Exhibit 10.50
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 5th day of November, 2003, by and
between ISRAEL DISCOUNT BANK OF NEW YORK ("Lender"), a New York banking
corporation, with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and
SYMS CORP., a New Jersey corporation ("Borrower"), with its chief executive
office located at ▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H
WHEREAS, Borrower has requested that Lender provide a $20 million
credit facility for the purposes hereinafter set forth; and
WHEREAS, Lender has agreed to make the requested credit facility
available on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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
1.1 LOANS. Lender hereby agrees, on the terms and subject to the
conditions of this Agreement, and for so long as no Event of Default exists, to
make Revolving Credit Loans to Borrower during the period (the "Credit Period")
from the date hereof to and including the Business Day immediately preceding the
Commitment Termination Date, as requested by Borrower in the manner set forth in
subsection 3.1.1 hereof, in an aggregate principal amount which, when added to
the Lender Letter of Credit Obligations which are to be outstanding immediately
after giving effect to the borrowing and application of such Loans, shall not
exceed the Maximum Revolving Credit Amount (also hereinafter referred to as the
"Commitment"). Subject to the terms of this Agreement, during the Credit Period,
Borrower may borrow Revolving Credit Loans by means of Floating Rate Loans and
LIBOR Rate Loans. The principal amount of any repayment during the Credit Period
shall be deemed available, subject to the extent of an Available Commitment, for
borrowing during the Credit Period and shall otherwise be governed in all
respects by the other terms and conditions of this Agreement. Amounts repaid on
or after the Commitment Termination Date may not be reborrowed. All Revolving
Credit Loans shall be due and payable in full, together with all interest and
fees accrued hereunder, on the Commitment Termination Date, subject to prior
payment thereof as required pursuant to the terms hereof.
1.2 USE OF PROCEEDS. The proceeds of the Loans shall be used solely for
Borrower's general business purposes not inconsistent with the terms of this
Agreement.
1.3 LETTERS OF CREDIT.
(a) Subject to the terms and conditions hereof, and for so
long as no Event of Default exists, Lender shall, upon the request of Borrower,
issue Letters of Credit (which term shall be deemed to include the amendment,
renewal or extension of an existing Letter of Credit) for the account of
Borrower during the period from the date hereof through and including the
Commitment Termination Date having an aggregate face amount at any one time
outstanding up to the Available Letter of Credit Commitment as then in effect.
Documentary Letters of Credit shall not have an expiry date later than 90 days
after issuance and standby Letters of Credit shall not have an expiry date later
than 1 year after issuance. In no event, however, shall any Letter of Credit
have an expiry date later than the Commitment Termination Date. Borrower shall
execute and deliver to Lender, all letter of credit agreements and other
documents required by Lender, in form and substance satisfactory to Lender in
its sole discretion. Borrower agrees to unconditionally and absolutely
indemnify, defend, pay and hold harmless Lender for all draws, claims, losses,
damages, obligations and liabilities suffered or incurred at any time by Lender,
including without limitation attorneys' fees and reasonable costs with respect
to any and all Letters of Credit, except to the extent suffered or incurred as a
result of Lender's gross negligence or willful misconduct. Lender shall notify
Borrower in accordance with its customary practice of any payment or
disbursement made by Lender under any Letter of Credit. Borrower shall either
(i) reimburse Lender in immediately available funds on the same day as Borrower
is notified by Lender that any draw is paid by Lender under the Letters of
Credit (all such amounts so paid or disbursed until paid, are hereinafter
referred to as "Unpaid Drawings"), or (ii) notify the Lender that it has elected
to convert such amount into a Revolving Credit Loan.
(b) If, notwithstanding the other provisions of this
subsection 1.3, on the Commitment Termination Date there are outstanding any
Letters of Credit which have not expired or been terminated with the consent of
the Borrower and the respective beneficiaries thereof, then this Agreement
(including, without limitation, this Section 1.3 and Section 2.7 hereof) and the
respective rights, obligations and covenants of the Borrower and Lender under
this Agreement shall remain in full force and effect until the date on which the
last of the Letters of Credit expire or is terminated (with the consent of the
Borrower and the respective beneficiaries thereof) and all payments made by
Lender under the Letters of Credit are reimbursed in full by the Borrower except
that the Commitment (including the obligation to issue Letters of Credit) shall
terminate on the Commitment Termination Date and Lender shall have no obligation
after the Commitment Termination Date to make Loans or issue or extend Letters
of Credit hereunder.
(c) Upon the execution and delivery by Borrower to Lender of
its standard form of application and continuing reimbursement agreement for
Letters of Credit and Letter of Credit Security Agreement attached hereto as
Exhibit 1.3 (individually, an "Application", and collectively, the
"Applications") and upon payment by Borrower to Lender of the standard charges
and fees then customarily imposed by Lender in connection with such
Applications, and the Letter of Credit Fees described in Section 2.4 for the
sole account of Lender, Lender shall, subject to the terms and conditions of
this Agreement, in a timely manner in accordance with its standard operating
procedures, issue a Letter of Credit for the account of the Borrower. In the
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event of any conflict or inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any Application, the terms of this
Agreement shall control.
(d) The obligations of the Borrower under this Section 1.3 to
reimburse Lender with respect to Unpaid Drawings (including interest thereon)
shall, absent gross negligence or willful misconduct of Lender, be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which Borrower may have or have had against
Lender.
SECTION 2: INTEREST, FEES AND CHARGES
2.1 INTEREST.
2.1.1 REVOLVING CREDIT LOANS:
(a) RATE OPTIONS. Except as provided below, all Loans shall
bear interest at the applicable Floating Rate. At the time of each Loan, and
thereafter from time to time, Borrower shall have the right, subject to the
terms and conditions of this Agreement, and provided no Event of Default has
occurred and is continuing, to designate to Lender in a writing that all or a
portion of the Loans shall bear interest at either the (i) LIBOR Based Rate or
(ii) Floating Rate. Interest on each portion thereof shall accrue and be paid at
the time and rate applicable to the respective option selected by Borrower or
otherwise governing under the terms of this Agreement. If for any reason the
LIBOR Based Rate option is unavailable, the Floating Rate shall apply. The rate
of interest on Floating Rate Loans shall increase or decrease by an amount equal
to any increase or decrease in the Prime Rate effective as of the opening of
business on the day that any such change in the Prime Rate occurs.
(b) LIBOR RATE OPTION:
(i) REQUESTS. Provided no Event of Default has
occurred and is continuing, and subject to the provisions of this Section
2.1.1(a)(i), if Borrower desires to have the LIBOR Based Rate apply to all or a
portion of the Loans, Borrower shall give Lender a written irrevocable request
no later than 12:00 Noon Eastern time two (2) Business Days prior to the
requested borrowing date specifying (i) the date the LIBOR Based Rate shall
apply (which shall be a Business Day), (ii) the LIBOR Interest Period, and (iii)
the amount to be subject to the LIBOR Based Rate provided that such amount shall
be an integral multiple of $100,000. In no event may Borrower have outstanding
at any time more than five different tranches of LIBOR Rate Loans.
(ii) LIBOR INTEREST PERIODS. LIBOR Rate Loans
shall be selected by Borrower for a LIBOR Interest Period during which the LIBOR
Based Rate is applicable; provided, however, that (x) if the LIBOR Interest
Period would otherwise end on a day which shall not be a Business Day, such
LIBOR Interest Period shall be extended to the next preceding or succeeding
Business Day as is customary in the market to which such LIBOR Rate Loan
relates. All accrued and unpaid interest on a LIBOR Rate Loan shall be paid at
the end of the applicable LIBOR Interest Period in accordance with Section
3.2.2. Notwithstanding
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anything herein contained to the contrary, no LIBOR Interest Period with respect
to any of the Revolving Credit Loans may end after the Commitment Termination
Date. Subject to all of the terms and conditions applicable to a request to
convert all or a portion of the Loans to a LIBOR Rate Loan, Borrower may extend
a LIBOR Rate Loan as of the last day of the LIBOR Interest Period to a new LIBOR
Rate Loan. If Borrower fails to notify Lender of the LIBOR Interest Period for a
subsequent LIBOR Rate Loan at least two (2) Business Days prior to the last day
of the then current LIBOR Interest Period of an outstanding LIBOR Rate Loan,
then such outstanding LIBOR Rate Loan shall, at the end of the applicable LIBOR
Interest Period, accrue interest at the Floating Rate.
(iii) ADJUSTMENTS. The Adjusted LIBOR Rate may
be automatically adjusted by Lender on a prospective basis to take into account
the increased costs of the Lender in making or maintaining LIBOR Rate Loans
hereunder due to changes in applicable law or regulation or the interpretation
thereof occurring subsequent to the commencement of the then applicable LIBOR
Interest Period, including but not limited to, changes in tax laws (except
changes of general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor or other applicable governing body), excluding
the Reserve Percentage and any Reserve which has resulted in a payment pursuant
to Section 2.7 below, that increase the cost to Lender of funding the LIBOR Rate
Loan. Lender shall promptly give Borrower notice of such a determination and
adjustment, which determination shall be prima facie evidence of the correctness
of the fact and the amount of such adjustment.
(iv) UNAVAILABILITY. If Borrower shall have
requested the rate based on the Adjusted LIBOR Rate in accordance with this
Section 2.1.1(a)(i) and Lender shall have reasonably determined, in good faith,
that Eurodollar deposits equal to the amount of the principal of the requested
LIBOR Rate Loan and for the LIBOR Interest Period specified are unavailable, or
that the rate based on the Adjusted LIBOR Rate will not adequately and fairly
reflect the cost of the Adjusted LIBOR Rate applicable to the specified LIBOR
Interest Period, of making or maintaining the principal amount of the requested
LIBOR Rate Loan during the LIBOR Interest Period specified, or that by reason of
circumstances affecting Eurodollar markets, adequate means do not exist for
ascertaining the rate based on the Adjusted LIBOR Rate applicable to the
specified LIBOR Interest Period, Lender shall promptly give notice of such
determination to Borrower that the rate based on the Adjusted LIBOR Rate is not
available. A determination, in good faith, by Lender hereunder shall, absent
manifest error, be prima facie evidence of the correctness of the fact and
amount of such additional costs or unavailability. Upon such a determination,
(i) the obligation to convert to, or maintain a LIBOR Rate Loan at the rate
based on the Adjusted LIBOR Rate shall be suspended until Lender, shall have
notified Borrower that such conditions shall have ceased to exist, and (ii) the
portion of the Loans subject to the request or requested conversion shall accrue
interest at the Floating Rate.
(v) ILLEGALITY. Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof after the date hereof by any governmental authority
charged with the administration or interpretation thereof shall make it unlawful
for Lender to make or maintain any LIBOR Rate
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Loan, then, by written notice to Borrower, Lender may: (i) declare that LIBOR
Rate Loans will not thereafter be made by Lender hereunder, whereupon Borrower
shall be prohibited from requesting LIBOR Rate Loans from Lender hereunder
unless such declaration is subsequently withdrawn; and (ii) if unlawful to be so
maintained, require that all outstanding LIBOR Rate Loans made by it be
converted to Floating Rate Loans, in which event (x) all such LIBOR Rate Loans
shall be automatically converted to Floating Rate Loans as of the effective date
of such notice as provided in the sentence below and (y) all payments and
prepayments of principal which would otherwise have been applied to repay the
converted LIBOR Rate Loans shall instead be applied to repay the Floating Rate
Loans resulting from the conversion of such LIBOR Rate Loans. For purposes of
this Paragraph (E), a notice to Borrower by Lender pursuant to this paragraph
shall be effective, if lawful, on the last day of the then current LIBOR
Interest Period; in all other cases, such notice shall be effective on the day
of receipt by Borrower.
(vi) CAPITAL ADEQUACY. If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (where or not
having the force of law) issued after the date hereof (each a "Change of Law"),
there shall be any increase in the cost to Lender of making, funding, or
maintaining Loans or issuing or maintaining Letters of Credit, then Borrower
shall, from time to time, upon Lender's demand, pay to Lender additional amounts
sufficient to compensate Lender for such increased cost. In addition, if Lender
determines that compliance with any law or regulation or any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) issued after the date hereof affects or would affect
the amount of capital required or expected to be maintained by Lender or any
corporation controlling Lender and that the amount of such capital is increased
by or based upon the existence of loans or letters of credit hereunder, then,
upon Lender's demand, Borrower shall immediately pay to Lender, from time to
time as specified by Lender, additional amounts sufficient to compensate Lender
or such corporation in the light of such circumstances to the extent that Lender
reasonably determines such increase in capital to be allocable to the existence
of loans or letters of credit hereunder. Notwithstanding anything to the
contrary herein contained, the Borrower shall not be required to compensate the
Lender for any increased costs or increased capital incurred more than ninety
(90) days prior to the date that the Lender notifies the Borrower of the Change
in Law giving rise to such increased costs or increased capital and of Lender's
intention to claim compensation therefor.
2.1.2 DEFAULT RATE OF INTEREST. Upon the occurrence of any Event of
Default under Sections 7.1.1 or 7.1.2, or upon the occurrence of any other Event
of Default and notice from the Lender to the Borrower, during the continuance of
such Event of Default, the outstanding principal balance of all Loans shall, at
the option of Lender, bear interest at a rate per annum equal to the Default
Rate.
2.1.3 CONVERSION OF LOANS. Subject to the terms hereof, Borrower
shall have the right to convert Floating Rate Loans into LIBOR Rate Loans and
LIBOR Rate Loans into Floating Rate Loans from time to time, provided that
Borrower shall give to Lender notice of
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each such conversion as provided in Section 3.1.1 and provided further that no
conversion of LIBOR Rate Loans shall occur except on the last day of the LIBOR
Interest Period applicable thereto unless Borrower has compensated Lender
pursuant to Section 2.7(e) hereof.
2.2 COMPUTATION OF INTEREST AND FEES. Interest and all fees shall
be computed on the actual number of days elapsed over a year of 360 days.
2.3 UNUSED LINE FEE. Borrower shall pay to Lender a non-refundable
unused line fee (the "Line Fee") on the daily average amount of the Available
Commitment for the period from the date hereof to and including the earlier of
the date the Commitment is terminated pursuant to Section 3.3 hereof or the
Commitment Termination Date, at the rate of .5% per annum. The Line Fee shall be
payable quarterly in arrears on the last Business Day of each March, June,
September and December and on the earlier of the date the Commitment is
terminated pursuant to Section 3.3 hereof or the Commitment Termination Date.
2.4 LETTER OF CREDIT FEES. Borrower shall pay to Lender letter of
credit fees equal to (i) for documentary letters of credit, the greater of (1)
one-eighth of one percent (.125%) of the face amount of such documentary letters
of credit or (2) $100.00, payable at (A) the time of a draw on a Letter of
Credit and (B) the time of the issuance of a Letter of Credit and on each 120th
day thereafter (if such Letter of Credit shall remain outstanding) to the extent
of the undrawn amount of such Letter of Credit, and (ii) for standby letters of
credit two and one-half percent (2.5%) per annum of the face amount of each such
standby letter of credit, payable quarterly in advance. Borrower shall also pay
to Lender all of Lender's standard charges and fees (including without
limitation all cable and wire transfer charges) for the amendment, extension,
cancellation or other administration of each such Letter of Credit
("Administrative Fees"). All such fees are collectively the "L/C Fees". L/C Fees
shall not be subject to refund or pro-ration for any reason.
2.5 DEFICIENCY BALANCE FEES. Borrower shall pay a deficiency
balance fee ("Deficiency Balance Fee") on (a) the excess, if any, of (i)
$250,000 over (ii) the aggregate average daily balance of collected free and
unrestricted funds in Borrower's non-interest bearing deposits maintained with
Lender, after deducting any and all service charges thereon (the "Collected
Balances") during each three month period or portion thereof (the "Period");
multiplied by (b) the average of the Floating Rate in effect during such Period
for the actual number of days in the Period. The Deficiency Balance Fee shall be
payable quarterly in arrears on the last Business Day of each March, June,
September and December and on the earlier of the date the Commitment is
terminated pursuant to Section 3.3.2 hereof or the Commitment Termination Date.
2.6 REIMBURSEMENT OF EXPENSES. If, at any time or times regardless
of whether or not an Event of Default then exists, Lender incurs reasonable
out-of-pocket legal or accounting expenses or any other reasonable out-of-pocket
costs or expenses in connection with (a) the analysis, negotiation and
preparation of this Agreement or any of the other Loan Documents, and any
amendment, modification, replacement or termination of this Agreement or any of
the other Loan Documents that has been requested by Borrower and Lender or been
executed by the Loan Parties; (b) the administration of this Agreement or any of
the other Loan Documents and the transactions contemplated hereby and thereby;
(c) any litigation, contest, dispute, suit,
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proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to this Agreement or any of the other Loan Documents
or Borrower's affairs (except to the extent any such cost or expense arises from
Lender's gross negligence or willful misconduct); or (iv) any attempt to enforce
any rights of 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, then
all such costs and expenses shall be charged to Borrower. All amounts chargeable
to Borrower under this Section shall be payable promptly after demand by the
Lender therefore, which demand shall include a reasonably detailed invoice
therefore, and shall bear interest from the date 10 business days after such
demand is made until paid in full at the Floating Rate applicable to the Loans
from time to time.
2.7 MAXIMUM REVOLVING CREDIT OBLIGATIONS; PREPAYMENTS.
(a) At no time shall the aggregate principal amount of the
Loans and Lender Letter of Credit Obligations outstanding exceed the Maximum
Revolving Credit Amount. In the event that for any reason, the aggregate
outstanding principal amount of the Loans and Lender Letter of Credit
Obligations exceeds the Maximum Revolving Credit Amount, Borrower shall
immediately, after notice, prepay the Loans or cash collateralize the Letters of
Credit in an amount sufficient to reduce the sum of the aggregate principal
amount of the Loans and Lender Letter of Credit Obligations to an amount not
greater than the Maximum Revolving Credit Amount. Any such prepayment shall be
made with interest accrued to the date of prepayment and be subject to the
indemnity agreement set forth in Section 2.7(e) hereof.
(b) Subject to the delivery of a Borrowing Notice pursuant to
Section 3.1.1 and to the indemnity agreement set forth in Section 2.7(e) hereof
with respect to LIBOR Rate Loans, but otherwise without premium or penalty,
Borrower shall have the right to prepay any Loan at any time and from time to
time in whole or in part; PROVIDED, HOWEVER, that (x) any such prepayment (other
than a prepayment pursuant to SECTION 2.7(A)) shall be in an amount not less
than such amounts as provided in Section 2.7(d) hereof; and (y) any such
prepayment of a Loan shall be made with interest accrued on the principal amount
being prepaid to the date of prepayment.
(c) Except as set forth in Sections 2.1.1(b)(iv) and (v)
hereof, and except as may be otherwise expressly directed by Borrower provided
no Event of Default exists or is continuing, all payments and repayments made
pursuant to the terms hereof shall be applied first to Floating Rate Loans, and
shall be applied to LIBOR Rate Loans only to the extent any such payment exceeds
the principal amount of Floating Rate Loans outstanding at the time of such
payment.
(d) Except for borrowings which exhaust the full remaining
amount of the Commitment or prepayments pursuant to SECTION 2.7(A) or which
result in the prepayment of all Loans of a particular type, each borrowing and
prepayment and each conversion of a LIBOR Rate Loan shall be in a minimum amount
of $100,000, and each borrowing and prepayment of a Floating Rate Loan shall be
in a minimum amount of $50,000.
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(e) INDEMNITY; YIELD PROTECTION. [Borrower hereby indemnifies
Lender against any loss (each a "Loss") or reasonable out-of-pocket expenses
which Lender may sustain or incur as a consequence of (a) the receipt or
recovery by Lender whether by voluntary prepayment, acceleration or otherwise,
of all or any part of a LIBOR Rate Loan other than on the last day of any LIBOR
Interest Period applicable to such Loan, (b) the conversion of a LIBOR Rate Loan
prior to the last day of any LIBOR Interest Period applicable to such LIBOR Rate
Loan, (c) the failure to borrow any LIBOR Rate Loan after agreement shall have
been reached with respect to the LIBOR Interest Period therefor, or (d) any
failure by Borrower to borrow a LIBOR Rate Loan on the date specified by
Borrower's written notice. The Borrower shall pay to Lender a yield maintenance
fee (the "yield maintenance fee") as payment in full in respect of each such
Loss, if any, 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 maturity date of the term chosen pursuant to
the LIBOR Interest Period as to which the prepayment is made, shall be
subtracted from the "Cost of Funds" component of the fixed 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 term chosen pursuant to the LIBOR Interest
Period as to which the prepayment is made. Said amount shall be reduced to
present value calculated by using the number of days remaining in the designated
term and using the above-referenced United States Treasury security rate and the
number of days remaining in the term chosen pursuant to the LIBOR Interest
Period as to which the prepayment is made. The resulting amount shall be the
yield maintenance fee due to Lender upon prepayment of the LIBOR Rate Loan.
"Cost of Funds" as used herein means with respect to any such LIBOR Rate Loan
the Adjusted LIBOR Rate applicable thereto. If by reason of an Event of Default
hereunder, Lender elects to declare the Loans to be immediately due and payable,
then any yield maintenance fee with respect to the Loans shall become due and
payable in the same manner as though Borrower had been granted and had exercised
a right of prepayment.]
SECTION 3: LOAN ADMINISTRATION
3.1 MANNER OF BORROWING LOANS. Borrowings under the Credit Facility
established pursuant to Section 1 hereof shall be as follows:
3.1.1 LOAN REQUESTS. A request for a Loan shall be made, or shall
be deemed to be made, by an Authorized Officer in the following manner: Borrower
shall give Lender telephonic notice, to be promptly confirmed in writing on the
form attached hereto as Exhibit 3.1.1., of each borrowing (or continuation with
respect to a LIBOR Rate Loan), each conversion and prepayment of a Loan and, in
the case of the borrowing or prepayment of, or conversion of a Loan into, a
LIBOR Rate Loan, of the duration of each LIBOR Interest Period applicable
thereto (a "Borrowing Notice"). Each Borrowing Notice shall be irrevocable and
shall be effective only if received by Lender no later than, in the case of the
borrowing (or continuation), prepayment or conversion of a Floating Rate Loan,
12:00 Noon New York City time, on the date of borrowing (or continuation),
prepayment or conversion of such Floating Rate Loan or, in the case of the
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borrowing (or continuation), prepayment or conversion of a LIBOR Rate Loan,
12:00 Noon New York City time, on the date which is at least two (2) Business
Days, prior to the date of such borrowing (or continuation), prepayment or
conversion of the Loan designated in the Borrowing Notice. Each such Borrowing
Notice shall specify (a) the amount and type of Loan to be borrowed (or
continued), converted or prepaid and (b) the date of such borrowing (or
continuation), conversion or prepayment (which shall be a Business Day). Each
such Borrowing Notice of the duration of an LIBOR Interest Period shall specify
the LIBOR Rate Loans to which such LIBOR Interest Period is to relate.
3.1.2 DISBURSEMENT. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Loan requested, or deemed to be requested,
pursuant to this Section 3.1 as follows: the proceeds of each Loan shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds to Borrower's operating account maintained with
Lender for such purpose.
3.1.3 AUTHORIZATION. Borrower hereby authorizes Lender, in Lender's
sole discretion, to debit Borrower's operating account(s) in such sums as are
sufficient to pay all interest, when due, all principal when due, and all costs,
fees and expenses at any time owed by Borrower to Lender hereunder. Promptly
following any debit to Borrower's operating account for fees and expenses,
Lender shall provide Borrower with an invoice as to such fees and expenses.
3.2 PAYMENTS. The Obligations shall be payable as follows:
3.2.1 FUNDS; MANNER OF PAYMENT. Each payment and prepayment of
principal and interest on the Note shall be made in lawful money of the United
States in Federal or other immediately available funds without set-off or
counterclaim to Lender. Whenever any payment to be made hereunder or under any
Note shall be stated to be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or
fees, as the case may be.
3.2.2 INTEREST. Except as provided in the following sentence,
accrued interest on each Loan shall be payable in arrears (i) in the case of
Floating Rate Loans, quarterly in arrears on the last Business Day of each
March, June, September and December, (ii) in the case of LIBOR Rate Loans, on
the last day of the applicable LIBOR Interest Period relating thereto, and in
each case until the maturity of such Loan or the payment or prepayment thereof
in full. Interest at the Default Rate shall be payable from time to time on
demand of Lender.
3.2.3 COSTS, FEES AND CHARGES. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof to Lender or to any other Person designated by Lender in
writing.
3.2.4 OTHER OBLIGATIONS. The balance of the Obligations (other than
those set forth in this Section 3.2) requiring the payment of money shall be
payable by Borrower to
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Lender as and when provided in this Agreement, the Revolving Credit Note, the
Other Agreements, or the other Loan Documents.
3.3 MANDATORY AND OPTIONAL PREPAYMENTS; COMMITMENT REDUCTION OR
TERMINATION.
3.3.1 REDUCTION OR TERMINATION OF THE COMMITMENT. Borrower shall
have the right, upon at least two (2) Business Days' prior written or telephonic
notice (promptly confirmed in writing) to Lender, at any time to terminate or
from time to time reduce the Commitment without premium or penalty; PROVIDED
that the Commitment may not be reduced to the extent that following such
reduction the sum of the aggregate unpaid principal balance of the Loans and the
Lender Letter of Credit Obligations would exceed the Commitment. 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 extend or amend any Letters of Credit on or after the termination date
stated in such notice.
3.3.2 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 given by Borrower pursuant to Section 3.3.1. All
undertakings, agreements, covenants, warranties and representations of Borrower
contained in the Loan Documents shall survive any such termination and Lender
shall retain all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds and with respect to any
outstanding Letters of Credit issued for the account of Borrower and any other
outstanding Obligations of Borrower to Lender, Lender has obtained sufficient
cash collateral or an appropriate indemnification by any new lender.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. Subject to subsection 2.7
of this Agreement, all items of payment received by Lender by 2:00 P.M. Eastern
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 2:00 P.M. Eastern time, on any Business Day
shall be deemed received on the following Business Day. Until payment in full of
all Obligations and termination of this Agreement, Borrower irrevocably waives
(except as otherwise expressly provided for by Lender) 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, in such
manner as Lender may reasonably deem advisable, notwithstanding any entry by
Lender upon any of its books and records.
3.4.1 RELIANCE BY LENDER. Lender shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of Borrower or such other proper person or persons as may
be designated by Borrower in writing from time to time, and upon advice and
statements of legal counsel, independent accountants and other experts
reasonably selected by Lender.
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SECTION 4: REPRESENTATIONS AND WARRANTIES
4.1 GENERAL REPRESENTATIONS AND WARRANTIES. To induce Lender to enter
into this Agreement and to extend credit hereunder, each of the Loan Parties
makes the following representations and warranties to Lender:
4.1.1 ORGANIZATION AND QUALIFICATION. Each Loan Party is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the power to own its assets and to
transact the business in which it is presently engaged and in which it proposes
to be engaged. Each Loan Party 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 4.1.1 hereto and in all other states and
jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary, other than in such jurisdictions
where the failure to be so qualified would not have a material adverse effect on
the business, operations or financial condition of the Loan Parties taken as a
whole (a "Material Adverse Effect").
4.1.2 CORPORATE POWER AND AUTHORITY. Each Loan Party has full
corporate power and authority to enter into, execute, deliver and perform this
Agreement and each of the other 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
(i) require any consent or approval of the shareholders of the Loan Parties that
has not been obtained; (ii) contravene any Loan Party's charter, articles or
certificate of incorporation or by-laws; (iii) violate, or cause any Loan Party
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 such Loan Party, except to the extent that any such violation
or default would not have a Material Adverse Effect; (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 a Loan Party is a party or by
which it or its Properties may be bound or affected, except to the extent that
any such breach or default would not have a Material Adverse Effect; or either
(v) result in, or require, the creation or imposition of any Lien upon or with
respect to any of the Properties now owned or hereafter acquired by any Loan
Party, other than the Liens created hereby in favor of Lender.
4.1.3 LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement to which it is a
party, will be, a legal, valid and binding obligation of such Loan Party and
enforceable against such Loan Party in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general principles
of equity.
4.1.4 TITLE TO PROPERTIES; PRIORITY OF LIENS. Borrower and each of
its Subsidiaries has good and valid title to, or valid and subsisting interests
in, all of its real Property, and all of its other Property, in each case, free
and clear of all Liens except Permitted Liens. Borrower has paid or discharged,
or reserved for, all lawful claims which, if unpaid, might become a Lien against
any Properties of Borrower that is not a Permitted Lien.
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4.1.5 FINANCIAL STATEMENTS; FISCAL YEAR. The audited Consolidated
and Consolidating balance sheets of Borrower as of March 1, 2003 and the related
statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP and present fairly the financial positions of Borrower at such dates
and the results of Borrower's operations for such period. Except as set forth on
Exhibit 4.1.5, since March 1, 2003, there has been no material adverse change in
the financial condition of Borrower. The fiscal year of Borrower and, as of the
date of this Agreement, each of its Subsidiaries ends on or about the last day
of February of each year.
4.1.6 FULL DISCLOSURE. The financial statements referred to in
Section 4.1.5 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender provided pursuant to this Agreement or the other
Loan Documents, contain any untrue statement of a material fact or, (when taken
as a whole with all other information submitted by Borrower or made available by
Borrower to Lender), omit a material fact necessary to make the statements
contained therein or herein not misleading.
4.1.7 SOLVENT FINANCIAL CONDITION. Borrower is now and, after
giving effect to the Loans and Letters of Credit to be extended hereunder, at
all times will be, Solvent.
4.1.8 SURETY OBLIGATIONS. Except pursuant to the Loan Documents or
as set forth on EXHIBIT 4.1.5 hereto, as of the date of this Agreement no Loan
Party is obligated as guarantor, surety or indemnitor under any guaranty, surety
or similar bond to assure payment, performance or completion of performance of
any Indebtedness for Money Borrowed of any other Person.
4.1.9 TAXES. Borrower and each of its Subsidiaries has filed all
federal, state and local tax returns and other tax reports it is required by law
or extensions 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 are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings and the
applicable Borrower or Subsidiary maintains reasonable reserves on its books
therefor. The provision for taxes on the books of Borrower and each Subsidiary
of Borrower is reasonably adequate for all years not closed by applicable
statutes, and for its current fiscal year.
4.1.10 BROKERS. There are no claims against Borrower for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement.
4.1.11 PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower and
each Subsidiary of Borrower own or possess all the patents, trademarks, service
marks, trade names, copyrights and licenses used in and necessary for the
present conduct of its business without any known conflict with the rights of
others, except to the extent that any such failure so to do would not have a
Material Adverse Effect.
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4.1.12 GOVERNMENTAL CONSENTS. Each Loan Party has, and is in good
standing with respect to, all governmental consents, approvals, licenses,
authorizations, permits, certificates, inspections and franchises necessary to
conduct its business and to own or lease and operate its Properties as now owned
or leased by it, except, in each such case, where such failure would not have a
Material Adverse Effect on the business or Properties of the Loan Parties taken
as a whole.
4.1.13 COMPLIANCE WITH LAWS. Each Loan Party 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 it, its Properties or the conduct of
its business, domestic or foreign, and there have been no citations, notices or
orders of noncompliance issued to it under any such law, rule or regulation,
except, in each such case, where such noncompliance would not have a Material
Adverse Effect on its business, Property or financial condition. Each Loan Party
has established and maintains a system to monitor its compliance with all
federal, state and local laws, regulations and rules applicable to it, domestic
or foreign, the failure with which to comply would have a Material Adverse
Effect.
4.1.14 RESTRICTIONS. No Loan Party is a party or subject to any
contract or agreement which prohibits its execution of or compliance with this
Agreement or the other Loan Documents to which it is a party.
4.1.15 LITIGATION. Except as set forth on EXHIBIT 4.1.15 hereto,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of such Loan Party, threatened, against or affecting it or the
business, operations, Properties, profits or condition of such Loan Party which
(a) directly relate to the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) based on its good faith assessment of the
outcome, would reasonably be expected to have a Material Adverse Effect. No Loan
Party is in default with respect to any order, writ, injunction, judgment,
decree or rule of any court, governmental authority or arbitration board or
tribunal, except to the extent that any such default would not have a Material
Adverse Effect.
4.1.16 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 an Event of Default.
4.1.17 LEASES. Borrower is in full compliance with all of the terms
of each of its respective capitalized and operating leases except where such
noncompliance would not have a Material Adverse Effect.
4.1.18 EMPLOYEE PENSION BENEFIT PLANS. Except as disclosed on
EXHIBIT 4.1.18, neither Borrower nor any Subsidiary of Borrower has established,
maintained or contributed to (or had the obligation to contribute to) any
Employee Pension Benefit Plans. With respect to its Employee Pension Benefit
Plans, Borrower and/or its Subsidiaries as appropriate will have made, on or
prior to the Closing Date, all payments required to be made by it on or prior to
the Closing Date. Borrower has made available to Lender a true and correct copy
of the most current Form 5500 and any other form or filing required to be
submitted to any governmental agency
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with regard to all Employee Benefit Plans maintained by Borrower and/or any
Subsidiary of Borrower. All Employee Benefit Plans of Borrower and its
Subsidiaries have been operated in material compliance with the provisions of
the governing documents and with all applicable laws including, without
limitation, ERISA and the Code and the regulations and rulings thereunder.
Neither Borrower nor any Subsidiary of Borrower has incurred any withdrawal
liability, nor does Borrower or any of its Subsidiaries, except as disclosed on
EXHIBIT 4.1.18, have any contingent withdrawal liability, under ERISA to any
Multiemployer Plan. The present value of all accrued benefits under each Single
Employer Plan maintained by each Borrower and/or any of its Subsidiaries (based
on those assumptions used to fund the Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. All liabilities relating to accrued benefits or individual accounts
under those Employee Benefit Plans which are exempt from Part IV of ERISA have
been funded (either through insurance or otherwise) as of the date of this
representation. There are no pending actions, claims or lawsuits which have been
asserted or instituted against Borrower or its Subsidiaries' Employee Pension
Benefit Plans, the assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or against any fiduciary of any of such Employee
Pension Benefit Plans (other than routine benefit claims) nor does Borrower or
any of its Subsidiaries have knowledge of facts which could form the basis for
any such action, claim or lawsuit. There are no investigations or audits of
Borrower's or its Subsidiaries' Employee Pension Benefit Plans, any trusts under
such plans, the plan sponsor, the plan administrator or any fiduciary of any
such Employee Pension Benefit Plans which have been threatened or instituted nor
does Borrower or any of its Subsidiaries have knowledge of facts which could
form the basis for any such investigation or audit.
4.1.19 LABOR RELATIONS. Except as described on EXHIBIT 4.1.19
hereto, as of the date of this Agreement neither Borrower nor any Subsidiary of
Borrower is a party to any collective bargaining agreement. There are no
grievances, disputes or controversies with any union or any other organization
of Borrower or any Subsidiary of Borrower's employees, or threats of strikes,
work stoppages or any asserted pending demands for collective bargaining by any
union or organization which would reasonably be expected to have a Material
Adverse Effect.
4.1.20 FEDERAL RESERVE REGULATIONS. Borrower is not engaged
principally in, nor does it have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
"margin stock" (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States, as amended to the date hereof).
No part of the proceeds of any of the Loans will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose which violates or which is
inconsistent with the provisions of Regulations T, U, or X of said Board of
Governors.
4.1.21 NOT AN INVESTMENT COMPANY. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
nor is it subject to regulation under any federal or state statute or regulation
which limits its ability to incur Indebtedness for Money Borrowed hereunder.
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4.1.22 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of Borrower, all of Borrower's
operations and facilities are in material compliance with all material
Environmental Laws, and there is no Hazardous Materials contamination or
violation of any Environmental Law at its operations and facilities which is
reasonably likely to have a Material Adverse Effect.
(b) Borrower has not received any written complaint, notice of
violation, or of potential liability that is currently pending under
Environmental Laws which is reasonably likely to have a Material Adverse Effect,
nor is it aware that any governmental authority is contemplating delivering to
it any such notice.
(c) Borrower does not generate, treat, store or dispose of
Hazardous Materials except in a DE MINIMIS amount, in the ordinary course of its
business and in material conformity with all applicable material Environmental
Laws.
4.1.23 INDEBTEDNESS. Except as described on Exhibit 4.1.23 attached
hereto and except for Loans and Letters or Credit contemplated hereunder,
neither Borrower nor any of its Subsidiaries has outstanding, as of the Closing
Date, and after giving effect to the initial Loans and Letters of Credit
hereunder on the Closing Date, any Indebtedness for Money Borrowed.
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties of each Loan Party 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.
SECTION 5: COVENANTS AND CONTINUING AGREEMENTS
5.1 AFFIRMATIVE COVENANTS. During the term of this Agreement, so long
as the Commitment remains in effect, and for so long as there are any
Obligations outstanding to Lender, each Loan Party covenants and agrees that,
unless otherwise consented to by Lender in writing, it shall do the following:
5.1.1 VISITS AND INSPECTIONS. Permit representatives of Lender,
from time to time, during normal business hours, as often as may be reasonably
requested, to visit and inspect the Properties of Borrower and any Subsidiary of
Borrower, inspect, audit and make extracts from their books and records, and
discuss with their officers, their employees and their independent accountants,
Borrower's and any Subsidiary of Borrower's business, assets, liabilities,
financial condition, business, prospects and results of operations.
Notwithstanding anything to the contrary contained herein, unless an Event of
Default shall have occurred and be continuing, all costs and expenses incurred
by Lender under this Section 5.1.1 shall be for the account of the Lender, and
the Borrower shall have no liability therefore.
5.1.2 NOTICES. Promptly notify Lender in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading in any material respect,
15
including but not limited to promptly giving written notice to Lender of: (i)
the details of any Reportable Events (as defined in ERISA); (ii) the occurrence
of any event which constitutes an Event of Default; (iii) the commencement of
any proceeding or litigation which, if adversely determined, would materially
and adversely affect its financial condition or ability to conduct its business;
and (iv) the creation, establishment or acquisition, in any manner, of any
Subsidiary not existing on the date hereof.
5.1.3 FINANCIAL STATEMENTS. Cause to be prepared and furnished to
Lender the following (all to be prepared on a consistent basis):
(a) not later than ninety (90) days after the close of each
fiscal year of Borrower, either its 10K or audited consolidated financial
statements of Borrower and its Consolidated Subsidiaries as of the end of such
year, prepared and certified by either Deloitte & Touche LLP or another
nationally recognized firm of independent certified public accountants selected
by Borrower to have been prepared in accordance with GAAP without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit;
(b) not later than forty-five (45) days after the end of each
fiscal quarter hereafter, other than the fiscal quarter ending on the last month
of Borrower's fiscal year, either its 10Q or unaudited interim financial
statements of Borrower and its Consolidated Subsidiaries as of the end of such
quarter and of the portion of Borrower's fiscal year then elapsed, on a
Consolidated and Consolidating basis, certified by the principal financial
officers of Borrower to have been prepared in accordance with GAAP and fairly to
present the Consolidated and Consolidating financial position and results of
operations of Borrower and its Subsidiaries for such quarter and period, subject
only to the absence of footnotes, changes from audit and normal year-end audit
adjustments;
(c) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements and 8K's, which any such Loan Party files
with the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange;
(d) promptly after the filing thereof, copies of any annual
report to be filed under ERISA in connection with each Plan;
(e) not later than forty-five (45) days after the close of
each fiscal quarter hereafter, financial Projections for Borrower for the
balance of the current fiscal year in form reasonably acceptable to Lender;
(f) together with each set of financial statements described
in (i) and (ii) above, or more frequently if requested by Lender, a compliance
certificate signed by the chief financial officer of Borrower substantially in
the form of EXHIBIT 5.1.3 attached hereto, demonstrating compliance with the
financial covenants contained in Section 5.3 by calculation thereof as of the
end of such fiscal period, and certifying that no event has occurred which
constitutes an Event of Default under the Loan Documents; and
16
(g) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or related to
Borrower's financial condition or results of operations.
(h) Within forty-five (45) days after the delivery of the
financial statements described in clause (i) of Section 5.1.3, Borrower shall
forward to Lender a copy of the accountants' letter to Borrower's management, if
any, that is prepared in connection with such financial statements.
5.1.4 SIGNIFICANT SUBSIDIARIES. If the Borrower establishes,
creates, acquires or maintains any Significant Subsidiary, such entity shall
execute and deliver to the Lender an unconditional guaranty of payment of all
the Obligations, which guaranty shall be in form and substance reasonably
satisfactory to the Lender.
5.1.5 CONTINUANCE OF BUSINESS. Do, or cause to be done, all things
reasonably necessary to preserve and keep in full force and effect its corporate
existence and all permits, rights and privileges necessary for the proper
conduct of its business and continue to engage in the same or a similar line of
business, except to the extent the failure so to do would not have a Material
Adverse Effect.
5.1.6 PERFORM OBLIGATIONS. Pay and discharge all of its obligations
and liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties, when due, unless and to the
extent only that (a) the failure so to do would not have a Material Adverse
Effect, or (b) such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by it, and then only to the extent
that a bond is filed in cases where the filing of a bond is necessary to avoid
the creation of a Lien against any of its Properties.
5.1.7 INSURANCE. Maintain or cause to be maintained, with
responsible insurance companies such insurance on such of its properties, in
such amounts and against such risks as is customarily maintained by similar
businesses; file with Lender upon its request a detailed list of the insurance
then in effect, stating the names of the insurance companies, the amounts and
rates of the insurance, dates of the expiration thereof and the properties and
risks covered thereby;
5.1.8 COMPLY WITH ERISA. Comply with all applicable provisions of
ERISA now or hereafter in effect, except to the extent the failure so to comply
would not have a Material Adverse Effect.
5.1.9 COMPLIANCE WITH LAWS. Comply in all material respects with,
the provisions of all federal, state and local laws, rules and regulations
applicable to it, its Properties or the conduct of its business, domestic or
foreign, except where such noncompliance would not have a Material Adverse
Effect.
5.1.10 ENVIRONMENTAL LAWS.
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(a) Comply in all material respects with all material
Environmental Laws and obtain, comply with and maintain any and all material
licenses, approvals, registrations or permits required by material Environmental
Laws; and
(b) Defend, indemnify and hold harmless Lender and its
respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or relating to the violation of or non-compliance with any
material Environmental Laws applicable to any Loan Party, or any orders,
requirements or demands of any governmental authorities related thereto,
including, without limitation, attorney's and consultant's fees, investigation
and laboratory fees, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor.
5.2 NEGATIVE COVENANTS. During the term of this Agreement, so long as
the Commitment remains in effect, and for so long as there are any Obligations
outstanding to Lender, Borrower covenants and agrees that, unless Lender has
first consented thereto in writing, it will not do the following:
5.2.1 ACQUISITIONS; MERGERS.
(a) Acquire or permit any Subsidiary of a Borrower to acquire
all or substantially all of the stock, securities or assets of any Person
(whether by purchase, merger, consolidation or otherwise) other than another
Loan Party and other than acquisitions of (i) capital assets to the extent
governed by Section 5.3.4 and/or (ii) acquisitions of inventory in the ordinary
course of its business in any transaction or in any series of related
transactions (an "Acquisition"), unless such Acquisition constitutes a Permitted
Acquisition.
(b) Merge or consolidate, or permit any Subsidiary to merge
or consolidate, with any Person unless either Borrower or such Subsidiary is the
surviving corporation, the Loan Parties remain in compliance with all covenants
and agreements contained in this Agreement and the other Loan Documents, and
there exists no Event of Default after giving effect thereto, except that any
Subsidiary may merge into or consolidate with the Borrower or another
Subsidiary.
5.2.2 LOANS. Make, or permit any Subsidiary of a Borrower to make,
any loans or other advances of money (other than (i) any loan, advance, store
credit or similar credit extended to retail or wholesale customers of any Loan
Party in the ordinary course of business, (ii) commission, travel and other
loans, credits and advances to officers and employees in the ordinary course of
business consistent with past practice and (ii) anticipatory prepayments to
vendors in the ordinary course of business) to any Person (other than another
Loan Party) exceeding $2,000,000 in the aggregate outstanding at any time.
5.2.3 TOTAL INDEBTEDNESS FOR MONEY BORROWED. Create, incur, assume,
or suffer to exist, or permit any Subsidiary of a Borrower to create, incur,
assume, or suffer to exist, any Indebtedness for Money Borrowed, except:
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(a) Indebtedness for Money Borrowed owing to Lender under or
in connection with the Loan Documents;
(b) Indebtedness for Borrower Money to another Loan Party;
(c) Obligations to pay Capitalized Lease Obligations;
(d) Permitted Purchase Money Indebtedness;
(e) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(f) Indebtedness set forth on Exhibit 4.1.23 hereto; and
(g) guaranties of Capitalized Lease Obligations to the extent
that such lease obligations or similar obligations are not otherwise prohibited
by this Agreement;
5.2.4 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 (other than another Loan Party),
except in the ordinary course of and pursuant to the reasonable requirements of
Borrower's or Subsidiary's business and upon fair and reasonable terms that are
no less favorable to Borrower or Subsidiary than such Borrower or Subsidiary
would obtain in a comparable arm's length transaction with a Person not an
Affiliate of Borrower or its Subsidiaries.
5.2.5 LIMITATION ON LIENS. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(a) Liens at any time granted in favor of Lender;
(b) Liens for taxes, assessments or charges imposed by any
governmental authority (excluding any Lien imposed pursuant to any of the
provisions of ERISA) not yet due, or being contested in the manner described in
Section 4.1.9 hereto;
(c) deposits under workers' compensation, unemployment
insurance and social security laws, or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases or
to secure statutory obligations or surety, appeal bonds or discharge of ▇▇▇▇
▇▇▇▇▇, or to secure indemnity, performance or other similar bonds in the
ordinary course of business;
(d) statutory liens of landlords and other liens imposed by
law, such as carriers', warehousemen's or mechanic's liens, incurred in good
faith in the ordinary course of business and deposits made or bonds filed in the
ordinary course of business to obtain the release of such liens;
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(e) Liens existing on the Property of any Person at the time
such Person becomes a Subsidiary of the Borrower or is merged or consolidated
into the Borrower pursuant to a Permitted Acquisition transaction, and, in each
case, not created in contemplation of or in connection with the Permitted
Acquisition transaction, provided however, that such Liens do not extend to any
other Property of the Borrower;
(f) such other Liens as appear on EXHIBIT 5.2.5 hereto;
(g) Purchase Money Liens securing Permitted Purchase Money
Indebtedness; and
(h) judgment liens in respect of judgments that do not
constitute an Event of Default under Section 7.1.13;
(i) , zoning restrictions, rights of way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower and the Subsidiaries;
(j) Liens in favor of a financial institution encumbering
deposits (including the right of set-off) held by such financial institution in
the ordinary course of its commercial business and which are within the general
parameters customary in the banking industry;
(k) Liens on the assets of any Subsidiary in favor of the
Borrower or any other Subsidiary, and Liens on assets of the Borrower in favor
of any Subsidiary;
(l) Liens on "margin stock" to the extent that a prohibition
on such Liens would violate Regulation U;
(m) any extension, renewal or replacement of any Lien
otherwise permitted by this Agreement, PROVIDED that (i) such Lien shall not
apply to any other property or asset of the Borrower or any Subsidiary and (ii)
such Lien shall secure only those obligations which it secures on the date of
this Agreement and any extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(n) one or more other Liens securing Indebtedness or other
obligations, in the aggregate, not in excess of $500,000 at any one time
outstanding;
(o) such other Liens as Lender may hereafter approve in
writing.
5.2.6 [RESERVED].
5.2.7 DISPOSITION OF ASSETS. Sell, lease or otherwise dispose of,
or permit any Subsidiary of Borrower to sell, lease or otherwise dispose of all
or substantially all of its Assets other than any sale, lease or other
disposition of any Subsidiary to the Borrower.
20
5.2.8 RESTRICTED INVESTMENT. Make or have, or permit an Subsidiary
of Borrower to make or have, any Restricted Investment.
5.2.9 CHANGE IN BUSINESS. With respect to each Loan Party, make or
permit any Subsidiary to make any material change in its business, or in the
nature of its operation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution), except that (a) a Subsidiary of a Borrower may
dissolve so long as its assets are transferred to such Borrower or any other
subsidiary, and there exists no Event of Default after giving effect thereto.
5.2.10 ACCOUNTING POLICIES AND PROCEDURES. Permit any material
change in its or its Subsidiaries' accounting policies and procedures, other
than as required or permitted by GAAP, including a change in fiscal year,
without the prior consent of Lender.
5.2.11 AMENDMENT OF DOCUMENTS.
(a) Modify, amend, supplement its Certificate of
Incorporation or by-laws in any way that is adverse to the Lender.
(b) Modify, amend or supplement, agree to modify, amend or
supplement, or consent to the modification, amendment or supplement of any
documents evidencing or relating to any Subordinated Debt, without the express
prior written consent of Lender.
5.3 SPECIFIC FINANCIAL COVENANTS. During the term of this Agreement, so
long as the Commitment remains in effect, and for so long as there are any
Obligations outstanding to Lender, the Borrower, covenants and agrees that it
shall:
5.3.1 WORKING CAPITAL. Maintain as of the end of each fiscal
quarter for Borrower, Working Capital of no less than $50,000,000.
5.3.2 CONSOLIDATED LEVERAGE RATIO. Not permit the ratio of its
Consolidated Unsubordinated Indebtedness to its Consolidated Tangible Net Worth
to be greater than 1.0 to 1.
5.3.3 CONSOLIDATED TANGIBLE NET WORTH. Maintain as of the end of
each fiscal quarter a Consolidated Tangible Net Worth of not less than
$175,000,000.
5.3.4 CAPITAL EXPENDITURES. Not permit the sum of Borrower's
Capital Expenditures plus Dividends minus Net Proceeds to exceed $10,000,000 for
any fiscal year of the Borrower, commencing with the fiscal year ending February
28, 2004.
5.3.5 MAXIMUM NET OPERATING LOSS. Not permit the Net Operating Loss
after Taxes to exceed (a) $10,000,000 for any fiscal quarter, or for the four
consecutive fiscal quarters, ending March 1, 2004; or (b) $8,000,000 for any
fiscal quarter, or any four consecutive fiscal quarters, thereafter.
21
SECTION 6: CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO EFFECTIVENESS AND INITIAL LOAN AND/OR
LETTER OF CREDIT. 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, the effectiveness of the
Lender's commitment to extend credit under this Agreement is subject to
satisfaction of each of the following conditions precedent, and Lender shall not
be required to make the initial Loan or any subsequent Loan or issue the initial
or any subsequent Letter of Credit under this Agreement unless and until each of
the following conditions has been satisfied:
6.1.1 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 and certificates as Lender and its counsel shall require in
connection therewith, all in form and substance satisfactory to Lender and its
counsel, including, without limitation, the following:
(a) Certified copies of (i) resolutions of Borrower
authorizing the execution and delivery of this Agreement and the Loan Documents
and the performance of all transactions contemplated hereby and thereby, (ii)
Borrower's by-laws, and (iii) an incumbency certificate of Borrower listing the
Authorized Officers;
(b) A copy of the articles or certificate of incorporation of
Borrower, and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation;
(c) Good standing certificate for Borrower, issued by the
Secretary of State or other appropriate official of Borrower's jurisdiction of
incorporation;
(d) A closing certificate signed by a senior executive
officer of Borrower dated as of the date hereof, stating that (i) the
representations and warranties set forth in Section 4 hereof are true and
correct on and as of such date; and (ii) on such date no Event of Default has
occurred or is continuing;
(e) Borrower shall have executed and delivered to Lender the
Note;
(f) The favorable, written opinion of counsel to Borrower as
to the transactions contemplated by this Agreement and any of the other Loan
Documents as required by Lender;
(g) Payment of any fees and expenses owing to Lender
hereunder;
(h) Payment of reasonable legal fees and expenses of Lender;
(i) Such other documents, instruments and agreements as
Lender shall reasonably request in connection with the foregoing matters; and
22
(j) All legal matters incident to the effectiveness of this
Agreement shall be satisfactory to counsel to Lender.
6.1.2 NO DEFAULT. No Event of Default shall exist.
6.1.3 OTHER LOAN DOCUMENTS. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.
6.1.4 NO LITIGATION. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body (i) 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 or (ii) which relates to the assets, business operations or
obligations of any Loan Party which (in Lender's judgment) could have a material
adverse effect upon the creditworthiness, condition, operations or prospects
(financial or otherwise) of such Loan Party.
Upon the fulfillment of all of the foregoing conditions, the
Borrower shall deliver to the Lender a representation letter in the form
attached hereto as Exhibit 6.1, stating that all of the conditions of Section
6.1 have been satisfied, such representation letter to be signed and
acknowledged by Lender.
6.2 CONDITIONS TO EACH LOAN AND LETTER OF CREDIT. The obligation of
Lender to make each Loan or to issue each Letter of Credit hereunder (in each
case, an "extension of credit") (including the initial extension of credit to be
made hereunder) is subject to the satisfaction of the following conditions
precedent:
6.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Loan Parties herein and in the other Loan Documents and
which are contained in any certificate furnished at any time under or in
connection herewith shall be true and correct in all material respects on and as
of the date of such extension of credit as if made on and as of such date
(except for those which expressly relate to an earlier date);
6.2.2 NO EVENT OF DEFAULT. No Event of Default shall exist on the
date of such extension of credit or after giving effect to the extension of
credit to be made on such date;
6.2.3 RECEIPT OF NOTICE OR REQUEST. Lender shall have received a
Borrowing Notice for borrowing in accordance with Section 3.1.1 hereof or a
request for the issuance of a Letter of Credit in accordance with Section 1.3
hereof; and
6.2.4 LEGAL MATTERS. All legal matters incident to such extension
of credit shall be satisfactory to counsel to Lender.
Each request for an extension of credit (including continuations and
conversions) and each acceptance by Borrower of an extension of credit
(including continuations and conversions) shall be deemed to constitute a
representation and warranty by Borrower as of the date of such extension of
credit that the applicable conditions in Sections 6.2 have been satisfied.
23
SECTION 7: EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an "Event of Default":
7.1.1 PAYMENT OF PRINCIPAL. Borrower shall fail to make any payment
of principal owing hereunder or under the Note, on the due date thereof (whether
due at stated due date, maturity, upon acceleration, or otherwise).
7.1.2 PAYMENT OF INTEREST, FEES AND OTHER OBLIGATIONS. Borrower
shall fail to make any payment of interest, fees or expenses owing hereunder or
under the Note, within five (5) Business Days after the date such payment is due
and payable (whether due at stated due date, maturity, upon acceleration, or
otherwise).
7.1.3 PAYMENT OF OTHER OBLIGATIONS. Borrower shall fail to pay any
other of the Obligations (excluding those set forth in Sections 7.1.1 and
7.1.2), on the due date thereof (whether due at stated due date, maturity, upon
acceleration, or otherwise) and such failure shall continue beyond five (5)
Business Days after demand therefor.
7.1.4 MISREPRESENTATIONS. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower 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 6.2 hereof.
7.1.5 BREACH OF COVENANTS. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement and the breach
of such covenant is not cured within thirty (30) days after the sooner to occur
of notice of such breach from Lender or the date on which such failure or
neglect first becomes known to any officer of Borrower.
7.1.6 DEFAULT UNDER OTHER AGREEMENTS. 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 the Other Agreements or
other Loan Documents and such default is not cured within thirty (30) days after
notice from the Bank of such default.
7.1.7 OTHER DEFAULTS. There shall occur any default or event of
default on the part of a Borrower under any agreement, document or instrument to
which such Borrower is a party or by which a Borrower or any of its Property is
bound, creating or relating to any Indebtedness for Money Borrowed (other than
the Obligations) in excess of $1,000,000 ("Material Debt"), and such default or
event of default results in material Debt becoming due prior to its scheduled
maturity or payment date, or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any Material Debt
to cause any Material Debt to become due prior to its scheduled maturity or
payment date, PROVIDED that this Section 7.1.7 shall not apply to secured
Indebtedness for Money Borrowed that becomes due solely as a result of the
voluntary sale or transfer of the property or assets securing such Indebtedness
for Money Borrowed.
24
7.1.8 INSOLVENCY AND RELATED PROCEEDINGS. Borrower 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 shall be filed by or against Borrower under
the Bankruptcy Code (if against a Borrower, the continuation of such proceeding,
unstayed, for more than 60 days), or Borrower shall make any offer of
settlement, extension or composition to its unsecured creditors generally.
7.1.9 BUSINESS DISRUPTION; CONDEMNATION. There shall occur a
cessation of a substantial part of the business of a Borrower for a period which
significantly affects Borrower's capacity to continue its business, on a
profitable basis; or Borrower shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
substantially all of its business affairs.
7.1.10 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
Pension Benefit Guaranty Corporation to institute proceedings to terminate any
Employee Pension Benefit Plan or for the appointment by the appropriate United
States district court of a trustee for any Employee Pension Benefit Plan,
pursuant to Section 4042, or if any shall be terminated in a "distress
termination" pursuant to Section 4041(c) or any such trustee shall be requested
or appointed, or if Borrower is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal from such Employee Pension Benefit
Plan.
7.1.11 CHALLENGE TO AGREEMENT. A Loan Party shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement or any of the other Loan Documents, or the legality or enforceability
of any of the Obligations.
7.1.12 JUDGMENTS OR EXECUTIONS. One or more judgments for the
payment of money in an aggregate amount in excess of $500,000 above any
applicable insurance coverage therefore shall be rendered against the Borrower
and the same shall remain undischarged or unbonded for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of the Borrower to enforce any such judgment.
7.2 REMEDIES. Upon or at any time after the occurrence and during the
continuance of an Event of Default, Lender may, by written notice to Borrower
(i) terminate the Commitment, and/or (ii) declare the Note or any portion of the
Obligations to be forthwith due and payable, both as to principal and interest,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding, PROVIDED that if an event specified in Section 7.1.8
hereof shall have occurred, the Commitment shall automatically and immediately
terminate, the Note and all Obligations shall automatically and immediately
become due and payable, and Lender in each instance shall have the right to
exercise its rights hereunder, under the other Loan Documents and as otherwise
permitted by law.
25
7.3 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 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, powers, or
remedies hereunder or under any of the aforesaid agreements or other documents
or security shall not operate as a waiver of such performance, rights, powers
and remedies, but all such requirements, 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
and this Agreement has been terminated. 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 Document 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 8: MISCELLANEOUS
8.1 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 attorneys' fees and
legal expenses) to the extent resulting from Borrower's failure to observe,
perform or discharge Borrower's duties hereunder. Notwithstanding any contrary
provision in this Agreement, (i) the obligation of Borrower under this Section
8.1 shall survive the payment in full of the Obligations and the termination of
this Agreement, and (ii) the indemnity provided herein shall not be available to
the extent any such liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Lender arises from Lender's gross negligence or willful
misconduct.
8.2 MODIFICATION OF AGREEMENT; SALE OF INTEREST; PARTICIPATIONS. (a)
This Agreement may not be modified, altered or amended, except by an agreement
in writing signed by Borrower and 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 to any other bank or
financial institution. Provided no Event of Default exists or is continuing,
Lender may not sell, assign, transfer, or otherwise dispose of this Agreement
and any of the other Loan Documents to an entity other than a bank or financial
institution without Borrower's prior written consent, such consent not to be
unreasonably withheld. In the case of an assignment, the assignee shall have,
26
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 so assigned; provided, however, that Lender shall not assign the
Obligations to nor divide the Obligations among, more than three financial
institutions at any one time; provided, however, that any such assignee must be
a United States lending office of such financial institution. 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 participation 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.
8.2.1 In furtherance and without limiting the foregoing, Lender
shall have the unrestricted right at any time and from time to time, and without
the consent of or notice to Borrower, to grant to one or more banks or other
financial institutions (each, a "Participation") participating interests in the
any or all of the liabilities held by the Lender hereunder and under the Note.
In the event of any such grant by Lender of a participating interest to a
Participant, whether or not upon notice to any Borrower, Lender shall remain
responsible for the performance of its obligations hereunder and Borrower shall
continue to deal solely and directly with Lender in connection with Lender's
rights and obligations hereunder. Lender may furnish any information concerning
any Borrower in its possession from time to time to prospective Participants,
provided that Lender shall require any such prospective Participant to agree in
writing to maintain the confidentiality of such information.
8.3 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.
8.4 SUCCESSORS AND ASSIGNS. This Agreement, the other Loan Documents,
the Other Agreements shall be binding upon and inure to the benefit of the
successors and assigns of the Loan Parties thereto and Lender.
8.5 CUMULATIVE EFFECT; CONFLICT OF TERMS. 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.
8.6 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. Signature by facsimile shall bind the parties hereto.
8.7 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 personal delivery
27
against receipt, by overnight courier or by facsimile and shall be effective
upon receipt, addressed as follows:
If to Lender: Israel Discount Bank of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: (except for Notices and communications of
financial reports or Notices of borrowings,
conversions, continuations or prepayments)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: Syms Corp.
▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
or to such other address as each party may designate for itself by notice given
in accordance with this Section 8.7.
8.8 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.
8.9 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.
8.10 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF NEW
28
YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. EACH PARTY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY COURT WITHIN
THE STATE OF NEW YORK, AND EACH PARTY HEREBY WAIVES ANY OBJECTION WHICH PARTIES
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. EACH PARTY 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 TO THE PARTIES AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND SHALL BE EFFECTIVE UPON RECEIPT. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY PARTY 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.
8.11 WAIVER OF JURY TRIAL. THE PARTIES MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR THEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THE TRANSACTION
CONTEMPLATED HEREBY.
8.12 RIGHT OF SET-OFF. Each Loan Party hereby grants to Lender, a lien,
security interest and right of setoff as security for all liabilities and
Obligations to Lender, whether now existing or hereafter arising, upon and
against all deposits, credits, and property, now or hereafter in the possession,
custody, safekeeping or control of Lender or any entity under the control of
Lender, or in transit to any of them. At any time after the occurrence and
during the continuance of any Event of Default without demand or notice, Lender
may set off the same or any part thereof and apply the same to any liability or
Obligation of any Loan Party even though unmatured.
8.13 USURY. All agreements between any Loan Party and Lender are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced by the
29
Note or otherwise, shall the amount paid or agreed to be paid to Lender for the
use, forbearance or detention of the indebtedness evidenced by the Notes exceed
the maximum permissible under applicable law. In this regard, it is expressly
agreed that it is the intent of the Loan Parties and Lender in the execution,
delivery and acceptance of the Notes to contract in strict compliance with the
laws of the State of New York from time to time in effect. If, from any
circumstance whatsoever, fulfillment of any provision hereof or of said
agreements at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then the obligation to be
fulfilled shall automatically be reduced to the limit of such validity, and if
from any circumstances Lender should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced by
the Notes and not to the payment of interest. This provision shall control every
other provision of all agreements between the Loan Parties and Lender.
8.14 TREATMENT OF CERTAIN INFORMATION. The Lender agrees to use
reasonable precautions to keep confidential, in accordance with its customary
procedures for handling confidential information of the same nature, all
non-public information supplied by the Borrower or any Subsidiary pursuant to
the Loan Documents which (i) is clearly identified by such Person as being
confidential at the time the same is delivered to such Loan Party or (ii)
constitutes any financial statement, financial projections or forecasts, budget,
compliance certificate, audit report, management letter or accountants'
certification delivered hereunder ("information"), PROVIDED that nothing herein
shall limit the disclosure of any information (a) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, or
requested by any bank regulatory authority, (b) to auditors and accountants
thereof, (c) to the extent such information (A) becomes publicly available other
than as a result of a breach of this Agreement, (B) becomes available to Lender
on a non-confidential basis from a source other than the Borrower or any of its
Affiliates or (C) was available to the Lender on a non-confidential basis prior
to its disclosure to any of them by the Borrower or any of its Affiliates; and
(d) to the extent the Borrower shall have consented to such disclosure in
writing. Notwithstanding anything herein to the contrary, the Lender may
disclose to any and all persons, without limitation of any kind, any information
with respect to the U.S. federal income tax treatment and U.S. federal income
tax structure of the transactions contemplated hereby and all materials of any
kind (including opinion or other tax analyses) that are provided to the Lender
relating to such tax treatment and tax structure.
SIGNATURES ON FOLLOWING PAGE
30
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
BORROWER: SYMS CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
LENDER: ISRAEL DISCOUNT BANK OF NEW YORK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Vice President
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan Agreement dated as of November [5], 2003 by and
between Israel Discount Bank of New York, as Lender, and Syms Corp., as
Borrower, 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):
ACQUISITION - as defined in Section 5.2.1 of this Agreement.
ADJUSTED LIBOR RATE - for any LIBOR Interest Period applicable to any
LIBOR Rate Loan, the rate per annum as determined on the basis of the British
Bankers' Association ("BBA") "Interest Settlement Rate" for deposits, for a
period of time comparable to such LIBOR Interest Period, in U.S. Dollars as it
appears on the Dow ▇▇▇▇▇ Telerate Service page 3750 (or such other pages as may
replace page 3750 on that service or such other service as may by nominated by
the BBA for the purpose of displaying BBA Interest Settlement Rates) as of 11:00
a.m. London time on the day that is two (2) Business Days prior to the beginning
of such LIBOR Interest Period; provided, however, if the rate described above
does not so appear on any applicable interest determination date, the Adjusted
LIBOR Rate shall be the rate for deposits in 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 (2) Business Days prior to
the beginning of such LIBOR 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 Interest Period
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) Business Days
prior to the beginning of such LIBOR Interest Period preceding the first day of
such LIBOR Rate Loan as selected by Lender. The principal London office of each
of the four major London banks will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two such quotations are provided,
the rate for that date will be the arithmetic mean of all 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 Rate Loan
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is two London Business Days preceding the first day
of such LIBOR Rate Loan. In the event that Lender is unable to obtain any such
quotation as provided above, it will be deemed that the Adjusted LIBOR Rate
pursuant to a LIBOR Rate Loan 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 Lender, then for any period during which such
Reserve Percentage shall apply, the Adjusted LIBOR Rate shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.
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 Agreement referred to in the first sentence of
this Appendix A, all Exhibits thereto and this Appendix A as each of the same
may be amended, modified, renewed, extended, replaced, restated or substituted
from time to time.
APPLICABLE MARGIN - means the following percentage points with respect
to the Floating Rate or Adjusted LIBOR Rate, as applicable.
----------------------------------------------------------------------------
LIBOR RATE LOAN APPLICABLE MARGIN FLOATING RATE LOAN APPLICABLE MARGIN
----------------------------------------------------------------------------
2.50% 0%
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AUTHORIZED OFFICER - any officer of Borrower authorized by resolution
of the Board of Directors of Borrower to execute documents, instruments,
certificates and agreements on behalf of Borrower in favor of Lender and who is
identified on either the incumbency certificate referenced in Section 6.1 herein
or any updated incumbency certificate of the Borrower delivered to the Lender.
AVAILABLE COMMITMENT - at a particular time, an amount equal to the
amount by which the Commitment exceeds the sum of (i) the aggregate unpaid
principal amount at such time of all Loans made pursuant to Section 1.1, and
(ii) the Lender Letter of Credit Obligations.
AVAILABLE LETTER OF CREDIT COMMITMENT - at any date shall mean the
lesser of (a) the difference between the Letter of Credit Sublimit and the
Lender Letter of Credit Obligations at such date and (b) the Available
Commitment at such date.
BORROWING DATE - the Business Day specified in a Borrowing Notice
delivered pursuant to Section 3.1.1 as the date on which Borrower requests a
Loan.
BORROWING NOTICE - as defined in Section 3.1.1 of the Agreement.
BUSINESS DAY - any day other than a Saturday, Sunday, or other day on
which commercial banks in New York, New York are authorized or required to close
and, if the applicable day relates to a LIBOR Rate Loan or a LIBOR Interest
Period, the day on which dealings in dollar deposits are also carried on in the
London interbank market.
CAPITAL EXPENDITURES - cash expenditures made for the acquisition
(other than in connection with an 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
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portion of Capitalized Lease Obligations excluding expenditures for the
replacement of any assets leased under a Capitalized Lease Obligation in
connection with a casualty or loss thereof.
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.
COMMITMENT - as defined in Section 1.1 hereof.
COMMITMENT TERMINATION DATE - May 1, 2005
CONSOLIDATED - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
CONSOLIDATED AND CONSOLIDATING - the consolidation and consolidating in
accordance with GAAP of the accounts or other items as to which such term
applies.
CONSOLIDATED CURRENT ASSETS shall mean, at any time, the consolidated
current assets of the Borrower and its Subsidiaries, as determined in accordance
with GAAP.
CONSOLIDATED CURRENT LIABILITIES shall mean, at any time, the
consolidated current liabilities of the Borrower and its Subsidiaries, as
determined in accordance with GAAP.
CONSOLIDATED NET INCOME shall mean, for any period, net income of the
Borrower and its Subsidiaries for such period determined on a Consolidated basis
in accordance with GAAP.
CONSOLIDATED TANGIBLE NET WORTH as of any date shall mean the excess of
the Consolidated assets of the Borrower and its Consolidated Subsidiaries over
their Consolidated liabilities, all as determined in accordance with GAAP, but
excluding from such Consolidated assets all items that would be considered
"intangible assets" under GAAP and excluding from Consolidated liabilities all
Subordinated Debt.
CONSOLIDATED UNSUBORDINATED INDEBTEDNESS as of any date shall mean all
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis other
than Subordinated Debt.
CREDIT FACILITY - the credit facility established by Lender for the
making of Loans and the issuance of Letters of Credit pursuant to the Agreement.
CREDIT PERIOD - as defined in Section 1.1 hereof.
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 - in respect of any Loans not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate of interest per annum
during the period commencing on the due date thereof until such Loans are paid
in full equal to (a) in respect of the principal amount of Floating Rate Loans,
3% in excess of the Prime Rate as in effect from time to time plus the
Applicable Margin, and (b) in respect of the principal amount of LIBOR Rate
Loans, 3% in
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excess of the Adjusted LIBOR Rate in effect thereon at the time of such default
plus the Applicable Margin until the end of the then current LIBOR Interest
Period therefor and, thereafter, 3% in excess of the Prime Rate as in effect
from time to time plus the Applicable Margin; and in respect of other amounts
payable by any Borrower hereunder (including interest) not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period commencing on the due date until such other amounts are paid
in full equal to 3% in excess of the Prime Rate as in effect from time to time
plus the Applicable Margin.
DEFICIENCY BALANCE FEE - as defined in Section 2.5 of the Agreement.
DIVIDENDS shall mean all dividends declared or paid by the Borrower,
whether in cash or by the distribution of property (other than capital stock of
the Borrower), and any money or other property paid or distributed by the
Borrower in connection with the purchase, redemption, cancellation or retirement
of any capital stock of the Borrower.
DOLLARS OR $ OR US$ - lawful currency of the United States of America.
EMPLOYEE PENSION BENEFIT PLAN - means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, now or hereafter maintained for
employees of Borrower.
ENVIRONMENTAL LAWS - all federal, state and local laws, rules,
regulations, ordinances, permits, guidance, orders and consent decrees relating
to protection of the environment.
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 7.1 of the Agreement.
FLOATING RATE - a rate of interest equal to the Prime Rate plus the
Applicable Margin.
FLOATING RATE LOANS - collectively, all Loans bearing interest at the
Floating Rate.
GAAP - generally accepted accounting principles in the United States of
America, as in effect from time to time.
HAZARDOUS MATERIALS - any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, defined in
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.),
and in the regulations adopted pursuant thereto, or in any other Environmental
Law.
INDEBTEDNESS - as applied to a Person means, without duplication
SECTION 1: 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
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the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person, and
(iv) in the case of Borrower, the Obligations.
INDEBTEDNESS FOR MONEY BORROWED - means (i) Indebtedness arising from
the lending of money by any Person to the Borrower, including Indebtedness (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) that was issued or assumed on a
deferred basis as full or partial payment for Property (other than obligations,
if any, to retail or wholesale customers in respect of deposits, lay-a-way
payments or other similar obligations); (ii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iii) reimbursement obligations with respect to
letters of credit or guaranties of letters of credit and (iv) Indebtedness of a
Loan Party under any guaranty of obligations that would constitute Indebtedness
for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by a
Loan Party.
LETTER OF CREDIT SUBLIMIT - $20,000,000.
LENDER LETTER OF CREDIT OBLIGATIONS - at any date shall mean the sum of
(a) the aggregate undrawn amount at such date of all outstanding Letters of
Credit issued by Lender pursuant to this Agreement, plus (b) the amount of all
Unpaid Drawings relating to such Letters of Credit, less cash collateral
securing the same.
LETTER(S) OF CREDIT - any standby or documentary letter of credit
issued under the terms hereof.
LIBOR BASED RATE - a rate of interest on the Loans equal to the
Adjusted LIBOR Rate plus the Applicable Margin.
LIBOR INTEREST PERIOD - a period of one, two or three months duration
during which the LIBOR Based Rate is applicable.
LIBOR RATE LOANS - collectively, all Loans bearing interest at the
LIBOR Based Rate.
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 and including, without limitation,
the security interest, security title or lien arising from a security agreement,
mortgage, deed of trust, deed to secure debt, encumbrance, pledge, conditional
sale or trust receipt, or a lease, consignment or bailment for security
purposes. 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
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which title to the Property has been retained by or vested in some other Person
for security purposes.
LINE FEE - as defined in Section 2.3 of the Agreement.
LOAN DOCUMENTS - the Agreement, the Notes and the Other Agreements, as
each of the same may be amended, modified, renewed, extended, replaced, restated
or substituted from time to time.
LOANS - all loans and advances of any kind made by Lender pursuant to
the Agreement.
LOAN PARTY - each of Borrower and any Significant Subsidiary of
Borrower.
MAXIMUM REVOLVING CREDIT AMOUNT - $20,000,000.
MULTIEMPLOYER PLAN - means a Plan which is described in Section
4001(a)(3) of ERISA.
NET OPERATING LOSS AFTER TAXES means, for any period, the operating
loss of the Borrower and its Consolidated Subsidiaries determined in accordance
with GAAP adjusted for provision for income taxes and without giving effect to
any extraordinary gains or losses or gains or losses from sales of assets other
than inventory sold in the ordinary course of business.
NET PROCEEDS - for any period, the net cash proceeds received by the
Borrower and its Subsidiaries on a Consolidated basis during such period in
connection with the sale, transfer or other disposition of any fixed assets.
NOTE - the Revolving Credit Note.
OBLIGATIONS - all Loans, Unpaid Drawings, Lender Letter of Credit
Obligations, 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, or either of them, to Lender of any kind
or nature, present or future, arising under the Agreement or any of the other
Loan Documents and 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. The term includes
without limitation, all interest, charges, fees, expenses, attorneys' fees, and
any other sums chargeable to Borrower under any of the Loan Documents.
OTHER AGREEMENTS - any and all agreements and instruments (other than
the Agreement), heretofore, now or hereafter executed by Borrower, any other
Loan Party, or any guarantor, and delivered to Lender in respect of the
transactions contemplated by the Agreement, as each of the same may be amended,
modified, renewed, extended, replaced, restated or substituted from time to
time.
PARTICIPATION - as defined in Section 11.3(b) of the Agreement.
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PERMITTED ACQUISITION - an Acquisition by any Borrower or its
Subsidiaries which satisfies all of the following requirements: (a) no Event of
Default exists hereunder or would exist immediately after giving effect to such
Acquisition; (b) the Purchased Business engages in the same, similar or related
lines of business as Borrower's; (c) in the case of a merger or consolidation,
and in other cases where appropriate, the board of directors or other governing
body of the other Person which is the subject of the transaction of merger or
consolidation shall have approved such Acquisition; (d) the Loan Parties shall
have delivered to Lender a certificate from the chief financial officer of
Borrower stating that the Acquisition constitutes a Permitted Acquisition (as
defined under the Loan Agreement) and will not result, immediately after giving
effect thereto, in Event of Default, together with: (i) a compliance certificate
demonstrating financial covenant compliance under Section 5.3 before giving
effect to such Acquisition; and (ii) a pro forma compliance certificate
demonstrating that, upon giving effect to such Acquisition on a PRO FORMA basis
(i.e., calculations being made after giving effect to the Acquisition during the
tested period as if such transaction had occurred on the first day of such
period), the Loan Parties shall be in compliance with all of the covenants set
forth in Section 5.3; (e) the consideration (including cash consideration and
any assumption of Indebtedness for Money Borrowed, but excluding consideration
consisting of any capital stock of Borrower issued to the seller or the capital
stock or other Property which is the subject of the Acquisition) paid, shall not
exceed $2,500,000 for any one Acquisition (whether in one instance or series of
related transactions) or $5,000,000 in the aggregate for all Acquisitions in any
twelve month period without the consent of Lender; and (f) Borrower shall have
given Lender ten (10) days written notice prior to the consummation of such
Acquisition.
PERMITTED LIENS - any Lien of a kind specified in Section 5.2.5 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 Purchase
Money Indebtedness of Borrower and Capitalized Lease Obligations of Borrower at
the time outstanding, does not exceed $1,000,000.
PERSON - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, unincorporated
organization, or a government or agency or political subdivision thereof, or any
other type of entity.
PRIME RATE - a fluctuating per annum rate of interest so designated or
publicly announced from time to time by Lender as its prime rate for commercial
loans. The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate being charged to any customer.
PROJECTIONS - Borrower's forecasted Consolidated and Consolidating (a)
balance sheets, (b) profit and loss statements, and (c) cash flow statements,
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.
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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 for Money Borrowed (other than
the Obligations) incurred at the time of or within 90 days prior to or after the
acquisition or construction of any fixed assets for 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 Indebtedness shall not include any Capitalized Lease Obligation.
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 (which shall be deemed to include all accessions thereto,
proceeds thereof and appurtenances (whether tangible or intangible) thereto),
the purchase price of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien.
PURCHASED BUSINESS - the business purchased in an Acquisition.
REGULATION D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal Regulations, as
amended, and any successor thereto.
RENTALS - means, as of the date of determination, all payments which
the lessee is required to make by the terms of any lease.
REPORTABLE EVENT - any of the events set forth in Section 4043(b) of
ERISA with respect to which the PBGC has not waived the notice requirement
provided for in that Section.
RESERVE - for any day, that reserve (expressed as a decimal) which is
in effect (whether or not actually incurred) with respect to Lender on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor or any other banking authority to which Lender is subject including
any board or governmental or administrative agency of the United States or any
other jurisdiction to which Lender is subject), for determining the maximum
reserve requirement (including without limitation any basic, supplemental,
marginal or emergency reserves) for Eurocurrency liabilities as defined in
Regulation D.
RESERVE PERCENTAGE - for Lender on any day, that percentage (expressed
as a decimal) which is in effect on such day, prescribed by the Board of
Governors of the Federal Reserve System (or any successor or any other banking
authority to which Lender is subject, including any board or governmental or
administrative agency of the United States or any other jurisdiction to which
Lender is subject) for determining the maximum reserve requirement (including
without limitation any basic, supplemental, marginal or emergency reserves) for
"Eurocurrency liabilities" as defined in Regulation D, in each case used to fund
a LIBOR Rate Loan subject to an Adjusted LIBOR Rate. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective day of any change in
the Reserve Percentage.
RESTRICTED INVESTMENT - any investment made in cash 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:
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(i) investments in one or more Subsidiaries of the Borrower and
investments by one or more Subsidiaries of the Borrower in the Borrower or any
other Subsidiary thereof;
(ii) property (excluding real property) to be used in the ordinary
course of business;
(iii) current assets arising from the sale of goods and services in
the ordinary course of business of a Borrower;
(iv) 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;
(v) investments in certificates of deposit, bankers acceptances and
other "money market instruments" maturing within one year from the date of
acquisition issued by Israel Discount Bank of New York or any of its
subsidiaries and Affiliates or by any other financial institution organized
under the laws of the United States, any state thereof having capital surplus
and undivided profits aggregating at least $100,000,000;
(vi) 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;
(vii) repurchase agreements maturing not more than 90 days after
the acquisition thereof, entered into with any bank or trust company organized
under the laws of the United States of America, any State thereof having capital
and surplus in an aggregate amount of not less than $500,000,000 relating to
United States of America government obligations;
(viii) mutual funds that invest in any of the foregoing;
(ix) Permitted Acquisitions; and
(x) investments permitted by Section 5.2.2;
(xi) Capital Expenditures permitted by section 5.3.4; and
(xii) other investments having an aggregate outstanding unrecovered
cost not in excess of $500,000.
REVOLVING CREDIT LOANS - revolving credit loans made by Lender to
Borrower during the Credit Period pursuant to Section 1.1 of the Agreement.
REVOLVING CREDIT NOTE - the promissory note in substantially the form
of Exhibit A hereto, to be executed by Borrower in favor of Lender to evidence
Borrower's obligation to repay the Revolving Credit Loans.
SECURITY - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
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SIGNIFICANT SUBSIDIARY - shall have the same meaning as set forth in
Rule 1-02 of Regulation S-X as promulgated by the Securities and Exchange
Commission.
SINGLE EMPLOYER PLAN - means an Employee Benefit Plan which is
described in Section 4001(a)(15) of ERISA.
SOLVENT - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
liabilities (including contingent debts), (ii) is able to pay all of its
liabilities as such liabilities mature and (iii) has capital sufficient to carry
on its business and transactions and all business and transactions in which it
is about to engage.
SUBORDINATED DEBT - unsecured Indebtedness for Money Borrowed of
Borrower or any Subsidiary of Borrower that is subordinated to the Obligations
in a manner, under terms and subject to a written agreement satisfactory to
Lender.
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.
UNPAID DRAWINGS - as defined in Section 1.3.
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).
WORKING CAPITAL as of any date shall mean Consolidated Current Assets
minus Consolidated Current Liabilities.
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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