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FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS AGENT AND LENDER)
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
(AS LENDERS)
AND
TWIN LABORATORIES INC.,
ADVANCED RESEARCH PRESS, INC.,
CHANGES INTERNATIONAL, INC.,
PR NUTRITION, INC.,
HEALTH FACTORS INTERNATIONAL, INC.,
AND
▇▇▇▇▇▇▇ LABORATORIES, INC.
(AS BORROWERS)
DATED: MARCH 29, 2001
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS............................................... 1
SECTION 2. CONDITIONS PRECEDENT...................................... 16
SECTION 3. REVOLVING LOANS........................................... 21
SECTION 4. TERM LOAN................................................. 26
SECTION 5. COLLATERAL................................................ 27
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS................. 30
SECTION 7. INTEREST, FEES AND EXPENSES............................... 39
SECTION 8. POWERS.................................................... 41
SECTION 9. EVENTS OF DEFAULT AND REMEDIES............................ 42
SECTION 10. TERMINATION............................................... 46
SECTION 11. MISCELLANEOUS............................................. 46
SECTION 12. AGREEMENT BETWEEN THE LENDERS............................. 48
SECTION 13. AGENCY.................................................... 50
SECTION 14. LETTERS OF CREDIT......................................... 54
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EXHIBITS
Exhibit A - Form of Lockbox Agreement
Exhibit B - Form of Term Loan Promissory Note (New York)
Exhibit C - Form of Assignment and Transfer Agreement
SCHEDULES
Schedule 1 -- Collateral Information
Schedule 2 - Permitted Indebtedness
Schedule 3 - Permitted Investments
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FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, with offices
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(hereinafter "CIT"), and CIT as agent for the Lenders (the "Agent"), and any
other party which now or hereafter becomes a lender hereunder pursuant to
Section 12.9 hereof (individually a "Lender" and collectively the "Lenders") are
pleased to confirm the terms and conditions under which the Agent shall make
revolving loans, a term loan and other financial accommodations to TWIN
LABORATORIES INC., a Utah corporation with a principal place of business at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (herein "TLI"), ADVANCED RESEARCH
PRESS, INC., a New York corporation with a principal place of business at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (herein "ARP"), CHANGES INTERNATIONAL,
INC., a Florida corporation with a principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (herein "CII"), PR NUTRITION, INC., a
California corporation with a principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (herein "PR Nutrition"), HEALTH FACTORS
INTERNATIONAL, INC., a Delaware corporation with a principal place of business
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (herein "HFI") and ▇▇▇▇▇▇▇
LABORATORIES, INC., a Delaware corporation with a principal place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (herein "▇▇▇▇▇▇▇", and individually
a "Company" and collectively with TLI, ARP, CII, PR Nutrition and HFI, the
"Companies").
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of each of the Companies' now existing and future: (A)
accounts (as defined in the UCC), and any and all other receivables (whether or
not specifically listed on schedules furnished to the Agent), including, without
limitation, all accounts created by, or arising from, all of each of the
Companies' sales, leases, rentals of goods or renditions of services to their
customers, including but not limited to, those accounts arising under any of the
Companies' trade names or styles, or through any of the Companies' divisions;
(B) any and all instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the UCC); (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 hereto; (F) guarantees, supporting obligations,
payment intangibles and letter of credit rights (all as defined in the UCC); (G)
insurance policies or rights relating to any of the foregoing; (H) general
intangibles pertaining to any and all of the foregoing (including all rights to
payment, including those arising in connection with bank and non-bank credit
cards), and including books and records and any electronic media and software
thereto; (I) notes, deposits or property of account debtors securing the
obligations of any such account debtors to the Companies or any one of them; and
(J) cash and non-cash proceeds (as defined in the UCC) of any and all of the
foregoing.
AFFILIATE shall mean, as to any person or entity, any other person or entity
(other than a subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such person or entity. For
purposes of this definition, "control" of a person or entity means the power,
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directly or indirectly, to direct or cause the direction of the management and
policies of such person or entity, whether by contract or otherwise.
ANNIVERSARY DATE shall mean the date occurring three (3) years from the Closing
Date and the same date in every year thereafter.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and Transfer
Agreement in the form of Exhibit C hereto
AVAILABILITY shall mean, as to the Collective Borrowers at any time of
calculation, the amount by which: (a) the CB Borrowing Base exceeds (b) the
outstanding aggregate amount of all of the Collective Borrowers' Obligations,
including without limitation, all Obligations with respect to Revolving Loans,
including the Term Loan, and shall mean, as to TLI at any time of calculation,
the amount by which: (a) the TLI Borrowing Base exceeds (b) the outstanding
aggregate amount of all of TLI's Obligations, including without limitation, all
Obligations with respect to Revolving Loans and the Term Loan, but excluding the
Letters of Credit; provided that in the calculation of Availability, the
Obligations of a Borrower shall not be accounted for more than once (i.e., joint
and several liability, including that relating to the Term Loan, shall not
reduce the amount of Availability).
AVAILABILITY RESERVE shall mean, as to any Company at any time of calculation,
the sum of: (a) (i) three months then applicable rental payments or similar
charges for any of such Company's leased premises at which is located Collateral
of a material amount (in Agent's determination) and for which such Company has
not delivered to the Agent a landlord's waiver in form and substance reasonably
satisfactory to the Agent, plus (ii) three months estimated payments plus any
other fees or charges owing by such Company to any applicable warehousemen or
third party processor that has not executed a notice of security interest
agreement in form and substance reasonably satisfactory to Agent (as determined
by the Agent in its reasonable business judgement but not in excess of the value
of the Eligible Inventory or Equipment Collateral located thereat), provided
that any of the foregoing amounts shall be increased or decreased from time to
time hereafter to take into account any (x) delivery to the Agent of any such
acceptable waiver, (y) opening or closing of a Collateral location and/or (z)
change in the amount of the then applicable rental, storage or processor
payments or similar charges; (b) the value of finished packaged goods Inventory
in excess of 12-months of the applicable Company's sales of packaged goods
Inventory; (c) any reserve which the Agent may reasonably require from time to
time pursuant to this Financing Agreement, including without limitation, for
Letters of Credit pursuant to Paragraph 14.1 of Section 14 hereof; (d)
$5,000,000 from and after the date of delivery to Agent of the Companies
consolidated, audited financial statements for the 2001 Fiscal Year and
continuing thereafter throughout the term hereof unless otherwise agreed by
Agent, in its discretion; and (e) and such other reserves as Agent deems
necessary in its commercially reasonable judgment as a result of x) negative
forecasts and/or trends in the Companies' (taken as a whole) business, industry,
prospects, profits, operations or financial condition or y) other issues,
circumstances or facts that could otherwise negatively impact the Companies
(taken as whole), their business, prospects, profits, operations, industry,
financial condition or assets.
BLECHMANS means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
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BLECHMANS AGREEMENT REGARDING LETTERS OF CREDIT means that certain letter
agreement, dated of even date herewith, between the Agent and the Blechmans
respecting certain terms and drawing conditions of the Blechmans Letters of
Credit.
BLECHMANS CONTROL AGREEMENT means the Control Agreement, dated on or about the
date hereof, among ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, Agent, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
BLECHMANS GUARANTY means that certain Guaranty, dated of even date herewith,
executed by ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ as guarantors.
BLECHMANS INTERCREDITOR AGREEMENT means that certain Intercreditor Agreement,
dated of even date herewith, among ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ and Agent.
BLECHMANS LETTERS OF CREDIT means one or more irrevocable standby letters of
credit in the aggregate original face amount of $15,000,000, issued for the
account of the Blechmans and issued to the Agent, as beneficiary, for the
benefit of the Lenders.
BLECHMANS SECURITY AGREEMENT means the Security Agreement - Securities Pledge,
dated of even date herewith, between the ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, as debtor, and
Agent, as secured party.
BLOCKED ACCOUNT shall mean each Depository Account owned by a Company which is
governed by a lockbox and blocked account or similar agreement in form
substantially similar to Exhibit A hereto and which account is subject to the
written instructions only from one or more of the Companies unless and until the
Agent shall give the institution holding such account written instructions to
the contrary in accordance with the terms of Section 3.4 hereof.
BORROWING BASE shall mean the CB Borrowing Base, the TLI Borrowing Base, or
both, as applicable.
BUSINESS DAY shall mean any day on which the Agent and The Chase Manhattan Bank
are open for business.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate expenditures of
the Companies during such period on account of, property, plant, equipment or
similar fixed assets that, in conformity with GAAP, are required to be reflected
as fixed assets in the balance sheet of the Companies.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure in the balance sheet of the Companies.
CB BORROWING BASE shall mean, as to the Collective Borrowers, the sum of (a) the
lesser of (x) eighty-five percent (85%) of the Collective Borrowers' aggregate
outstanding Eligible Accounts Receivable, or (y) the amount of the cash
collections received in respect of the Collective Borrowers' Trade Accounts
Receivable during the preceding 75 days, plus (b) the lesser of (i) seventeen
percent (17%) of the aggregate value of the Collective Borrowers' Eligible
Inventory consisting of raw materials, thirty five percent (35%) of the
aggregate value of the Collective Borrowers' Eligible Inventory consisting of
bulk finished goods, and sixty percent (60%) of the aggregate value of the
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Collective Borrowers' Eligible Inventory consisting of packaged finished goods
inventory, in each case valued at the lower of cost or market, on a first in,
first out basis, (ii) eighty percent (80%) of the appraised aggregate net
orderly liquidation value of the Collective Borrowers' Eligible Inventory, or
(iii) the Inventory Loan Cap (less amount of then outstanding advances made to
TLI against TLI's Eligible Inventory), less (c) any applicable Availability
Reserves; provided that in the event that at any time the CB Borrowing Base
exceeds fifteen percent (15%) of the TLI Borrowing Base, Agent shall have the
right to treat one or more of the Collective Borrowers as separate and
independent borrowers hereunder, each subject to separate and independent
borrowing bases.
CHASE BANK RATE shall mean the rate of interest per annum announced by The Chase
Manhattan Bank or its successors from time to time as its prime rate in effect
at its principal office in New York City. The prime rate is not intended to be
the lowest rate of interest charged by The Chase Manhattan Bank to its
borrowers.
CHASE BANK RATE MARGIN shall mean one and one-half (1.5) percentage points.
CHASE BANK RATE LOANS shall mean any loans or advances pursuant to this
Financing Agreement made or maintained at a rate of interest based upon the
Chase Bank Rate.
CLOSING DATE shall mean the date that this Financing Agreement has been duly
executed by the parties hereto and delivered to the Agent.
COLLATERAL shall mean all present and future Accounts, Equipment, Inventory,
Documents of Title, General Intangibles, Real Estate, pledged stock of the
Companies' subsidiaries and Other Collateral of each of the Companies. In
addition, the Collateral shall include, to the extent not included in the
foregoing, the following property of each Company: (a) investment property,
documents, instruments, deposit accounts, letter-of-credit rights, accounts,
chattel paper, commercial tort claims, goods, equipment, fixtures, inventory and
general intangibles as such terms are defined under the Uniform Commercial Code;
and (b) all cash and other monies and property in the possession or control of
any Lender, all books, records, ledger cards, 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 all cash and non-cash proceeds of any of the
foregoing.
COLLECTIVE BORROWERS shall mean ARP, CII, PR Nutrition, ▇▇▇▇▇▇▇ and HFI.
COMMITMENT shall mean each Lender's commitment in accordance with this Financing
Agreement to make Revolving Loans (the "Revolving Credit Commitment") and the
Term Loan funding (the "Term Loan Commitment"), in the amount of their
respective pro rata share set forth opposite such Lender's name on the signature
pages hereof, or in the Assignment and Transfer Agreement executed by such
Lender by which it becomes a Lender hereunder, as such pro rata share may be
adjusted pursuant to Assignment and Transfer Agreements executed pursuant to
Section 12.9 hereof.
CONSOLIDATED FINANCIAL STATEMENT shall mean a consolidated balance sheet, income
statement, cash flow statement and statement of stockholders' equity for the
Parent, the Companies and their subsidiaries, if any, eliminating all
inter-company transactions and prepared in accordance with GAAP, except that
monthly and quarterly financial statements need not have footnotes.
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CONSOLIDATING FINANCIAL STATEMENT shall mean a Consolidated Financial Statement
plus individual balance sheets, income statements, cash flow statements and
statements of stockholders' equity for each Company and other subsidiary of
Parent showing all elimination of inter-company transactions and prepared in
accordance with GAAP and including a balance sheet for each Company and Parent,
exclusively, except that monthly and quarterly financial statements need not
have footnotes.
COPYRIGHTS shall mean all of each of the Companies' present and hereafter
acquired copyrights, copyright registrations, recordings, applications, designs,
styles, licenses, marks, prints and labels bearing any of the foregoing,
goodwill, any and all general intangibles, intellectual property and rights
pertaining thereto, and all cash and non-cash proceeds thereof.
CURRENT ASSETS shall mean those assets of the Companies which, in accordance
with GAAP, are classified as current.
CURRENT LIABILITIES shall mean those liabilities of the Companies which, in
accordance with GAAP, are classified as "current," provided however, that,
notwithstanding GAAP, the Revolving Loans and the current portion of Permitted
Indebtedness shall be considered "current liabilities."
DEFAULT shall mean any event specified in Section 9 hereof, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum on any
Obligations hereunder, equal to the sum of: (a) two percent (2%) and (b) the
applicable increment over the Chase Bank Rate (as set forth in paragraph 7.1
hereof) plus the Chase Bank Rate, which the Agent shall be entitled to charge
the Companies on all Obligations due the Agent on behalf of the Lenders by the
Companies, as further set forth in Paragraph 9.2 of Section 9 of this Financing
Agreement.
DEPOSITORY ACCOUNTS shall mean those accounts which are designated for the
collection of proceeds of Collateral as more fully provided in Paragraph 3.4 of
Section 3 of this Financing Agreement.
DOCUMENTATION FEE shall mean Agent's standard and reasonable fees relating to
any and all modifications, waivers, releases, amendments or additional
collateral with respect to this Financing Agreement, the Collateral and/or the
Obligations.
DOCUMENTS OF TITLE shall mean all of each of the Companies' present and future
documents (as defined in the UCC), and any and all warehouse receipts, bills of
lading, shipping documents, chattel paper, instruments and similar documents,
all whether negotiable or not and all goods and Inventory relating thereto and
all cash and non-cash proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Companies or any one of
them terminates this Financing Agreement or the Revolving Line of Credit which
date is prior to an Anniversary Date. Notice of termination, as aforesaid, by
any one Company shall be deemed to be notice by the Companies for purposes
hereof.
EARLY TERMINATION FEE shall: (A) mean the fee the Agent on behalf of the Lenders
is entitled to charge the Companies in the event the Companies or any one of
them terminates the Revolving Line of Credit or this Financing Agreement on a
date prior to an Anniversary Date; and (B) be determined by multiplying the Line
of Credit by two percent (2%).
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EBITDA shall mean, in any period, all consolidated earnings of the Companies and
their consolidated Subsidiaries before all (i) interest and tax obligations,
(ii) depreciation and (iii) amortization for said period, all determined in
accordance with GAAP on a consistent basis with the latest audited financial
statements of the Companies, but excluding the effect of extraordinary and/or
non-reoccurring gains or losses for such period.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean, as to any Company, the gross amount of
such Company's Trade Accounts Receivable that are subject to a valid, exclusive,
first priority and fully perfected security interest in favor of the Agent, on
behalf of the Lenders, which conform to the warranties contained herein and
which, at all times, continue to be acceptable to the Agent in the exercise of
its reasonable business judgment, less, without duplication, the sum of: (a) any
returns, discounts, claims, credits and allowances of any nature (whether
issued, owing, granted, claimed or outstanding), and (b) reserves for any such
Trade Accounts Receivable 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 agency, department or division thereof, except for any such sales as to
which such Company has complied with the Assignment of Claims Act of 1940 or any
other applicable statute, rules or regulation, to the Agent'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 the Agent) issued or confirmed by, and payable at, banks having
a place of business in the United States of America, or (y) to customers
residing in Canada to the extent such Accounts do not exceed $2,000,000 in the
aggregate at any one time; (iii) Accounts that remain unpaid more than 90 days
from invoice date (120 days with respect to General Nutrition Corporation) or 60
days from due date; (iv) contra accounts; (v) sales to Parent, any other
Company, any subsidiary, or to any company affiliated with the Companies or
Parent in any way; (vi) ▇▇▇▇ and hold (deferred shipment) or consignment sales;
(vii) sales to any customer which is: (A) insolvent, (B) the debtor in any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, (C) negotiating, or has called a
meeting of its creditors for purposes of negotiating, a compromise of its debts,
or (D) financially unacceptable to the Agent or has a credit rating unacceptable
to the Agent; (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 90 days from invoice date (120 days with respect to General
Nutrition Corporation) or 60 days from due date; (ix) pre-billed receivables and
receivables arising from progress billing; (x) an amount representing,
historically, returns, discounts, claims, credits, allowances and applicable
terms; (xi) sales not payable in United States currency; (xii) sales to any
customer and/or its affiliates to the extent such sales exceed at any one time
twenty five percent (25%) (until June 30, 2001, 50% with respect to General
Nutrition Corporation) or more of all Eligible Accounts Receivable; and (xiii)
any other reasons deemed necessary by the Agent in its reasonable judgment, and
which are customary either in the commercial finance industry or in the lending
practices of the Agent and/or the Lenders.
ELIGIBLE INVENTORY shall mean, as to any Company, the gross amount of such
Company's Inventory which consists of raw materials, bulk finished goods (i.e.,
products which have been refined, processed or manufactured and are held in bulk
but not yet packaged) or packaged finished goods and that is subject to a valid,
exclusive, first priority and fully perfected security interest in favor of the
Agent (subject to Permitted Encumbrances consisting of warehouseman possessory
liens), on behalf of the Lenders, and which conforms to the warranties contained
herein and which, at all times, continues to be acceptable to the Agent in the
exercise of its reasonable business judgment, less, to
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the extent otherwise included in Eligible Inventory, without duplication, any
(a) work-in-process, (b) supplies (other than raw materials), (c) Inventory not
present in the United States of America, (d) Inventory returned or rejected by
any of the Company's customers (except to the extent such Inventory has been
determined to be saleable, pursuant to ordinary course quality control and
assurance procedures, by such Company in the ordinary course of business) and
goods to be returned to a Company's suppliers, (e) Inventory in transit to third
parties (other than a Company's agents or warehouses), or in the possession of a
warehouseman, bailee, third party processor, or other third party, unless such
warehouseman, bailee or third party has executed a notice and acknowledgement of
security interest agreement (in form and substance satisfactory to the Agent)
and the Agent shall have a first priority perfected security interest in such
Inventory or such lack of an agreement with respect to such Inventory shall have
otherwise been reserved for under Availability Reserves, and (f) less any
reserves required by the Agent in its reasonable discretion, including without
limitation for special order goods, discontinued, slow-moving and obsolete
Inventory, market value declines, ▇▇▇▇ and hold (deferred shipment), consignment
sales, shrinkage, any applicable customs, freight, duties and Taxes,
deterioration in Inventory turnover respecting raw materials, bulk finished
goods and packaged goods Inventory, and cost variance between standard and
actual Inventory costs.
EQUIPMENT shall mean all of each Companies' present and hereafter acquired
equipment (as defined in the UCC) including, without limitation, all machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto and all proceeds thereof of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 9 of this
Financing Agreement.
EXISTING LENDER shall mean The Chase Manhattan Bank.
FEE LETTER shall mean that certain letter agreement, dated on or about the date
hereof, among CIT and the Companies.
FINANCING LEASE shall mean any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
FINANCING LEASE OBLIGATIONS shall mean as to any Person, the obligations of such
Person to pay rent or other amounts under any Financing Lease; the amount of
such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
FISCAL QUARTER shall mean, with respect to the Companies, each three (3) month
period ending on March 31, June 30, September 30, and December 31 of each Fiscal
Year.
FISCAL YEAR shall mean each twelve (12) month period commencing on January 1 of
each year and ending on the following December 31.
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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, provided that in the event the Companies
modify their accounting principles and procedures as applied as of the Closing
Date, the Companies shall provide to the Agent and the Lenders such statements
of reconciliation as shall be in form and substance acceptable to the Agent.
GENERAL INTANGIBLES shall mean all of each of the Companies' present and
hereafter acquired general intangibles (as defined in the UCC), and shall
include, without limitation, all present and future right, title and interest in
and to: (a) all Trademarks, tradenames, corporate names, business names, logos
and any other designs or sources of business identities, (b) Patents, together
with any improvements on said Patents, utility models, industrial models, and
designs, (c) Copyrights, (d) trade secrets, (e) licenses, permits and
franchises, (f) all applications with respect to the foregoing, (g) all right,
title and interest in and to any and all extensions and renewals, (h) goodwill
with respect to any of the foregoing, (i) any other forms of similar
intellectual property, (j) all customer lists, distribution agreements, supply
agreements, blue prints, indemnification rights and tax refunds, together with
all monies and claims for monies now or hereafter due and payable in connection
with any of the foregoing or otherwise, and all cash and non-cash proceeds
thereof, including, without limitation, the proceeds or royalties of any
licensing agreements between any Company and any licensee of any such Company's
General Intangibles.
GUARANTIES shall mean the guaranty documents executed and delivered by the
Guarantors guaranteeing the Obligations.
GUARANTORS shall mean (i) the Parent, (ii) each of the Companies, and (iii)
Twinlab FSC Inc., a Barbados corporation.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money, or the issuance of letters of credit or for the deferred
purchase price of property, services or assets, other than trade accounts
payable and other current liabilities (other than for borrowed money) arising in
the ordinary course of business and other than compensation, pension obligations
and other obligations arising from employee benefits in the ordinary course of
business, or (b) lease obligations which, in accordance with GAAP, have been, or
which should be capitalized.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTELLECTUAL PROPERTY SECURITY AGREEMENT shall mean a security agreement
executed by the Companies, in form and substance reasonably acceptable to Agent,
by which the Companies grant a security interest and lien in all of their
respective patents, trademarks, and copyrights to Agent.
INTEREST EXPENSE shall mean the total interest expense of the Companies,
determined in accordance with GAAP, on a consistent basis with the latest
audited statements of the Companies, provided that amortization of deferred
financing costs shall not be included in Interest Expense.
INVENTORY shall mean all of each of the Companies' present and hereafter
acquired inventory (as defined in the UCC) and including, without limitation,
all merchandise, inventory and goods (other than Equipment), and all additions,
substitutions and replacements thereof, wherever located,
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together with all goods (other than Equipment) and materials used or usable in
manufacturing, processing, packaging or shipping same in all stages of
production from raw materials through work-in-process to finished goods - and
all proceeds thereof of whatever sort.
INVENTORY LOAN CAP shall mean the amount of $25,000,000.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Companies.
LETTERS OF CREDIT shall mean all letters of credit issued with the assistance of
the Agent in accordance with Section 14 hereof by the Issuing Bank for or on
behalf of a Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the Agent, on
behalf of the Lenders, to the Issuing Bank of any Company's reimbursement
obligations under the Issuing Bank's reimbursement agreement, application for
Letter of Credit or other like document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee the Lenders may charge the
Companies under Paragraph 7.6 of Section 7 of this Financing Agreement for: a)
issuing a Letter of Credit Guaranty, and/or b) otherwise aiding the Companies,
or any one of them, in obtaining Letters of Credit, all pursuant to Section 14
hereof.
LETTER OF CREDIT SUB-LINE shall mean the commitment of the Agent to assist the
Companies in obtaining Letters of Credit, pursuant to Section 14 hereof, in an
aggregate amount of $5,000,000.
LINE OF CREDIT shall mean the aggregate commitment of the Lenders to (a) make
Revolving Loans pursuant to Section 3 of this Financing Agreement, (b) assist
any of the Companies in opening Letters of Credit pursuant to Section 14 of this
Financing Agreement, and (c) make the Term Loan pursuant to Section 4 of this
Financing Agreement, in the aggregate amount equal to $60,000,000, provided that
nothing herein shall be deemed to increase any Lender's commitment hereunder,
which commitment shall be set forth opposite such Lender's name on the signature
pages hereof, or in the Assignment and Transfer Agreement executed by such
Lender by which it becomes a Lender hereunder, as such pro rata share may be
adjusted pursuant to Assignment and Transfer Agreements executed pursuant to
Section 12.9 hereof.
LINE OF CREDIT FEE shall: (a) mean the fee due the Agent at the end of each
month for the Revolving Line of Credit, and (b) be determined by multiplying the
difference between (i) the Revolving Line of Credit, and (ii) the average daily
balance of (x) Revolving Loans and the Term Loan plus (y) Letters of Credit
outstanding for said month, by three-eighths percent (.375%) per annum for the
number of days in said month during which this Financing Agreement is in effect.
LOAN DOCUMENTS shall mean this Financing Agreement, the Promissory Note, the Fee
Letter, the Blechmans Letters of Credit, the Blechmans Agreement Regarding
Letters of Credit, the Blechmans Control Agreement, the Blechmans Intercreditor
Agreement, the Blechmans Security Agreement, the Blechmans Guaranty, the
mortgages and/or deeds of trust, the other closing documents and any other
ancillary loan and security agreements executed from time to time in connection
with this Financing Agreement, all as may be renewed, amended, extended,
increased or supplemented from time to time.
LOCKBOX AGREEMENT shall have the meaning set forth in Section 3.4(b) hereof.
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OBLIGATIONS shall mean all loans, advances and extensions of credit made by the
Agent and/or the Lenders to the Companies, or any one of them, or to others for
the Companies' account (including, without limitation, all Revolving Loans,
Letter of Credit Guaranties, and the Term Loan); any and all indebtedness and
obligations which may at any time be owing by the Companies or any one of them
to the Agent and/or the Lenders howsoever arising, whether now in existence or
incurred by the Companies or any one of them from time to time hereafter;
whether principal, interest, fees, costs, expenses or otherwise; whether secured
by pledge, lien upon or security interest in any of the Companies' Collateral,
assets or property or the assets or property of any other person, firm, entity
or corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether the Companies are
liable to the Agent and/or the Lenders for such indebtedness as principal,
surety, endorser, guarantor or otherwise. Obligations shall also include
indebtedness owing to the Agent and/or the Lenders by the Companies or any one
of them under any Loan Document or under any other agreement or arrangement now
or hereafter entered into between the Companies and the Agent and/or the
Lenders; indebtedness or obligations incurred by, or imposed on, the Agent
and/or the Lenders as a result of environmental claims arising out of any of the
Companies' operations, premises or waste disposal practices or sites in
accordance with paragraph 7.9 hereof; the Companies' liability to the Agent
and/or the Lenders as maker or endorser of any promissory note or other
instrument for the payment of money; the Companies' liability to the Agent
and/or the Lenders under any instrument of guaranty or indemnity, or arising
under any guaranty, endorsement or undertaking which the Agent and/or the
Lenders may make or issue to others for the Companies' account, including any
Letter of Credit Guaranty or other accommodation extended by Agent with respect
to applications for Letters of Credit, the Agent and/or the Lender's acceptance
of drafts or the Agent and/or the Lenders endorsement of notes or other
instruments for the Companies' account and benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
OTHER COLLATERAL shall mean all of each of the Companies' now owned and
hereafter acquired lockbox, blocked account and any other deposit accounts
maintained with any bank or financial institutions into which the proceeds of
Collateral are or may be deposited; all cash and other monies and property in
the possession or control of the Agent and/or any of the Lenders; all books,
records, ledger cards, 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 all cash and non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of the Agent's (and the Lenders upon the
occurrence of an Event of Default which is not waived by the Required Lenders or
cured to the satisfaction of Agent or Required Lenders) present and future
reasonable and documented expenses incurred relative to this Financing Agreement
or any other Loan Documents, whether incurred heretofore or hereafter, which
expenses shall include, without being limited to: the cost of record searches,
all costs and expenses incurred by the Agent in opening bank accounts,
depositing checks, receiving and transferring funds, and wire transfer charges,
any charges imposed on the Agent due to returned items and "insufficient funds"
of deposited checks and the Agent's standard fees relating thereto, any amounts
paid by, incurred by or charged to, the Agent and/or the Lenders by the Issuing
Bank under a Letter of Credit Guaranty or a Company's reimbursement agreement,
application for Letters of Credit or other like document which pertain either
directly or indirectly to such Letters of Credit, and
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the Agent's standard fees relating to the Letters of Credit and any drafts
thereunder, travel, lodging and similar expenses of the Agent's personnel in
connection with inspecting and monitoring the Collateral from time to time
hereunder, any applicable counsel fees and disbursements, fees and taxes
relative to the filing of financing statements, all expenses, costs and fees set
forth in Paragraph 9.3 of Section 9 of this Financing Agreement, and title
insurance premiums, real estate survey costs, costs of preparing and recording
mortgages/deeds of trust against the Real Estate; provided that Out-of-Pocket
Expenses shall not include internal, administrative, or overhead costs of Agent
or any Lenders (other than allocated fees of internal legal counsel), or items
covered by in the Fee Letter.
OVERADVANCE RATE shall mean a rate equal to one percentage point (100 basis
points) per annum in excess of the applicable contract rates of interest
determined in accordance with Section 7, Paragraph 7.1 of this Financing
Agreement.
OVERADVANCES shall mean the amount by which (a) the sum of all outstanding
Revolving Loans and Letters of Credit made hereunder exceed (b) the applicable
Borrowing Base.
PARENT shall mean Twinlab Corporation, a Delaware corporation.
PATENTS shall mean all of each of the Companies' present and hereafter acquired
patents, patent applications, registrations, any reissues or renewals thereof,
licenses, any inventions and improvements claimed thereunder, and all general
intangible, intellectual property and patent rights with respect thereto of the
Companies or any one of them and all income, royalties, cash and non-cash
proceeds thereof.
PERMITTED AFFILIATE TRANSACTIONS shall mean: any transaction that: (a) is
otherwise permitted under the Loan Documents, (b) occurs in the ordinary course
of such Company's business, consistent with past practices, and (c) is upon fair
and reasonable terms no less favorable to such Company than would be obtained in
a comparable, arm's-length transaction with a party not an Affiliate. Permitted
Affiliate Transactions shall include, without limitation, (i) any Permitted
Investments, (ii) any Permitted Indebtedness, (iii) any transactions among the
Companies and their subsidiaries otherwise permitted under the Loan Documents,
and (iv) the execution, delivery and (subject to the terms of the Blechmans
Intercreditor Agreement) performance of the Reimbursement Agreements (as defined
in the Blechmans Agreement Regarding Letters of Credit) and the Blechmans
Security Agreement (as defined in the Blechmans Intercreditor Agreement).
PERMITTED ENCUMBRANCES shall mean: (a) liens existing on the date hereof on
specific items of Equipment and other liens expressly permitted, or consented to
in writing by the Agent and/or the Required Lenders; (b) Purchase Money Liens;
(c) liens of local or state authorities for franchise or other like Taxes,
provided that the aggregate amounts of such liens shall not exceed $250,000 in
the aggregate at any one time; (d) 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 for 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 applicable Companies, as
applicable, in accordance with GAAP); (e) deposits made (and the liens thereon)
in the ordinary course of business of any of the Companies (including, without
limitation, security deposits for leases, indemnity bonds, surety bonds and
appeal bonds) in
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connection with utilities, 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); (f) easements (including, without limitation,
reciprocal easement agreements and utility agreements), encroachments, minor
defects or irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate, if applicable,
and which in the aggregate (A) do not materially interfere with the occupation,
use or enjoyment by the Companies of the business or property so encumbered and
(B) in the reasonable business judgment of the Agent do not materially and
adversely affect the value of such Real Estate; and (g) liens granted the Agent
by the Companies or any one of them; (h) liens of judgment creditors provided
such liens do not exceed, in the aggregate, at any time, $150,000 (other than
liens stayed, satisfied, bonded or insured to the reasonable satisfaction of the
Agent); (i) liens for Taxes which are not yet due and payable or which are being
diligently contested in good faith by the Companies by appropriate proceedings,
and which liens are not (x) filed on any public records, (y) other than with
respect to Real Estate, senior to the liens of the Agent or (z) for Taxes due
the United States of America or any state thereof having similar priority
statutes, as further set forth in paragraph 6.7 hereof; (j) any (a) interest or
title of a lessor or sublessor under any lease not prohibited by this Financing
Agreement, (b) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to, or (c) subordination of the interest of
the lessee or sublessee under such lease to any restriction or encumbrance
referred to in the preceding clause (b); (k) any zoning or similar law or right
reserved to or vested in any governmental office or agency to control or
regulate use of any property; (l) leases or subleases in the ordinary course of
business, not involving Inventory, and granted to third parties not otherwise
prohibited by this Financing Agreement and not interfering in any material
respect with the ordinary conduct of the business of the Companies or their
subsidiaries; (m) any extension, renewal or replacement of any Permitted
Encumbrance provided the same is limited to the property encumbered by such
Permitted Encumbrance and the obligation secured is not greater than that
secured by such Permitted Encumbrance; (n) building codes, zoning ordinances and
other similar laws, regulations, rules, orders or determinations by any
governmental authority; (o) liens created hereunder or under any other Loan
Document; (p) liens arising in connection with trade letters of credit issued to
secure the purchase of Inventory in the ordinary course of business provided
that such liens are limited to such Inventory and any associated documents of
title; (q) liens existing on the date hereof granted pursuant to the Deed of
Trust dated March 22, 1999, among TLI, as Trustor, Zions First National Bank, as
Beneficiary, and Zions Trust National Bank, as Trustee; and (r) the subordinated
liens granted pursuant to the Reimbursement Agreements (as defined in the
Blechmans Agreement Regarding Letters of Credit) or pursuant to the Blechmans
Security Agreement (as defined in the Blechmans Intercreditor Agreement).
PERMITTED INDEBTEDNESS shall mean: (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, Taxes or labor; (b) the Indebtedness secured by
Purchase Money Liens; (c) Subordinated Debt; (d) Indebtedness arising under
Letters of Credit and this Financing Agreement; (e) deferred Taxes and other
expenses (including unsecured Indebtedness in respect of reimbursement
obligations incurred in connection with surety and appeal bonds, performance
bonds and other similar obligations relating to the operation of the Real Estate
in accordance with the terms of this Agreement) incurred in the ordinary course
of business; (f) other Indebtedness existing on the date of execution of this
Financing Agreement and listed in the most recent financial statement delivered
to the Agent and the Lenders or otherwise disclosed to the Agent and the Lenders
in writing prior to the Closing Date;
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(g) Capital Leases provided that the Indebtedness incurred under such Capital
Leases shall not exceed $250,000 in any fiscal year; (h) other unsecured
Indebtedness in an aggregate principal amount not exceeding $5,000,000 at any
time outstanding; (i) any extension, renewal or replacement of any of the
foregoing or of any Indebtedness referred to in clause (k) or clause (l) of this
definition, provided that any extension, renewal or replacement shall (a) be in
an amount not greater than the Indebtedness so extended, renewed or replaced
(plus the amount of expenses, fees and any premium or penalty paid in connection
with such extension, renewal or replacement), and (b) in the case of
Subordinated Debt, shall (1) have an amortization schedule that results in the
same or longer average life to maturity than the Subordinated Debt and (2)
contain subordination provisions which are substantially similar to those in the
documents evidencing the Subordinated Debt; (j) Indebtedness arising from the
honoring by a bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business, provided that
such Indebtedness is extinguished within five Business Days of notice to the
Borrower of its incurrence and all such Indebtedness outstanding at any time
does not exceed $100,000; (k) Indebtedness outstanding on the Closing Date and
listed on Schedule 2 hereto; (l) Financing Lease Obligations and Indebtedness
for the deferred purchase price of newly acquired property or to finance
equipment used in the ordinary course of business (provided such financing is
entered into within 30 days of the acquisition of such property) in an amount
not exceeding an aggregate principal amount of $2,000,000 per annum; and (M)
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.
PERMITTED INVESTMENTS shall mean (i) commercial paper and municipal bonds, in
each case issued or guaranteed by a party rated P-1 or better by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's") or A-1 or MIG-1 or better by Standard &
Poor's Rating Services ("S & P"), (ii) certificates of deposit, time deposits,
Eurodollar deposits or bankers' acceptances maturing not more than one year
after the date of issue, issued by any commercial banking institution, which is
a member of the Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $100,000,000, (iii) repurchase agreements
having maturities of not more than one year and which are secured by readily
marketable direct obligations of the Government of the United States of America
or any agency thereof, (iv) readily marketable obligations of the Government of
the United States of America or any agency thereof; (v) readily marketable
obligations issued by any state of the United States or any political
subdivision thereof having a rating by Moody's or S & P of "A" or its equivalent
or better; (vi) money market mutual funds which are regularly traded in the
United States of America whose investments are limited to those described in
clauses (i) through (v) above; (vii) investments received by any Company in
settlement of or other resolution of claims or disputes or in connection with a
plan of reorganization in connection with a bankruptcy or insolvency of an
entity indebted to such Company and, in each case, extensions, modifications and
renewals thereof; (viii) loans and advances to officers, directors and employees
of any Company, Parent or any subsidiary of a Company or Parent for travel,
entertainment and relocation expenses in the ordinary course of business in an
aggregate amount not to exceed $250,000 outstanding at any time; (ix)
investments by (A) the Companies in their domestic subsidiaries as of the
Closing Date, (B) any Company in any Company, (C) any foreign subsidiary in any
other foreign subsidiary, or (D) the Companies in other domestic subsidiaries or
in foreign subsidiaries in an amount for this clause (D) not to exceed $500,000
at any time outstanding; (x) securities and other investments held by the
Companies or any of their subsidiaries on the Closing Date and set forth on
Schedule 3 hereto; and
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(xi) other loans, advances and investments in an aggregate amount not to exceed
$500,000 at any time outstanding.
PROMISSORY NOTE shall mean the Term Loan Promissory Note (New York), in the form
of Exhibit B attached hereto, delivered by Companies to the Agent to evidence
the Term Loan pursuant to, and repayable in accordance with, the provisions of
this Financing Agreement.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired, (b) a description of the Equipment
so acquired is furnished to the Agent, and (c) the debt incurred in connection
with such acquisitions shall not exceed, in the aggregate, $100,000 in any
Fiscal Year.
REAL ESTATE shall mean each of the Companies' fee and/or leasehold interests in
the real property, including any such real property which has been, or will be,
encumbered, mortgaged, pledged or assigned to the Agent or its designee.
REQUIRED LENDERS shall mean the Lenders holding aggregate Commitments under this
Financing Agreement in an amount of 51% or more.
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of the Lenders to
make loans and advances pursuant to Section 3 of this Financing Agreement to the
Companies, and issue Letters of Credit Guaranties pursuant to Section 14 hereof
to the Companies, in the aggregate amount of up to $60,000,000 including the
amount of the Term Loan.
REVOLVING LOAN ACCOUNT(S) shall mean the accounts on the Agent's books, in each
Company's name in which each Company will be charged with all applicable
Obligations under this Financing Agreement.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of each of the Companies by the Agent on behalf of the Lenders
pursuant to Section 3 of this Financing Agreement.
SETTLEMENT DATE shall mean the date, weekly, and more frequently, at the
discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans that the Agent and the
Lenders shall settle amongst themselves so that (x) the Agent shall not have, as
the Agent, any money at risk and (y) on such Settlement Date the Lenders shall
have a pro rata amount of all outstanding Revolving Loans and Letters of Credit,
provided that each Settlement Date for a Lender shall be a Business Day on which
such Lender and its bank are open for business.
SUBORDINATED DEBT shall mean the debt outstanding under the Senior Subordinated
Notes issued under that certain Indenture, dated May 7, 1996, between TLI, as
Issuer, and Fleet National Bank, as Trustee, in the approximate principal amount
of $39,915,000 as of the Closing Date, and any other debt due a Subordinating
Creditor (and the note(s) evidencing such) which has been subordinated, by a
Subordination Agreement, to the prior payment and satisfaction of the
Obligations of the Companies to the Agent and the Lenders (in form and substance
satisfactory to the Agent and/or the Required Lenders).
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SUBORDINATING CREDITOR shall mean the holders of existing Subordinated Debt and
any other party hereafter executing a Subordination Agreement.
SUBORDINATION AGREEMENT shall mean an agreement (in form and substance
satisfactory to the Agent) among the Companies, a Subordinating Creditor and the
Agent, pursuant to which Subordinated Debt is subordinated to the prior payment
and satisfaction of all of the Companies' Obligations to the Agent and the
Lenders (in form and substance satisfactory to the Agent).
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due by the Companies
with respect to their business, operations, Collateral or otherwise.
TERM LOAN shall have the meaning assigned in Section 4 hereof.
TERM LOAN PROMISSORY NOTE (NEW YORK) shall mean the promissory note in the form
of Exhibit B hereto executed to evidence the Term Loan made by the Agent under
Section 4 hereof.
TLI BORROWING BASE shall mean, as to TLI, the sum of the sum of (a) the lesser
of (x) eighty-five percent (85%) of TLI's outstanding Eligible Accounts
Receivable, or (y) the amount of the cash collections received in respect of
TLI's Trade Accounts Receivable during the preceding 75 days, plus (b) the
lesser of (i) seventeen percent (17%) of the aggregate value of TLI's Eligible
Inventory consisting of raw materials, thirty five percent (35%) of the
aggregate value of TLI's Eligible Inventory consisting of bulk finished goods,
and sixty percent (60%) of the aggregate value of TLI's Eligible Inventory
consisting of packaged finished goods inventory, in each case valued at the
lower of cost or market, on a first in, first out basis, (ii) eighty percent
(80%) of the appraised aggregate net orderly liquidation value of TLI's Eligible
Inventory, or (iii) the Inventory Loan Cap (less amount of then outstanding
advances made to TLI against TLI's Eligible Inventory), plus (c) the market
value (but not in excess of $15,000,000) as determined by Agent of the
collateral pledged pursuant to the Blechmans Security Agreement and if and when
such collateral is replaced by the Blechmans Letters of Credit, the aggregate
face amount thereof (but not in excess of $15,000,000),
less (d) any applicable Availability Reserves.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP, on a
basis consistent with the latest audited financial statements of the Companies.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, on a basis consistent with the latest audited financial statements of the
Companies.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of each of the Companies'
Accounts which arises from the sale of Inventory or the rendition of services in
the ordinary course of the Companies' business.
TRADEMARKS shall mean all of each of the Companies' present and hereafter
acquired trademarks, trademark registrations, recordings, applications,
tradenames, trade styles, service marks, prints and labels (on which any of the
foregoing may appear), licenses, reissues, renewals, and any other intellectual
property and trademark rights pertaining to any of the foregoing, together with
the goodwill associated therewith, and all cash and non-cash proceeds thereof.
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UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the state of California.
WORKING CAPITAL shall mean Current Assets in excess of Current Liabilities.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
SECTION 2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT
The obligation of the Agent and the Lenders to make the initial loans
hereunder is subject to the satisfaction of, extension of or waiver in writing
of, on or prior to, the Closing Date, the following conditions precedent:
(a) LIEN SEARCHES - the Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent for all locations
presently occupied or used by each of the Companies.
(b) CASUALTY INSURANCE - Each of the Companies shall have delivered to the
Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as additional insured, loss payee or mortgagee, as the case
may be, are in full force and effect, all as set forth in Paragraph 6.5 of
Section 6 of this Financing Agreement.
(c) UCC FILINGS - Any financing statements required to be filed in order
to create, in favor of the Agent, on behalf of the Lenders, a first perfected
security interest in the Collateral which can be perfected by the filing of a
financing statement, subject only to the Permitted Encumbrances, shall have been
properly filed in each office in each jurisdiction required in order to create
in favor of the Agent for the benefit of the Lenders a perfected lien on the
Collateral. The Agent shall have received acknowledgment copies of all such
filings (or, in lieu thereof, the Agent shall have received other evidence
reasonably satisfactory to the Agent that all such filings have been made) and
the Agent shall have received evidence that all necessary filing fees and all
taxes or other expenses related to such filings have been paid in full.
(d) BOARD RESOLUTION - The Agent shall have received a copy of the
resolutions of the Board of Directors of each of the Companies and the
Guarantors (as the case may be) authorizing the execution, delivery and
performance of (i) this Financing Agreement, (ii) the Guaranties, and (iii) any
related agreements, in each case certified by the Secretary or Assistant
Secretary of each of the Companies and the Guarantors (as the case may be) as of
the date hereof, together with a certificate of the Secretary or Assistant
Secretary of the Companies and the Guarantors (as the case may be) as to the
incumbency and signature of the officers of each of the Companies and/or the
Guarantors executing such Loan Documents and any certificate or other documents
to be delivered by them pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(e) CORPORATE ORGANIZATION - The Agent shall have received (i) a copy of
the Certificate of Incorporation of each of the Companies and the Guarantors
certified by the Secretary of State of the states of their incorporation, and
(ii) a copy of the By-Laws of each of the Companies
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certified by the respective Secretary or Assistant Secretary thereof, all as
amended through the date hereof.
(f) LOAN DOCUMENTS - The Agent shall have received the executed Loan
Documents.
(g) OPINIONS - Counsel for the Companies and the Guarantors shall have
delivered to the Agent on behalf of the Lenders opinions satisfactory to the
Agent opining, inter alia, that, subject to the (i) filing, priority and
remedies provisions of the Uniform Commercial Code, (ii) the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, (iii) the equity powers
of a court of law and (iv) such other matters as may be agreed upon with the
Agent: this Financing Agreement, the Guaranty and all other Loan Documents of
each of the Companies and the Guarantors are (A) valid, binding and enforceable
according to their terms, (B) are duly authorized, executed and delivered, and
(C) do not violate any terms, provisions, representations or covenants in the
charter or by-laws of each of the Companies or the Guarantors or, to the best
knowledge of such counsel, of any loan agreement, mortgage, deed of trust, note,
security or pledge agreement, indenture or other contract to which the
Companies, or any one of them, or the Guarantors are signatories or by which the
Companies, or any one of them, or the Guarantors or their assets are bound and
which such counsel knows to be material or which a Company or Guarantor has
identified to such counsel as material; together with an opinion from counsel
for the Blechmans respecting the enforceability of the Blechmans Agreement
Regarding Letters of Credit, the Blechmans Intercreditor Agreement, the
Blechmans Guaranty, the Blechmans Control Agreement and the Blechmans Security
Agreement and the perfection of the security interest granted under the
Blechmans Security Agreement.
(h) ABSENCE OF DEFAULT - No Default or Event of Default shall have
occurred and no material adverse change shall have occurred since December 31,
1999 (other than as previously disclosed to the Agent) in the financial
condition, business, prospects, profits, operations or assets of the Companies
or any one of them, Parent, the Guarantors or any of the Companies'
subsidiaries.
(i) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there shall be
no: x) litigation, investigation or proceeding (judicial or administrative)
pending or threatened against the Companies or any one of them , Parent or the
Guarantors or their assets, by any agency, division or department of any county,
city, state or federal government arising out of this Financing Agreement; y)
injunction, writ or restraining order restraining or prohibiting the
consummation of the financing arrangements contemplated under this Financing
Agreement; or z) suit, action, investigation or proceeding (judicial or
administrative) pending against the Companies or any one of them or the
Guarantors or their assets, which, in the opinion of the Agent, if adversely
determined, is reasonably likely to result in a material adverse effect on the
business, operation, assets, financial condition or Collateral of the Companies
or any one of them and/or the Guarantors.
(j) GUARANTIES - The Guarantors shall have executed and delivered to the
Agent guaranties, in form acceptable to the Agent, guaranteeing all present and
future Obligations of the Companies.
(k) FINANCIAL PROJECTIONS - The Agent shall have received, reviewed and be
satisfied with two years financial projections prepared by the Companies,
including monthly detail and projected borrowing availability for the first
year, together with a balance sheet, profit and loss
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statement, and statement of cash flows, accompanied by a management discussion
and analysis as well as detail of material assumptions, all in form and
substance satisfactory to Agent.
(l) PLEDGE AGREEMENT - Parent and/or the Companies, as the case may be,
shall (i) execute and deliver to the Agent on behalf of the Lenders a pledge and
security agreement pledging to the Agent on behalf of the Lenders as additional
collateral for the Obligations of the Companies not less than 100% of the issued
and outstanding stock of each of the Companies and not less than 100% of the
stock of all subsidiaries of the Companies and, (ii) deliver to the Agent on
behalf of the Lenders the stock certificates evidencing such stock together with
duly executed stock powers (undated and in-blank) with respect thereto, all in
form and substance satisfactory to Agent.
(m) ADDITIONAL DOCUMENTS - Each of the Companies shall have executed and
delivered to the Agent all Loan Documents necessary to consummate the lending
arrangement contemplated between the Companies, the Agent and the Lenders, and
the Blechmans shall have caused the Blechmans Agreement Regarding Letters of
Credit, the Blechmans Guaranty, the Blechmans Control Agreement, the Blechmans
Security Agreement and the Blechmans Intercreditor Agreement shall have been
executed and delivered by the Blechmans to Agent, in form and substance
satisfactory to Agent, in its discretion.
(n) DISBURSEMENT AUTHORIZATION - The Companies shall have delivered to the
Agent all information necessary for the Agent and the Lenders to issue wire
transfer instructions on behalf of each of the Companies for the initial and
subsequent loans and/or advances to be made under this Financing Agreement
including, but not limited to, disbursement authorizations in form reasonably
acceptable to the Agent.
(o) EXAMINATION & VERIFICATION - The Agent and each of the Lenders shall
have completed, to their respective satisfaction, an examination and
verification of the Accounts, Inventory, financial statements, books and records
of each of the Companies which examination shall indicate that, after giving
effect to all Revolving Loans, advances and extensions of credit to be made at
closing, the Companies shall have an aggregate opening additional Availability
of at least $10,000,000, as evidenced by the respective Borrowing Base
certificates delivered by each of the Companies to the Agent as of the Closing
Date. In addition, it is understood that such requirement contemplates that all
debts and obligations are current, and that all payables are being handled in
the normal course of the Companies' business and consistent with their past
practice, and, in that regard, there shall be imposed an additional reserve
against Availability as of the Closing Date of $6,300,000 (i.e., the aggregate
opening additional Availability shall be equal to such $10,000,000 amount after
giving effect to such $6,300,000 reserve).
(p) DEPOSITORY ACCOUNTS; NOTIFICATION OF GNC - Each of the Companies shall
have established a system of lockbox and bank accounts with respect to the
collection of Accounts and the deposit of proceeds of Collateral as contemplated
hereunder and as shall be acceptable to the Agent in all respects. Such accounts
shall be subject to three party agreements (between the Companies, the Agent and
the depository bank), which shall be in form and substance satisfactory to the
Agent. In addition, a notification letter shall have been sent to General
Nutrition Corporation by Agent directing General Nutrition Corporation to make
payments on its Accounts directly to the lockbox arrangement established under
the Lockbox Agreement.
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(q) EXISTING REVOLVING CREDIT AGREEMENT - The Companies' existing credit
agreement with the Existing Lender shall be: (i) terminated; (ii) all loans and
obligations of the Companies and/or the Guarantors thereunder shall be paid or
satisfied in full, including through utilization of the proceeds of the initial
Revolving Loans and Term Loan to be made under this Financing Agreement; and
(iii) all liens or security interests in favor of the Existing Lender on the
Collateral and otherwise in connection therewith shall be terminated and/or
released upon such payment.
(r) MORTGAGES/DEEDS OF TRUST - The Companies shall have executed and
delivered to the Agent, an agent of the Agent or to a title insurance company
acceptable to the Agent, such mortgages and/or deeds of trust as the Agent on
behalf of the Lenders may reasonably require to obtain first liens on the fee
owned Real Estate in Arizona and New York, and second priority liens with
respect to the fee owned Real Estate in Utah.
(s) TITLE INSURANCE POLICIES - The Agent shall have received, in respect
of each mortgage or deed of trust, a mortgagee's title policy or marked-up
unconditional binder for such insurance. Each such policy shall (i) be in an
amount satisfactory to the Agent; (ii) insure that the mortgage or deed of trust
insured thereby creates a valid first priority (second priority with respect to
the Utah Real Estate) lien on the property covered by such mortgage or deed of
trust, free and clear of all defects and encumbrances except those acceptable to
the Agent; (iii) name the Agent on behalf of the Lenders as the insured
thereunder; and (iv) contain such endorsements and effective coverage as the
Agent may reasonably request, including, without limitation, the revolving line
of credit endorsement. The Agent shall also have received evidence that all
premiums in respect of such policies have been paid and that all charges for
mortgage recording taxes, if any, shall have been paid. In addition, the Agent
shall have received the title insurer's acknowledgement that it has received
irrevocable authorization from the Companies counsel to record the mortgages and
deeds of trust.
(t) SURVEYS - The Agent and the title insurance company issuing each
policy referred to in the immediately preceding paragraph (each, a "Title
Insurance Company") shall have received maps or plats of a perimeter or boundary
of the site of each of the properties covered by the mortgages or deeds of
trust, dated a date satisfactory to the Agent and the relevant Title Insurance
Company prepared by an independent professional licensed land surveyor
satisfactory to the Agent and the relevant Title Insurance Company, which maps
or plats and the surveys on which they are based shall be made in accordance
with the Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping; and, without limiting the generality of the
foregoing, there shall be surveyed and shown on the maps or plats or surveys the
following: (i) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines insofar as the
foregoing affect the perimeter or boundary of such property; (ii) the lines of
streets abutting the sites and width thereof; (iii) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(iv) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the sites, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building,
structures and improvements on the sites; and (vi) if the site is designated as
being on a filed map, a legend relating the survey to said
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map. Further, the survey shall x) be certified to the Agent and the Title
Insurance Company and y) contain a legend reciting as to whether or not the site
is located in a flood zone.
(u) APPRAISALS The Agent shall have received satisfactory appraisals on
each of the Companies' Equipment, Inventory and Real Estate.
(v) ENVIRONMENTAL REPORT The Agent shall have received environmental audit
reports on i) all of each of the Companies' leasehold (other than office leases)
and fee interests, and ii) the Companies' waste disposal practices. The reports
must x) be satisfactory to the Agent and y) not disclose or indicate any
material liability (real or potential) stemming from the Companies' premises,
their operations, their waste disposal practices or waste disposal sites used by
Companies.
(w) SCHEDULES The Companies or their counsel shall provide the Agent with
schedules of: (a) any of the Companies' and their subsidiaries (i) Trademarks,
(ii) Patents, and (iii) Copyrights, as applicable and all in such detail as to
provide appropriate recording information with respect thereto, (b) any
tradenames, and (c) monthly rental payments for any leased premises or any other
premises where any Collateral may be stored or processed.
(x) INVENTORY RECONCILIATION With respect to the Companies Inventory,
Agent shall have received a reconciliation for the Fiscal Year ended December
31, 2001 of book-to- physical count in form and substance satisfactory to Agent.
(y) LOAN FACILITY FEE. The Companies shall pay to the Agent, for the
account of Lenders, a fee in the amount of $600,000 (which amount includes the
Documentation Fee in connection with the execution hereof).
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as otherwise set forth hereinabove or as the Companies and the
Agent shall otherwise agree in writing.
2.2 CONDITIONS TO EACH EXTENSION OF CREDIT
Subject to the terms of this Financing Agreement, including without
limitation the Agent's rights pursuant to paragraph 9.2 of Section 9 hereof, the
agreement of the Agent on behalf of the Lenders to make any extension of credit
requested to be made by it to any of the Companies on any date (including
without limitation, the initial extension of credit) is subject to the
satisfaction of the following conditions precedent:
a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by each of the Companies in or pursuant to this Financing
Agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
b) NO DEFAULT - No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
c) BORROWING BASE - Except as may be otherwise agreed to from time to time
by the Agent and the Companies in writing, after giving effect to the extension
of credit requested to be made by any of the Companies on such date, the
aggregate outstanding balance of the Revolving
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Loans and outstanding Letters of Credit owing by each of the Companies will not
exceed the lesser of (i) the Revolving Line of Credit or (ii) the applicable
Borrowing Base.
Each borrowing by a Company hereunder shall constitute a representation and
warranty by the Companies as of the date of such loan or advance that each of
the representations, warranties and covenants contained in the Financing
Agreement have been satisfied and are true and correct in all material respects,
except as the Companies and the Agent and/or the Required Lenders shall
otherwise agree herein or in a separate writing.
SECTION 3. REVOLVING LOANS
3.1 (a) The Agent and the Lenders agree, subject to the terms and
conditions of this Financing Agreement, from time to time, and within the
Availability, but subject to Agent's and Lenders' right to make Overadvances, to
make loans and advances to the Companies on a revolving basis (i.e. subject to
the limitations set forth herein, the Companies may borrow, repay and re-borrow
Revolving Loans). Such loans and advances shall be in amounts not to exceed the
Companies' applicable Borrowing Base, or, in the aggregate, the Revolving Line
of Credit. Revolving Loans may be made to TLI based upon the TLI Borrowing Base,
and to the other Companies based upon the CB Borrowing Base. All requests for
loans and advances must be received by an officer of the Agent no later than
1:00 p.m., New York time, of the Business Day on which any such Chase Bank Rate
Loans and advances are required. Should the Agent for any reason honor requests
for Overadvances, any such Overadvances shall be made in the Agent's sole
discretion and subject to any additional terms the Agent and/or the Required
Lenders deem necessary.
(b) (i) Whenever the Companies desire the Agent, on behalf of the Lenders, to
make a Revolving Loan pursuant to this Section 3, it shall give the Agent notice
in writing or irrevocable telephonic notice confirmed promptly in writing,
specifying (A) the amount to be borrowed, and (B) the requested borrowing date
(which shall be a Business Day and shall be prior to: the next Anniversary Date,
and if applicable, any Early Termination Date, or prior to any effective
termination date of this Financing Agreement, all as further set forth herein).
All requests for loans and advances must be received by an officer of the Agent
no later than 1:00 P.M. New York time on any borrowing date. The procedure for
Revolving Loans to be made on a requested borrowing date may be such other
procedure as is mutually satisfactory to the Companies, the Agent and/or the
Lenders. The Agent shall make loans and advances to a bank account designated by
the Companies or in such other manner as requested by Companies and agreed to by
Agent.
(ii) Subject to paragraph 13.10 hereof, should the Agent, on behalf of the
Lenders, for any reason honor requests for Overadvances, such Overadvance shall
be made in the Agent's sole discretion, subject to any additional terms the
Agent and/or the Required Lenders deem necessary. Requests for loans and
advances shall be made solely by the Companies and shall be directed to the
Agent.
(c) The Agent shall on any Settlement Date, and upon notice given by the
Agent no later than 2:00 P.M. New York time, request each Lender to make, and
each Lender hereby agrees to make, a Revolving Loan in an amount equal to such
Lender's Revolving Credit Commitment percentage (calculated with respect to the
aggregate Revolving Credit Commitments then outstanding) of the aggregate amount
of the Revolving Loans made by the Agent from the preceding Settlement Date to
the date of such notice. Each Lender's obligation to make the Revolving Loans
referred to in
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subsection (a) and to make the settlements pursuant to this subsection (c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation (i) any set-off, counterclaim, recoupment, defense
or other right which any such Lender or any of the Companies may have against
the Agent, the (other) Companies, any other Lender or any other person for any
reason whatsoever; (ii) the occurrence or continuance of a Default or an Event
of Default; (iii) any adverse change in the condition (financial or otherwise)
of the Companies or any one of them; (iv) any breach of this Financing Agreement
or any other loan document by the Companies or any one of them or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing. Without limiting the liability and
obligation of each Lender to make such advances, the Companies authorize the
Agent to charge the Companies' Revolving Loan Account(s) with the Agent to the
extent amounts received from the Lenders are not sufficient to repay in full the
amount of any such deficiency.
3.2 In furtherance of the continuing collateral assignment and security
interest in the Companies' Trade Accounts Receivable and Inventory, the
Companies shall deliver to Agent not later than: (1) ten (10) days after the end
of each month an aging of the respective Companies' Trade Accounts Receivable in
such form and manner as Agent may reasonably require but consistent with the
current practices of the Companies and (2) ten (10) days after the end of each
month, a monthly inventory confirmation statement stating the aggregate amount
of Eligible Inventory of each Company. In addition, the Companies will provide
to Agent such additional information and material with respect to the Trade
Accounts Receivable and Inventory, in such form and detail, as Agent may
reasonably request to effectively evaluate the Trade Accounts Receivable and the
collectibility thereof and the mix of the Inventory and such other information
as Agent may reasonably require to evaluate the Companies' Trade Accounts
Receivable and Inventory, such as returns, claims, credits, allowances and
information identifying and describing the Trade Accounts Receivable. Failure to
provide Agent with the foregoing information will in no way affect, diminish,
modify or limit the security interest granted herein. Such reports are to be
executed by an authorized officer of the Companies. The Companies shall deliver
weekly reports respecting the preceding week with respect to the Borrowing Base.
3.3 Each of the Companies hereby represents and warrants that: each Trade
Accounts Receivable is based on an actual and bona fide sale and delivery of
goods or rendition of services to customers, made by the Companies in the
ordinary course of its business; the Inventory being sold and/or supplied and
the Trade Accounts Receivable created are the exclusive property of the
Companies and are not and shall not be subject to any lien, consignment
arrangement, encumbrance, security interest or financing statement whatsoever,
other than the Permitted Encumbrances; the invoices evidencing such Trade
Accounts Receivable or credit card receipts evidencing credit card sales are in
the name of such Company; and except for disputes, offsets, defenses,
counterclaims, contras, returns or credits, all arising in the normal course of
such Company's business or except as may be promptly disclosed to Agent, the
Companies' customers owe and are obligated to pay the amount stated in the
invoices or credit card receipts. The Companies confirm to Agent that any and
all taxes or fees relating to their business, their sales, the Trade Accounts
Receivable or goods relating thereto, are their sole responsibility and that
same will be paid by the Companies (except as otherwise permitted by this
Financing Agreement) and that none of said taxes or fees represent a lien on or
claim against the Trade Accounts Receivable. Each of the Companies also warrants
and represents that it is a duly and validly existing corporation and is
qualified in all states where the failure to so qualify would have a material
adverse effect on its business or its ability to enforce
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collection of Trade Accounts Receivable due from customers residing in that
state. The Companies agree to maintain such books and records regarding Trade
Accounts Receivable as Agent may reasonably require, consistent with the
Companies' current record keeping practices, and agree that the books and
records of the Companies will reflect Agent's interest in the Trade Accounts
Receivable as Agent may reasonably request. All of the books and records of the
Companies will be available to Agent at normal business hours, including any
records handled or maintained for the Companies by any other company or entity.
3.4 (a) Pursuant to the Lockbox Agreement, each of the Companies shall:
(i) indicate on all of their invoices that funds should be delivered to and
deposited in a Blocked Account; (ii) direct all of their account debtors to
deposit any and all proceeds of Collateral to the Blocked Account; (iii)
irrevocably authorize and direct any banks which maintain the Companies' initial
receipt of cash, checks and other items to promptly wire transfer all available
funds to a Depository Account; and (iv) advise all such banks of the Agent's
security interest in such funds. The Companies shall provide the Agent with
prior written notice of any and all deposit accounts opened or to be opened
subsequent to the Closing Date. All amounts received by the Agent in payment of
Accounts will be credited to the Obligations when the Agent is advised by its
bank of its receipt of "collected funds" at the Agent's bank account in New
York, New York on the Business Day of such advise if advised no later than 2:00
p.m. EST or on the next succeeding Business Day if so advised after 2:00 PM EST.
No checks, drafts or other instruments received by the Agent shall constitute
final payment to the Agent and/or the Lenders unless and until such instruments
have actually been collected. If the loan account reflects a zero Revolving Loan
balance and there is then no Event of Default, then Agent shall promptly remit
to the operating account of the Companies any credit balances in the loan
account.
(b) The Companies shall establish and maintain, in their name and at their
expense, Deposit Accounts with such banks as are acceptable to the Agent (the
"Blocked Accounts") into which shall be deposited pursuant to the Lockbox
Agreement: (i) all proceeds of Collateral received by any of the Companies,
including all amounts payable to the Companies from credit card issuers and
credit card processors, and (ii) all amounts on deposit in deposit accounts used
by the Companies at each of their locations, all as further provided in
Paragraph 3.4(a) above. The banks at which the Blocked Accounts are established
shall enter into an agreement, in form and substance satisfactory to the Agent
(the "Lockbox Agreements"), providing that all cash, checks and items received
or deposited in the Blocked Accounts are the property of the Agent, that the
depository bank has no lien upon, or right of set off against, the Blocked
Accounts and any cash, checks, items, wires or other funds from time to time on
deposit therein, except as otherwise provided in the Blocked Account Agreements,
and that upon the request of the Agent the depository bank will wire, or
otherwise transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to such bank account as the
Agent may from time to time designate for such purpose. The Agent may instruct
the depository banks at which the Blocked Accounts are maintained to transfer
all funds received or deposited into the Blocked Accounts to the Depository
Account at any time. The Companies hereby confirm and agree that all amounts
deposited in such Blocked Accounts and any other funds received and collected by
the Agent, whether as proceeds of Inventory or other Collateral or otherwise,
shall be the property of the Agent.
3.5 The Companies agree to notify the Agent: (a) of any matters adversely
affecting the value, enforceability or collectibility of any Trade Accounts
Receivable and of all customer disputes,
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offsets, defenses, counterclaims, returns, rejections and all reclaimed or
repossessed merchandise or goods, and of any adverse effect in the value of
their Inventory, in their weekly and monthly collateral reports (as applicable)
provided to the Agent hereunder, in such detail and format as the Agent may
reasonably require from time to time, and (b) promptly of any such matters which
are material, as a whole, to the Accounts and/or the Inventory. The Companies
agree to issue credit memoranda promptly (with duplicates to the Agent upon
request after the occurrence of an Event of Default which is not waived in
writing by the Required Lenders or cured to Agent's and/or the Required Lenders'
satisfaction) upon accepting returns or granting allowances. Upon the occurrence
of an Event of Default (which is not waived in writing by the Required Lenders
or cured to Agent's and/or the Required Lenders' satisfaction,) and on notice
from the Agent, the Companies agree that all returned, reclaimed or repossessed
merchandise or goods shall be set aside by the Companies, marked with the
Agent's name (as secured party) and held by the Companies for the Agent's
account.
3.6 (a) Subject to the provisions of paragraph (b) below, the Agent shall
maintain a Revolving Loan Account on its books in which each of the Companies
will be charged with all loans and advances made by the Agent to such Company to
it or for its account, and with any other Obligations, including any and all
reasonable and documented costs, expenses and reasonable and documented
attorney's fees which the Agent may incur in connection with the exercise by or
for the Agent of any of the rights or powers herein conferred upon the Agent, or
in the prosecution or defense of any action or proceeding to enforce or protect
any rights of the Agent in connection with this Financing Agreement, the other
Loan Documents or the Collateral assigned hereunder, or any Obligations owing by
such Company. The Companies will be credited with all amounts received by the
Agent and/or the Lenders from the Companies or from others for the Companies'
account, including, as above set forth, all amounts received by the Agent in
payment of Accounts, and such amounts will be applied to payment of the
Obligations as set forth herein. In no event shall prior recourse to any
Accounts or other security granted to or by the Companies be a prerequisite to
the Agent's right to demand payment of any Obligation. Further, it is understood
that the Agent and/or the Lenders shall have no obligation whatsoever to perform
in any respect any of the Companies contracts or obligations relating to the
Accounts.
(b) In order to utilize the collective borrowing powers of the Collective
Borrowers in the most efficient and economical manner, and in order to
facilitate the handling of the accounts of the Collective Borrowers on the
Agent's books, the Collective Borrowers have requested, and the Agent has
agreed, to handle accounts of the Collective Borrowers on the Agent's books on a
combined basis, all in accordance with the following provisions: (i) in lieu of
maintaining separate accounts on the Agent's books in the name of each of the
Collective Borrowers, the Agent shall maintain one account under the name of TLI
(which shall be referenced as for the benefit of the Collective Borrowers;
herein the "Collective Account"). Confirmatory assignments (in such form as
Agent may request) of Trade Accounts Receivable will continue to be made to the
Agent by each of the Collective Borrowers. Loans and advances made by the Agent
to any of the Collective Borrowers will be charged to the Collective Account
indicated above, along with any charges and expenses under this Financing
Agreement. The Collective Account will be credited, with all amounts received by
the Agent and/or the Lenders from any of the Collective Borrowers or from others
for their account including all amounts received by the Agent in payment of
Accounts; (ii) each month the Agent will render to the Collective Borrowers one
extract of the combined Collective Account, which shall be deemed to be an
account stated as to each of the Collective Borrowers and which will be deemed
correct and accepted by all of the Collective Borrowers unless the Agent
receives a
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written statement of exceptions from them within thirty (30) days after such
extract has been rendered by the Agent. It is expressly understood and agreed by
each of the Collective Borrowers that the Agent shall have no obligation to
account separately to any of the Collective Borrowers; (iii) requests for loans
and advances may be made by TLI as agent for the Collective Borrowers and the
Agent is hereby authorized and directed to accept, honor and rely on such
instructions and requests, subject to the limitation and provisions set forth in
this Financing Agreement. It is expressly understood and agreed by each of the
Collective Borrowers that the Agent shall have no responsibility to inquire into
the correctness of the apportionment, allocation, or disposition of (x) any
loans and advances made to any of the Collective Borrowers or (y) any of the
Agent's expenses and charges relating thereto. All loans and advances are made
for the Collective Account; (iv) the Collective Borrowers jointly and severally
unconditionally guarantee to the Agent and the Lenders the prompt payment in
full of (A) all loans and advances made and to be made by the Agent and/or the
Lenders to any of them under this Financing Agreement, as well as (B) all other
Obligations of the Collective Borrowers to the Agent and/or the Lenders and
hereby expressly confirm in all respects the Guaranties executed by each of the
Collective Borrowers in the Agent's and/or the Lenders' favor as more fully set
forth therein; (v) all Accounts assigned to the Agent for the benefit of the
Lenders by any of the Collective Borrowers and any other collateral security now
or hereafter given to the Agent and/or the Lenders by any of the Collective
Borrowers (be it Accounts or otherwise), shall secure all loans and advances
made by the Agent and/or the Lenders to any of the Collective Borrowers, and
shall be deemed to be pledged to the Agent as security for any and all other
Obligations of the Collective Borrowers to the Agent and/or the Lenders as set
forth under this Financing Agreement, the Guaranties, or any other agreements
between the Agent and/or the Lenders and any of the Collective Borrowers; (vi)
It is understood that the handling of the accounts of the Collective Borrowers
in a combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Collective Borrowers and at their request, and that the
Agent shall incur no liability to the Collective Borrowers as a result thereof.
To induce the Agent and the Lenders to do so, and in consideration thereof, each
of the Collective Borrowers hereby agrees to indemnify the Agent and the Lenders
and hold the Agent and the Lenders harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Agent and/or the
Lenders by any of the Collective Borrowers or by any third party whosoever,
arising from or incurred solely by reason of (1) the method of handling the
accounts of the Collective Borrowers as herein provided, (2) the Agent relying
on any instructions of any of the Collective Borrowers, or (3) any other action
taken by the Agent in accordance with this subparagraph (b) of Paragraph 3.6 of
Section 3 of this Financing Agreement; and (vii) The foregoing request was made
because the Collective Borrowers are engaged in an integrated operation with
each other and TLI that requires financing on a basis permitting the
availability of credit from time to time to each of the Collective Borrowers as
required for the continued successful operation of each of the Collective
Borrowers. Each of the Collective Borrowers expects to derive benefit, directly
or indirectly, from such availability since the successful operation of each of
the Collective Borrowers is dependent on the continued successful performance of
the functions of the integrated group. In addition, the Companies have informed
the Agent that:
(A) TLI, in order to increase the efficiency and productivity of
each of the Collective Borrowers, has centralized in itself a cash
management system which entails, in part, central disbursement and
operating accounts in which it provides the working capital needs of
each of the Collective Borrowers and manages and timely pays the
accounts payable of each of the Collective Borrowers;
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(B) TLI is further enhancing the operating efficiencies of the
Collective Borrowers by purchasing, or causing to be purchased, in
its name for its account all materials, supplies, inventory and
services required by the other Collective Borrower which will result
in reducing the operating costs of the Collective Borrowers; and
(C) Since all of the Collective Borrowers are now engaged in an
integrated operation with each other and TLI that requires financing
on an integrated basis and since each Collective Borrower expects to
benefit from the continued successful performance of such integrated
operations and in order to best utilize the collective borrowing
powers of each Collective Borrower in the most effective and cost
efficient manner and to avoid adverse effects on the operating
efficiencies of each Collective Borrower and the existing
back-office practices of the Collective Borrowers, each Collective
Borrower has requested that all Revolving Loans and advances be
disbursed solely upon the request of TLI, for the benefit of the
Collective Borrowers and to bank accounts managed solely by TLI for
the benefit of the Collective Borrowers and that TLI will manage for
the benefit of each Collective Borrower the expenditure and usage of
such funds.
3.7 After the end of each month, the Agent shall promptly send the
Companies a statement showing the accounting for the charges, loans, advances
and other transactions occurring between the Agent and each of the Companies
during that month. The monthly statements shall be deemed correct and binding
upon each of the Companies and shall constitute an account stated between the
Companies and the Agent unless the Agent receives a written statement of the
exceptions within thirty (30) days of the date of the monthly statement.
3.8 In the event that (a) the sum of (i) the outstanding balance of
Revolving Loans advanced to TLI or Collective Borrowers and (ii) outstanding
balance of Letters of Credit issued for the account of TLI or Collective
Borrowers exceeds (b)(x) the applicable Borrowing Base or (y) the Revolving Line
of Credit, any such nonconsensual Overadvance shall be due and payable to the
Agent on behalf of the Lenders immediately upon the Agent's demand therefor.
SECTION 4. TERM LOAN
4.1 The Companies hereby agree to execute and deliver to the Agent on
behalf of the Lenders that certain Term Loan Promissory Note (New York), to
evidence Term Loan to be extended by the Agent on behalf of the Lenders.
4.2 Upon receipt of such Term Loan Promissory Note (New York), the Lenders
hereby agree to extend to such Company the Term Loan in the original principal
amount of $4,200,000.
4.3 The principal amount of the Term Loan shall be repaid to the Agent on
behalf of the Lenders by such Company by one (1) installment of the principal
balance then outstanding on the termination date of this Agreement under Section
10 hereof or as otherwise provided in Section 9 hereof.
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4.4 In the event this Financing Agreement or the Line of Credit is
terminated by the Agent, the Required Lenders or the Companies or any one of
them for any reason whatsoever, the Term Loan shall become due and payable on
the effective date of such termination notwithstanding any provision to the
contrary in the Term Loan Promissory Note (New York) or this Financing
Agreement.
4.5 The Companies may prepay the Term Loan in whole, but not in part, and
only together with the prepayment in full of all of the other Obligations,
together with such prepayment premium as may be payable under the terms hereof.
SECTION 5. COLLATERAL
5.1 As security for the prompt payment in full of all Obligations, each of
the Companies hereby pledges and grants to the Agent on behalf of the Lenders a
continuing general lien upon, and security interest in, all of its:
(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Documents of Title;
(e) Other Collateral;
(f) Equipment;
(g) Real Estate; and
(h) Issued and outstanding stock of any subsidiaries of the Companies.
5.2 The security interests granted hereunder shall extend and attach
to:
(a) All Collateral which is owned by any of the Companies or in which the
Companies have any interest (but only to the extent of such interest), whether
held by the Companies or others for their account, and, if any Collateral is
Equipment, whether the Companies' interest in such Equipment is as owner,
finance lessee or conditional vendee;
(b) All Equipment, whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and
(c) All Inventory and any portion thereof which may be returned, rejected,
reclaimed or repossessed by either the Agent or the Companies from the
Companies' customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by the Companies, or to the sale, promotion
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or shipment thereof. Anything in this Financing Agreement to the contrary
notwithstanding, the Collateral shall not include, and no security interest,
lien or pledge granted hereunder shall extend or attach to, (i) the Companies'
rights (other than rights to payment) under any license agreements or lease
agreements existing as of the date hereof, or any leases of real property or
leases of motor vehicles or other personal property now or hereafter existing
that prohibit the grant of a security interest or lien therein or pledge to the
extent, and only to the extent, that the terms prohibiting the grant of such
security interest or lien or pledge have not been waived or consented to in
writing by the licensor, lessor or other necessary person or entity under such
agreement, or (ii) the Companies' rights in and to specific items of Equipment
which are subject to liens permitted by clause (a) or (b) of the definition of
Permitted Encumbrances or the Companies' rights under any agreement granting any
such liens to the extent, and only to the extent, that (A) the agreements
granting such liens prohibit the grant of a security interest in the Companies'
rights in such Equipment or in such agreements and (B) the terms prohibiting the
grant of such security interest have not been waived or consented to in writing
by the secured party or other necessary person or entity under such agreement.
5.3 The Companies agree to take reasonable steps, consistent with current
business practices, to safeguard, protect and hold all Inventory and make no
disposition thereof except in the regular course of the business of the
Companies. Inventory sold to customers may only be sold and shipped by the
Companies to its customers in the ordinary course of the Companies' business,
for cash, credit card sales or on open account on terms customary in the
industry, provided that all proceeds of all sales are deposited in accordance
with paragraph 3.4 of Section 3 of this Financing Agreement. Upon the sale,
exchange, or other disposition of Inventory, as herein provided, the security
interest in the Companies' Inventory provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money, accounts
receivable, contract rights, documents of title, shipping documents, chattel
paper and all other cash and non-cash proceeds of such sale, exchange or
disposition. As to any such sale, exchange or other disposition, Agent shall
have a security interest in all of the rights of the Companies as an unpaid
seller, including stoppage in transit, replevin, rescission and reclamation.
5.4 Each Company agrees at its own cost and expense to take reasonable
steps, consistent with current business practices, to safeguard, protect and
hold all Equipment and to make no dispositions thereof except in the ordinary
course of business, provided that all proceeds of all dispositions of Equipment
in the form of cash, checks, notes, instruments for the payment of money and
similar proceeds shall be deposited in the Depository Accounts or otherwise paid
over or delivered to Agent; provided, that in no event shall the aggregate
amount of all such dispositions exceed $500,000 per year, Agent shall be
provided prior written notice of each sale in excess of $25,000, and the
proceeds of any such sale must equal or exceed the appraised orderly liquidation
value of the items sold. Upon the sale, exchange, or other disposition of the
Equipment, as herein provided, the security interest provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sales, exchange
or disposition. As to any such sale, exchange or other disposition, Agent shall
have a security interest in all of the rights of the Companies as an unpaid
seller, including stoppage in transit, replevin, rescission and reclamation.
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5.5 The rights and security interests granted to Agent hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the account maintained in the Companies'
name on the books of Agent may from time to time be temporarily in a credit
position, until the satisfaction in full of all Obligations and the termination
of this Financing Agreement. Any delay, or omission by Agent to exercise any
right hereunder, shall not be deemed a waiver thereof, or be deemed a waiver of
any other right, unless such waiver be in writing and signed by Agent. 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. Upon the final satisfaction in full of all
Obligations and the termination of this Financing Agreement, Agent will take, at
the Companies' request and expense, all actions and do all things reasonably
necessary to release the rights and security interests in the Collateral. Upon a
disposition of Collateral permitted hereunder, Agent will take, at the
Companies' request and expense, all actions and do all things reasonably
necessary to release the rights and security interests in the Collateral that is
the subject of such partial release.
5.6 Notwithstanding the Agent's security interest in the Collateral and to
the extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral or by the guarantee, endorsement, assets or
property of any other person, the Agent shall have the right in its sole
discretion to determine which rights, liens, security interests or remedies the
Agent 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 them, or any of the Agent's and/or the Lenders' rights
hereunder.
5.7 Any balances to the credit of the Companies, or any one of them, and
any other property or assets of the Companies, or any one of them, in the
possession or control of the Agent and/or the Lenders may be held by the Agent
as security for any Obligations and applied in whole or partial satisfaction of
such Obligations when due. The liens and security interests granted herein, and
any other lien or security interest the Agent and/or the Lenders may have in any
other assets of the Companies, shall secure payment and performance of all now
existing and future Obligations. The Agent may in its discretion charge any or
all of the Obligations to the Revolving Loan Accounts of the Companies when due.
5.8 With such exceptions as are not material in the aggregate, each of the
Companies possess all General Intangibles and rights thereto necessary to
conduct their business as conducted as of the Closing Date and, with such
exceptions as are not material in the aggregate, the Companies shall maintain
their rights in, and the value of, the foregoing in the ordinary course of their
business, including, without limitation, by making timely payment with respect
to any applicable licensed rights. The Companies shall deliver to the Agent,
from time to time such pledge or security agreements with respect to General
Intangibles (now or hereafter acquired) of the Companies and their subsidiaries
as the Agent shall require to obtain valid first liens thereon. In furtherance
of the foregoing, the Companies shall provide timely notice to the Agent of any
additional United States registered Patents, Trademarks, tradenames, service
marks, Copyrights, brand names, trade names, logos and other trade designations
acquired or applied for subsequent to the Closing Date and the Companies shall
execute such documentation as the Agent may reasonably require to obtain and
perfect its lien thereon. The Companies hereby confirm that they shall deliver,
or cause to be delivered, any pledged stock issued subsequent to the Closing
Date to the Agent in accordance with the applicable terms of the Pledge
Agreement referenced in Section 2.1(m) hereof and prior to such delivery, shall
hold any such stock in trust for the Agent. Each of the Companies hereby
irrevocably
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grants to the Agent a royalty-free, non-exclusive license in the General
Intangibles, including tradenames, Trademarks, Copyrights, Patents, licenses,
and any other proprietary and intellectual property rights and any and all
right, title and interest in any of the foregoing, for the sole purpose, upon
the occurrence of an Event of Default (which is not waived in writing by the
Required Lenders or cured to the Agent's and/or the Required Lenders'
satisfaction), of the right to: (i) advertise for sale and sell or transfer any
Inventory bearing any of the General Intangibles, and (ii) make, assemble,
prepare for sale or complete, or cause others to do so, any applicable raw
materials or Inventory bearing any of the General Intangibles, including use of
the Equipment and Real Estate for the purpose of completing the manufacture of
unfinished goods, raw materials or work-in-process comprising Inventory, and
apply the proceeds thereof to the Obligations hereunder, all as further set
forth in this Financing Agreement and irrespective of the Agent's lien and
perfection in any General Intangibles.
5.9 This Financing Agreement and the obligation of the Companies to
perform all of their covenants and obligations hereunder are further secured by
mortgage(s) or deed(s) of trust on the fee owned Real Estate in Arizona, New
York and Utah.
5.10 The Companies shall give to the Agent from time to time such
mortgage(s) and deed(s) of trust on the Real Estate or real estate acquired
after the date hereof as the Agent shall require to obtain a valid first lien
thereon subject only to Permitted Encumbrances and those exceptions of title as
set forth in future title insurance policies that are reasonably satisfactory to
the Agent.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 The Companies hereby warrant and represent and/or covenant that: i)
the fair value of the Companies' assets exceeds the book value of the Companies'
liabilities; ii) the Companies are generally able to pay their debts as they
become due and payable; and iii) the Companies do not have unreasonably small
capital to carry on their business as currently conducted absent extraordinary
and unforeseen circumstances. The Companies further warrant and represent that
except for the Permitted Encumbrances, the security interests granted herein
constitute and shall at all times constitute the first and only liens on the
Collateral; that, except for the Permitted Encumbrances, the Companies are or
will be at the time additional Collateral is acquired by them, the owners of the
Collateral with full right to pledge, sell, consign, transfer and create a
security interest therein, free and clear of any and all claims or liens in
favor of others; that the Companies will at their expense warrant and, at
Agent's request, defend the same from any and all claims and demands of any
other person other than the Permitted Encumbrances; that the Companies will not
grant, create or permit to exist, any lien upon or security interest in the
Collateral, or any proceeds thereof, in favor of any other person other than the
holders of the Permitted Encumbrances; and that the Equipment does not comprise
a part of the Inventory of the Companies and that the Equipment is and will only
be used by the Companies in their business and will not be held for sale or
lease, or removed, except in the ordinary course of business, from their
premises, or otherwise disposed of by the Companies without the prior written
approval of Agent except as otherwise permitted in paragraph 5.4 of Section 5 of
this Financing Agreement. Companies further warrant and represent that Schedule
1 hereto correctly and completely sets forth their chief executive office,
jurisdiction of organization, trade names, and all of their Collateral
locations.
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6.2 The Companies are also to advise Agent promptly, in sufficient detail,
of any material adverse change relating to the type, quantity or quality of the
Collateral or on the security interests granted to Agent therein. The Companies
agree to maintain accurate books and records pertaining to the Collateral
consistent with past practices. If an Event of Default does not exist, Agent or
its agents may, from time to time upon reasonable notice, enter upon the
Companies' premises at any time during normal business hours, or at such other
times as Agent and the Companies may agree upon, for the purpose of inspecting
the Collateral and any and all records pertaining thereto, all at Agent's
expense. During the continuance of an Event of Default, Agent or its agents may,
at the Companies' expense, enter the Companies' premises, upon reasonable notice
and during normal business hours, and as often as it deems reasonably necessary,
to inspect the Collateral and the books and records of the Companies. The
Companies agree to afford Agent prior written notice of any change in the
location of any Collateral (other than motor vehicles and other than Collateral
that is in transit), other than to locations that are known to Agent and at
which Agent has filed financing statements and otherwise fully perfected its
liens thereon.
6.3 The Companies agree to: (a) execute and deliver to Agent no less than
on a weekly basis certificates respecting the Borrowing Base, which shall
include a breakdown of Inventory classified by raw materials, bulk finished
goods and packaged finished goods, (b) execute and deliver to Agent, from time
to time, solely for Agent's convenience in maintaining a record of the
Collateral, such written statements, and schedules as Agent may reasonably
require, designating, identifying or describing the Collateral pledged to Agent
hereunder, including monthly short-dated and slow-moving Inventory reports
tracking on a monthly basis the short-dated and slow-moving Inventory; (c)
provide Agent weekly Inventory reports with respect to the mix and type of each
Company's Inventory; (d) provide Agent monthly reports consisting of a standard
to actual inventory costing analysis; (e) provide Agent, on request (but not
more often than twice per calendar year so long as no Default or Event of
Default has occurred and is continuing), with an appraisal of the Inventory
which appraisal shall be at the Company's expense and otherwise acceptable to
Agent; (f) permit Agent to perform field examinations no less than quarterly;
(g) provide Agent with an Inventory cycle count four times per year during the
first year of the term hereof, prepared by Deloitte & Touche (or any other "big
5" accounting firm as is satisfactory to Agent) at the Company's expense and
otherwise acceptable to Agent; and (h) provide Agent with a copy, as and when
available, of the comprehensive internal audit report being prepared for the
Companies by Ernst & Young, LLP. The Companies' failure, however, to promptly
give Agent such statements, or schedules shall not affect, diminish, modify or
otherwise limit Agent's security interests in the Collateral.
6.4 The Companies agree, to the extent reasonably requested by Agent, to
comply with the requirements of all state and federal laws in order to grant to
Agent valid and perfected first security interests in the Collateral, subject
only to the Permitted Encumbrances, provided, however, that perfection as to
leasehold interests in Real Estate shall not be required, and further provided
that (except in the case of distribution centers) fixture filings shall not be
required. Agent is hereby authorized, to the extent permitted by applicable law,
by the Companies to file any financing statements covering the Collateral
whether or not the Companies' signatures appear thereon. The Companies agree to
do whatever Agent may reasonably request, from time to time, by way of: filing
notices of liens, financing statements, amendments, renewals and continuations
thereof; cooperating with Agent's agents and employees; keeping Collateral
records; transferring proceeds of Collateral to Agent's possession in accordance
with the terms of this Financing Agreement; and performing
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such further acts as Agent may reasonably require in order to effect the
purposes of this Financing Agreement.
6.5 The Companies agree to maintain insurance on the Real Estate owned in
fee, Equipment and Inventory in amounts and on terms no less favorable than the
insurance coverage on Real Estate owned in fee, Equipment and Inventory in place
as of the date hereof. All policies covering the Real Estate owned in fee,
Equipment and Inventory are, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to Agent, to be made payable to Agent, in
case of loss, under a standard non-contributory "mortgagee", "lender" or
"secured party" clause and are to contain such other provisions as Agent may
reasonably require to fully protect Agent's interest in the Real Estate owned in
fee, Inventory and Equipment and to any payments to be made under such policies
with respect to the Real Estate owned in fee, Inventory and the Equipment. All
original policies or true copies thereof or certificates thereof are to be
delivered to Agent, with all premiums current, with the loss payable endorsement
(as to casualty coverage) in Agent's favor, and shall provide for not less than
thirty (30) days (ten (10) days in the case of nonpayment of premium) prior
written notice to Agent of the exercise of any right of cancellation. At the
Companies' request, or if the Companies fail to maintain such insurance, Agent
may arrange for such insurance, but at the Companies' expense and without any
responsibility on Agent's part for: obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
During the continuance of an Event of Default which is not waived or cured,
Agent shall, subject to the rights of any holders of Permitted Encumbrances
holding claims senior to Agent, have the sole right, in the name of Agent or the
Companies, to file claims under any insurance policies with respect to the Real
Estate owned in fee, Inventory and the Equipment, to receive, receipt and give
acquittance for any payments that may be payable thereunder with respect to the
Real Estate owned in fee, Inventory and the Equipment, and to execute any and
all endorsements, receipts, releases, assignments, reassignments or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies. In the event of any
loss or damage by fire or other casualty, Insurance Proceeds relating to
Collateral shall be deposited in the Depository Accounts in accordance with
paragraph 3.4 of Section 3 of this Financing Agreement.
6.6(a) In the event any part of the Companies' or a Company's Real Estate
or Equipment is damaged by fire or other casualty and the Insurance Proceeds for
such damage or other casualty is less than or equal to $100,000.00, the Agent
shall promptly apply such proceeds to reduce such Companies' outstanding balance
in the Revolving Loan Account. Upon the occurrence of a Default or Event of
Default (which is not waived in writing by the Required Lenders or cured to the
Agent's and/or the Required Lenders' satisfaction), such Insurance Proceeds may
be applied to the Obligations in such order as the Agent may elect.
(b) Absent the occurrence of an Event of Default (which has not been
waived in writing by the Required Lenders or cured to the Agent's and/or the
Required Lenders' satisfaction), and provided that (x) the Companies have
sufficient business interruption insurance to replace the lost profits of any of
the Companies' facilities, and (y) the Insurance Proceeds are in excess of
$100,000.00, the Companies may elect (by delivering written notice to the Agent)
to replace, repair or restore such Real Estate or Equipment to substantially the
equivalent condition prior to such fire or other casualty as set forth herein.
If the Companies do not, or cannot, elect to use the Insurance Proceeds as set
forth above, the Agent may, subject to the rights of any holders of Permitted
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Encumbrances holding claims senior to the Agent, apply the Insurance Proceeds to
the payment of the Obligations in such manner and in such order as the Agent may
reasonably elect.
(c) If the Companies elect to use the Insurance Proceeds for the repair,
replacement or restoration of any Real Estate and/or Equipment, and there is
then no Event of Default, (x) Insurance Proceeds for any such loss in excess of
$100,000.00 on Equipment and/or Real Estate owned in fee will be applied to the
reduction of the Revolving Loans, and (y) the Agent may set up an Availability
Reserve for an amount equal to said insurance proceeds. The Availability Reserve
will be reduced dollar-for-dollar upon receipt of non-cancelable executed
purchase orders, delivery receipts or contracts for the replacement, repair or
restoration of Equipment and/or the Real Estate owned in fee and disbursements
in connection therewith. Prior to the commencement of any material restoration,
repair or replacement of Real Estate owned in fee, the Companies shall provide
the Agent with a restoration plan and a total budget certified by an independent
third party experienced in construction costing. If there are insufficient
Insurance Proceeds to cover the cost of restoration as so determined, the
Companies shall be responsible for the amount of any such insufficiency, prior
to the commencement of restoration and shall demonstrate evidence of such before
the reserve will be reduced. Completion of restoration shall be evidenced by a
final, unqualified certification of the design architect employed, if any; an
unconditional Certificate of Occupancy, if applicable; such other certification
as may be required by law; or if none of the above is applicable, a written good
faith determination of completion by the Companies (herein collectively the
"Completion"). Upon Completion, any remaining reserve as established hereunder
will be automatically released.
6.7 The Companies agree to pay, when due, all taxes, assessments, claims
and other charges (herein "taxes") lawfully levied or assessed upon the
Companies or the Collateral; provided, however, that such taxes need not be paid
on or before the due date thereof if: (i) such taxes are being diligently
contested by the Companies in good faith and by appropriate proceedings; (ii)
the Companies establish such reserves as may be required by GAAP; (iii) such
taxes (if in excess of $100,000) are not secured by a filed lien which Agent
reasonably determines could be or become senior to the liens of Agent on the
Collateral, and (iv) such taxes secured by a filed lien are not due to the
United States of America. To prevent the imminent foreclosure of any tax liens
(whether such liens are senior or junior to the liens of Agent) or in the event
Agent is exercising its remedies as a secured creditor on Collateral, then Agent
may, on the Companies' behalf, pay any taxes then due and secured by a lien on
the Collateral and the amount thereof shall be an Obligation secured hereby.
6.8 Subject to the provisions of the preceding paragraph, the Companies:
(a) agree to comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official, which the failure to
comply with would have a material and adverse impact on the Collateral, or any
material part thereof, or on the operation of the Companies' business, taken as
a whole, provided that the Companies may contest any acts, rules, regulations,
orders and directions of such bodies or officials in any reasonable manner which
will not materially and adversely effect Agent's rights or priority in the
Collateral; (b) agree to comply with all environmental statutes, acts, rules,
regulations or orders as presently existing or as adopted or amended in the
future, applicable to the ownership and/or use of their real property and
operation of their business, which the failure to comply with would have a
material and adverse impact on the Collateral, or any material part thereof, or
on the operation of the business of the Companies, taken as a whole. Other than
as resulting from Agent's gross negligence or willful misconduct, the Companies
hereby indemnify Agent and agree to defend and hold Agent harmless from and
against any and all loss, damage,
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claim, liability, injury or expense which Agent may sustain or incur in
connection with: any claim or expense asserted against Agent as a result of any
environmental pollution, hazardous material or environmental clean-up of the
Companies' real property; or any claim or expense which results from the
Companies' operations (including, but not limited to, the Companies' off-site
disposal practices) and the Companies further agree that this indemnification
shall survive termination of this Financing Agreement as well as the payment of
all Obligations or amounts payable hereunder; and (c) shall not be deemed to
have breached any provision of this paragraph 6 if (i) the failure to comply
with the requirements of this paragraph 6 resulted from good faith error or
innocent omission, (ii) the Companies promptly commence and diligently pursue a
cure of such breach and such cure is eventually, within a reasonably time frame,
but not to exceed 45 days, based upon the circumstances and the amount work
required, completed and (iii) such failure has not resulted in a materially
adverse effect on any material portion of the Collateral or the business,
financial condition or operations of the Companies.
6.9 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Companies agree that, unless
Agent shall have otherwise consented in writing, the Companies will furnish to
Agent, within ninety (90) days after the end of each fiscal year of the
Companies, a Consolidated Financial Statement and a Consolidating Financial
Statement as at the close of and for such year, audited by independent public
accountants selected by the Companies and satisfactory to Agent (Agent hereby
agrees that Deloitte & Touche or any other "big 5" accounting firm as is
satisfactory to Agent); within forty-five (45) days after the end of each fiscal
quarter a Consolidated Financial Statement and Consolidating Financial Statement
as at the end of such period, certified by an authorized financial or accounting
officer of the Companies; and within thirty (30) days after the end of each
month a Consolidated Financial Statement as at the end of and for such period,
certified by an authorized financial or accounting officer of the Companies; and
from time to time, such further information regarding the business affairs and
financial condition of the Companies as Agent may reasonably request, including
without limitation annual cash flow projections in form reasonably satisfactory
to Agent. Each financial statement which the Companies are required to submit
hereunder must be accompanied by an officer's certificate, signed by the
President, Vice President, Controller, or Treasurer, pursuant to which any one
such officer must certify that: (i) the financial statement(s) in all material
respects fairly and accurately represent(s) the Companies' financial condition
at the end of the particular accounting period, as well as the Companies'
operating results during such accounting period, subject to year-end audit
adjustments and, in the case of monthly and quarterly financial statements, the
absence of footnotes; (ii) during the particular accounting period: (x) there
has been no Default or Event of Default under this Financing Agreement,
provided, however, that if any such officer has knowledge that any such Default
or Event of Default has occurred during such period, the existence of and a
detailed description of same shall be set forth in such officer's certificate;
and (y) the Companies have not received any notice of cancellation with respect
to their property insurance policies or certifying as to replacement policies
therefor; and (iii) the exhibits attached to such financial statement(s)
constitute detailed calculations showing compliance with all financial covenants
contained in this Financing Agreement.
6.10 Until termination of the Financing Agreement and payment and
satisfaction of all Obligations hereunder, each of the Companies agrees that,
without the prior written consent of the Agent, except as otherwise herein
provided, the Companies or any one of them will not:
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(a) Mortgage, pledge, 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 Companies'
Collateral or any other assets, whether now owned or hereafter
acquired, except for the Permitted Encumbrances;
(b) Incur or create any Indebtedness other than the Permitted
Indebtedness;
(c) Except for Permitted Indebtedness secured by Permitted
Encumbrances, borrow any money on the security of the
Companies' Collateral from sources other than Agent;
(d) Sell, lease, assign, transfer or otherwise dispose of (i)
Collateral consisting of cash, Trade Accounts Receivable,
Inventory, Equipment or Permitted Investments, except as otherwise
permitted by this Financing Agreement, (ii) any other Collateral
having a value in excess of $250,000 per year, or (iii) all or
substantially all of any of the Companies' assets, which do not
constitute Collateral;
(e) Merge, consolidate, reincorporate or otherwise alter or modify
their respective corporate names, principal places of business,
jurisdictions of incorporation and organization, their
structure, corporate good standing, status or existence, or
enter into or engage in any business other than businesses
engaged in by the Companies on the date hereof and similar or
related businesses or businesses incidental thereto, except
that (A) the Companies may change their corporate name or
address, or (B) a Company may merge with and into any other
Company (with a Company being the survivor of such merger),
provided that: (i) in any such instance under (A) or (B) above
the Companies shall give the Agent thirty (30) days prior
written notice thereof; and (ii) the Companies shall execute
and deliver, prior to or simultaneously with any such action,
any and all documents and agreements requested by the Agent to
confirm the continuation and preservation of all security
interests and liens granted to the Agent hereunder;
(f) Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any other person, firm, entity or corporation,
except (i) by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business, (ii) subleases or assignment of leases as
to which such Company retains liability or as to which a
Company is a sublessee or assignee, (iii) in the ordinary
course of business (but not in excess of $500,000 at any time
outstanding), or (iv) assumptions and guarantees of obligations
of another Company;
(g) Declare or pay any dividend or distributions of any kind on, or
purchase, acquire, redeem or retire, any of its capital stock
or equity interest, of any class whatsoever, whether now or
hereafter outstanding, other than dividends payable solely in
shares of capital stock of the Companies. Notwithstanding the
foregoing, (i) any subsidiary of a Company may pay dividends or
distributions to the holders of its equity securities, and (ii)
TLI may pay dividends and distributions to Parent in an amount
not to exceed $350,000 in any calendar year;
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(h) Except for Permitted Investments, make any advance or loan to, or
any investment in, any firm, entity, person or corporation or
purchase or acquire all or substantially all of the stock or
assets of any entity, person or corporation;
(i) Pay any management, consulting or other similar fees to any
person, corporation or other entity affiliated with the
Companies; or
(j) Make any prepayment on any Subordinated Debt.
6.11 Until termination of the Financing Agreement and payment and
satisfaction in full of all Obligations hereunder, the Companies, on a
consolidated basis, shall:
(a) maintain at the end of each month, on a cumulative basis for each
month during Fiscal Year 2001 and on a rolling, trailing 12-month basis
thereafter, EBITDA of not less than the amounts set forth below for the
applicable period:
PERIOD AMOUNT
------ ------
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, <$6,500,000>
calculated as of month-end, April, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, <$5,000,000>
calculated as of month-end, May, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, <$1,200,000>
calculated as of month-end, June, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, <$300,000>
calculated as of month-end, July, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, $ 2,000,000
calculated as of month-end, August, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, $ 7,000,000
calculated as of month-end, September, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, $ 8,300,000
calculated as of month-end, October, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, $10,500,000
calculated as of month-end, November, 2001
------------------------------------------------------------------------
Cumulative for Fiscal Year 2001, $15,000,000
calculated as of month-end, December, 2001
------------------------------------------------------------------------
Cumulative trailing 12 months $15,000,000
thereafter, calculated as of each month end
------------------------------------------------------------------------
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(b) without the prior written consent of the Agent, the Companies will
not:
(i) enter into any Operating Lease if after giving effect thereto
the aggregate obligations with respect to Operating Leases of the
Companies during any Fiscal Year would exceed $2,000,000, excluding
obligations for maintenance, repairs, insurance, taxes, assessments
and similar charges;
(ii) contract for, purchase, make expenditures for, lease pursuant
to a Capital Lease or otherwise incur obligations with respect to
Capital Expenditures (whether subject to a security interest or
otherwise) during any period below in an aggregate amount payable
during such period in excess of the amount set forth for such
period, provided than any unused permitted amount may be carried
forward to one or more future periods:
(A) $6,000,000 for the Fiscal Year ending December 31, 2001;
(B) $8,000,000 for the Fiscal Year ending December 31, 2002;
(C) $8,000,000 for the Fiscal Year ending December 31, 2003.
6.12 Each of the Companies agrees to advise the Agent in writing of: a)
all expenditures (actual or reasonably anticipated) in excess of $50,000 from
the budgeted amount therefor in any Fiscal Year for x) environmental clean-up,
y) environmental compliance or z) environmental testing and the impact of said
expenses on each of the Companies' Working Capital; and b) any notices the
Companies receive from any local, state or federal authority advising the
Companies of any environmental liability (real or potential) stemming from any
of the Companies' operations, their premises, their waste disposal practices, or
waste disposal sites used by any of the Companies and to provide the Agent with
copies of all such notices if so required.
6.13 Each of the Companies hereby agrees to indemnify and hold harmless
the Agent and its officers, directors, employees, attorneys and agents (each an
"Indemnified Party") from, and holds each of them harmless against, any and all
losses, liabilities, obligations, claims, actions, damages, costs and expenses
(including attorney's fees) and any payments made by the Agent pursuant to any
indemnity provided by the Agent with respect to or to which any Indemnified
Party could be subject insofar as such losses, liabilities, obligations, claims,
actions, damages, costs, fees or expenses with respect to the Loan Documents,
including without limitation those which may arise from or relate to: (a) the
Depository Account, the lockbox and/or any other depository account and/or the
agreements executed in connection therewith; and (b) any and all claims or
expenses asserted against the Agent as a result of any environmental pollution,
hazardous material or environmental clean-up relating to the Real Estate; or any
claim or expense which results from any of the Companies' operations (including,
but not limited to, any of the Companies' off-site disposal practices) and use
of the Real Estate, which the Agent may sustain or incur (other than solely as a
result of the physical actions of the Agent or any Lender on the Companies'
premises which are determined to constitute gross negligence or willful
misconduct by a court of competent jurisdiction), all whether through the
alleged or actual negligence of such person or otherwise, except and to the
extent that the same results solely and directly from the gross negligence or
willful misconduct of any Indemnified Party
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as finally determined by a court of competent jurisdiction. The Companies hereby
agree that this indemnity shall survive termination of this Financing Agreement,
as well as payments of Obligations which may be due hereunder. The Agent may, in
its sole business judgement, establish such Availability Reserves with respect
thereto as it may deem advisable under the circumstances and, upon any
termination hereof, hold such reserves as cash reserves for any such contingent
liabilities.
6.14 Except for Permitted Affiliate Transactions, without the prior
written consent of the Agent, the Companies agree that they will not enter into
any transaction, including, without limitation, any purchase, sale, lease, loan
or exchange of property with the Parent or any subsidiary or affiliate of the
Companies or Parent, provided that, except as otherwise set forth in this
Financing Agreement, the Companies or any one of them may enter into sale and
service transactions in the ordinary course of their business and pursuant to
the reasonable requirements of any such Company, and upon standard terms and
conditions and fair and reasonable terms, no less favorable to such Company than
such Company could obtain in a comparable arms length transaction with an
unrelated third party, provided further that no Default or Event of Default
exists or will occur hereunder prior to and after giving effect to any such
transaction.
6.15 The Companies acknowledge that Agent intends to syndicate the Line of
Credit to other financial institutions identified by Agent in consultation with
the Companies. To actively assist Agent in its syndication efforts, the
Companies agree (i) to provide and cause Agent's advisors to provide Agent and
other proposed syndicate members upon request with all information with respect
to the business of the Companies and their respective affiliates and that is
deemed necessary by Agent to complete the syndication including, without
limitation, all financial information, evaluations and projections as may
reasonably be requested by Agent, subject to standard confidentiality
limitations to be agreed upon, (ii) to assist Agent upon its request in the
preparation of an information memorandum to be used in connection with the
syndication of the Line of Credit, and (iii) to otherwise assist Agent in its
syndication efforts, including making available from time to time officers of
the Companies and Parent to attend, and make presentations regarding the
business and prospects of the Companies at, one or more meetings or conference
calls with potential lenders.
6.16 The Companies covenant that the Blechmans Letter of Credit will be
delivered to the Agent on or before April 16, 2001.
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SECTION 7. INTEREST, FEES AND EXPENSES
7.1 Interest on the Revolving Loans and the Term Loan shall be payable
monthly as of the end of each month and shall be an amount equal to the Chase
Bank Rate Margin plus the Chase Bank Rate, per annum, on the average of the net
balances owing by the Companies to Agent in the Companies' account at the close
of each day during such month. In the event of any change in said Chase Bank
Rate, the rate above shall change, as of the first of the month following any
change, so as to remain equal to the new Chase Bank Rate plus the Chase Bank
Rate Margin. The rate hereunder shall be calculated based on a 360-day year.
Agent shall be entitled to charge the Companies' account at the rate provided
for herein when due until all Obligations then due have been paid in full.
7.2 During the continuance of an Event of Default, after the giving of any
required notice by Agent, and the satisfaction of any other applicable
conditions, in accordance with the provisions of Section 9, Paragraph 9.2,
clause (b) hereof, all Obligations shall bear interest at the Default Rate of
Interest.
7.3 In the event that the sum of (i) the outstanding Revolving Loans and
(ii) the outstanding Letters of Credit exceed the lesser of either (x) the
maximum aggregate amount available under Section 3 of this Financing Agreement
or (y) the Revolving Line of Credit: (A) as a result of Revolving Loans advanced
by the Agent at the request of the Companies or any one of them (herein
"Requested Overadvances"), for any one (1) or more days in any month, or (B) for
any other reason whatsoever (herein "Other Overadvances") and such Other
Overadvances continue for five (5) or more days in any month , the average net
balance of all Revolving Loans for such month shall bear interest at the
Overadvance Rate.
7.4 Each of the Companies shall reimburse or pay the Agent, as the case
may be, for: (a) all Out-of-Pocket Expenses and (b) any applicable Documentation
Fee.
7.5 Upon the last Business Day of each month commencing with the month
during which the Closing Date occurs, the Companies shall pay to the Agent, for
the benefit of the Lenders, the Line of Credit Fee.
7.6 In consideration of the Letter of Credit Guaranty of the Agent, the
Companies shall pay the Agent the Letter of Credit Guaranty Fee which shall be
an amount equal to (a) 2.0% of the face amount of each documentary Letter of
Credit payable upon issuance thereof and (b) 2.0% per annum, payable monthly, on
the face amount of each standby Letter of Credit less the amount of any and all
amounts previously drawn under such standby Letter of Credit.
7.7 Any and all charges, fees, commissions, costs and expenses charged to
the Agent for the Companies' account by any Issuing Bank in connection with, or
arising out of, Letters of Credit or out of transactions relating thereto will
be charged to the Revolving Loan Account in full when charged to, or paid by the
Agent, or as may be due upon any termination of this Financing Agreement hereof,
and when made by any such Issuing Bank shall be conclusive on the Agent.
7.8 The Companies shall pay the Agent's standard charges and fees for the
Agent's personnel used by the Agent for reviewing the books and records of the
Companies and for verifying, testing,
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43
protecting, safeguarding, preserving or disposing of all or any part of the
Collateral (which fees shall be in addition to the fees provided for in the Fee
Letter and any Out-of-Pocket Expenses).
7.9 Each of the Companies hereby authorizes the Agent to charge their
respective Revolving Loan Account(s) with the amount of all their Obligations
due hereunder as such payments become due. The Companies hereby confirm and
agree that they shall promptly pay any Obligations then due to the Agent upon
its request therefor. Each of the Companies confirms that (i) its liability for
any and all of the fee obligations and Out-of-Pocket Expenses, set forth in this
Financing Agreement and in any of the other Loan Documents is joint and several,
(ii) the Companies, as between themselves, shall determine how to pro-rate any
such payments due hereunder, and (iii) for ease of administration, the Agent may
charge any of their Revolving Loan Accounts with the amount of any such fee
payments and any such charges which the Agent may so make to any of the
Companies' Revolving Loan Account(s) as herein provided will be made as an
accommodation to the Companies and solely at the Agent's discretion. In the
event Agent is unable or unwilling to charge any such payment to the Companies'
account, then Agent shall so notify the Companies in writing and the amount of
such payment shall be immediately due and payable.
7.10 In the event that the Agent or any participant hereunder (or any
financial institution which may from time to time become a participant or lender
hereunder) shall have determined in the exercise of its reasonable business
judgement that, subsequent to the Closing Date, any change in applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in the
interpretation or administration thereof, or compliance by the Agent or such
participant with any new request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Agent's or such participant's capital as a consequence of its obligations
hereunder to a level below that which the Agent or such participant could have
achieved but for such adoption, change or compliance (taking into consideration
the Agent's or such participant's policies with respect to capital adequacy) by
an amount reasonably deemed by the Agent or such participant to be material,
then, from time to time, the Companies shall pay no later than ten (10) days
following receipt of written demand (accompanied by reasonable detail as to the
basis and calculation thereof) to the Agent or such participant such additional
amount or amounts as will compensate the Agent or such participant for such
reduction. In determining such amount or amounts, the Agent or such participant
may use any reasonable averaging or attribution methods. The protection of this
Paragraph 7.10 shall be available to the Agent or such participant regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable law, regulation or condition. A certificate of the Agent or such
participant setting forth such amount or amounts as shall be necessary to
compensate the Agent or such participant with respect to this Section 7.10 and
the calculation thereof when delivered to the Companies shall be conclusive on
the Companies absent manifest error. Notwithstanding anything in this paragraph
to the contrary, in the event the Agent or such participant has exercised its
rights pursuant to this paragraph, and subsequent thereto determines that the
additional amounts paid by the Companies in whole or in part exceed the amount
which the Agent or such participant actually required to be made whole, the
excess, if any, shall be returned to the Companies by the Agent or such
participant, as applicable.
7.11. In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by the Agent or such participant with any request or
directive (whether or not having the force of law) from any central bank or
other
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financial, monetary or other authority, in each case made or effective
subsequent to the Closing Date, shall:
(a) subject the Agent or such participant to any tax of any kind
whatsoever with respect to this Financing Agreement or change the basis of
taxation of payments to the Agent or such participant of principal, fees,
interest or any other amount payable hereunder or under any other documents
(except for changes in the rate of tax on the overall net income of the Agent or
such participant by the federal government or the jurisdiction in which it
maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by the Agent or
such participant by reason of or in respect to this Financing Agreement and the
Loan Documents, including (without limitation) pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or
(c) impose on the Agent or such participant any other condition with
respect to this Financing Agreement or any other Loan Document,
and the result of any of the foregoing is to increase the cost to the Agent or
such participant of making, renewing or maintaining its loans hereunder by an
amount that the Agent or such participant deems to be material in the exercise
of its reasonable business judgement or to reduce the amount of any payment
(whether of principal, interest or otherwise) in respect of any of the loans by
an amount that the Agent or such participant deems to be material in the
exercise of its reasonable business judgement, then, in any case the Companies
shall pay the Agent or such participant, within five (5) days following its
demand (accompanied by a reasonable explanation and calculation thereof), such
additional cost or such reduction, as the case may be. The Agent or such
participant shall certify the amount of such additional cost or reduced amount
to the Companies and the calculation thereof and such certification shall be
conclusive upon the Companies absent manifest error. Notwithstanding anything in
this paragraph to the contrary, in the event the Agent or such participant has
exercised its rights pursuant to this paragraph, and subsequent thereto
determine that the additional amounts paid by the Companies in whole or in part
exceed the amount which the Agent or such participant actually required pursuant
hereto, the excess, if any, shall be returned to the Companies by the Agent or
such participant.
SECTION 8. POWERS
Each Company hereby constitutes the Agent, or any person or agent the
Agent may designate, as its attorney-in-fact, at the Companies' cost and
expense, to exercise all of the following powers, which being coupled with an
interest, shall be irrevocable until all Obligations to the Agent have been paid
in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name
of the Agent or the Companies or any one of them, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral for (i)
deposit to a Blocked Account (consistent with the terms of paragraph 4 of
Section 3 of this Financing Agreement) or (ii) after the acceleration by Agent
of Obligations, for application to satisfaction of the Obligations consistent
with the terms of paragraph 3 of Section 9 hereof;
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45
(b) To receive, open and dispose of all mail addressed to the Companies or
any one of them and to notify postal authorities to change the address for
delivery thereof to such address as the Agent may designate;
(c) To request from customers indebted on Trade Accounts Receivable at any
time, in the name of the Agent or the Companies, in the name of a certified
public accountant designated by the Agent, or in the name of the Agent's
designee, information concerning the amounts owing on the Trade Accounts
Receivable;
(d) To transmit to customers indebted on Trade Accounts Receivable notice
of the Agent's interest therein and to notify customers indebted on Trade
Accounts Receivable to make payment directly to the Agent for the Companies'
account; and
(e) To take or bring, in the name of the Agent or the Companies or any one
of them, all steps, actions, suits or proceedings reasonably deemed by the Agent
necessary or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers
set forth in (a),(b), (d) and (e) and above may only be exercised after the
occurrence of an Event of Default and until such time as such Event of Default
is waived in writing by the Agent.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
9.1 Notwithstanding anything hereinabove to the contrary, the Agent may
terminate this Financing Agreement immediately upon the occurrence of any of the
following Events of Default:
(a) cessation of the business of any Company or the calling of a
general meeting of the creditors of any Company for purposes of
compromising the debts and obligations of such Company;
(b) any Company admits in writing its inability to generally meet
its debts as they mature;
(c) (i) the commencement by any Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or
similar proceedings under any federal or state law; (ii) the
commencement against any Company, of any bankruptcy,
insolvency, arrangement, reorganization, receivership or
similar proceeding under any federal or state law by creditors
of such Company, which proceeding shall not have been dismissed
and vacated within sixty (60) days of commencement, or any of
the actions sought in any such proceeding shall occur or the
Company shall take action to authorize or effect any of the
actions in any such proceeding; or (iii) the commencement (x)
by Parent or any Company's subsidiaries, or any one of them, of
any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding under any applicable state
law, or (y) against Parent or any Company's subsidiaries, or
any one of them, of any involuntary bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeding
under applicable law, which proceeding shall not have been
dismissed or vacated within sixty (60) days of commencement, or
any of the actions sought in any such proceeding shall
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46
occur or any Company's subsidiaries, or any one of them, shall
take action to authorize or effect any of the actions in any such
proceeding; provided, further, that such Default shall not be
deemed an Event of Default if the proceeding, petition, case or
arrangement is commenced or supported by creditors holding
$1,000,000 or less of indebtedness and is dismissed within 60
days of the filing of, or the commencement of, such petition,
case, proceeding or arrangement;
(d) material breach by any Company or Parent of any warranty,
representation or covenant contained herein (other than those
referred to in sub-paragraph (e) below) or in any other written
agreement between such Company or Parent and the Agent relating
to this Financing Agreement (including any Guaranty or the
Blechmans Guaranty) , provided that such Default by such
Company of any of the warranties, representations or covenants
referred in this clause (d) shall not be deemed to be an Event
of Default unless and until such Default shall remain
unremedied to the Agent's satisfaction for a period of fifteen
(15) days from the date of such breach;
(e) breach by any Company of any warranty, representation or
covenant of Paragraphs 3.3 (other than the fourth sentence of
Paragraph 3.3) and 3.4 of Section 3 hereof; Paragraphs 5.3 and
5.4 (other than the first sentence of Paragraph 5.4) of Section
5 hereof; Paragraphs 6.1, 6.5, 6.6, and 6.9 through 6.11, or
the termination, revocation or purported revocation by any
Company, Parent or other Guarantor of its Guaranty or by any
guarantor under the Blechmans Guaranty;
(f) failure of the Companies to pay any of the Obligations within five
(5) Business Days of the due date thereof, provided that nothing
contained herein shall prohibit the Agent from charging such
amounts to the Revolving Loan Account on the due date thereof;
(g) the Companies or any one of them shall (i) engage in any
"prohibited transaction" as defined in ERISA, (ii) have any
"accumulated funding deficiency" as defined in ERISA, (iii)
have any "reportable event" as defined in ERISA, (iv) terminate
any "plan", as defined in ERISA or (v) be engaged 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 to this sub-paragraph (g) such event or condition (x)
remains uncured for a period of sixty (60) days from date of
occurrence and (y) could reasonably be expected to subject any
of the Companies to any tax, penalty or other liability
materially adverse to the business, operations or financial
condition of the Companies, taken as a whole;
(h) without the prior written consent of the Agent and, except as
permitted in the Subordination Agreement, the Companies or any one
of them shall (x) amend or modify the Subordinated Debt, or (y)
make any prepayment on account of the Subordinated Debt; or
(i) 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 (x) Subordinated Debt, or
(y) any other Indebtedness of the Companies or any one of
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them having an aggregate principal amount in excess of $2,000,000
if the effect of such default or event of default is to permit the
holder or holders of such Subordinated Debt or other Indebtedness,
as the case may be, to cause the same to become or be declared due
and payable prior to its stated maturity or charge an increased
rate of interest.
9.2 Upon the occurrence of a Default and/or an Event of Default, the Agent
in its sole discretion may, or upon the written direction of the Required
Lenders the Agent shall, declare that, all loans, advances and extensions of
credit provided for in Sections 3 and 4 of this Financing Agreement shall be
thereafter in the Agent's or the Required Lenders' sole discretion, and the
obligation of the Agent and/or the Lenders to make Revolving Loans, open Letters
of Credit and provide Letters of Credit Guaranties, shall cease unless such
Default or Event of Default is waived in writing by the Required Lenders or
cured to the Agent's or the Required Lenders' satisfaction in the exercise of
the Agent's or the Required Lenders' reasonable judgement. Upon the occurrence
of an Event of Default, the Agent in its sole discretion may, or upon the
written direction of the Required Lenders the Agent shall, declare that: (a) all
Obligations shall upon notice (provided, however, that no such notice is
required if the Event of Default is the Event of Default listed in paragraph
9.1(c) of this Section 9) become immediately due and payable; (b) the Agent may
charge the Companies the Default Rate of Interest on all then outstanding or
thereafter incurred Obligations in lieu of the interest provided for in Section
7 of this Financing Agreement, provided that, with respect to this clause "(b)"
the Agent has given notice of the imposition of the Default Rate of Interest,
provided further however, that no notice is required if the Event of Default is
the Event listed in Paragraph 9.1(c) of this Section 9; and (c) the Agent may
immediately terminate this Financing Agreement upon notice to the Companies,
provided, however, that upon the occurrence of an Event of Default listed in
Paragraph 9.1(c) of this Section 9, this Financing Agreement shall automatically
terminate and all Obligations shall become due and payable, without any action,
declaration, notice or demand by the Agent. Notwithstanding anything herein
contained to the contrary, if Agent or the Required Lenders waives all Events of
Default, then by written notice to the Companies, the acceleration of the
Obligations will be rescinded and all remedies and actions then being exercised
by Agent shall cease. The exercise of any option is not exclusive of any other
option, which may be exercised at any time by the Agent.
9.3 Immediately upon the occurrence of any Event of Default, the Agent
may, to the extent permitted by 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 any electronic
records, contracts and signatures pertaining thereto), documents, instruments,
files and records, and any receptacles or cabinets containing same, relating to
the Accounts, or the Agent may use, at the Companies' expense, such of the
Companies' personnel, supplies or space at the Companies' 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 Companies or the Agent, and generally shall have all other rights
respecting said Accounts, including without limitation the right to: accelerate
or extend the time of payment, settle, compromise, release in whole or in part
any amounts owing on any Accounts and issue credits in the name of the Companies
or the Agent; (c) sell, assign and deliver the Collateral and any returned,
reclaimed or repossessed Inventory, with or without advertisement, at public or
private sale, for cash, on credit or otherwise, at the Agent's sole option and
discretion, and, to the extent permitted by applicable law, the Agent may bid or
become a purchaser at any such sale, free from
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48
any right of redemption, which right is hereby expressly waived by the
Companies; (d) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any Inventory and Equipment and/or Other 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, to the
extent permitted by applicable law. The Agent shall have the right, without
notice or advertisement, to sell, lease, or otherwise dispose of all or any part
of the Collateral, whether in its then condition or after further preparation or
processing, in the name of the Companies or the Agent, or in the name of such
other party as the Agent 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, and upon such other terms and conditions as the
Agent in its sole discretion may deem advisable, and the Agent shall have the
right to purchase at any such sale. If any Inventory and Equipment shall require
rebuilding, repairing, maintenance or preparation, the Agent shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and Equipment in such saleable form as the
Agent shall deem appropriate and any such costs shall be deemed an Obligation
hereunder. The Companies agree, at the request of the Agent, to assemble the
Inventory and Equipment and to make it available to the Agent at premises of the
Companies or such other location reasonably designated by Agent and to make
available to the Agent the premises and facilities of the Companies for the
purpose of the Agent's taking possession of, removing or putting the Inventory
and Equipment 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 the Agent's exercise of any of the foregoing
rights, (after deducting all charges, costs and expenses, including reasonable
attorneys' fees) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in such order as the Agent may elect,
and the Companies shall remain liable to the Agent for any deficiencies, and the
Agent in turn agrees to remit to the Companies or their 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 rights, all of which shall be cumulative. The Companies
hereby indemnifies the Agent and holds the Agent harmless from any and all
costs, expenses, claims, liabilities, Out-of-Pocket Expenses or otherwise,
incurred or imposed on the Agent by reason of the exercise of any of its rights,
remedies and interests hereunder, including, without limitation, from any sale
or transfer of Collateral, preserving, maintaining or securing the Collateral,
defending its interests in Collateral (including pursuant to any claims brought
by the Companies, the Companies as debtor-in-possession, any secured or
unsecured creditors of the Companies, any trustee or receiver in bankruptcy, or
otherwise), and the Companies hereby agree to so indemnify and hold the Agent
harmless, absent the Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. The foregoing indemnification
shall survive termination of this Financing Agreement until such time as all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof the Agent, may establish such reserves for
Obligations hereunder (including any contingent Obligations) as it may deem
advisable in its reasonable business judgement. Any applicable mortgage(s),
deed(s) of trust or assignment(s) issued to the Agent on the Real Estate shall
govern the rights and remedies of the Agent thereto.
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SECTION 10. TERMINATION
Except as otherwise permitted herein, the Agent may terminate this
Financing Agreement only as of the initial or any subsequent Anniversary Date
and then only by giving the Companies at least sixty (60) days prior written
notice of termination. Notwithstanding the foregoing the Agent may terminate the
Financing Agreement immediately upon the occurrence of an Event of Default upon
notice to the Companies, provided, however, that if the Event of Default is an
event listed in Paragraph 9.1(c) of Section 9 of this Financing Agreement, this
Financing Agreement shall terminate in accordance with paragraph 9.2 of Section
9. The Companies or any one of them may terminate this Financing Agreement on
the first Anniversary Date or any subsequent Anniversary Date so long as the
Companies give sixty (60) days' prior written notice to the Agent. Companies or
any one of them may also terminate this Financing Agreement at any other time
upon sixty (60) days prior written notice to Agent, provided that the Companies
pay to the Agent immediately on demand an Early Termination Fee. Notice of
termination, as aforesaid, by any one Company shall be deemed to be notice by
the Companies for purposes hereof. All Obligations shall become due and payable
as of any termination hereunder or under Section 9 hereof and, pending final
payment in full of all Obligations, the Agent may withhold any balances in the
Companies' account (unless supplied with an indemnity satisfactory to the Agent)
to cover all of the Obligations, whether absolute or contingent, including, but
not limited to, cash reserves for any contingent Obligations, including an
amount of 110% of the face amount of any outstanding Letters of Credit with an
expiry date on, or within thirty (30) days of the effective date of termination
of this Financing Agreement. All of the Agent's rights, liens and security
interests shall continue after any termination until all Obligations have been
paid and satisfied in full.
SECTION 11. MISCELLANEOUS
11.1 Except as otherwise expressly provided in this Financing Agreement,
the Companies hereby waive diligence, demand, presentment and protest and any
notices thereof as well as notice of nonpayment. No delay or omission of the
Agent or the Companies to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the Agent of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy.
11.2 This Financing Agreement and the Loan Documents executed and
delivered in connection therewith constitute the entire agreement among the
Companies, the Lenders and the Agent; supersede any prior agreements; can be
changed only by a writing signed by both the Companies and the Agent; and shall
bind and benefit the Companies and the Agent and their respective successors and
assigns.
11.3 In no event shall the Companies, upon demand by the Agent 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, the Agent 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 the Agent
ever receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if
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principal is paid in full, any remaining excess shall be refunded to the
Companies. This paragraph shall control every other provision hereof, the Loan
Documents and of any other agreement made in connection herewith.
11.4 If any provision hereof or of any other agreement made in connection
herewith 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 EACH OF THE COMPANIES, THE LENDERS AND THE AGENT EACH HEREBY WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER. EACH OF THE COMPANIES
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 THE AGENT BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
11.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (provided that, any
electronic communications from any of the Companies with respect to any request,
transmission, document, electronic signature, electronic mail or facsimile
transmission shall be deemed binding on the Companies for purposes of this
Financing Agreement, provided further that any such transmission shall not
relieve the Companies from any other obligation hereunder to communicate further
in writing), and shall be deemed to have been validly served, given or delivered
when hand delivered or sent by facsimile, or three days after deposit in the
United State mails, with proper first class postage prepaid and addressed to the
party to be notified or to such other address as any party hereto may designate
for itself by like notice, as follows:
(A) if to the Agent, at:
The CIT Group/Business Credit, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Manager
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) if to the Companies at:
Twin Laboratories, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
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With a copy to the Companies' counsel at:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
(C) if to any other Lender hereunder, at the address set forth therefor
in the applicable Assignment and Assumption Agreement
provided, however, that the failure of the Agent to provide the Companies'
counsel with a copy of such notice shall not invalidate any notice given to the
Companies and shall not give the Companies any rights, claims or defenses due to
the failure of the Agent to provide such additional notice.
11.7 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF CALIFORNIA, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES
AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 12. AGREEMENT BETWEEN THE LENDERS
12.1 a) The Agent, for the account of the Lenders, shall disburse all
loans and advances to the Companies and shall handle all collections of
Collateral and repayment of Obligations. It is understood that for purposes of
advances to the Companies and for purposes of this Section 12 the Agent is using
the funds of the Agent.
b) Unless the Agent shall have been notified in writing by any
Lender prior to any advance to the Companies that such Lender will not make the
amount which would constitute its share of the borrowing on such date available
to the Agent, the Agent may assume that such Lender shall make such amount
available to the Agent on a Settlement Date, and the Agent may, in reliance upon
such assumption, make available to the Companies a corresponding amount. A
certificate of the Agent submitted to any Lender with respect to any amount
owing under this subsection shall be conclusive, absent manifest error. If such
Lender's share of such borrowing is not in fact made available to the Agent by
such Lender on the Settlement Date, the Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to Revolving Loans
hereunder, on demand, from the Companies without prejudice to any rights which
the Agent may have against such Lender hereunder. Nothing contained in this
subsection shall relieve any Lender which has failed to make available its
ratable portion of any borrowing hereunder from its obligation to do so in
accordance with the terms hereof. Nothing contained herein shall be deemed to
obligate the Agent to make available to the Companies the full amount of a
requested advance when the Agent has any notice (written or otherwise) that any
of the Lenders will not advance its ratable portion thereof.
12.2 On the Settlement Date, the Agent and the Lenders shall each remit to
the other, in immediately available funds received by 4:00 p.m. New York time,
all amounts necessary so as to ensure that, as of the Settlement Date, the
Lenders shall have their proportionate share of all outstanding Obligations.
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12.3 The Agent shall forward to each Lender, at the end of each month, a
statement rendered by the Agent with respect to that Lender's share of the loans
and advances.
12.4 The Agent shall, after receipt of any interest and fees earned under
this Financing Agreement, promptly remit to the Lenders: a) their pro rata
portion of all fees, provided, however, that the Lenders (other than CIT in its
role as the Agent) shall not share in the fees provided for in the Fee Letter;
b) interest computed at the rate and as provided for in Section 7 of this
Financing Agreement on all outstanding amounts advanced by the Lenders on each
Settlement Date, prior to adjustment, that are subsequent to the last remittance
by the Agent to the Lenders of the Companies' interest; c) its pro rata portion
of all principal repaid on the Term Loan; and d) interest on the Term Loan
computed at the rate and as provided for in Section 7 of this Financing
Agreement.
12.5 (a) The Companies acknowledge that the Lenders with the prior written
consent of the Agent may sell participation in the loans and extensions of
credit made and to be made to the Companies hereunder. The Companies further
acknowledge that in doing so, the Lenders may grant to such participants certain
rights which would require the participant's consent to certain waivers,
amendments and other actions with respect to the provisions of this Financing
Agreement, provided that the consent of any such participant shall not be
required except for matters requiring the consent of all Lenders hereunder as
set forth in Section 13, Paragraph 13.10 hereof.
(b) The Companies authorize each Lender to disclose to any
participant or purchasing lender (each, a "Transferee") and any prospective
Transferee, subject to the provisions of Section 13.14, any and all financial
information in such Lender's possession concerning the Companies and their
affiliates which has been delivered to such Lender by or on behalf of the
Companies pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Companies in connection with such Lender's credit
evaluation of the Companies and their affiliates prior to entering into this
Agreement, provided that such Transferee agrees to hold such information in
confidence in the ordinary course of its business and as required pursuant to
Section 13.14.
12.6 The Companies hereby agree that each Lender is solely responsible for
its portion of the Line of Credit and that neither the Agent nor any Lender
shall be responsible for, nor assume any obligations for the failure of any
Lender to make available its portion of the Line of Credit. Further, should any
Lender refuse to make available its portion of the Line of Credit, then any
other Lender may, but without obligation to do so, increase, unilaterally, its
portion of the Line of Credit in which event the Companies are so obligated to
that other Lender.
12.7 In the event that the Agent, the Lenders or any one of them is sued
or threatened with suit by the Companies or any one of them, or by any receiver,
trustee, creditor or any committee of creditors on account of any preference,
voidable transfer or lender liability issue, alleged to have occurred or been
received as a result of, or during the transactions contemplated under this
Financing Agreement, then in such event any money paid in satisfaction or
compromise of such suit, action, claim or demand and any expenses, costs and
attorneys' fees paid or incurred in connection therewith, whether by the Agent,
the Lenders or any one of them, shall be shared proportionately by the Lenders.
In addition, any costs, expenses, fees or disbursements incurred by outside
agencies or attorneys retained by the Agent to effect collection or enforcement
of any rights in the Collateral, including enforcing, preserving or maintaining
rights under this Financing Agreement shall be
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shared proportionately between and among the Lenders to the extent not
reimbursed by the Companies or from the proceeds of Collateral. The provisions
of this paragraph shall not apply to any suits, actions, proceedings or claims
that (x) predate the date of this Financing Agreement or (y) are based on
transactions, actions or omissions that predate the date of this Financing
Agreement.
12.8 Each of the Lenders agrees with each other Lender that any money or
assets of the Companies held or received by such Lender, no matter how or when
received, shall be applied to the reduction of the Obligations (to the extent
permitted hereunder) after (x) the occurrence of an Event of Default and (y) the
election by the Required Lenders to accelerate the Obligations. In addition, the
Companies authorize, and the Lenders shall have the right, without notice, upon
any amount becoming due and payable hereunder, to set-off and apply against any
and all property held by, or in the possession of such Lender the Obligations
due such Lenders.
12.9 The Agent shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, its obligations under the Line of Credit, Term
Loan, and the Revolving Loans and its rights and obligations with respect to
Letters of Credit). Upon execution of an Assignment and Transfer Agreement, (a)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such assignment,
have the rights and obligations of the Agent as the case may be hereunder and
(b) the Agent shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such assignment, relinquish its rights and be
released from its obligations under this Financing Agreement. The Companies
shall, if necessary, execute any documents reasonably required to effectuate the
assignments. No other Lender may assign its interest in the loans and advances
and extensions of credit hereunder without the prior written consent of the
Agent. In the event that the Agent consents to any such assignment by any other
Lenders (i) the amount being assigned shall in no event be less than the lesser
of (x) $5,000,000 or (y) the entire interest of such Lender hereunder, (ii) such
assignment shall be of a pro-rata portion of all of such assigning Lender's
loans and commitments hereunder and (iii) the parties to such assignment shall
execute and deliver to the Agent an Assignment and Transfer Agreement, and, at
the Agent's election, a processing and recording fee of $3,000 payable by the
Companies to the Agent for its own account.
SECTION 13. AGENCY
13.1 Each Lender hereby irrevocably designates and appoints CIT as the
Agent for the Lenders under this Financing Agreement and any ancillary loan
documents and irrevocably authorizes CIT as the Agent for such Lender, to take
such action on its behalf under the provisions of this Financing Agreement and
all ancillary documents and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of this Financing Agreement
and all ancillary documents together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Financing Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Financing Agreement and the ancillary documents or otherwise exist against the
Agent.
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13.2 The Agent may execute any of its duties under this Financing
Agreement and all ancillary documents by or through agents or attorneys-in-fact
and shall be entitled to the advice of counsel concerning all matters pertaining
to such duties.
13.3 Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (i) liable to any Lender for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Financing Agreement and all ancillary documents (except for
its or such person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Companies or any officer thereof
contained in this Financing Agreement and all ancillary documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Financing Agreement
and all ancillary documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Financing Agreement and all
ancillary documents or for any failure of the Companies to perform their
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Financing Agreement
and all ancillary documents or to inspect the properties, books or records of
the Companies.
13.4 The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Companies), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Financing Agreement and all ancillary documents
unless it shall first receive such advice or concurrence of the Lenders, or the
Required Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Financing Agreement and all ancillary
documents in accordance with a request of the Lenders, or the Required Lenders,
as the case may be, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
13.5 The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received written notice from a Lender or the Companies describing such Default
or Event of Default. In the event that the Agent receives such a notice, the
Agent shall promptly give notice thereof to the Lenders. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Lenders, or Required Lenders, as the case may be;
provided that unless and until the Agent shall have received such direction, the
Agent may in the interim (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable and in the best interests of the Lenders. In
the event the Agent in its sole discretion, or at the request of the Required
Lenders, continues to make Revolving Loans and advances under this Financing
Agreement upon the occurrence of a Default or Event of Default, any such
Revolving Loans and advances may be in such amounts (subject to Paragraph 13.10
hereof) and on such additional terms and conditions as the Agent or the Required
Lenders may deem appropriate.
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13.6 Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Companies, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Companies and made its own decision to enter into this
Financing Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the Financing Agreement and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition or creditworthiness of the Companies. The Agent, however,
shall provide the Lenders with copies of all financial statements, projections
and business plans which come into the possession of the Agent or any of its
officers, employees, agents or attorneys-in-fact.
13.7 (a) The Lenders agree to indemnify the Agent in its capacity as such
(to the extent not reimbursed by the Companies and without limiting the
obligation of the Companies to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (including, without limitation, all Out-of-Pocket
Expenses) of any kind whatsoever (including negligence on the part of the Agent)
which may at any time be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Financing Agreement or any
ancillary documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated or thereby hereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this paragraph shall survive
the payment of the Obligations.
(b) The Agent will use its reasonable business judgement in handling
the collection of the Accounts, enforcement of its rights hereunder and
realization upon the Collateral but shall not be liable to the Lenders for any
action taken or omitted to be taken in good faith or on the written advice of
counsel. The Lenders expressly release the Agent from any and all liability and
responsibility (express or implied), for any loss, depreciation of or delay in
collecting or failing to realize on any Collateral, the Obligations or any
guaranties therefor and for any mistake, omission or error in judgment in
passing upon or accepting any Collateral or in making (or in failing to make)
examinations or audits or for granting indulgences or extensions to the
Companies, any account debtor or any guarantor, other than resulting from the
Agent's gross negligence or willful misconduct.
13.8 The Agent may make loans to and generally engage in any kind of
business with the Companies as though the Agent were not the Agent hereunder.
With respect to its loans made or renewed by it or loan obligations hereunder as
Lender, the Agent shall have the same rights and powers, duties and liabilities
under this Financing Agreement as any Lender and may exercise the same as though
it was not the Agent and the terms "Lender" and "Lenders" shall include the
Agent
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in its individual capacity.
13.9 The Agent may resign as the Agent upon 30 days' notice to the Lenders
and the Companies and such resignation shall be effective upon the appointment
of a successor Agent. If the Agent shall resign as Agent, then the Required
Lenders shall appoint a successor Agent for the Lenders from among the Lenders
whereupon such successor Agent shall succeed to the rights, powers and duties of
the Agent and the term "Agent" shall mean such successor agent effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Financing Agreement. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Section 13 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent.
13.10 Notwithstanding anything contained in this Financing Agreement to
the contrary, the Agent will not, without the prior written consent of all
Lenders: (a) amend the Financing Agreement to (i) increase the Line of Credit;
(ii) reduce the interest rates; (iii) reduce or waive (x) any fees in which the
Lenders share hereunder, or (y) the repayment of any Obligations due the
Lenders; (iv) extend the maturity of the Obligations; or (v) alter or amend (x)
this Paragraph 13.10 or (y) the definitions of Inventory Loan Cap, Collateral or
Required Lenders, or (vi) increase the advance percentages against Eligible
Accounts Receivable or Eligible Inventory; (b) except as otherwise required or
permitted in this Financing Agreement or any of the Loan Documents, release any
guaranty or Collateral in excess of $500,000 during any year, or (c) knowingly
make any Revolving Loan hereunder for any Company or assist in opening any
Letter of Credit hereunder if after giving effect thereto the total of Revolving
Loans and Letters of Credit hereunder for the Company would exceed one hundred
and ten percent (110%) of the maximum amount available under this Financing
Agreement (the portion in excess of 100% of such maximum available amount shall
be referred to herein as the "Agent Permitted Overadvances"), provided that the
Agent shall not be entitled to continue to knowingly make such Agent Permitted
Overadvances for a period in excess of ninety (90) days without the Lenders'
consent, and provided further that the foregoing limitations shall not prohibit
or restrict advances by the Agent to preserve and protect Collateral. Subject to
the provisions of Section 11, Paragraph 11.2 and the provisions of this
Paragraph 13.10 of Section 13 of this Financing Agreement, in all other respects
the Agent is authorized by each of the Lenders to take such actions or fail to
take such actions under this Financing Agreement if the Agent, in its reasonable
discretion, deems such to be advisable and in the best interest of the Lenders.
Notwithstanding any provision to the contrary contained in this Financing
Agreement (including the provisions of Section 11, Paragraph 11.2 and Section
13, Paragraph 13.10 hereof) the Agent is authorized to take such actions or fail
to take such actions in connection with (a) the exercise of (i) any and all
rights and remedies under this Financing Agreement (including but not limited to
the exercise of rights and remedies under Section 9, Paragraph 9.2 of this
Financing Agreement) and (ii) its discretion in (x) determining compliance with
the eligibility requirements of Eligible Accounts Receivable and/or Eligible
Inventory and establishing reserves against Availability in connection therewith
and/or (y) the making of Agent Permitted Overadvances, and/or (b) the release of
Collateral not otherwise required or permitted hereunder or under any other Loan
Document not to exceed $500,000 in the aggregate during any Fiscal Year, and/or
(c) curing any ambiguity, defect or inconsistency in the terms of this Financing
Agreement; provided that the Agent, in its reasonable discretion, deems such to
be advisable and in the best interests of the Lenders. In the event the Agent
terminates this Financing Agreement pursuant to the written instructions of the
Required Lenders,
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the Agent will cease making any loans or advances upon the effective date of
termination except for any loans or advances which the Agent deems, in its sole
discretion, to be reasonably required to maintain, protect or realize upon the
Collateral.
13.11 In the event any Lender's consent is required pursuant to the
provisions of this Financing Agreement and such Lender does not respond to any
request by the Agent for such consent within 10 days after such request is made
to such Lender, such failure to respond shall be deemed a consent. In addition,
in the event that any Lender declines to give its consent to any such request,
it is hereby mutually agreed that the Agent and/or any other Lender shall have
the right (but not the obligation) to purchase such Lender's share of the Loans
for the full amount thereof together with accrued interest thereon to the date
of such purchase.
13.12 Each Lender agrees that notwithstanding the provisions of Section 10
of this Financing Agreement any Lender may terminate this Financing Agreement
and the Line of Credit only as of the initial or any subsequent Anniversary Date
and then only by giving the Agent 120 days prior written notice thereof. Within
30 days after receipt of any such termination notice, the Agent shall, at its
option, either (i) give notice of termination to the Company hereunder or (ii)
purchase, or arrange for the purchase of, the Lender's share of the Obligations
hereunder for the full amount thereof plus accrued interest thereon. Unless so
terminated this Financing Agreement and the Line of Credit shall be
automatically extended from Anniversary Date to Anniversary Date. Termination of
this Financing Agreement by any of the Lenders as herein provided shall not
affect the Lenders' respective rights and obligations under this Financing
Agreement incurred prior to the effective date of termination as set forth in
the preceding sentence.
13.13 If the Agent is required at any time to return to the Companies or
to a trustee, receiver, liquidator, custodian or other similar official any
portion of the payments made by the Companies to the Agent as result of a
bankruptcy or similar proceeding with respect to the Companies, any guarantor or
any other person or entity or otherwise, then each Lender shall, on demand of
the Agent, forthwith return to the Agent its ratable share of any such payments
made to such Lender by the Agent, together with its ratable share of interest
and/or penalties, if any, payable by the Lenders; this provision shall survive
the termination of this Financing Agreement.
13.14 The Agent and the Lenders agree to maintain the confidentiality of
any non-public information provided by or on behalf of the Companies to them,
provided that the foregoing confidentiality provision shall terminate three (3)
years after the termination date of this Financing Agreement, and provided
further that the Agent or any Lender may disclose such information (i) upon the
request or demand of any bank regulatory, auditor personnel, or other
governmental authority having jurisdiction over such party, (ii) upon the advise
of their counsel, to any prospective Transferee which agrees to abide by this
Section 13.14, (iii) to employees, agents and advisors of the Agent or any
Lender for purposes related to the transaction contemplated hereby, or (iv) in
connection with the exercise of any remedy hereunder or under any Loan Document.
SECTION 14. LETTERS OF CREDIT
In order to assist the Companies, or any one of them, in establishing or
opening Letters of Credit with an Issuing Bank, the Companies have requested the
Agent, on behalf of the Lenders, to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such
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Letters of Credit and any drafts or acceptances thereunder through the issuance
of the Letters of Credit Guaranty, thereby lending the Agent's credit to the
Companies and the Agent has agreed to do so. These arrangements shall be handled
by the Agent subject to the terms and conditions set forth below.
14.1 Within the Revolving Line of Credit and Availability, the Agent on
behalf of the Lenders shall assist each of the Companies in obtaining Letter(s)
of Credit in an amount not to exceed the outstanding amount of the Letter of
Credit Sub-Line. the Agent's assistance for amounts in excess of the limitation
set forth herein shall at all times and in all respects be in the Agent's sole
discretion. It is understood that the term, form and purpose of each Letter of
Credit and all documentation in connection therewith, and any amendments,
modifications or extensions thereof, must be mutually acceptable to the Agent,
the Issuing Bank and the Companies, provided that Letters of Credit shall not be
used for the purchase of domestic Inventory or to secure present or future debt
of domestic Inventory suppliers. Any and all outstanding Letters of Credit
issued hereunder for any Company shall be reserved dollar for dollar from
Company's Availability as an Availability Reserve.
14.2 The Agent shall have the right, without notice to any of the
Companies, to charge a Company's Revolving Loan Account with the amount of any
and all indebtedness, liability or obligation of any kind incurred by the Agent
and/or the Lenders under the Letters of Credit Guaranty at the earlier of (a)
payment by the Agent under the Letters of Credit Guaranty; or (b) the occurrence
of an Event of Default which has not been waived in writing by the Required
Lenders. Any amount charged to the Companies' Revolving Loan Accounts shall be
deemed a Revolving Loan hereunder and shall incur interest at the rate provided
in Paragraph 8.1 of Section 8 of this Financing Agreement.
14.3 Each of the Companies jointly and severally unconditionally
indemnifies the Agent and the Lenders and holds the Agent and the Lenders
harmless from any and all loss, claim or liability incurred by the Agent arising
from any transactions or occurrences relating to Letters of Credit established
or opened for any Company's account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or willful misconduct by the Agent
and/or the Lenders under the Letters of Credit Guaranty. This indemnity shall
survive termination of this Financing Agreement. The Companies agree that any
charges incurred by the Agent for any of the Companies' account by the Issuing
Bank shall be conclusive on the Agent and may be charged to such Company's
Revolving Loan Account.
14.4 The Agent and/or the Lenders 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; (b) any difference
or variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; (c) the validity,
sufficiency or genuineness of any 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; (f) any deviation from instructions; (g) delay, default, or fraud by
the shipper and/or anyone else in
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connection with the goods or the shipping thereof; or (h) any breach of contract
between the shipper or vendors and the Companies.
14.5 The Companies agree that any action taken by the Agent and/or the
Lenders, if taken in good faith, or any action taken by any Issuing Bank, under
or in connection with the Letters of Credit, the Letter of Credit Guaranties,
the drafts or acceptances, or the Collateral, shall, as between the Companies
and the Agent and/or the Lenders, be binding on each of the Companies and shall
not put the Agent and/or the Lenders in any resulting liability to the
Companies. In furtherance thereof, the Agent shall have the full right and
authority to: (a) clear and resolve any questions of non-compliance of
documents; (b) give any instructions as to acceptance or rejection of any
documents or goods; (c) execute any and all steamship or airways guaranties (and
applications therefore), indemnities or delivery orders; (d) grant any
extensions of the maturity of, time of payment for, or time of 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, drafts or
acceptances; all in the Agent's sole name. The Issuing Bank shall be entitled to
comply with and honor any and all such documents or instruments executed by or
received solely from the Agent, all without any notice to or any consent from
the Companies or any one of them. Notwithstanding any prior course of conduct or
dealing with respect to the foregoing including amendments and non-compliance
with documents and/or any of the Company's instructions with respect thereto,
the Agent may exercise its rights hereunder in its sole and reasonable business
judgement. In addition, without the Agent's express consent and endorsement in
writing, the Companies agree: (a) not to execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances or documents; or to 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, drafts or acceptances;
and (b) after the occurrence of an Event of Default which is not cured within
any applicable grace period, if any, or waived by the Agent, if so directed by
the Agent, not to (i) clear and resolve any questions of non-compliance of
documents, or (ii) give any instructions as to acceptances or rejection of any
documents or goods.
14.6 In connection with any Letter of Credit, the Companies agree that:
(a) any necessary import, export or other licenses or certificates for the
import or handling of the Collateral which is the subject of such Letter of
Credit will have been promptly procured; (b) all foreign and domestic
governmental laws and regulations in regard to the shipment and importation of
the Collateral which is the subject of such Letter of Credit, or the financing
thereof will have been promptly and fully complied with; and (c) any
certificates in that regard that the Agent may at any time request will be
promptly furnished. In connection herewith, the Companies warrant and represent
that all shipments made under any such Letters of Credit are in accordance 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. Each of the
Companies 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 in connection with any goods purchased, imported or acquired
under a Letter of Credit. Any embargo, restriction, laws, customs or regulations
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
Companies' risk, liability and responsibility.
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14.7 Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, the Agent on behalf of the Lenders shall acquire by subrogation, any
rights, remedies, duties or obligations granted or undertaken by the Companies
or any one of them to the Issuing Bank in any application for Letters of Credit,
any standing agreement relating to Letters of Credit or otherwise, all of which
shall be deemed to have been granted to the Agent on behalf of the Lenders and
apply in all respects to the Agent and shall be in addition to any rights,
remedies, duties or obligations contained herein.
14.8 Nothing herein is intended to relieve any Issuing Bank from any
Liability to any person or entity.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be executed (and effective, accepted and delivered at Los Angeles,
California) by their proper and duly authorized officers as of the date set
forth above.
THE CIT GROUP/
BUSINESS CREDIT, INC.
(as Agent and Lender)
By___________________________________
Title:
TWIN LABORATORIES INC.,
a Utah corporation
By: __________________________
Title:
ADVANCED RESEARCH PRESS, INC.,
a New York corporation
By: __________________________
Title:
CHANGES INTERNATIONAL, INC.,
a Florida corporation
By:_________________________
Title:
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PR NUTRITION, INC.,
a California corporation
By:_________________________
Title:
HEALTH FACTORS INTERNATIONAL, INC.,
a Delaware corporation
By:_________________________
Title:
▇▇▇▇▇▇▇ LABORATORIES, INC.,
a Delaware corporation
By:_________________________
Title:
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EXHIBIT B
TERM LOAN PROMISSORY NOTE (NEW YORK)
March 29, 2001
$4,200,000
FOR VALUE RECEIVED, the undersigned (the "Companies"), each jointly and
severally promises to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC.
(herein "CIT") as Agent for the Lenders (the "Agent") at its office located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in lawful
money of the United States of America and in immediately available funds, the
principal amount of Four Million Two Hundred Thousand Dollars ($4,200,000) as
follows: 1) one (1) principal installment of the outstanding principal balance
on the date of termination of the Financing Agreement or as otherwise provided
therein.
The Company further agrees to pay interest at said office, in like money, on the
unpaid principal amount owing hereunder from time to time from the date hereof
on the date and at the rate specified in Section 7 of the Financing Agreement,
of even date herewith between the Company, the other Companies party thereto,
the Lenders and the Agent (the "Financing Agreement"). Capitalized terms used
herein and defined in the Financing Agreement shall have the same meanings as
set forth therein unless otherwise specifically defined herein.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is the Term Loan Promissory Note (New York) referred to in the
Financing Agreement, evidences the Term Loan thereunder, and is subject to, and
entitled to, all provisions and benefits thereof and is subject to optional and
mandatory prepayment, in whole or in part, as provided therein.
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Upon the occurrence of any Event of Default specified in the Financing Agreement
or upon termination of the Financing Agreement, all amounts then remaining
unpaid on this Note may become, or be declared to be, at the sole election of
the Agent, immediately due and payable as provided in the Financing Agreement.
TWIN LABORATORIES INC.,
a Utah corporation
By: __________________________
Title:
ADVANCED RESEARCH PRESS, INC.,
a New York corporation
By: __________________________
Title:
CHANGES INTERNATIONAL, INC.,
a Florida corporation
By:_________________________
Title:
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PR NUTRITION, INC.,
a California corporation
By:_________________________
Title:
HEALTH FACTORS INTERNATIONAL, INC.,
a Delaware corporation
By:_________________________
Title:
▇▇▇▇▇▇▇ LABORATORIES, INC.,
a Delaware corporation
By:_________________________
Title:
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SCHEDULE 1 - COLLATERAL INFORMATION
[TO BE PROVIDED BY THE COMPANIES AND COMPANIES' COUNSEL]
EXACT NAME OF EACH OF THE COMPANIES IN THEIR STATE OF ORGANIZATION:
STATE(S) OF INCORPORATION OR FORMATION:
FEDERAL TAX I.D. NOS. [AND STATE ORGANIZATION NOS.]
CHIEF EXECUTIVE OFFICE(S):
COLLATERAL LOCATIONS:
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