a
Revolving Advance and added to the Obligations and, until Borrowers shall
furnish Agent with an indemnity therefor (or supply Agent with evidence
satisfactory to Agent that due provision for the payment thereof has been made),
Agent may hold without interest any balance standing to Borrowers' credit and
Agent shall retain its security interest in any and all Collateral held by
Agent.
4.14. PAYMENT OF LEASEHOLD OBLIGATIONS. Each Borrower shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request, will provide evidence of having done so; provided, however,
that any Borrower may contest its rental obligations under a lease in good faith
provided that any related Lien is stayed and sufficient reserves are established
to the reasonable satisfaction of Agent to protect Agent's security interest in
or Lien on the Collateral.
4.15. RECEIVABLES.
(a) NATURE OF RECEIVABLES. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) SOLVENCY OF CUSTOMERS. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Borrower who are not solvent such
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) LOCATIONS OF BORROWERS. Each Borrower's chief executive
office is located at the locations set forth on SCHEDULE 4.15(C). Until written
notice is given to Agent by Borrowing Agent of any other office at which it
keeps its records pertaining to Receivables, all such records shall be kept at
such executive office.
(d) COLLECTION OF RECEIVABLES. Until any Borrower's authority
to do so is terminated by Agent (which notice Agent may give at any time
following the occurrence and during the continuance of an Event of Default),
each Borrower will, at such Borrower's sole cost and expense, but on Agent's
behalf and for Agent's account, collect as Agent's property and in trust for
Agent all amounts received on Receivables, and shall not commingle such
collections
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with any Borrower's funds or use the same except to pay Obligations. Each
Borrower shall, upon request, deliver to Agent the Blocked Account or the
Depositary Account in original form and on the date of receipt thereof, all
checks, drafts, notes, money orders, acceptances, cash and other evidences of
Indebtedness except that such Borrower may maintain base cash amounts at retail
store locations in the ordinary course of business consistent with past
practices and in any event not to exceed (i) $600,000 in the aggregate at any
time during the months of January through and including October of each calendar
year and (ii) $1,200,000 in the aggregate at any time during the months of
November and December of each calendar year.
(e) NOTIFICATION OF ASSIGNMENT OF RECEIVABLES. At any time
following the occurrence and during the continuance of an Event of Default,
Agent shall have the right to send notice of the assignment of, and Agent's
security interest in, the Receivables to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral. Thereafter,
Agent shall have the sole right to collect the Receivables, take possession of
the Collateral, or both. Agent's actual collection expenses, including, but not
limited to, stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to the applicable Borrower's Account and added to the
Obligations.
(f) POWER OF AGENT TO ACT ON BORROWERS' BEHALF. Agent shall
have the right to receive, endorse, assign and/or deliver in the name of Agent
or any Borrower any and all checks, drafts and other instruments for the payment
of money relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as such Borrower's
attorney with power (i) to endorse such Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) upon the occurrence and during the continuance of an Event of
Default to sign such Borrower's name on any invoice or ▇▇▇▇ of lading relating
to any of the Receivables, drafts against Customers and assignments of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv)
upon the occurrence and during the continuance of an Event of Default to sign
such Borrower's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v) upon the
occurrence and during the continuance of an Event of Default to demand payment
of the Receivables; (vi) upon the occurrence and during the continuance of an
Event of Default to enforce payment of the Receivables by legal proceedings or
otherwise; (vii) upon the occurrence and during the continuance of an Event of
Default to exercise all of Borrowers' rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) upon the
occurrence and during the continuance of an Event of Default to settle, adjust,
compromise, extend or renew the Receivables; (ix) upon the occurrence and during
the continuance of an Event of Default to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) upon the occurrence and during
the continuance of an Event of Default to prepare, file and sign such Borrower's
name on a proof of claim in bankruptcy or similar document against any Customer;
(xi) upon the occurrence and during the continuance of an Event of Default to
prepare, file and sign such Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said
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attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or of law, unless done maliciously or with
gross (not mere) negligence; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid. Agent shall have the
right at any time following the occurrence and during the continuance of an
Event of Default to change the address for delivery of mail addressed to any
Borrower to such address as Agent may designate and to receive, open and dispose
of all mail addressed to any Borrower.
(g) NO LIABILITY. Neither Agent nor any Lender shall, under
any circumstances or in any event whatsoever, have any liability for any error
or omission or delay of any kind occurring in the settlement, collection or
payment of any of the Receivables or any instrument received in payment thereof,
or for any damage resulting therefrom except for liability arising from Agent's
or such Lender's gross (not mere) negligence or willful misconduct. Following
the occurrence and during the continuance of an Event of Default, Agent may,
without notice or consent from any Borrower, ▇▇▇ upon or otherwise collect,
extend the time of payment of, compromise or settle for cash, credit or upon any
terms any of the Receivables or any other securities, instruments or insurance
applicable thereto and/or release any obligor thereof. Agent is authorized and
empowered to accept following the occurrence and during the continuance of an
Event of Default the return of the goods represented by any of the Receivables,
without notice to or consent by any Borrower, all without discharging or in any
way affecting any Borrower's liability hereunder.
(h) ESTABLISHMENT OF A LOCKBOX ACCOUNT, DOMINION ACCOUNT. All
proceeds of Collateral shall, at the direction of Agent, be deposited by each
Borrower into a lockbox account, dominion account or such other blocked account
(each, a "Blocked Account") as Agent may require pursuant to an arrangement with
such bank as may be selected by each Borrower and be acceptable to Agent. Each
Borrower shall issue to any such bank, an irrevocable letter of instruction
directing said bank to transfer such funds so deposited to Agent, either to any
account maintained by Agent at said bank or by wire transfer to appropriate
account(s) of Agent. All funds deposited in such Blocked Account shall
immediately become the property of Agent and such Borrower shall obtain the
agreement by such bank to waive any offset rights against the funds so
deposited. Agent assumes no responsibility for such Blocked Account arrangement,
including without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder. Alternatively, Agent
may establish depository accounts ("Depository Accounts") in the name of Agent
at a bank or banks for the deposit of such funds and such Borrower shall deposit
all proceeds of Collateral or cause same to be deposited, in kind, in such
Depository Accounts of Agent in lieu of depositing same to such Borrower's
Blocked Account.
(i) ADJUSTMENTS. No Borrower will, without Agent's consent,
compromise or adjust any of the Receivables (or extend the time for payment
thereof) or accept any returns of merchandise or grant any additional discounts,
allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in
the business of such Borrower.
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4.16. INVENTORY. All Inventory, to the extent produced by Borrowers,
has been and will be produced in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder.
4.17. MAINTENANCE OF EQUIPMENT. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment taken as a whole shall be maintained
and preserved. No Borrower shall use or operate the Equipment in material
violation of any law, statute, ordinance, code, rule or regulation. Each
Borrower shall have the right to sell Equipment to the extent set forth in
Section 4.3 hereof.
4.18. EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Agent or any Lender as any Borrower's agent for any
purpose whatsoever, nor shall Agent or any Lender be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause thereof
except for any of the foregoing which arises out of Agent's or such Lender's
gross (not mere) negligence or willful misconduct. Neither Agent nor any Lender,
whether by anything herein or in any assignment or otherwise, assume any
Borrower's obligations under any contract or agreement assigned to Agent or such
Lender, and neither Agent nor any Lender shall be responsible in any way for the
performance by any Borrower of any of the terms and conditions thereof.
4.19. FINANCING STATEMENTS. Except as respects the financing statements
filed by Agent and the financing statements described on SCHEDULE 1.2(A) and
continuation statements relating thereto, no financing statement covering any of
the Collateral or any proceeds thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. AUTHORITY. Each Borrower has full power, authority and legal right
to enter into this Agreement and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of such Borrower's by-laws, articles of incorporation or
other applicable documents relating to such Borrower's formation or to the
conduct of such Borrower's business or of any material agreement or undertaking
to which such Borrower is a party or by which such Borrower is bound, and (b)
will not conflict with nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law, or other instrument to
which such Borrower is a party or by which it or its property may be bound.
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5.2. FORMATION AND QUALIFICATION.
(a) Each Borrower is duly incorporated and in good standing
under the laws of the states set forth on SCHEDULE 5.2(A). Each Borrower is
qualified to do business and is in good standing in the states listed on
SCHEDULE 5.2(A) which constitute all states in which qualification and good
standing are necessary for such Borrower to conduct its business and own its
property except where the failure to so qualify could not have a Material
Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and
complete copies of its articles of incorporation and by-laws and will promptly
notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower are listed on
SCHEDULE 5.2(B).
5.3. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of each Borrower contained in this Agreement and the Other
Documents shall be true at the time of such Borrower's execution of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
5.4. TAX RETURNS. Each Borrower's federal tax identification number is
set forth on Schedule 5.4. Each Borrower has filed all federal, state and local
tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable. Federal, state and local income tax returns of each Borrower have been
examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending 1991. The provision for taxes on the books of each Borrower
are adequate for all years not closed by applicable statutes, and for its
current fiscal year, and no Borrower has knowledge of any deficiency or
additional assessment in connection therewith not provided for on its books.
5.5. FINANCIAL STATEMENTS.
(a) The pro forma balance sheet of Borrowers on a Consolidated
Basis (the "Pro Forma Balance Sheet") furnished to Agent on the Closing Date
reflects the consummation of the transactions contemplated by the Acquisition
Agreement and under this Agreement (the "Transactions") and is complete and
fairly presents the financial condition of Borrowers on a Consolidated Basis as
of the Closing Date after giving effect to the Transactions, and has been
prepared in accordance with GAAP, consistently applied. The Pro Forma Balance
Sheet of Borrowers on a Consolidated Basis has been certified as accurate,
complete and correct in all material respects by the President and Chief
Financial Officer of Borrowing Agent. All financial statements referred to in
this subsection 5.5(a), including the related schedules and notes thereto, have
been prepared, in accordance with GAAP, except as may be disclosed in such
financial statements.
(b) The monthly profit and loss statements, balance sheets and
cash flow projections of Borrowers on a Consolidated Basis, copies of which are
annexed hereto as EXHIBIT 5.5(B) prepared (i) on a quarterly basis for fiscal
years 1998 and 1999 and (ii) on an annual basis for fiscal years 2000, 2001,
2002, 2003 and 2004 (the "Projections") were prepared by the Chief
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Financial Officer of each Borrower, are in sufficient detail to determine
revenue from each material business category, fixed and variable costs and are
based on underlying assumptions which provide a reasonable basis for the
projections contained therein and reflect Borrowers' judgment based on present
circumstances of the most likely set of conditions and course of action for the
projected period. The cash flow Projections together with the Pro Forma Balance
Sheet, are referred to as the "Pro Forma Financial Statements".
(c) The consolidated and consolidating balance sheets of LTC,
its Subsidiaries and such other Persons described therein (including the
accounts of all Subsidiaries for the respective periods during which a
subsidiary relationship existed) as of July 31, 1997, the consolidated and
consolidating balance sheets of TWI, its Subsidiaries and such other persons
described therein (including the accounts of all Subsidiaries for the respective
periods during which a subsidiary relationship existed) as of December 31, 1996,
and the consolidated and consolidating nine month certified balance sheets of
CWI, its Subsidiaries and such other persons described therein (including the
accounts of all Subsidiaries for the respective periods during which a
subsidiary relationship existed) as of September 30, 1997 and in each case the
related statements of income, changes in stockholder's equity, and changes in
cash flow for the period ended on such dates, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants concur and fairly present the financial position of
Borrowers and their Subsidiaries at such dates and the results of their
operations for such period. Since July 31, 1997 with respect to LTC, December
31, 1996 with respect to TWI and September 30, 1997 with respect to CWI there
has been no change in the condition, financial or otherwise, of the applicable
Borrower or its Subsidiaries as shown on the consolidated balance sheet as of
such date and no material change in the aggregate value of machinery, equipment
and Real Property owned by such Borrower and its Subsidiaries, except changes in
the ordinary course of business, none of which individually or in the aggregate
has been materially adverse.
5.6. CORPORATE NAME. No Borrower has been known by any other corporate
name in the past five years and does not sell Inventory under any other name
except as set forth on SCHEDULE 5.6(A), nor has any Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years except as disclosed
on SCHEDULE 5.6(B).
5.7. O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.
(a) Each Borrower has duly complied with in all material
respects, and its facilities, business, assets, property, leaseholds and
Equipment are in compliance in all material respects with, the provisions of the
Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws; there have been no outstanding citations,
notices or orders of non-compliance issued to any Borrower or relating to its
business, assets, property, leaseholds or Equipment under any such laws, rules
or regulations.
(b) Each Borrower has been issued all required material
federal, state and local licenses, certificates or permits relating to all
applicable Environmental Laws.
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(c) To the best of each Borrower's knowledge (i) There are no
visible signs of releases, spills, discharges, leaks or disposal (collectively
referred to as "Releases") of Hazardous Substances at, upon, under or within any
Real Property or any premises leased by any Borrower; (ii) there are no
underground storage tanks or polychlorinated biphenyls on the Real Property or
any premises leased by any Borrower; (iii) neither the Real Property nor any
premises leased by any Borrower has ever been used as a treatment, storage or
disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property or any other premises leased by any Borrower,
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and governmental regulations and in proper storage
containers and as are necessary for the operation of the commercial business of
any Borrower or of its tenants.
5.8. SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.
(a) After giving effect to the Transactions, Borrowers will be
solvent, able to pay their debts as they mature, have capital sufficient to
carry on their business and all businesses in which they are about to engage,
and (i) as of the Closing Date, the fair present saleable value of its assets,
calculated on a going concern basis, is in excess of the amount of their
liabilities and (ii) subsequent to the Closing Date, the fair saleable value of
their assets (calculated on a going concern basis) will be in excess of the
amount of its liabilities.
(b) Except as disclosed in SCHEDULE 5.8(B), no Borrower has
(i) pending or threatened litigation, arbitration, actions or proceedings which
involve the possibility of having a Material Adverse Effect on such Borrower,
and (ii) any liabilities nor indebtedness other than the Obligations.
(c) No Borrower is in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect on Borrowers, nor is any Borrower in violation of
any order of any court, governmental authority or arbitration board or tribunal.
(d) No Borrower or any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d)
hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
material "accumulated funding deficiency," as defined in Section 302(a)(2) of
ERISA and Section 412(a) of the Code, whether or not waived, and each Borrower
and each member of the Controlled Group has met all applicable minimum funding
requirements under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is
exempt from federal income tax under Section 501(a) of the Code, (iii) no
Borrower or any member of the Controlled Group has incurred any liability to the
PBGC other than for the payment of premiums, and there are no premium payments
which have become due which are unpaid, (iv) no Plan has been terminated by the
plan administrator thereof or by the PBGC, and there is no occurrence which
would cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Plan, (v) at this time, the current value of the assets of
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each Plan exceeds the present value of the accrued benefits and other
liabilities of such Plan and no Borrower or any member of the Controlled Group
knows of any facts or circumstances which would materially decrease the value of
such assets and accrued benefits and other liabilities, (vi) no Borrower or any
member of the Controlled Group has breached any of the material
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) no Borrower or any member of a Controlled Group has incurred any
such material liability for any excise tax arising under Section 4972 or 4980B
of the Code, and no fact exists which could give rise to any such material
liability, (viii) no Borrower or any member of the Controlled Group or any
fiduciary of, or any trustee to, any Plan, has engaged in a "prohibited
transaction" described in Section 406 of the ERISA or Section 4975 of the Code
or taken any action which would constitute or result in a Termination Event with
respect to any such Plan which is subject to ERISA, (ix) each Borrower and each
member of the Controlled Group has made all material contributions due and
payable with respect to each Plan, (x) there exists no event described in
Section 4043(b) of ERISA, for which the thirty (30) day notice period contained
in 29 CFR ss.2615.3 has not been waived, (xi) no Borrower or any member of the
Controlled Group has any fiduciary responsibility for investments with respect
to any plan existing for the benefit of persons other than employees or former
employees of any Borrower and any member of the Controlled Group, and (xii) no
Borrower or any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. All patents, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned by any Borrower are set forth on
SCHEDULE 5.9, are valid and have been duly registered or filed with all
appropriate governmental authorities and constitute all of the material
intellectual property rights which are necessary for the operation of its
business; to each Borrower's knowledge, there is no objection to or pending
challenge to the validity of any such patent, trademark, copyright, design
right, tradename, trade secret or license and no Borrower is aware of any
grounds for any challenge, except as set forth in SCHEDULE 5.9 hereto. Each
patent, patent application, patent license, trademark, trademark application,
trademark license, service ▇▇▇▇, service ▇▇▇▇ application, service ▇▇▇▇ license,
design right, copyright, copyright application and copyright license owned or
held by any Borrower and all trade secrets used by any Borrower consists of
original material or property developed by such Borrower or was lawfully
acquired by such Borrower from the proper and lawful owner thereof. Each of such
items has been maintained so as to preserve the value thereof from the date of
creation or acquisition thereof. With respect to all software used by any
Borrower, such Borrower is in possession of all source and object codes related
to each piece of such software or is the beneficiary of a source code escrow
agreement.
5.10. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting and where the failure to procure such
licenses or permits could have a Material Adverse Effect on Borrowers taken as a
whole.
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5.11. DEFAULT OF INDEBTEDNESS. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness in excess of $100,000 or
under any instrument or agreement under or subject to which any such
Indebtedness has been issued and no event has occurred under the provisions of
any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default
thereunder.
5.12. NO DEFAULT. No Borrower is in default in the payment or
performance of any of its contractual obligations in excess of $100,000 and no
Default has occurred.
5.13. NO BURDENSOME RESTRICTIONS. No Borrower is party to any contract
or agreement the performance of which could have a Material Adverse Effect on
such Borrower. No Borrower has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
5.14. NO LABOR DISPUTES. No Borrower is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire prior to the Term Loan Termination Date other than as set forth on
SCHEDULE 5.14 hereto.
5.15. MARGIN REGULATIONS. No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance
will be used for "purchasing" or "carrying" "margin stock" as defined in
Regulation U of such Board of Governors.
5.16. INVESTMENT COMPANY ACT. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17. DISCLOSURE. No representation or warranty made by any Borrower in
this Agreement or in the Acquisition Agreement, or in any financial statement,
report, certificate or any other document furnished in connection herewith or
therewith contains any untrue statement of fact or omits to state any fact
necessary to make the statements herein or therein not misleading. There is no
fact known to any Borrower or which reasonably should be known to any Borrower
which Borrowers have not disclosed to Agent in writing with respect to the
transactions contemplated by the Acquisition Agreement, or this Agreement which
could have a Material Adverse Effect on any Borrower.
5.18. DELIVERY OF ACQUISITION AGREEMENT. Agent has received complete
copies of the Acquisition Agreement (including all exhibits, schedules and
disclosure letters referred to therein or delivered pursuant thereto, if any)
and all amendments thereto, waivers relating thereto and other side letters or
agreements affecting the terms thereof. None of such documents and
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agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent.
5.19. SWAPS. No Borrower is a party to, nor will it be a party to, any
swap agreement whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.20. CONFLICTING AGREEMENTS. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21. APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower or any
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including without limitation,
statutes or regulations relative to common or interstate carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
5.22. BUSINESS AND PROPERTY OF BORROWERS. Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than distribution
and retail of cellular, wireless, paging and internet related products and
services and activities necessary to conduct same. On the Closing Date, each
Borrower will own all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Borrower.
VI. AFFIRMATIVE COVENANTS.
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1. PAYMENT OF FEES. Pay to Agent on demand all usual and customary
fees and expenses including all fees required in the Fee Letter or in this
Agreement which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(h). Agent may, without
making demand, charge the account of Borrowers for all such fees and expenses.
6.2. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties necessary in its business
in good working order and condition (reasonable wear and tear excepted and
except as may be disposed of in accordance with the terms of this Agreement),
including, without limitation, all material licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and
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protect the validity of any material intellectual property right or other right
included in the Collateral; (b) keep in full force and effect its existence and
comply in all material respects with the laws and regulations governing the
conduct of its business; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof.
6.3. VIOLATIONS. Promptly notify Agent in writing of any violation of
any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could have a Material Adverse
Effect on any Borrower.
6.4. GOVERNMENT RECEIVABLES. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them.
6.5. EXECUTION OF SUPPLEMENTAL INSTRUMENTS. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.6. PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at or
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and each
Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary, subject at all times to any applicable subordination
arrangement in favor of Lenders.
6.7. STANDARDS OF FINANCIAL STATEMENTS. Cause all financial statements
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to those to
which GAAP is applicable to be complete in all material respects and fairly
present the financial condition of Borrowers on a Consolidated Basis (subject,
in the case of interim financial statements, to normal year-end audit
adjustments and the absence of footnotes) and to be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein (except as concurred in by such reporting accountants or
officer, as the case may be, and disclosed therein).
6.8. SUBSIDIARY GUARANTY AND SECURITY AGREEMENT. Cause all of its
direct or indirect subsidiaries to (i) enter into guaranty agreements in form
and substance satisfactory to Agent and its counsel pursuant to which each such
subsidiary unconditionally guarantees the Obligations, (ii) enter into security
agreements in form and substance satisfactory to Agent and its counsel, and
(iii) deliver to Agent all documents, including legal opinions, it may
reasonably require to establish compliance with the foregoing requirement.
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6.9. LANDLORD WAIVERS. Promptly deliver to Agent with respect to any
new Primary Location where Collateral will be located a landlord, mortgagee or
warehouseman agreement satisfactory to Agent.
6.10. INTEREST RATE PROTECTION. Within sixty (60) days of the Closing
Date, Borrowers shall have entered into an interest rate protection agreement
with a financial institution reasonably satisfactory to Agent with respect to an
amount equal to at least $15,000,000 and for a period not less than thirty-six
months.
6.11. ENVIRONMENTAL MATTERS. (a) Shall ensure that the Real Property
remains in material compliance with all Environmental Laws and they shall not
place or permit to be placed any Hazardous Substances on any Real Property
except as not prohibited by applicable law or appropriate governmental
authorities.
(b) Intentionally omitted.
(c) Shall dispose of any and all Hazardous Waste generated at
the Real Property only at facilities and with carriers that maintain valid
permits under RCRA and any other applicable Environmental Laws. Borrowers shall
use their best efforts to obtain certificates of disposal, such as hazardous
waste manifest receipts, from all treatment, transport, storage or disposal
facilities or operators employed by Borrowers in connection with the transport
or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives
notice of any Release or threat of Release of a reportable quantity of any
Hazardous Substances at the Real Property (any such event being hereinafter
referred to as a "Hazardous Discharge") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or any Borrower's interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person or entity, including any
state agency responsible in whole or in part for environmental matters in the
state in which the Real Property is located or the United States Environmental
Protection Agency (any such person or entity hereinafter the "Authority"), then
Borrowing Agent shall, within five (5) Business Days, give written notice of
same to Agent detailing facts and circumstances of which any Borrower is aware
giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Agent to protect its security interest in
the Real Property and is not intended to create nor shall it create any
obligation upon Agent or any Lender with respect thereto.
(e) Shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Borrower
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrowers shall promptly forward to Agent
copies of all documents and
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reports concerning a Hazardous Discharge at the Real Property that any Borrower
is required to file under any Environmental Laws. Such information is to be
provided solely to allow Agent to protect Agent's security interest in the Real
Property and the Collateral.
(f) Shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If any Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Borrower shall fail to comply with
any of the requirements of any Environmental Laws, Agent on behalf of the
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's interest in Collateral: (A) give such notices or (B) enter
onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and the Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrowers, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Borrower.
(g) Promptly upon the written request of Agent from time to
time following the occurrence of an Event of Default, Borrowers shall provide
Agent, at Borrowers' expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $100,000, Agent shall have the right to require Borrowers
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.
(h) Shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, agents, Affiliates, directors and
officers harmless from and against all loss, liability, damage and expense,
claims, costs, fines and penalties, including attorney's fees, suffered or
incurred by Agent or the Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any Lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrowers'
obligations under this Section 6.11 shall arise upon the discovery of the
presence of any
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Hazardous Substances at the Real Property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the presence of any Hazardous Substances. Borrowers' obligation and the
indemnifications hereunder shall survive the termination of this Agreement.
(i) For purposes of Section 5.7 and 6.11, all references to
Real Property shall be deemed to include all of Borrowers' right, title and
interest in and to its owned and leased premises.
6.12. EVIDENCE OF RENTAL PAYMENTS. Promptly deliver to Agent, when
paid, evidence that each Borrower has paid its rent and other obligations due to
its landlords on all Primary Locations and all premises located in the States of
Alabama, Delaware, Tennessee, Pennsylvania and in Washington, D.C.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1. MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.
(a) Enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it, provided, however, Borrowers may make
investments or acquire stock or assets so long as the investment or acquisition
is paid solely with (i) the stock of LTC and/or (ii) cash up to $2,000,000
individually and in the aggregate for all Borrowers during the term of this
Agreement (a "Permitted Acquisition").
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets (including, without limitation, any promissory notes
payable to any Borrower), except in the ordinary course of its business and
except as permitted in Sections 2.10(a) and 4.3 hereof.
7.2. CREATION OF LIENS. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3. GUARANTEES. Become liable upon the obligations of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on SCHEDULE 7.3 and (b) the endorsement of checks in the
ordinary course of business.
7.4. INVESTMENTS. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a
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holding company of which it is a Subsidiary, are rated not less than A (or the
equivalent rating) by a nationally recognized investment rating agency; (d) U.S.
money market funds that invest solely in obligations issued or guaranteed by the
United States of America or an agency thereof; and (e) any investment permitted
under Section 7.1(a) above.
7.5. LOANS. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate.
7.6. CAPITAL EXPENDITURES. Contract for, purchase or make any
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an amount in excess of $6,000,000 in the aggregate
for all Borrowers in Fiscal Year 1998 and $8,000,000 in the aggregate for all
Borrowers in each Fiscal Year thereafter.
7.7. DIVIDENDS; MANAGEMENT FEES. Declare, pay or make any dividend or
distribution on any shares of the common stock or preferred stock of such
Borrower (other than dividends or distributions payable in its stock, or
split-ups or reclassifications of its stock) or apply any of its funds, property
or assets to the purchase, redemption or other retirement of any common or
preferred stock, or of any options to purchase or acquire any such shares of
common or preferred stock of such Borrower or pay any management fees except
fees to HIG in an amount not to exceed 2% of any purchase price payable by such
Borrower for a Permitted Acquisition.
7.8. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to
Lenders; (ii) Indebtedness incurred for capital expenditures permitted under
Section 7.6 hereof; (iii) Indebtedness assumed under the Acquisition Agreement
and (iv) Indebtedness not to exceed $250,000 in the aggregate for all Borrowers
outstanding at any time.
7.9. NATURE OF BUSINESS. Substantially change the nature of the
business in which it is presently engaged.
7.10. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions conducted in the
ordinary course of business, on an arm's-length basis on terms no less favorable
than terms which would have been obtainable from a Person other than an
Affiliate.
7.11. INTENTIONALLY OMITTED.
7.12. SUBSIDIARIES.
(a) Form any Subsidiary unless (i) such Subsidiary enters into
a guaranty agreement in form and substance satisfactory to Agent and its counsel
pursuant to which such Subsidiary unconditionally guarantees the Obligations and
(ii) Agent shall have received all documents, including legal opinions, it may
reasonably require to establish compliance with each of the foregoing
conditions.
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(b) Enter into any partnership, joint venture or similar
arrangement.
7.13. FISCAL YEAR AND ACCOUNTING CHANGES. Change its fiscal year from
July 31 or make any change in accounting treatment and reporting practices
except as required by GAAP.
7.14. PLEDGE OF CREDIT. Pledge Agent's or any Lender's credit on any
purchases or for any purpose whatsoever or use any portion of any Advance in or
for any business other than such Borrower's business as conducted on the date of
this Agreement.
7.15. AMENDMENT OF ARTICLES OF INCORPORATION, BY-LAWS. Unless required
by law, amend, modify or waive any term or material provision of its Articles of
Incorporation or By-Laws if any such amendment, modification or waiver could, in
Agent's reasonable judgment have a Material Adverse Effect on any Borrower.
7.16. COMPLIANCE WITH ERISA. (i) (x) Maintain, or permit any member of
the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on SCHEDULE 5.8(D); (ii) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction," as that term is defined in section 406 of ERISA and
Section 4975 of the Code; (iii) incur, or permit any member of the Controlled
Group to incur, any material "accumulated funding deficiency," as that term is
defined in Section 302 of ERISA or Section 412 of the Code; (iv) terminate, or
permit any member of the Controlled Group to terminate, any Plan where such
event could result in any liability of any Borrower or any member of the
Controlled Group or the imposition of a lien on the property of any Borrower or
any member of the Controlled Group pursuant to Section 4068 of ERISA; (v)
assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on SCHEDULE 5.8(D); (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event; (viii) fail to comply, or permit a member
of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other applicable laws in respect of any Plan; (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
7.17. PREPAYMENT OF INDEBTEDNESS. At any time, directly or indirectly,
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of any Borrower.
7.18. OTHER AGREEMENTS. Enter into any material amendment, waiver or
modification of the Acquisition Agreement or any related agreements.
7.19. FIXED CHARGE COVERAGE RATIO. Permit Fixed Charge Coverage Ratio
(i) at the end of the fiscal quarters ending January 31, 1999 and April 30, 1999
with respect to the immediately preceding four fiscal quarter period (ending on
the last day of the last of such fiscal quarters) to be less than 1.05 to 1.00
and (ii) at the end of each fiscal quarter thereafter, with respect to the
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immediately preceding four fiscal quarter period (ending on the last day of the
last of such fiscal quarters) to be less than 1.10 to 1.00.
7.20. MINIMUM EBITDA. Permit EBITDA at the end of (i) the fiscal
quarter ended July 31, 1998 with respect to the immediately preceding two fiscal
quarter period (ending on the last day of such fiscal quarter) to be less than
$5,400,000 and (ii) the fiscal quarter ended October 31, 1998 with respect to
the immediately preceding three fiscal quarter period (ending on the last day of
such fiscal quarter) to be less than $9,000,000.
7.21. LEVERAGE RATIO. Permit Leverage Ratio at the end of (i) the
fiscal quarter ended January 31, 1999 and each fiscal quarter thereafter through
and including the fiscal quarter ended July 31, 1999, in each case with respect
to the immediately preceding four fiscal quarter period (ending on the last day
of the last of such fiscal quarters) to be more than 2.50 to 1.00 and (ii) the
fiscal quarter ended October 31, 1999 and each fiscal quarter thereafter with
respect to the immediately preceding four fiscal quarter period (ending on the
last day of such fiscal quarters) to be more than 2.00 to 1.00.
7.22. INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio at
the end of (i) the fiscal quarter ended July 31, 1998 with respect to the
immediately preceding two fiscal quarter period (ending on the last day of such
fiscal quarters) to be less than 2.50 to 1.00 and (ii) the fiscal quarter ended
October 31, 1998 with respect to the immediately preceding three fiscal quarter
period (ending on the last day of such fiscal quarters) to be less than 2.25 to
1.00.
7.23. ▇▇▇▇▇▇▇▇ NOTE. At any time following the occurrence of a Default
or an Event of Default, directly or indirectly, make any payment of principal or
interest on the ▇▇▇▇▇▇▇▇ Note.
VIII. CONDITIONS PRECEDENT.
8.1. CONDITIONS TO INITIAL ADVANCES. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) NOTES. Agent shall have received the Notes duly executed
and delivered by an authorized officer of each Borrower.
(b) FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any Other Document or under law or reasonably
requested by Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral
shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto.
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(c) CORPORATE PROCEEDINGS OF BORROWERS. Agent shall have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent, of the Board of Directors of each Borrower authorizing (i) the
execution, delivery and performance of the Loan Documents and the Acquisition
Agreement and (ii) the granting by each Borrower of the security interests in
and liens upon the Collateral in each case certified by the Secretary or an
Assistant Secretary of each Borrower as of the Closing Date; and, such
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate.
(d) INCUMBENCY CERTIFICATES OF BORROWERS. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of each
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of each Borrower executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(e) CERTIFICATES. Agent shall have received a copy of the
Articles of Incorporation of each Borrower and each Guarantor, and all
amendments thereto, certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation together with copies of the
By-Laws of each Borrower and each Guarantor.
(f) GOOD STANDING CERTIFICATES. Agent shall have received good
standing certificates for each Borrower and each Guarantor dated not more than
ten days prior to the Closing Date, issued by the Secretary of State or other
appropriate official of each Borrower's and each Guarantor's jurisdiction of
incorporation and each jurisdiction where the conduct of each Borrower's and
each Guarantor's business activities or the ownership of its properties
necessitates qualification.
(g) LEGAL OPINION. Agent shall have received the executed
legal opinion of White & Case LLP and other legal counsel in form and substance
satisfactory to the Agent which shall cover such matters incident to the
transactions contemplated by the Loan Documents as Agent may reasonably require
and each Borrower hereby authorizes and directs such counsel to deliver such
opinions to Agent and each Lender.
(h) NO LITIGATION. (i) No litigation, investigation or
proceeding before or by any arbitrator or Governmental Body shall be continuing
or threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Loan Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which if adversely determined, could, in the reasonable opinion
of Agent, have a Material Adverse Effect on any Borrower; and (ii) no
injunction, writ, restraining order or other order of any nature materially
adverse to any Borrower or the conduct of its business or inconsistent with the
due consummation of the Transactions shall have been issued by any Governmental
Body.
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(i) FINANCIAL CONDITION CERTIFICATES. Agent shall have
received an executed Financial Condition Certificate substantially in the form
of EXHIBIT 8.1(I) hereof, together with all required attachments.
(j) COLLATERAL EXAMINATION; APPRAISALS. Agent shall have
completed a Collateral examination the results of which shall be satisfactory in
form and substance to the Lenders, of the Receivables, Inventory, General
Intangibles, Real Property and Equipment of each Borrower and all books and
records in connection therewith.
(k) FEES. Agent shall have received all fees payable to Agent
and the Lenders on or prior to the Closing Date, including legal fees, costs and
disbursements, fees pursuant to Article III hereof and fees payable pursuant to
the Fee Letter.
(l) FINANCIAL STATEMENTS; PRO FORMA FINANCIAL STATEMENTS.
Agent shall have received copies of
(i) the Pro Forma Financial Statements which shall be
reasonably satisfactory in all respects to Agent;
(ii) certified financial statements of Borrowers on a
Consolidated Basis by Ernst & Young or another independent certified public
accountant satisfactory to the Agent for the three fiscal years immediately
preceding the Closing Date, together with all written materials, reports and/or
management letters prepared by such independent certified public accountants,
each of which shall be in form and substance satisfactory to Agent; and
(iii) certified financial statements of CWI audited by Ernst
& Young satisfactory to Agent for the fiscal year ending December 31, 1997,
together with all written materials, reports and management letters prepared by
Ernst & Young, each of which shall be in form and substance satisfactory to
Agent.
(m) ACQUISITION DOCUMENTS. Agent shall have received final
executed copies of the Acquisition Agreement and all related agreements,
documents and instruments as in effect on the Closing Date, the terms and
conditions of such documentation shall be satisfactory to Agent and the
transactions contemplated by such documentation shall be consummated
concurrently with the making of the initial Advance, including, without
limitation, evidence that total cash portion of the purchase price is not
greater than $19,500,000 (including expenses).
(n) GUARANTY; GUARANTOR SECURITY AGREEMENT; PLEDGE AGREEMENT;
OTHER DOCUMENTS. Agent shall have received executed Guaranties, Guarantor
Security Agreements, Pledge Agreement, the Collateral Assignment and all Other
Documents, each in form and substance satisfactory to Lenders.
(o) INSURANCE. Agent shall have received in form and substance
satisfactory to Agent, certified copies of Borrowers' casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee,
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and certified copies of Borrowers' liability insurance policies and directions
and officers insurance, together with endorsements naming Agent as a co-insured.
(p) UNDRAWN AVAILABILITY; BORROWING BASE. After giving effect
to the initial Advances, Borrowers shall have collective Undrawn Availability of
not less than $7,000,000. Agent shall have received evidence from each Borrower
that the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
each Borrower on the Closing Date.
(q) PAYMENT INSTRUCTIONS. Agent shall have received written
instructions from Borrowing Agent directing the application of proceeds of the
initial Advances made pursuant to this Agreement.
(r) BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements establishing the Blocked Accounts with financial institutions
acceptable to Agent for the collection or servicing of the Receivables and
proceeds of the Collateral.
(s) CONSENTS. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary.
(t) NO ADVERSE MATERIAL CHANGE. (i) Since July 31, 1997 as
respects LTC, December 31, 1996 as respects TWI and September 30, 1997 as
respects CWI, there shall not have occurred (x) any material adverse change in
the condition, financial or otherwise, operations, properties or prospects of
such Borrower, (y) any material damage or destruction to any of the Collateral
nor any material depreciation in the value thereof and (z) any event, condition
or state of facts which could have a Material Adverse Effect on such Borrower
and (ii) no representations made or information supplied to Agent or any Lender
shall have been proven to be inaccurate or misleading in any material respect.
(u) LEASEHOLD AGREEMENTS. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to the
Primary Locations.
(v) CONTRACT REVIEW. Agent shall have reviewed all material
contracts of Borrowers including, without limitation, leases, union contracts,
labor contracts, employee contracts, vendor supply contracts, license agreements
and distributorship agreements and such contracts and agreements shall be
satisfactory in all respects to Agent.
(w) CLOSING CERTIFICATE. Agent shall have received a closing
certificate signed by the Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations and warranties set forth
in this Agreement and the Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing.
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(x) CUSTOMERS AND SUPPLIERS. Agent shall have conducted and be
satisfied with the results of its customer and supplier checks.
(y) CASH MANAGEMENT. Agent shall be reasonably satisfied with
each Borrower's cash management and management information systems.
(z) SCHEDULE OF AFFILIATES AND SUBSIDIARIES. Agent shall have
received a schedule of Affiliates and Subsidiaries of each Borrower.
(aa) OTHER. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent, the Lenders
and their counsel.
8.2. CONDITIONS TO EACH ADVANCE. The agreement of Lenders to make any
Advance requested to be made on any date (including, without limitation, its
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by any Borrower in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;
(b) NO DEFAULT. No Event of Default or Default shall have
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the transactions
contemplated by the Acquisition Agreement; PROVIDED, HOWEVER that Lenders in
their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) MAXIMUM ADVANCES. In the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum Advances permitted under Section 2.1 hereof.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations and
the termination of this Agreement:
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9.1. DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectability of any portion of the Collateral including, without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
or disputes asserted by any Customer or other obligor regarding a material
amount of goods or claims. No Borrower will, without Agent's consent, compromise
or adjust any material amount of the Receivables (or extend the time for payment
thereof) or accept any material returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of such Borrower.
9.2. SCHEDULES. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable ageings, (b)
Inventory reports, (c) accounts payable ageings and (d) reconciliations with
respect to each of foregoing. Borrower shall deliver to Agent on or before the
fifteenth (15th) day of each month as and for the prior month accounts payable
ageings and reconciliations, lockbox statements and such copies of sales,
collection, debit and credit adjustment schedules as Agent may request.
Borrowing Agent shall deliver to Agent on or before the fifteenth (15th) day of
each month as and for the prior month a Borrowing Base Certificate. Agent shall
have the right to confirm and verify all Receivables by any manner and through
any medium it considers advisable and do whatever it may deem reasonably
necessary to protect its interests hereunder. The items to be provided under
this Section are to be in form satisfactory to Agent and executed by each
Borrower and delivered to Agent from time to time solely for Agent's convenience
in maintaining records of the Collateral, and any Borrower's failure to deliver
any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent's Lien with respect to the Collateral.
9.3. ENVIRONMENTAL REPORTS. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7, 9.8 and 9.9,
with a certificate signed by the President or Chief Financial Officer of
Borrowing Agent stating, to the best of his knowledge, that each Borrower is in
compliance in all material respects with all federal, state and local laws
relating to environmental protection and control and occupational safety and
health. To the extent any Borrower is not in compliance with the foregoing laws,
the certificate shall set forth with specificity all areas of non-compliance and
the proposed action such Borrower will implement in order to achieve full
compliance.
9.4. LITIGATION. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding, investigation, tax audits affecting any
Borrower, whether or not the claim is covered by insurance, and of any suit or
administrative proceeding, which may have a Material Adverse Effect on any
Borrower.
9.5. MATERIAL OCCURRENCES. Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event of default
under the Acquisition Agreement; (c) any event which with the giving of notice
or lapse of time, or both, would constitute an event of default under the
Acquisition Agreement; (d) any event, development or circumstance whereby any
financial statements or other reports furnished to Agent fail in any material
respect to present fairly, in accordance with GAAP consistently applied, the
financial condition or operating results of any Borrower as of the date of such
statements; (e) any accumulated
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retirement plan funding deficiency which, if such deficiency continued for two
plan years and was not corrected as provided in Section 4971 of the Code, could
subject any Borrower to a tax imposed by Section 4971 of the Code; (f) each and
every default by any Borrower which might result in the acceleration of the
maturity of any Indebtedness in excess of $100,000, including the names and
addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (g) any other development
in the business or affairs of any Borrower which might have a Material Adverse
Effect; in each case describing the nature thereof and the action Borrowers
propose to take with respect thereto.
9.6. GOVERNMENT RECEIVABLES. Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and the United States,
any state, or any department, agency or instrumentality of any of them.
9.7. ANNUAL FINANCIAL STATEMENTS. Furnish Agent after the end of each
fiscal year upon the filing thereof with the Securities and Exchange Commission,
but in no event later than ninety (90) days after the end of each fiscal year of
Borrowers, financial statements of Borrowers on a Consolidated Basis and on a
consolidating basis including, but not limited to, statements of income and
stockholders' equity and cash flow and same store sales from the beginning of
the current fiscal year to the end of such fiscal year and the balance sheet as
at the end of such fiscal year, all prepared in accordance with GAAP applied on
a basis consistent with prior practices, and in reasonable detail and reported
upon without qualification by an independent certified public accounting firm
selected by Borrowers and reasonably satisfactory to Agent (the "Accountants").
The report of the Accountants shall be accompanied by a statement of the
Accountants certifying that (i) they have caused the Loan Agreement to be
reviewed, (ii) in making the examination upon which such report was based either
no information came to their attention which to their knowledge constituted an
Event of Default or a Default under this Agreement or any Other Document or, if
such information came to their attention, specifying any such Default or Event
of Default, its nature, when it occurred and whether it is continuing, and such
report shall contain or have appended thereto calculations which set forth
Borrowers' computations and compliance with the requirements or restrictions
imposed by Sections 7.6, 7.8, 7.11, 7.19, 7.20, 7.21 and 7.22. In addition, the
reports shall be accompanied by a certificate of Borrowing Agent's Chief
Financial Officer which shall state that, based on an examination sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case, specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and the steps being taken by
Borrowers with respect to such event and, such certificate shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 7.6 and 7.11.
9.8. QUARTERLY FINANCIAL STATEMENTS. Furnish Agent after the end of
each quarter upon the filing thereof with the Securities and Exchange
Commission, but in no event later than forty-five (45) days after the end of
each fiscal quarter, an unaudited balance sheet of Borrowers on a Consolidated
Basis and consolidating basis and unaudited statements of income and
stockholders' equity and cash flow of Borrowers (without footnotes) and same
store sales reflecting results of operations from the beginning of the fiscal
year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and in all
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material respects and fairly present the financial condition of Borrowers on a
Consolidated Basis, subject to normal year end adjustments and the absence of
footnotes. The reports shall be accompanied by a certificate of Borrowing
Agent's President and/or Chief Financial Officer which shall state that, based
on an examination sufficient to permit him to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrowers with respect to such default
and, such certificate shall have appended thereto calculations which set forth
Borrowers' compliance with the requirements or restrictions imposed by Sections
7.6, 7.8, 7.11, 7.19, 7.20, 7.21 and 7.22.
9.9. MONTHLY FINANCIAL STATEMENTS. Furnish Agent within forty-five (45)
days after the end of each month, an unaudited balance sheet of Borrowers on a
Consolidated Basis and consolidating basis and unaudited statements of income
and stockholders' equity and cash flow of Borrowers on a Consolidated Basis and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The reports shall be
accompanied by a certificate of Borrowing Agent's Chief Financial Officer which
shall state that, based on an examination sufficient to permit him to make an
informed statement, no Default or Event of Default exists, or, if such is not
the case, specifying such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being taken by Borrowers with
respect to such event and, such certificate shall have appended thereto
calculations which set forth Borrowers' compliance with the requirements or
restrictions imposed by Sections 7.6, 7.8, 7.11, 7.19, 7.20, 7.21 and 7.22.
9.10. OTHER REPORTS. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders.
9.11. ADDITIONAL INFORMATION. Furnish Agent with additional information
as Agent shall reasonably request in order to enable Agent and Lenders to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Other Documents have been complied with by Borrowers
including, without limitation and without the necessity of any request by Agent,
(a) copies of all environmental audits and reviews, (b) at least twenty (20)
days prior thereto, notice of any Borrower's opening of any new office or place
of business or any Borrower's closing of any existing office or place of
business, and (c) promptly upon any Borrower's learning thereof, of any labor
dispute to which any Borrower may become a party, any strikes or walkouts
relating to any of its plants or other facilities, and the expiration of any
labor contract to which any Borrower is a party or by which any Borrower is
bound.
9.12. PROJECTED OPERATING BUDGET. Furnish Agent, no later than thirty
(30) days prior to the beginning of each of Borrowers' fiscal years commencing
with fiscal year 1999 a month by month projected operating budget and cash flow
of Borrowers on a Consolidated Basis and consolidating basis for such fiscal
year (including an income statement for each month and a balance sheet as at the
end of the last month in each fiscal quarter), such projections to be
accompanied by a certificate signed by each Borrower's President or President
and/or Chief Financial Officer to the effect that such projections have been
prepared on the basis of sound
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financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared.
9.13. VARIANCES FROM OPERATING BUDGET. Furnish Agent, concurrently with
the delivery of the financial statements referred to in Section 9.7 and each
quarterly and monthly report, a written report summarizing all material
variances from budgets submitted by Borrowers pursuant to Section 9.12 and a
discussion and analysis by management with respect to such variances.
9.14. NOTICE OF SUITS, ADVERSE EVENTS. Furnish Agent with prompt notice
of (i) any lapse or other termination of any Consent issued to any Borrower by
any Governmental Body or any other Person that is material to the operation of
any Borrower's business, (ii) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (iii) copies of any periodic or
special reports filed by any Borrower with any Governmental Body or Person, if
such reports indicate any material change in the business, operations, affairs
or condition of any Borrower, or if copies thereof are requested by Agent and
(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Borrower.
9.15. ERISA NOTICES AND REQUESTS. Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which such Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Service, Department of Labor or PBGC with respect thereto,
(ii) any Borrower or any member of the Controlled Group knows or has reason to
know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975
of the Code) has occurred together with a written statement describing such
transaction and the action which such Borrower or any member of the Controlled
Group has taken, is taking or proposes to take with respect thereto, (iii) a
funding waiver request has been filed with respect to any Plan together with all
communications received by any Borrower or any member of the Controlled Group
with respect to such request, (iv) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions
to any Plan to which any Borrower or any member of the Controlled Group was not
previously contributing shall occur, (v) any Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (vi) any Borrower or any member of the Controlled Group
shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) any Borrower
or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice;
(viii) any Borrower or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or payment; (ix) any Borrower or
any member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer
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Plan, or (c) the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan.
9.16. ADDITIONAL DOCUMENTS. Execute and deliver to Agent, upon request,
such documents and agreements as Agent may, from time to time, reasonably
request to carry out the purposes, terms or conditions of this Agreement.
9.17 SEC FILINGS. Deliver to Agent as and when filed copies of all
filings made with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1. failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or in any Other Document when due;
10.2. any representation or warranty made or deemed made by any
Borrower in this Agreement or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3. failure by any Borrower to (i) furnish financial information when
due or when requested or (ii) permit the inspection of its books or records;
10.4. issuance of a notice of Lien, levy, assessment, injunction or
attachment for an amount in excess of $100,000 in the aggregate for all
Borrowers which is not stayed, bonded or lifted within thirty (30) days;
10.5. failure or neglect of any Borrower to perform, keep or observe
any term, provision, condition, covenant herein contained, or contained in any
other agreement or arrangement, now or hereafter entered into between any
Borrower and any Lender;
10.6. any judgment is rendered or judgment liens filed against any
Borrower or any Guarantor for an amount in excess of $100,000 in the aggregate
which within thirty (30) days of such rendering or filing is not either
satisfied, stayed, bonded or discharged of record;
10.7. any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of
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creditors, (iii) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
10.8. any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. any Subsidiary of any Borrower, or any Guarantor, shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. this Agreement or any of the Other Documents shall for any
reason cease to be, or shall be asserted by any Borrower not to be, a legal,
valid and binding obligation of any Borrower, enforceable in accordance with its
terms, or the security interest or Lien purported to be created by any of the
Loan Documents shall for any reason cease to be, or be asserted by any Borrower
not to be, a valid, first priority perfected security interest and Lien in any
Collateral (except to the extent otherwise permitted under this Agreement or any
of the Other Documents);
10.11. any material damage to, or loss, theft or destruction of, any
material Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, natural disaster or public enemy, or other
casualty which causes, for more than thirty (30) consecutive days beyond the
coverage period of any applicable business interruption insurance, the cessation
or substantial curtailment of revenue producing activities at any facility of
any Borrower if any such event or circumstance could have a Material Adverse
Effect on any Borrower;
10.12. an event of default has occurred and been declared under the
Acquisition Agreement which default shall not have been cured or waived within
any applicable grace period and which could have a Material Adverse Effect on
any Borrower;
10.13. a default shall occur with respect to any Indebtedness in an
amount equal to or in excess of $100,000 or when taken together with all other
Indebtedness which are in default shall exceed $250,000 for the Borrowers taken
as a whole which default is not cured within any applicable grace period;
10.14. termination or breach of any Guaranty or similar agreement
executed and delivered to Agent in connection with the Obligations of any
Borrower, or if any Guarantor
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attempts to terminate, challenges the validity of, or its liability under, any
such Guaranty or similar agreement;
10.15. any Change of Control shall occur;
10.16. any material provision of this Agreement shall, for any reason,
cease to be valid and binding on any Borrower, or any Borrower shall so claim in
writing to Agent;
10.17. if (i) any Governmental Body shall (A) revoke, terminate,
suspend or adversely modify any license, permit, patent, trademark or tradename
of any Borrower, the continuation of which is material to the continuation of
any Borrower's business, or (B) commence proceedings to suspend, revoke,
terminate or adversely modify any such license, permit, trademark, tradename or
patent and such proceedings shall not be dismissed or discharged within sixty
(60) days, or (c) schedule or conduct a hearing on the renewal of any license,
permit, trademark, tradename or patent necessary for the continuation of any
Borrower's business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent; (ii) any
agreement which is necessary or material to the operation of any Borrower's
business shall be revoked or terminated and not replaced by a substitute
acceptable to Agent within thirty (30) days after the date of such revocation or
termination, and such revocation or termination and non-replacement could have a
Material Adverse Effect on any Borrower;
10.18. any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower which
is the owner of any material portion of the Collateral shall have become the
subject matter of litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents; or
10.19. an event or condition specified in Sections 7.16 or 9.16 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, could have a Material Adverse Effect on any
Borrower.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. RIGHTS AND REMEDIES. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
any Borrower in any involuntary case under any state or federal bankruptcy laws,
the obligations of Lenders to make Advances hereunder shall be terminated other
than as may be required by an appropriate order of the
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bankruptcy court having jurisdiction over such Borrower. Upon the occurrence of
any Event of Default, Agent shall have the right to exercise any and all other
rights and remedies provided for herein, under the Uniform Commercial Code and
at law or equity generally, including, without limitation, the right to
foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take possession of and
sell any or all of the Collateral with or without judicial process. Agent may
enter any Borrower's premises or other premises without legal process and
without incurring liability to any Borrower therefor, and Agent may thereupon,
or at any time thereafter, in its discretion without notice or demand, take the
Collateral and remove the same to such place as Agent may deem advisable and
Agent may require Borrowers to make the Collateral available to Lenders at a
convenient place. With or without having the Collateral at the time or place of
sale, Agent may sell the Collateral, or any part thereof, at public or private
sale, at any time or place, in one or more sales, at such price or prices, and
upon such terms, either for cash, credit or future delivery, as Agent may elect.
Except as to that part of the Collateral which is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Agent shall give Borrowers reasonable notification of such sale or
sales, it being agreed that in all events written notice mailed to Borrowers at
least five (5) days prior to such sale or sales is reasonable notification. At
any public sale Agent or any Lender may bid for and become the purchaser, and
Agent, any Lender or any other purchaser at any such sale thereafter shall hold
the Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and such right and equity are hereby
expressly waived and released by each Borrower. In connection with the exercise
of the foregoing remedies, Agent is granted permission, without charge, to use
all of Borrowers' trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral shall be applied as
follows: first, to the reasonable costs, expenses and attorneys' fees and
expenses incurred by Agent and Lenders for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the Collateral;
second, to interest due upon any of the Obligations; and, third, to the
principal of the Obligations. If any deficiency shall arise, Borrowers shall
remain liable to Agent and the Lenders therefor.
11.2. AGENT'S DISCRETION. Agent shall have the right in its reasonable
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3. SETOFF. In addition to any other rights which Agent or any Lender
may have under applicable law, upon the occurrence and during the continuance of
an Event of Default hereunder, Agent and such Lender shall have a right to apply
any Borrower's property held by Agent and such Lender or by the Bank to reduce
the Obligations.
11.4. RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
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XII WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. WAIVER OF NOTICE. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2. DELAY. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3. JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each
Borrower, Agent and each Lender, shall become effective on the date hereof and
shall continue in full force and effect until April ___, 2004 (the "Term")
unless sooner terminated as herein provided. Agent's and Lenders' obligation to
make Revolving Advances shall expire on the Revolving Advance Termination Date
and all outstanding Revolving Advances shall be paid in full at such time.
Borrowers may terminate this Agreement at any time upon ninety (90) days' prior
written notice ("Termination Date") upon payment in full of the Obligations.
13.2. TERMINATION. The termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative
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until all transactions entered into, rights or interests created or Obligations
have been fully disposed of, concluded or liquidated. The security interests,
Liens and rights granted to Agent and the Lenders hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that any
Borrower's Account may from time to time be temporarily in a zero or credit
position, until all of the Obligations of each Borrower have been paid or
performed in full after the termination of this Agreement or each Borrower has
furnished Agent and the Lenders with an indemnification satisfactory to Agent
and the Lenders with respect thereto. Accordingly, each Borrower waives any
rights which it may have under Section 9-404(1) of the Uniform Commercial Code
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to each
Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations are paid in full in cash. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until all Obligations are repaid or performed in full.
XIV. REGARDING AGENT.
14.1. APPOINTMENT. Each Lender hereby designates Chase to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Section
3.4 and in the Fee Letter), charges and collections (without giving effect to
any collection days) received pursuant to this Agreement, for the ratable
benefit of Lenders. Agent may perform any of its duties hereunder by or through
its agents or employees. As to any matters not expressly provided for by this
Agreement (including without limitation, collection of the Note) Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; PROVIDED, HOWEVER, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2. NATURE OF DUTIES. Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by any Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness,
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enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of any Borrower to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of any Borrower. The duties of Agent as respects
the Advances to Borrowers shall be mechanical and administrative in nature;
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement except as expressly set forth herein.
14.3. LACK OF RELIANCE ON AGENT AND RESIGNATION. Independently and
without reliance upon Agent or any other Lender, each Lender has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of each Borrower in connection with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
each Borrower. Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
making of the Advances or at any time or times thereafter except as shall be
provided by any Borrower pursuant to the terms hereof. Agent shall not be
responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectability or sufficiency of this
Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement, the
Other Documents or the financial condition of any Borrower, or the existence of
any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders
and Borrowing Agent and upon such resignation, the Required Lenders will
promptly designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties
of Agent, and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent. After any Agent's resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
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14.5. RELIANCE. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; PROVIDED, THAT, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7. INDEMNIFICATION. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; PROVIDED THAT, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8. AGENT IN ITS INDIVIDUAL CAPACITY. With respect to the obligation
of Agent to lend under this Agreement, the Advances made by it shall have the
same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term "Lender" or any
similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9. DELIVERY OF DOCUMENTS. To the extent Agent receives financial
statements required under Sections 9.7, 9.8 and 9.9 from any Borrower pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.
14.10. BORROWERS' UNDERTAKING TO AGENT. Without prejudice to their
respective obligations to the Lenders under the other provisions of this
Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time
to time on demand all amounts from time to time due and payable by it for the
account of Agent or the Lenders or any of them pursuant to this Agreement to the
extent not already paid. Any payment made pursuant to any such demand shall PRO
TANTO satisfy the relevant Borrower's obligations to make payments for the
account of the Lenders or the relevant one or more of them pursuant to this
Agreement.
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XV. BORROWING AGENCY
15.1. BORROWING AGENCY PROVISIONS.
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Neither Agent nor
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent and each Lender and holds Agent and each Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any
Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
to Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
15.2. WAIVER OF SUBROGATION. Each Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or hereafter have against the other
Borrowers or other Person directly or contingently liable for the Obligations
hereunder, or against or with respect to the other Borrowers' property
(including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement.
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XVI. MISCELLANEOUS.
16.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York. Any judicial proceeding brought
by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, each Borrower accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to Borrowing Agent at its address set forth in
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America. Nothing herein shall affect the right to serve process in any manner
permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon FORUM NON CONVENIENS. Any judicial proceeding by any
Borrower against Agent or any Lender involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the City of New York, State of New York.
16.2. ENTIRE UNDERSTANDING. (a) This Agreement and the documents
executed concurrently herewith contain the entire understanding between each
Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained and hereinafter
made shall have no force and effect unless in writing, executed by the party or
parties making such representations, warranties or guarantees. Neither this
Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Each Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrowers may, subject to the provisions of this
Section 16.2 (b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of the Lenders, Agent or Borrowers
thereunder or the conditions, provisions or terms thereof of waiving any Event
of Default
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thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all the Lenders:
(i) increase the Commitment Percentage of any Lender.
(ii) increase the Maximum Revolving Advance Amount;
(iii) except as otherwise provided herein, increase
the Advance Rate;
(iv) release any Guarantor;
(v) extend the maturity of the due date for any
amount payable hereunder, or decrease the rate of interest or
reduce any fee payable by Borrowers to Lenders pursuant to
this Agreement;
(vi) alter the definition of the term Required
Lenders or alter, amend or modify this Section 16.2(b);
(vii) release any Collateral during any calendar year
having an aggregate value in excess of $2,000,000; and
(viii) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
16.3. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Transferee"). Each Transferee may exercise all rights of payment (including
without limitation rights of set-off) with respect to the portion of such
Advances held by it or other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that Borrowers shall not be
required to pay to any Transferee more than the amount which it would have been
required to pay to Lender which granted an interest in its
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Advances or other Obligations payable hereunder to such Transferee had such
Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder and in no event shall Borrowers be required to pay any such
amount arising from the same circumstances and with respect to the same Advances
or other Obligations payable hereunder to both such Lender and such Transferee.
Each Borrower hereby grants to any Transferee a continuing security interest in
any deposits, moneys or other property actually or constructively held by such
Transferee as security for the Transferee's interest in the Advances.
(c) Any Lender may sell, assign or transfer all or any part of
its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording; PROVIDED, HOWEVER, no
Lender shall sell its rights under this Agreement and the Other Documents
without the prior written consent of Agent. Upon such execution, delivery,
acceptance and recording, from and after the transfer effective date determined
pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrowers hereby consent to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrowers shall execute and deliver such further documents and do
such further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrowers, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Agent shall receive a fee in the amount of $3,000 payable
by the applicable Purchasing Lender upon the effective date of each transfer or
assignment to such Purchasing Lender.
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(f) Borrowers authorize each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrowers which has been delivered to such Lender by or on behalf of Borrowers
pursuant to this Agreement or in connection with such Lender's credit evaluation
of Borrowers.
16.4. APPLICATION OF PAYMENTS. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5. INDEMNITY. Each Borrower shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, fees and disbursements
of counsel) which may be imposed on, incurred by, or asserted against Agent or
any Lender in any litigation, proceeding or investigation instituted or
conducted by any governmental agency or instrumentality or any other Person with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the Other Documents, whether or not
Agent or any Lender is a party thereto, except to the extent that any of the
foregoing arises out of the willful misconduct or gross (not mere) negligence of
the party being indemnified.
16.6. NOTICE. Any notice or request hereunder may be given to any
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon actual receipt thereof
when sent by telecopier to the number set forth below with electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:
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(A) If to Agent or The Chase Manhattan Bank
Chase at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Let's Talk Cellular Account Executive
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ & Hessen LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Lender other than Agent, as specified on the signature pages
hereof
(C) If to any Borrower
or Borrowing Agent,
at: Let's Talk Cellular & Wireless, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: White & Case LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
16.7. SURVIVAL. The obligations of Borrowers and Lenders under Sections
2.2(f), 3.7, 3.8, 3.9, 6.11(h), 14.7 and 16.5 shall survive termination of this
Agreement and the Other Documents and payment in full of the Obligations.
16.8. SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.9. EXPENSES. All costs and expenses including, without limitation,
reasonable attorneys' fees and disbursements incurred by Agent, Agent on behalf
of the Lenders and the Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related
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86
agreements, documents and instruments, or (c) in instituting, maintaining,
preserving, enforcing and foreclosing on Agent's security interest in or Lien on
any of the Collateral, whether through judicial proceedings or otherwise, or (d)
in defending or prosecuting any actions or proceedings arising out of or
relating to Agent's or any Lender's transactions with any Borrower, or (e) in
connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement and all related agreements, may be
charged to the applicable Borrower's Account and shall be part of the
Obligations.
16.10. INJUNCTIVE RELIEF. Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Lenders; therefore, each Lender, if such Lender so requests, shall
be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving that actual damages are not an adequate remedy.
16.11. CONSEQUENTIAL DAMAGES. Neither Agent, any Lender nor any agent
or attorney for any of them shall be liable to any Borrower for consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
16.12. CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14. CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15. CONFIDENTIALITY. Agent, each Lender and each Transferee shall
hold all non-public information obtained by Agent, such Lender or such
Transferee pursuant to the requirements of this Agreement in accordance with its
customary procedures for handling confidential information of this nature;
PROVIDED, HOWEVER, Agent, each Lender and each Transferee may disclose such
confidential information (a) to its examiners, affiliates, outside auditors,
counsel and other professional advisors, (b) to Agent, any Lender or to any
prospective Transferees and Purchasing Lenders; and (c) as required or requested
by any Governmental Body or representative thereof or pursuant to legal process;
PROVIDED, FURTHER that (i) unless specifically prohibited by applicable law or
court order, Agent, each Lender and each Transferee shall use its best efforts
prior to disclosure thereof, to notify Borrower of the applicable request for
disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event
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shall Agent, any Lender or any Transferee be obligated to return any materials
furnished by any Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
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Each of the parties has signed this Agreement as of the day and year
first above written.
LET'S TALK CELLULAR & WIRELESS, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE WAREHOUSE, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CELLULAR WAREHOUSE, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
NATIONAL CELLULAR, INCORPORATED
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CELLULAR USA
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
89
▇▇▇▇▇▇▇ ENTERPRISES, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
THE CHASE MANHATTAN BANK, as Lender and as Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
-------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Commitment Percentage: 100%
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Chief Executive Officer of Let's Talk Cellular & Wireless, Inc., the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the board of directors of said
corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of Telephone Warehouse, Inc., the corporation described in
and which executed the foregoing instrument and that he signed his name thereto
by order of the board of directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of Cellular Warehouse, Inc., the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, 1998
91
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of National Cellular, Incorporated, the corporation described
in and which executed the foregoing instrument and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Chief Executive Officer of Cellular USA, the corporation described in and
which executed the foregoing instrument and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇
▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of ▇▇▇▇▇▇▇ Enterprises, Inc., the corporation described in
and which executed the foregoing instrument and that he signed his name thereto
by order of the board of directors of said corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, 1998
92
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 1st day of April, 1998, before me personally came ▇▇▇▇▇▇▇▇
▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of THE CHASE MANHATTAN BANK and that she was authorized to
sign her name thereto.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Notary Public
▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public of New York
No. 01HA4995575
Qualified in Nassau County
Commission Expires April 27, 1998