REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
This REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT dated April 15,
1999, among THE ▇▇▇▇▇▇▇▇▇▇ CORPORATION, a corporation organized under the laws
of the State of Delaware ("▇▇▇▇▇▇▇▇▇▇"); DAG ACQUISITION CORP., a Delaware
corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇▇▇ ("DAGA"); COMPONENTS
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsidiary of
▇▇▇▇▇▇▇▇▇▇ ("Components"); GLOBAL SOURCING NETWORK, LTD., a New York corporation
and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇▇▇ ("GSN"; Pietrafesa, DAGA, Components
and GSN, each a "Borrower" and collectively "Borrowers"); the financial
institutions which are now or which hereafter become a party hereto
(collectively, the "Lenders" and individually a "Lender"); and PNC BANK,
NATIONAL ASSOCIATION, a national banking association ("PNC"), as collateral and
administrative agent for Lenders (PNC, together with its successors and assigns
in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein
contained, Borrowers, Lenders and Agent hereby agree as follows:
SECTION 1. DEFINITIONS.
1.1 Accounting Terms. As used in this Agreement, each Note, or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of ▇▇▇▇▇▇▇▇▇▇ for ▇▇▇▇▇▇▇▇▇▇'▇ Fiscal Year ended
December 31, 1998.
1.2 General Terms. For purposes of this Agreement the following terms
shall have the following meanings (terms defined in the singular to have the
same meaning when used in the plural, and vice versa):
"Account Debtor" shall mean any Person who is or may become obligated
under or on account of a Receivable.
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
"Accounts Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i) hereof.
"Acquisition" shall mean any transaction (other than the Initial
Acquisitions), or any series of related transactions, by which a Borrower
directly or indirectly (i) acquires all or substantially all of any ongoing
business of any Person, whether through the purchase of assets, merger or
otherwise, (ii) acquires (in one transaction or as the most recent transaction
in a series of transactions) control of at least a majority in
ordinary voting power of the Equity Interests having ordinary voting power for
the election of directors, or (iii) acquires control of 50% or more of the
Equity Interests in any other Person.
"Acquisition Documents" shall mean all stock purchase agreements,
merger agreements, asset purchase agreements or similar agreements, documents or
instruments entered into by a Borrower in connection with an Acquisition and all
schedules, exhibits and attachments forming a part thereof.
"Acquisition Target" shall mean a Person whose assets or Equity
Interests are to be acquired by a Borrower or a wholly-owned Subsidiary of a
Borrower pursuant to an Acquisition.
"Advance Rates" shall mean, collectively, the Receivables Advance Rate
and the Inventory Advance Rate.
"Advances" shall mean and include the Revolving Advances, Letters of
Credit, the Term Loan and each other advance made by Agent or Lenders pursuant
to the terms of this Agreement or any of the Other Documents to or for the
benefit of any Borrower.
"Affiliate" of any Person shall mean (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the Equity Interests having ordinary voting power for the election of
directors of such Person or the individuals performing similar functions for any
such Person, or (y) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
Agreement and shall include its successors and assigns.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Base Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"Amount Due From Factor" shall mean (a) at the date in question, (i) if
a current Factor Status Statement has been delivered to Lender on such date, an
amount equal to the aggregate credit balances due to Borrower under the
Factoring Agreement on such date as reflected on the Factor Status Statement, or
(ii) if a current Factor Status Statement has not been delivered to Lender on
such date, an amount equal to the aggregate credit balances due to Borrower
under the Factoring Agreement on such date as reflected on the Due From Factor
Report delivered to Lender by Borrower on such date or (iii) in the absence of
delivery of Due From Factor Report, an amount determined by Lender in its sole
discretion, minus (b) at the date in question, the Factor Reserve.
"Applicable Law" shall mean all laws, rules and regulations applicable
to the Person, conduct, transaction, covenant, Loan Document or Material
Contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of governmental bodies;
and all orders, judgments and decrees of all courts and arbitrators.
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"Asset Acquisition Agreement" shall mean the Asset Purchase Agreement
(including all exhibits and schedules thereto) dated as of March 11, 1999 among
DAG, as seller, Nadel, DAGA, as buyer, and ▇▇▇▇▇▇▇▇▇▇.
"Asset Acquisition Documents" shall mean the Asset Acquisition
Agreement and all documents, instruments and other agreements executed in
connection therewith or pursuant thereto, including the Asset Acquisition Note.
"Asset Acquisition Note" shall mean that certain Promissory Note dated
on or about the Closing Date made by DAGA payable to the order of DAG in the
original principal amount of $400,000.
"Authority" shall have the meaning set forth in Section 4.19(d).
"Bankruptcy Code" shall mean title 11 of the United States Code.
"Base Rate" shall mean the base commercial lending rate of PNC as
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by PNC as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by PNC to any particular class or category of customers of PNC.
"Blocked Account" shall have the meaning ascribed to it in Section
4.15(h) hereof.
"Borrower" or "Borrowers" shall have the meaning set forth in the
preamble to this Agreement, all Persons who become a Borrower by executing and
delivering a Joinder Agreement at Agent's request, and shall extend to all
permitted successors and assigns of such Persons.
"Borrowers on a consolidated basis" shall mean the Borrowers' accounts
or other items as to which such term applies, consolidated in accordance with
GAAP.
"Borrowers' Account" shall have the meaning set forth in Section 2.7.
"Borrowing Agent" shall mean ▇▇▇▇▇▇▇▇▇▇.
"Borrowing Base Certificate" shall mean a certificate from the
President, Chief Operating Officer or Chief Financial Officer of the Borrowing
Agent to Agent by which such officer shall certify to Agent the Formula Amount
and calculation thereof as of the date of the certificate, such certificate to
be in form and substance satisfactory to Agent.
"Business Day" shall mean with respect to Eurodollar Rate Loans, any
day on which commercial banks are open for domestic and international business,
including dealings in Dollar deposits in London, England and New York, New York
and with respect to all other matters, any day other than a day on which
commercial banks in New York, New York are authorized or required by law to
close.
"Business Interruption Insurance Assignment" shall mean the Collateral
Assignment of Business Interruption Insurance to be executed by each Borrower on
the Closing Date in favor of Agent, for its benefit and for the ratable benefit
of Lenders, as security for the payment of the Obligations.
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"Capital Expenditures" shall mean expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations.
"Capitalized Lease Obligation" shall mean any Indebtedness of a
Borrower represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Cash Taxes" shall mean, for any period, the actual federal, state and
location taxes of a Person based on income or business activity paid in cash
during such period.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean (a) the occurrence of any event (whether
in one or more transactions) which results in a transfer of Control of
▇▇▇▇▇▇▇▇▇▇ to a Person who is not the Original Owner or (b) any merger or
consolidation of or with any Borrower in which a Borrower is not the surviving
entity or sale of all or substantially all of the property or assets of any
Borrower to any Person other than another Borrower.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, Liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon the
Collateral, any Borrower or any of its Subsidiaries.
"Client Risk Account" shall mean a Factored Account with respect to
which the risk of the Account Debtor's nonpayment for any reason is borne by
▇▇▇▇▇▇▇▇▇▇ instead of Factor.
"Closing Date" shall mean April 15, 1999 or such other date as may be
agreed to in writing by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean and include all of the following types or items
of property or interests in property of each Borrower:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
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(e) all Real Property;
(f) all Subsidiary Stock;
(g) all of each Borrower's right, title and interest in and to (i) its
respective goods and other property including all merchandise returned or
rejected by Customers, relating to or securing any of the Receivables; (ii) all
of each Borrower's rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff,
detinue, replevin, reclamation and repurchase; (iii) all additional amounts due
to any Borrower from any Customer relating to the Receivables; (iv) other
property, including warranty claims, relating to any goods securing this
Agreement; (v) all of each Borrower's contract rights, rights of payment which
have been earned under a contract right, instruments, documents, chattel paper,
warehouse receipts, deposit accounts, money, securities and investment property;
(vi) if and when obtained by any Borrower, all real and personal property of
third parties in which such Borrower has been granted a Lien or security
interest as security for the payment or enforcement of Receivables; and (vii)
any other goods, personal property or real property now owned or hereafter
acquired in which any Borrower has expressly granted a security interest or may
in the future grant a security interest to Agent hereunder, or in any amendment
or supplement hereto or thereto, or under any other agreement between Agent and
any Borrower;
(h) all of each Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f) or
(g) of this Paragraph; and
(i) all proceeds and products of (a), (b), (c), (d), (e), (f), (g) and
(h) in whatever form, including: cash, deposit accounts (whether or not
comprised solely of proceeds), certificates of deposit, insurance proceeds
(including hazard, flood and credit insurance), negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements,
documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds.
"Commitment Percentage" of any Lender shall mean the percentage set
forth below such Lender's name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.
"Commitment Transfer Supplement" shall mean a document in the form of
Exhibit B hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Eligible Assignee purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Compliance Certificate" shall mean a compliance certificate to be
signed by the chief financial officer of the Borrowing Agent, which shall state
that, based on an examination sufficient to permit him to make an informed
statement, no Default or Event of Default exists, or if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Borrowers with respect to
such default and, such certificate shall have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Section 6.9, 7.6 and 7.11 hereof.
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"Consents" shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Borrower's
business, including all consents required by Applicable Law.
"Consigned Inventory" shall mean Inventory of a Borrower that is in the
possession of another Person on a consignment, sale or return, or other basis
that does not constitute a final sale and acceptance of such Inventory.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate
or the Term Loan Rate.
"Control" or "control" of any Person" shall mean the power, direct or
indirect (x) to vote 50% or more of the securities having ordinary voting power
for the election of directors of such Person or (y) to direct or cause the
direction of the management and policies of such Person by contract or
otherwise.
"Controlled Disbursement Account" shall mean any demand deposit account
established and maintained by Borrowers with PNC or any Affiliate of PNC after
the Closing Date with respect to which Borrowers and Agent agree that the
presentation for payment by PNC or such Affiliate of PNC of any check or other
item of payment drawn on a such account shall be deemed an irrevocable request
for a Revolving Advance pursuant to Section 2.1(d)(iii) of this Agreement.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrowers, are treated as a single employer
under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
"DAG" shall mean Diversified Apparel Group, Ltd., a New York
corporation.
"DAG Subordination Agreement" shall mean that certain Debt
Subordination Agreement dated on or about the Closing Date among Agent,
▇▇▇▇▇▇▇▇▇▇, DAGA and DAG with respect to the obligations of ▇▇▇▇▇▇▇▇▇▇ and DAGA
to DAG.
"Debt Payments" shall mean and include all cash actually expended by
Borrowers to make (a) interest payments on any Advances hereunder, plus (b)
scheduled principal payments on the Term Loan, plus (c) payments for all fees,
commissions and charges set forth herein and with respect to any Advances, plus
(d) capitalized lease payments, plus (e) schedule payments with respect to any
other Indebtedness for borrowed money.
"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
"Defaulting Lender" shall have the meaning set forth in Section 2.15(a)
hereof.
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"Depository Accounts" shall have the meaning set forth in Section
4.15(h) hereof.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Domestic Rate Loan" shall mean any Advance that bears interest based
upon the Alternate Base Rate.
"Due From Factor Report" shall mean a report based on information
provided to ▇▇▇▇▇▇▇▇▇▇ by Factor and prepared by ▇▇▇▇▇▇▇▇▇▇ concurrently with
each request for an Advance under this Agreement (but no less frequently than
weekly) that reflects the status of Factored Accounts on such date.
"Early Termination Date" shall have the meaning set forth in Section
13.1 hereof.
"Earnings Before Interest and Taxes" shall mean for any period the sum
of (i) net income (or loss) of Borrowers on a consolidated basis for such period
(excluding extraordinary gains), plus (ii) all interest expense of Borrowers on
a consolidated basis for such period, plus (iii) all charges against income of
Borrowers on a consolidated basis for such period for federal, state and local
taxes.
"EBITDA" shall mean for any period, the sum, for Borrowers and its
Subsidiaries on a consolidated basis, of (i) Earnings Before Interest and Taxes
for such period, plus (ii) depreciation expenses for such period, plus (iii)
amortization expenses for such period.
"Eligible Assignee" shall mean a Lender or a U.S. based Affiliate of a
Lender; a commercial bank organized under the laws of the United States or any
state and having total assets in excess of $5,000,000,000 or an asset-based
lending Affiliate of any such banks; or any other financial institution that is
acceptable to Agent and Lenders and that in the ordinary course of its business
extends credit of the type evidenced by the Revolving Credit Notes and has total
assets in excess of $1,000,000,000.
"Eligible Inventory" shall mean and include, with respect to each
Borrower, all Inventory of such Borrower, valued at the lower of cost or market
value, determined on a first-in-first-out basis, which is not, in Agent's
opinion, obsolete, slow moving or unmerchantable and which Agent, in its sole
discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem to be appropriate, including whether the
Inventory is subject to a perfected, first priority security interest in favor
of Agent, whether the Inventory is subject to any other Lien that is not a
Permitted Encumbrance, and whether the Inventory conforms to all standards
imposed by any Governmental Body that has regulatory authority over such goods
or the use or sale thereof. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if it does not meet all standards imposed
by any Governmental Body, is in transit, is located outside the continental
United States, is situated at a location (other than a location owned by a
Borrower) and not subject to a landlord agreement, mortgagee agreement,
warehouse agreement and/or Licensor/Agent Agreement satisfactory to Agent, is
situated at a location that is not otherwise in compliance with this Agreement,
or constitutes Consigned Inventory. Without limiting the generality of the
foregoing, no Inventory located at a Processor or Processors for which the
Processor Conditions have not been satisfied shall be deemed Eligible Inventory.
"Eligible Receivables" shall mean and include with respect to each
Borrower, each Receivable of such Borrower arising from the sale of goods in the
ordinary course of such Borrower's business and which Agent, in its sole credit
judgment, shall deem to be an Eligible Receivable, based on such considerations
as
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Agent may from time to time deem appropriate. A Receivable shall not be deemed
eligible unless such Receivable is subject to Agent's first priority perfected
security interest and no other Lien (other than Permitted Encumbrances), and is
evidenced by an invoice or other documentary evidence satisfactory to Agent. In
addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by a Borrower to an Affiliate of any
Borrower or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than ninety (90) days after the original
invoice date;
(c) fifty percent (50%) or more of the Receivables from such Customer
are not deemed Eligible Receivables hereunder. Such percentage may, in Agent's
sole discretion, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States of
America, unless the sale is either (i) on letter of credit, guaranty or
acceptance terms, or (ii) covered by credit insurance, in each case acceptable
to Agent in its sole discretion;
(g) the sale to the Customer is on a ▇▇▇▇-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless the applicable
Borrower assigns its right to payment of such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such Receivable have not been shipped and
delivered to and accepted by the Customer or the services giving rise to such
Receivable have not been performed by the applicable Borrower and accepted by
the Customer or the Receivable otherwise does not represent a final sale;
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(k) the Receivables of the Customer exceed a credit limit determined by
Agent, in its sole discretion, to the extent such Receivable exceeds such limit;
(l) the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of a
Borrower or the Receivable is contingent in any respect or for any reason;
(m) the applicable Borrower has made any agreement with any Customer
for any deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the rendition of services has not
been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Receivable is not payable to a Borrower;
(q) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner; or
(r) if such Receivable is a Factored Account.
"Environmental Complaint" shall have the meaning set forth in Section
4.19(d) hereof.
"Environmental Indemnity Agreement" shall mean that certain
Environmental Indemnity Agreement dated on or about the Closing Date executed by
Borrowers in favor of Agent and Lenders.
"Environmental Laws" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Equipment" shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory) whether now owned or hereafter acquired
and wherever located, including all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"Equity Interest" shall mean the interest of (i) a shareholder in a
corporation, (ii) a partner (whether general or limited) in a partnership
(whether general, limited or limited liability), (iii) a member in a limited
liability company, or (iv) any other Person having any other form of equity
security or ownership interest.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and the rules and regulations promulgated
thereunder.
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"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto the interest rate per annum (the
resulting quotient taken out to the fifth decimal place), determined by Agent to
be the rate of interest in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) by dividing (i) the
average of the London interbank offered rates for U.S. dollars quoted by the
British Bankers' Association as set forth on Dow ▇▇▇▇▇ Markets Service (formerly
known as Telerate) display page 3750 (or appropriate successor or, if the
British Bankers' Association or its successor ceases to provide such quotes, a
comparable replacement determined by Agent) two (2) Business Days prior to the
first day of the Interest Period for an amount comparable to the outstanding
principal balance of the Eurodollar Rate Loan and having a borrowing date and
maturity comparable to such Interest Period, by (ii) a number equal to 1.00
minus the Reserve Percentage.
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of the events set
forth in Section 10 hereof.
"Excess Cash Flow" shall mean, with respect to any fiscal period, the
remainder of EBITDA, minus Unfunded Capitalized Expenditures made during such
period, minus Cash Taxes paid during such period, minus Debt Payments made
during such period.
"Factor" shall mean The CIT Group/Commercial Services, Inc., a New York
corporation.
"Factor Assignment Agreement" shall mean the Assignment of Factoring
Proceeds dated on or about the Closing Date between ▇▇▇▇▇▇▇▇▇▇ and Agent, and
consented to by Factor, pursuant to which, among other things, ▇▇▇▇▇▇▇▇▇▇
assigns to Agent, for its benefit and the benefit of Lenders, and Factor
acknowledges the assignment to Agent, of all sums at any time or times due or to
become due from Factor under the Factoring Agreement.
"Factor Intercreditor Agreement" shall mean the Intercreditor Agreement
dated on or about the Closing Date between Factor and Agent by which, among
other things, such parties establish the relative priorities of their Liens with
respect to ▇▇▇▇▇▇▇▇▇▇'▇ Accounts.
"Factor Reserve" shall mean the amount which at any time may be charged
to ▇▇▇▇▇▇▇▇▇▇ under the Factoring Agreement or withheld from sums otherwise due
to ▇▇▇▇▇▇▇▇▇▇ under the Factoring Agreement, including, without limitation,
interest, fees, commissions, ledger debt and other charges due Factor under the
Factoring Agreement and the amount of any actual or anticipated disputes or
claims arising with respect to any Factored Account.
"Factor Status Statement" shall means an account current statement or
similar report issued by Factor on a monthly basis under the Factoring Agreement
and setting forth the status of the Factored Accounts.
"Factored Account" shall mean an Account of ▇▇▇▇▇▇▇▇▇▇ for which
Today's Man is the Account Debtor which is factored by Factor under the
Factoring Agreement.
"Factoring Agreement" shall mean that certain Accounts Receivable
Purchase Agreement dated November 30, 1998, between Borrower and Factor, as at
any time amended.
- 10 -
"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by PNC from three Federal funds brokers of recognized
standing selected by PNC.
"Financial Condition Certificate" shall mean a certificate
substantially in the form of Exhibit D attached hereto.
"Fiscal Quarter" shall mean one (1) of the four (4) fiscal quarters of
Borrowers and their Subsidiaries for accounting and tax purposes, which end on
March 31, June 30, September 30 and December 31 of each Fiscal Year.
"Fiscal Year" shall mean the fiscal year of Borrowers and their
Subsidiaries for accounting and tax purposes, which ends on December 31 of each
year and, when preceded by the designation of a calendar year (e.g., 1999 Fiscal
Year), means the Fiscal Year of Borrowers and their Subsidiaries ended on
December 31 of such designated calendar year.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to
any fiscal period, the ratio of (a) EBITDA, minus Unfunded Capital Expenditures
made during such period, minus Cash Taxes paid during such period to (b) all
Debt Payments made during such period.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"General Intangibles" shall mean and include, as to each Borrower, all
of such Borrower's general intangibles, whether now owned or hereafter acquired,
including all choses in action, causes of action, corporate or other business
records, inventions, designs, patents, patent applications, equipment
formulations, manufacturing procedures, quality control procedures, trademarks,
service marks, trade secrets, goodwill, copyrights, design rights,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to Borrowers to secure payment of any of the
Receivables by a Customer all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).
"Governmental Body" shall mean any nation or government, any state or
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"GSN Subordination Agreement" shall mean that certain Debt
Subordination Agreement dated on or about the Closing Date among Agent,
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ with respect to the obligations of ▇▇▇▇▇▇▇▇▇▇ to Lister.
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"Guarantor" shall mean all Persons listed on Schedule 1.1 attached
hereto and any Person who may hereafter guarantee payment or performance of the
whole or any part of the Obligations and "Guarantors" means collectively all
such Persons.
"Guarantor Security Agreement" shall mean any Security Agreement
executed by any Guarantor in favor of Agent securing the Guaranty of such
Guarantor.
"Guaranty" shall mean any guaranty of the obligations of Borrowers
executed by a Guarantor in favor of Agent for the ratable benefit of Lenders.
"Hazardous Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act (49 U.S.C. Sections 1801, et seq.), RCRA, or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Indebtedness" of a Person at a particular date shall mean all
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred.
"Individual Formula Amount" shall mean, at the date of determination
thereof, with respect to each Borrower, an amount equal to the sum of: (i) the
Accounts Advance Rate multiplied by the Net Amount of Eligible Receivables of
such Borrower, plus (ii) the Factoring Advance Rate of the Amount Due From
Factor that is attributable to Factored Accounts that are not Client Risk
Accounts of such Borrower, plus (iii) the Inventory Advance Rate multiplied by
the Value of Eligible Inventory of such Borrower, minus (iv) the aggregate
amount of outstanding Letters of Credit of such Borrower, minus (v) such
reserves as Agent may reasonably deem proper and necessary from time to time.
"Initial Acquisition Documents" shall mean the Asset Acquisition
Documents and the Stock Acquisition Documents.
"Initial Acquisitions" shall mean (a) the acquisition by ▇▇▇▇▇▇▇▇▇▇ of
all the issued and outstanding capital stock of GSN pursuant to the Stock
Acquisition Documents, and (b) the acquisition by DAGA of substantially all of
the assets and the assumption of substantially all of the liabilities of DAG
pursuant to the Asset Acquisition Documents.
- 12 -
"Interest Period" shall mean the period provided for any Eurodollar
Rate Loan pursuant to Section 2.16(a).
"Interest Rate Agreement" shall mean any forward contract, future
contract, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate change agreement or other similar agreement
or arrangement designed to protect any Borrower against fluctuations in interest
rates.
"Interest Rate Reduction Conditions" shall mean (i) that ▇▇▇▇▇▇▇▇▇▇
shall have completed an initial public offering of its common stock resulting in
net proceeds to ▇▇▇▇▇▇▇▇▇▇ (after underwriters' discount) of at least
$20,000,000 or Agent shall have received evidence, satisfactory to Agent in its
sole discretion, that ▇▇▇▇▇▇▇▇▇▇ has received an aggregate amount of at least
$20,000,000 in cash equity contributions by some other means on or after the
Closing Date, and (ii) Agent shall have received (and found satisfactory in its
sole discretion) such evidence, as applicable, prior to the beginning of the
current month.
"Inventory" shall mean and include, as to each Borrower, all of such
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(iii) hereof.
"Issuer" shall mean any Person who issues a Letter of Credit and/or
accepts a draft pursuant to the terms hereof.
"Joinder Agreement" shall mean a Joinder Agreement and Supplement to
Revolving Credit, Term Loan and Security Agreement in the form of Exhibit E
annexed hereto by which a Person that is a wholly-owned Subsidiary of a Borrower
shall become a "Borrower" under, and shall be bound by all the terms of, this
Agreement, but only if and to the extent requested or permitted to do so by
Agent in the exercise of its sole and absolute discretion.
"Lender" and "Lenders" shall have the meaning ascribed to such term in
the preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
"Letter of Credit Fees" shall have the meaning set forth in Section
3.2.
"Letters of Credit" shall have the meaning set forth in Section 2.8.
"License Agreement" shall mean any agreement between a Borrower and a
Licensor pursuant to which such Borrower markets, manufactures or sells
Inventory.
"Licensor" shall mean any Person from whom a Borrower licenses the
right to use any trademark, copyright or other intangible in connection with the
manufacture, marketing or sale of any Inventory.
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"Licensor/Agent Agreement" shall mean an agreement between Agent and a
Licensor by which Agent is given the unqualified right, vis-a-vis such Licensor,
to enforce Agent's Liens with respect to a Borrower's Inventory irrespective of
such Borrower's default under such Borrower's License Agreement with such
Licensor (subject only to Agent's payment to such Licensor the amount of
royalties that would be payable with respect to a sale of such Inventory if such
sale had been concluded by such Borrower under the License Agreement with such
Licensor) and which is otherwise in form and substance satisfactory to Agent.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or preference, priority or other security agreement or preferential
arrangement held or asserted in respect of any asset of any kind or nature
whatsoever, including any conditional sale or other title retention agreement,
any lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement under the UCC
or comparable law of any jurisdiction.
"Lien Perfection Documents" shall mean all instruments, agreements,
filings and recordings necessary or, in Agent's reasonable determination,
necessary or desirable to perfect, maintain or continue the perfection of, or
achieve or maintain the first priority status of any Lien granted to Agent
pursuant to any of the Loan Documents by any Borrower or Guarantor, including
all UCC-1 financing statements, pledges, assignments, hypothecations,
registrations of pledge, notifications, bailment agreements, landlord or
mortgagee waivers, processor waivers, intercreditor agreements, subordination
agreements, chattel mortgage filings or similar instruments, agreements or
documents.
"Lister" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇.
"Liverpool Property" shall mean the real property and improvements
thereon owned by ▇▇▇▇▇▇▇▇▇▇ and located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇.
"Loan Documents" shall mean this Agreement and all of the Other
Documents.
"Material Adverse Effect" shall mean a material adverse effect upon (a)
the condition, operations, assets or business of the Borrowers as a whole or any
Guarantor, (b) all Borrowers' or any Guarantor's ability to pay the Obligations
in accordance with the terms thereof, (c) the value of the Collateral, or
Agent's Liens on the Collateral or the priority of any such Lien or (d) the
practical realization of the benefits of Agent's and each Lender's rights and
remedies under this Agreement and the Other Documents.
"Material Contract" shall mean an agreement to which any Borrower or
Guarantor is a party (other than the Loan Documents) (i) which is deemed to be a
material contract as provided in Regulation S-K promulgated by the SEC under the
Securities Act of 1933 or (ii) for which breach, termination, cancellation,
nonperformance or failure to renew could reasonably be expected to have a
Material Adverse Effect.
"Maximum Revolving Advance Amount" shall mean, at any date of
determination, $18,000,000 minus the amount of any reserve established by Agent
from time to time in respect of obligations of Borrowers under Interest Rate
Agreements.
"Monthly Advances" shall have the meaning set forth in Section 3.1
hereof.
- 14 -
"Money Borrowed" shall mean, as applied to any Person, (i) Indebtedness
arising from the lending of money by any other Person to such Person; (ii)
Indebtedness, whether or not in any such case arising from the lending of money
by another Person to such Person, (A) which is represented by notes payable or
drafts accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar instruments, or (C)
upon which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for property; (iii)
Indebtedness that constitutes a capitalized lease obligation; (iv) reimbursement
obligations with respect to letters of credit or guaranties of letters of
credit; and (v) Indebtedness of such Person under any guaranty of obligations
that would constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by such Person.
"Mortgage" shall mean the mortgage on the Liverpool Property securing
the Obligations together with all extensions, renewals, amendments, supplements,
modifications, substitutions and replacements thereto and thereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"▇▇▇▇▇" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇.
"Net Amount" shall mean, with reference to Eligible Receivables, the
face amount of such Eligible Receivables on any date, less any and all returns,
rebates, discounts (which may, at Agent's option, be calculated on shortest
terms), credits, allowances or taxes (including sales, excise or other taxes) at
any time issued, owing, claimed by Customers, granted, outstanding or payable in
connection with, or any interest accrued on the amount of, such Eligible
Receivables at such date.
"Notes" shall mean, collectively, the Term Notes and the Revolving
Credit Notes.
"Obligations" shall mean and include the following, in each case,
whether now in existence or hereafter arising and howsoever the same may be
evidenced, (i) the principal of, and interest and premium, if any, on the
Advances; (ii) all Indebtedness and other obligations of any Borrower to any
Lender under any Interest Rate Agreement, currency or equity swap, future,
option, or other similar agreement or arrangement; (iii) all other Indebtedness,
covenants and duties now or at any time or times hereafter owing by any or all
Borrowers to Agent or any Lender arising under or pursuant to this Agreement or
any of the other Loan Documents, whether evidenced by any note or other writing,
whether arising from any extension of credit, opening of a letter of credit,
acceptance, loan, guaranty, indemnification or otherwise, whether direct or
indirect, absolute or contingent, due or to become due, primary or secondary, or
joint or several, including all interest, charges, expenses, fees or other sums
chargeable to any or all Borrowers or Guarantors hereunder or under any of the
other Loan Documents; and (iv) in the case of PNC and its Affiliates, any
indebtedness, liabilities, obligations, covenants and duties arising in
connection with any banking or related transactions, services or functions
provided to any Borrower or Guarantor in connection with any conduct of such
Borrower's or Guarantor's business (excluding extensions of credit giving rise
to any Indebtedness for Money Borrowed not related to this Agreement or any
other Loan Documents).
"OCIDA" shall mean the Onondaga County Industrial Development Agency, a
public benefit corporation established and existing under the laws of the State
of New York.
- 15 -
"OCIDA Subordination Agreement" shall mean the Subordination Agreement
dated on or about the Closing Date by ▇▇▇▇▇▇▇▇▇▇ and OCIDA in favor of Agent,
pursuant to which ▇▇▇▇▇▇▇▇▇▇ and OCIDA subordinate their leasehold interests in
the Liverpool Property to the interests of Agent in such Liverpool Property
under the Mortgage.
"Organization Documents" shall mean, with respect to any Person, its
charter, certificate or articles of incorporation, bylaws, articles of
organization, operating agreement, members' agreement, partnership agreement,
voting trust or similar agreement or instrument governing the formation or
operation of such Person.
"Original Owner" shall mean ▇▇ ▇▇▇▇▇▇▇▇▇▇, L.P., a Delaware limited
partnership.
"Other Documents" shall mean the Notes, the Questionnaire, the
Mortgage, any Guaranty, any Guarantor Security Agreement, the Subordination
Agreements, the Pledge Agreements, the Trademark Security Agreement, the Factor
Assignment, the Factor Intercreditor Agreement, the Environmental Indemnity
Agreement, and any and all other agreements, instruments and documents,
including guaranties, pledges, powers of attorney, consents, and all other
writings heretofore, now or hereafter executed by any Borrower or Guarantor
and/or delivered to Agent or any Lender in respect of the transactions
contemplated by this Agreement.
"Out-of-Formula Condition" shall have the meaning set forth in Section
2.1(c) of this Agreement.
"Out-of-Formula Loan" shall mean a Revolving Advance made when an
Out-of-Formula Condition exists or the amount of any Revolving Advance which,
when funded, results in an Out-of-Formula Condition.
"Parent" of any Person shall mean a corporation or other entity owning,
directly or indirectly at least 50% of the shares of stock or other Equity
Interests having ordinary voting power to elect a majority of the directors of
the Person, or other individuals performing similar functions for any such
Person.
"Participant" shall mean each Person who shall be granted the right by
any Lender to participate in any of the Advances and who shall have entered into
a participation agreement in form and substance satisfactory to such Lender.
"Payment Office" shall mean initially ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; thereafter, such other office of Agent, if any,
which it may designate by notice to the Borrowing Agent and to each Lender to be
the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" shall mean any Acquisition by any Borrower in
which each of the following conditions is satisfied: (a) the business of the
Acquisition Target to be acquired is related or substantially similar to the
business of Borrowers; (b) immediately before and after giving effect to such
Acquisition, no Default or Event of Default shall have occurred and be
continuing or would result therefrom; (c) Borrowing Agent has given Agent not
less than 30 days prior written notice of the proposed consummation of the
Acquisition and has provided to Agent complete and accurate copies of all term
sheets, letters of intent, commitment letters, proposals and substantially final
drafts and all final drafts of Acquisition Documents,
- 16 -
promptly after Borrower's receipt thereof; (d) immediately after giving effect
to the consummation of such Acquisition, Borrowers shall have an Undrawn
Availability of at least $5,000,000; (e) Borrowers' consummation of the
Acquisition will be in compliance with Applicable Law (and Agent and Lenders
shall have received legal opinions to that effect from Borrowers' legal counsel,
if and to the extent so requested by Agent and Lenders), and Borrowers shall
have obtained all required approvals from Governmental Bodies; (f) Agent shall
have completed its field examination of the business to be acquired with respect
to all assets of the Acquisition Target which may constitute Eligible
Receivables or Eligible Inventory and the information obtained may be used by
Agent and Lenders in determining applicable advance rates for the assets of the
Acquisition Target for purposes hereof; (g) if the Acquisition takes the form of
a purchase of Equity Interests of the Acquisition Target or if the Acquisition
involves the formation of a new Subsidiary of a Borrower to purchase the assets
of the Acquisition Target, the Acquisition Target or such newly-formed
Subsidiary becomes or remains a wholly-owned Subsidiary of a Borrower upon the
consummations of the Acquisitions and such Borrower has pledged all of the
Equity Interests of such new Subsidiary to the Agent as security for the
Obligations; (h) concurrently with the consummation of such Acquisition, any
wholly-owned Subsidiary formed or acquired in connection with the Acquisition
shall, at Agent's option, either (1) execute and deliver to Agent a Joinder
Agreement by which such Subsidiary shall become a Borrower hereunder and bound
by all of the terms hereof and each of the Other Documents or (2) execute and
deliver to Agent, for its benefit and for the ratable benefit of Lenders, a
Guaranty and Guarantor Security Agreement; (i) prior to the consummation of such
Acquisition (1) ▇▇▇▇▇▇▇▇▇▇ shall have completed an initial public offering of
its common stock resulting in net proceeds to ▇▇▇▇▇▇▇▇▇▇ (after underwriters'
discount) of at least $20,000,000 or (2) Agent shall have received evidence,
satisfactory to Agent in its sole discretion, that ▇▇▇▇▇▇▇▇▇▇ has received an
aggregate amount of at least $20,000,000 in cash equity contributions by some
other means on or after the Closing Date, and Agent shall have received (and
found satisfactory in its sole discretion) such evidence, as applicable; and (j)
for so long as any Borrower owes any Indebtedness to UDC, such Borrower has
obtained the prior written consent of UDC to such Acquisition and has delivered
evidence of such consent to Agent.
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for the
benefit of Agent and Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers, but only if the Lien shall have no effect on the priority of
the Liens in favor of Agent or the value of the assets in which Agent has such a
Lien and a stay of enforcement of any such Lien shall be in effect; (c) Liens
disclosed in the financial statements referred to in Section 5.5, the existence
of which Agent has consented to in writing; (d) deposits or pledges to secure
obligations under worker's compensation, social security or similar laws, or
under unemployment insurance; (e) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of a Borrower's business; (f) judgment Liens that
have been stayed or bonded and mechanics', workers', materialmen's or other like
Liens arising in the ordinary course of a Borrower's business with respect to
obligations which are not due or which are being contested in good faith by the
applicable Borrower; (g) Liens placed upon fixed assets hereafter acquired to
secure a portion of the purchase price thereof, provided that (x) any such Lien
does not encumber any other property of any Borrower and (y) the aggregate
amount of Indebtedness secured by such Liens incurred as a result of such
purchases during any Fiscal Year shall not exceed the amount provided for in
Section 7.6; and (h) Liens disclosed on Schedule 1.2.
"Permitted Purchase Money Indebtedness" shall mean Purchase Money
Indebtedness of Borrowers which is incurred after the date of this Agreement and
which is secured by no Lien or only by a Purchase
- 17 -
Money Lien, provided the aggregate amount of Purchase Money Indebtedness
outstanding at any time may not exceed $750,000. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness consisting
of capitalized leases shall be computed as a Capitalized Lease Obligation.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Pledge Agreements" shall mean, collectively, (i) the Stock Pledge
Agreement dated the Closing Date executed by ▇▇▇▇▇▇▇▇▇▇ in favor of Agent
pursuant to which ▇▇▇▇▇▇▇▇▇▇ has pledged to Agent, for the benefit of itself and
Lenders, all of the issued and outstanding capital stock of DAGA, GSN and
Components, and (ii) the Note Pledge Agreement dated the Closing Date executed
by DAGA in favor of Agent pursuant to which DAGA has pledged to Agent, for the
benefit of itself and Lenders, the ▇▇▇▇▇ Note.
"Pro Forma Balance Sheet" shall have the meaning set forth in Section
5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
Section 5.5(b) hereof.
"Processor" shall mean any Person that manufactures or processes any of
Borrowers' Inventory.
"Processor Agreement" shall mean an agreement between Agent and a
Processor, in form and substance satisfactory to Agent, by which for locations
at which a Borrower places Inventory with such Processor, such Processor agrees
to waive or subordinate any Lien it may have with respect to such Inventory in
favor of Agent's Lien therein, to not offset any amounts owed by such Processor
to any Borrower against amounts owed to such Processor by such Borrower, and to
permit Agent to enter upon such premises and remove such Property or to use such
premises to store or dispose of such Property.
"Processor Conditions" shall mean, with respect to any Processor, each
of the following conditions: (i) such Processor shall have entered into a
Processor Agreement, (ii) such Processor shall have executed and delivered a UCC
financing statement in favor of the appropriate Borrower or Borrowers with
respect to the Inventory processed by such Processor, and (iii) Agent shall have
received assurances satisfactory to it that such Processor has not granted a
Lien on the Inventory processed by such Processor to any Person other than such
Borrower or Borrowers.
"Projections" shall have the meaning set forth in Section 5.5(b)
hereof.
"Properly Contested" shall mean, in the case of any Indebtedness of any
Borrower (including any Charges) that is not paid as and when due or payable by
reason of such Borrower's bona fide dispute concerning its liability to pay same
or concerning the amount thereof, that (i) such Indebtedness is being properly
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted; (ii) Borrower has established appropriate reserves as
shall be required in conformity with GAAP; (iii) the
- 18 -
non-payment of such Indebtedness will not have a Material Adverse Effect and
will not result in a forfeiture of any assets of any Borrower; (iv) no Lien is
imposed upon any of any Borrower's assets with respect to such Indebtedness
unless such Lien is at all times junior and subordinate in priority to the Liens
in favor of Agent (except only with respect to property taxes that have priority
as a matter of applicable state law) and enforcement of such Lien is stayed
during the period prior to the final resolution or disposition of such dispute;
(v) if the Indebtedness results from, or is determined by the entry, rendition
or issuance against a Borrower or any of its assets of a judgment, writ, order
or decree, execution on such judgment, writ, order or decree is stayed pending a
timely appeal or other judicial review; and (vi) if such contest is abandoned,
settled or determined upon a final resolution adversely to such Borrower, such
Borrower forthwith pays such Indebtedness and all penalties and interest in
connection therewith.
"Purchase Money Indebtedness" shall mean and include (i) Indebtedness
(other than the Obligations) of any or all Borrowers for the payment of all or
any part of the purchase price of any fixed assets, (ii) any Indebtedness (other
than the Obligations) of any or all Borrowers incurred at the time of or within
ten (10) days prior to or after the acquisition of any fixed assets for the
purpose of financing all or any part of the purchase price thereof (whether by
means of a loan agreement, capitalized lease or otherwise), and (iii) any
renewals, extensions or refinancings (but not any increases in the principal
amounts) thereof outstanding at the time.
"Purchase Money Lien" shall mean 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 acquired through the incurrence of the
Purchase Money Indebtedness secured by such Lien and such Lien constitutes a
purchase money security interest under the UCC.
"Purchasing Lender" shall have the meaning set forth in Section 16.3
hereof.
"Questionnaire" shall mean the Documentation Information Questionnaire
and the responses thereto provided by each Borrower and delivered to Agent.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
ss. 6901 et seq., as same may be amended from time to time.
"Real Property" shall mean all of each Borrower's right, title and
interest in and to any real property, whether owned or leased by such Borrower,
including the owned and leased premises identified on Schedule 4.19 hereto.
"Receivables" shall mean and include, as to each Borrower, all of such
Borrower's accounts, contract rights, instruments (including those evidencing
Indebtedness owed to such Borrower by any of its Affiliates), documents, chattel
paper, general intangibles relating to accounts, drafts and acceptances, and all
other forms of obligations owing to Borrowers arising out of or in connection
with the sale or lease of Inventory or the rendition of services, all guarantees
and other security therefor, whether secured or unsecured, now existing or
hereafter created, and whether or not specifically sold or assigned to Agent
hereunder.
"Receivables Advance Rate" shall mean, collectively, the Accounts
Advance Rate and the Factoring Advance Rate.
"Releases" shall have the meaning set forth in Section 5.7(c)(i)
hereof.
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"Reportable Event" shall mean a reportable event described in Section
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty-one
percent (51%) of the Advances and, if no Advances are outstanding, shall mean
Lenders holding fifty-one percent (51%) of the Commitment Percentages; provided,
however, that if any Lender shall be a Defaulting Lender, then, for so long as
such breach continues, the term "Required Lenders" shall mean Lenders (excluding
each Defaulting Lender) holding at least fifty-one percent (51%) of the Advances
(excluding Advances held by each Defaulting Lender), and, if no Advances are
outstanding, at least fifty-one percent (51%) of the Commitment Percentages
(excluding the Commitment Percentages held by each Defaulting Lender).
"Reserve Percentage" shall mean the maximum effective percentage in
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) with respect to
euroccurency funding.
"Revolving Advances" shall mean Advances made other than Letters of
Credit and the Term Loan under this Agreement to or for the benefit of any
Borrower.
"Revolving Credit Notes" shall mean, collectively, promissory notes
referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean (a) prior to the satisfaction of
the Interest Rate Reduction Conditions, an interest rate per annum equal to (i)
the sum of the Alternate Base Rate plus one-half percent (0.50%) with respect to
Domestic Rate Loans, and (ii) the sum of the Eurodollar Rate plus two and
three-quarters percent (2.75%) with respect to Eurodollar Rate Loans, and (b)
subsequent to the satisfaction of the Interest Rate Reduction Conditions, an
interest rate per annum equal to (i) the sum of the Alternate Base Rate plus
one-quarter percent (0.25%) with respect to Domestic Rate Loans, and (ii) the
sum of the Eurodollar Rate plus two and one-half percent (2.50%) with respect to
Eurodollar Rate Loans.
"Scheduled Term Loan Balance" shall mean the remainder of (a)
$7,000,000, minus (b) the sum of (i) repayments of the outstanding principal
amount of the Term Loan pursuant to Sections 2.3 and 2.13(b), to the extent such
payments are actually made by Borrowers, plus (ii) the amount, up to $4,000,000,
of voluntary prepayments of the Term Loan made by Borrowers after ▇▇▇▇▇▇▇▇▇▇
completes an initial public offering of its common stock resulting in net
proceeds to ▇▇▇▇▇▇▇▇▇▇ (after underwriters' discount) of at least $20,000,000 or
Agent shall have received evidence, satisfactory to Agent in its sole
discretion, that ▇▇▇▇▇▇▇▇▇▇ has received an aggregate amount of at least
$20,000,000 in cash equity contributions by some other means after the Closing
Date.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday
of each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"Solvent" shall mean, with respect 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 Indebtedness (including contingent), (ii) is able to pay
all of its Indebtedness as such Indebtedness matures, (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage, and (iv) is not "insolvent" within
the meaning of Section 101(32) of the Bankruptcy Code.
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"SourceOne" shall mean SourceOne, L.L.C., a New York limited liability
company.
"Stock Acquisition Agreement" shall mean the Stock Purchase Agreement
(including all exhibits and schedules thereto) dated March 11, 1999 among
▇▇▇▇▇▇▇▇▇▇, as buyer, GSN, and Lister, as seller.
"Stock Acquisition Documents" shall mean the Stock Acquisition
Agreement and all documents, instruments and other agreements executed in
connection therewith or pursuant thereto, including the Stock Acquisition Note.
"Stock Acquisition Note" shall mean that certain Promissory Note dated
on or about the Closing Date made by ▇▇▇▇▇▇▇▇▇▇ payable to Lister in the
original principal amount of $800,000.
"Subordinated Indebtedness" shall mean, collectively, (a) the
obligations of ▇▇▇▇▇▇▇▇▇▇ and DAGA to DAG under the Asset Acquisition Documents,
and (b) the obligations of ▇▇▇▇▇▇▇▇▇▇ to Lister under the Stock Acquisition
Documents.
"Subordinated Notes" shall mean, collectively, Asset Acquisition Note
and the Stock Acquisition Note.
"Subordination Agreements" shall mean, collectively, the DAG
Subordination Agreement, the GSN Subordination Agreement, the UDC Subordination
Agreement, and the OCIDA Subordination Agreement.
"Subsidiary" shall mean a corporation or other entity of whose shares
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the issued and outstanding shares
of stock of any Subsidiaries of Borrowers, including DAGA, GSN and Components.
"Term" shall have the meaning set forth in Section 13.1 hereof.
"Term Loan" shall mean the Advances made pursuant to Section 2.3
hereof.
"Term Loan Rate" shall mean (a) prior to the satisfaction of the
Interest Rate Reduction Conditions, an interest rate per annum equal to (i) the
sum of the Alternate Base Rate plus one and one-half percent (1.50%) with
respect to Domestic Rate Loans, and (ii) the sum of the Eurodollar Rate plus
three and one-half percent (3.50%) with respect to Eurodollar Rate Loans, and
(b) subsequent to the satisfaction of the Interest Rate Reduction Conditions, an
interest rate per annum equal to (i) the sum of the Alternate Base Rate plus one
and one-quarter percent (1.25%) with respect to Domestic Rate Loans, and (ii)
the sum of the Eurodollar Rate plus three and one-quarter percent (3.25%) with
respect to Eurodollar Rate Loans.
"Term Notes" shall mean, collectively, the promissory notes described
in Section 2.3 hereof.
"Termination Event" shall mean (i) a Reportable Event with respect to
any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any
member of the Controlled Group from a Plan or Multiemployer Plan during a plan
year in which such entity was a "substantial employer" as defined in
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Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Borrower or any member of the Controlled Group
from a Multiemployer Plan.
"Today's Man" shall mean Today's Man, Inc. of Moorestown, New Jersey.
"Toxic Substance" shall mean and include any material present on the
Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. ss. 2601 et seq.,
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
"Trademark Security Agreement" shall mean each Trademark Security
Agreement to be executed by a Borrower in favor of Agent on or before the
Closing Date and by which such Borrower shall collaterally assign and ▇▇▇▇▇ ▇
▇▇▇▇ to Agent, for its benefit and for the ratable benefit of Lenders, as
security for the Obligations, in all of such Borrower's right, title and
interest in and to all of its trademarks.
"Transactions" shall have the meaning set forth in Section 5.5 hereof.
"UCC" shall mean the Uniform Commercial Code (or any successor statute)
as adopted and in force in the State of New York or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or any
successor statute) of such state.
"UDC" shall mean the New York State Urban Development Corporation, a
corporate government agency of the State of New York constituting a political
subdivision and public benefit corporation.
"UDC Reserve" shall mean a reserve in the amount of $560,000.
"UDC Reserve Release Conditions" shall mean either of the following
conditions: (a) Agent shall have received a duly executed intercreditor
agreement among Agent, UDC and ▇▇▇▇▇▇▇▇▇▇ on terms and conditions satisfactory
to Agent in its sole discretion, including (i) a subordination of UDC's interest
in the Liverpool Property to Agent's Lien therein securing Obligations in the
minimum principal amount of $2,100,000, (ii) no restrictions on Agent's right to
amend the Loan Documents, including the maximum amount of the Obligations and
the payment terms thereof, (iii) a prohibition on UDC's right to take any action
to enforce its interest in such assets for 180 days after an Event of Default,
and (iv) no right of UDC to cure any Default or Event of Default under this
Agreement and Borrowers shall have executed and delivered an amendment to the
Mortgage in form and substance satisfactory to Agent to increase the
indebtedness secured thereby to $3,000,000, delivered to Agent an endorsement to
the mortgagee title insurance policy insuring the Lien of the Mortgage as so
amended, which endorsement shall be in form and substance satisfactory to Agent
and shall give effect to the Mortgage amendment, and paid all applicable
documentary stamp, intangibles, recording, note, mortgage or other similar taxes
payable with respect to the Mortgage amendment and the premium for such title
insurance endorsement; or (b) Borrowers' payment in
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full of all Indebtedness of Borrowers to UDC, the release of all interests UDC
may have in Borrowers' assets, the termination of all UDC loan and security
documents, all as evidenced by duly executed documentation delivered to Agent
and satisfactory to Agent in its sole discretion, and Borrowers shall have
executed and delivered an amendment to the Mortgage in form and substance
satisfactory to Agent to increase the indebtedness secured thereby to
$3,000,000, delivered to Agent an endorsement to the mortgagee title insurance
policy insuring the Lien of the Mortgage as so amended, which endorsement shall
be in form and substance satisfactory to Agent and shall give effect to the
Mortgage amendment, and paid all applicable documentary stamp, intangibles,
recording, note, mortgage or other similar taxes payable with respect to the
Mortgage amendment and the premium for such title insurance endorsement.
"UDC Subordination Agreement" shall mean that certain Subordination,
Waiver and Consent Agreement among the UDC, ▇▇▇▇▇▇▇▇▇▇ and Agent dated on or
about the Closing Date pursuant to which the UDC subordinates its Lien on the
Liverpool Property and certain Equipment of ▇▇▇▇▇▇▇▇▇▇ to Agent's Lien on such
property.
"Undrawn Availability" at a particular date shall mean an amount equal
to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances
(other than the Term Loan) plus (ii) all amounts due and owing to Borrowers'
trade creditors which are more than sixty (60) days past due, plus (iii) fees
and expenses for which Borrowers are liable but which have not been paid or
charged to Borrowers' Account.
"Unfunded Capital Expenditures" shall mean, for any period, the Capital
Expenditures of a Person not financed by a means other than an Advance
hereunder.
"Upstream Payment" shall mean a payment or distribution of cash or
other property by a Subsidiary of a Borrower to such Borrower, whether in
repayment of Indebtedness owed by such Subsidiary to such Borrower, to pay
dividends on account of such Borrower's ownership of Equity Interests or
otherwise.
"Value" shall mean, with reference to the value of Inventory, value
determined on the basis of the lower of cost or market of such Inventory, with
the cost thereof calculated on a first-in, first-out basis, determined in
accordance with GAAP.
"Week" shall mean the time period commencing with the opening of
business on a Wednesday and ending on the end of business the following Tuesday.
1.3 UCC Terms. All terms used herein and defined in the UCC as adopted
in the State of New York shall have the meaning given therein unless otherwise
defined herein.
1.4 Certain Matters of Construction. The terms "herein," "hereof," and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references herein to the
time of day shall mean the time in East Brunswick, New Jersey. Unless otherwise
provided, all references to any instruments or agreements to which Agent is a
party, including references to any of the Other Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof. Whenever the words "including" or "include" shall be used, such words
shall be
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understood to mean "including, without limitation" or "include, without
limitation." A Default or Event of Default shall be deemed to exist at all times
during the period commencing on the date that such Default or Event of Default
occurs to the date on which such Default or Event of Default is waived in
writing pursuant to this Agreement or, in the case of a Default, is cured with
any period of cure expressly provided for in this Agreement; and an Event of
Default shall "continue" or be "continuing" until such Event of Default has been
waived in writing by Agent. Any Lien referred to in this Agreement or any of the
Other Documents as having been created in favor of Agent, any agreement entered
into by Agent pursuant to this Agreement or any of the Other Documents, any
payment made by or to or funds received by Agent pursuant to or as contemplated
by this Agreement or any of the Other Documents, or any act taken or admitted to
be taken by Agent, shall, unless otherwise expressly provided, be created,
entered into, made or received, or taken or omitted, for the benefit or account
of Agent and Lenders.
SECTION 2. ADVANCES, PAYMENTS
2.1 Revolving Advances.
(a) Subject to the terms and conditions set forth in this
Agreement, each Lender, severally and not jointly, will make Revolving Advances
to Borrowers in aggregate amounts outstanding at any time not to exceed such
Lender's Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount less the aggregate amount of outstanding Letters of Credit or (y)
an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b) hereof
("Accounts Advance Rate"), of the Net Amount of Eligible Receivables,
plus
(ii) up to 85%, subject to the provisions of Section 2.1(b) hereof
("Factoring Advance Rate"), of the Amount Due From Factor on such date
that is attributable to Factored Accounts that are not Client Risk
Accounts, plus
(iii) up to the lesser of (A) the sum of (1) 55%, subject to the
provisions of Section 2.1(b) hereof (the "Raw Materials Advance Rate"),
of the Value of Eligible Inventory consisting of raw materials, plus (2)
the lesser of (a) 25%, subject to the provisions of Section 2.1(b)
hereof (the "WIP Advance Rate"), of the Value of Eligible Inventory
consisting of work in process and (b) $1,000,000, plus (3) 65%, subject
to the provisions of Section 2.1(b) hereof (the "Finished Goods Advance
Rate"; together with the Raw Materials Advance Rate and the WIP Advance
Rate, collectively the "Inventory Advance Rate"), of the Value of the
Eligible Inventory consisting of finished goods or (B) $8,000,000, minus
(iv) the aggregate amount of outstanding Letters of Credit, other
than any Letters of Credit for which Agent holds cash collateral as
provided in Section 2.10(e), minus
(v) prior to satisfaction of the UDC Reserve Release Conditions,
the UDC Reserve, minus
(vi) such other reserves as Agent may reasonably deem proper and
necessary from time to time.
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The amount derived from the remainder of (A) the sum of Sections
2.1(a)(y)(i), (ii) and (iii) minus (B) Section 2.1(a)(y)(iv), (v) and (vi) at
any time and from time to time shall be referred to as the "Formula Amount." If
any event occurs or any condition exists that Agent determines is likely to have
a Material Adverse Effect, or if a Default or Event of Default exists, Agent
shall have the right (exercisable at such time or times as Agent deems
appropriate) to require that separate calculations of the Individual Formula
Amount be made for each Borrower, as well as the right to limit the use of
proceeds of Advances to or for the benefit of each Borrower to an amount that
does not exceed such Borrower's Individual Formula Amount. The Revolving
Advances shall be evidenced by secured promissory notes ("Revolving Credit
Notes") in favor of each Lender in substantially in the form attached hereto as
Exhibit A.
(b) Discretionary Rights. Agent may, in its discretion, from
time to time, upon not less than fifteen (15) days prior notice to Borrower, (i)
reduce the Receivables Advance Rate with respect to Eligible Receivables and
Amounts Due from Factor to the extent that Agent determines in good faith that:
the dilution with respect to the Receivables for any period (based on the ratio
of the aggregate amount of reductions in Receivables other than as a result of
payments in cash to the aggregate amount of total sales) has increased in any
material respect or may be reasonably anticipated to increase in any material
respect above historical levels, or the general creditworthiness of account
debtors has declined or (ii) reduce the Applicable Inventory Advance Rate with
respect to Eligible Inventory to the extent that Lender determines that: (A) the
number of days of the turnover of the Inventory for any period has changed in
any material respect, or (B) the liquidation value of the Eligible Inventory, or
any category thereof, has decreased in any material respect, or (C) the nature
and quality of the Inventory has deteriorated in any material respect. In
determining whether to reduce the Advance Rates, Agent may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Receivables, Eligible Inventory or in establishing availability
reserves. Borrower consents to any such decreases and acknowledges that
decreasing the Advance Rates or increasing the reserves may limit or restrict
Revolving Advances requested by Borrower.
(c) Out-of-Formula Loans. If the unpaid balance of Revolving
Advances outstanding at any time should exceed the Formula Amount at such time
(an "Out-of-Formula Condition"), such Revolving Advances shall nevertheless
constitute Obligations that are secured by the Collateral and entitled to all of
the benefits of the Loan Documents. If Agent or Lenders are willing in their
sole and absolute discretion to make Out-of-Formula Loans, such Out-of-Formula
Loans shall be payable on demand and shall bear interest at the Default Rate;
provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor
Lenders shall be deemed thereby to have changed the limits of Section 2.1(a) or
be obligated to honor requests for Revolving Advances when an Out-of-Formula
Condition exists or would result therefrom.
(d) Procedure for Revolving Advances Borrowing. A request for
a Revolving Advance shall be made, or shall be deemed to be made, in the
following manner: (i) Borrowing Agent on behalf of any Borrower may notify Agent
prior to 1:00 p.m. (East Brunswick, New Jersey time) on a Business Day of a
Borrower's request to incur, on that day, a Revolving Advance hereunder; (ii)
unless payment is otherwise timely made by Borrowers, the coming due of any
amount required to be paid as interest hereunder, or as fees or other charges
under this Agreement or any other agreement with Agent or Lenders, or with
respect to any other Obligation, become due, shall be deemed a request for a
Revolving Advance as of the date such payment is due, in the amount required to
pay in full such interest, fee, charge or Obligation under this Agreement or any
other agreement with Agent or Lenders, and such request shall be irrevocable;
and (iii) unless payment is otherwise timely made by Borrowers, the presentation
for payment by PNC of any check or other item of payment drawn on a Controlled
Disbursement Account shall be deemed an irrevocable request (without any
requirement for the submission of a notice by any Borrower) for a Revolving
Advance
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on the date of such presentation and in an amount equal to the aggregate amount
of the items presented for payment, and the proceeds of such Revolving Advance
may be disbursed by way of direct payment to the Controlled Disbursement Account
that such items were drawn upon. Agent shall have no obligation to Borrowers to
honor any deemed request for a Revolving Advance, but may do so in its
discretion and without regard to the existence of, and without being deemed to
have waived, any Default or Event of Default and without regard to the existence
or creation of an Out-of-Formula Condition.
2.2 Disbursement of Advance Proceeds. All Advances shall be disbursed
from whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on Agent's books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowers or deemed to have been
requested by Borrowers under Section 2.1(d) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the Borrowers on the day so requested by way of credit to
such operating account at PNC, or such other bank as the Borrowing Agent may
designate following notification to Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by any Borrower, be disbursed to Agent to
be applied to the outstanding Obligations giving rise to such deemed request.
2.3 Term Loan. Subject to the terms and conditions of this Agreement,
each Lender, severally and not jointly, will fund its portion of the Term Loan
by making Advances to Borrowers in the sum equal to such Lender's Commitment
Percentage of $7,000,000. The Advances comprising the Term Loan shall be
advanced on the Closing Date and shall be, with respect to principal, payable as
follows: thirty-three (33) monthly installments of $116,667 each, with such
payments due on the first day of each month after the Closing Date, and a final
payment of all unpaid principal thereof on April 15, 2002, subject to
acceleration upon the occurrence of an Event of Default under this Agreement or
termination of this Agreement. The Term Loan shall be evidenced by secured
promissory notes (collectively, "Term Notes") in substantially the form attached
hereto as Exhibit A-1. Borrowers shall not be permitted to reborrow any amount
repaid with respect to the Term Loan.
2.4 Maximum Advances. The aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.5 Repayment of Obligations.
(a) The Advances and other Obligations shall be due and payable in
full on the last day of the Term subject to earlier prepayment as herein
provided. The Term Loan shall be due and payable as provided in Section 2.3
hereof and in the Term Notes.
(b) Each Borrower recognizes that the amounts evidenced by checks,
notes, drafts or any other items of payment relating to and/or proceeds of
Collateral may not be collectible by Agent on the date received. In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the Business Day on which Agent receives those items of payment, each
Borrower agrees that, in computing the charges under this Agreement, all items
of payment shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day Agent receives such payments via wire
transfer or electronic depository check. Agent is not, however, required to
credit Borrowers' Account for the amount
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of any item of payment that is unsatisfactory to Agent, and Agent may charge
Borrowers' Account for the amount of any item of payment which is returned to
Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent at the
Payment Office not later than 1:00 p.m. (East Brunswick, New Jersey time) on the
due date therefor in lawful money of the United States of America in federal
funds or other funds immediately available to Agent. Agent and Lenders shall
have the right to effectuate payment on any and all Obligations due and owing
hereunder by charging Borrowers' Account or by making Advances as provided in
Sections 2.1 and 2.16 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts
payable hereunder, or under any related agreement, without any deduction
whatsoever, including any deduction for any setoff or counterclaim.
2.6 Repayment of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.7 Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account ("Borrowers' Account") in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent or Lenders to record the date and amount of any
Advance shall not adversely affect Agent or any Lender. Each month, Agent shall
send to the Borrowing Agent a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and other transactions among
Agent, Lenders and Borrowers during such month. The monthly statements shall be
deemed correct and binding upon Borrowers in the absence of manifest error and
shall constitute an account stated between Lenders and Borrowers unless Agent
receives a written statement of Borrowers' specific exceptions thereto within
thirty (30) days after such statement is received by the Borrowing Agent. The
records of Agent with respect to the Borrowers' Account shall be conclusive
evidence absent manifest error of the amounts of Advances and other charges
thereto and of payments applicable thereto.
2.8 Letters of Credit. Subject to the terms and conditions hereof,
Agent shall issue or cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of any Borrower; provided, however, that Agent will not be
required to issue or cause to be issued any Letters of Credit to the extent that
the face amount of such Letters of Credit would then cause the sum of (i) the
outstanding Revolving Advances plus (ii) outstanding Letters of Credit to exceed
the lesser of (x) the Maximum Revolving Advance Amount or (y) the Formula
Amount. The maximum amount of outstanding Letters of Credit shall not exceed
$1,000,000 in the aggregate at any time. All disbursements or payments related
to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of
Revolving Advances and shall bear interest at the Revolving Interest Rate for
Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not
bear interest.
2.9 Issuance of Letters of Credit.
(a) The Borrowing Agent, on behalf of Borrowers, may request Agent
to issue or cause the issuance of a Letter of Credit by delivering to Agent at
the Payment Office, Agent's form of Letter of Credit Application (the "Letter of
Credit Application") completed to the satisfaction of Agent; and, such
- 27 -
other certificates, documents and other papers and information as Agent may
reasonably request. The Borrowing Agent, on behalf of Borrowers, also has the
right to give instructions and make agreements with respect to any application,
any applicable letter of credit and security agreement, any applicable letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any amendment, extension or renewal of any Letter
of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide
for the payment of sight drafts or acceptances of usance drafts when presented
for honor thereunder in accordance with the terms thereof and when accompanied
by the documents described therein and (ii) have an expiry date not later than
six (6) months after such Letter of Credit's date of issuance and in no event
later than the last day of the Term. Each Letter of Credit shall be subject to
the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof adhered to by the Issuer and, to the extent not inconsistent
therewith, the laws of the State of New Jersey.
(c) Agent shall use its reasonable efforts to notify Lenders of
the request by Borrowers for a Letter of Credit hereunder.
2.10 Requirements For Issuance of Letters of Credit.
(a) In connection with the issuance of any Letter of Credit,
Borrowers, jointly and severally, shall indemnify, save and hold Agent, each
Lender and each Issuer harmless from any loss, cost, expense or liability,
including payments made by Agent, any Lender or any Issuer and expenses and
reasonable attorneys' fees incurred by Agent, any Lender or Issuer arising out
of, or in connection with, any Letter of Credit to be issued or created for any
Borrower. Borrowers shall be bound by Agent's or any Issuer's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrowers' Account, although this interpretation may be different from its own;
and, neither Agent, nor any Lender, nor any Issuer nor any of their
correspondents shall be liable for any error, negligence, or mistakes, whether
of omission or commission, in following the Borrowing Agent's or any Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements thereto or in issuing or paying any Letter of Credit,
except for Agent's, any Lender's, any Issuer's or such correspondents' willful
misconduct or gross negligence.
(b) The Borrowing Agent shall authorize and direct any Issuer to
name the applicable Borrower as the "Applicant" or "Account Party" of each
Letter of Credit. If Agent is not the Issuer of any Letter of Credit, the
Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all
instruments, documents, and other writings and property received by the Issuer
pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor or any acceptance therefor.
(c) In connection with all Letters of Credit issued or caused to
be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority (i) to sign and/or
endorse such Borrower's name upon any warehouse or other receipts, letter of
credit applications and acceptances; (ii) to sign such Borrower's name on bills
of lading; (iii) to clear Inventory through the United States of America Customs
Department ("Customs") in the name of such Borrower or Agent or Agent's
designee, and to sign and deliver to Customs officials powers of attorney in
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the name of such Borrower for such purpose; and (iv) to complete in such
Borrower's name or Agent's, or in the name of Agent's designee, any order, sale
or transaction, obtain the necessary documents in connection therewith, and
collect the proceeds thereof. Neither Agent nor its attorneys will be liable for
any acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's willful misconduct or gross negligence.
This power, being coupled with an interest, is irrevocable as long as any
Letters of Credit remain outstanding.
(d) Each Lender shall to the extent of the percentage amount equal
to the product of such Lender's Commitment Percentage times the aggregate amount
of all unreimbursed reimbursement obligations arising from disbursements made or
obligations incurred with respect to the Letters of Credit be deemed to have
irrevocably purchased an undivided participation in each such unreimbursed
reimbursement obligation. In the event that at the time a disbursement is made
the unpaid balance of Revolving Advances exceeds or would exceed, with the
making of such disbursement, the lesser of the Maximum Revolving Advance Amount
or the Formula Amount, and such disbursement is not reimbursed by Borrowers
within two (2) Business Days, Agent shall promptly notify each Lender and upon
Agent's demand each Lender shall pay to Agent such Lender's proportionate share
of such unreimbursed disbursement together with such Lender's proportionate
share of Agent's unreimbursed costs and expenses relating to such unreimbursed
disbursement. Upon receipt by Agent of a repayment from any Borrower of any
amount disbursed by Agent for which Agent had already been reimbursed by
Lenders, Agent shall deliver to each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment shall continue until the last
to occur of any of the following events: (A) Agent ceases to be obligated to
issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit
issued hereunder remains outstanding and uncanceled or (C) all Persons (other
than the applicable Borrower) have been fully reimbursed for all payments made
under or relating to Letters of Credit.
(e) On demand, Borrowers will cause cash to be deposited and
maintained in an account with Agent, as cash collateral, in an amount equal to
one hundred and five percent (105%) of the outstanding Letters of Credit, and
each Borrower hereby irrevocably authorizes Agent, in its discretion, on such
Borrower's behalf and in such Borrower's name, to open such an account and to
make and maintain deposits therein, or in an account opened by such Borrower, in
the amounts required to be made by such Borrower, out of the proceeds of
Receivables or other Collateral or out of any other funds of such Borrower
coming into any Lender's possession at any time. Agent will invest such cash
collateral (less applicable reserves) in such short-term money-market items as
to which Agent and the Borrowing Agent mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash
collateral. No Borrower may withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations and termination of this
Agreement.
2.11 Additional Payments. Any sums expended by Agent or any Lender due
to any Borrower's failure to perform or comply with its obligations under this
Agreement or any Other Document, including any Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers'
Account as a Revolving Advance and added to the Obligations.
2.12 Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of Lenders. The Term Loan shall be
advanced according to the Commitment Percentages of Lenders.
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(b) Each payment (including each prepayment) by Borrowers on
account of the principal of and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to the applicable
Commitment Percentages of Lenders. Each payment (including each prepayment) by
any Borrower on account of the principal of and interest on the Term Note, shall
be made from or to, or applied to that portion of the Term Loan evidenced by the
Term Note pro rata according to the Commitment Percentages of Lenders. Except as
expressly provided herein, all payments (including prepayments) to be made by
Borrowers on account of principal, interest and fees shall be made without set
off or counterclaim and shall be made to Agent on behalf of the Lenders to the
Payment Office, in each case on or prior to 1:00 p.m. (East Brunswick, New
Jersey time), in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in
Sections 2.12(a) and (b) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Advances shall be
advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 p.m. (East Brunswick, New Jersey time), on each Settlement
Date commencing with the first Settlement Date following the Closing Date, Agent
and Lenders shall make certain payments as follows: (i) if the aggregate amount
of new Revolving Advances made by Agent during the preceding Week (if any)
exceeds the aggregate amount of repayments applied to outstanding Revolving
Advances during such preceding Week, then each Lender shall provide Agent with
funds in an amount equal to its applicable Commitment Percentage of the
difference between (w) such Revolving Advances and (x) such repayments and (ii)
if the aggregate amount of repayments applied to outstanding Revolving Advances
during such Week exceeds the aggregate amount of new Revolving Advances made
during such Week, then Agent shall provide each Lender with funds in an amount
equal to such Lender's applicable Commitment Percentage of the difference
between (y) such repayments and (z) such Revolving Advances.
(ii) Agent and each Lender shall be entitled to earn interest
at the applicable Contract Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall
submit to each Lender a certificate with respect to payments received and
Advances made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(d) If any Lender or Participant (a "benefitted Lender") shall at
any time receive any payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Advances, or interest thereon, and such greater proportionate payment
or receipt of Collateral is not expressly permitted hereunder, such benefitted
Lender shall purchase for cash from the other Lenders a participation in such
portion of each such other Lender's Advances, or shall provide such other Lender
with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such Collateral or proceeds ratably with each of Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender's Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
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(e) Unless Agent shall have been notified by telephone, confirmed
in writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent on the next Settlement Date and, in reliance
upon such assumption, make available to Borrowers a corresponding amount. Agent
will promptly notify the Borrowing Agent of its receipt of any such notice from
a Lender. If such amount is made available to Agent on a date after such next
Settlement Date, such Lender shall pay to Agent on demand an amount equal to the
product of (i) the daily average Federal Funds Rate (computed on the basis of a
year of 360 days) during such period as quoted by Agent, times (ii) such amount,
times (iii) the number of days from and including such Settlement Date to the
date on which such amount becomes immediately available to Agent. A certificate
of Agent submitted to any Lender with respect to any amounts owing under this
paragraph (e) shall be conclusive, in the absence of manifest error. If such
amount is not in fact made available to Agent by such Lender within three (3)
Business Days after such Settlement Date, Agent shall be entitled to recover
such an amount, with interest thereon at the rate per annum then applicable to
such Revolving Advances hereunder, on demand from Borrowers; provided, however,
that Agent's right to such recovery shall not prejudice or otherwise adversely
affect Borrowers' rights (if any) against such Lender.
2.13 Mandatory Prepayments.
(a) When any Borrower sells or otherwise disposes of any
Collateral other than Inventory in the ordinary course of business (including
close-out sales of finished goods Inventory in the ordinary course of business)
and Equipment to the extent permitted by Section 4.3 hereof, Borrowers shall
repay the Advances in an amount equal to the net proceeds of such sale (i.e.,
gross proceeds less the reasonable costs of such sales or other dispositions),
such repayments to be made promptly but in no event more than one (1) Business
Day following receipt of such net proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. The foregoing shall not be deemed to
be implied consent to any such sale otherwise prohibited by the terms and
conditions hereof. Such repayments shall be applied first, to the Obligations in
such order as Agent may determine, subject to Borrowers' ability to reborrow
Revolving Advances in accordance with the terms hereof.
(b) Borrowers shall prepay the outstanding amount of the Advances
in an amount equal to fifty percent (50%) of Borrowers' Excess Cash Flow for
each Fiscal Year commencing on or after January 1, 1999, payable upon delivery
of the financial statements to Agent referred to in and required by Section 9.7
for such Fiscal Year but in any event not later than ninety (90) days after the
end of each such Fiscal Year, which amount shall be applied first, to the
outstanding principal installments of the Term Loan in the inverse order of the
maturities thereof and, second, to the remaining Advances in such order as Agent
may determine subject to Borrowers' ability to reborrow Revolving Advances in
accordance with the terms hereof. In the event that the financial statement is
not so delivered, then a calculation based upon estimated amounts shall be made
by Agent upon which calculation Borrowers shall make the prepayment required by
this Section 2.13(b), subject to adjustment when the financial statement is
delivered to Agent as required hereby. The calculation made by Agent shall not
be deemed a waiver of any rights Agent or Lenders may have as a result of the
failure by Borrowers to deliver such financial statement.
2.14 Use of Proceeds. Borrowers shall apply the proceeds of Advances to
(i) repay existing indebtedness owed to National Bank of Canada and to Fleet
Bank, (ii) pay fees and expenses relating to this
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transaction and the Acquisitions, (iii) provide for Borrowers' working capital
needs, (iv) finance the transactions contemplated by the Initial Acquisition
Documents, and (v) finance Permitted Acquisitions.
2.15 Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in
the event any Lender (x) has refused (which refusal constitutes a breach by such
Lender of its obligations under this Agreement) to make available its portion of
any Advance or (y) notifies either Agent or the Borrowing Agent that it does not
intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a "Lender Default"), all rights and obligations hereunder of such Lender
(a "Defaulting Lender") as to which a Lender Default is in effect and of the
other parties hereto shall be modified to the extent of the express provisions
of this Section 2.15 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any Advances required to be advanced by any Lender shall
be increased as a result of such Lender Default. Amounts received in respect of
principal of any type of Advances shall be applied to reduce the applicable
Advances of each Lender pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions
to Agent or to approve, disapprove, consent to or vote on any matters relating
to this Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders," a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this Section 2.15 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrowers, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
2.16 Provisions Applicable to Eurodollar Rate Loans.
(a) Notwithstanding the provisions of Section 2.1 above, in the
event a Borrower desires to obtain a Eurodollar Rate Loan, the Borrowing Agent
shall give Agent at least two (2) Business Days prior written notice, specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
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type of borrowing and the amount on the date of such Advance to be borrowed,
which amount shall be an integral multiple of $1,000,000, and (iii) the duration
of the first Interest Period therefor. Interest Periods for Eurodollar Rate
Loans shall be for one, two or three months; provided, if an Interest Period
would end on a day that is not a Business Day, it shall end on the next
succeeding Business Day unless such day falls in the next succeeding calendar
month in which case the Interest Period shall end on the next preceding Business
Day. No Eurodollar Rate Loan shall be made available to Borrowers during the
continuance of a Default or an Event of Default.
(b) Each Interest Period of a Eurodollar Rate Loan shall commence
on the date such Eurodollar Rate Loan is made and shall end on such date as the
Borrowing Agent may elect as set forth in (a)(iii) above provided that the exact
length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
The Borrowing Agent shall elect the initial Interest Period applicable
to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.16(a) or by its notice of conversion given to Agent pursuant to
Section 2.16(c), as the case may be. The Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Agent of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Eurodollar Rate
Loan. If Agent does not receive timely notice of the Interest Period elected by
the Borrowing Agent, Borrowers shall be deemed to have elected to convert to a
Domestic Rate Loan subject to Section 2.16(c) herein below.
(c) Provided that no Event of Default shall have occurred and be
continuing, the Borrowing Agent may, on the last Business Day of the then
current Interest Period applicable to any outstanding Eurodollar Rate Loan, or
on any Business Day with respect to Domestic Rate Loans, convert any such loan
into a loan of another type in the same aggregate principal amount provided that
any conversion of a Eurodollar Rate Loan shall be made only on the last Business
Day of the then current Interest Period applicable to such Eurodollar Rate Loan.
If the Borrowing Agent desires to convert a loan, the Borrowing Agent shall give
Agent not less than three (3) Business Days' prior written notice to convert
from a Domestic Rate Loan to a Eurodollar Rate Loan or one (1) Business Day's
prior written notice to convert from a Eurodollar Rate Loan to a Domestic Rate
Loan, specifying the date of such conversion, the loans to be converted and if
the conversion is from a Domestic Rate Loan to any other type of loan, the
duration of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than five (5) Eurodollar Rate
Loans, in the aggregate.
(d) Borrowers shall jointly and severally indemnify Agent and
Lenders and hold Agent and Lenders harmless from and against any and all losses
or expenses that Agent and Lenders may sustain or incur as a consequence of any
prepayment, conversion of or any default by Borrowers in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by Borrowers to
complete a borrowing of, a prepayment of or conversion of or to a Eurodollar
Rate Loan after notice thereof has been given, including any interest payable by
Agent or Lenders to lenders of funds obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder. A certificate setting forth any additional
amounts payable pursuant to the foregoing sentence submitted by Agent or any
Lender to the Borrowing Agent shall be conclusive absent manifest error.
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(e) Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (e), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans to make or maintain its
Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans
hereunder shall forthwith be canceled and Borrowers shall, if any affected
Eurodollar Rate Loans are then outstanding, promptly upon request from Agent,
either pay all such affected Eurodollar Rate Loans or convert such affected
Eurodollar Rate Loans into loans of another type. If any such payment or
conversion of any Eurodollar Rate Loan is made on a day that is not the last day
of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall
pay Agent, upon Agent's request, such amount or amounts as may be necessary to
compensate Lenders for any loss or expense sustained or incurred by Lenders in
respect of such Eurodollar Rate Loan as a result of such payment or conversion,
including any interest or other amounts payable by Lenders to lenders of funds
obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A
certificate setting forth any additional amounts payable pursuant to the
foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive
absent manifest error.
SECTION 3. INTEREST AND FEES.
3.1 Interest. Interest on Advances shall accrue be payable in arrears
on the last day of each month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each Interest Period or, for
Eurodollar Rate Loans with an Interest Period in excess of three months, at the
earlier of (a) each three months on the anniversary date of the commencement of
such Eurodollar Rate Loan or (b) the end of the Interest Period. Interest
charges shall be computed on the actual principal amount of Advances outstanding
during the month (the "Monthly Advances") at a rate per annum equal to with
respect to Revolving Advances, the applicable Revolving Interest Rate and (ii)
with respect to the Term Loan, the applicable Term Loan Rate (as applicable, the
"Contract Rate"). Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect. The Eurodollar Rate shall be adjusted
with respect to Eurodollar Rate Loans without notice or demand of any kind on
the effective date of any change in the Reserve Percentage as of such effective
date. Upon and after the occurrence of an Event of Default, and during the
continuation thereof, (i) the Obligations other than Eurodollar Rate Loans shall
bear interest at the applicable Contract Rate plus two (2%) percent per annum,
and (ii) Eurodollar Rate Loans shall bear interest at the applicable Contract
Rate plus two (2%) percent per annum (as applicable, the "Default Rate").
3.2 Letter of Credit Fees. Borrowers shall pay (x) to Agent, for the
benefit of Lenders, fees for each Letter of Credit for the period from and
excluding the date of issuance of same to and including the date of expiration
or termination, equal to the average daily face amount of each outstanding
Letter of Credit multiplied by one and one-half percent (1.50%) per annum, such
fees to be calculated on the basis of a 360-day year for the actual number of
days elapsed and to be payable monthly in arrears on the first day of each month
and on the last day of the Term and (y) to the Issuer, any and all fees and
expenses as agreed upon by the Issuer and the Borrowing Agent in connection with
any Letter of Credit, including in connection with the opening, amendment or
renewal of any such Letter of Credit and any acceptances created thereunder and
shall reimburse Agent for any and all fees and expenses, if any, paid by Agent
to the Issuer (all of the foregoing fees, the "Letter of Credit Fees"). All such
charges shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination
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of this Agreement for any reason. Any such charge in effect at the time of a
particular transaction shall be the charge for that transaction, notwithstanding
any subsequent change in the Issuer's prevailing charges for that type of
transaction. All Letter of Credit Fees payable hereunder shall be deemed earned
in full on the date when the same are due and payable hereunder and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason.
3.3 Closing and Facility Fees.
(a) Upon the execution of this Agreement, Borrowers shall pay to
Agent for the ratable benefit of Lenders a closing fee of $250,000 less that
portion of the deposit fee of $50,000 and the commitment fee of $50,000
heretofore paid by Borrowers to Agent remaining after application of such fee to
out-of-pocket expenses. An additional closing fee equal of $62,500 shall be
deemed fully earned at the time on the Closing Date and shall be payable six
months after the Closing Date; provided, however, if Agent receives evidence,
satisfactory to Agent in its sole discretion, that ▇▇▇▇▇▇▇▇▇▇ has received at
least $20,000,000 of cash equity contributions no later than six months after
the Closing Date, Borrowers shall not be obligated to make pay such additional
closing fee.
(b) If, for any month during the Term, the average daily unpaid
balance of the Revolving Advances for each day of such month does not equal the
Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the
ratable benefit of Lenders a fee at a rate equal to one-half of one percent
(0.50%) per annum on the amount by which the Maximum Revolving Advance Amount
exceeds such average daily unpaid balance. Such fee shall be payable to Agent in
arrears on the last day of each Fiscal Quarter.
3.4 Collateral Evaluation and Monitoring Fee.
(a) Borrowers shall pay Agent a collateral evaluation fee equal
to $2,000 per month, commencing on the first day of the month following the
Closing Date and on the first day of each month thereafter during the Term. The
collateral evaluation fee shall be deemed earned in full on the date when same
is due and payable hereunder and shall not be subject to rebate or proration
upon termination of this Agreement for any reason.
(b) Borrowers shall pay to Agent on the first day of each month
following any month in which Agent performs any collateral monitoring - namely
any field examination, collateral analysis or other business analysis, the need
for which is to be determined by Agent and which monitoring is undertaken by
Agent or for Agent's benefit - a collateral monitoring fee in an amount equal to
$675 per day for each person (other than Agent's management personnel) employed
to perform such monitoring and in an amount equal to $675 per day for each
manager of Agent performing such monitoring, plus all costs and disbursements
incurred by Agent in the performance of such examination or analysis.
3.5 Computation of Interest and Fees. Interest and fees hereunder
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
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3.6 Maximum Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under Applicable
Law. In the event interest and other charges as computed hereunder would
otherwise exceed the highest rate permitted under Applicable Law, such excess
amount shall be first applied to any unpaid principal balance owed by Borrowers,
and if the then remaining excess amount is greater than the previously unpaid
principal balance, Lenders shall promptly refund such excess amount to Borrowers
and the provisions hereof shall be deemed amended to provide for such
permissible rate.
3.7 Increased Costs. In the event that any Applicable Law, treaty or
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Other Document or change the basis of
taxation of payments to Agent or any Lender of principal, fees, interest or any
other amount payable hereunder or under any Other Documents (except for changes
in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or any Lender, including pursuant to Regulation D of the Board
of Governors of the Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowers, and such certification shall be
conclusive absent manifest error.
3.8 Basis For Determining Interest Rate Inadequate or Unfair. In the
event that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate applicable pursuant to Section 2.16 hereof for any Interest Period; or
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(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,
then Agent shall give the Borrowing Agent prompt written, telephonic or
telegraphic notice of such determination. If such notice is given, (i) any such
requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless the
Borrowing Agent shall notify Agent no later than 10:00 a.m. (East Brunswick, New
Jersey time) two (2) Business Days prior to the date of such proposed borrowing,
that its request for such borrowing shall be cancelled or made as an unaffected
type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate
Loan that was to have been converted to an affected type of Eurodollar Rate Loan
shall be continued as or converted into a Domestic Rate Loan, or, if the
Borrowing Agent shall notify Agent, no later than 10:00 a.m. (East Brunswick,
New Jersey time) two (2) Business Days prior to the proposed conversion, shall
be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans shall be converted into a Domestic
Rate Loan, or, if the Borrowing Agent shall notify Agent, no later than 10:00
a.m. (East Brunswick, New Jersey time) two (2) Business Days prior to the last
Business Day of the then current Interest Period applicable to such affected
Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar
Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or
maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have
the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate Loan.
3.9 Capital Adequacy.
(a) In the event that Agent or any Lender shall have determined
that any Applicable Law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the term "Lender"
shall include Agent or any Lender and any corporation or bank controlling Agent
or any Lender) and the office or branch where Agent or any Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Agent or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance
(taking into consideration Agent's and each Lender's policies with respect to
capital adequacy) by an amount deemed by Agent or any Lender to be material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional amount or amounts as will compensate Agent or such Lender for
such reduction. In determining such amount or amounts, Agent or such Lender may
use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any
possible contention of invalidity or inapplicability with respect to any
Applicable Law or condition.
(b) A certificate of Agent or such Lender setting forth such
amount or amounts as shall be necessary to compensate Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.
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SECTION 4. COLLATERAL: GENERAL TERMS
4.1 Security Interest in the Collateral. To secure the prompt payment
and performance to Agent and each Lender of the Obligations, each Borrower
hereby assigns, pledges and grants to Agent, for its benefit and the ratable
benefit of Lenders, a continuing security interest in and to all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Borrower shall ▇▇▇▇ its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent's security
interest and shall cause its financial statements to reflect such security
interest.
4.2 Perfection of Security Interest. Borrower shall take all action
that may be necessary or desirable, or that Agent may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral and to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including (i)
immediately discharging all Liens other than Permitted Encumbrances, (ii)
obtaining landlords' or mortgagees' Lien waivers, (iii) delivering to Agent,
endorsed or accompanied by such instruments of assignment as Agent may specify,
and stamping or marking, in such manner as Agent may specify, any and all
chattel paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (iv) entering into warehousing,
lockbox and other custodial arrangements satisfactory to Agent, and (v)
executing and delivering, or causing to be executed or delivered, Lien
Perfection Documents requested by Agent, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the UCC or other
Applicable Law. Agent is hereby authorized to file financing statements signed
by Agent instead of Borrower in accordance with Section 9-402(2) of the UCC as
adopted in the State of New York. All charges, expenses and fees Agent may incur
in doing any of the foregoing, and any local taxes relating thereto, shall be
charged to Borrowers' Account as a Revolving Advance of a Domestic Rate Loan and
added to the Obligations, or, at Agent's option, shall be paid to Agent for the
ratable benefit of Lenders immediately upon demand.
4.3 Disposition of Collateral. Each Borrower will safeguard and
protect all Collateral for Agent's general account and make no disposition
thereof whether by sale, lease or otherwise except (a) the sale of Inventory in
the ordinary course of business (including close-out sales of finished goods
Inventory in the ordinary course of such Borrower's business) and (b) the
disposition or transfer of obsolete and worn-out Equipment in the ordinary
course of business during any Fiscal Year having an aggregate fair market value
of not more than $100,000 and only to the extent that (i) the proceeds of any
such disposition are used to acquire replacement Equipment which is subject to
Agent's first priority security interest or (ii) the proceeds of which are
remitted to Agent for application to the Obligations in accordance with this
Agreement.
4.4 Preservation of Collateral. Following the occurrence of a Default
or Event of Default, in addition to the rights and remedies set forth in Section
11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary
to protect Agent's interest in and to preserve the Collateral, including the
hiring of such security guards or the placing of other security protection
measures as Agent may deem appropriate; (b) may employ and maintain at any of
any Borrower's premises a custodian who shall have full authority to do all acts
necessary to protect Agent's interests in the Collateral; (c) may lease
warehouse facilities to which Agent may move all or part of the Collateral; (d)
may use any Borrower's owned or leased lifts, hoists, trucks and other
facilities or equipment for handling or removing the Collateral; and (e) shall
have, and is hereby granted, a right of ingress and egress to the places where
the Collateral is located, and may proceed over and through any Borrower's owned
or leased property. Each Borrower shall cooperate
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fully with all of Agent's efforts to preserve the Collateral and will take such
actions to preserve the Collateral as Agent may direct. All of Agent's expenses
of preserving the Collateral, including any expenses relating to the bonding of
a custodian, shall be charged to Borrowers' Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations.
4.5 Ownership of Collateral. With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security interest: (a) each
Borrower shall be the sole owner of and fully authorized and able to sell,
transfer, pledge and/or grant a first priority security interest in each and
every item of its respective Collateral to Agent; and, except for Permitted
Encumbrances, the Collateral shall be free and clear of all Liens and
encumbrances whatsoever; (b) each document and agreement executed by each
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (c) all signatures and endorsements
of each Borrower that appear on such documents and agreements shall be genuine
and each Borrower shall have full capacity to execute same; and (d) each
Borrower's Equipment and Inventory shall be located as set forth on Schedule 4.5
and shall not be removed from such locations without the prior written consent
of Agent except with respect to the sale of Inventory in the ordinary course of
business and Equipment to the extent permitted in Section 4.3 hereof. In no
event shall (i) the aggregate Value of Borrowers' Consigned Inventory on any
date exceed five percent (5.0%) of the aggregate Value of all Borrowers'
Inventory, (ii) the aggregate Value of Borrowers' Inventory at all locations in
the United State and not subject to a landlord agreement, mortgagee agreement,
warehouseman agreement, Processor Agreement and/or Licensor/Agent Agreement
satisfactory to Agent exceed ten percent (10.0%) of the aggregate Value of all
Borrowers' Inventory, and (iii) the aggregate Value of Borrowers' Inventory at
any single location in the United States and not subject to a landlord
agreement, mortgagee agreement, warehouseman agreement, Processor Agreement
and/or Licensor/Agent Agreement satisfactory to Agent exceed ten percent (10.0%)
of the aggregate Value of all Borrowers' Inventory.
4.6 Defense of Agent's and Lenders' Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent's prior written
consent, pledge, sell (except Inventory in the ordinary course of business
(including close-out sales of finished goods Inventory in the ordinary course of
such Borrower's business and sales of Equipment to the extent permitted in
Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any way except for Permitted
Encumbrances, any part of the Collateral. Each Borrower shall defend Agent's
interests in the Collateral against any and all Persons whatsoever. At any time
following demand by Agent for payment of all Obligations, Agent shall have the
right to take possession of the indicia of the Collateral and the Collateral in
whatever physical form contained, including labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take
possession of the Collateral, each Borrower shall, upon demand, assemble it in
the best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral, Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further provided by the UCC or other Applicable Law. Each Borrower shall, and
Agent may, at its option, instruct all suppliers, carriers, forwarders,
warehouses or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver same to Agent
and/or subject to Agent's order and if they shall come into such Borrower's
possession, they, and each of them, shall be held by Borrowers in trust as
Agent's trustee, and such Borrower will immediately deliver them to Agent in
their original form together with any necessary endorsement.
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4.7 Books and Records. Each Borrower shall (a) keep proper books of
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all Charges and claims; and (c) on a
reasonably current basis set up on its books, from its earnings, allowances
against doubtful Receivables, advances and investments and all other proper
accruals (including by reason of enumeration, accruals for premiums, if any, due
on required payments and accruals for depreciation, obsolescence, or
amortization of properties), which should be set aside from such earnings in
connection with its business. All determinations pursuant to this subsection
shall be made in accordance with, or as required by, GAAP consistently applied
in the opinion of such independent public accountant as shall then be regularly
engaged by Borrowers.
4.8 Financial Disclosure. Each Borrower hereby irrevocably authorizes
and directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Borrower's financial statements, trial balances or other accounting records
of any sort in the accountant's or auditor's possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower's financial status and business operations. Each Borrower hereby
authorizes all federal, state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to Such Borrower, whether
made by such Borrower or otherwise; however, Agent and each Lender will attempt
to obtain such information or materials directly from such Borrower prior to
obtaining such information or materials from such accountants or such
authorities.
4.9 Compliance with Laws. Each Borrower shall comply with all
Applicable Law with respect to its respective Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably be expected to have a Material Adverse Effect on such Borrower. Each
Borrower may, however, contest or dispute any acts, rules, regulations, orders
and directions of those bodies or officials in any reasonable manner, provided
that such contest or dispute is pursued diligently, in good faith and by
appropriate proceedings, any related Lien is inchoate or stayed and sufficient
reserves are established to the reasonable satisfaction of Agent to protect
Agent's Lien on or security interest in the Collateral. The Collateral and other
assets of such Borrower at all times shall be maintained in accordance with the
requirements of all insurance carriers which provide insurance with respect to
the Collateral and such other assets of such Borrower so that such insurance
shall remain in full force and effect.
4.10 Inspection of Premises. At all reasonable times upon not less
than twenty-four hours prior oral or written notice to Borrowing Agent, Agent
and its agents, and each Lender in the company of Agent or its agents, shall
have full access to and the right to audit, check, inspect and make abstracts
and copies from each Borrower's books, records, audits, correspondence and all
other papers relating to the Collateral and the operation of such Borrower's
business. Agent and its agents, and any Lender or Lenders and their agents in
the company of Agent or its agents, may enter upon any of any Borrower's
premises at any time during business hours and at any other reasonable time, and
from time to time upon not less than twenty-four hours prior oral or written
notice to Borrowing Agent, for the purpose of inspecting the Collateral and any
and all records pertaining thereto and the operation of such Borrower's
business.
4.11 Insurance. Each Borrower shall bear the full risk of any loss of
any nature whatsoever with respect to the Collateral. At each Borrower's own
cost and expense in amounts and with carriers acceptable to Agent, Borrowers
shall (a) keep all its properties in which it has an interest insured against
the hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies engaged in businesses similar to
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such Borrower's including business interruption insurance; (b) maintain a bond
in such amounts as is customary in the case of companies engaged in businesses
similar to such Borrower insuring against larceny, embezzlement or other
criminal misappropriation of insured's officers and employees who may either
singly or jointly with others at any time have access to the assets or funds of
such Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of
all policies and evidence of the maintenance of such policies by the renewal
thereof at least thirty (30) days before any expiration date, and (ii)
appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as a co-insured and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a), and (c)
above, and providing (A) that all proceeds thereunder shall be payable to Agent,
(B) no such insurance shall be affected by any act or neglect of the insured or
owner of the property described in such policy, and (C) that such policy and
loss payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein are hereby directed by Agent and the
applicable Borrower to make payment for such loss to Agent and not to such
Borrower and Agent jointly. If any insurance losses are paid by check, draft or
other instrument payable to any Borrower and Agent jointly, Agent may endorse
such Borrower's name thereon and do such other things as Agent may deem
advisable to reduce the same to cash. When any Event of Default exists, Agent is
hereby authorized to adjust and compromise claims under insurance coverage
referred to in clauses (a) and (b) above. All loss recoveries received by Agent
upon any such insurance may be applied to the Obligations, in such order as
Agent in its sole discretion shall determine. Any surplus shall be paid by Agent
to Borrowers or applied as may be otherwise required by law. Any deficiency
thereon shall be paid by Borrowers to Agent, on demand. Anything hereinabove to
the contrary notwithstanding, and subject to the fulfillment of the conditions
set forth below, Agent shall remit to Borrowers insurance proceeds received by
Agent during any calendar year under insurance policies procured and maintained
by Borrowers which insure Borrowers' insurable properties to the extent such
insurance proceeds do not exceed $300,000 in the aggregate during such calendar
year or $300,000 per occurrence. In the event the amount of insurance proceeds
received by Agent for any occurrence exceeds $300,000, then Agent shall not be
obligated to remit the insurance proceeds to Borrowers unless Borrowers shall
provide Agent with evidence reasonably satisfactory to Agent that the insurance
proceeds will be used by Borrowers to repair, replace or restore the insured
property which was the subject of the insurable loss. In the event Borrowers
have previously received (or, after giving effect to any proposed remittance by
Agent to Borrowers would receive) insurance proceeds which equal or exceed
$300,000 in the aggregate during any calendar year, then Agent may, in its sole
discretion, either remit the insurance proceeds to Borrowers upon Borrowers
providing Agent with evidence reasonably satisfactory to Agent that the
insurance proceeds will be used by Borrowers to repair, replace or restore the
insured property which was the subject of the insurable loss, or apply the
proceeds to the Obligations, as aforesaid. The agreement of Agent to remit
insurance proceeds in the manner above provided shall be subject in each
instance to satisfaction of each of the following conditions: (x) No Event of
Default or Default shall then have occurred, and (y) Borrowers shall use such
insurance proceeds to repair, replace or restore the insurable property which
was the subject of the insurable loss and for no other purpose.
4.12 Failure to Pay Insurance. If any Borrower fails to obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects, may obtain such insurance and pay the premium therefor on behalf of
such Borrower, and charge Borrowers' Account therefor as a Revolving Advance of
a Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
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4.13 Payment of Taxes. Each Borrower will pay, when due, all Charges
lawfully levied or assessed upon such Borrower or any of the Collateral
including real and personal property taxes, assessments and charges and all
franchise, income, employment, social security benefits, withholding, and sales
taxes. If any tax by any governmental authority is or may be imposed on or as a
result of any transaction between any Borrower and Agent or any Lender which
Agent or any Lender may be required to withhold or pay (other than a tax based
on Agent's or any Lender's income) or if any Charges remain unpaid after the
date fixed for their payment, or if any claim shall be made which, in Agent's or
any Lender's opinion, may possibly create a valid Lien on the Collateral, Agent
may without notice to Borrowers pay the Charges and each Borrower hereby jointly
and severally indemnifies and holds Agent and each Lender harmless in respect
thereof. Agent will not pay any taxes, assessments or Charges to the extent that
any Borrower has Properly Contested those taxes, assessments or Charges. The
amount of any payment by Agent under this Section 4.13 shall be charged to
Borrowers' Account as a Revolving Advance and added to the Obligations and,
until Borrowers shall furnish Agent with an indemnity therefor (or supply Agent
with evidence satisfactory to Agent that due provision for the payment thereof
has been made), Agent may hold without interest any balance standing to
Borrowers' credit and Agent shall retain its security interest in any and all
Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Each Borrower shall at all
times pay, when and as due, its rental obligations under all leases under which
it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at
Agent's request will provide evidence of having done so.
4.15 Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore
rendered by a Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the applicable Borrower's standard terms of
sale without dispute, setoff or counterclaim except as may be stated on the
accounts receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of each
Borrower's knowledge, as of the date each Receivable is created, is and will be
Solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of any Borrower who are not
Solvent Borrowers has set up on its books and in its financial records bad debt
reserves adequate to cover such Receivables.
(c) Locations of Borrowers. Each Borrower's chief executive
office is located at the addresses set forth on Schedule 4.15(c) hereto. Until
written notice is given to Agent by the Borrowing Agent of any other office at
which any Borrower keeps its records pertaining to Receivables, all such records
shall be kept at such executive office.
(d) Collection of Receivables. Until any Borrower's authority to
do so is terminated by Agent (which notice Agent may give at any time following
the occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Lenders' best interest to do so), each Borrower
will, at
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such Borrower's sole cost and expense, but on Agent's and Lender's behalf and
for Agent's and Lender's account, collect as Agent's and Lender's property and
in trust for Agent and Lenders all amounts received on Receivables, and shall
not commingle such collections with any Borrower's funds or use the same except
to pay Obligations. Each Borrower shall, upon request, deliver to Agent, or
deposit in the Blocked Account, in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness relating, in each case, to the Receivables.
(e) Notification of Assignment of Receivables. At any time that
an Event of Default exists, Agent shall have the right to send notice of the
assignment of, and Agent's security interest in, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the
Collateral. Thereafter, Agent shall have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent's actual
collection expenses, including stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel
used for collection, may be charged to Borrowers' Account and added to the
Obligations.
(f) Power of Agent to Act on Borrowers' Behalf. Agent shall have
the right to receive, endorse, assign and/or deliver in the name of Agent or any
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and each Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Each
Borrower hereby constitutes Agent or Agent's designee as such Borrower's
attorney with power (i) to endorse such Borrower's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral; (ii) to sign such Borrower's name on any invoice or ▇▇▇▇ of lading
relating to any of the Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) to send verifications of Receivables to any
Customer; (iv) to sign such Borrower's name on all financing statements or any
other documents or instruments deemed necessary or appropriate by Agent to
preserve, protect, or perfect Agent's interest in the Collateral and to file
same; (v) to demand payment of the Receivables; (vi) to enforce payment of the
Receivables by legal proceedings or otherwise; (vii) to exercise all of such
Borrower's rights and remedies with respect to the collection of the Receivables
and any other Collateral; (viii) to settle, adjust, compromise, extend or renew
the Receivables; (ix) to settle, adjust or compromise any legal proceedings
brought to collect Receivables; (x) to prepare, file and sign such Borrower's
name on a proof of claim in bankruptcy or similar document against any Customer;
(xi) to prepare, file and sign such Borrower's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Receivables; and (xii) to do all other acts and things necessary to carry out
this Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence
and during the continuance of an Event of Default or Default, to change the
address for delivery of mail addressed to any Borrower to such address as Agent
may designate and to receive, open and dispose of all mail addressed to any
Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of a Default or an
Event of Default Agent may, without notice or consent from any Borrower, ▇▇▇
upon or otherwise collect, extend the time of payment of, compromise or settle
for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and
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empowered to accept following the occurrence of an Event of Default or Default
the return of the goods represented by any of the Receivables, without notice to
or consent by any Borrower, all without discharging or in any way affecting any
Borrower's liability hereunder.
(h) Establishment of Cash Management System. All proceeds of
Collateral shall, at the direction of Agent, be deposited by Borrowers into a
lockbox account, dominion account or other "blocked account" ("Blocked Account")
as Agent may require pursuant to an arrangement with such bank or banks as may
be selected by Borrowers and be acceptable to Agent. Each Borrower shall issue
to any such bank, an irrevocable letter of instruction directing said bank to
transfer such funds so deposited to Agent, either to any account maintained by
Agent at said bank or by wire transfer to appropriate account(s) of Agent. All
funds deposited into any Blocked Account shall immediately become the property
of Agent and Borrowers shall obtain the agreement by each bank at which a
Blocked Account is maintained to waive any offset rights against the funds so
deposited. Neither Agent nor any Lender assumes any responsibility for such
Blocked Account, including any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder. Agent may also establish
depository accounts ("Depository Accounts") in the name of Agent at a bank or
banks for the deposit of such funds and Borrowers shall deposit all proceeds of
Collateral or cause same to be deposited, in kind, in such Depository Accounts
of Agent.
(i) Adjustments. No Borrower will, without Agent's consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any additional discounts, allowances
or credits thereon except for those compromises, adjustments, returns,
discounts, credits and allowances as have been heretofore customary in the
business of such Borrower.
4.16 Inventory. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by Borrowers in
accordance with the Federal Fair Labor Standards Act of 1938 and all rules,
regulations and orders thereunder. Borrowers shall promptly notify Agent in
writing if any Borrower enters into any License Agreement other than as set
forth on Schedule 4.16 or has any Inventory located at a Processor in the United
States other than those Processors set forth on Schedule 4.16.
4.17 Maintenance of Equipment. The Equipment shall be maintained in
good operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrowers shall use or operate the Equipment in violation of any Applicable Law.
4.18 Exculpation of Liability. Nothing herein contained shall be
construed to constitute Agent or any Lender as Borrowers' agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Borrower's obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Borrower of any of
the terms and conditions thereof.
4.19 Intentionally Omitted.
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4.20 Financing Statements. Except as respects the financing statements
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
4.21 Amounts Due From Factor. Promptly provide Agent with copies of all
reports, statements of account and other communications received by ▇▇▇▇▇▇▇▇▇▇
from Factor with reference to the Factoring Agreement, including, without
limitation, all Factor Status Statements (but specifically excluding daily cash
receipts), all notices of default or termination, and all amendments the
Factoring Agreement. ▇▇▇▇▇▇▇▇▇▇ shall identify to Agent each month identifying
the Client Risk Accounts and amount the thereof. Concurrently with the
submission of each Borrowing Base Certificate, ▇▇▇▇▇▇▇▇▇▇ shall provide to Agent
a Due From Factor Report, together with copies of all data and other information
requested by Agent from which such Due From Factor Reports are derived.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1 Authority. Each Borrower has full power, authority and legal
right to enter into this Agreement and the Other Documents and to perform all
its Obligations hereunder and thereunder. The execution, delivery and
performance of this Agreement and of the Other Documents (a) are within such
Borrower's corporate powers, have been duly authorized, are not in contravention
of any Applicable Law or the terms of Borrowers' Organization Documents relating
to such Borrower's formation or to the conduct of such Borrower's business or of
any material agreement or undertaking to which such Borrower is a party or by
which such Borrower is bound, and (b) will not conflict with nor result in any
breach in any of the provisions of or constitute a default under or result in
the creation of any Lien except Permitted Encumbrances upon any asset of such
Borrower under the provisions of any agreement, Organization Documents or other
instrument to which such Borrower or its property is a party or by which such
Borrower or its property may be bound.
5.2 Formation and Qualification.
(a) Each Borrower has been duly organized and is in good standing
under the laws of the state listed on Schedule 5.2(a) and is qualified to do
business and is in good standing in the states listed on Schedule 5.2(a) which
constitute all states in which qualification and good standing are necessary for
Borrowers to conduct its business and own its property and where the failure to
so qualify could reasonably be expected to have a Material Adverse Effect. Each
Borrower has delivered to Agent true and complete copies of its Organization
Documents and will promptly notify Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each Borrower as of the date hereof
are listed on Schedule 5.2(b).
5.3 Survival of Representations and Warranties. All representations and
warranties of each Borrower contained in this Agreement and the Other Documents
shall be true at the time of Borrowers' execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
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5.4 Tax Returns. Each Borrower's federal tax identification number is
set forth on Schedule 5.4. Each Borrower has filed all federal, state and local
tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable. Federal, state and local income tax returns of each Borrower have been
examined and reported upon by the appropriate taxing authority or closed by
applicable statute and satisfied for all Fiscal Years prior to and including the
Fiscal Year ending December 31, 1997. The provision for taxes on the books of
each Borrower are adequate for all years not closed by applicable statutes, and
for its current Fiscal Year, and no Borrower has any knowledge of any deficiency
or additional assessment in connection therewith not provided for on its books.
5.5 Financial Statements.
(a) The pro forma balance sheet of Borrowers and its Subsidiaries
on a consolidated and consolidating basis (the "Pro Forma Balance Sheet")
furnished to Agent on the Closing Date reflects the consummation of the
transactions contemplated by the Initial Acquisition Documents and under this
Agreement (the "Transactions") and is accurate, complete and correct and,
subject to the qualifications and assumptions stated therein, fairly reflect the
financial condition of Borrowers on a consolidated basis as of the Closing Date
after giving effect to the Transactions. The Pro Forma Balance Sheet has been
certified as accurate, complete and correct in all material respects by the
President and Chief Financial Officer of the Borrowing Agent. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared in accordance with GAAP, except
as may be disclosed in such financial statements.
(b) The three-year cash flow projections (including projected
borrowings) of Borrowers on a consolidated basis and their projected balance
sheets as of the Closing Date, copies of which are annexed hereto as Exhibit C
(the "Projections") were prepared by the Chief Financial Officer of the
Borrowing Agent, are based on underlying assumptions which provide a reasonable
basis for the projections contained therein and reflect Borrowers' judgment
based on present circumstances of the most likely set of conditions and course
of action for the projected period. The cash flow Projections together with the
Pro Forma Balance Sheet and the Fair Saleable Value Balance Sheet, are referred
to as the "Pro Forma Financial Statements."
5.6 Corporate Name. Except as set forth on Schedule 5.6, no Borrower
has been known by any other corporate name in the past five (5) years and no
Borrower has sold any Inventory under any other name except as set forth on
Schedule 5.6, nor has any Borrower been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person
during the preceding five (5) years.
5.7 O.S.H.A. and Environmental Compliance.
(a) Each Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders of
non-compliance issued to Borrowers or relating to its business, assets,
property, leaseholds or Equipment under any such laws, rules or regulations.
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(b) Each Borrower has been issued all required federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.
(c) (i) There are no visible signs of releases, spills, discharges,
leaks or disposal (collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any real property owned or leased by any
Borrower; (ii) there are no underground storage tanks or polychlorinated
biphenyls on any real property owned or leased by any Borrower; (iii) to each
Borrower's knowledge, no real property owned or leased by any Borrower has ever
been used as a treatment, storage or disposal facility of Hazardous Waste; and
(iv) no Hazardous Substances are present on the Real Property or any premises
leased by any Borrower, excepting such quantities as are handled in accordance
with all applicable manufacturer's instructions and governmental regulations and
in proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
(a) After giving effect to the Transactions, each Borrower is and
will at all time remain Solvent.
(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any
pending or threatened litigation, arbitration, actions or proceedings which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect, and (ii) any liabilities or Indebtedness for Money Borrowed other than
the Obligations.
(c) No Borrower nor any member of the Controlled Group maintains or
contributes to any Plan other than those listed on Schedule 5.8(c) hereto, and
(i) no Plan has incurred any "accumulated funding deficiency," as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not
waived, and each Borrower and each member of the Controlled Group has met all
applicable minimum funding requirements under Section 302 of ERISA in respect of
each Plan, (ii) each Plan which is intended to be a qualified plan under Section
401(a) of the Code as currently in effect has been determined by the Internal
Revenue Service to be qualified under Section 401(a) of the Code and the trust
related thereto is exempt from federal income tax under Section 501(a) of the
Code, (iii) neither any Borrower nor any member of the Controlled Group has
incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due which are unpaid, (iv) no
Plan has been terminated by the plan administrator thereof nor by the PBGC, and
there is no occurrence which would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan, (v) at this time, the current value of
the assets of each Plan exceeds the present value of the accrued benefits and
other liabilities of such Plan and neither any Borrower nor any member of the
Controlled Group knows of any facts or circumstances which would materially
change the value of such assets and accrued benefits and other liabilities, (vi)
no Borrower nor any member of the Controlled Group has breached any of the
responsibilities, obligations or duties imposed on it by ERISA with respect to
any Plan, (vii) neither any Borrower nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B of
the Code, and no fact exists which could give rise to any such liability, (viii)
neither any Borrower nor any member of the Controlled Group nor any fiduciary
of, nor any trustee to, any Plan, has engaged in a "prohibited transaction"
described in Section 406 of the ERISA or Section 4975 of the Code nor taken any
action which would constitute or result in a Termination Event with respect to
any such Plan which is subject to ERISA, (ix) each Borrower and each member of
the Controlled Group has made all contributions due and payable with respect to
each Plan, (x) there exists no event described in Section 4043(b) of ERISA, for
which the thirty (30) day
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notice period contained in 29 CFR 2615.3 has not been waived, (xi) no Borrower
nor any member of the Controlled Group has any fiduciary responsibility for
investments with respect to any plan existing for the benefit of persons other
than employees or former employees of any Borrower and any member of the
Controlled Group, and (xii) no Borrower nor any member of the Controlled Group
has withdrawn, completely or partially, from any Multiemployer Plan so as to
incur liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by Borrowers are set
forth on Schedule 5.9, are valid and have been duly registered or filed with all
appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no objection to or pending challenge to the validity of any such material
patent, trademark, copyright, design right, tradename, trade secret or license
and no Borrowers is aware of any grounds for any challenge, except as set forth
in Schedule 5.9 hereto. Each patent, patent application, patent license,
trademark, trademark application, trademark license, service ▇▇▇▇, service ▇▇▇▇
application, service ▇▇▇▇ license, copyright, copyright application and
copyright license owned or held by Borrowers and all trade secrets used by
Borrowers consist of original material or property developed by Borrowers or was
lawfully acquired by Borrowers from the proper and lawful owner thereof. Each of
such items has been maintained so as to preserve the value thereof from the date
of creation or acquisition thereof. With respect to all proprietary software
used by Borrowers, Borrowers is in possession of all source and object codes
related to each piece of software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being listed on Schedule 5.9
hereto.
5.10 Licenses and Permits. Except as set forth in Schedule 5.10, each
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any Applicable Law or
regulation for the operation of its business in each jurisdiction wherein it is
now conducting or proposes to conduct business and where the failure to procure
such licenses or permits could reasonably be expected to have a Material Adverse
Effect on such Borrower.
5.11 Default of Indebtedness. No Borrower is in default in the payment
of the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. No Borrower is in default in the payment or
performance of any of its contractual obligations and no Default has occurred
thereunder.
5.13 No Burdensome Restrictions. No Borrower is party to any contract
or agreement the performance of which could have a Material Adverse Effect on
such Borrower. No Borrower has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.
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5.14 No Labor Disputes. No Borrower is involved in any labor dispute;
there are no strikes or walkouts or union organization of any Borrower's
employees threatened or in existence and no labor contract is scheduled to
expire during the Term other than as set forth on Schedule 5.14 hereto.
5.15 Margin Regulations. No Borrowers is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
"purchasing" or "carrying" "margin stock" as defined in Regulation U of such
Board of Governors.
5.16 Investment Company Act. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by any Borrower in
this Agreement, in any other Loan Document, in the Initial Acquisition
Documents, or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of fact or omits to state any fact necessary to make the statements
herein or therein not misleading. There is no fact known to any Borrower or
which reasonably should be known to any Borrower which Borrowers have not
disclosed to Agent in writing with respect to the Transactions which could
reasonably be expected to have a Material Adverse Effect on any Borrower.
5.18 Delivery of Initial Acquisition Documents. Agent has received
complete copies of the Initial Acquisition Documents and (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof. None of such
documents and agreements has been amended or supplemented, nor have any of the
provisions thereof been waived, except pursuant to a written agreement or
instrument which has heretofore been delivered to Agent.
5.19 Swaps. No Borrower is a party to, nor will it be a party to, any
swap agreement whereby any Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default thereunder are payable on an unlimited "two-way basis"
without regard to fault on the part of either party.
5.20 Conflicting Agreements. No provision of any mortgage, indenture,
contract, agreement, judgment, decree or order binding on any Borrower or
affecting the Collateral conflicts with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.
5.21 Application of Certain Laws and Regulations. No Borrower nor any
Affiliate of any Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness, including statutes or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility services.
5.22 Business and Property of Borrowers. Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than in the
apparel industry and activities necessary to conduct the
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foregoing. On the Closing Date, each Borrower will own all the property and
possess all of the rights and Consents necessary for the conduct of the business
of such Borrower.
5.23 Compliance with Laws. No Borrower is in violation of any
Applicable Law in any respect which could reasonably be expected to have a
Material Adverse Effect on such Borrower, nor is any Borrower in violation of
any order of any Governmental Body or arbitration board or other tribunal.
SECTION 6. AFFIRMATIVE COVENANTS.
Each Borrower shall, until payment in full of the Obligations and
termination of this Agreement:
6.1 Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses which Agent incurs in connection with (a) the forwarding of
Advance proceeds and (b) the establishment and maintenance of any Blocked
Account or Depository Accounts as provided for in Section 4.15(h). Agent may,
without making demand, charge Borrowers' Account for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including all licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all actions necessary to
enforce and protect the validity of any intellectual property right or other
right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with all Applicable Laws governing
the conduct of its business where the failure to do so could reasonably be
expected to have a Material Adverse Effect on Borrowers; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof.
6.3 Violations. Promptly notify Agent in writing of any Applicable
Law which could reasonably be expected to have a Material Adverse Effect on any
Borrower.
6.4 Government Receivables. Take all steps necessary to protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other Applicable Law and deliver to Agent appropriately endorsed, any instrument
or chattel paper connected with any Receivable arising out of contracts between
any Borrower and the United States, any state or any department, agency or
instrumentality of any of them.
6.5 Intentionally Omitted.
6.6 Intentionally Omitted.
6.7 Intentionally Omitted.
6.8 Intentionally Omitted.
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6.9 Fixed Charge Coverage Ratio. Cause to be maintained as of the end
of each Fiscal Quarter, a Fixed Charge Ratio for the immediately preceding four
Fiscal Quarters of not less than 1.10 to 1.00.
6.10 Execution of Supplemental Instruments. Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement may be carried into effect.
6.11 Payment of Indebtedness. Pay, discharge or otherwise satisfy at
or before maturity (subject, where applicable, to specified grace periods and,
in the case of the trade payables, to normal payment practices) all its
obligations and liabilities of whatever nature, except when the failure to do so
could not reasonably be expected to have a Material Adverse Effect or when the
amount or validity thereof is currently being contested and diligently in good
faith by appropriate proceedings and each Borrower shall have provided for such
reserves as Agent may reasonably deem proper and necessary, subject at all times
to any applicable subordination arrangement in favor of Lenders.
6.12 Standards of Financial Statements. Cause all financial
statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and
9.14 as to which GAAP is applicable to be complete and correct in all material
respects (subject, in the case of interim financial statements, to normal
year-end audit adjustments) and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as the
case may be, and disclosed therein).
6.13 Exercise of Rights. Enforce all of its rights under the Initial
Acquisition Documents executed in connection therewith including all
indemnification rights and pursue all remedies available to it with diligence
and in good faith in connection with the enforcement of any such rights.
6.14 Year 2000 Compatibility. Take all action necessary to assure
that such Borrower's computer based systems are able to operate and effectively
process data, including dates on and after January 1, 2000. Such Borrower shall
provide Agent written assurance acceptable to Agent that such systems are Year
2000 compliant on or before July 31, 1999. Such Borrower shall (i) promptly and
in no event later than July 31, 1999, take all action necessary to ensure that
all computer based systems of such Borrower and its Subsidiaries are capable of
the following: (a) handling date information involving all and any dates before,
during and/or after January 1, 2000, including accepting input, providing output
and performing date calculations in whole or in part; (b) operating, accurately
without interruption on and in respect of any and all dates before, during
and/or after January 1, 2000, and without any change in performance; (c)
responding to and processing two-digit year input without creating any ambiguity
as to the century; (d) storing and providing date input information without
creating any ambiguity as to the century; and (ii) promptly and in no event
later than July 31, 1999, take all action necessary to ensure that all computer
based systems of each of their vendors, suppliers and customers are capable of
(a) through (d) above, where noncompliance could be reasonably expected to have
a Material Adverse Effect. In addition, at the request of Agent, such Borrower
shall provide Agent assurances in form and substance satisfactory to Agent of
such Borrower's and each of its Subsidiaries' Year 2000 compatibility.
6.15 UDC Reserve Release Conditions. Cause the UDC Reserve Release
Conditions to be satisfied on or before June 30, 1999.
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SECTION 7. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person, or acquire all or a substantial portion of the
assets or Equity Interests of any Person other than another Borrower, or permit
any other Person (other than another Borrower) to consolidate with or merge with
it, other than Permitted Acquisitions.
(b) Sell, lease, transfer or otherwise dispose of any of its
properties or assets to any Person other than another Borrower, except (i) sales
by a Borrower of its Inventory in the ordinary course of its business as
presently conducted, (ii) transfers of Consigned Inventory by a Borrower to the
extent not prohibited by this Agreement, (iii) sales and other dispositions of
Equipment of a Borrower to the extent permitted by this Agreement, and (iv)
other dispositions expressly authorized by this Agreement.
7.2 Creation of Liens. Create or suffer to exist any Lien or transfer
upon or against any of its property or assets now owned or hereafter acquired,
except Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person
(other than another Borrower) by assumption, endorsement or guaranty thereof or
otherwise (other than to Lenders), except (a) as set forth on Schedule 7.3, and
(b) the endorsement of checks in the ordinary course of business.
7.4 Investments. Purchase or acquire obligations or stock of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) the Initial Acquisitions, and (f) any Permitted
Acquisitions.
7.5 Loans. Make advances, loans or extensions of credit to any
Person, including any Parent, Subsidiary or Affiliate, except (i) the extension
of commercial trade credit in connection with the sale of Inventory in the
ordinary course of its business; (ii) loans or advances of money made by one
Borrower to another Borrower or to a Guarantor, provided that any instrument
given to evidence any such loan or advance is promptly pledged to Agent as
security for the Obligations; and (iii) other advances, loans or extensions of
credit to any Person not to exceed an outstanding principal balance of $250,000
in the aggregate for all such advances.
7.6 Capital Expenditures. Contract for or make any Capital
Expenditures in any Fiscal Year in an amount in excess of $750,000.
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7.7 Dividends. Declare, pay or make any dividend or distribution on
any shares of the Equity Interests of any Borrower (other than Upstream Payments
or dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any common or preferred stock,
or of any options to purchase or acquire any such shares of common or preferred
stock of any Borrower; except that, so long as (a) a notice of termination with
regard to this Agreement shall not be outstanding, (b) no Event of Default or
Default shall have occurred, (c) such payment would not violate Applicable Law,
(d) Borrowers shall have delivered a notice to Agent of their intent to make a
payment simultaneously with the delivery of the Borrowing Base Certificate and
supporting information pursuant to Section 9.2 hereto and providing calculations
showing Undrawn Availability of at least $2,500,000 as of the end of the
preceding month after giving effect to such payment, and (e) within 2 Business
Days of Agent's receipt of such notice, Agent has either (i) elected not to
conduct an audit of the Collateral and Borrowers' books and records, or (ii)
elected to conduct an audit of the Collateral and Borrowers' books and records
to be performed by Agent or its agents (such audit to completed within twelve
(12) Business Days of Agent's receipt of such notice) and Agent shall have
confirmed Borrowers' calculation that the Borrowers' Undrawn Availability is not
less than $2,500,000 after giving effect to such payments, as of the end of the
preceding month; Borrowers shall be permitted to make payments, after April 30,
1999, of the liability for tax distributions to partners as accrued on
Borrowers' audited balance sheet for the year ended December 31, 1998, not in
excess of $1,516,000 in the aggregate.
7.8 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness (exclusive of trade debt, Indebtedness to Lenders; Indebtedness
incurred for Capital Expenditures permitted under Section 7.6 hereof, and
Indebtedness disclosed on Schedule 5.8(b) of this Agreement) with an aggregate
outstanding balance at any time in excess of $500,000.
7.9 Nature of Business. Substantially change the nature of the
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
7.10 Transactions with Affiliates. Except as set forth on Schedule
7.10, directly or indirectly, purchase, acquire or lease any property from, or
sell, transfer or lease any property to, or otherwise deal with, any Affiliate,
except transactions disclosed in the ordinary course of business, on an
arm's-length basis on terms no less favorable than terms which would have been
obtainable from a Person other than an Affiliate.
7.11 Leases. Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental payments for all leased
property would exceed $750,000 in any one Fiscal Year.
7.12 Subsidiaries. Form or maintain any Subsidiary other than a
wholly-owned Subsidiary organized under the laws of a state of the United States
and formed or acquired as part of a Permitted Acquisition; enter into any
partnership, joint venture or similar arrangement; or own less than all of the
Equity Interests of any Subsidiary.
7.13 Fiscal Year and Accounting Changes. Change its Fiscal Year from
December 31, permit any Subsidiary to have a fiscal year that is different from
the Fiscal year or make any change (i) in accounting treatment and reporting
practices except as required by GAAP or (ii) in tax reporting treatment except
as required by Applicable Law.
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7.14 Pledge of Credit. Now or hereafter pledge Agent's or any
Lender's credit on any purchases or for any purpose whatsoever or use any
portion of any Advance in or for any business other than Borrowers' business as
conducted on the date of this Agreement.
7.15 Amendment of Organization Documents. Amend, modify or waive any
term or material provision of its Organization Documents except as required by
Applicable Law.
7.16 Compliance with ERISA. (a) (i) Maintain, or permit any member of
the Controlled Group to maintain, or (ii) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(c), (b) engage, or
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction," as that term is defined in Section 406 of ERISA and
Section 4975 of the Code, (c) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency," as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (d) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a Lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (e) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(c), (f) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (g) fail promptly to notify Agent of the occurrence of any
Termination Event, (h) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the requirements of ERISA or the Code or other
Applicable Laws in respect of any Plan, (i) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled
Group to postpone or delay any funding requirement with respect of any Plan.
7.17 Prepayment of Indebtedness. Except as permitted pursuant to
Section 7.18 hereof, at any time, directly or indirectly, prepay any
Indebtedness (other than the Obligations), or repurchase, redeem, retire or
otherwise acquire any Indebtedness of any Borrower, including the Subordinated
Indebtedness.
7.18 Initial Acquisition Documents. At any time, directly or
indirectly, (a) amend or modify the terms of any agreement applicable to the
Subordinated Indebtedness, other than to extend the time of payment thereof or
to reduce the rate of interest payable in connection therewith, or (b) make any
payment on account of any principal of, interest on or premium payable in
connection with any of the Subordinated Indebtedness except as expressly
permitted in the Subordination Agreements.
7.19 Upstream Payments. Create or suffer to exist any encumbrance or
restriction on the ability of any Borrower or a Subsidiary of any Borrower to
make any Upstream Payment, except for encumbrances or restrictions (a) pursuant
to any of the Other Documents and (b) existing under Applicable Law.
7.20 Consigned Inventory. Permit the aggregate Value of all
Borrowers' Consigned Inventory to exceed five percent (5.0%) of the Value of all
Borrowers' Inventory on any date. If and to the extent requested to do so by
Agent, each Borrower having any Consigned Inventory shall execute and deliver to
Agent, for its benefit and the pro rata benefit of Lenders, collateral
assignments of all UCC consignment filings and other documents at any time
executed, delivered or filed with any Governmental Body to evidence or perfect
such Borrower's rights with respect to such Consigned Inventory.
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7.21 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
7.22 Conduct of Business. Engage in any business other than the
business engaged by it on the Closing Date and any business or activities that
are substantially similar, related or incidental thereto.
7.23 Other Agreements. Enter into any material amendment, waiver or
modification of the Initial Acquisition Documents.
7.24 Amendment to Factoring Agreement. Enter into or permit any
amendment or modification to the Factoring Agreement except to the extent
expressly permitted under the Factor Intercreditor Agreement.
SECTION 8. CONDITIONS PRECEDENT.
8.1 Conditions to Initial Advances. The agreement of Lenders to make
the initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Other Documents. Agent shall have received each of the Other
Documents duly executed and delivered by an authorized officer of each of the
parties thereto, including each Borrower;
(b) Filings, Registrations and Recordings. Each document
(including any UCC financing statement) required by this Agreement, or any Other
Documents or under Applicable Law or reasonably requested by the Agent to be
filed, registered or recorded in order to create, in favor of Agent, a perfected
security interest in or Lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrowers. Agent shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors of each Borrower authorizing (i) the execution,
delivery and performance of this Agreement, the Notes, the Mortgage, any related
agreements, the Initial Acquisition Documents, and each of the other Loan
Documents and (ii) the granting by each Borrower of the security interests in
and Liens upon the Collateral in each case certified by the Secretary or an
Assistant Secretary of each Borrower as of the Closing Date; and, such
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Borrowers. Agent shall have
received a certificate of the Secretary or an Assistant Secretary of each
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of each Borrower executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
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(e) Organization Documents. Agent shall have received a copy of
the Organization Documents of each Borrower, and all amendments thereto,
certified by the Secretary of State or other appropriate official of its
jurisdiction of organization together with copies of the By-Laws of each
Borrower and all agreements of each Borrower's shareholders certified as
accurate and complete by the Secretary of each Borrower;
(f) Good Standing Certificates. Agent shall have received good
standing certificates for each Borrower dated not more than fifteen (15) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of each Borrower's jurisdiction of incorporation and each jurisdiction
where the conduct of each Borrower's business activities or the ownership of its
properties necessitates qualification;
(g) Legal Opinion. Agent shall have received favorable legal
opinions of Borrowers' counsel (qualified to practice in the States of New York)
in form and substance satisfactory to Agent, which shall cover such matters
incident to the transactions contemplated by this Agreement and the other Loan
Documents as Agent may require, and each Borrower hereby authorizes and directs
each such counsel to deliver such opinions to Agent;
(h) No Litigation. No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or directors of any
Borrower (A) in connection with any of the Loan Documents or any of the
transactions contemplated thereby and which, in the reasonable opinion of Agent,
is deemed material or (B) which could, in the reasonable opinion of Agent, have
a Material Adverse Effect; and no injunction, writ, restraining order or other
order of any nature materially adverse to any Borrower or the conduct of its
business or inconsistent with the due consummation of the transactions
contemplated hereby shall have been issued by any Governmental Body;
(i) Financial Condition Certificate. Agent shall have received an
executed Financial Condition Certificate in the form of Exhibit D.
(j) Collateral Examination. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles, Real Property, Leasehold Interests and Equipment of each Borrower
and all books and records in connection therewith;
(k) Fees. Agent shall have received all fees payable to Agent and
Lenders on or prior to the Closing Date pursuant to Section 3 hereof;
(l) Pro Forma Financial Statements. Agent shall have received a
copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Agent;
(m) Initial Acquisition Documents. Agent shall have received
final executed copies of the Initial Acquisition Documents and all related
agreements, documents and instruments as in effect on the Closing Date and the
transactions contemplated by such documentation shall be consummated prior to
the making of the initial Advance;
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(n) Subordination Agreements. Agent shall have entered into the
Subordination Agreements which shall set forth the basis upon which the holders
of the Subordinated Indebtedness may receive, and Borrowers may make, payments,
which basis shall be satisfactory in form and substance to Agent in its sole
discretion;
(o) Other Documents. Agent shall have received all Other
Documents, duly executed, and each in form and substance satisfactory to Agent
and Lenders;
(p) Insurance. Agent shall have received in form and substance
satisfactory to Agent, certified copies of each Borrower's casualty insurance
policies, together with loss payable endorsements on Agent's standard form of
loss payee endorsement naming Agent as loss payee, and certified copies of each
Borrower's liability insurance policies, together with endorsements naming Agent
as a co-insured;
(q) Title Insurance. Agent shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Agent's satisfaction to evidence the form of such
policies to be delivered with respect to the Mortgage), in standard ALTA form,
issued by a title insurance company satisfactory to Agent, each in an amount
equal to not less than the fair market value of the Real Property subject to the
Mortgage, insuring the Mortgage to create a valid Lien on the Real Property with
no exceptions which Agent shall not have approved in writing and no survey
exceptions;
(r) Environmental Reports. Agent shall have received all
environmental studies and reports prepared by independent environmental
engineering firms with respect to all Real Property owned or leased by any
Borrower;
(s) Payment Instructions. Agent shall have received written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(t) Lockbox and Blocked Account Agreements. Agent shall have
received duly executed agreements establishing the Blocked Accounts acceptable
in all respects to Agent for the collection and servicing of the Receivables and
other proceeds of Collateral;
(u) Consents. Agent shall have received any and all Consents
necessary to permit the effectuation of the transactions contemplated by any of
the Loan Documents; and, Agent shall have received such Consents and waivers of
such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(v) No Adverse Material Change. Since December 31, 1998, there
shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and no representations
made or information supplied to Agent shall have been proven to be inaccurate or
misleading in any material respect;
(w) Leasehold Agreements. Agent shall have received landlord,
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by any Borrower at which any Inventory or Equipment is located;
(x) Processor Conditions. The Processor Conditions shall have
been satisfied for SourceOne.
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(y) Mortgage. Agent shall have received in form and substance
satisfactory to Lenders (i) an executed Mortgage for the Liverpool Property and
(ii) a plat of survey thereof satisfactory to Agent; and
(z) Contract Review. Agent shall have reviewed all Material
Contracts of each Borrower including leases, union contracts, labor contracts,
vendor supply contracts, license agreements and distributorship agreements and
such contracts and agreements shall be satisfactory in all respects to Agent;
(aa) Closing Certificate. Agent shall have received a closing
certificate signed by the President of each Borrower dated as of the date
hereof, stating that (i) all representations and warranties set forth in this
Agreement and the other Loan Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance with all the terms and
provisions set forth in this Agreement and the other Loan Documents and (iii) on
such date no Default or Event of Default has occurred or is continuing;
(bb) Borrowing Base. Agent shall have received evidence from
Borrowers that the aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support Advances in the amount
requested by Borrowers on the Closing Date;
(cc) Undrawn Availability. After giving effect to the initial
Advances hereunder, Borrowers shall have Undrawn Availability on the Closing
Date of at least $2,000,000;
(dd) No Labor Disputes. Agent shall have received assurances
satisfactory to it that there are no threats of strikes or work stoppages by any
employees, or organization of employees, of any Borrower or any Guarantor, which
Agent reasonably determines may have a Material Adverse Effect; and
(ee) Other. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
Advance requested to be made on any date (including the initial Advance) is
subject to the satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) Representations and Warranties. Each of the representations and
warranties made by Borrowers in or pursuant to this Agreement and any of the
Other Documents, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any of the Other Documents all be
true and correct in all material respects on and as of such date as if made on
and as of such date;
(b) No Default. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the Transactions; provided,
however that Lenders, in their sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any
Advances so made shall not be deemed a waiver of any such Event of Default or
Default; and
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(c) Borrowing Base Certificates; Maximum Advances. Agent shall have
received each Borrowing Base Certificate required by the terms of this Agreement
or otherwise requested by Agent, and, in the case of any Advances requested to
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof;
(d) No Litigation. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court or Governmental Body to enjoin, restrain or prohibit, or to obtain damages
in respect of, or which is related to or arises out of, this Agreement or any of
the Other Documents or the consummation of the transactions contemplated hereby
or thereby; and
(e) No Material Adverse Effect. No event shall have occurred and no
condition shall exist which has or could be reasonably expected to have a
Material Adverse Effect.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
SECTION 9. INFORMATION AS TO BORROWERS.
Each Borrower shall, until satisfaction in full of the Obligations
and the termination of this Agreement:
9.1 Disclosure of Material Matters. Promptly upon learning thereof,
report to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including any Borrower
reclamation or repossession of, or the return to any Borrower of, a material
amount of goods or claims or disputes asserted by any Customer or other obligor.
9.2 Schedules. Deliver to Agent on or before the fifteenth (15th) day
of each month as and for the prior month (a) accounts receivable agings, (b)
accounts payable schedules, (c) Inventory reports, and (d) a Borrowing Base
Certificate. In addition, each Borrower will deliver to Agent at such intervals
as Agent may reasonably request: (i) confirmatory assignment schedules, (ii)
copies of Customer's invoices, (iii) evidence of shipment or delivery, and (iv)
such further schedules, documents and/or information regarding the Collateral as
Agent may require including trial balances and test verifications. Agent shall
have the right to confirm and verify all Receivables by any manner and through
any medium it considers advisable and do whatever it may deem reasonably
necessary to protect its interests hereunder. The items to be provided under
this Section are to be in form satisfactory to Agent and executed by each
Borrower and delivered to Agent from time to time solely for Agent's convenience
in maintaining records of the Collateral, and any Borrower's failure to deliver
any of such items to Agent shall not affect, terminate, modify or otherwise
limit Agent's Lien with respect to the Collateral.
9.3 Environmental Reports. Furnish Agent, concurrently with the
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the Chief Operating Officer of the Borrowing Agent, on
behalf of each Borrower, on behalf of Borrowers stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
Environmental Laws and laws relating to occupational safety and health. To the
extent any Borrower is not in compliance with the foregoing laws,
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the certificate shall set forth with specificity all areas of non-compliance and
the proposed action such Borrower will implement in order to achieve full
compliance.
9.4 Litigation. Promptly notify Agent in writing of any litigation,
suit or administrative proceeding affecting Borrowers, whether or not the claim
is covered by insurance, and of any suit or administrative proceeding, which in
any such case could reasonably be expected to have a Material Adverse Effect on
such Borrower.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
occurrence of (a) any Default or Event of Default; (b) any event of default
under any Acquisition Document; (c) any event, development or circumstance
whereby any financial statements or other reports furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of Borrowers as of the
date of such statements; (d) any accumulated retirement plan funding deficiency
which, if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Borrower to a tax
imposed by Section 4971 of the Code; (e) each and every default by any Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (f) any other development in the business or affairs of any Borrower which
could reasonably be expected to have a Material Adverse Effect; in each case
describing the nature thereof and the action any Borrower propose to take with
respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between any Borrower and any Governmental
Body.
9.7 Annual Financial Statements. Furnish Agent within ninety (90)
days after the end of each Fiscal Year of Borrowers, financial statements of
Borrowers on a consolidating and consolidated basis including statements of
income and stockholders' equity and cash flow from the beginning of the current
Fiscal Year to the end of such Fiscal Year and the balance sheet as at the end
of such Fiscal Year, all prepared in accordance with GAAP applied on a basis
consistent with prior practices, and in reasonable detail and reported upon
without qualification by Ernst & Young LLP or such other independent certified
public accounting firm selected by Borrowers and satisfactory to Agent (the
"Accountants"). The report of the Accountants shall be accompanied by a
statement of the Accountants certifying that (i) they have caused the Loan
Agreement to be reviewed, (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any related
agreement or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth Borrowers' compliance with the requirements or restrictions
imposed by Sections 6.9, 7.6 and 7.11 hereof. In addition, the reports shall be
accompanied by a Compliance Certificate.
9.8 Quarterly Financial Statements. Furnish Agent within ninety (90)
days after the end of each Fiscal Quarter, an unaudited balance sheet of
Borrowers and their Subsidiaries on a consolidated and consolidating basis and
unaudited statements of income and stockholders' equity and cash flow of
Borrowers and their Subsidiaries on a consolidated and consolidating basis
reflecting results of operations from the beginning of the Fiscal Year to the
end of such quarter and for such quarter, prepared on a basis consistent
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with prior practices and complete and correct in all material respects, subject
to normal year end adjustments. The reports shall be accompanied by a Compliance
Certificate.
9.9 Monthly Financial Statements. Furnish Agent within thirty (30)
days after the end of each month, an unaudited balance sheet of Borrowers and
their Subsidiaries on a consolidated and consolidating basis and unaudited
statements of income and stockholders' equity and cash flow of Borrowers and
their Subsidiaries on a consolidated and consolidating basis reflecting results
of operations from the beginning of the Fiscal Year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete
and correct in all material respects, subject to normal year end adjustments.
The reports shall be accompanied by a Compliance Certificate.
9.10 Other Reports. Furnish Agent as soon as available, but in any
event within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as each Borrower shall send to its
stockholders and (ii) copies of all notices sent pursuant to the Initial
Acquisition Documents.
9.11 Additional Information. Furnish Agent with such additional
information as Agent shall reasonably request in order to enable Agent to
determine whether the terms, covenants, provisions and conditions of this
Agreement and the Notes have been complied with by any Borrower including, and
without the necessity of any request by Agent, (a) copies of all environmental
audits and reviews, (b) at least thirty (30) days prior thereto, notice of any
Borrower's opening of any new office or place of business or Borrowers' closing
of any existing office or place of business, (c) promptly upon any Borrower's
learning thereof, notice of any labor dispute to which any Borrower may become a
party, any strikes or walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to which any Borrower is a
party or by which any Borrower is bound, and (d) notice of each payment made by
any Borrower that is subject to Section 7.7 hereof.
9.12 Projected Operating Budget. Furnish Agent, no later than thirty
(30) days prior to the beginning of Borrowers' Fiscal Years commencing with
Fiscal Year 2000, a month by month projected operating budget and cash flow of
Borrowers and their Subsidiaries on a consolidated and consolidating basis for
such Fiscal Year (including an income statement for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial
Officer of the Borrowing Agent to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past
budgets and financial statements and that such officer has no reason to question
the reasonableness of any material assumptions on which such projections were
prepared.
9.13 Variances From Operating Budget. Furnish Agent, concurrently
with the delivery of the financial statements referred to in Sections 9.7 and
9.8, a written report summarizing all material variances from budgets submitted
by Borrowers pursuant to Section 9.12 and a discussion and analysis by
management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt
notice of (i) any lapse or other termination of any Consent issued to any
Borrower by any Governmental Body or any other Person that is material to the
operation of any Borrower's business, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by Any Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower, or if copies thereof are
requested by Lender, and
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(iv) copies of any material notices and other communications from any
Governmental Body or Person which specifically relate to any Borrower.
9.15 ERISA Notices and Requests. Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which any Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which any Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) any Borrower or any
member of the Controlled Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) any Borrower or any member of the
Controlled Group shall receive any favorable or unfavorable determination letter
from the Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Code, together with copies of each such letter; (vii) any
Borrower or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice; (viii) any Borrower or any member of the Controlled Group shall fail to
make a required installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or payment; (ix) any
Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC
has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.
9.16 Additional Documents. Execute and deliver to Agent, upon
request, such documents and agreements as Agent may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
SECTION 10. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein or in any Other Document when due;
10.2 any representation or warranty made or deemed made by any
Borrower in this Agreement or any Other Document or in any certificate, document
or financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made or deemed to have been made;
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10.3 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of any Borrower's property;
10.4 except as otherwise provided for in Sections 10.1, failure or
neglect of any Borrower to perform, keep or observe any term, provision,
condition, covenant herein contained, or contained in any other agreement or
arrangement, now or hereafter entered into between any Borrower and Agent or any
Lender except for a failure or neglect of any Borrower to perform, keep or
observe any term, provision, condition or covenant, contained in Sections 4.6,
4.7, 4.9, 4.11, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within twenty
(20) days from the occurrence of such failure or neglect;
10.5 any judgment or judgments are rendered against any Borrower or
any Guarantor and either (i) enforcement proceedings shall have been commenced
upon such judgment or (ii) the amount of such judgment exceeds $250,000 there
shall be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, shall
not be in effect;
10.6 Any Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or declared insolvent, (v)
file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty
(30) days, any petition filed against it in any involuntary case under such
bankruptcy laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
10.7 Any Borrower or any Guarantor shall admit in writing its
inability, or be generally unable, to pay its debts as they become due, cease
operations of its present business or cease to be Solvent;
10.8 any Subsidiary of any Borrower or any Guarantor shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.9 any change in any Borrower's condition or affairs (financial or
otherwise) which, in Agent's opinion, has a Material Adverse Effect;
10.10 any Lien created hereunder or provided for hereby or under any
Other Document for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest;
10.11 an event of default has occurred and been declared under any
the documents evidencing the Subordinated Indebtedness which default shall not
have been cured or waived within any applicable grace period and for which the
holder of such Subordinated Indebtedness is permitted to accelerate the maturity
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of such Subordinated Indebtedness, take enforcement action, or exercise any
remedies take action pursuant to the terms of the documents evidencing such
Subordinated Indebtedness as in effect on the Closing Date;
10.12 a default of the obligations of any Borrower under any other
agreement to which it is a party shall occur that has or could reasonably be
expected to have a Material Adverse Effect and which is not cured within any
applicable grace period;
10.13 termination or breach of any Guaranty or any Guarantor
Security Agreement executed and delivered to Agent in connection with the
Obligations or, if any Guarantor attempts to terminate or challenges the
validity of or its liability under, any such Guaranty or Guarantor Security
Agreement or similar agreement;
10.14 any Change of Control shall occur;
10.15 any material provision of this Agreement or any of the Other
Documents shall, for any reason, cease to be valid and binding on any Borrower,
or any Borrower shall so claim in writing to Agent;
10.16 (i) any Governmental Body shall (A) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or tradename of any
Borrower, the continuation of which is material to the continuation of such
Borrower's business, or (B) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(c) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of any Borrower's
business and the staff of such Governmental Body issues a report recommending
the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, tradename or patent; (ii) any agreement which
is necessary or material to the operation of any Borrower's business shall be
revoked or terminated and not replaced by a substitute acceptable to Agent
within thirty (30) days after the date of such revocation or termination, and
such revocation or termination and non-replacement would reasonably be expected
to have a Material Adverse Effect on a Borrower;
10.17 any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower which
is the owner of any material portion of the Collateral shall have become the
subject matter of litigation which might, in the opinion of Agent, upon final
determination, result in impairment or loss of the security provided by this
Agreement or the Other Documents;
10.18 the operations of any Borrower's manufacturing facility in
Liverpool, New York are interrupted at any time for more than forty-eight (48)
hours during any period of five (5) consecutive days, unless such Borrower shall
(i) be entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive three (3) month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if Borrowers shall be receiving the proceeds of business
interruption insurance for a period of thirty (30) consecutive days;
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10.19 an event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Plan and, as a result of such
event or condition, together with all other such events or conditions, any
Borrower or any member of the Controlled Group shall incur, or in the opinion of
Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both)
which, in the reasonable judgment of Agent, could reasonably be expected to have
a Material Adverse Effect on any Borrower; or
10.20 any Borrower shall cease to be entitled to use or operate any
machinery or equipment leased by it from another Person by reason of such
Person's insolvency, bankruptcy, dissolution, receivership or other winding up
of its affairs or liquidation of its assets which could reasonably be expected
to have a Material Adverse Effect on any Borrower.
SECTION 11. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 Rights and Remedies. Upon the occurrence of (i) an Event of
Default pursuant to Section 10.6 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lenders to make Advances shall
be deemed terminated; and, (ii) any of the other Events of Default and at any
time thereafter (such default not having previously been cured), at the option
of Required Lenders all Obligations shall be immediately due and payable and
Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances and (iii) a filing of a petition against
any Borrower in any involuntary case under any state or federal bankruptcy laws,
the obligation of Lenders to make Advances hereunder shall be terminated other
than as may be required by an appropriate order of the bankruptcy court having
jurisdiction over such Borrower. Upon or after the occurrence of any Event of
Default, Agent shall have the right to exercise any and all other rights and
remedies provided for herein, under the UCC and at law or equity generally,
including the right to foreclose the security interests granted herein and to
realize upon any Collateral by any available judicial procedure and/or to take
possession of and sell any or all of the Collateral with or without judicial
process. Agent may enter any of any Borrower's premises or other premises
without legal process and without incurring liability to any Borrower therefor,
and Agent may thereupon, or at any time thereafter, in its discretion without
notice or demand, take the Collateral and remove the same to such place as Agent
may deem advisable and Agent may require Borrowers to make the Collateral
available to Agent at a convenient place. With or without having the Collateral
at the time or place of sale, Agent may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or more sales,
at such price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Agent shall give the Borrowing Agent reasonable
notification of such sale or sales, it being agreed that in all events written
notice mailed to the Borrowing Agent at least five (5) days prior to such sale
or sales is reasonable notification. At any public sale Agent or any Lender may
bid for and become the purchaser, and Agent, any Lender or any other purchaser
at any such sale thereafter shall hold the Collateral sold absolutely free from
any claim or right of whatsoever kind, including any equity of redemption and
such right and equity are hereby expressly waived and released by Borrowers. In
connection with the exercise of the foregoing remedies, Agent is granted
permission to use all of each Borrower's trademarks, trade styles, trade names,
patents, patent applications, licenses, franchises and other proprietary rights
which are used in connection with (a) Inventory for the purpose of marketing,
advertising for sale and disposing of such Inventory and (b) Equipment for the
purpose of completing the manufacture of unfinished goods. The proceeds realized
from the sale of any Collateral shall be applied as follows: first, to the
reasonable costs, expenses and attorneys' fees and expenses incurred by Agent
for collection and for acquisition, completion, protection, removal, storage,
sale and delivery of the Collateral; second, to interest due upon any of the
Obligations and any fees
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payable under this Agreement; and, third, to the principal of the Obligations.
If any deficiency shall arise, Borrowers shall remain liable to Agent and
Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.
11.3 Setoff. In addition to any other rights which Agent or any
Lender may have under Applicable Law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right to apply Borrowers' property
held by Agent and such Lender to reduce the Obligations.
11.4 Rights and Remedies not Exclusive. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
SECTION 12. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 Waiver of Notice. Each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
notice of loans or advances made, credit extended, Collateral received or
delivered, or any other action taken in reliance hereon, and all other demands
and notices of any description, except such as are expressly provided for
herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
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SECTION 13. EFFECTIVE DATE AND TERMINATION.
13.1 Term. This Agreement shall become effective on the date hereof
and shall continue in full force and effect until April 15, 2002 (the "Term")
unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ninety (90) days prior written notice from the
Borrowing Agent to Agent upon payment in full of the Obligations. In the event
the Obligations are prepaid in full prior to the last day of the Term (the date
of such prepayment hereinafter referred to as the "Early Termination Date"),
Borrowers shall pay to Agent for the benefit of Lenders an early termination fee
in an amount equal to (x) three percent (3.0%) of the Maximum Revolving Amount
plus the Scheduled Term Loan Balance if the Early Termination Date occurs on or
after the Closing Date to and including the date immediately preceding the first
anniversary of the Closing Date, (y) two percent (2.0%) of the Maximum Revolving
Amount plus the Scheduled Term Loan Balance if the Early Termination Date occurs
on or after the first anniversary of the Closing Date to and including the date
immediately preceding the second anniversary of the Closing Date, and (z) one
percent (1.0%) of the Maximum Revolving Amount plus the Scheduled Term Loan
Balance if the Early Termination Date occurs on or after the second anniversary
of the Closing Date to and including the date immediately preceding the third
anniversary of the Closing Date.
13.2 Termination. The termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrowers' Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of each Borrower have been paid or performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders
with an indemnification satisfactory to Agent and Lenders with respect thereto.
Accordingly, except for dispositions of assets that are permitted under this
Agreement or that are approved in writing by Agent and Borrowing Agent, each
Borrower waives any rights which it may have under Section 9-404(1) of the UCC
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to any
Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are paid or performed in full.
SECTION 14. REGARDING AGENT.
14.1 Appointment. Each Lender hereby designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of each of the Loan Documents and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in Sections 3.3(a) and
3.4), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for its benefit and the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through its agents
or employees. As to any matters not expressly provided for by this Agreement
(including collection of the Notes) Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding; provided, however,
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that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
14.2 Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents. Neither Agent nor any of its officers, directors, employees or
agents shall be (i) liable for any action taken or omitted by them as such
hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, any of the Loan
Documents or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Loan Documents or for any failure of any Borrower
to perform its obligations hereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, any of the Loan Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.
14.3 Lack of Reliance on Agent and Resignation.
(a) Independently and without reliance upon Agent or any other
Lender, each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Borrower in
connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own
appraisal of the creditworthiness of each Borrower. Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before making of the Advances or at any time or times thereafter
except as shall be provided by any Borrower pursuant to the terms hereof. Agent
shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document,
certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents, or of the financial condition of any
Borrower, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement,
the Notes, the Other Documents or the financial condition of any Borrower, or
the existence of any Event of Default or any Default.
(b) Agent may resign (unless Agent is the only Lender) on sixty
(60) days written notice to each of Lenders and the Borrowing Agent and upon
such resignation, the Required Lenders will promptly designate a successor Agent
reasonably satisfactory to Borrowers. Any such successor Agent shall succeed to
the rights, powers and duties of Agent, and the term "Agent" shall mean such
successor agent effective upon its appointment, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent. After any Agent's resignation as
Agent, the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
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14.4 Certain Rights of Agent. If Agent shall request instructions
from Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder or
under the Other Documents, unless Agent has received notice from a Lender or
Borrowers referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default." In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, however, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrowers, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Advances (or, if no Advances are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Document; provided, however, that, Lenders shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the
obligation of Agent to lend under this Agreement, the Advances made by it shall
have the same rights and powers hereunder as any other Lender and as if it were
not performing the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
any Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
14.9 Delivery of Documents. To the extent Agent receives financial
statements required under Sections 9.7, 9.8, and 9.9 from any Borrower pursuant
to the terms of this Agreement, Agent will promptly furnish such documents and
information to Lenders.
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14.10 Borrowers' Undertaking to Agent. Without prejudice to their
respective obligations to Lenders under the other provisions of this Agreement,
each Borrowers hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrowers' obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.
SECTION 15. CO-BORROWERS PROVISIONS.
15.1 Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates the Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all
loan proceeds hereunder in accordance with the request of the Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. In order to
utilize the financial powers of each Borrower in the most efficient and
economical manner, and in order to facilitate the financing of each Borrower's
needs, Lenders will, at the request of the Borrowing Agent, make Advances and
other financial accommodations to all Borrowers on a combined basis and in
accordance with the provisions set forth in this Agreement. Borrowers
acknowledge that their business is a mutual and collective enterprise and
Borrowers believe that the consolidation of all Advances and other financial
accommodations under this Agreement will enhance the aggregate borrowing powers
of each Borrower and ease the administration of their loan relationship with
Lenders, all to the mutual advantage of Borrowers. Agent's and Lenders'
willingness to extend credit to Borrowers pursuant to the terms hereof and to
administer each Borrower's portion of the Collateral therefor, on a combined
basis as more fully set forth in this Agreement, is done solely as an
accommodation to Borrowers, at their request and in furtherance of their mutual
and collective enterprise. To induce Agent and Lenders to do so and in
consideration thereof, each Borrower hereby jointly and severally indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
and to the extent provided herein, reliance by Agent or any Lender on any
request or instruction from the Borrowing Agent or any other action taken by
Agent or any Lender with respect to this Section 15.1 except due to willful
misconduct or gross (not mere) negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
to Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by any Borrower to pay upon any notice issued
pursuant thereto is
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unconditional and unaffected by prior recourse by Agent or any Lender to the
other Borrowers or any Collateral for such Borrower's Obligations or the lack
thereof.
(d) Each Borrower's joint and several liability hereunder with
respect to the Advances and other Obligations shall, to the fullest extent
permitted by Applicable Law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of any of the Obligations or of any
promissory note or other document evidencing all or any part of the Obligations,
(ii) the absence of any attempt to collect any of the Obligations from any other
Borrower or Guarantor or any Collateral or other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance or granting of any indulgence by Agent or any Lender with
respect to any of the Obligations or any instrument or agreement evidencing or
securing the payment of any of the Obligations, or any other agreement now or
hereafter executed by any other Borrower and delivered to Agent or any Lender,
(iv) the failure by Lender to take any steps to perfect or maintain the
perfected status of its security interest in or Lien upon, or to preserve its
rights to, any of the Collateral or other security for the payment or
performance of any of the Obligations, or Agent's or any Lender's release of any
Collateral or of its Liens upon any Collateral, (v) Agent's or any Lenders'
election, in any proceeding instituted under the Bankruptcy Code, for the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or
grant of a security interest by any other Borrowers, as debtor-in-possession
under Section 364 of the Bankruptcy Code, (vii) the release or compromise, in
whole or in part, of the liability of any Borrower or Guarantor for the payment
of any of the Obligations, (viii) any amendment or modification of any of the
Loan Documents or waiver of any Default or Event of Default thereunder, (ix) any
increase in the amount of the Obligations beyond any limits imposed herein or in
the amount of any interest, fees or other charges payable in connection
therewith, or any decrease in the same, (x) the disallowance of all or any
portion of Lender's claims for the repayment of any of the Obligations under
Section 502 of the Bankruptcy Code, or (xi) any other circumstance that might
constitute a legal or equitable discharge or defense of any Borrower and
Guarantor. At any time an Event of Default exists, Lender may proceed directly
and at once, without notice to any Borrower or Guarantor, against any or all
Borrowers or Guarantors to collect and recover all or any part of the
Obligations, without first proceeding against any other Borrower or Guarantor or
against any Collateral or other security for the payment or performance of any
of the Obligations, and each Borrower waives any provision that might otherwise
require Agent or any Lender under Applicable Law to pursue or exhaust its
remedies against any Collateral or any other Borrowers or Guarantor before
pursuing Borrower. Borrowers consents and agrees that Agent and any Lender shall
be under no obligation to ▇▇▇▇▇▇▇▇ any assets in favor of Borrowers or Guarantor
or against or in payment of any or all of the Obligations.
(e) Each Borrower is unconditionally obligated to repay the
Obligations as a joint and several obligor under this Agreement. If, as of any
date, the aggregate amount of payments made by Borrowers on account of the
Obligations and proceeds of Borrowers' Collateral that are applied to the
Obligations exceeds the aggregate amount of Advances actually used by Borrower
in its business (such excess amount being referred to as an "Accommodation
Payment"), then each of the other Borrowers shall be obligated to make
contribution to such Borrower (the "Paying Borrower") in an amount equal to (A)
the product derived by multiplying the sum of each Accommodation Payment of each
Borrower by the Allocable Percentage of the Borrower from whom contribution is
sought less (B) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Borrower (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such Contributing Borrower by way of contribution hereunder, and to be
decreased by any amounts theretofore received by such Contributing Borrower by
way of contribution hereunder); provided, however, that a Paying
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Borrower's recovery of contribution hereunder from the other Borrowers shall be
limited to that amount paid by the Paying Borrower in excess of its Allocable
Percentage of all Accommodation Payments then outstanding of all Borrowers. As
used herein, the term "Allocable Percentage" shall mean, on any date of
determinations thereof, a fraction the denominator of which shall be equal to
the number of Borrowers who are parties to this Agreement on such date and the
numerator of which shall be 1; provided, however, that such percentages shall be
modified in the event that contribution from a Borrower is not possible by
reason of insolvency, bankruptcy or otherwise by reducing Borrower's Allocable
Percentage equitably and by adjusting the Allocable Percentage of the other
Borrowers proportionately so that the Allocable Percentages of all Borrowers at
all times equals 100%.
15.2 Subordination. Each Borrower expressly subordinates and
postpones the exercise of any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution of any other claim that Borrowers may now
or hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to
the other Borrowers' property (including any property which is Collateral for
the Obligations), arising from the existence or performance of this Agreement,
until termination of this Agreement and repayment in full of the Obligations.
SECTION 16. MISCELLANEOUS.
16.1 Governing Law; Process. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applied to
contracts to be performed wholly within the State of New York without giving
effect to the conflicts of laws principles thereof. Any judicial proceeding
brought by or against any Borrower with respect to any of the Obligations, this
Agreement or any related agreement may be brought in any court of competent
jurisdiction in the State of New York, United States of America, and, by
execution and delivery of this Agreement, Each Borrower accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. Each
Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return
receipt requested) directed to the Borrowing Agent at its address set forth in
Section 16.6 and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America, or, at the Agent's and/or any Lender's option, by service upon the
Borrowing Agent. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of Agent or any Lender to bring
proceedings against any Borrower in the courts of any other jurisdiction. Each
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any
Borrower against Agent or any Lender involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this
Agreement or any related agreement, shall be brought only in a federal or state
court located in the Borough of Manhattan, State of New York.
16.2 Entire Understanding.
(a) This Agreement and the documents executed concurrently
herewith contain the entire understanding between each Borrower, Agent and each
Lender and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing, signed by the Borrowing Agent's, Agent's and each
Lender's respective officers. Neither this Agreement nor
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any portion or provisions hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by the
party to be charged. Each Borrower acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with the
terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrowers may, subject to the provisions of this
Section 16.2(b), from time to time enter into written supplemental agreements to
this Agreement or any of the Other Documents executed by Borrowers, for the
purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or
the conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:
(i) increase the Commitment Percentage of any Lender;
(ii) extend the maturity of any Note or the due date for
any amount payable hereunder, or decrease the rate of interest
or reduce any fee payable by Borrowers to Lenders pursuant to
this Agreement;
(iii) alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b);
(iv) release any Collateral during any calendar year (other
than in accordance with the provisions of this Agreement)
having an aggregate value in excess of $500,000;
(v) change the rights and duties of Agent;
(vi) increase the Maximum Revolving Advance Amount or
permit any Out-of- Formula Loan to be made if after giving
effect thereto the total of Revolving Advances outstanding
hereunder would exceed the Formula Amount for more than sixty
(60) consecutive Business Days or exceed one hundred and ten
percent (110%) of the Formula Amount;
(vii) increase the Advance Rates above the Advance Rates in
effect on the Closing Date.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within five (5) days of delivery of such request, such Lender shall be deemed to
have consented to matter that was the subject of the request. In the event that
Agent requests the consent of a Lender pursuant to this Section 16.2 and such
consent is denied, then PNC
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may, at its option, require such Lender to assign its interest in the Advances
to PNC or to another Lender or to any other Person designated by the Agent (the
"Designated Lender"), for a price equal to the then outstanding principal amount
thereof plus accrued and unpaid interest and fees due such Lender, which
interest and fees shall be paid when collected from Borrowers. In the event PNC
elects to require any Lender to assign its interest to PNC or to the Designated
Lender, PNC will so notify such Lender in writing within forty five (45) days
following such Lender's denial, and such Lender will assign its interest to PNC
or the Designated Lender no later than five (5) days following receipt of such
notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC
or the Designated Lender, as appropriate, and Agent.
16.3 Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the
benefit of Borrowers, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns, except that no Borrower may assign
or transfer any of its rights or obligations under this Agreement without the
prior written consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Advances to other financial
institutions (each such transferee or purchaser of a participating interest, a
"Participant"). Each Participant may exercise all rights of payment (including
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Participant were the
direct holder thereof provided that Borrowers shall not be required to pay to
any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Participant had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrowers be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Participant. Each Borrower hereby grants to any
Participant a continuing security interest in any deposits, moneys or other
property actually or constructively held by such Participant as security for the
Participant's interest in the Advances.
(c) Any Lender may with the consent of Agent (which shall not
be unreasonably withheld or delayed) sell, assign or transfer all or any part of
its rights under the Loan Documents to one or more Eligible Assignees, and one
or more Eligible Assignments may commit to make Advances hereunder (each a
"Purchasing Lender"), in minimum amounts of not less than $5,000,000, pursuant
to a Commitment Transfer Supplement, executed by an Eligible Assignee, the
transferor Lender, and Agent and delivered to Agent for recording; provided,
however, that nothing contained herein shall prohibit or restrict PNC from
assigning any of its rights and obligations under the Loan Document to any other
Person after the Closing Date. Upon such execution, delivery, acceptance and
recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Eligible Assignee thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Eligible Assignee and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Eligible Assignee of all or a
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portion of the rights and obligations of such transferor Lender under this
Agreement and the Other Documents. Each Borrower hereby consent to the addition
of such Eligible Assignee and the resulting adjustment of the Commitment
Percentages arising from the purchase by such Eligible Assignee of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Other Documents. Borrowers shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
(d) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Advances owing to each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and Borrowers, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $3,500 payable by the applicable Eligible Assignee upon the effective
date of each transfer or assignment to such Eligible Assignee.
(e) Borrowers authorize each Lender to disclose to any
Participant or Eligible Assignee and any prospective Participant or Eligible
Assignee any and all financial information in such Lender's possession
concerning Borrowers which has been delivered to such Lender by or on behalf of
Borrowers pursuant to this Agreement or in connection with such Lender's credit
evaluation of Borrowers.
16.4 Application of Payments. Agent shall have the continuing and
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obligations. To the extent that any
Borrower makes a payment or Agent or any Lender receives any payment or proceeds
of the Collateral for any Borrower's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5 Indemnity. Borrowers shall indemnify Agent, each Lender and
each of their respective officers, directors, Affiliates, employees and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) which
may be imposed on, incurred by, or asserted against Agent or any Lender in any
litigation, proceeding or investigation instituted or conducted by any
Governmental Body or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, any of
the Loan Documents, whether or not Agent or any Lender is a party thereto,
except to the extent that any of the foregoing arises out of the willful
misconduct or gross negligence of the party being indemnified.
16.6 Notice. Any notice or request hereunder may be given to any
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of change of address under this Section. Any notice or request
hereunder shall be given by (a) hand delivery, (b) overnight courier, (c)
registered or certified mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail, or (e) telecopy to the
number set out below (or such other number as may hereafter be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication
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required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or three (3) days following posting
thereof in the U.S. Mail by certified or registered mail, postage prepaid, or
(c) upon actual receipt thereof when sent by a recognized overnight delivery
service or (d) upon actual receipt thereof when sent by telecopier to the number
set forth below with electronic confirmation of its receipt, in each case
addressed to each party at its address set forth below or at such other address
as has been furnished in writing by a party to the other by like notice:
(A) If to Agent or PNC Bank, National Association
PNC at: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Parker, Hudson, Rainer & ▇▇▇▇▇ LLP
1500 Marquis Two Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to a Lender other than Agent, as specified on the signature
pages hereof
(C) If to the Borrowing Agent
or any Borrower, at: The ▇▇▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Kotel
Tower 49
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
16.7 Survival. The obligations of Borrowers under Sections 2.16(d),
3.7, 3.8, 3.9, 4.19(h), 14.7 and 16.5 hereof and under the Environmental
Indemnity Agreement shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.
16.8 Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under Applicable Laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent
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so contrary, prohibited or invalid, but the remainder hereof shall not be
invalidated thereby and shall be given effect so far as possible.
16.9 Expenses. All costs and expenses including reasonable
attorneys' fees (including the allocated costs of in house counsel) and
disbursements incurred by Agent, Agent on behalf of Lenders and Lenders (a) in
all efforts made to enforce payment of any Obligation or effect collection of
any Collateral, (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements, documents and instruments, (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Agent's
security interest in or Lien on any of the Collateral, whether through judicial
proceedings or otherwise, (d) in defending or prosecuting any actions or
proceedings arising out of or relating to Agent's or any Lender's transactions
with any Borrower, or (e) in connection with any necessary advice given to Agent
or any Lender with respect to its rights and obligations under this Agreement
and all related agreements, may be charged to Borrowers' Account and shall be
part of the Obligations.
16.10 Injunctive Relief. Each Borrower recognizes that, in the event
any Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
16.11 Consequential Damages. Neither Agent nor any Lender, nor any
agent or attorney for any of them, shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
16.12 Captions. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.13 Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
16.14 Construction. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15 Confidentiality; Sharing Information.
(a) Agent, each Lender and each Participant shall hold all
non-public information obtained by Agent, such Lender or such Participant
pursuant to the requirements of this Agreement in accordance with Agent's, such
Lender's and such Participant's customary procedures for handling confidential
information of this nature; provided, however, Agent, each Lender and each
Participant may disclose such confidential information (a) to its examiners,
affiliates, outside auditors, counsel and other professional advisors, (b) to
Agent, any Lender or to any prospective Participants and Eligible Assignees, and
(c) as required or requested by any Governmental Body or representative thereof
or pursuant to legal process;
- 77 -
provided, further that (i) unless specifically prohibited by Applicable Law or
court order, Agent, each Lender and each Participant shall use its best efforts
prior to disclosure thereof, to notify the applicable Borrower of the applicable
request for disclosure of such non-public information (A) by a Governmental Body
or representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Participant by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Participant be obligated to return any materials
furnished by any Borrower other than those documents and instruments in
possession of Agent or any Lender in order to perfect its Lien on the Collateral
once the Obligations have been paid in full and this Agreement has been
terminated.
(b) Each Borrower acknowledges that from time to time
financial advisory, investment banking and other services may be offered or
provided to such Borrower or one or more of its Affiliates (in connection with
this Agreement or otherwise) by any Lender or by one or more Subsidiaries or
Affiliates of such Lender and each Borrower hereby authorizes each Lender to
share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender, it being understood that any such Subsidiary or Affiliate of any
Lender receiving such information shall be bound by the provision of Section
16.15 as if it were a Lender hereunder. Such authorization shall survive the
repayment of the other Obligations and the termination of the Loan Agreement.
16.16 Intentionally Omitted.
16.17 Acknowledgment. The parties hereto acknowledge that this
Agreement is intended (i) to act as a "Credit Support Document" (as defined in
the 1992 ISDA Master Agreement (together with any and all schedules, annexes,
confirmations and amendments relating thereto or any successor ISDA agreement,
the "Master Agreement")) in respect of Interest Rate Agreements with respect to
each party and is made part of the Schedule to said Master Agreement by and
between or which may be entered into by and between some of the parties hereto,
and (ii) as a "transfer" under a swap agreement, made by or to a swap
participant, in connection with a swap agreement within the meaning of U.S.
Bankruptcy Code Section 546(g).
Each of the parties has executed and delivered this Agreement in New
York, New York as of the day and year first above written.
THE ▇▇▇▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chief Financial
Officer, Senior Vice President and Secretary/
Treasurer
[CORPORATE SEAL]
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
- 78 -
DAG ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
and Secretary
[CORPORATE SEAL]
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
COMPONENTS ACQUISITION CORP.
By: /s ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
and Secretary
[CORPORATE SEAL]
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
GLOBAL SOURCING NETWORK, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
and Secretary
[CORPORATE SEAL]
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
- 79 -
PNC BANK, NATIONAL ASSOCIATION, as
Lender and as Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name:___________________________________
Title:__________________________________
Commitment Percentage: 100%
- 80 -
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 1999, before me personally came ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is the Chief Financial Officer, Senior Vice President and Secretary/Treasurer of
THE ▇▇▇▇▇▇▇▇▇▇ CORPORATION, the corporation described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
/s/
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 1999, before me personally came ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is the Vice President and Secretary of DAG ACQUISITION CORP., the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by order of the board of directors of said
corporation, and that he signed his name thereto by like order.
/s/
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 1999, before me personally came ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is the Vice President and Secretary of COMPONENTS ACQUISITION CORP., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
/s/
------------------------------
NOTARY PUBLIC
- 81 -
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 1999, before me personally came ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is the Vice President and Secretary of GLOBAL SOURCING NETWORK, LTD., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.
/s/
------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this _____ day of April, 1999, before me personally came ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of PNC BANK, NATIONAL ASSOCIATION, the national banking
association described in and which executed the foregoing instrument and that he
signed his name thereto by on behalf of said national banking association.
/s/
------------------------------
NOTARY PUBLIC
- 82 -
Exhibit A-1
Form of Term Note
TERM NOTE
$__________ ___________________
_________, New York
This Term Note is executed and delivered under and pursuant to the
terms of that certain Revolving Credit, Term Loan and Security Agreement dated
April ___, 1999 (as amended, restated, supplemented or modified from time to
time, the "Loan Agreement") by and among THE ▇▇▇▇▇▇▇▇▇▇ CORPORATION, a
corporation organized under the laws of the State of Delaware, DAG ACQUISITION
CORP., a Delaware corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇▇▇
("DAGA"), COMPONENTS ACQUISITION CORP., a Delaware corporation and a
wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇▇▇ ("Components"), GLOBAL SOURCING NETWORK,
LTD., a New York corporation and a wholly-owned Subsidiary of ▇▇▇▇▇▇▇▇▇▇ ("GSN";
Pietrafesa, DAGA, Components and GSN, each a "Borrower" and collectively
"Borrowers"); the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender"); and
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), as
collateral and administrative agent for Lenders (PNC, together with its
successors and assigns in such capacity, the "Agent"). Capitalized terms not
otherwise defined herein shall have the meanings provided in the Loan Agreement.
FOR VALUE RECEIVED, Borrowers hereby jointly and severally promise to
pay to the order of ____________________ ("________"), at the office of Agent
located at _____________, __________, __________, ____________ _____ or at such
other place as Agent may from time to time designate to Borrowers in writing:
(i) the principal sum of ______________ AND __/100 DOLLARS
($__________), payable in accordance with the provisions of the Loan Agreement,
subject to acceleration upon the occurrence of an Event of Default under the
Loan Agreement or earlier termination of the Loan Agreement pursuant to the
terms thereof; and
(ii) interest on the unpaid principal amount of this Note from time to
time outstanding until such principal amount is paid in full at the applicable
Term Loan Rate in accordance with the provisions of the Loan Agreement. Upon and
after the occurrence of an Event of Default, and during the continuation
thereof, interest shall be payable at the Default Rate. In no event, however,
shall interest exceed the maximum interest rate permitted by law.
This Note is one of the Term Notes referred to in the Loan Agreement
and is secured by the liens granted pursuant to the Loan Agreement and the Other
Documents, is entitled to the benefits of the Loan Agreement and the Other
Documents and is subject to all of the agreements, terms and conditions therein
contained.
This Note is subject to mandatory prepayment and may be voluntarily
prepaid, in whole or in part, on the terms and conditions set forth in the Loan
Agreement.
Exhibit A-1 - Page 1
If an Event of Default under Section 10.6 of the Loan Agreement shall
occur, then this Note shall immediately become due and payable, without notice,
together with reasonable attorneys' fees if the collection hereof is collected
by or through an attorney at law. If any other Event of Default shall occur
under the Loan Agreement or any of the Loan Documents, which is not cured within
any applicable grace period, then this Note may, as provided in the Loan
Agreement, be declared to be immediately due and payable, without notice,
together with reasonable attorneys' fees, if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof.
This Note shall be construed and enforced in accordance with the
internal laws of the State of New York without regard to principles of conflicts
of laws and is intended to take effect as a sealed instrument under New York
law.
Each Borrower expressly waives any presentment, demand, protest, notice
of protest, or notice of any kind except as expressly provided in the Loan
Agreement.
SIGNED, SEALED AND DELIVERED in ___________, New York.
THE ▇▇▇▇▇▇▇▇▇▇ CORPORATION
By:__________________________________
Title:_________________________
[CORPORATE SEAL]
DAG ACQUISITION CORP.
By:__________________________________
Title:_________________________
[CORPORATE SEAL]
Exhibit A-1 - Page 2
COMPONENTS ACQUISITION CORP.
By:__________________________________
Title:_________________________
[CORPORATE SEAL]
GLOBAL SOURCING NETWORK, LTD.
By:__________________________________
Title:_________________________
[CORPORATE SEAL]
Exhibit A-1 - Page 3
STATE OF ________ )
) ss.
COUNTY OF ______ )
On the ____ day of _______, _____, before me personally came
____________________________, to me known, who being by me duly sworn, did
depose and say that he is the ________________________ of THE ▇▇▇▇▇▇▇▇▇▇
CORPORATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto as the act and deed of such
corporation by order of the board of directors of said corporation.
------------------------------
Notary Public
STATE OF ________ )
) ss.
COUNTY OF ______ )
On the ____ day of _______, _____, before me personally came
____________________________, to me known, who being by me duly sworn, did
depose and say that he is the ____________________________ of DAG ACQUISITION
CORP., the corporation described in and which executed the foregoing instrument;
and that he signed his name thereto as the act and deed of such corporation by
order of the board of directors of said corporation.
------------------------------
Notary Public
STATE OF ________ )
) ss.
COUNTY OF ______ )
On the ____ day of _______, _____, before me personally came
____________________________, to me known, who being by me duly sworn, did
depose and say that he is the ____________________________ of COMPONENTS
ACQUISITION CORP., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto as the act and deed of such
corporation by order of the board of directors of said corporation.
------------------------------
Notary Public
Exhibit A-1 - Page 4
STATE OF ________ )
) ss.
COUNTY OF ______ )
On the ____ day of _______, _____, before me personally came
____________________________, to me known, who being by me duly sworn, did
depose and say that he is the ____________________________ of GLOBAL SOURCING
NETWORK, LTD., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto as the act and deed of such
corporation by order of the board of directors of said corporation.
------------------------------
Notary Public
Exhibit A-1 - Page 5