Exhibit 10.2
FINANCING AGREEMENT
Effective as of October 16, 2007 (the "Effective Date"), THE CIT
GROUP/COMMERCIAL SERVICES, INC., a New York corporation, with offices located at
Two Wachovia Center, Suite 2500, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "CIT"), is pleased to confirm, the terms and
conditions under which CIT shall make loans and other financial accommodations
to CONCORD KEYSTONE SALES CORP., an Illinois corporation, with its principal
office located at the address set forth in Section 1(e) of the Schedule (herein
the "Company").
SECTION 1 DEFINITIONS As used in this Agreement:
Accounts shall mean any and all of the Company's present and future: (a)
accounts (as defined in the UCC); (b) instruments, documents, chattel paper
(including electronic chattel paper) (all as defined in the UCC) relating to the
foregoing; (c) unpaid seller's or lessor's rights (including rescission,
replevin, reclamation, repossession and stoppage in transit) relating to the
foregoing or arising therefrom; (d) rights to any goods represented by any of
the foregoing, including rights to returned, reclaimed or repossessed goods; (e)
reserves and credit balances arising in connection with or pursuant to this
Agreement; (f) guaranties, other supporting obligations, payment intangibles and
letter of credit rights (all as defined in the UCC) relating to any of the
foregoing; (g) insurance policies or rights relating to any of the foregoing;
(h) general intangibles pertaining to any of the foregoing (including rights to
payment, including those arising in connection with bank and non-bank credit
cards), and all books and records and any electronic media and software relating
thereto; (i) notes, deposits or other property of the Company's account debtors
securing the obligations owed by such account debtors to the Company; and (j)
all Proceeds of any of the foregoing.
Agreement shall mean this Financing Agreement, together with the Schedule
and any other schedules, exhibits, supplements or annexes hereto, all as may be
renewed, amended, restated or supplemented from time to time.
Availability shall mean, at any time, the amount by which (a) the lesser
of the Revolving Credit Limit or the Borrowing Base at such time exceeds (b) the
sum at such time of the outstanding balance of the Revolving Loan Account plus
the undrawn amount of all outstanding Letters of Credit.
Availability Reserve shall mean an amount equal to the sum of: (a) any
reserve which CIT may establish from time to time pursuant to the express terms
of this Agreement; plus (b) any additional reserves identified in Section 2.3 of
the Schedule; plus (c) such other reserves against Availability as CIT deems
necessary in the exercise of its reasonable business judgment as a result of (i)
negative forecasts and/or trends in the Company's business, industry, prospects,
profits, operations or financial condition or (ii) other issues, circumstances
or facts that could otherwise negatively impact the Company or its business,
prospects, profits, operations, industry, financial condition or assets.
Base Rate shall mean the rate of interest per annum announced by JPMorgan
Chase Bank (or its successor) from time to time as its prime rate in effect at
its principal office in New York City, which rate is not intended as the lowest
rate of interest charged by JPMorgan Chase Bank to its borrowers.
Base Rate Loan shall mean a loan outstanding under this Agreement when the
interest rate applicable thereto is based upon the Base Rate.
Borrowing Base shall have the meaning set forth in Section 2.2 of the
Schedule.
Business Day shall mean any day on which CIT is open for business.
CIT's Bank Account shall mean CIT's bank account at JPMorgan Chase Bank
(or its successor) in New York, New York or such other account of CIT as CIT may
designate from time to time.
CIT's System shall mean CIT's StuckyNet or other internet-based loan
accounting and reporting system.
Collateral shall mean all present and future Accounts, Inventory,
Documents of Title and Other Collateral.
Default shall mean any event specified in Section 8.1 hereof, regardless
of whether any requirement for the giving of notice, the lapse of time, or both,
or any other condition, event or act has occurred or been satisfied.
Depository Account shall mean each bank account (and the related lockbox,
if any) subject to CIT's control that is established by CIT, at CIT's option, or
the Company pursuant to Section 2.1.2 or Section 5.1.11 hereof.
Documents of Title shall mean all of the Company's present and future
documents (as defined in the UCC) relating to Inventory, and any and all
warehouse receipts, bills of lading, shipping documents, chattel paper,
instruments and similar documents relating to Inventory, all whether negotiable
or non-negotiable, and all Proceeds of any of the foregoing.
Eligible Accounts shall mean the gross amount of the Company's Trade
Accounts that are subject to a valid, exclusive, first priority and fully
perfected security interest in favor of CIT, which conform to the warranties
contained herein and which, at all times, continue to be acceptable to CIT in
the exercise of its reasonable business judgment, less, without duplication, the
sum of:
(a) actual returns, discounts, claims, disputes, credits and
allowances of any nature (whether issued, owing, granted, claimed or
outstanding), plus
(b) reserves for such Trade Accounts that arise from, or are subject
to or include: (i) sales to the United States of America, any state or other
governmental entity or to any
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agency, department or division thereof, except for any such sales as to which
the Company has complied with the Assignment of Claims Act of 1940 or any other
applicable statute, rules or regulation to CIT's satisfaction in the exercise of
its reasonable business judgment; (ii) foreign sales, other than sales which
otherwise comply with all of the other criteria for eligibility hereunder and
are (x) secured by letters of credit (in form and substance satisfactory to CIT)
issued or confirmed by, and payable at, banks acceptable to CIT having a place
of business in the United States of America, or (y) to customers residing in
Canada; provided that, such Accounts are payable in United States Dollars; (iii)
Accounts that remain unpaid more than the earlier of ninety (90) days from
invoice date or sixty (60) days from due date; (iv) contra accounts; (v) sales
to any subsidiary (direct or indirect) or parent (direct or indirect) of the
Company, or to any other person or entity otherwise affiliated with the Company
or with any shareholder, subsidiary (direct or indirect) or parent (direct or
indirect) of the Company in any way; (vi) ▇▇▇▇ and hold (deferred shipment),
consignment sales, guaranteed sales, sale and return, sale on approval or other
terms under which payment by the account debtor may be conditional or
contingent; (vii) sales to any customer which is either (w) insolvent, (x) the
debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceedings under any federal or state law, (y) negotiating, or has
called a meeting of its creditors for purposes of negotiating, a compromise of
its debts, or (z) financially unacceptable to CIT or has a credit rating
unacceptable to CIT; (viii) all sales to any customer if fifty-percent (50%) or
more of the aggregate dollar amount of all outstanding invoices to such customer
are unpaid more than the earlier of ninety (90) days from invoice date or sixty
(60) days from due date; (ix) the amount at any time that the aggregate
outstanding sales to Walgreen Co. and/or its affiliates exceeds forty-five
percent (45%) or more of all Eligible Accounts at such time; (x) the amount at
any time that the aggregate outstanding sales to Wal-Mart Stores Inc. and/or its
affiliates exceeds sixty percent (60%) or more of all Eligible Accounts at such
time; (xi) the amount at any time that the aggregate outstanding sales to any
customer (other than Wal-Mart Stores Inc. or Walgreen Co.) and/or its affiliates
exceeds twenty percent (20%) or more of all Eligible Accounts at such time;
(xii) pre-billed receivables and receivables arising from progress ▇▇▇▇▇▇▇▇; and
(xiii) sales not payable in United States currency; plus
(c) reserves established by CIT to account for increases in the
dilution of the Company's Trade Accounts above the Company's historical dilution
levels as determined by CIT in the exercise of its reasonable business judgment;
plus
(d) such other reserves against Trade Accounts as CIT deems
necessary in the exercise of its reasonable business judgment and which are
customary either in the commercial finance industry or in the lending practices
of CIT.
It is understood and agreed that:
(1) CIT may, but shall not be obligated to, increase from time to
time the concentration percentages contained in clauses (b)(ix), (b)(x) and
(b)(xi) above if requested by the Company, such increases to be in amounts and
for periods of time determined by CIT in its reasonable credit judgment based on
information provided to CIT by the Company; and
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(2) CIT may reduce the percentage contained in clause (b)(x) above
based on CIT's reasonable credit judgment but not below forty-five percent
(45%).
Eligible Inventory shall mean the gross amount of the Company's Inventory
that is subject to a valid, exclusive, first priority and fully perfected
security interest in favor of CIT and that conforms to the warranties contained
herein and that, at all times, continues to be acceptable to CIT in the exercise
of its reasonable business judgment, less, without duplication: (a) all
work-in-process; (b) all supplies (other than raw materials); (c) all Inventory
not present in the United States of America except for Inventory in-transit to
the Company's customers located in Canada; (d) all Inventory returned or
rejected by the Company's customers (other than goods that are undamaged and
resalable in the normal course of business) and goods to be returned to the
Company's suppliers; (e) all Inventory in the possession of, or located with, a
warehouseman, bailee, third party processor, or other third party (other than
carriers engaged by the Company), unless such warehouseman, bailee, third party
processor or third party has executed a notice of security interest agreement or
waiver agreement (in form and substance satisfactory to CIT); and (f) the amount
of such other reserves against Inventory as CIT deems necessary in the exercise
of its reasonable business judgment, including, without limitation, reserves for
special order, or private label goods, Inventory subject to a license agreement,
discontinued, slow-moving and obsolete Inventory, market value declines, ▇▇▇▇
and hold (deferred shipment), shrinkage and any applicable customs, freight,
duties and taxes.
Eligible In-Transit Inventory shall mean the gross amount of the Company's
finished goods Inventory that is in transit to the United States of America,
that conforms to the warranties contained herein, that at all times continues to
be acceptable to CIT in the exercise of its reasonable business judgment and
that meets the following additional requirements: (a) such Inventory is shipped
via shipping terms that provide for the passage of title of such Inventory to
the Company at or prior to the time such Inventory is loaded on the carrier; (b)
all documents issued by the carrier or bailee thereof are negotiable and issued
in the name of CIT; (c) such Inventory is covered by cargo insurance reasonably
acceptable to CIT with CIT as loss payee; and (d) a bailment agreement, in form
and content satisfactory in all respects to CIT, has been duly executed and
delivered to CIT by each freight forwarder or customs agent with respect to such
Inventory or related Documents of Title, less such reserves against in-transit
Inventory as CIT deems necessary in the exercise of its reasonable business
judgment, including, without limitation, reserves for any applicable customs,
freight, duties and taxes.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time.
Event of Default shall have the meaning given to such term in Section 8.1
hereof.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply.
Inventory shall mean all of the Company's present and hereafter acquired
inventory (as defined in the UCC) including, without limitation, all merchandise
and inventory in all stages of
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production (from raw materials through work-in-process to finished goods), and
all additions, substitutions and replacements thereof, wherever located,
together with all goods and materials used or usable in manufacturing,
processing, packaging, selling, promoting or shipping of the foregoing, and all
Proceeds of any of the foregoing.
Inventory Formula Amount shall mean the lesser of (a) sixty percent (60%)
of the aggregate value of the Eligible Inventory, valued at the lower of cost or
market on a first in, first out basis or (b) eighty-five percent (85%) of the
Net Forced Liquidation Value.
In-Transit Inventory Formula Amount shall mean the lesser of (a) sixty
percent (60%) of the aggregate value of the Eligible In-Transit Inventory,
valued at cost, (b) eighty-five percent (85%) of the Net Forced Liquidation
Value.
Issuing Institution shall mean CIT, any affiliate of CIT or any bank
issuing a Letter of Credit for the Company.
Letters of Credit shall mean all letters of credit issued for or on behalf
of the Company with the assistance of CIT by an Issuing Institution, and any
banker's acceptances covered by a Letter of Credit Guaranty in accordance with
Section 2.2 hereof.
Letter of Credit Guaranty shall mean any guaranty or similar agreement
delivered by CIT to an Issuing Institution of the Company's reimbursement
obligation under such Issuing Institution's reimbursement agreement, application
for letter of credit or other like document.
Letter of Credit Sub-Line shall mean the commitment of CIT to assist the
Company in obtaining Letters of Credit in an aggregate amount set forth in
Section 2.4 of the Schedule.
LIBOR Rate shall mean at any time of determination, and subject to
availability, for each calendar month, the higher of the one-month London
Interbank Offered Rate paid in London on dollar deposits from other banks as
published under "Money Rates" in the New York City edition of the Wall Street
Journal or, if there is no such publication or statement therein as to the
London Interbank Offered Rate, then in any publication used in the New York City
financial community.
LIBOR Rate Loan shall mean a loan outstanding under this Agreement when
the interest rate applicable thereto is based upon the LIBOR Rate.
Loan Documents shall mean this Agreement, the other closing documents
executed by the Company, and any other ancillary loan and security agreements
executed by the Company from time to time in connection with this Agreement, all
as may be renewed, amended, restated or supplemented from time to time.
Net Forced Liquidation Value shall mean, at any time of determination, the
product of (a) the cost of all of the Eligible Inventory at such time
(determined on a first-in, first-out basis) multiplied by (b) the percentage of
the cost of the Eligible Inventory that was determined by the
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most recent appraisal of all of the Company's Inventory conducted in accordance
with Section 6.8 hereof to be the net forced liquidation value of such Eligible
Inventory.
Obligations shall mean: (a) all loans, advances and other extensions of
credit made by CIT to the Company or to others for the Company's account
(including, without limitation, all Revolving Loans and all obligations of CIT
under Letter of Credit Guaranties); (b) any and all other indebtedness,
obligations and liabilities which may be owed by the Company to CIT and arising
out of, or incurred in connection with, this Agreement or any of the other Loan
Documents (including all Out-of-Pocket Expenses), whether (i) now in existence
or incurred by the Company from time to time hereafter, (ii) secured by pledge,
lien upon or security interest in any of the Company's assets or property or the
assets or property of any other person, firm, entity or corporation, (iii) such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect, or (iv) the Company is liable to CIT for such indebtedness
as principal, surety, endorser, guarantor or otherwise; (c) all indebtedness,
obligations and liabilities owed by the Company to CIT under any other agreement
or arrangement now or hereafter entered into between the Company, on the one
hand, and CIT, on the other hand, whether or not such agreement or arrangement
relates to the transactions contemplated by this Agreement (including, without
limitation, indebtedness for goods and services purchased by the Company from
any party whose accounts are factored or financed by CIT); (d) indebtedness,
obligations and liabilities incurred by, or imposed on, CIT as a result of
environmental claims relating to the Company's operations, premises or waste
disposal practices or disposal sites; (e) the Company's liabilities to CIT as
maker or endorser on any promissory note or other instrument for the payment of
money; and (f) the Company's liabilities to CIT under any instrument of guaranty
or indemnity, or arising under any guaranty, endorsement or undertaking which
CIT may make or issue to others for the Company's account, including any
accommodations extended by CIT with respect to applications for Letters of
Credit, CIT's acceptance of drafts or CIT's endorsement of notes or other
instruments for the Company's account and benefit.
Other Collateral shall mean: (a) all present and hereafter established
lockbox, blocked account and other deposit accounts maintained with any bank or
financial institution into which the proceeds of Collateral are or may be
deposited (including the Depository Accounts); (b) all cash and other monies and
property in the possession or control of CIT (including negative balances in the
Revolving Loan Account and cash collateral held by CIT pursuant to this
Agreement); (c) all books, records, invoices, ledger cards, bills of lading and
other shipping evidence, statements, correspondence, credit files and other data
relating to the Collateral or any account debtor, disks and related data
processing software at any time evidencing or containing information relating to
any of the Collateral described herein or otherwise necessary or helpful in the
collection thereof or realization thereon; and (d) all Proceeds of any of the
foregoing.
Out-of-Pocket Expenses shall mean all of CIT's present and future costs,
fees and expenses incurred from third parties in connection with this Agreement
and the other Loan Documents, including, without limitation, (a) the cost of
lien searches (including tax lien and judgment lien searches), pending
litigation searches and similar items, (b) fees and taxes imposed in connection
with the filing of any financing statements or other personal property security
documents; (c) all costs and expenses incurred by CIT in opening and maintaining
the Depository Accounts and any related lockboxes, depositing checks, and
receiving and
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transferring funds (including charges imposed on CIT for "insufficient funds"
and the return of deposited checks); (d) note taxes and intangible taxes; (e)
all appraisal fees and expenses payable by the Company under Section 6.8 hereof,
and all reasonable costs, fees and expenses incurred by CIT in connection with
any action taken under Section 6.7 hereof, including reasonable travel, meal and
lodging expenses of CIT personnel; (f) all reasonable costs that CIT may incur
to maintain the insurance required hereunder and all reasonable costs, fees and
expenses incurred by CIT in connection with the collection of insurance proceeds
with respect to the Collateral; (g) all reasonable costs, fees, expenses and
disbursements of outside counsel hired by CIT to consummate the transactions
contemplated by this Agreement (including the documentation and negotiation of
this Agreement, the other Loan Documents and all amendments, supplements and
restatements thereto or thereof), and to advise CIT as to matters relating to
the transactions contemplated hereby; and (h) without duplication, all
reasonable costs, fees and expenses incurred by CIT in connection with the
administration, collection, liquidation, enforcement, protection and defense of
the Obligations, the Collateral and CIT's rights under this Agreement,
including, without limitation, all reasonable costs, fees, expenses and
disbursements of outside counsel to CIT incurred as a result of a workout,
restructuring, reorganization, liquidation, insolvency proceeding and in any
appeals arising therefrom, whether incurred before, during or after the
termination of this Agreement or the commencement of any case with respect to
the Company or any subsidiary of the Company (as the case may be) under the
United States Bankruptcy Code or any similar statute.
Parent shall mean Concord Camera Corp., a New Jersey corporation.
Permitted Encumbrances shall mean: (a) liens existing on the Closing Date
and set forth in Section 1(g) of the Schedule; (b) statutory liens of landlords
and liens of carriers, warehousemen, bailees, mechanics, materialmen and other
like liens imposed by law, created in the ordinary course of business and
securing amounts not yet due (or which are being contested in good faith, by
appropriate proceedings or other appropriate actions which are sufficient to
prevent imminent foreclosure of such liens), and with respect to which adequate
reserves or other appropriate provisions are being maintained by the Company in
accordance with GAAP; (c) deposits made (and the liens thereon) in the ordinary
course of business of the Company (including, without limitation, security
deposits for leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts; (d) liens
granted to CIT by the Company; (e) liens of judgment creditors; provided that,
such liens do not exceed $100,000 in the aggregate at any time (other than liens
bonded or insured to the reasonable satisfaction of CIT); and (g) Permitted Tax
Liens.
Permitted Tax Liens shall mean liens for taxes not yet due and payable and
liens for taxes that the Company is contesting in good faith, by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such liens,
and with respect to which adequate reserves are being maintained by the Company
in accordance with GAAP; provided that, in either case, such liens (a) are not
filed of record in any public office, (b) are not senior in priority to the
liens granted by the Company to CIT, or (c) do not secure taxes owed to the
United States
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of America (or any departmental or agency thereof) or any State or State
authority, if applicable State law provides for the priority of tax liens in a
manner similar to the laws of the United States of America.
Proceeds shall have the meaning given to such term in the UCC, including,
without limitation, all (a) payments or other proceeds from an insurance carrier
with respect to any loss, casualty or damage to Collateral, and (b) payments
received on account of any condemnation or other governmental taking of any
Collateral.
Renewal Date shall mean, initially, the date set forth in Section 6 of the
Schedule and, subsequently, the same date in every year thereafter.
Revolving Credit Limit shall mean the amount set forth in Section 2.1 of
the Schedule.
Revolving Line of Credit shall mean the commitment of CIT to make
Revolving Loans pursuant to Section 2.1 hereof and assist the Company in opening
Letters of Credit pursuant to Section 2.2 hereof, in an aggregate amount not to
exceed the Revolving Credit Limit.
Revolving Loan Account shall mean the account on CIT's books, in the
Company's name, in which the Company will be charged with all Obligations in
accordance with Section 2.1.3 hereof.
Revolving Loans shall mean the loans made from time to time to or for the
account of the Company by CIT pursuant to Section 2.1 of this Agreement.
Schedule shall mean the Schedule attached hereto and incorporated herein
by reference.
Subordinated Debt shall mean all indebtedness of the Company (and the
note(s) evidencing such indebtedness) that is subordinated to the prior payment
and satisfaction of the Obligations pursuant to a subordination agreement
between the subordinating creditor and CIT.
Trade Accounts shall mean that portion of the Company's Accounts which
arises from the sale of Inventory or the rendition of services in the ordinary
course of the Company's business.
UCC shall mean the Uniform Commercial Code as the same may be amended and
in effect from time to time in the State of New York.
SECTION 2 FINANCIAL COMMITMENTS
Subject to the terms and conditions set forth in this Agreement, CIT agrees to
make the following financial accommodations to the Company:
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2.1 Revolving Loans and Collections
2.1.1 Amounts and Requests. Subject to the terms and conditions of this
Agreement, CIT may make in its discretion loans and advances to the Company on a
revolving basis in amounts requested by the Company, but not in excess of the
Availability on the date of the request therefor or the funding thereof. All
requests by the Company for a Revolving Loan must be received by CIT no later
than 11:00 a.m., Charlotte, North Carolina time on the Business Day that a
Revolving Loan is required. The Company hereby authorizes CIT to make Revolving
Loans to the Company based upon a telephonic or e-mail request (or, if permitted
by CIT, based upon a request posted on CIT's System) made by any officer or
other employee of the Company that the Company has authorized in writing to
request Revolving Loans hereunder, as reflected by CIT's records. Each
telephonic, e-mail or posted request by the Company shall be irrevocable, and
the Company agrees to confirm any such request for a Revolving Loan in a writing
approved by CIT and signed by such authorized officer or employee, within one
(1) Business Day of CIT's request for such confirmation. CIT shall have the
right to rely on any telephonic, e-mail or posted request for a Revolving Loan
made by anyone purporting to be an officer or other employee of the Company that
the Company has authorized in writing to request Revolving Loans hereunder,
without further investigation.
2.1.2 Handling of Proceeds of Collateral; Cash Dominion.
(a) Collection of Accounts and Other Proceeds. The Company, at its
expense, will enforce and collect payments and other amounts owing on all
Accounts in the ordinary course of the Company's business subject to the terms
hereof. The Company agrees to direct its account debtors and any credit card
processors to send payments on all Accounts directly to a lockbox associated
with a Depository Account or the Depository Account directly, as the case may
be, and to include on all of the Company's invoices the address of such a
lockbox as the sole address for remittance of payment. Notwithstanding the
foregoing, should the Company ever receive any payment on an Account or other
Proceeds of the sale of Collateral, including checks, cash, receipts from credit
card sales and receipts, notes or other instruments or property with respect to
any Collateral, the Company agrees to hold such proceeds in trust for CIT,
separate from the Company's other property and funds, and to deposit such
proceeds directly into a Depository Account not more than two (2) Business Days
after receipt.
(b) Transfer of Funds from Depository Accounts. Funds remaining on
deposit in a Depository Account shall be transferred to CIT's Bank Account on
each Business Day (except Veterans Day), and the Company agrees to take all
actions reasonably required by CIT or any bank at which a Depository Account is
maintained in order to effectuate the transfer of funds in this manner. Subject
to Section 3.2.3 hereof, all amounts received from a Depository Account and any
other proceeds of the Collateral deposited into CIT's Bank Account will, for
purposes of calculating Availability and interest, be credited to the Revolving
Loan Account on the date of deposit in CIT's Bank Account. No checks, drafts or
other instruments received by CIT shall constitute final payment to CIT unless
and until such instruments have actually been collected.
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(c) New Depository Accounts. The Company agrees not to open any
lockbox or new bank account into which Proceeds of Collateral are to be
delivered or deposited unless concurrently with the opening of such lockbox
and/or bank account, CIT, the Company and the bank which will maintain such
lockbox or at which such account will be maintained, execute a depository
account control agreement, in form and substance satisfactory to CIT with
respect to such lockbox and/or related bank account. Upon compliance with the
terms set forth above, such lockbox and/or bank account shall constitute a
Depository Account for purposes of this Agreement.
2.1.3 Revolving Loan Account. CIT shall charge the Revolving Loan Account
for all loans and advances made by CIT to the Company or for the Company's
account, and at CIT's option for any other Obligations, including Out-of-Pocket
Expenses, interest and fees when due and payable hereunder. The Company confirms
that any charges which CIT may make to the Revolving Loan Account as provided
herein will be made as an accommodation to the Company and solely at CIT's
discretion, without notice to the Company. If a credit balance exists in the
Revolving Loan Account, such credit balance shall not accrue interest in favor
of the Company but shall be available to the Company at any time or times so
long as no Default or Event of Default exists.
2.1.4 Repayment of Overadvances. If at any time the sum of the outstanding
balance of the Revolving Loan Account and the undrawn amount of outstanding
Letters of Credit exceed either the Revolving Credit Limit (or any applicable
sublimits thereof) or the Borrowing Base at such time, the amount of such excess
shall be immediately due and payable, unless CIT otherwise agrees in writing.
Should CIT for any reason honor requests for loans or advances in excess of
Availability, such loans or advances shall be made in CIT's sole discretion and
subject to any additional terms CIT deems necessary.
2.1.5 Application of Proceeds of Collateral. Unless this Financing
Agreement expressly provides otherwise, so long as no Event of Default shall
have occurred and remain outstanding, CIT agrees to apply (i) all Proceeds of
Trade Accounts and Inventory to the Revolving Loan Account and (ii) any other
payment received by CIT with respect to the Obligations, in such order and
manner as CIT may elect in its sole discretion. If an Event of Default shall
have occurred and remain outstanding, CIT may apply all Proceeds of Collateral
and all other payments received by CIT to the payment of the Obligations in such
manner and in such order as CIT may elect in its sole discretion.
2.1.6 Monthly Statement. Within ten (10) Business Days after the end of
each month, CIT agrees to prepare and make available to the Company (by access
to CIT's System or as otherwise mutually agreed to by the Company and CIT), a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between CIT and the Company during that month. Absent
manifest error, each monthly statement shall be deemed correct and binding upon
the Company and shall constitute an account stated between the Company and CIT
unless CIT receives a written statement of exception from the Company within
thirty (30) days of the date of such monthly statement.
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2.1.7 Access to CIT's System. CIT shall provide to the Company access to
CIT's System during normal business hours, for the purposes of (i) obtaining
information regarding loan balances and Availability, and (ii) if permitted by
CIT, making requests for Revolving Loans and submitting borrowing base
certificates. Such access shall be subject to the following terms, in addition
to all terms set forth on the website for CIT's System:
(a) CIT shall provide to the Company an initial password for secured
access to CIT's System. The Company shall provide CIT with a list of officers
and employees that are authorized from time to time to access CIT's System, and
the Company agrees to limit access to the password and CIT's System to such
authorized officers and employees. After the initial access, the Company shall
be solely responsible for (i) changing and maintaining the integrity of the
Company's password and (ii) any unauthorized use of the Company's password or
CIT's System by the Company's officers and employees.
(b) The Company shall use CIT's System and the Company's information
thereon solely for the purposes permitted above, and shall not access CIT's
System for the benefit of third parties or provide any information obtained from
CIT's System to third parties. CIT makes no representation that loan balance or
Availability information is or will be available, accurate, complete, correct or
current at all times. CIT's System may be inoperable or inaccessible from time
to time, whether for required website maintenance, upgrades to CIT's System, or
for other reasons, and in any such event the Company must obtain loan balance
and Availability information, and (if permitted by CIT) make requests for
Revolving Loans and submit borrowing base certificates using other available
means.
(c) The Company hereby confirms and agrees that CIT's System consist
of proprietary software, data, tools, scripts, algorithms, business logic,
website designs and interfaces and related intellectual property, information
and documentation. CIT's System and related intellectual property, information
and documentation are the sole and exclusive property of CIT, and the Company
shall have no right, title or interest therein or thereto, except for the
limited right to access CIT's System for the purposes permitted above. Upon
termination of this Agreement, the Company agrees to cease any use of CIT's
System.
(d) All agreements, covenants and representations and warranties
made by the Company in any borrowing base certificate submitted to CIT by means
of CIT's System are incorporated herein by reference.
2.2 Letters of Credit
2.2.1 Amounts and Form. Subject to the terms and conditions of this
Agreement, CIT agrees to either issue Letters of Credit or assist the Company in
establishing or opening Letters of Credit with an Issuing Institution by joining
in the applications for such Letters of Credit, and/or issuing one or more
Letter of Credit Guaranties; provided that, the face amount of any such Letter
of Credit shall not exceed Availability on the date of the request therefor or
the issuance thereof and the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed the Letter of Credit Sub-Line. The terms,
form and purpose of each Letter of
11
Credit and all documentation in connection therewith, and any amendments,
modifications or extensions thereof must be mutually acceptable to CIT, the
Issuing Institution and the Company.
2.2.2 Authority to Charge Revolving Loan Account. The Company hereby
authorizes CIT, without notice to the Company, to charge the Revolving Loan
Account with the amount of all indebtedness, liabilities and obligations of any
kind incurred by CIT under a Letter of Credit or Letter of Credit Guaranty,
including the charges of an Issuing Institution, as such indebtedness,
liabilities and obligations are charged to or paid by CIT, or if earlier, upon
the occurrence of an Event of Default.
2.2.3 Compliance of Goods, Documents and Shipments with Agreed Terms. CIT
shall not be responsible for: (a) the existence, character, quality, quantity,
condition, packing, value or delivery of the goods purporting to be represented
by any documents relating to any Letter of Credit; (b) any difference or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in such documents; (c) the validity,
sufficiency or genuineness of such documents or of any endorsements thereon,
even if such documents should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (d) the time, place, manner or
order in which shipment is made; (e) partial or incomplete shipment, or failure
or omission to ship any or all of the goods referred to in the Letters of Credit
or documents relating thereto; (f) any deviation from instructions; (g) delay,
default, or fraud by the shipper and/or anyone else in connection with the goods
or the shipping thereof; or (h) any breach of contract between the shipper or
vendors and the Company.
2.2.4 Handling of Goods, Documents and Shipments. The Company agrees that
any action taken by CIT in good faith, or any action taken by the Issuing
Institution of whatever nature, under or in connection with a Letter of Credit,
a Letter of Credit Guaranty, drafts or acceptances relating to such Letter of
Credit or the goods subject thereto, shall be binding on the Company and shall
not result in any liability whatsoever of CIT to the Company. CIT shall have the
full right and authority to (a) clear and resolve any questions of
non-compliance of documents, (b) give instructions as to acceptance or rejection
of any documents or goods, (c) execute steamship or airway guaranties (and
applications therefor), indemnities or delivery orders, (d) grant any extensions
of the maturity of, time of payment for, or presentation of, any drafts,
acceptances or documents, and (e) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, Letter of Credit Guaranties or drafts or
acceptances relating to Letters of Credit. An Issuing Institution shall be
entitled to comply with and honor any documents or instruments executed by or
received solely from CIT, without notice to or consent from the Company.
Notwithstanding any prior course of conduct or dealing with respect to the
foregoing (including amendments to and non-compliance with any documents, and/or
the Company's instructions with respect thereto), CIT may exercise its rights
hereunder in its sole but reasonable business judgment. The Company agrees not
to, without CIT's prior written consent, which consent shall not be unreasonably
withheld: (a) execute any applications for steamship or airway guaranties,
indemnities or delivery orders; (b) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances or
documents; (c) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any terms or conditions of any applications, Letters
of Credit, drafts, or
12
acceptances; (d) clear or resolve any questions of non-compliance of documents;
or (e) give any instructions as to acceptances or rejection of any documents or
goods.
2.2.5 Compliance with Laws; Payment of Levies and Taxes. The Company
agrees that (a) all necessary import and export licenses and certificates
necessary for the import or handling of the Collateral will be promptly
procured, (b) all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral or the financing
thereof will be promptly and fully complied with, and (c) any certificate in
that regard that CIT may at any time request will be promptly furnished to CIT.
In connection herewith, the Company represents and warrants to CIT that all
shipments made under any Letter of Credit are and will be in compliance with the
laws and regulations of the countries in which the shipments originate and
terminate, and are not prohibited by any such laws and regulations. The Company
assumes all risk, liability and responsibility for, and agrees to pay and
discharge, all present and future local, state, federal or foreign taxes,
duties, or levies pertaining to the importation and delivery of the Collateral.
Any embargo, restriction, law, custom or regulation of any country, state, city,
or other political subdivision, where the Collateral is or may be located, or
wherein payments are to be made, or wherein drafts may be drawn, negotiated,
accepted, or paid, shall be solely the Company's risk, liability and
responsibility.
2.2.6 Subrogation Rights. Upon any payments made to an Issuing Institution
under a Letter of Credit Guaranty, CIT shall acquire by subrogation, any rights,
remedies, duties or obligations granted to or undertaken by the Company to the
Issuing Institution in any application for Letters of Credit, any standing
agreement relating to Letters of Credit, under the UCC or otherwise, all of
which shall be deemed to have been granted to CIT and apply in all respects to
CIT and shall be in addition to any rights, remedies, duties or obligations
contained herein.
SECTION 3 INTEREST, FEES AND EXPENSES
3.1 Interest
3.1.1 Interest on Revolving Loan Account. During the month or months that
Revolving Loans are Base Rate Loans, interest on the daily debit balance of the
Revolving Loan Account at the close of each day during each month shall be due
and payable monthly on the first day of the immediately following month and
shall accrue interest at the Base Rate plus 0.25% per annum. During the month or
months that Revolving Loans are LIBOR Rate Loans, interest on the daily debit
balance of the Revolving Loan Account at the close of each day during each month
shall be due and payable monthly on the first day of the immediately following
month and shall accrue interest at the LIBOR Rate plus 2.25% per annum.
3.1.2 Selection of Interest Rate. The Company may select the interest rate
(i.e., either the Base Rate or the LIBOR Rate) that will apply to all Revolving
Loans for a particular calendar month by giving notice to CIT not later than
11:00 a.m. (New York time) on the third (3rd) Business Day prior to the first
day of such month. The Base Rate or the LIBOR Rate applicable to any month will
be the Base Rate or the LIBOR Rate on the first day of such month, and such Base
Rate or LIBOR Rate will remain constant throughout such month and will not
fluctuate. If the Company does not notify CIT of its selection of the applicable
interest rate (i.e., either the
13
Base Rate or the LIBOR Rate) for any month by 11:00 a.m. (New York time) on the
third (3rd) Business Day prior to the first day of such month, the Company will
be deemed to have selected for the next month the rate of interest then in
effect, which rate will be reset to the Base Rate or the LIBOR Rate in effect on
the first day of such month. For the calendar month in which the Closing Date
occurs, all Revolving Loans shall be deemed to be outstanding as LIBOR Rate
Loans. In the event of a Default or Event of Default, all Revolving Loans shall,
at CIT's option, be deemed to be converted to Base Rate Loans, and the Company
shall not be permitted to select the LIBOR Rate as the applicable rate of
interest. All interest rates shall be calculated based on a 360-day year and
actual days elapsed.
3.1.3 Default Interest Rate. Upon the occurrence of an Event of Default,
all Obligations may, at the election of CIT, bear interest at a rate equal to
two percent (2.0%) per annum greater than the applicable interest rate charged
under this Section 3.1 until such Event of Default is waived by CIT.
3.1.4 Inability to Determine LIBOR Rate. Notwithstanding any other
provision of this Agreement to the contrary, (a) if CIT determines in the
exercise of its reasonable business judgment (which determination shall be
conclusive and binding upon the Company) that by reason of circumstances
affecting the interbank LIBOR market, adequate and reasonable means do not exist
for ascertaining the LIBOR Rate or (b) if any law, regulation, treaty or
directive shall make it unlawful for CIT to make or maintain any LIBOR Rate Loan
or shall result in increasing the cost to CIT of making or maintaining any LIBOR
Rate Loan, CIT shall give written notice of such determination to the Company,
all LIBOR Rate Loans outstanding shall convert automatically to Base Rate Loans
and the obligation of CIT thereafter to continue making LIBOR Rate Loans shall
be suspended until CIT determines that adequate and reasonable means once again
exist for ascertaining the LIBOR Rate or such law, regulation, treaty or
directive ceases to be in effect and CIT rescinds the earlier notice.
3.2 Fees and Expenses
3.2.1 Loan Facility Fee. The Company agrees to pay CIT a Loan Facility Fee
in the amount set forth in Section 3.2 of the Schedule, which shall be due and
payable as set forth in Section 3.2 of the Schedule, and fully earned upon
execution of this Agreement by CIT and the Company.
3.2.2 Line of Credit Fee. On the first day of each month, the Company
agrees to pay to CIT a Line of Credit Fee equal to the following: (a) (i) the
Revolving Credit Limit minus (ii) the average daily balance of the Revolving
Loan Account and the average daily undrawn amount of Letters of Credit
outstanding during the immediately preceding month, multiplied by, (b) the rate
per annum set forth in Section 3.3 of the Schedule divided by twelve (12). Such
Line of Credit Fee shall be calculated based on a 360-day year and actual days
elapsed.
3.2.3 Annual Renewal Fee. Unless this Agreement is terminated pursuant to
Section 9 hereof, the Company agrees to pay CIT an Annual Renewal Fee in the
amount set forth in Section 3.4 of the Schedule, which shall be due and payable
as set forth in Section 3.4 of the Schedule, and fully earned upon each Renewal
Date.
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3.2.4 Letter of Credit Guaranty Fees and Charges. In consideration of CIT
providing its assistance in obtaining Letters of Credit pursuant to Section 2.2
hereof, the Company agrees to pay CIT: (a) the Letter of Credit Guaranty Fees
equal to the rates and in the manner set forth in Section 3.5 of the Schedule;
(b) all standard fees imposed by CIT for processing, amending, cancelling or
handling the Letters of Credit and any drafts thereunder as set forth in Annex C
attached hereto; and (c) any amounts paid or incurred by CIT or charged to CIT
by an Issuing Institution under any Letter of Credit or the reimbursement
agreement relating thereto, any application for Letters of Credit, Letter of
Credit Guaranty or other like document which pertains either directly or
indirectly to Letters of Credit. CIT may change the fees that are set forth in
Annex C attached hereto from time to time upon notice to the Company; provided,
however, any failure to give the Company such notice does not constitute a
breach of this Agreement and does not impair CIT's ability to institute any such
change. To effectuate any such change in such fees, CIT may in its discretion
send or transmit to the Company a new Annex C which shall replace Annex C in
effect on the date thereof.
3.2.5 Standard Operational Fees. In addition to all Out-of-Pocket
Expenses, the Company agrees to pay CIT (a) CIT's standard fees for the use of
CIT's in-house legal department relating to any and all modifications, waivers,
releases, legal file reviews or additional collateral with respect to this
Agreement, the Collateral and/or the Obligations, (b) CIT's standard charges for
any employee of CIT used to conduct any of the examinations, verifications,
inspections, physical counts and other valuations (currently $1,000 per person,
per day), and (c) CIT's standard charges for each wire transfer made by CIT to
or for the benefit of the Company (currently $30 per wire); provided that, such
standard charges may be increased by CIT from time to time. Such charges shall
be due and payable in accordance with CIT's standard practices, as in effect
from time to time.
3.2.6 Out-of-Pocket Expenses. The Company agrees to reimburse or pay CIT
for all Out-of-Pocket Expenses when charged to or paid by CIT.
SECTION 4 COLLATERAL
4.1 Grant of Security Interest. As security for the prompt payment in full of
all Obligations, the Company hereby pledges and grants to CIT a continuing
general lien upon, and security interest in, all of the Collateral. The security
interests granted hereunder shall extend and attach to all Collateral which is
presently in existence or hereafter acquired and which is owned by the Company
or in which the Company has any interest, whether held by the Company or by
others for the Company's account, and wherever located.
4.2 Nature of Security Interest. (a) The rights and security interests granted
to CIT hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that the Revolving Loan Account may,
from time to time, be temporarily in a credit position, until the termination of
this Agreement and the full and final payment and satisfaction of the
Obligations. Any reserves or balances to the credit of the Company (in the
Revolving Loan Account or otherwise), and any other property or assets of the
Company in the possession of CIT, may be held by CIT as Other Collateral, and
applied in whole or partial
15
satisfaction of such Obligations when due, subject to the terms of this
Agreement. The liens and security interests granted to CIT herein and any other
lien or security interest which CIT may have in any other assets of the Company
secure payment and performance of all present and future Obligations.
(b) Notwithstanding CIT's security interests in the Collateral, to the
extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral, or by the guaranty, endorsement, assets or
property of any other person, CIT shall have the right in its sole discretion to
determine which rights, security, liens, security interests or remedies CIT
shall at any time pursue, foreclose upon, relinquish, subordinate, modify or
take any other action with respect to, without in any way modifying or affecting
any of such rights, security, liens, security interests or remedies, or any of
CIT's rights under this Agreement.
4.3 Limited License. Regardless of whether CIT's security interests in any of
the General Intangibles has attached or is perfected, the Company hereby
irrevocably grants to CIT a royalty-free, non-exclusive license to use the
Company's trademarks, copyrights, patents and other proprietary and intellectual
property rights, in connection with the (i) advertisement for sale, and the sale
or other disposition of, any finished goods Inventory by CIT in accordance with
the provisions of this Agreement, and (ii) if applicable, the manufacture,
assembly, completion and preparation for sale of any unfinished Inventory by CIT
in accordance with the provisions of this Agreement.
4.4 Collateral Reporting. Until the termination of this Agreement and the full
and final payment and satisfaction of the Obligations, the Company agrees to
furnish to CIT the reports, documents and information listed in Section 4.1 of
the Schedule.
4.5 Collateral Representations, Warranties and Covenants.
4.5.1 Generally. The Company represents, warrants and agrees that: (a)
upon the filing of UCC financing statements covering the Collateral in all
required jurisdictions, this Agreement creates a valid, perfected and first
priority security interest in the Collateral in which a security interest may be
perfected by filing of a UCC financing statement in the appropriate state or
jurisdiction and the security interests granted herein constitute and shall at
all times constitute the first and only liens on the Collateral except for
Permitted Encumbrances; (b) the Company is, or will be at the time additional
Collateral is acquired by the Company, the absolute owner of the Collateral with
full right to pledge, sell, transfer and create a security interest therein,
free and clear of any and all claims or liens in favor of others except for
Permitted Encumbrances; and (c) the Company will, at its expense, forever
warrant and, at CIT's request, defend the same from any and all claims and
demands of any other person.
4.5.2 Agreements Regarding Accounts and Inventory. (a) The Company
represents and warrants to CIT that: (i) each Trade Account is, or will be when
an additional Trade Account is created, based on an actual and bona fide sale
and delivery of Inventory or rendition of services to customers, made by the
Company in the ordinary course of its business; (ii) the invoices evidencing any
such Trade Accounts are and will at all times be in the name of the Company;
(iii) the customers of the Company have accepted the Inventory or services, owe
and
16
are obligated to pay the full amounts stated in the invoices according to their
terms, without dispute, offset, defense, counterclaim or contra, except for
disputes and other matters arising in the ordinary course of business which the
Company has notified CIT pursuant to Section 4.4 hereof; and (iv) the Company's
Inventory is and will at all times be marketable in ordinary course of the
Company's business, and no Inventory has been or will be produced in violation
of the Fair Labor Standards Act (29 U.S.C. ss.201 et seq.), as amended.
(b) The Company agrees to issue credit memoranda promptly upon
accepting returns or granting allowances and to deliver to CIT copies of such
credit memoranda as and when required to do so under Section 4.4 hereof. In no
event shall prior recourse to any Account or other security granted to or by the
Company be a prerequisite to CIT's right to demand payment of any of the
Obligations. In addition, the Company agrees that CIT shall have no obligation
whatsoever to perform in any respect any of the Company's contracts or
obligations relating to the Accounts.
(c) The Company agrees not to acquire any Inventory on a consignment
basis, nor co-mingle its Inventory with any goods of its customers or any other
person (whether pursuant to any ▇▇▇▇ and hold sale or otherwise). The Company
agrees to safeguard, protect and hold all Inventory for CIT's account and to
make no sale or other disposition thereof except in the ordinary course of its
business, on open account and on commercially reasonable terms consistent with
the Company's past practices. Notwithstanding the ordinary course of the
Company's business and the Company's past practices, the Company agrees not to
sell Inventory on a consignment basis, nor retain any lien on or security
interest in any Inventory sold by the Company. As to any such sale, transfer,
lease or other disposition of Inventory, CIT shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Upon the occurrence of an Event of Default which has not been
waived in accordance with this Agreement and on notice from CIT, the Company
agrees that all returned, reclaimed or repossessed merchandise or goods shall be
set aside by the Company, marked with CIT's name (as secured party) and held by
the Company for CIT's account.
(d) Anything in this Financing Agreement to the contrary
notwithstanding, CIT and the Company acknowledge and agree that the
private-label Inventory manufactured by the Company for Walgreen Co. is
impressed with a trademark owned by Walgreen Co., and thus the sale and/or other
disposition thereof may be subject to certain limitations and restrictions.
There is no written agreement between the Company and Walgreen Co. relating to
such production or restrictions.
4.5.3 Agreements Regarding Equipment. The Company agrees to (i) maintain
its equipment (as defined in the UCC) in good and substantial repair and
condition, reasonable wear and tear excepted and (ii) make any and all repairs
and replacements when and where necessary.
4.5.4 Agreements Regarding General Intangibles. The Company represents and
warrants to CIT that as of the date hereof, the Company possesses all general
intangibles (as defined in the UCC) necessary to conduct the Company's business
as presently conducted. The Company agrees to maintain the Company's rights in,
and the value of, all such general intangibles, and to pay when due all payments
required to maintain in effect any licensed rights.
17
4.5.5 Letter of Credit Rights. The Company represents and warrants to CIT
that as of the date hereof, the Company is not the beneficiary of any letter of
credit.
4.5.6 Further Assurances. The Company agrees to comply with the
requirements of all state and federal laws in order to grant to CIT valid and
perfected first priority security interests in the Collateral. CIT is hereby
authorized by the Company to file from time to time any financing statements or
continuations, or amendments upon which CIT and the Company have agreed,
covering the Collateral without the Company's signature in accordance with the
provisions of the UCC. CIT shall provide the Company with notice of the filing
of any such financing statements or amendments. The Company hereby consents to
and ratifies the filing of any financing statements covering the Collateral by
CIT on or prior to the Effective Date. The Company agrees to do whatever CIT may
reasonably request, from time to time, by way of: (a) filing notices of liens,
financing statements, agreed upon amendments, renewals and continuations
thereof; (b) cooperating with CIT's agents and employees; (c) keeping Collateral
records; (d) transferring proceeds of Collateral to CIT's possession in
accordance with the terms hereof; (e) obtaining waivers from landlords,
warehousemen, third party processors and mortgagees; and (f) performing such
further acts as CIT may reasonably require in order to effect the purposes of
this Agreement.
SECTION 5 CONDITIONS PRECEDENT
5.1 Conditions Precedent to Initial Funding. Without limiting CIT's discretion
to make loans and financial accommodations hereunder, CIT will not make the
initial loans and financial accommodations hereunder unless the following
conditions precedent have been satisifed:
5.1.1 Loan Documents. The Company shall have executed and delivered to CIT
this Agreement and all Loan Documents required by CIT or its counsel to
consummate the lending arrangement contemplated between the Company and CIT.
5.1.2 Lien Searches. CIT shall have received tax, judgment, litigation,
and UCC searches from all jurisdictions reasonably required by CIT, and such
searches shall verify that CIT has a first priority security interest in the
Collateral and any other assets securing the Obligations, subject to Permitted
Encumbrances.
5.1.3 Insurance. The Company shall have delivered to CIT evidence
satisfactory to CIT that: (i) all insurance required by this Agreement is in
full force and effect and (ii) CIT has been named as loss payee with respect
thereto in a manner satisfactory to CIT.
5.1.4 UCC Filings. All UCC financing statements and similar documents
required to be filed in order to create in favor of CIT a first priority
perfected security interest in the Collateral and any other assets securing the
Obligations (to the extent that such a security interest may be perfected by a
filing under the UCC or applicable law) shall have been properly filed in each
office in each jurisdiction required. CIT shall have received (i) acknowledgment
copies of all such filings and (ii) evidence that all necessary filing fees,
taxes and other expenses related to such filings have been paid in full.
18
5.1.5 Resolutions. CIT shall have received a copy of the resolutions of
the Board of Directors, members or managers of the Company (as the case may be),
authorizing the execution, delivery and performance of the Loan Documents,
certified as the date hereof by the Secretary or manager of the Company (as the
case may be), together with a certificate of such Secretary or manager (as the
case may be) as to the incumbency and signature of the officers of the Company
executing such Loan Documents.
5.1.6 Organizational Documents. CIT shall have received a copy of the
Certificate or Articles of Incorporation of the Company, certified by the
Secretary of State of the state of its formation and a copy of the by-laws, as
amended through the date hereof, certified by the Secretary of the Company.
5.1.7 Officer's Certificate. CIT shall have received an executed officer's
certificate for the Company, satisfactory in form and substance to CIT,
certifying that as of the Effective Date, (a) the representations and warranties
contained herein are true and correct in all material respects, (b) the Company
is in compliance with all of the terms and provisions set forth herein and (c)
no Default or Event of Default has occurred.
5.1.8 Appraisals. CIT shall have received and be satisfied with an
appraisal of the Company's Inventory conducted by an appraiser selected by CIT.
5.1.9 Disbursement Authorizations. The Company shall have delivered to CIT
all wire transfer instructions for the initial and subsequent loans and/or
advances to be made under this Agreement in a form satisfactory to CIT.
5.1.10 Examination & Verification. CIT shall have completed and be
satisfied with an updated examination and verification of the Accounts,
Inventory and books and records of the Company.
5.1.11 Depository Accounts. The Company shall have established one or more
Depository Accounts and CIT, the Company and each depository bank maintaining
such Depository Accounts shall have entered into a depository account control
agreement, in form and substance satisfactory to CIT.
5.1.12 Opinions. Counsel for the Company shall have delivered to CIT an
opinion letter, in form and substance satisfactory to CIT.
5.1.13 Legal Restraints/Litigation. As of the Effective Date, there shall
be no (x) injunction, writ or restraining order restraining or prohibiting the
consummation of the financing arrangements contemplated under this Agreement, or
(y) suit, action, investigation or proceeding (judicial or administrative)
pending against the Company, any subsidiary of the Company or any of their
assets, which, in the opinion of CIT, if adversely determined, could have a
material adverse effect on the Company.
5.2 Conditions to Each Extension of Credit. Without limiting CIT's discretion to
make loans and financial accommodations hereunder, CIT will not make any loans
and financial accommodations hereunder (including, without limitation, the
initial extension of credit) unless
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the following conditions precedent are satisfied:
5.2.1 Representations and Warranties. Each of the representations and
warranties made by the Company in or pursuant to this Agreement, including all
representations and warranties in a borrowing base certificate, shall be true
and correct in all material respects on and as of the date of such loan or
financial accommodation as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date.
5.2.2 No Default or Material Adverse Change. No Default or Event of
Default shall have occurred and be continuing or would result from the making of
such loan or financial accommodation and no material adverse change shall have
occurred in the financial condition, business, prospects, profits, operations or
assets of the Parent, the Company or the Company's affiliates since the date of
the latest financial statements delivered to CIT prior to the Effective Date.
SECTION 6 REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company represents and
warrants to CIT as follows, and the Company covenants that the following
representations will continue to be true, and that the Company will at all times
comply with all of the following covenants until the termination of this
Agreement and the full and final payment and satisfaction of the Obligations:
6.1 Organization Matters; Collateral Locations. Section 1 of the Schedule
correctly and completely sets forth (a) the Company's exact name, as currently
reflected by the records of the Company's State of incorporation, (b) the
Company's State of incorporation, (c) the Company's federal employer
identification number and state organization identification number and (d) the
address of the Company's chief executive office and all locations of Collateral
other than Inventory in-transit.
6.2 Financial Condition. (a) The amount of the Company's assets, at fair
valuation, exceeds the book value of the Company's liabilities, (b) the Company
is generally able to pay its debts as they become due and payable, and (c) the
Company does not have unreasonably small capital to carry on its business as
currently conducted absent extraordinary and unforeseen circumstances. All
financial statements of the Company previously or hereafter furnished to CIT
present fairly, in all material respects, the financial condition of the Company
as of the date of such financial statements.
6.3 Power and Authority; Conflicts; Enforceability. (a) The Company has full
power and authority to execute and deliver this Agreement and the other Loan
Documents to which it is a party, and to perform all of the Company's
obligations thereunder.
(b) The execution and delivery by the Company of this Agreement and
the other Loan Documents to which it is a party, and the performance of the
Company's obligations thereunder, have been duly authorized by all necessary
corporate action, and do not (i) require any consent or approval of any director
or shareholder of the Company that has not been obtained, (ii) violate any term,
provision or covenant contained in the organizational documents of the Company
(such as the certificate or articles of incorporation or the by-laws), (iii)
violate,
20
or cause the Company to be in default under, any law, rule, regulation, order,
judgment or award applicable to the Company or its assets, or (iv) violate any
term, provision, covenant or representation contained in, or constitute a
default under, or result in the creation of any lien under, any loan agreement,
lease, indenture, mortgage, deed of trust, note, security agreement or pledge
agreement to which the Company is a signatory or by which the Company or any of
the Company's assets are bound or affected.
(c) This Agreement and the other Loan Documents to which the Company
is a party constitute legal valid and binding obligations of the Company,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, fraudulent transfer and other laws affecting
creditors' rights generally, and subject to general principles of equity,
regardless of whether considered in a proceeding at law or in equity.
(d) The Company agrees to qualify to do business, and to remain
qualified to do business and in good standing, in each jurisdiction where the
failure to so qualify or to remain qualified or in good standing, would have a
material adverse effect on the Company.
6.4 Compliance with Laws. The Company and the Company's properties are and will
continue to be in compliance with all federal, state and local acts, rules and
regulations, and all orders of any federal, state or local legislative,
administrative or judicial body or official, except to the extent the failure to
so comply would not have a material adverse effect on the Company. The Company
has obtained and will continue to maintain all permits, approvals,
authorizations and licenses necessary to conduct its business as presently
conducted, except to the extent the failure to have such permits, approvals,
authorizations or licenses would not have a material adverse effect on the
Company.
6.5 Environmental Matters. (a) None of the operations of the Company are the
subject of any federal, state or local investigation to determine whether any
remedial action is needed to address the presence or disposal of any
environmental pollution, hazardous material or environmental clean-up of any
real property now or previously owned or operated by the Company. No enforcement
proceeding, complaint, summons, citation, notice, order, claim, litigation,
investigation, letter or other communication from a federal, state or local
authority has been filed against or delivered to the Company, regarding or
involving any release of any environmental pollution or hazardous material on
any real property now or previously owned or operated by the Company.
(b) The Company has no known contingent liability with respect to
any release of any environmental pollution or hazardous material on any real
property now or previously owned or operated by the Company.
(c) The Company is and will continue to be in compliance with all
environmental statutes, acts, rules, regulations and orders applicable to the
operation of the Company's business, except to the extent that the failure to so
comply would not have a material adverse effect. The Company agrees to promptly
notify CIT in writing of (i) any expenditure (actual or anticipated) in excess
of $100,000 for environmental clean-up, environmental
21
compliance or environmental testing and (ii) the Company's receipt of notice
from any local, state or federal authority advising the Company of any
environmental liability (real or potential).
6.6 Pending Litigation. Except as previously disclosed by the Company to CIT in
writing, there exist no actions, suits or proceedings of any kind by or against
the Company pending in any court or before any arbitrator or governmental body,
or to the best of the Company's knowledge threatened against the Company, that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company.
6.7 Maintenance of Financial Records; Inspections. The Company agrees to
maintain books and records pertaining to the Collateral and the Company's
financial matters in such detail, form and scope as CIT reasonably shall require
and agrees that such books and records will reflect CIT's interest in the
Collateral. The Company agrees that CIT or its agents, upon at least twenty-four
(24) hours prior notice from CIT to the Company (except that during the
occurrence of a Default or Event of Default, no such notice shall be required),
may enter upon the Company's premises at any time during normal business hours,
and from time to time, in order to (i) examine and inspect the books and records
of the Company, and make copies thereof and take extracts therefrom, and (ii)
verify, inspect and perform physical counts and other valuations of the
Collateral and any and all records pertaining thereto. The Company irrevocably
authorizes all accountants and third parties to disclose and deliver directly to
CIT, at the Company's expense, all financial statements and information, books,
records, work papers and management reports generated by them or in their
possession regarding the Company or the Collateral. All out-of-pocket costs,
fees and expenses incurred by CIT in connection with such examinations,
inspections, physical counts and other valuations shall constitute Out-of-Pocket
Expenses.
6.8 Asset Appraisals. From time to time upon the request of CIT, the Company
agrees to permit CIT to perform appraisals of the Company's Inventory. The
Company agrees to reimburse CIT for the costs and expenses relating to (a) one
(1) Inventory appraisal in each calendar year, so long as no Event of Default
shall have occurred and remain outstanding and (b) all such appraisals performed
while an Event of Default remains outstanding. To the extent that the Company is
required by this Section 6.8 to reimburse CIT for CIT's costs and expenses
relating to appraisals, such costs and expenses shall constitute Out-of-Pocket
Expenses.
6.9 Insurance. The Company agrees to maintain insurance, including, without
limitation, insurance on its business and assets, under such policies of
insurance, with such insurance companies, in such reasonable amounts and
covering such insurable risks as are at all times reasonably satisfactory to
CIT. All policies covering the Inventory are, to be made payable to CIT, in case
of loss, under a standard non-contributory "lender" or "secured party" clause or
endorsement, and are to contain such other provisions as CIT may require to
fully protect CIT's interest in the Inventory and to any payments to be made
under such policies, including, without limitation, provisions (x) for not less
than thirty (30) days prior written notice to CIT of the exercise of any right
of cancellation or material change and (y) that CIT's right to payment under any
property insurance policy will not be invalidated by any act or neglect of, or
any breach of warranty or condition by, the Company or any party. All original
policies or true copies thereof are to be delivered to CIT, premium prepaid,
with such loss payable endorsement in CIT's favor. If the Company fails to
maintain such insurance on its assets and business, CIT may arrange for
22
such insurance, but at the Company's expense and without any responsibility on
CIT's part for: (i) obtaining the insurance; (ii) the solvency of the insurance
companies; (iii) the adequacy of the coverage; or (iv) the collection of claims.
CIT may apply any insurance proceeds to the cost of repairs, or replacement of
any Collateral and/or, at CIT's option, to payment of any of the Obligations in
any order or manner as CIT determines.
6.10 Taxes. The Company agrees to pay when due all taxes lawfully levied,
assessed or imposed upon the Company or the Collateral (including all sales
taxes collected by the Company on behalf of the Company's customers in
connection with sales of Inventory and all payroll taxes collected by the
Company on behalf of the Company's employees), unless the Company is contesting
such taxes in good faith, by appropriate proceedings, and is maintaining
adequate reserves for such taxes in accordance with GAAP. Notwithstanding the
foregoing, if a lien securing any taxes is filed in any public office, then the
Company shall pay all taxes secured by such lien immediately and remove such
lien of record promptly. Pending the payment of such taxes and removal of such
lien, CIT may, at its election and without curing or waiving any Event of
Default which may have occurred as a result thereof, (i) establish an
Availability Reserve in the amount of such taxes (or such other amount as CIT
shall deem appropriate in the exercise of its reasonable business judgment) or
(ii) pay such taxes on behalf of the Company, and the amount paid by CIT shall
become an Obligation which is due and payable on demand by CIT.
6.11 Anti-Money Laundering and Terrorism Regulations. The Company agrees to
comply with all applicable anti-money laundering and terrorism laws, regulations
and executive orders in effect from time to time (including, without limitation,
the USA Patriot Act (Pub. L. No. 107-56). The Company also agrees to ensure that
no person who owns a controlling interest in or otherwise controls the Company
is a person designated under Section 1(b), (c) or (d) of Executive Order No.
13224 (issued September 23, 2001) or any other similar Executive Order. The
Company acknowledges that CIT's performance hereunder is subject to compliance
with all such laws, regulations and executive orders, and in furtherance of the
foregoing, the Company agrees to provide to CIT all information about the
Company's ownership, officers, directors, customers and business structure as
CIT reasonably may require to comply with, such laws, regulations and executive
orders.
6.12 Financial and Other Reporting. The Company agrees that it will deliver to
CIT: (a) on a timely basis, the financial statements and/or information listed
in Section 5.1 of the Schedule; (b) notice of the occurrence of any Default or
Event of Default immediately upon knowledge thereof; and (c) from time to time,
such further information regarding the business affairs and financial condition
of the Company as CIT may reasonably request. In addition, should the Company
modify its accounting principles and procedures from those in effect on the
Effective Date, the Company agrees to prepare and deliver to CIT statements of
reconciliation in form and substance reasonably satisfactory to CIT.
6.13 Negative Covenants. The Company agrees not to:
6.13.1 Indebtedness. Incur or create any indebtedness, except for (a)
current indebtedness maturing in less than one (1) year and incurred in the
ordinary course of business for inventory, supplies, equipment, services, taxes
or labor, (b) Subordinated Debt, (c)
23
indebtedness arising under the Letters of Credit and this Agreement and (d) any
other indebtedness to which CIT has expressly consented in writing.
6.13.2 Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of (i) Collateral, except as otherwise specifically permitted by this Agreement,
or (ii) all or any substantial part of its assets, if any, which do not
constitute Collateral.
6.13.3 Pledge of Assets. Mortgage, assign, pledge, transfer or otherwise
permit any lien, charge, security interest, encumbrance or judgment (whether as
a result of a purchase money or title retention transaction, or other security
interest, or otherwise) to exist on any of the Collateral, whether now owned or
hereafter acquired, except for Permitted Encumbrances. 6.13.4 Corporate Change.
Merge, consolidate or otherwise alter or modify its corporate name, principal
place of business, structure, or existence, or enter into or engage in any
operation or activity materially different from that presently being conducted
by the Company.
6.13.5 Guaranty Obligations. Assume, guarantee, endorse, or otherwise
become liable upon the obligations of any person, firm, entity or corporation,
except by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;
6.13.6 Dividends and Distributions. Declare or pay any dividend or
distributions of any kind on, or purchase, acquire, redeem or retire, any of its
equity interests (of any class or type), except for (a) dividends payable solely
in stock or other equity interests and (b) so long as no Default or Event of
Default remains outstanding, dividends payable to the Parent in the ordinary
course of business and in accordance with past practices.
6.13.7 Restricted Payments. Make any payment of the principal of, or
interest on, any Subordinated Debt, or purchase, acquire or redeem any of the
Subordinated Debt, unless (x) such payment, purchase, acquisition or redemption
is expressly permitted by the terms of the applicable subordination agreement
and (y) no Default or Event of Default shall have occurred and remain
outstanding on the date on which such payment or transaction occurs, or would
occur as a result thereof.
6.13.8 Investments. (a) Create any new subsidiary, or (b) make any advance
or loan to, or any investment in, any firm, entity, person or corporation, or
(c) acquire all or substantially all of the assets of, or any capital stock or
any equity interests in, any firm, entity or corporation, other than current
investments of the Company in existing subsidiaries and, so long as no Default
or Event of Default remains outstanding, loans to the Parent and/or the
Company's affiliates in the ordinary course of business and in accordance with
past practices.
6.13.9 Related Party Transactions. (a) Enter into any transaction,
including, without limitation, any purchase, sale, lease, loan or exchange of
property, with any shareholder, officer, director, parent (direct or indirect),
subsidiary (direct or indirect) or other person or entity otherwise affiliated
with the Company, unless (i) such transaction otherwise complies with the
provisions of this Agreement, (ii) such transaction is for the purchase or sale
of goods or services rendered in the ordinary course of business and pursuant to
the reasonable requirements of the
24
Company, and upon standard terms and conditions and fair and reasonable terms,
no less favorable to the Company than the Company could obtain in a comparable
arms length transaction with an unrelated third party, and (iii) no Default or
Event of Default shall have occurred and remain outstanding at the time such
transaction occurs, or would occur after giving effect to such transaction, or
(b) pay any management, consulting or other similar fees to any shareholder,
director, subsidiary (direct or indirect) or other person or entity otherwise
affiliated with the Company other than the Parent.
SECTION 7 POWERS
The Company hereby authorizes CIT, or any person or agent CIT may
designate, at the Company's cost and expense, to exercise all of the following
powers, which authority shall be irrevocable until termination of this Agreement
and the full and final payment and satisfaction of all Obligations: (a) to
receive, take, endorse, sign, assign and deliver, all in the name of CIT or the
Company, any and all checks, notes, drafts, and other documents or instruments
relating to the Collateral; (b) to receive, open and dispose of all mail
addressed to the Company and to notify postal authorities to change the address
for delivery thereof to such address as CIT may designate; (c) to request from
customers indebted on Accounts at any time, in the name of CIT information
concerning the amounts owing on the Accounts; (d) to request from customers
indebted on Accounts at any time, in the name of the Company, in the name of a
certified public accountant designated by CIT or any other designee of CIT,
information concerning the amounts owing on the Accounts; (e) to transmit to
customers indebted on Accounts notice of CIT's interest therein and to notify
customers indebted on Accounts to make payment directly to CIT for the Company's
account; and (f) to take or bring, in the name of CIT or the Company, all steps,
actions, suits or proceedings deemed by CIT necessary or desirable to enforce or
effect collection of the Accounts. The powers set forth in clauses (b), (c), (e)
and (f) of this Section 7 may only be exercised if an Event of Default shall
have occurred and remain outstanding.
SECTION 8 EVENTS OF DEFAULT AND REMEDIES
8.1 Events of Default. Each of the following events shall constitute an "Event
of Default":
8.1.1 The failure of the Company to pay any of the Obligations when due;
8.1.2 The cessation of the business of the Company or the calling of a
meeting of the creditors of the Company for purposes of compromising its debts
and obligations;
8.1.3 The commencement by the Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership, assignment for the benefit of
creditors or similar proceedings under any federal or state law;
8.1.4 The commencement against the Company of any bankruptcy, insolvency,
arrangement, reorganization, receivership, assignment for the benefit of
creditors or similar proceeding under any federal or state law by creditors of
the Company, but only if such proceeding is not contested by the Company within
ten (10) days and not dismissed or vacated
25
within thirty (30) days of commencement, or any of the actions or relief sought
in any such proceeding shall occur or be authorized by the Company;
8.1.5 Any representation or warranty made or furnished by the Company to
CIT in this Financing Agreement, any other Loan Document or any certificate or
financial statement proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 5.2.1;
8.1.6 The breach or violation by the Company of any covenant contained in
this Financing Agreement (other than those referred to in Section 8.1.7 below),
provided that such breach or violation shall not be deemed to be an Event of
Default unless the Company fails to cure such breach or violation to CIT's
reasonable satisfaction within thirty (30) days from the date of such breach or
violation;
8.1.7 The breach or violation by the Company of any warranty,
representation or covenant contained in Sections 2.1.2, 4.4, 4.5.6, 6.12 and
6.13;
8.1.8 The occurrence of any default or event of default (after giving
effect to any applicable grace or cure period) under any of the other Loan
Documents, or any of the other Loan Documents ceases to be valid, binding and
enforceable in accordance with its terms;
8.1.9 The Company shall (i) engage in any "prohibited transaction" as
defined in ERISA, (ii) incur any "accumulated funding deficiency" as defined in
ERISA, (iii) incur any "reportable event" as defined in ERISA, (iv) terminate
any "plan", as defined in ERISA or (v) become involved in any proceeding in
which the Pension Benefit Guaranty Corporation shall seek appointment, or is
appointed, as trustee or administrator of any "plan", as defined in ERISA, and
with respect this subsection 8.1.9, such event or condition either (x) remains
uncured for a period of thirty (30) days from date of occurrence and (y) could,
in CIT's reasonable business judgment, subject the Company to any tax, penalty
or other liability having a material adverse effect on the Company;
8.1.10 The Parent ceases to own and control 100% of the voting equity of
the Company;
8.1.11 A final judgment for the payment of money in excess of $100,000 (to
the extent not covered by insurance as to which the carrier has been notified of
the potential claims and has not disputed coverage) shall be rendered against
the Company;
8.1.12 The occurrence of any default or event of default (after giving
effect to any applicable grace or cure periods) under any instrument or
agreement evidencing or governing (x) Subordinated Debt or (y) any other
indebtedness of the Company having a principal amount in excess of $100,000;
8.1.13 The Company shall modify the terms or provisions of any agreement,
instrument or other document relating to any Subordinated Debt without CIT's
prior written consent or make any payment, purchase, acquire or redeem of any
Subordinated Debt which is not
26
expressly not permitted by the terms of the subordination agreement with respect
to such Subordinated Debt in favor of CIT; or
8.1.14 Any other event shall have occurred that has had or could
reasonably be expected to have a material adverse effect on the Parent, the
Company or its affiliates.
8.2 Remedies With Respect to Outstanding Obligations. Upon the occurrence of a
Default or an Event of Default, at the option of CIT, all loans, advances and
extensions of credit provided for in Section 2 hereof shall be thereafter made
in CIT's sole discretion, and the obligation of CIT to make Revolving Loans and
to assist the Company in opening Letters of Credit, shall cease unless such
Default is cured to CIT's reasonable satisfaction or such Event of Default is
waived in accordance herewith. In addition, upon the occurrence of an Event of
Default, CIT may, at its option (a) declare all Obligations immediately due and
payable, (b) charge the Company the default rate of interest on all
then-outstanding or thereafter-incurred Obligations in lieu of the interest
provided for in Section 3.1.3 hereof, and (c) immediately terminate this
Agreement upon notice to the Company. Notwithstanding the foregoing, (x) CIT's
commitment to make loans, advances and extensions of credit provided for in
Section 2 hereof automatically shall terminate without any declaration, notice
or demand by CIT upon the commencement of any proceeding described in Sections
8.1.3 or 8.1.4 hereof, and (y) this Agreement automatically shall terminate and
all Obligations shall become due and payable immediately without any
declaration, notice or demand by CIT, upon the commencement of any proceeding
described in Section 8.1.3 hereof or the occurrence of an Event of Default under
Section 8.1.4 hereof. The exercise of any option is not exclusive of any other
option that may be exercised at any time by CIT.
8.3 Remedies With Respect to Collateral. Immediately after the occurrence of an
Event of Default, CIT may, at its option, to the extent permitted by applicable
law: (a) remove from any premises where same may be located any and all books
and records, computers, electronic media and software programs associated with
any Collateral (including electronic records, contracts and signatures
pertaining thereto), documents, instruments and files, and any receptacles or
cabinets containing same, relating to the Accounts, and CIT may use, at the
Company's expense, such of the Company's personnel, supplies or space at the
Company's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Company or CIT, and
generally shall have all other rights respecting the Accounts, including,
without limitation, the right to (i) accelerate or extend the time of payment,
(ii) settle, compromise, release in whole or in part any amounts owing on any
Accounts and (iii) issue credits in the name of the Company or CIT; (c) sell,
assign and deliver the Collateral and any returned, reclaimed or repossessed
merchandise, with or without advertisement, at public or private sale, for cash,
on credit or otherwise, at CIT's sole option and discretion, and CIT may bid or
become a purchaser at any such sale, free from any right of redemption, which
right is hereby expressly waived by the Company; (d) foreclose CIT's security
interests in the Collateral by any available judicial procedure, or take
possession of any or all of the Collateral without judicial process, and to
enter any premises where any Collateral may be located for the purpose of taking
possession of or removing the same; and (e) exercise any other rights and
remedies provided in law, in equity, by contract or otherwise. CIT shall have
the right, without notice or advertisement, to sell, lease, or otherwise dispose
of all or
27
any part of the Collateral whether in its then condition or after further
preparation or processing, in the name of the Company or CIT, or in the name of
such other party as CIT may designate, either at public or private sale or at
any broker's board, in lots or in bulk, for cash or for credit, with or without
warranties or representations (including, without limitation, warranties of
title, possession, quiet enjoyment and the like), and upon such other terms and
conditions as CIT in its sole discretion may deem advisable, and CIT shall have
the right to purchase at any such sale. If any Inventory shall require
rebuilding, repairing, maintenance or preparation, CIT shall have the right, at
its option, to do such of the aforesaid as is necessary, for the purpose of
putting the Inventory in such saleable form as CIT shall deem appropriate. The
Company agrees, at the request of CIT, to assemble the Inventory, and to make it
available to CIT at premises of the Company or elsewhere and to make available
to CIT the premises and facilities of the Company for the purpose of CIT's
taking possession of, removing or putting the Inventory in saleable form. If
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from CIT's
exercise of any of the foregoing rights (after deducting all Out-of-Pocket
Expenses relating thereto) shall be applied by CIT to the payment of the
Obligations, whether due or to become due, in such order as CIT may elect, and
the Company shall remain liable to CIT for any deficiencies, and CIT in turn
agrees to remit to the Company or its successors or assigns, any surplus
resulting therefrom. The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other right of CIT under applicable law or the other Loan Documents, all of
which shall be cumulative.
SECTION 9 TERMINATION
Except as otherwise provided in Section 8.2 hereof, CIT may terminate this
Agreement and the Revolving Line of Credit only as of the initial or any
subsequent Renewal Date, and then only by giving the Company at least thirty
(30) days prior written notice of termination. The Company may terminate this
Agreement at any time prior to any Renewal Date upon thirty (30) days prior
written notice to CIT. THIS AGREEMENT, UNLESS TERMINATED AS HEREIN PROVIDED,
SHALL AUTOMATICALLY CONTINUE FROM RENEWAL DATE TO RENEWAL DATE. All Obligations
shall become due and payable in full on the date of any termination hereunder.
Pending a final accounting of the Obligations, unless supplied with an indemnity
satisfactory to CIT, the Company shall pay to CIT in immediately available
funds, or CIT may withhold any credit balances in the Revolving Loan Account as
a cash reserve, an amount sufficient to cover any contingent Obligation then
outstanding, including, but not limited to, an amount equal to one hundred ten
percent (110%) of the face amount of any outstanding Letters of Credit. All of
CIT's rights, liens and security interests granted pursuant to the Loan
Documents shall continue after any termination of this Agreement until all
Obligations have been fully and finally paid and satisfied.
SECTION 10 GENERAL INDEMNITY
In addition to the Company's agreement to reimburse CIT for Out-of-Pocket
Expenses, but without duplication, the Company hereby agrees to indemnify CIT
and its officers, directors, employees, attorneys and agents (each, an
"Indemnified Party") from, and to defend and hold
28
each Indemnified Party harmless against, any and all losses, liabilities,
obligations, claims, actions, judgments, suits, damages, penalties, costs, fees,
expenses (including reasonable attorney's fees) of any kind or nature which at
any time may be imposed on, incurred by, or asserted against, any Indemnified
Party:
(a) as a result of CIT's exercise of (or failure to exercise) any of CIT's
rights and remedies hereunder, including, without limitation, (i) any sale or
transfer of the Collateral, (ii) the preservation, repair, maintenance,
preparation for sale or securing of any Collateral, and (iii) the defense of
CIT's interests in the Collateral (including the defense of claims brought by
the Company, as a debtor-in-possession or otherwise, any secured or unsecured
creditors of the Company, or any trustee or receiver in bankruptcy);
(b) as a result of any environmental pollution, hazardous material or
environmental clean-up relating to any real property now or previously owned or
operated by the Company, the Company's operation and use of any real property
now or previously owned or operated by the Company, and the Company's off-site
disposal practices;
(c) arising from or relating to (i) the maintenance and operation of any
Depository Account, (ii) any agreement or document relating to any Depository
Account to which any Indemnified Party is party and (iii) any action taken (or
failure to act) by any Indemnified Party with respect thereto;
(d) arising from any transactions or occurrences relating to Letters of
Credit established or opened for the Company's account, the Collateral relating
thereto and any drafts or acceptance thereunder, including any such loss, claim
or liability arising from any error, omission, negligence, misconduct or other
action taken by an Issuing Institution;
(e) in connection with any regulatory investigation or proceeding by any
regulatory authority or agency having jurisdiction over the Company; and
(f) otherwise relating to or arising out of the transactions contemplated
by this Agreement and the other Loan Documents, or any action taken (or failure
to act) by any Indemnified Party with respect thereto;
provided that, an Indemnified Party's conduct in connection with the any of the
foregoing matters does not constitute gross negligence or willful misconduct, as
finally determined by a court of competent jurisdiction, and provided further,
that the Company shall have no indemnification obligations under the Section 10
with respect to any losses, liabilities, obligations, claims, actions,
judgments, suits, damages, penalties, costs, fees and expenses to the extent
attributable to the failure by CIT or any of its employees, agents or other
representatives to act in a commercially reasonable manner in connection with
exercise by CIT of its rights and remedies with respect to the Collateral. This
indemnification shall survive the termination of this Agreement and the payment
and satisfaction of the Obligations. CIT may from time to time establish
Availability Reserves with respect to this indemnity as CIT may deem advisable
in the exercise of its reasonable business judgment, and upon termination of
this Agreement, CIT may hold such reserves as cash reserves as security for this
indemnity.
29
SECTION 11 MISCELLANEOUS
11.1 Waivers. The Company hereby waives diligence, demand, presentment, protest
and any notices thereof as well as notices of nonpayment, intent to accelerate
and acceleration. No waiver of an Event of Default by CIT shall be effective
unless such waiver is in writing and signed by CIT. No delay or failure of CIT
to exercise any right or remedy hereunder, whether before or after the happening
of any Event of Default, shall impair any such right or remedy, or shall operate
as a waiver of such right or remedy, or as a waiver of such Event of Default. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion. No single or partial exercise by CIT of
any right or remedy precludes any other or further exercise thereof, or
precludes any other right or remedy.
11.2 Entire Agreement; Amendments; Sale of Interest.
(a) This Agreement and the other Loan Documents: (a) constitute the entire
agreement between the Company and CIT; (b) supersede any prior agreements
(including the agreements set forth in any commitment letter); (c) may be
amended only by a writing signed by the Company and CIT; and (d) shall bind and
benefit the Company and CIT and their respective successors and assigns, except
that the Company shall not have the right to assign (by operation of law or
otherwise) its rights or obligations hereunder without the prior written consent
of CIT. Should the provisions of any other Loan Document conflict with the
provisions of this Agreement, the provisions of this Agreement shall apply and
govern.
(b) The Company hereby consents to CIT's participation, sale, assignment,
transfer or other disposition, at any time or times hereafter, of this Agreement
and any of the other Loan Documents, or of any portion hereof or thereof,
including, without limitation, CIT's rights, title, interests, remedies, powers,
and duties hereunder or thereunder. In the case of an assignment, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were "CIT" hereunder, and CIT shall be relieved,
to the extent of any such assignment, of all obligations hereunder upon any such
assignment. The Company agrees that it will use its best efforts to assist and
cooperate with CIT in any manner reasonably requested by CIT to effect the sale
of participations in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents. The Company further agrees that
CIT may disclose credit information regarding Borrower and its affiliates to any
potential participant or assignee, provided, that, before disclosing any then
confidential and non-public information concerning the Borrower or any of its
affiliates to any potential participant or assignee, CIT shall obtain in writing
from each such recipient appropriate confidentiality undertakings. .
11.3 Usury Limit. In no event shall the Company, upon demand by CIT for payment
of any indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith, CIT shall never be entitled to receive, charge or apply, as
interest on any indebtedness relating hereto, any amount in excess of the
maximum amount of interest permissible under applicable law. If CIT ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such.
30
If as a result, the entire principal amount of the Obligations is paid in full,
any remaining excess shall be refunded to the Company. This Section 11.3 shall
control every other provision of the Agreement, the other Loan Documents and any
other agreement made in connection herewith.
11.4 Severability. If any provision hereof or of any other Loan Document is held
to be illegal or unenforceable, such provision shall be fully severable, and the
remaining provisions of the applicable agreement shall remain in full force and
effect and shall not be affected by such provision's severance. Furthermore, in
lieu of any such provision, there shall be added automatically as a part of the
applicable agreement a legal and enforceable provision as similar in terms to
the severed provision as may be possible.
11.5 WAIVER OF JURY TRIAL; JUDICIAL REFERENCE; SERVICE OF PROCESS.
(a) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AND CIT EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREUNDER.
(b) THE COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR LOST PROFITS OR OTHER
SPECIAL OR CONSEQUENTIAL DAMAGES.
11.6 Notices. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (messages sent by e-mail or
other electronic transmission (other than by telecopier) shall not constitute a
writing, however any signature on a document or other writing that is
transmitted by e-mail or telecopier shall constitute a valid signature for
purposes hereof), and shall be deemed to have been validly served, given or
delivered when received by the recipient if hand delivered, sent by commercial
overnight courier or sent by facsimile, or three (3) Business Days after deposit
in the United States mail, with proper first class postage prepaid and addressed
to the party to be notified as follows:
(a) if to CIT, at: The CIT Group/Commercial Services, Inc.
Two Wachovia Center, Suite 2500
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Executive - Concord Keystone
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, at: Concord Keystone Sales Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇; or
31
(c) to such other address as any party
may designate for itself by like
notice.
11.7 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or by electronic transmission in "pdf" or other imaging format
shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement
by telefacsimile or electronic transmission also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability and binding
effect of this Agreement.
11.8 CHOICE OF LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES AN
EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION. 11.8
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and effective by their proper and duly authorized officers as of the
date set forth above.
CONCORD KEYSTONE SALES CORP. THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------ ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President - Finance, ▇▇▇ ▇▇▇▇▇▇▇▇, Vice President
Treasurer and Assistant Secretary
[Financing Agreement]
SCHEDULE TO FINANCING AGREEMENT
BETWEEN
CONCORD KEYSTONE SALES CORP.
AND
THE CIT GROUP/COMMERCIAL SERVICES, INC.
SECTION 1 COMPANY INFORMATION
(a) Name of Company: Concord Keystone Sales Corp.
(b) Type of Entity and State An Illinois corporation
of Incorporation/Formation:
(c) Federal Employer ID No.: ▇▇-▇▇▇▇▇▇▇
(d) State Organization No.: 56066748
(e) Chief Executive Office Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(f) Address where Collateral is (i) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
located, if different than above: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(g) Existing Liens: N/A
SECTION 2 FINANCIAL COMMITMENTS
2.1 Revolving Credit Limit: $15,000,000
2.2 Borrowing Base: At any time, an amount equal to the sum
at such time of:
(a) 90% of the outstanding Eligible
Accounts; plus
(b) the lesser of (i) the amount
described in clause (a) of this
definition or (ii) the sum of the
Inventory Formula Amount plus the
In-Transit Inventory Formula Amount;
minus
Schedule 1
(c) the amount of the Availability
Reserve in effect at such time.
Notwithstanding the foregoing to the
contrary, the In-Transit Inventory
Formula Amount shall comprise no more
than thirty-five percent (35%) of the
amount described in the foregoing clause
(b).
2.3 Additional Availability A reserve equal to (i) three (3) months
Reserves: rental payments or similar charges for
any of the Company's leased premises or
other Collateral locations (other than
the Company's headquarters location on
the date of this Financing Agreement and
the Company's premises subleased by the
Company on the Effective Date), and (ii)
three (3) months estimated payments
(plus any other fees or charges owing by
the Company) to any applicable
warehousemen or third party processor
(as determined by CIT in the exercise of
its reasonable business judgment);
provided that, any of the foregoing
amounts shall be adjusted from time to
time hereafter upon delivery to CIT of
an acceptable waiver agreement.
2.4 Letter of Credit Sub-Line: $10,000,000
SECTION 3 INTEREST, FEES AND EXPENSES
3.2 Loan Facility Fee: $56,250 on the Effective Date.
3.3 Line of Credit Fee: 0.20% per annum
3.4 Annual Renewal Fee: $28,125 on each Renewal Date.
3.5 Letter of Credit Guaranty Fee:
(a) Documentary Letters of On the first day of each month, 0.167%
Credit: on the daily average outstanding balance
during the immediately preceding month
(but in no event less than $100.00)
(b) Standby Letters of Credit: On the first day of each month, 0.167%
on the daily average outstanding balance
during the immediately preceding month
Schedule 2
SECTION 4 COLLATERAL
4.1 Collateral Reporting: See Annex A attached hereto.
SECTION 5 REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Financial Reporting: (a) within sixty (60) days after the
Effective Date, monthly projections of
the Company's consolidated balance
sheet, and consolidated statements of
profits and loss and cash flow of the
Company, prepared in accordance with
GAAP, as well as monthly projected
Availability for the Company for the
first and second fiscal quarters of the
Company's 2008 fiscal year;
(b) by November 30, 2007, monthly
projections of the Company's
consolidated balance sheet, and
consolidated statements of profits and
loss and cash flow of the Company,
prepared in accordance with GAAP, as
well as monthly projected Availability
for the Company for the third and fourth
fiscal quarters of the Company's 2008
fiscal year;
(c) within ninety (90) days after the
end of each fiscal year of the Parent, a
consolidated balance sheet as at the
close of such year, and consolidated
statements of profit and loss and cash
flow of the Parent for such year,
prepared in accordance with GAAP and
audited by independent public
accountants selected by the Parent and
satisfactory to CIT, together with (i)
the unqualified opinion of the
accountants preparing such financial
statements, (ii) an officer's
certificate substantially in the form
set forth on Annex B attached hereto,
signed by the treasurer or chief
financial officer of the Company, and
(iii) if requested by CIT after the
occurrence of a Default or Event of
Default, such accountants' management
practice letter;
(d) within forty-five (45) days after
the end of each fiscal quarter of the
Parent, a consolidated balance sheet as
at the close of such fiscal quarter, and
consolidated statements of profit and
loss and cash flow of the Parent for
such fiscal quarter and for the period
commencing on the first day of the
current fiscal year through the end of
such fiscal quarter, prepared in
accordance with GAAP
Schedule 3
and certified by the treasurer or chief
financial officer of the Parent (or any
other authorized officer satisfactory to
CIT);
(e) within thirty (30) days after the
end of each fiscal month of the Company,
(i) a consolidated balance sheet as at
the end of such month, (ii) consolidated
statements of profit and loss and cash
flow of the Company for such month and
for the period commencing on the first
day of the current fiscal year through
the end of such month, (iii) comparative
statements of profit and loss and cash
flow of the Company for the same month
and same fiscal year-to-date period in
the prior fiscal year, prepared in
accordance with GAAP and certified by
the treasurer or chief financial officer
of the Company (or any other authorized
officer satisfactory to CIT), and (iv)
an officer's certificate substantially
in the form set forth on Annex B
attached hereto, signed by the treasurer
or chief financial officer of the
Company;
(f) as and when filed by the Company,
copies of all (i) financial reports,
registration statements and other
documents filed by the Company with the
U.S. Securities and Exchange Commission,
as and when filed by the Company, and
(ii) upon CIT's request, annual reports
filed pursuant to ERISA in connection
with each benefit plan of the Company
subject to ERISA; and
(g) no later than thirty (30) days prior
to the beginning of each fiscal year of
the Company, monthly projections of the
Company's consolidated balance sheet,
and consolidated statements of profits
and loss and cash flow of the Company,
prepared in accordance with GAAP, as
well as monthly projected Availability
for the Company for such fiscal year.
SECTION 6: TERMINATION
Initial Renewal Date: October 16, 2008
Schedule 4
ANNEX A - Collateral Reporting Provisions
A. The Company agrees to furnish to CIT:
(1) At least once each week (but more frequently upon CIT's reasonable
request), a borrowing base certificate in form and substance satisfactory to
CIT, certified by the treasurer or chief financial officer of the Company (or
any other authorized officer satisfactory to CIT), updating Elgible Accounts
weekly and Eligible Inventory and Eligible In-Transit Inventory monthly,
together with such confirmatory schedules of Trade Accounts (in form and
substance satisfactory to CIT) weekly and such confirmatory schedules of
Inventory (in form and substance satisfactory to CIT) monthly, in each case, as
CIT reasonably may request. CIT, in its sole discretion, may permit the Company
to access CIT's System for the purpose (in addition to those set forth in
Section 2.1.7 of the Agreement) of completing and submitting borrowing base
certificates when required hereunder.
(2) On or before the fifteenth (15th) day of each month (but more
frequently upon CIT's reasonable request), a summary of Inventory (containing
such detail from the Company's perpetual inventory as CIT may require) as of the
last Business Day of the preceding week, together with information sufficient to
allow CIT to update the amount of ineligible Inventory.
(3) On or before the fifteenth (15th) day of each month (but more
frequently upon CIT's reasonable request), a detailed and summary aging report
of Trade Accounts existing as of the last day of the preceding month and a
roll-forward of Trade Accounts from the first day of the preceding month through
the last day of the preceding month, all in such form as CIT reasonably shall
require, certified by the treasurer or the chief financial officer of the
Company (or any other authorized officer satisfactory to CIT), together with (x)
a reconciliation, as of the last day of the preceding month, of the Company's
Trade Accounts aging report to the Company's general ledger, and (y) if required
by CIT, such other information sufficient to allow CIT to (A) reconcile, as of
the date of such report, the Company's Trade Accounts aging report to the
applicable borrowing base certificate delivered by the Company to CIT and (B)
update the amount of Eligible Accounts, Eligible In-Transit Inventory and
Eligible Inventory.
(4) On or before the fifteenth (15th) day of each month (but more
frequently upon CIT's reasonable request), an aged trial balance of all the
Company's accounts payable as of the last day of the preceding month.
(5) Prompt written disclosure of (x) all matters adversely affecting the
value, enforceability or collectibility of the Trade Accounts of the Company,
(y) all customer disputes, offsets, defenses, counterclaims, returns, rejections
and all reclaimed or repossessed merchandise or goods, and (z) all matters
adversely affecting the value or marketability of the Inventory, all in such
detail and format as CIT reasonably may require; provided that, to the extent
that any such matter would not have a material adverse effect on the Company,
the Company may disclose
Annex A-1
such matter to CIT when the Company provides CIT with the borrowing base
certificate described in clause (1) above.
(6) Prior written notice of any change in the location of any Collateral
and any material change in type, quantity, quality or mix of the Inventory.
(7) From time to time, access to the Company's computers, electronic
media, software programs (including any electronic records, contracts and
signatures) and such other documentation and information relating to the Trade
Accounts, Inventory and other Collateral as CIT reasonably may require.
B. The Company may deliver to CIT any borrowing base certificate, collateral
report or other material that the Company is required to deliver to CIT under
clauses (1), (2) and (3) of Section A of this Annex A by e-mail or other
electronic transmission (an "Electronic Transmission"), subject to the following
terms:
(1) Each Electronic Transmission must be sent by the treasurer or chief
financial officer of the Company (or any other authorized officer satisfactory
to CIT), and must be addressed to the loan officer and the collateral analyst of
CIT that handle the Company's account, as designated by CIT from time to time.
If any Electronic Transmission is returned to the sender as undeliverable, the
material included in such Electronic Transmission must be delivered to the
intended recipient in the manner required by Section 11.6 of the Agreement.
(2) Each certificate, collateral report or other material contained in an
Electronic Transmission must be in a "pdf" or other imaging format and, to the
extent that such material must be certified by an officer of the Company under
this Annex A, must contain the signature of the officer submitting the
Electronic Transmission. As provided in Section 11.7, any signature on a
certificate, collateral report or other material contained in an Electronic
Transmission shall constitute a valid signature for purposes hereof. CIT may
rely upon, and assume the authenticity of, any such signature, and any material
containing such signature shall constitute an "authenticated" record for
purposes of the Uniform Commercial Code and shall satisfy the requirements of
any applicable statute of frauds.
(3) The Company agrees to maintain the original versions of all
certificates, collateral reports and other materials delivered to CIT by means
of an Electronic Transmission and agrees to furnish to CIT such original
versions within five (5) Business Days of CIT's request for such materials,
signed and certified (to the extent required hereunder) by the officer
submitting the Electronic Transmission.
C. The Company hereby authorizes CIT to regard the Company's printed name or
rubber stamp signature on assignment schedules or invoices as the equivalent of
a manual signature by one of the Company's authorized officers or agents. The
Company's failure to promptly deliver to CIT any schedule, report, statement or
other information set forth in this Annex A shall not affect, diminish, modify
or otherwise limit CIT's security interests in the Collateral.
Annex A-2
ANNEX B
FORM OF COMPLIANCE CERTIFICATE
[Date]
The CIT Group/Commercial Services, Inc.
Two Wachovia Center, Suite 2500
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Financing Agreement dated as of October 16, 2007 (as amended, the
"Financing Agreement") between The CIT Group/Commercial Services,
Inc. ("CIT") and Concord Keystone Sales Corporation (the "Company")
Ladies and Gentlemen:
Reference is made to the Financing Agreement. Capitalized terms used
herein and not specifically defined shall have the meanings given to such terms
in the Financing Agreement.
Pursuant to Sections 4.4 and 6.12 of the Financing Agreement, I enclose:
(a) the Company's financial statements for the month ended _______, 200__ (the
"Reporting Month") and the fiscal year-to-date period ended _______, 200__; and
(b) a borrowing base certificate as of the last day of the Reporting Month,
together with a detailed and summary aging report of Trade Accounts existing as
of the last day of the Reporting Month and a roll-forward of Trade Accounts from
the first day of the Reporting Month through the last day of the Reporting
Month.
As the ________ of the Company, I hereby certify to CIT that: (a) the
financial statement(s) fairly and accurately represent the Company's financial
condition at the end of the particular accounting periods covered by such
financial statements, as well as the Company's operating results during such
accounting periods, subject to year-end accountant reviewed adjustments; (b) the
borrowing base certificate is true, correct, and based on information contained
in the Company's own financial accounting records; (c) during the Reporting
Month, (i) to my knowledge, there has occurred no Default or Event of Default
under the Financing Agreement, or, if I have knowledge that any Default or Event
of Default has occurred during such period, a detailed description thereof is
set forth on the Exhibit __ attached hereto, and (ii) the Company has not
received any notice of cancellation with respect to its property insurance
policies; and (d) Exhibit __ attached hereto sets forth detailed calculations
showing compliance with all financial covenants contained in the Financing
Agreement, for the periods of measurement covered by or ending on the last day
of the Reporting Month.
Very truly yours,
[attach appropriate exhibits]
ANNEX C
CIT STANDARD FEE SCHEDULE FOR
DOCUMENTARY LETTERS OF CREDIT
Transaction Fee
Issuance
(a) Processing Fee $70.00
(b) Cable Fee $35.00
Amendments
(a) L/C Amount Increase 0.25% of the increased amount
(b) Processing Fee
- First Four Amendments $95.00
- After Fourth Amendment $130.00
(c) Cable Fee $10.00
Guarantees $50.00
Plus: Processing Fee $50.00
Discrepancies $75.00
Cancellations $50.00
Unutilized L/C Fee $100.00
Payments
(a) Sight $20.00 plus 0.125% of amount
(but in no event less than
$55.00 per set)
(b) Time $30.00 plus 1.5% per annum on
draft amount for term (but in no
event less than $70.00)