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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this ___ day of January,
2001, by and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island
corporation with an office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇ BROTHERS, INC., ("Borrower"), a New Hampshire corporation with its chief
executive office and principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇. Capitalized terms used in this Agreement have the meanings
assigned to them in Appendix A, General Definitions. Accounting terms not
otherwise specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, including the Notes, Lender agrees to make a Total Credit Facility of
up to $14,000,000 available to Borrower, comprising a Revolving Credit Loan in
an amount not to exceed the Revolver Availability and a Term Loan in an amount
not to exceed $8,000,000, in each case upon Borrower's request therefor, as
follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to Borrower
from time to time, as requested by Borrower in the manner set forth in
subsection 3.1.1(a) hereof, up to a maximum principal amount at any time
outstanding not to exceed the Revolver Availability. Lender shall have the right
to establish reserves in such amounts, and with respect to such matters, as
Lender shall deem necessary or appropriate, against the amount of Revolving
Credit Loans which Borrower may otherwise request under this subsection 1.1.1,
including, without limitation, with respect to (i) price adjustments, damages,
unearned discounts, returned products or other matters for which credit
memoranda are issued in the ordinary course of Borrower's business; (ii)
shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving Inventory;
(iv) other sums chargeable against Borrower's Loan Account as Revolving Credit
Loans under any section of this Agreement; (v) amounts owing by Borrower to any
Person to the extent secured by a Lien on, or trust over, any Property of
Borrower; and (vi) such other matters, events, conditions or contingencies as to
which Lender, in its sole credit judgment, determines reserves should be
established from time to time hereunder (the "Reserves"). The Revolving Credit
Loans shall be repayable in accordance with the terms of Section 3.2.1(a) and
shall be secured by all of the Collateral.
1.2 Term Loan.
1.2.1 Term Loan. Lender agrees to make a Term Loan to Borrower
on the Closing Date in the principal amount of $8,000,000, which shall be
repayable in accordance with the terms of Section 3.2.1(b) and shall be secured
by all of the Collateral.
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1.3 Letters of Credit; LC Guaranties. Lender agrees, for so long as no
Default or Event of Default exists and if requested by Borrower, to (i) issue
its, or cause to be issued by the Bank or Affiliate, Letters of Credit for the
account of Borrower or (ii) execute LC Guaranties by which Lender, Bank or any
Affiliate shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to Letters of Credit, provided that the
LC Amount at any time shall not exceed $1,500,000. No Letter of Credit or LC
Guarantee may have an expiration date that is after the last day of the Term.
Any amounts paid by Lender, Bank or any Affiliate under any LC Guaranty or in
connection with any Letter of Credit shall be treated as Revolving Credit Loans,
shall be secured by all of the Collateral and shall bear interest and be payable
at the same rate and in the same manner as Revolving Credit Loans.
1.4 Use of Proceeds. The Revolving Credit Loans and the Term Loan shall
be used solely for the Acquisition and for Borrower's general operating capital
needs, including Letters of Credit and in each case in a manner consistent with
the provisions of the Agreement and all applicable laws.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest
2.1.1 Rates of Interest. From the Closing Date to March 31,
2002, at Borrower's option, interest shall accrue on the principal amount of the
Loans outstanding at any time at a fluctuating rate per annum equal to (i) the
Base Rate plus the Applicable Margin, each a Base Rate Advance, or (ii) the
LIBOR Rate plus the Applicable Margin, each a LIBOR Advance. Commencing upon
April 1, 2002 and on each subsequent calendar quarter thereafter (following
receipt in each case of the applicable financials for such period) the interest
rate on the Loans shall be adjusted (effective the first day of the calendar
month after the date Lender receives such financials) in accordance with the
Pricing Grid. The Pricing Grid shall determine the applicable interest rate,
based upon Borrower's Fully Loaded Fixed Charge Coverage Ratio, as determined
from Borrower's quarterly financial statements for the relevant period;
provided, that no reduction in the interest rate shall occur if an Event of
Default has occurred and is continuing. The rate of interest applicable to Base
Rate Advances shall increase or decrease by an amount equal to any increase or
decrease in the Base Rate, effective as of the opening of business on the day
that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence
of an Event of Default, and during the continuation thereof, (i) the principal
amount of all Loans (including Letters of Credit) shall bear interest at a rate
per annum equal to 2% above the interest rate otherwise applicable thereto (the
"Default Rate"), and (ii) any Loans made thereafter shall be at the Base Rate
and all Loans then outstanding shall be converted to Base Rate Advances.
2.1.3 Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest on the Loans and charged or collected
pursuant to the terms of this Agreement exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If any provisions of this
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Agreement, are in contravention of any such law, such provisions shall be deemed
amended to conform thereto.
2.1.4 Computation of Interest and Fees. Interest, Letter of
Credit and LC Guaranty fees and unused line fees hereunder shall be calculated
daily and shall be computed on the actual number of days elapsed over a year of
360 days. For the purpose of computing interest hereunder, all items of payment
received by Lender shall be deemed applied by Lender on account of the
Obligations (subject to final payment of such items) on the first Business Day
after receipt by Lender of such items in Lender's account located in the
Dominion Account.
2.2 Facility Fees. Borrower shall pay to Lender (i) a closing fee of
$245,000, which shall be fully earned and nonrefundable on the Closing Date and
shall be paid concurrently with the initial Loan hereunder, and (ii) an
Administrative Fee of $25,000 per annum. The Administrative Fee shall be payable
in advance on the Closing Date and on each anniversary of the Closing Date
thereafter or the Business Day immediately following each such anniversary.
2.3 Letter of Credit and LC Guaranty Fees. Borrower shall pay to
Lender, for Letters of Credit and LC Guaranties of standby Letters of Credit, a
letter of credit fee equal to the Applicable Margin or the Revolving Credit
Interest Margin stated in the Pricing Grid, as applicable, that is applicable to
Revolving Credit Loans that are LIBOR Advances on the aggregate face amount of
such Letters of Credit and LC Guaranties outstanding from time to time during
the term of this Agreement, plus all normal and customary charges associated
with the issuance thereof, which fees and charges shall be deemed fully earned
upon issuance of each such Letter of Credit or LC Guaranty, shall be due and
payable on the first Business Day of each month and shall not be subject to
rebate or proration upon the termination of this Agreement for any reason.
2.4 Unused Line Fee. Borrower shall pay to Lender a fee equal to 1/2 of
1% per annum of the average monthly amount by which $6,000,000 exceeds the sum
of the outstanding principal balance of the Revolving Credit Loans plus the LC
Amount. The unused line fee shall be payable monthly in arrears on the first day
of each calendar month hereafter.
2.5 Collection Charges. If items of payment are received by Lender at a
time when there are no Revolving Credit Loans outstanding, such items of payment
shall be subject to a collection charge equal to two (2) days' interest on the
amount thereof at the rate then applicable to Base Rate Advances, which
collection charges shall be payable on the first Business Day of each month.
2.6 Audit and Appraisal Fees. Borrower shall pay to Lender audit and
appraisal fees in accordance with Lender's current schedule of fees in effect
from time to time in connection with audits and appraisals of Borrower's books
and records and such other matters as Lender shall deem appropriate, plus all
out-of-pocket expenses incurred by Lender in connection with such audits and
appraisals. Audit fees shall be payable on the first day of the month following
the date of issuance by Lender of a request for payment thereof to Borrower.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participating
Lender incurs legal or accounting
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expenses or any other costs or out-of-pocket expenses in connection with (i) the
negotiation and preparation of this Agreement or any of the other Loan
Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or any sale or attempted sale of any interest herein to a
Participating Lender; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any of the other Loan Documents or Borrower's affairs; (iv)
any attempt to enforce any rights of Lender or any Participating Lender against
Borrower or any other Person which may be obligated to Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors; or (v) any attempt to inspect, verify, protect, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the
Collateral; then all such legal and accounting expenses, other costs and out of
pocket expenses of Lender shall be charged to Borrower. All amounts chargeable
to Borrower under this Section 2.7 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Lender or to such Participating
Lender, as the case may be, and shall bear interest from the date such demand is
made until paid in full at the rate applicable to Base Rate Advances from time
to time. Borrower shall also reimburse Lender for expenses incurred by Lender in
its administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.
2.8 Bank Charges. Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender or any Participating Lender pays to a bank
or other similar institution (including, without limitation, any fees paid by
Lender to any Participating Lender) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by Lender or
any Participating Lender, of proceeds of loans made by Lender to Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Lender or
any Participating Lender, of any check or item of payment received or delivered
to Lender or any Participating Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings
under the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests. (a) Revolving Loans. A request for a
Revolving Credit Loan shall be made, or shall be deemed to be made, in the
following manner: (i) Borrower may give Lender notice of its intention to
borrow, in which notice Borrower shall specify the amount of the proposed
borrowing and the proposed borrowing date, no later than 11:00 a.m. Eastern
Standard time on the proposed borrowing date (a "Borrowing Notice"), provided,
however, that no such request may be made at a time when there exists a Default
or an Event of Default; and (ii) the becoming due of any amount required to be
paid under this Agreement, whether as interest, fees including attorneys' fees,
or for any other Obligation, shall be deemed irrevocably to be a request for a
Revolving Credit Loan on the due date in the amount required to pay such
interest or other Obligation. As an accommodation to Borrower, Lender may permit
telephonic or electronic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in
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writing not to accept or act upon telephonic or electronic communications from
Borrower, Lender shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Lender's honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Lender by Borrower and Lender shall have no duty to verify the origin of
any such communication or the authority of the person sending it.
(b) Term Loan. Borrower shall notify Lender two (2) Business
Days prior to the Closing Date of its election to obtain a LIBOR Advance or a
Base Rate Advance, and in the case of a LIBOR Advance such notice shall comply,
to the extent necessary, with the terms of Section 3.1.4 below.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes
Lender to disburse the proceeds of each Revolving Credit Loan requested, or
deemed to be requested, pursuant to this subsection 3.1.2 as follows: (i) the
proceeds of each Revolving Credit Loan requested under subsection 3.1.1(i) shall
be disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written notice from Borrower, and in the case of each
subsequent borrowing to the Loan Account; and (ii) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(ii) above shall be
disbursed by Lender by way of direct payment of the relevant interest or other
Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
Borrower's Loan Account hereunder as a Base Rate Advance, a sum sufficient to
pay all interest accrued on the Obligations during the immediately preceding
month and to pay all costs, fees and expenses (including, without limitation,
attorneys' fees) at any time owed by Borrower to Lender hereunder.
3.1.4 LIBOR Advances. Notwithstanding the provisions of
subsection 3.1.1, in the event Borrower desires to obtain a LIBOR Advance,
Borrower shall give Lender an irrevocable Borrowing Notice no later than 11:00
A.M. New York time on the second Business Day prior to the requested borrowing
date specifying (i) Borrower's election to obtain a LIBOR Advance, (ii) the
Interest Period for such LIBOR Advance, (iii) the date of the proposed borrowing
(which shall be a Business Day) and (iv) the amount to be borrowed, which amount
shall be in a minimum principal amount of $1,000,000 and may increase in
integral multiples of $1,000,000. In no event shall Borrower be permitted to
have outstanding at any one time LIBOR Advances with more than three (3)
different Interest Periods.
3.1.5 Conversion of Base Rate Advances. Provided that no
Default has occurred which is then continuing, Borrower may, on any Business
Day, convert any Base Rate Advance into a LIBOR Advance. If Borrower desires to
convert a Base Rate Advance, Borrower shall give Lender not less than two (2)
Business Days' prior written notice (prior to 11:00 A.M. New York time on such
Business Day), specifying the date of such conversion and the amount to be
converted. Each conversion to a LIBOR Advance shall be in a minimum principal
amount of $1,000,000 and may increase in integral multiples of $100,000 in
excess thereof. After giving effect to any conversion of Base Rate Advances to
LIBOR Advances,
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Borrower shall not be permitted to have outstanding at any one time LIBOR
Advances with more than three (3) different Interest Periods.
3.1.6 Continuation of LIBOR Advances. Borrower shall have the
right on two (2) Business Days' prior irrevocable written notice given to Lender
by Borrower (prior to 11:00 A.M. New York time on such Business Day), subject to
the provisions hereof, to continue any LIBOR Advance into a subsequent Interest
Period of the same or a different permitted duration, in each case subject to
the satisfaction of the following conditions:
(i) in the case of a continuation of less than all
LIBOR Advances, the LIBOR Advances continued shall
each be in a minimum principal amount of $1,000,000
and may increase in integral multiples of $100,000;
and
(ii) no LIBOR Advance (or portion thereof) may be
continued as a LIBOR Advance if a Default has
occurred which is then continuing or if, after giving
effect to such continuation, Borrower shall have
outstanding more than three (3) separate LIBOR
Advances in the aggregate.
If Borrower shall fail to give timely notice of its election to
continue any LIBOR Advance or portion thereof as provided above, or if such
continuation shall not be permitted, such LIBOR Advance or portion thereof,
unless such LIBOR Advance shall be repaid, shall automatically be converted into
a Base Rate Advance at the end of the Interest Period then in effect with
respect to such LIBOR Advance.
3.1.7 Inability to Make LIBOR Advances. 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 Lender (for purposes of this subsection 3.1.7, the term
"Lender" shall include the office or branch where Lender, Bank or any
corporation or bank then controlling any Lender makes or maintains any LIBOR
Advances) to make or maintain its LIBOR Advances, or if with respect to any
Interest Period, Lender is unable to determine the LIBOR Rate relating thereto,
or adverse or unusual conditions in or changes in applicable law relating to the
London interbank market make it, in the reasonable judgment of Lender,
impracticable to fund therein any of the LIBOR Advances or make the projected
LIBOR Rate unreflective of the actual costs of funds therefor to Lender, the
obligation of Lender to make LIBOR Advances hereunder shall forthwith be
suspended during the pendency of such circumstances and Borrower shall, if any
affected LIBOR Advances are then outstanding, promptly upon request from Lender,
convert such affected LIBOR Advances into Base Rate Advances.
3.2 Payments. Except where evidenced by Notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.2 (in which event the conflicting
provisions of said Notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
3.2.1 Repayment of Principal. (a) Principal payable on account
of Revolving Credit Loans shall be payable by Borrower to Lender immediately
upon the earliest of (i) the receipt by Lender or Borrower of any proceeds of
any of the Collateral, to the extent of said
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proceeds, (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the Obligations, (iii)
termination of this Agreement pursuant to Section 4.2 hereof; or (iv) the
Termination Date. Each payment (including principal prepayment) by Borrower on
account of principal of the Revolving Credit Loans shall be applied first to
Base Rate Advances, then to LIBOR Advances. Any Revolving Loans repaid hereunder
can be reborrowed. If an Overadvance shall exist at any time, Borrower shall, on
demand, repay the Overadvance.
(b) Principal payable on account of the Term Loan shall be
payable in equal quarterly installments during the Original Term. Payments shall
be due on the first Business Day after the end of the preceding quarter,
commencing April 1, 2001. The amount of principal payable on account of the Term
Loan per year shall be paid as follows:
Quarter Ended March 31, 2001 $ 187,500
Quarter Ended June 30, 2001 $ 187,500
Quarter Ended September 30, 2001 $ 187,500
Quarter Ended December 31, 2001 $ 187,500
Quarter Ended March 31, 2002 $ 250,000
Quarter Ended June 30, 2002 $ 250,000
Quarter Ended September 30, 2002 $ 250,000
Quarter Ended December 31, 2002 $ 250,000
Quarter Ended March 31, 2003 $ 250,000
Quarter Ended June 30, 2003 $ 250,000
Quarter Ended September 30, 2003 $ 250,000
Quarter Ended December 31, 2003 $ 250,000
Quarter Ended March 31, 2004 $ 625,000
Quarter Ended June 30, 2004 $ 625,000
Quarter Ended September 30, 2004 $ 625,000
Quarter Ended December 31, 2004 $ 625,000
Quarter Ended March 31, 2005 $ 687,500
Quarter Ended June 30, 2005 $ 687,500
Quarter Ended September 30, 2005 $ 687,500
Quarter Ended December 31, 2005 $ 687,500
Notwithstanding anything to the contrary stated in this Agreement (i), on the
Termination Date the Borrower shall repay any and all Loans then outstanding
together with all interest accrued and unpaid thereon and any and all fees and
expenses due to the Lender, and (ii) upon an Event of Default or the termination
of this Agreement pursuant to Section 4.2 the aggregate principal amount of the
Loans then outstanding, together with all unpaid interest and expenses shall be
immediately due and payable.
3.2.2 Payment of Interest. Interest accrued on the Loans shall
be due on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4.2 hereof.
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3.2.3 Deductions from Loan Account. All amounts due hereunder,
including without limitation, principal, interest, costs, fees and charges
payable pursuant to this Agreement shall be payable by Borrower as and when
provided in Sections 2 or 3 hereof, to Lender or to any other Person designated
by Lender in writing and notwithstanding anything to the contrary contained
herein, Borrower hereby authorizes the Lender to withdraw payment when due from
the Loan Account.
3.2.4 Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to Lender
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.2.5 Prepayment of LIBOR Advances. Borrower may prepay a
LIBOR Advance only upon at least three (3) Business Days prior written notice to
Lender (which notice shall be irrevocable), and any such prepayment shall occur
only on the last day of the Interest Period for such LIBOR Advance. Borrower
shall pay to Lender, upon request of Lender, such amount or amounts as shall be
sufficient (in the reasonable opinion of Lender) to compensate it for any loss,
cost, or expense incurred as a result of: (i) any payment of a LIBOR Advance on
a date other than the last day of the Interest Period for such Loan; (ii) any
failure by Borrower to borrow a LIBOR Advance on the date specified by
Borrower's written notice; or (iii) any failure by Borrower to pay a LIBOR
Advance on the date for payment specified in Borrower's written notice. Without
limiting the foregoing, Borrower shall pay to Lender a "yield maintenance fee"
in an amount computed as follows: the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the Interest Period chosen pursuant to the LIBOR
Advance as to which the prepayment is made, shall be subtracted from the LIBOR
Rate in effect at the time of prepayment. If the result is zero or a negative
number, there shall be no yield maintenance fee. If the result is a positive
number, then the resulting percentage shall be multiplied by the amount of the
principal balance being prepaid. The resulting amount shall be divided by 360
and multiplied by the number of days remaining in the Interest Period chosen
pursuant to the LIBOR Advance as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days remaining in the
term chosen pursuant to the LIBOR Advance as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to Lender upon the
payment of a LIBOR Advance. If by reason of an Event of Default, Lender elects
to declare the Obligations to be immediately due and payable, then any yield
maintenance fee with respect to a LIBOR Advance shall become due and payable in
the same manner as though the Borrower had exercised such right of prepayment.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided in subsection 6.4.2 hereof, if Borrower sells any
of the Equipment or real Property, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrower shall pay to Lender, unless
otherwise agreed by Lender, as and when received by Borrower and as a mandatory
prepayment of the Term Loan, a sum equal to the entire proceeds (including
insurance payments) received by Borrower from such sale,
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loss, destruction or condemnation, less Borrower's out-of-pocket expenses, and
any taxes, incurred in connection with such sale, loss, destruction or
condemnation; provided, however, that Borrower may replace any such Equipment,
real Property, or lost, destroyed or condemned Collateral out of proceeds
therefor to the extent that such proceeds do not exceed an aggregate of $100,000
in any one year and an aggregate of $500,000 during the Term.
3.3.2 Excess Cash Flow Recapture. Borrower shall prepay the
Term Loan in amounts equal to 50% of Borrower's Excess Cash Flow with respect to
each fiscal year of Borrower during the Term hereof, such prepayments to be made
within five (5) Business Days following the due date for delivery by Borrower to
Lender of the annual financial statements required by subsection 8.1.3(i) hereof
and each such prepayment shall be applied to the installments of principal due
under the Term Loan in the inverse order of their maturities until payment
thereof in full.
3.4 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, Eastern Standard time, on any Business Day
shall be deemed received on that Business Day. All items of payment received
after 12:00 noon, Eastern Standard time, on any Business Day shall be deemed
received on the following Business Day. Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Lender from or on behalf of Borrower, and Borrower
does hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and collections received at
any time or times hereafter by Lender or its agent against the Obligations as
follows:
(i) first, to pay any fees, charges, expenses,
reimbursements or indemnities then due to Lender;
(ii) second, to pay interest due on Revolving Credit
Loans;
(iii) third, to pay interest due on the Term Loan;
(iv) fourth, to pay or prepay principal of the
Revolving Credit Loans;
(v) fifth, to pay or prepay principal of the Term
Loan. If a scheduled payment is due to be made on the
Term Loan pursuant to Section 3.2.1(b), then any
amounts received hereunder shall first be applied to
that payment and then shall be applied to the
installments of principal due under the Term Loan in
the inverse order of their maturities until payment
thereof in full.
If as the result of collections of Accounts as authorized by subsection
6.2.6 hereof a credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrower, but shall be available to
Borrower at any time or times for so long as no Default or Event of Default has
occurred and is continuing. Such credit balance shall not be applied or be
deemed to have been applied as a prepayment of the Term Loan, except that Lender
may, at its option, offset such credit balance against any of the Obligations
upon and after the occurrence of an Event of Default.
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3.5 All Loans to Constitute One Obligation. The Loans shall constitute
one general Obligation of Borrower, and shall be secured by Lender's Lien upon
all of the Collateral pursuant to the terms of this Agreement and the other
Security Documents.
3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly with
a statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within 30 days of the date each accounting is mailed to Borrower. Such notice
shall only be deemed an objection to those items specifically objected to
therein.
3.8 Increased Costs. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of Lender therewith, shall:
(i) (1) subject Lender to any tax with respect to
this Agreement (other than (a) any tax based on or
measured by net income or otherwise in the nature of
a net income tax, including, without limitation, any
franchise tax or any similar tax based on capital,
net worth or comparable basis for measurement and (b)
any tax collected by a withholding on payments and
which neither is computed by reference to the net
income of the payee nor is in the nature of an
advance collection of a tax based on or measured by
the net income of the payee) or (2) change the basis
of taxation of payments to Lender of principal, fees,
interest or any other amount payable hereunder or
under any Loan Documents (other than in respect of
(a) any tax based on or measured by net income or
otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or
any similar tax based on capital, net worth or
comparable basis for measurement and (b) any tax
collected by a withholding on payments and which
neither is computed by reference to the net income of
the payee nor is in the nature of an advance
collection of a tax based on or measured by the net
income of the payee);
(ii) impose, modify or hold applicable any reserve
(except any reserve taken into account in the
determination of the applicable LIBOR), 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
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extended by, any office of Lender, including (without
limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or
(iii) impose on Lender or the London interbank market
any other condition with respect to any Loan
Document;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining Loans hereunder by an amount that 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 Loans by an amount that Lender
deems to be material, then, in any such case, Borrower shall pay Lender, upon
demand and certification not later than sixty (60) days following its receipt of
notice of the imposition of such increased costs, such additional amount as will
compensate Lender for such additional cost or such reduction, as the case may
be, to the extent Lender has not otherwise been compensated, with respect to a
particular Loan, for such increased cost as a result of an increase in the Base
Rate or the LIBOR Rate. An officer of Lender shall determine the amount of such
additional cost or reduced amount using reasonable averaging and attribution
methods and shall certify the amount of such additional cost or reduced amount
to Borrower, which certification shall include a written explanation of such
additional cost or reduction to Borrower. Such certification shall be conclusive
absent manifest error. If Lender claims any additional cost or reduced amount
pursuant to this Section 3.8, then Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
lending office or to file any certificate or document reasonably requested by
Borrower if the making of such designation or filing would avoid the need for,
or reduce the amount of, any such additional cost or reduced amount and would
not, in the sole discretion of Lender, be otherwise disadvantageous to Lender.
3.9 Basis for Determining Interest Rate Inadequate or Unfair. In the
event that Lender shall have determined that:
(i) reasonable means do not exist for ascertaining
the LIBOR Rate for any Interest Period; or
(ii) Dollar deposits in the relevant amount and for
the relevant maturity are not available in the London
interbank market with respect to a proposed LIBOR
Advance, or a proposed conversion of a Base Rate
Advance into a LIBOR Advance;
Lender shall give Borrower prompt written, telephonic or electronic notice of
the determination of such effect. If such notice is given, (i) any such
requested LIBOR Advance shall be made as a Base Rate Advance, unless Borrower
shall notify Lender no later than 10:00 A.M. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing that the request for
such borrowing shall be canceled or made as an unaffected type of LIBOR Advance,
and (ii) any Base Rate Advance which was to have been converted to an affected
type of LIBOR Advance shall be continued as or converted into a Base Rate
Advance, or, if Borrower shall notify Lender, 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 LIBOR Advance.
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SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making Loans
to Borrower upon or after the occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period of five years from the date
hereof, through and including January __, 2006 (the "Original Term"), unless
this Agreement is automatically renewed for one-year periods thereafter (the
"Renewal Terms"), or unless terminated as provided in Section 4.2 hereof (such
final date being the "Termination Date").
4.2 Termination.
4.2.1 Termination by Lender. Upon at least 30 days prior
written notice to Borrower, Lender may terminate this Agreement as of the last
day of the Original Term or the then current Renewal Term and Lender may
terminate this Agreement without notice upon or after the occurrence of an Event
of Default.
4.2.2 Termination by Borrower. Upon at least 30 days prior
written notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Lender's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Lender otherwise agrees in writing, and Lender shall have no
obligation to make any Loans or issue or procure any Letters of Credit or LC
Guaranties on or after the date stated in such termination notice. Borrower may
elect to terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of
termination of this Agreement, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to 3%
of the Total Credit Facility if termination occurs during the first twelve-month
period of the Term, 1% of the Total Credit Facility if termination occurs after
the first anniversary of the Closing Date but before the third anniversary of
the Closing Date; thereafter no termination charge shall be payable; provided,
that (i) if at any time during the period commencing on the Closing Date through
and including January __, 2004 the Loans are refinanced by the Borrower or
Guarantor with the Lender, the Lender may in its sole discretion waive any or
all of such fees in whole or in part or (ii) if such refinancing occurs in
connection with an acquisition by the Borrower of another Person and Lender in
its sole discretion determines that it shall not participate in such
refinancing, fifty percent (50%) only of the above fees shall be paid to Lender.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
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termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Lender may incur as a result of dishonored checks
or other items of payment received by Lender from Borrower or any Account Debtor
and applied to the Obligations, Lender shall, at its option, (i) have received a
written agreement, executed by Borrower and by any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Lender from any such loss or damage; or (ii) have retained such
monetary reserves and Liens on the Collateral for such period of time as Lender,
in its reasonable discretion, may deem necessary to protect Lender from any such
loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of Borrower's assets, including all of the following
Property and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Investment Property;
(vi) All monies and other Property of any kind now or
at any time or times hereafter in the possession or
under the control of Lender or a bailee or Affiliate
of Lender;
(vii) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds
of (i) through (vi) above, including, without
limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the
Collateral; and
(viii) All books and records (including, without
limitation, customer lists, credit files, computer
programs, print-outs, and other computer materials
and records) of Borrower pertaining to any of (i)
through (vii) above.
5.2 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take
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such other action as may be required to perfect or to continue the perfection of
Lender's Lien upon the Collateral. Unless prohibited by applicable law, Borrower
hereby authorizes Lender to execute and file any such financing statement on
Borrower's behalf. Lender shall use commercially reasonable efforts to provide
Borrower a copy of any such financing statement so executed and filed; provided
that the failure of Lender to provide such copy shall not be deemed a breach of
Lender's obligations under this Agreement. The parties agree that a photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Lender any and all documents, instruments and agreements
deemed necessary by Lender to give effect to or carry out the terms or intent of
the Loan Documents.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by Borrower
and its Subsidiaries at one or more of the business locations set forth in
Exhibit 7.1.6 hereto and shall not, without the prior written approval of
Lender, be moved therefrom except, prior to an Event of Default and Lender's
acceleration of the maturity of the Obligations in consequence thereof, for (i)
sales of Inventory in the ordinary course of business; and (ii) removals in
connection with dispositions of Equipment that are authorized by subsection
6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain and pay
for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Borrower shall deliver the originals of such policies to
Lender with satisfactory lender's loss payable endorsements, naming Lender as
primary loss payee, as its interests may appear, assignee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Lender in the event of cancellation of the policy for any reason whatsoever and
a clause specifying that the interest of Lender shall not be impaired or
invalidated by any act or neglect of Borrower or the owner of the Property or by
the occupation of the premises for purposes more hazardous than are permitted by
said policy. If Borrower fails to provide and pay for such insurance, Lender
may, at its option, but shall not be required to, procure the same and charge
Borrower therefor. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care
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in the custody thereof while any Collateral is in Lender's actual possession) or
for any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the twentieth day of each month from and
after the date hereof, Borrower shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $500,000 become
uncollectable, Borrower shall immediately notify Lender of such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $25,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence and
continuation of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor; provided, however that
Lender shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an
Event of Default has occurred, any of Lender's officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Lender, any
designee of Lender or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, electronic
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communication or otherwise. Borrower shall cooperate fully with Lender in an
effort to facilitate and promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain
a Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited in the Dominion Account shall immediately become the property of
Lender and Borrower shall obtain the agreement by such banks in favor of Lender
to waive any offset rights against the funds so deposited. Lender assumes no
responsibility for such lockbox arrangement, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of its Accounts for Lender. All remittances received by Borrower on
account of Accounts, together with the proceeds of any other Collateral, shall
be held as Lender's property by Borrower as trustee of an express trust for
Lender's benefit and Borrower shall immediately deposit same in kind in the
Dominion Account. Lender retains the right at all times after the occurrence and
continuation of a Default or an Event of Default to notify Account Debtors that
Accounts have been assigned to Lender and to collect Accounts directly in its
own name and to charge the collection costs and expenses, including attorneys'
fees to Borrower.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory. Borrower shall to furnish Lender
Inventory reports in form and detail satisfactory to Lender at such times as
Lender may request, but at least once each month, not later than the twentieth
day of such month. Borrower shall conduct a physical inventory no less
frequently than annually and shall provide to Lender a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Lender shall request.
6.3.2 Returns of Inventory. If at any time or times hereafter
any Account Debtor returns any Inventory to Borrower the shipment of which
generated an Account on which such Account Debtor is obligated in excess of
$50,000, Borrower shall immediately notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.6.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often
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if requested by Lender. Immediately on request therefor by Lender, Borrower
shall deliver to Lender any and all evidence of ownership, if any, of any of the
Equipment.
6.4.2 Dispositions of Equipment. Borrower will not sell, lease
or otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $200,000 or less, provided that all proceeds thereof, less
Borrower's out-of-pocket expenses, and any taxes, incurred in connection with
such sale, lease or other disposition or transfer, are remitted to Lender for
application to the Loans, or (ii) replacements of Equipment, which, in the
aggregate during any consecutive twelve-month period, has a fair market value or
book value, whichever is less, of $200,000 or less, and that is substantially
worn, damaged or obsolete with Equipment of like kind, function and value,
provided that the replacement Equipment shall be acquired prior to, concurrently
with, or within 90 days after, any disposition of the Equipment that is to be
replaced, the replacement Equipment shall be free and clear of Liens other than
Permitted Liens that are not Purchase Money Liens, and Borrower shall have given
Lender at least 5 days prior written notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Base Rate Advances from time to
time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter
into this Agreement and to make Loans hereunder, Borrower, for itself and its
Subsidiary, and for Guarantor, as applicable, warrants, represents and covenants
to Lender that:
7.1.1 Organization and Qualification. Each of Borrower and its
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiary is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions where
the character of its Properties or the nature of its activities make such
qualification necessary and in which the failure of Borrower or its Subsidiary
to be so qualified would have a material adverse effect on the financial
condition, business or Properties of Borrower or its Subsidiary.
7.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiary is duly authorized and empowered to enter into, execute, deliver and
perform each of the Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other Loan Documents
have been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of the shareholders of Borrower or its
Subsidiary; (ii) contravene Borrower's or its Subsidiary's charter, articles or
certificate of incorporation or by-laws; (iii) violate, or cause Borrower or its
Subsidiary to be in
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default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to Borrower or its Subsidiary; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or its Subsidiary is a
party or by which it or its Properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than Permitted
Liens) upon or with respect to any of the Properties now owned or hereafter
acquired by Borrower or its Subsidiary.
7.1.3 Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents as applicable when delivered under this
Agreement will be, a legal, valid and binding obligation of Borrower enforceable
against it in accordance with its respective terms.
7.1.4 Capital Structure. The Borrower has one Subsidiary.
Exhibit 7.1.4 hereto states (i) the correct name of each Subsidiary of Guarantor
and Borrower, its jurisdiction of incorporation and the percentage of its Voting
Stock owned by Guarantor and/or Borrower, (ii) the name of each of Guarantor and
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Guarantor as of the date hereof and the number, nature and holder of all
outstanding Securities of Borrower and each Subsidiary of Borrower and (iv) the
number of authorized, issued and treasury shares of Guarantor, Borrower and each
Subsidiary of Borrower. Each of Guarantor and Borrower has good title to all of
the shares it purports to own of the stock of each of its Subsidiaries, free and
clear in each case of any Lien other than Permitted Liens. All such shares have
been duly issued and are fully paid and non-assessable. There are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Borrower or any of its Subsidiaries. Except as set forth on Exhibit
7.1.4 and in Guarantor's filings with the Securities and Exchange Commission, to
the knowledge of Borrower, as of the date hereof, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Guarantor or any of its Subsidiaries. There are no outstanding
agreements or instruments binding upon any of Borrower's shareholders relating
to the ownership of its shares of capital stock. Except as set forth on Exhibit
7.1.4 and in Guarantor's filings with the Securities and Exchange Commission, to
the knowledge of Borrower, as of the date hereof, there are no outstanding
agreements or instruments binding upon any of Guarantor's shareholders relating
to the ownership of its shares of capital stock.
7.1.5 Corporate Names. Neither Borrower nor its Subsidiary has
been known as or used any corporate, fictitious or trade names, except those
listed on Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5, neither
Borrower nor its Subsidiary has been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each of
Borrower's and its Subsidiary's chief executive offices and other places of
business are as listed on Exhibit 7.1.6 hereto. During the preceding one-year
period, neither Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process other than as listed on Exhibit
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7.1.6. Except as shown on Exhibit 7.1.6, no Inventory is stored with a bailee,
warehouseman or similar party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each of Borrower
and its Subsidiary has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Borrower has
paid or discharged all lawful claims which, if unpaid, might become a Lien
against any of Borrower's Properties that is not a Permitted Lien. The Liens
granted to Lender under Section 5 hereof are secured first priority Liens,
subject only to Permitted Liens.
7.1.8 Accounts. Lender may rely on all statements and
representations made by Borrower with respect to any Account or Accounts. Unless
otherwise indicated in writing to Lender, with respect to each Account:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a
judgment;
(ii) It arises out of a bona fide sale for delivery
of goods or rendition of services by Borrower in the
ordinary course of its business and in accordance
with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and
forming a part of the contract between Borrower and
the Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or
rendition of services, a copy of which has been
furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not, and will not, by voluntary act or
omission of Borrower, be in the future, subject to
any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except
for disputes resulting in returned goods where the
amount in controversy is deemed by Lender to be
immaterial, and each such Account is absolutely owing
to Borrower and, except for the provision of services
by Borrower, is not contingent in any respect or for
any reason;
(v) Borrower has made no agreement with any Account
Debtor covering an Account of more than $10,000 for
any extension, compromise, settlement or modification
of any such Account or any deduction therefrom,
except as set forth on Exhibit 7.1.8 hereto or except
for discounts or allowances which are granted by
Borrower in the ordinary course of its business for
prompt payment and which are reflected in the
calculation of the net amount of each respective
invoice related thereto and are reflected in the
Schedules of Accounts submitted to Lender pursuant to
subsection 6.2.1 hereof;
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(vi) There are no facts, events or occurrences known
to Borrower which in any way impair the validity or
enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the
invoice and statements delivered to Lender with
respect thereto;
(vii) To Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the
time any contract or other document giving rise to
the Account was executed and (2) except where
adequate reserves have been made by Borrower, such
Account Debtor is Solvent; and
(viii) To Borrower's knowledge, there are no
proceedings or actions which are threatened or
pending against any Account Debtor thereunder which
might result in any material adverse change in such
Account Debtor's financial condition or the
collectability of such Account.
7.1.9 Equipment. The Equipment of Borrower is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved, reasonable wear and tear excepted.
Borrower will not permit any of the Equipment to become affixed to any real
Property leased to Borrower so that an interest arises therein under the real
estate laws of the applicable jurisdiction unless the landlord of such real
Property has executed a landlord waiver or leasehold mortgage in favor of and in
form acceptable to Lender, and Borrower will not permit any of the Equipment to
become an accession to any personal Property other than Equipment that is
subject to first priority (except for Permitted Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year.
(a) Borrower. The Consolidated financial statements of
Borrower and such other Persons described therein (including the accounts of
Borrower's Subsidiary for the respective periods during which a Subsidiary
relationship existed) as of October 31, 2000, as delivered to Lender, have been
prepared in accordance with GAAP, applied on a basis consistent with Borrower's
past practices, except for normal year-end adjustments and the absence of
footnotes, and present fairly the financial positions of Borrower and such
Persons at such dates and the results of Borrower's operations for such periods.
Since October 31, 2000, there has been no Material Adverse Effect and no
material change in the aggregate value of Equipment and real Property owned by
Borrower or such other Persons, except changes in the ordinary course of
business. The fiscal year of Borrower and its Subsidiary ends on December 31 of
each year.
(b) Guarantor. The Consolidated balance sheets of Guarantor
and such other Persons described therein (including the accounts of all
Subsidiaries of Guarantor for the respective periods during which a Subsidiary
relationship existed) as of September 30, 2000, and the related statements of
income, changes in stockholder's equity, changes in financial position and
statements of cash flows for the periods ended on such dates, have been prepared
in accordance with GAAP, and present fairly the financial positions of Guarantor
and such Persons at such dates and the results of Guarantor's operations for
such periods. Since September 30,
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2000, there has been no Material Adverse Effect. The fiscal year of Guarantor
and its Subsidiaries ends on December 31 of each year.
7.1.11 Full Disclosure. The financial statements referred to
in subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially affects adversely or, so far as Borrower can
now reasonably foresee, will materially affect adversely the Properties,
business, prospects, profits or condition (financial or otherwise) of Borrower
or any of its Subsidiaries or the ability of Borrower or its Subsidiaries to
perform this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each of Borrower,
Guarantor and their respective Subsidiaries other than ▇▇▇▇▇▇ Brothers
International, S.A. is now and, after giving effect to the Loans, including the
Term Loan made on the Closing Date, the Letters of Credit and LC Guaranties to
be issued hereunder and the obligations under the Guaranty to be delivered in
connection herewith, at all times will be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person.
7.1.14 Taxes. Borrower's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. The federal tax identification numbers of Guarantor and Borrower's
Subsidiary are shown on Exhibit 7.1.14 hereto. Each of Borrower and its
Subsidiary has filed all federal, state and local tax returns and other reports
it is required by law to file and has paid, or made provision for the payment
of, all taxes, assessments, fees, levies and other governmental charges upon it,
its income and Properties as and when such taxes, assessments, fees, levies and
charges that are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings and Borrower
maintains reasonable reserves on its books therefor. The provision for taxes on
the books of Borrower and its Subsidiary are adequate for all years not closed
by applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of
Borrower and its Subsidiary owns or possesses all the patents, trademarks,
service marks, trade names, copyrights and licenses necessary for the present
and planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit 7.1.16
hereto.
7.1.17 Governmental Consents. Each of Borrower and its
Subsidiary has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as
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now owned or leased by it, except where the failure to have or be in good
standing with respect to all such governmental consents, approvals, licenses,
authorizations, permits, certificates, inspections and franchises could not
reasonably be expected to have a Material Adverse Effect on Borrower and its
Subsidiary, taken as a whole.
7.1.18 Compliance with Laws. Each of Borrower and its
Subsidiary has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all federal, state and local laws, rules and regulations applicable to Borrower
or such Subsidiary, as applicable, its Properties or the conduct of its
business, and there have been no citations, notices or orders of noncompliance
issued to Borrower or its Subsidiary under any such law, rule or regulation,
except for those citations, notices or orders of noncompliance which could not
reasonably be expected to have a Material Adverse Effect on Borrower and its
Subsidiary, taken as a whole. Each of Borrower and its Subsidiary has
established and maintains an adequate monitoring system to insure that it
remains in compliance in all material respects with all federal, state and local
laws, rules and regulations applicable to it. No Inventory has been produced in
violation of the Fair Labor Standards Act (29 U.S.C. Section 201 et seq.), as
amended.
7.1.19 Restrictions. Neither Borrower nor its Subsidiary is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which materially and adversely affects its business or the use or
ownership of any of its Properties. Neither Borrower nor its Subsidiary is a
party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto,
none of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by Borrower or its Subsidiary, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit 7.1.20
hereto, there are no actions, suits, proceedings or investigations pending, or
to the knowledge of Borrower, threatened, against or affecting Borrower or its
Subsidiary, or the business, operations, Properties, prospects, profits or
condition of Borrower or its Subsidiary that if adversely determined could
reasonably be expected, individually or in the aggregate to have a Material
Adverse Effect. Neither Borrower nor its Subsidiary is in default with respect
to any order, writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor its Subsidiary is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default in the payment
of any Indebtedness to any Person for Money Borrowed, except for defaults in the
payment of any Indebtedness for Money Borrowed not in excess of $10,000.
7.1.22 Leases. Exhibit 7.1.22(a) hereto is a complete listing
of all capitalized leases of Borrower and its Subsidiary and Exhibit 7.1.22(b)
hereto is a complete listing of all operating leases of Borrower and its
Subsidiary. Each of Borrower and its Subsidiary is in full compliance with all
of the terms of each of its respective capitalized and operating leases.
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7.1.23 Pension Plans. Except as disclosed on Exhibit 7.1.23
hereto, neither Borrower nor its Subsidiary has any Plan. Each of Borrower and
its Subsidiary is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or its Subsidiary exists in connection with any Plan.
Neither Borrower nor its Subsidiary has any withdrawal liability in connection
with a Multiemployer Plan.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or its Subsidiary and any customer or
any group of customers whose purchases individually or in the aggregate are
material to the business of Borrower and its Subsidiary, taken as a whole, or
with any material supplier, and, to the knowledge of Borrower, there exists no
present condition or state of facts or circumstances which would materially
affect adversely Borrower and its Subsidiary, taken as a whole, or prevent
Borrower or its Subsidiary from conducting such business after the consummation
of the transaction contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Neither Borrower nor its Subsidiary is
a party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other organization
of Borrower's or its Subsidiary's employees, or threats of strikes, work
stoppages or any asserted pending demands for collective bargaining by any union
or organization.
7.1.26 Acquisition. No default has occurred under any of the
Purchase Documents.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement shall be continuous in
nature and shall remain accurate, complete and not misleading at all times
during the term of this Agreement, except (i) to the extent such representations
and warranties relate to an earlier date, (ii) to the extent the information
contained in any exhibit attached hereto is updated from time to time and such
information so updated would not otherwise cause or result in a Default or an
Event of Default under this Agreement, (iii) for changes in the nature of
Borrower's or its Subsidiary's business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or (iv) for such
changes are expressly permitted by this Agreement. Except as set forth in the
preceding sentence, each loan request made pursuant to subsection 3.1.1 hereof
shall constitute Borrower's reaffirmation, as of the date of each such loan
request, of each representation, warranty or other statement made or furnished
to Lender by or on behalf of Borrower, any Subsidiary of Borrower, or Guarantor
in this Agreement, any of the other Loan Documents, or any instrument,
certificate or financial statement furnished in compliance with or in reference
thereto.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
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SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested, to visit and
inspect the Properties of Borrower and its Subsidiary, inspect, audit and make
extracts from its books and records, and discuss with its officers, its
employees and its independent accountants, Borrower's and its Subsidiary's
business, assets, liabilities, financial condition, business prospects and
results of operations.
8.1.2 Notices. Promptly notify Lender in writing of the
occurrence of any event or the existence of any fact which (i) renders any
representation or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading or (ii) gives rise to a Material Adverse
Effect of Borrower or Guarantor.
8.1.3 Financial Statements and Reports. Keep, and cause each
Subsidiary to keep, adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP
applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein and such change is disclosed to Lender and is
consistent with GAAP):
(i) upon their completion, unaudited internally
prepared financial statements of Borrower as of the
end of each fiscal year;
(ii) not later than 90 days after the close of each
fiscal year of Borrower, (a) unqualified audited
financial statements of Borrower and any Subsidiary
as of the end of such year, on a Consolidated basis,
certified by a firm of independent certified public
accountants of recognized standing selected by
Borrower but acceptable to Lender (except for a
qualification for a change in accounting principles
with which the accountant concurs) and (b)
consolidating worksheets prepared by Borrower and
used by such accountants in preparing such audited
financial statements;
(iii) no later than 45 days after the end of each of
the first three fiscal quarters of Borrower,
unaudited quarterly financial statements of Borrower
and any Subsidiary as of the end of such quarter,
certified by the chief financial officer of Borrower
as prepared in accordance with GAAP and fairly
presenting the Consolidated and consolidating
financial position and results of operations of
Borrower and any Subsidiary for such quarter subject
only to changes from audit and year-end adjustments
and except that such statements need not contain
notes;
(iv) not later than 30 days after the end of each
month hereafter, including the last month of
Borrower's fiscal year, unaudited interim
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financial statements of Borrower and any Subsidiary
as of the end of such month and of the portion of
Borrower's financial year then elapsed, on a
Consolidated and consolidating basis, certified by
the chief financial officer of Borrower as prepared
in accordance with GAAP and fairly presenting the
Consolidated and consolidating financial position and
results of operations of Borrower and any Subsidiary
for such month and period subject only to changes
from audit and year-end adjustments and except that
such statements need not contain notes;
(v) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements,
financial statements or reports which Borrower has
made available to its shareholders and copies of any
regular, periodic and special reports or registration
statements which Borrower files with the Securities
and Exchange Commission or any governmental authority
which may be substituted therefor, or any national
securities exchange;
(vi) within 20 days after the end of each month, a
Borrowing Base Certificate calculated as of the end
of that month that is acceptable to the Lender in its
sole discretion;
(vii) promptly after the filing thereof, copies of
any annual report to be filed with ERISA in
connection with each Plan;
(viii) not later than 20 days after the end of each
month, a copy of the Backlog Report; and
(ix) such other data and information (financial and
otherwise) as Lender, from time to time, may
reasonably request, bearing upon or related to the
Collateral or Borrower's and its Subsidiary's
financial condition or results of operations.
Concurrently with the delivery of the financial statements described in clause
(ii) of this subsection 8.1.3, Borrower shall forward to Lender a copy of the
accountants' letter to Borrower's management that is prepared in connection with
such financial statements and also shall cause to be prepared and shall furnish
to Lender a certificate of the aforesaid certified public accountants certifying
to Lender that, based upon their examination of the financial statements of
Borrower and its Subsidiary performed in connection with their examination of
said financial statements, they are not aware of any Default or Event of
Default, or, if they are aware of such Default or Event of Default, specifying
the nature thereof, and acknowledging, in a manner satisfactory to Lender, that
they are aware that Lender is relying on such financial statements in making its
decisions with respect to the Loans. Concurrently with the delivery of the
financial statements described in clauses (ii) and (iii) of this subsection
8.1.3, or more frequently if requested by Lender, Borrower shall cause to be
prepared and furnished to Lender a Compliance Certificate in the form of Exhibit
8.1.3 hereto executed by the Chief Financial Officer of Borrower.
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8.1.4 Landlord and Storage Agreements. Provide Lender with
copies of all agreements between Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
8.1.5 Insurance. Maintain (i) insurance coverage on the
Collateral in such amounts, with such insurance carriers, covering such risks,
and otherwise as is acceptable to Lender and in accordance with industry
standards, and (ii) the Key Man Insurance Policies. All policies of insurance
shall name Lender as primary loss payee as its interests may appear.
8.1.6 Projections. No later than 30 days prior to the end of
each fiscal year of Borrower, deliver to Lender Projections of Borrower for the
forthcoming three fiscal years, year by year, and for the forthcoming fiscal
year, month by month.
8.1.7 Hedging Agreements. Within ten (10) days of the Closing
Date Borrower shall obtain and thereafter maintain in effect until the
Termination Date, one or more interest rate cap agreements, to which Borrower is
a party and Lender, the Bank or any Affiliate is a counterparty, with respect to
the Term Loan, in an aggregate principal amount of not less than fifty percent
(50%) of the Term Loan, each such interest rate cap agreement to be in the form
and substance satisfactory to Lender.
8.1.8 Loan Account. Maintain the Loan Account, the Dominion
Account and the Restricted Payments Account. Unless agreed in writing with
Lender, Borrower shall have no other bank accounts with any other financial
institution; provided, however, that Borrower may have certificates of deposit
with other banks so long as (a) such certificates of deposit are pledged to
Lender and (b) the aggregate amount of all such certificates of deposit shall
not exceed $500,000.
8.1.9 Spanish Subsidiary. Terminate the operations of and
commence the process to dissolve ▇▇▇▇▇▇ Brothers International, S.A. no later
than 120 days after the Closing Date.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations outstanding, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or
consolidate, or permit its Subsidiary to merge or consolidate, with any Person;
nor acquire, nor permit its Subsidiary to acquire, all or any substantial part
of the Property of any Person.
8.2.2 Loans. Make, or permit its Subsidiary to make, any loans
or other advances of money (other than for salary, travel advances, advances
against commissions and other similar advances in the ordinary course of
business) to any Person.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit its Subsidiary to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Lender;
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(ii) Subordinated Debt existing on the date of this
Agreement;
(iii) Indebtedness of the Subsidiary of Borrower to
Borrower; provided, that the Indebtedness on the
Closing Date of such Subsidiary does not exceed
$990,000 and that no proceeds of the Loans shall be
made available to such Subsidiary, except as
permitted by subsection 8.2.12;
(iv) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed)
which are not aged more than 60 days from billing
date or more than 15 days from the due date, in each
case incurred in the ordinary course of business and
paid within such time period, unless the same are
being actively contested in good faith and by
appropriate and lawful proceedings; and Borrower or
such Subsidiary shall have set aside such reserves,
if any, with respect thereto as are required by GAAP
and deemed adequate by Borrower or such Subsidiary
and its independent accountants;
(v) Obligations to pay Rentals permitted by
subsection 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of
endorsements of checks and other negotiable
instruments for deposit or collection in the ordinary
course of business; and
(viii) Capitalized Lease Obligations not to exceed
$500,000.
(ix) Indebtedness not included in paragraphs (i)
through (vii) above which does not exceed at any
time, in the aggregate, the sum of $250,000.
8.2.4 Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or any Affiliate of Guarantor, except
in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to Borrower than
would obtain in a comparable arm's length transaction with a Person not an
Affiliate of Borrower or such Subsidiary or an Affiliate of Guarantor, or except
as provided by the Loan Documents.
8.2.5 Limitation on Liens. Create or suffer to exist, or
permit the Subsidiary to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet
due, or being contested in the manner described in
subsection 7.1.14 hereto, but only if in Lender's
judgment
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such Lien does not adversely affect Lender's rights
or the priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of
Borrower's business by operation of law or
regulation, but only if payment in respect of any
such Lien is not at the time required and such Liens
do not, in the aggregate, materially detract from the
value of the Property of Borrower or materially
impair the use thereof in the operation of Borrower's
business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's
Subsidiaries to Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit 8.2.5(vi)
hereto; and
(vii) such other Liens as Lender may hereafter
approve in writing.
8.2.6 Subordinated Debt. Make, or permit the Subsidiary to
make, any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with the terms of this Agreement.
8.2.7 Distributions. Declare or make, or permit any Subsidiary
of Borrower to declare or make, any Distributions.
8.2.8 Capital Expenditures. Make Capital Expenditures
(including, without limitation, by way of capitalized leases, the Capitalized
Lease Obligation for a particular fiscal year) which, in the aggregate, as to
Borrower and its Subsidiaries, exceed $500,000 during any fiscal year of
Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose
of any of, or permit any Subsidiary of Borrower to sell, lease or otherwise
dispose of any of its Properties, including any disposition of Property as part
of a sale and leaseback transaction, to or in favor of any Person, except (i)
sales of Inventory in the ordinary course of business for so long as no Event of
Default has occurred and is continuing hereunder, (ii) a transfer of Property to
Borrower by a Subsidiary of Borrower or (iii) dispositions expressly authorized
by this Agreement; provided, however, that Borrower may sell, lease or otherwise
dispose of any of its Properties so long as (a) Borrower has obtained Lender's
prior written consent to such transaction and (b) all of the proceeds of such
sale, less Borrower's out-of-pocket expenses, and any taxes, incurred in
connection with such sale, lease or other disposition or transfer, are used to
prepay the Term Loan. Such prepayment shall be applied to the installments of
principal due under the Term Loan in the inverse order of their maturities until
payment thereof in full.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries
to issue any additional shares of its capital stock.
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8.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make a sale to any customer
on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any
Subsidiary of Borrower to make or have, any Restricted Investment; provided,
however, that Borrower may invest or lend up to $100,000 in or to ▇▇▇▇▇▇
Brothers International, S.A. solely for the purpose of terminating its
operations pursuant to subsection 8.1.9 hereof as long as ▇▇▇▇▇▇ Brothers
International, S.A. executes a Guaranty Agreement in favor of Lender similar to
the Guaranty Agreement set forth in Exhibit E.
8.2.13 Leases. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of 12 consecutive months
under the lease in question and all other leases under which Borrower or any of
its Subsidiaries is then lessee would exceed $1,000,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
8.2.14 Tax Consolidation. Pay the taxes covered by the Tax
Sharing Agreement among Borrower and Guarantor, substantially in the form of
Exhibit H hereto (the "Tax Sharing Agreement") other than in accordance with the
Tax Sharing Agreement.
8.2.15 Restricted Payments. Make any payments, including any
amount borrowed as a Revolving Credit Loan hereunder, to Guarantor, except that
Borrower may (x) pay, distribute or lend to Guarantor funds to pay (i) the
Management Fees, (ii) the Permitted Seller Notes Amount in accordance with the
terms of the Seller Notes and (iii) the Permitted Seller Notes Principal in
accordance with the terms of the Seller Notes; provided, no amounts shall be
paid to Guarantor until each of the following conditions, as applicable, has
been satisfied:
(a) during fiscal year 2001, Borrower shall pay the
Permitted Seller Notes Amount into the Restricted Payments Account and
Lender shall not release any amounts from the Restricted Payments
Account to be paid to Guarantor until each of the other following
conditions in this subsection 8.2.15(x), as applicable, has been
satisfied. Commencing in fiscal year 2002 and thereafter, Borrower may
pay the Permitted Seller Notes Amount directly to Guarantor so long as
each of the other following conditions in this subsection 8.2.15(x), as
applicable, has been satisfied;
(b) no amounts shall be released from the Restricted
Payments Account or paid to Guarantor, as applicable, for the fiscal
year 2001 until receipt by Lender of the audited financial statements
of Borrower for such fiscal year and receipt and approval by Lender of
Borrower's calculation of the Fully Loaded Fixed Charge Coverage Ratio
for such fiscal year on a pro forma basis, such that after the payment
of the Management Fees and the Permitted Seller Notes Amount for such
fiscal year, the Fully Loaded Fixed Charge Coverage Ratio shall be not
less than 1.30:1;
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(c) for fiscal year 2002 and thereafter, the
Management Fees and the Permitted Seller Notes Amount shall be paid to
Guarantor on a quarterly basis following receipt by Lender of the
unaudited financial statements of Borrower as of the end of each fiscal
quarter;
(d) the Permitted Seller Notes Principal shall not be
paid to Guarantor until receipt by Lender of the audited financial
statements of Borrower for the fiscal year 2002 and receipt and
approval by Lender of Borrower's calculation of the Fully Loaded Fixed
Charge Coverage Ratio for such fiscal year on a pro forma basis, such
that after the payment of the Management Fees, the Permitted Seller
Notes Amount and the Permitted Seller Notes Principal for such fiscal
year, the Fully Loaded Fixed Charge Coverage Ratio shall be not less
than 1.30:1;
(e) the Borrower shall be in compliance with each
term of this Agreement and the other Loan Documents; and
(f) no Event of Default shall have occurred or be
continuing or shall occur as a result of the payment of such amounts;
and (y) following payment pursuant to subsection 3.3.2 hereof, pay, distribute
or lend to Guarantor funds to pay the Earn-Out (as defined in the Purchase
Documents) in an amount equal to the lesser of (i) 25% of Borrower's Excess Cash
Flow and (ii) the amount actually owing under the Earn-Out in that fiscal year
pursuant to the Purchase Documents; provided that no Event of Default shall have
occurred or be continuing or shall occur as a result of the payment of such
amount. Borrower may not make any payment to Guarantor other than as provided in
this subsection 8.2.15 or unless Borrower has obtained Lender's prior written
consent.
8.3 Specific Financial Covenants. During the Term, and thereafter for
so long as there are any Obligations outstanding, Borrower covenants that,
unless otherwise consented to by Lender in writing:
8.3.1 Maximum Total Debt to EBITDA. The Borrower shall
maintain a ratio of Total Debt to EBITDA (for the trailing twelve months ending
on the date of measurement) less than or equal to 2.6 for each fiscal quarter
during the term of this Agreement.
8.3.2 Minimum EBITDA. At the end of each quarter the Borrower
shall have a minimum EBITDA of not less than $1,100,000 for that quarter, except
for the quarter ended March 31, 2001, in which case such amount shall not be
less than $700,000.
8.3.3 Minimum Net Worth. The Borrower shall have a minimum Net
Worth of not less than $5,500,000 at the Closing Date, such amount to increase
on a quarterly basis thereafter in an amount equal to 75% of the recorded Net
Income for each such quarter. If there is no Net Income for a particular
quarter, such amount shall not increase, and such amount shall not be reduced if
there is a net loss.
8.3.4 Minimum Fixed Charge Ratio. Borrower shall not permit
the Fixed Charge Ratio, calculated on a pro forma basis, for any quarter to be
less than 1.75:1 except for fiscal quarter ending on March 31, 2001 such ratio
shall not be less than 1.50:1.
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8.3.5 Minimum Fully Loaded Fixed Charge Coverage Ratio.
Commencing in fiscal year 2002 and thereafter, Borrower shall not permit the
Fully Loaded Fixed Charge Coverage Ratio for any quarter to be less than 1.45:1.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments, consents, if required (including third party consents) and
certificates as Lender and its counsel shall require in connection therewith
from time to time, including, without limitation, (i) pro forma "sources and
uses of cash" as of the Closing Date and a pro forma balance sheet, reflecting
the Loans made or to be made on the Closing Date, including the Term Loan; (ii)
a Borrowing Base Certificate; (iii) a Certificate from the chief financial
officer of the Borrower stating that the Borrower is Solvent after giving effect
to the Loans made on such Closing Date, including the Term Loan, (iv) the
Borrower Documents and (v) an opinion of counsel to Borrower all in form and
substance satisfactory to Lender and its counsel.
9.2 No Default. No Default or Event of Default shall exist hereunder or
under any Other Agreement to which Borrower, Guarantor and/or a Subsidiary is a
party.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 Equity. Lender shall have received evidence satisfactory to it that
not less than $5,500,000 in cash has been contributed as equity to the capital
of Borrower concurrently with the Acquisition in a manner acceptable to Lender
in its sole discretion and shall have delivered to Lender a listing showing the
names of and amounts invested by each such equity investor and the terms upon
which such investments were made.
9.5 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans, including the Term Loan and issued the
initial Letters of Credit and LC Guaranties contemplated hereby, and paid all
closing costs incurred in connection with the transactions contemplated hereby
(including without limitation attorneys' fees), Excess Availability shall not be
less than $1,000,000.00 at Closing.
9.6 Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
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9.7 Acquisition. The Acquisition shall have been consummated
substantially in accordance with the terms of the Purchase Documents which
Purchase Documents shall be acceptable to Lender in its sole discretion.
9.8 Management. Lender in its sole discretion shall have approved the
terms of all employment agreements and other contracts with senior managers of
Borrower.
9.9 Aging Report. Lender shall have received a report setting forth the
Accounts due and payable and the status of each such Account.
9.10 Other Debt. Other than as disclosed to and approved by Lender, the
Borrower shall not have entered into any arrangement in respect of Indebtedness
due to any third party.
9.11 Capital Leases. All capital leases entered into by Borrower shall
be on terms acceptable to Lender in its sole discretion.
9.12 Insurance. Lender shall have received copies of all insurance
policies held by Borrower, including, without limitation, copies of the Key Man
Insurance Policies.
9.13 Material Adverse Effect, etc. There shall have occurred no
Material Adverse Effect.
9.14 Solvency. Immediately after giving effect to the initial Loans,
including the Term Loan, the Borrower shall be Solvent, and the Chief Financial
officer shall provide to Lender a certificate to such effect.
9.15 Total Debt to EBITDA. As of the Closing Date, the Borrower shall
have a ratio of Total Debt to EBITDA (for the trailing twelve months ending on
the date of measurement) less than or equal to 2.6.
9.16 Other Agreements. Lender shall have received a copy of the Tax
Sharing Agreement executed by Borrower and Guarantor.
9.17 Other Documents. Lender shall have received such other documents
as Lender may reasonably request in writing.
SECTION 10. EVENTS OF DEFAULT;
RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Loans. Borrower shall fail to pay any
installment of principal, interest or premium, if any, owing on the Loans on the
due date therefor.
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10.1.2 Payment of Other Obligations. Borrower shall fail to
pay any of the Obligations that are not evidenced by the Notes on the due date
therefor (whether due at stated maturity, on demand, upon acceleration or
otherwise upon applicable notice).
10.1.3 Misrepresentations. Any representation, warranty or
other statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.1, 5.2,
6.1.1, 6.2, 8.1.1, 8.1.3, 8.1.6, 8.1.7, 8.2 or 8.3 hereof on the date that
Borrower is required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
10.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within 15 days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.
10.1.6 Default Under Security Documents/Other
Agreements/Purchase Documents. Any event of default shall occur under, or
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in, any of the Security Documents; the Other
Agreements or the Purchase Documents and such default shall continue beyond any
applicable grace period.
10.1.7 Other Defaults. There shall occur any default or event
of default on the part of Borrower under any agreement, document or instrument
to which Borrower is a party or by which Borrower or any of its Property is
bound, creating or relating to any Indebtedness (other than the Obligations) if
the payment or maturity of such Indebtedness is accelerated in consequence of
such event of default or demand for payment of such Indebtedness is made, other
than the occurrence of any default or event of default under any Indebtedness in
a principal amount less than $10,000 and Lender has not created a Reserve under
subsection 1.1.1 hereof equal to 125% of such Indebtedness.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any Material Adverse
Effect relating to Borrower or the Guarantor.
10.1.10 Insolvency and Related Proceedings. Borrower or
Guarantor shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief
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shall be filed by or against Borrower or Guarantor under the Bankruptcy Code (if
against Borrower or Guarantor, the continuation of such proceeding for more than
30 days), or Borrower or Guarantor shall make any offer of settlement, extension
or composition to their respective unsecured creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower or Guarantor for a
period which significantly affects Borrower's or Guarantor's capacity to
continue its business, on a profitable basis; or Borrower or Guarantor shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by Borrower or Guarantor which is necessary to the continued or lawful
operation of its business; or Borrower or Guarantor shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower or Guarantor leases, uses
or occupies any Property shall be canceled or terminated prior to the expiration
of its stated term and not concurrently replaced by Borrower or Guarantor; or
any part of the Collateral shall be taken through condemnation or the value of
such Property shall be impaired through condemnation.
10.1.12 Change of Ownership. Guarantor shall cease to own and
control, beneficially and or record, all of the issued and outstanding capital
stock of Borrower.
10.1.13 ERISA. A Reportable Event shall occur which Lender, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower, any Subsidiary of Borrower or any Guarantor is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multi-employer Plan resulting from Borrower's, such Subsidiary's or such
Guarantor's complete or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of
Borrower or Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
10.1.15 Repudiation of or Default Under Security Documents.
The Guarantor shall revoke or attempt to revoke the Guaranty Agreement or Pledge
Agreement signed by such Guarantor, or shall repudiate such Guarantor's
liability thereunder or shall be in default under the terms thereof.
10.1.16 Criminal Forfeiture. Borrower, any Subsidiary of
Borrower or Guarantor shall be criminally indicted or convicted under any law
that could lead to a forfeiture of any Property of Borrower, any Subsidiary of
Borrower or Guarantor.
10.1.17 Judgments. Any money judgment, writ of attachment or
similar process for an amount in excess of $50,000 is filed against Borrower,
any Subsidiary of Borrower or
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Guarantor, or any of their respective Properties and not lifted, removed or
satisfied within 60 days of such filing.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence and continuation of an Event of Default, all or any portion of the
Obligations shall, at the option of Lender and without presentment, demand
protest or further notice by Lender, become at once due and payable and Borrower
shall forthwith pay to Lender, the full amount of such Obligations, provided,
that upon the occurrence of an Event of Default specified in subsection 10.1.10
hereof, all of the Obligations shall become automatically due and payable
without declaration, notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence and continuation of
an Event of Default, Lender shall have and may exercise from time to time any or
all of the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that 10 days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses and attorneys' fees
incurred by Lender in collecting the Obligations, in enforcing the rights of
Lender under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral, second to the interest due upon any of the Obligations; and third,
to the principal
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of the Obligations. If any deficiency shall arise, Borrower and Guarantor shall
remain jointly and severally liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, require Borrower to deposit
with Lender funds equal to the LC Amount and, if Borrower fails to promptly make
such deposit, Lender may advance such amount as a Base Rate Advance (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Lender as a reserve to fund future payments on such LC Guaranties and
future drawings against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of
Borrower contained in this Agreement or any of the other Loan Documents and no
Event of Default by Borrower under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Lender and
directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
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11.1.1 At such time or times upon or after the occurrence and
continuation of a Default or an Event of Default as Lender or said agent, in its
sole discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
11.1.2 At such time or times upon or after the occurrence and
continuation of an Event of Default as Lender or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign Borrower's name to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or satisfaction
of lien or similar document in connection with any of the Collateral; (vi)
receive, open and dispose of all mail addressed to Borrower and to notify postal
authorities to change the address for delivery thereof to such address as Lender
may designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Lender on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating to the Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill Borrower's obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold Lender
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
Lender against and save it harmless from all claims of any Person with respect
to the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances or in connection with any brokerage
commissions and other fees as described in Section 7.1.14 herein.
Notwithstanding any contrary provision in this Agreement, the obligation of
Borrower under this Section 11.2 shall survive the payment in full of the
Obligations and the termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered or amended, except by an agreement in writing signed by
Borrower and
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Lender. Borrower may not sell, assign or transfer any interest in this
Agreement, any of the other Loan Documents, or any of the Obligations, or any
portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower, its Subsidiaries and any
Guarantor to any potential participant or assignee.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower, Lender and as applicable, any Participating
Lender.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
11.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, three
Business Days after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
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If to Lender: Fleet Capital Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇▇▇▇▇ Brothers, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Financial Performance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower, any of its Subsidiaries or Guarantor.
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11.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW
YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK: PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER,
BORROWER HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE STATE OF NEW YORK,
OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR
40
41
OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed in New York, New
York, on the day and year specified at the beginning of this Agreement.
ATTEST: ▇▇▇▇▇▇ BROTHERS, INC.
("Borrower")
/s/______________________________
Secretary By: /s/________________________________
[CORPORATE SEAL] Name:______________________________
Title:_____________________________
FLEET CAPITAL CORPORATION
("Lender")
By: /s/________________________________
Name:______________________________
Title:_____________________________
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of January __, 2001,
by and between Fleet Capital Corporation and ▇▇▇▇▇▇ Brothers, Inc., the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments and
documents, whether now owned or hereafter created or acquired by Borrower or in
which Borrower now has or hereafter acquired any interest.
Acquisition - the purchase of the stock of ▇▇▇▇▇▇ Brothers, Inc.
pursuant to the Purchase Documents.
Administrative Fee - the administrative and collateral monitoring fee
referred to in Section 2.2 of the Agreement.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
Applicable Margin - as at any date of determination, in respect of (i)
LIBOR Advances, and (ii) Base Rate Advances, a percentage equal to:
--------------------------------------------------------------------
TYPE OF LOAN APPLICABLE MARGIN APPLICABLE MARGIN
LIBOR ADVANCE BASE RATE ADVANCE
--------------------------------------------------------------------
Revolving Credit Loan: 3.25% 1.75%
Term Loan: 3.50% 2.00%
--------------------------------------------------------------------
Backlog Report - means a monthly report of Borrower's outstanding
contracts (in the same form as currently produced and in substance satisfactory
to Lender), which contracts must have on any date of determination a minimum
value of no less than $8,000,000 in the aggregate.
Bank - Fleet National Bank.
AP-1
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Base Rate - the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.
Base Rate Advances - any Loan bearing interest computed by reference to
the Base Rate.
Borrower Documents - means the certificate of incorporation and by-laws or
other equivalent charter documents of Borrower.
Borrowing Base Certificate - a certificate reflecting the Revolver
Availability under the Revolving Credit Loan substantially in the form of
Exhibit I attached hereto.
Borrowing Notice - as defined in Section 3.1.1 of the Agreement.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York (and, for purposes of
LIBOR Advances, the City of London) or is a day on which banking institutions
located in either of such places are closed.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement, but in no
event later than January __, 2001.
Code - the Uniform Commercial Code as adopted and in force in the State of
New York, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP except that amounts due from
Affiliates and investments in Affiliates shall be excluded therefrom.
AP-2
45
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Dominion Account - a special account of Lender established by Borrower
pursuant to this Agreement at the Bank and over which Lender shall have sole and
exclusive access and control for withdrawal purposes.
EBITDA - with respect to any fiscal period, the Consolidated Net Income of
the Borrower and its Subsidiary in such period plus (to the extent deducted in
determining such Consolidated Net Income) the sum of (i) the Interest Expense of
the Borrower and its Subsidiary in such period, plus (ii) depreciation,
amortization and other noncash charges of the Borrower and its Subsidiary in
such period, plus (iii) all income and franchise taxes of the Borrower and its
Subsidiary paid or provided for in such period, on a Consolidated basis in
conformity with GAAP; provided that EBITDA shall not be increased by (x) any
extraordinary gains or (y) any extraordinary losses.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Excess Availability - means the Revolver Availability less the sum of (i)
the then outstanding balance of the Revolving Credit Loans, (ii) all amounts due
and owing to Borrower's trade creditors which remain outstanding beyond normal
trade terms or special terms granted, (iii) the Reserves and (iv) fees and
expenses of the Closing.
Excess Cash Flow - with respect to any fiscal period of Borrower, the
amount derived by subtracting from EBITDA for such fiscal period, the sum of (i)
Interest Expense, (ii) scheduled payments of principal on Indebtedness for Money
Borrowed, (iii) Capital Expenditures paid in such period, (iv) payments of
Capitalized Lease Obligations, (v) the amounts paid to Guarantor
AP-3
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in respect of the Management Fees, (vi) the amount of cash taxes for such fiscal
period and (vii) the Permitted Seller Notes Amount and the Permitted Seller
Notes Principal.
Fixed Charge Ratio - means the ratio of (A) EBITDA minus Capital
Expenditures, to (B) the sum of (i) Interest Expense, (ii) scheduled principal
payment of Indebtedness under this Agreement, (iii) payments of Capitalized
Lease Obligations and (iv) taxes.
Fully Loaded Fixed Charge Coverage Ratio - means the ratio of (A) EBITDA
minus Capital Expenditures to (B) the sum of (i) Interest Expense, (ii)
scheduled principal payments of Indebtedness under this Agreement, (iii)
payments of Capitalized Lease Obligations, (iv) taxes, (v) amounts paid to
Guarantor in respect of the Management Fees, and (vi) amounts paid to Guarantor
in respect of the payments due under the Seller Notes.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
General Intangibles - all personal property of Borrower (including things
in action) other than goods, Accounts, chattel paper, documents, instruments and
money, whether now owned or hereafter created or acquired by Borrower.
Guarantor - Financial Performance Corporation, a New York corporation and
any other Person who may hereafter guarantee payment or performance of the whole
or any part of the Obligations.
Guaranty Agreement - the Secured Guaranty Agreement which is to be
executed by Guarantor in form and substance satisfactory to Lender.
Indebtedness - as applied to a Person means, without duplication
(i) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of
which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations,
(i) all obligations of other Persons which such Person has
guaranteed,
(ii) all reimbursement obligations in connection with letters
of credit or letter of credit guaranties issued for the
account of such Person, and
(iii) in the case of Borrower (without duplication), the
Obligations.
Interest Expense - means, for any period, the sum of total interest
expense (including that portion attributable to Capitalized Lease Obligations in
accordance with GAAP and capitalized interest) of Borrower and its Subsidiaries
on a Consolidated basis with respect to all outstanding Indebtedness of Company
and its Subsidiaries, including all commissions, discounts and other fees and
charges owed with respect to Letters of Credit and bankers' acceptance
financing, but excluding, however, the amortization of any fees payable
hereunder on or before the Closing Date.
AP-4
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Interest Period - as applicable to any LIBOR Advance, a period commencing
on the date a LIBOR Advance is made, and ending on the date which is one (1)
month, two (2) months, three (3) months or six (6) months later, as may then be
requested by Borrower; provided that (i) any Interest Period which would
otherwise end on a day which is not a Business Day shall end in the next
preceding or succeeding Business Day as is Lender's custom in the market to
which such LIBOR Advance relates; (ii) there remains a minimum of one (1) month,
two (2) months or three (3) months (depending upon which Interest Period
Borrower selects) in the Term; and (iii) all Interest Periods of the same
duration which commence on the same date shall end on the same date.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired including, but not limited to, all goods intended for sale or lease by
Borrower, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrower's business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
Investment Property - all of Borrower's investment property, as such term
is defined in the Code, whether now or hereafter acquired.
Key Man Insurance Policies - means the key man insurance policies in the
amount of $2,000,000 each on the life of each Seller.
LIBOR Rate - as applicable to any LIBOR Advance, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Advance which appears on the Telerate page 3750 as
of 11:00 a.m. London time on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Advance; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
London Banking Days prior to the beginning of such interest period. If both the
Telerate and Reuters system are unavailable, then the rate for that date will be
determined on the basis of the offered rates for deposits in U.S. dollars for a
period of time comparable to such LIBOR Advance which are offered by four major
banks in the London interbank market at approximately 11:00 a.m. London time, on
the day that is two (2) London Banking Days preceding the first day of such
LIBOR Advance as selected by Lender. The principal London office of each of the
major London Banks so selected will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two (2) such quotations are
provided, the rate for that date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in U.S. dollars to
leading European banks for a period of time comparable to such LIBOR Advance
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that its two (2) London Banking Days preceding the first
day of such LIBOR Advance.
AP-5
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In the event that Lender is unable to obtain any such quotation as provided
above, it will be determined that LIBOR pursuant to a LIBOR Advance cannot be
determined. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage with respect to LIBOR deposits of Bank
then for any period during which such Reserve Percentage shall apply, LIBOR
shall be equal to the amount determined above divided by an amount equal to 1
minus the Reserve Percentage.
LIBOR Advance - any Loan bearing interest computed by reference to the
LIBOR Rate.
LIBOR Notice - a request for a LIBOR Advance complying with the
requirements of Section 3.1.4 of the Agreement.
LC Amount - at any time, the aggregate undrawn face amount of all Letters
of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any Affiliate of
Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.
Letter of Credit - any letter of credit, including without limitation,
standby letters of credit and documentary letters of credit issued by Lender or
any of Lender's Affiliates for the account of Borrower.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Loan Account - the loan account or accounts established on the books of
Lender pursuant to Section 3.6 of the Agreement. All Loans made hereunder and
all amounts deducted as expenses due to Lender hereunder shall be deposited to
or deducted from the Loan Account.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - all Loans and advances of any kind made by Lender pursuant to the
Agreement.
London Banking Day - any date on which commercial banks are open for
business in London, England.
Management Fees - the fees paid by Borrower to Guarantor for managing the
business of Borrower, which fees shall be paid quarterly and shall not exceed
$100,000 per quarter.
Material Adverse Effect - means as to any Person (i) any event or change
in or effect on the business of such Person, that is or can reasonably be
expected to be materially adverse to the
AP-6
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business operations, properties (including intangible properties), condition
(financial or otherwise), assets, liabilities or prospects of such Person or
(ii) the impairment in any material respect of the ability of such Person to
perform, or of Lender to enforce, the Obligations.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to Letters of Credit or
LC Guaranties and (v) Indebtedness of Borrower under any guaranty of obligations
that would constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
Net Income - means, for any period, the net income (or loss) of Borrower
and its Subsidiaries on a Consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP; provided that there shall
be excluded therefrom (i) the income (or loss) of any Person (other than a
Subsidiary of Borrower) in which any other Person (other than Borrower or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, (ii) the income of any
Subsidiary of Borrower to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary.
Net Worth - means, as of any date of determination, the sum of the capital
stock and additional paid-in capital plus retained earnings (or minus
accumulated deficits) of Borrower and its Subsidiary determined on a
Consolidated basis in accordance with GAAP.
Notes - the Term Note and the Revolving Note.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrower to Lender of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - the Purchase Documents, the Seller Notes and any and
all agreements, instruments and documents (other than the Agreement and the
Security Documents),
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heretofore, now or hereafter executed by Borrower, any Subsidiary of Borrower or
any other third party and delivered to Lender in respect of the transactions
contemplated by the Agreement.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Revolver
Availability.
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed $750,000. For the purposes of this definition, the
principal amount of any Purchase Money Indebtedness consisting of capitalized
leases shall be computed as a Capitalized Lease Obligation.
Permitted Seller Notes Amount - the sum of the $7.5 Million Note Amount
and the Two Million Note Amount.
Permitted Seller Notes Principal - the remaining $1,050,000 of aggregate
principal payments due upon maturity with respect to the $2.0 million aggregate
principal amount of subordinated convertible promissory notes issued to the
Sellers; provided that if these notes are converted into common stock of
Guarantor in accordance with their terms, the Permitted Seller Notes Principal
Amount shall be zero.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Pledge Agreements - (i) the Pledge Agreement pursuant to which the stock
of Borrower shall be pledged by Guarantor in favor of Lender as security for the
obligations under the Guaranty Agreement (the "Pledge Agreement - Parent") and
(ii) the Pledge Agreement pursuant to which the stock of ▇▇▇▇▇▇ Brothers
International, S.A., a Spanish corporation shall be pledged by Borrower in favor
of Lender as security for the Obligations (the "Pledge Agreement - Borrower"),
each in form and substance satisfactory to Lender.
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Pricing Grid mean a grid as set forth below:
-------------------------------------------------------------------
FULLY LOADED FIXED CHARGE REVOLVING CREDIT INTEREST MARGIN
COVERAGE RATIO
-------------------------------------------------------------------
2.25:1 or greater Base Rate + 0.75% or LIBOR Rate
+ 2.50%
-------------------------------------------------------------------
Between 1.75:1 and 2.24:1 Base Rate + 1.25% or LIBOR Rate
+ 3.00%
-------------------------------------------------------------------
Less than or equal to 1.75:1 Base Rate + 1.75% or LIBOR Rate
+ 3.25%
-------------------------------------------------------------------
Interest on the Term Loan shall be 1/4 of 1% above the applicable Base Rate or
LIBOR Rate interest margin.
Projections - Borrower's forecasted Consolidated and consolidating (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; (d)
capitalization statements; and (e) statements of cash flow, all prepared on a
consistent basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Documents - the Stock Purchase Agreement by and among ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and the Guarantor, pursuant to which each Seller has
agreed to sell to Guarantor 150 shares of common stock of ▇▇▇▇▇▇ Brothers, Inc.,
and all documents and instruments to be executed or delivered in connection
therewith.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
Renewal Term - as defined in Section 4.1 of this Agreement.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
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Reserves - as defined in subsection 1.1.1 of this Agreement.
Reserve Percentage - the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D.
Restricted Investment - any investment made in cash, by the assumption of
Indebtedness or by delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the following:
(i) Property to be used in the ordinary course of business;
(ii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower and
its Subsidiaries;
(iii) investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by
the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof;
(iv) investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or
any state thereof having capital surplus and undivided profits
aggregating at least $100,000,000; and
(v) investments in commercial paper given the highest rating
by a national credit rating agency and maturing not more than
270 days from the date of creation thereof.
Restricted Payments Account - a special account of Lender established by
Borrower pursuant to subsection 8.2.15 hereof at the Bank and over which Lender
shall have sole and exclusive access and control for withdrawal purposes.
Revolver Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the lesser
of (i) $6,000,000 or (ii) the product of 2.5 times EBITDA for the prior 12 month
period, minus the sum of (a) the then outstanding balance of the Term Loan, (b)
any other Indebtedness for Money Borrowed, and (c) the Reserves.
Revolving Credit Loan - a senior Loan made by Lender as provided in
Section 1.1.1 of the Agreement.
Revolving Note - the Senior Secured Promissory Note to be executed by
Borrower on or about the Closing Date in favor of the Lender to evidence the
Revolving Credit Loan, which Note shall be in the form of Exhibit A-2 to the
Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the Agreement.
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Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreement, the Pledge Agreements, the
interest rate cap agreements described in subsection 8.1.7 and all other
instruments and agreements now or at any time hereafter securing the whole or
any part of the Obligations.
Sellers - means each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Seller Notes - each of the $3.75 million subordinated convertible term
promissory notes and the $1.0 million subordinated convertible promissory notes
issued to each Seller.
$7.5 Million Note Amount - an amount per fiscal quarter equal to the
lesser of (i) the interest due in any fiscal quarter on the $7.5 million
subordinated convertible term promissory notes issued to the Sellers in
accordance with the terms of such notes and (ii) $155,000.
Solvent - as to any Person, means that as of the date of determination
both (A) (i) the then fair saleable value of the Property of such Person is (y)
greater than the total amount of liabilities (including contingent liabilities)
of such Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and (B) such Person is "solvent" within the
meaning given that term and similar terms under applicable laws relating to
fraudulent transfer and conveyances. For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that, in
light of all of the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
Subordinated Debt - Indebtedness of Borrower that is subordinated to the
Obligations in a manner satisfactory to Lender including, without limitation,
the Seller Notes.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Term - the Original Term including any and all Renewal Terms, provided
that if there is no Renewal Term is agreed, "Term" shall have the same meaning
as "Original Term".
Term Loan - a senior Loan made by Lender as provided in Section 1.2.1 of
the Agreement.
Term Note - the Senior Secured Promissory Note to be executed by Borrower
on or about the Closing Date in favor of Lender to evidence the Term Loan, which
Note shall be in the form of Exhibit A-1 to the Agreement.
Termination Date - the last day of the Original Term or any Renewal Term.
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Total Credit Facility - $14,000,000.
Total Debt - means, as at any date of determination, the aggregate stated
balance sheet amount of all Indebtedness for Money Borrowed of Borrower and its
Subsidiary, including without limitation, the Loans, and Capitalized Lease
Obligations, determined on a Consolidated basis in accordance with GAAP.
Two Million Note Amount - an amount per fiscal quarter equal to: (i)
$100,000 for each of the first and second quarters of fiscal year 2001 or (ii)
$125,000 for each of the third and fourth quarters of fiscal year 2001 and each
quarter of fiscal year 2002; provided that if the $1.0 million subordinated
convertible promissory notes issued to each Seller is converted into common
stock of Guarantor in accordance with their terms, the Two Million Note Amount
shall be zero.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
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SECURED GUARANTY AGREEMENT
(PARENT)
THIS SECURED GUARANTY AGREEMENT (as amended, supplemented, amended and
restated, restructured or otherwise modified from time to time, the "Guaranty"),
dated as of January __, 2001, made by Financial Performance Corporation, a New
York corporation ("FPC") in favor of FLEET CAPITAL CORPORATION (the "Lender")
and its successors.
W I T N E S S E T H:
WHEREAS, pursuant to a Loan and Security Agreement, dated as of January
__, 2001, (the "Loan Agreement") between ▇▇▇▇▇▇ Brothers, Inc., a New Hampshire
corporation (the "Borrower") and the Lender, the Lender has agreed to make the
Loans available to the Borrower (capitalized terms used herein shall, if not
otherwise defined herein, have the meanings ascribed thereto in the Loan
Agreement or the Pledge Agreement); and
WHEREAS, as a condition precedent to the Lender making the Loans available
to the Borrower, FPC is required to execute and deliver this Guaranty; and
WHEREAS, Borrower is a wholly owned subsidiary of FPC, which owns directly
100% of the Capital Stock of Borrower and certain of the proceeds of the Loans
will be utilized to finance the Acquisition; and
WHEREAS, it is in the best interests of FPC to execute this Guaranty
inasmuch as FPC will derive substantial benefits (whether direct or indirect)
from the Acquisition and the Loans made by the Lender to the Borrower pursuant
to the Loan Agreement; and
WHEREAS, FPC has duly authorized the execution, delivery and
performance of this Guaranty; and
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lender
to make the Term Loan available to the Borrower pursuant to the Loan Agreement,
FPC agrees, for the benefit of the Lender as follows:
1. DEFINITIONS
(a) Certain Terms. Defined terms used herein shall have the meanings
ascribed thereto in the Loan Agreement unless otherwise defined herein:
"Capital Stock" means the common or preferred stock, shares, limited
partnership interests or any other form of ownership interest commonly
described as capital stock of any Person.
"Obligors" means and includes FPC, the Borrower and any Person which has
or which will have any liability (actual or contingent) and whether alone
or jointly with any other person and whether as principal debtor,
guarantor or surety or otherwise (or as the equivalent obligor under the
laws of any other jurisdiction) to the Lender for the payment
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or repayment of any amounts outstanding or capable of becoming outstanding
under the Loan Documents;
"UCC" means the Uniform Commercial Code as in effect in the State of New
York or, as the context may require, in any other jurisdiction the laws of
which may apply to all or a portion of the Collateral in which a security
interest is granted hereunder.
2. GUARANTY PROVISIONS
(a) Guaranty. FPC hereby absolutely, unconditionally and irrevocably
(i) guarantees, subject to the proviso set forth below, the full and
punctual payment when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all Obligations, whether for
principal, interest, fees, expenses or otherwise (including all such amounts
which would become due but for the operation of the automatic stay under Section
362(a) of the United States Bankruptcy Code, 11 U.S.C. Section 362(a), and the
operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. Section 502(b) and Section 506(b)); and
(ii) indemnifies and holds harmless the Lender for any and all costs
and expenses (including reasonable attorney's fees and expenses) incurred by the
Lender, in enforcing any of its rights under this Guaranty;
provided, however, that FPC shall only be liable under this Guaranty for the
maximum amount of such liability that can be hereby incurred without rendering
this Guaranty violable under any applicable laws relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. All payments
by FPC hereunder shall be made in U.S. Dollars.
(b) Acceleration of Guaranty. FPC agrees that, in the event of the
dissolution or insolvency of the Borrower or any other Obligor, or the inability
or failure of the Borrower or any other Obligor to pay debts as they become due,
or an assignment by the Borrower or any other Obligor for the benefit of
creditors, or the commencement of any case or proceeding in respect of the
Borrower or any other Obligor under any Bankruptcy, insolvency or similar laws,
and if such event shall occur at a time when any of the Obligations may not then
be due and payable, FPC will (without duplication) pay to the Lender forthwith
on demand by the Lender the full amount which would be payable hereunder by FPC
if all Obligations were then due and payable.
3. GENERAL PROVISIONS
(a) Continuing Security Interest. This Guaranty shall in all respects be a
continuing, absolute, unconditional and irrevocable guaranty of payment and
shall
(i) remain in full force and effect until settlement in full of all
the Obligations and the termination of the Loan Documents;
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(ii) be binding upon FPC and its successors, transferees and
assigns;
(iii) inure to the benefit of the Lender together with the rights
and remedies of the Lender hereunder;
without limiting the foregoing clause (c), the Lender may assign, grant
participations in, novate or otherwise transfer (in whole or in part) any right
and/or obligation held by it to any other person or entity, and such other
person or entity shall thereupon become vested with all rights and benefits in
respect thereof granted to the Lender under the Loan Agreement or any Loan
Document (including this Guaranty) or otherwise. Upon settlement in full of all
Obligations and the termination of the Loan Documents, the guarantee and
security interest granted herein shall terminate.
(b) Obligations Absolute. The liability of FPC hereunder shall be
absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability of the Loan
Agreement or any other Loan Document;
(ii) the failure of the Lender
(A) to assert any claim or demand or to enforce any right or remedy
against the Borrower, any other Obligor or any other person
(including any other guarantor) under the provisions of the Loan
Agreement, any other Loan Document or otherwise, or
(B) to exercise any right or remedy against any other guarantor
of, or collateral securing, the Obligations;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other extension,
compromise or renewal or amendment of any Obligations;
(iv) any reduction, limitation, impairment or termination of the
Obligations for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality, non-genuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Obligations or otherwise, all of which are hereby waived by FPC;
(v) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Loan Agreement or any
Loan Document;
(vi) any addition, exchange, release, surrender or nonperfection of
any collateral, or any amendment to or waiver or release, surrender or addition
of, or consent to
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departure from, any other guaranty, held by the Lender securing any part or all
of the Obligations;
(vii) any Bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the
Borrower, FPC, any other Obligor, any other person or any of their respective
properties or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding;
(viii) any merger or consolidation of the Borrower, any Obligor
and/or FPC into or with any other corporation or any sale, lease or transfer of
any of the assets of the Borrower, any Obligor and/or FPC to any other person;
(ix) any change in the ownership of any Capital Stock of the
Borrower, any Obligor or FPC; or
(x) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower, any
Obligor and/or FPC, any surety or guarantor or that might otherwise limit
recourse against FPC.
(c) Reinstatement, etc. FPC agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment (in
whole or in part) of any of the Obligations is rescinded or must otherwise be
restored by the Lender, upon the insolvency, Bankruptcy or reorganization of the
Borrower, FPC, any other Obligor or otherwise, all as though such payment had
not been made.
(d) Waiver, etc. FPC hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this
Guaranty and any requirement that the Lender protect, secure, perfect or insure
any security interest or encumbrance, or any property subject thereto, or
exhaust any right or take any action against the Borrower, any other Obligor or
any other person (including any other guarantor) or entity or any collateral
securing the Obligations.
(e) Waiver of Subrogation and Contribution. FPC hereby irrevocably waives
any claim, remedy or any other rights which it may now or hereafter acquire
against the Borrower or another Obligor that arise from the existence, payment,
performance or enforcement of FPC's obligations under this Guaranty or any other
Loan Document, including any right of subrogation, reimbursement, exoneration,
contribution or indemnification, any right to participate in any claim or remedy
of the Lender against the Borrower or another Obligor or any collateral which
the Lender now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including the
right to take or receive from the Borrower or another Obligor, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment or security on account of such claim, remedy or other rights until all
Obligations are paid in full. If any amount shall be paid to FPC in violation of
the preceding sentence and the Obligations shall not have been paid in full,
such amount shall be deemed to have been paid to FPC for the benefit of, and
held in trust for, the Lender, and shall forthwith be paid to the Lender to be
credited and applied upon the Obligations, whether matured or
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unmatured. FPC acknowledges that it will receive direct and indirect benefits
from the Loans contemplated by the Loan Agreement and that the waiver set forth
in this Section is knowingly made in contemplation of such benefits and the
benefits received by Borrower. The provisions of the first sentence of this
Section shall cease to have any force and effect upon the settlement in full of
all the Obligations and the termination of the Loan Agreement.
4. REPRESENTATIONS AND WARRANTIES
(a) General Representations and Warranties. FPC represents and covenants
to Lender that:
(i) Organization and Qualification. FPC is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of FPC and its Subsidiaries is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in each state or jurisdiction listed on Exhibit 4(a)(i) hereto and
in all other states and jurisdictions where the character of its Properties or
the nature of its activities make such qualification necessary and in which the
failure of FPC or any of its Subsidiaries to be so qualified would have a
material adverse effect on the financial condition, business or Properties of
FPC or any of its Subsidiaries.
(ii) Corporate Power and Authority. FPC is duly authorized and
empowered to enter into, execute, deliver and perform this Guaranty and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance by Guarantor of this Guaranty and each of the other Loan Documents
to which it is a party have been duly authorized by all necessary corporate
action and do not and will not (i) require any consent or approval of the
shareholders of FPC; (ii) contravene FPC's charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause FPC to be in default under,
any provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to FPC; (iv)
result in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which FPC is a
party or by which it or its Properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than Permitted
Liens) upon or with respect to any of the Properties now owned or hereafter
acquired by FPC.
(iii) Legally Enforceable Agreement. This Guaranty is, and each of
the other Loan Documents as applicable, will be, a legal, valid and binding
obligation of FPC enforceable against it in accordance with its respective
terms.
(iv) Capital Structure. Exhibit 4(a)(iv) hereto states, as of the
date hereof, (i) the correct name of each Subsidiary of FPC, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by FPC, (ii) the name
of each of FPC's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number and nature of all outstanding Securities of FPC
and the number, nature and holder of each Subsidiary of FPC and (iv) the number
of authorized, issued and treasury shares of FPC and each Subsidiary of FPC. FPC
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued
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and are fully paid and non-assessable. Except as set forth on Exhibit 4(a)(iv)
and in Guarantor's filings with the Securities and Exchange Commission, to the
knowledge of FPC, as of the date hereof, there are no outstanding options to
purchase, or any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Securities or obligations convertible into,
or any powers of attorney relating to, shares of the capital stock of FPC or any
of its Subsidiaries. Except as set forth on Exhibit 4(a)(iv) and in Guarantor's
filings with the Securities and Exchange Commission, to the knowledge of FPC, as
of the date hereof, there are no outstanding agreements or instruments binding
upon any of FPC's shareholders relating to the ownership of its shares of
capital stock.
(v) Business Locations; Agent for Process. Each of FPC's and
Borrower's chief executive offices and other places of business are as listed on
Exhibit 4(a)(vi) hereto. During the preceding one-year period, neither FPC nor
Borrower has had an office, place of business or agent for service of process
other than as listed on Exhibit 4(a)(v).
(vi) Title to Properties; Priority of Liens. FPC has good,
indefeasible and marketable title to all of the outstanding Capital Stock of
Borrower free and clear of all Liens except Permitted Liens.
(vii) Financial Statements; Fiscal Year. The Consolidated balance
sheets of FPC and such other Persons described therein (including the accounts
of all Subsidiaries of FPC for the respective periods during which a Subsidiary
relationship existed) as of September 30, 2000, and the related statements of
income, changes in stockholder's equity, changes in financial position and
statements of cash flows for the periods ended on such dates, have been prepared
in accordance with GAAP, and present fairly the financial positions of FPC and
such Persons at such dates and the results of FPC's operations for such periods,
except for audit and year-end adjustments and the absence of footnotes. Since
September 30, 2000, there has been no Material Adverse Effect. The fiscal year
of FPC and its Subsidiaries ends on December 31 of each year.
(viii) Full Disclosure. The financial statements referred to in
subsection 4(a)(viii) hereof do not, nor does this Guaranty or any other written
statement of FPC to Lender, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which FPC has failed to disclose to
Lender in writing which materially affects adversely or, so far as FPC can now
foresee, will materially affect adversely the Properties, business, prospects,
profits or condition (financial or otherwise) of FPC or Borrower or the ability
of FPC to perform this Guaranty.
(ix) Solvent Financial Condition. Each of FPC and its Subsidiaries
is now and, after giving effect to this Guaranty and the Loans, including the
Term Loan made on the Closing Date, and the Letters of Credit and LC Guaranties
to be issued under the Loan Agreement, at all times will be, Solvent.
(x) Surety Obligations. Neither FPC nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
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(xi) Taxes. FPC's federal tax identification number is ▇▇-▇▇▇▇▇▇▇.
The federal tax identification numbers of FPC's Subsidiary are shown on Exhibit
4(a)(xi) hereto. Each of FPC and its Subsidiaries has filed all federal, state
and local tax returns and other reports it is required by law to file and has
paid, or made provision for the payment of, all taxes, assessments, fees, levies
and other governmental charges upon it, its income and Properties as and when
such taxes, assessments, fees, levies and charges that are due and payable,
unless and to the extent any thereof are being actively contested in good faith
and by appropriate proceedings and FPC maintains reasonable reserves on its
books therefor. The provision for taxes on the books of FPC and its Subsidiaries
are adequate for all years not closed by applicable statutes, and for its
current fiscal year.
(xii) Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by the Loan Agreement or this Guaranty.
(xiii) Governmental Consents. Each of FPC and Borrower has, and is
in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it, except where the failure to have or be in good standing with
respect to all such governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises could not reasonably be
expected to have a Material Adverse Effect on FPC or Borrower.
(xiv) Compliance with Laws. Each of FPC and Borrower has duly
complied with, and its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to FPC or Borrower, as
applicable, its Properties or the conduct of its business and there have been no
citations, notices or orders of noncompliance issued to FPC or Borrower under
any such law, rule or regulation, except for those citations, notices or orders
of noncompliance which could not reasonably be expected to have a Material
Adverse Effect on FPC or Borrower. Each of FPC and Borrower has established and
maintains an adequate monitoring system to insure that it remains in compliance
in all material respects with all federal, state and local laws, rules and
regulations applicable to it.
(xv) Restrictions. Neither FPC nor Borrower is a party or subject to
any contract, agreement, or charter or other corporate restriction, which
materially and adversely affects its business or the use or ownership of any of
its Properties. Neither FPC nor Borrower is a party or subject to any contract
or agreement which restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit 4(a)(xv) hereto, none of which prohibit the
execution of or compliance with this Guaranty or any other Loan Documents by FPC
or Borrower, as applicable.
(xvi) Litigation. Except as set forth on Exhibit 4(a)(xvi) hereto,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of FPC, threatened,
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against or affecting FPC or any of its Subsidiaries or the business, operations,
Properties, prospects, profits or condition of FPC or any of its Subsidiaries
that if adversely determined could reasonably be expected, individually or in
the aggregate to have a Material Adverse Effect on Borrower and its Subsidiary,
taken as a whole, or on FPC and its Subsidiaries (other than Borrower and its
Subsidiary), taken as a whole. Neither FPC nor any of its Subsidiaries is in
default with respect to any order, writ, injunction, judgment, decree or rule of
any court, governmental authority or arbitration board or tribunal.
(xvii) No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of the Loan Agreement and
this Guaranty or FPC's performance hereunder, constitute a Default or an Event
of Default. Neither FPC nor any of its Subsidiaries is in default, and no event
has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Money Borrowed, except for
defaults in the payment of any Indebtedness for Money Borrowed not in excess of
$250,000.
(xviii) Pension Plans. Except as disclosed on Exhibit 4(a)(xviii)
hereto, neither FPC nor any of its Subsidiaries has any Plan. Each of FPC and
its Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of FPC or its Subsidiaries exists in connection with any Plan. Neither
FPC nor any of its Subsidiaries has any withdrawal liability in connection with
a Multiemployer Plan.
(xix) Acquisition. No default has occurred under any of the
Purchase Documents.
(b) Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Guaranty shall be continuous in
nature and shall remain accurate, complete and not misleading at all times
during the term of this Guaranty, except (i) to the extent such representations
and warranties relate to an earlier date, (ii) to the extent the information
contained in any exhibit attached hereto is updated from time to time and such
information so updated would not otherwise cause or result in a Default or Event
of Default under the Loan Agreement, or (iii) for changes in the nature of FPC's
or any of its Subsidiaries' business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or (iv) for such
changes are expressly permitted by this Guaranty. Except as set forth in the
preceding sentence, each loan request made pursuant to subsection 3.1.1 of the
Loan Agreement shall constitute FPC's reaffirmation, as of the date of each such
loan request, of each representation, warranty or other statement made or
furnished to Lender by or on behalf of FPC in this Guaranty, any of the other
Loan Documents, or any instrument, certificate or financial statement furnished
in compliance with or in reference thereto.
(c) Survival of Representations and Warranties. All representations and
warranties of FPC contained in this Guaranty or any of the other Loan Documents
shall survive the execution, delivery and acceptance thereof by Lender and the
parties thereto and the closing of the transactions described therein or related
thereto.
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5. COVENANTS, ETC.
(a) Affirmative Covenants. During the term of this Guaranty, and
thereafter for so long as there are any Obligations to Lender, FPC covenants
that, unless otherwise consented to by Lender in writing, it shall:
(i) Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, to visit and inspect the
Properties of FPC and Borrower, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, FPC's and Borrower's business, assets, liabilities, financial
condition, business prospects and results of operations.
(ii) Notices. Promptly notify Lender in writing of the occurrence of
any event or the existence of any fact which (i) renders any representation or
warranty in this Guaranty, the Loan Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading or (ii) gives rise to a Material Adverse
Effect of Borrower or FPC.
(iii) Financial Statements and Reports. Keep, and cause each
Subsidiary to keep, adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP
applied on a consistent basis, unless FPC's certified public accountants concur
in any change therein and such change is disclosed to Lender and is consistent
with GAAP):
(A) not later than 90 days after the close of each fiscal year of
FPC, unqualified audited financial statements of FPC and its
Subsidiaries as of the end of such year, on a Consolidated basis,
certified by a firm of independent certified public accountants of
recognized standing selected by FPC but acceptable to Lender (except
for a qualification for a change in accounting principles with which
the accountant concurs) and unaudited financial statements of FPC
and its Subsidiaries as of the end of such year, on a consolidating
basis; and
(B) no later than 45 days after the end of each of the first three
fiscal quarters of FPC, unaudited quarterly financial statements of
FPC and its Subsidiaries as of the end of such quarter, certified by
the chief financial officer of FPC as prepared in accordance with
GAAP and fairly presenting the Consolidated and consolidating
financial position and results of operations of FPC and its
Subsidiaries for such quarter subject only to changes from audit and
year-end adjustments and except that such statements need not
contain notes;
(iv) Further Assurances, etc. Will, at the expense of FPC, will
promptly execute and deliver all further instruments, and take all further
action, that may be necessary, or that the Lender may reasonably request, in
order to enable the Lender to exercise and enforce its rights and remedies
hereunder.
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(b) Negative Covenants. During the term of this Guaranty, and thereafter
for so long as there are any Obligations outstanding, FPC covenants that, unless
Lender has first consented thereto in writing, it will not:
(i) Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit Borrower to merge or consolidate, with any Person; nor acquire, nor
permit Borrower to acquire, all or any substantial part of the Property of any
Person; provided, however, that FPC or any of its Subsidiaries (other than
Borrower and its Subsidiaries) may from time to time engage in a merger,
consolidation, acquisition or similar transaction as long as in the reasonable
judgment of FPC, such merger, consolidation, acquisition or similar transaction
would not cause or result in a Default or Event of Default under the Loan
Agreement.
(ii) Affiliate Transactions. Enter into, or be a party to, or permit
Borrower to enter into or be a party to, any transaction with any Affiliate of
FPC, except in the ordinary course of and pursuant to the reasonable
requirements of FPC's or Borrower's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to FPC than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
of FPC or Borrower or except for a transaction not involving Borrower or its
Subsidiaries that in the reasonable judgment of FPC would not cause or result in
a Default or Event of Default under the Loan Agreement.
(iii) Disposition of Assets. Sell, lease or otherwise dispose of all
or a portion of its Capital Stock of Borrower, or permit Borrower to sell, lease
or otherwise dispose of any of its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except in accordance with the Loan Documents.
(iv) Stock of Borrower. Permit Borrower to issue any additional
shares of its Capital Stock.
(v) Restricted Investment. Permit Borrower to make or have any
Restricted Investment.
(vi) Tax Consolidation. Pay the taxes covered by the Tax Sharing
Agreement among Borrower and FPC, substantially in the form of Exhibit H to the
Loan Agreement, or require Borrower to pay such taxes, other than in accordance
with the Tax Sharing Agreement.
6. THE LENDER
(a) Lender Appointed Attorney-in-Fact. Without limitation to the other
rights and remedies of the Lender hereunder, FPC hereby irrevocably appoints the
Lender as FPC's attorney-in-fact, with full authority in the place and stead of
FPC and in the name of FPC or otherwise, from time to time in the Lender's
discretion, to take any action and to execute any instrument which the Lender
may deem necessary or advisable to accomplish the purposes of this Guaranty,
after the occurrence and during the continuance of any Event of Default, to file
any claims or take any action or institute any proceedings which the Lender may
deem necessary
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or desirable for the enforcement of the guarantee contained herein or otherwise
to enforce the rights of the Lender hereunder.
FPC hereby acknowledges, consents and agrees that the power of attorney granted
pursuant to this Section 6.1 is irrevocable and coupled with an interest.
(b) Lender May Perform. The Lender may from time to time, at its option,
perform any act which FPC agrees hereunder to perform and which FPC shall fail
to perform after being requested in writing so to perform (it being understood
that no such request need be given after the occurrence and during the
continuance of any Event of Default) and the Lender may from time to time take
any other action which the Lender reasonably deems necessary, it being
understood and agreed that in each such case all costs and expenses incurred by
the Lender in connection therewith shall be payable by FPC pursuant hereto.
7. REMEDIES
(a) Certain Remedies. If any Event of Default shall have occurred and be
continuing, the Lender may exercise all rights and remedies as set forth in
Sections 10.2 and 10.3 of the Loan Agreement, which Sections 10.2 and 10.3 are
hereby incorporated by reference as though specifically set forth in this
Section.
(b) Indemnity and Expenses. In addition to and not in limitation of the
terms of Section 2(a)(ii) herein, FPC hereby indemnifies and holds harmless the
Lender from and against any and all claims, losses, and liabilities arising out
of or resulting from this Guaranty (including enforcement of this Guaranty),
except claims, losses, or liabilities resulting from the Lender's gross
negligence or willful misconduct. Upon demand, FPC will pay to the Lender the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Lender may
incur in connection with:
(i) the administration of this Guaranty, the Loan Agreement and
the other Loan Documents;
(ii) the exercise or enforcement of any of the rights of the
Lender hereunder;
(iii) the failure by FPC to perform or observe any of the
provisions hereof; or
(iv) the advancing of any funds pursuant to the terms of this
Agreement.
8. MISCELLANEOUS PROVISIONS
(a) Loan Document. This Guaranty is a Loan Document executed pursuant to
the Loan Agreement and shall (unless otherwise expressly indicated herein) be
construed, administered and applied in accordance with the terms and provisions
thereof.
(b) Binding on Successors, Transferee and Assigns; Assignment. This
Guaranty shall be binding upon FPC and its successors, transferee and assigns
and shall inure to the benefit of
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and be enforceable by the Lender its successors, transferee and assigns;
provided, however, that FPC not may assign any of its obligations hereunder
without the prior written consent of the Lender.
(c) Amendments, etc. No amendment to or waiver of any provision of this
Guaranty, nor consent to any departure by FPC herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lender and FPC,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
(d) Addresses for Notices to the Guarantor. All notices and other
communications hereunder to FPC shall be delivered to it at the address set
forth below its signature hereto or at such other address or facsimile number as
shall be designated by FPC in a written notice to the Lender at the address
specified in the Loan Agreement and complying as to delivery with the terms of
Section 11.8 of the Loan Agreement.
(e) No Waiver; Remedies. In addition to, and not in limitation of, the
other sections herein, no failure on the part of the Lender to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(f) Captions. Section captions used in this Guaranty are for convenience
of reference only, and shall not affect the construction of this Guaranty.
(g) Setoff. In addition to, and not in limitation of, any rights of the
Lender under applicable law, the Lender shall have the right upon the occurrence
and continuance of any Event of Default to appropriate and apply to the payment
of the obligations of FPC owing to it hereunder, whether or not then due, and
FPC hereby grants to the Lender a continuing security interest in, any and all
balances, credits, deposits, accounts or moneys of FPC then or thereafter
maintained with the Lender.
(h) Severability. Wherever possible each provision of this Guaranty shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
(i) Counterparts. This Guaranty may be executed by the parties hereto in
several counterparts and additional persons may become a guarantor under this
Guaranty by executing a counterpart of this Guaranty, each of which shall be
deemed an original and all of which shall constitute but one and the same
agreement.
(j) Application of Payments. Upon the occurrence of an Event of Default as
set forth in Section 10.1 of the Loan Agreement all payments received by the
Lender hereunder shall be applied in the Loan Agreement.
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(k) GOVERNING LAW; CONSENT TO FORUM. THIS GUARANTY HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK, NEW
YORK. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK: PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF NEW YORK. AS
PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT
OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF PLEDGOR OR LENDER, PLEDGOR
HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, AT
LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN PLEDGOR AND LENDER PERTAINING TO THIS GUARANTY OR TO
ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY. PLEDGOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH PLEDGOR MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS GUARANTY AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF PLEDGOR'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS GUARANTY SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS GUARANTY TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
(l) WAIVERS BY PLEDGOR. PLEDGOR WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS, THE GUARANTY OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT,
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR
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ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH PLEDGOR MAY IN ANY WAY
BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS
REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR
ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. PLEDGOR
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S
ENTERING INTO THIS GUARANTY AND THAT LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH PLEDGOR. PLEDGOR WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, FPC has caused this Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.
FINANCIAL PERFORMANCE CORPORATION
By: /s/____________________________________
Name: _______________________________________
Title:_______________________________________
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
ACKNOWLEDGED AND ACCEPTED:
FLEET CAPITAL CORPORATION
By: /s/___________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
Title: Vice President
Date: as of January __, 2001
Address: ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
15