Exhibit 10.17
EXECUTION COPY
AMENDED AND RESTATED
FINANCING AGREEMENT
DATED AS OF
JULY 26, 2002
AMONG
CANNONDALE CORPORATION,
AS BORROWER,
THE LENDERS PARTY HERETO
AND
THE CIT GROUP/ BUSINESS CREDIT, INC.,
AS AGENT
$35 MILLION
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions.............................................................................................1
Section 1.01 Defined Terms.............................................................................1
Section 1.02 Terms Generally..........................................................................19
Section 1.03 Accounting Terms; GAAP...................................................................20
ARTICLE II Conditions Precedent..................................................................................20
Section 2.01 Conditions to Effectiveness..............................................................20
Section 2.02 Conditions to Each Extension of Credit...................................................23
ARTICLE III Revolving Loans......................................................................................24
Section 3.01 Revolving Loans Generally................................................................24
Section 3.02 Notice of Borrowing Request..............................................................25
Section 3.03 Agent May Fund Revolving Loans...........................................................25
Section 3.04 Agent's Assumptions......................................................................25
Section 3.05 Settlement Procedure.....................................................................26
Section 3.06 Defaulting Lenders.......................................................................26
Section 3.07 Revolving Loan Account...................................................................26
Section 3.08 Statement of Account.....................................................................27
Section 3.09 Mandatory Prepayments....................................................................27
ARTICLE IV Letters of Credit.....................................................................................27
Section 4.01 Letters of Credit Generally..............................................................28
Section 4.02 Authorization to Charge Revolving Loan Account...........................................28
Section 4.03 Indemnification..........................................................................28
Section 4.04 Participation............................................................................28
Section 4.05 Limitation on Agent's Responsibility.....................................................29
Section 4.06 Further Provisions.......................................................................29
Section 4.07 Licenses; Risk...........................................................................30
Section 4.08 Subrogation..............................................................................30
ARTICLE V Collateral.............................................................................................30
Section 5.01 Grant of Security Interest...............................................................30
Section 5.02 Security Interest Generally..............................................................31
Section 5.03 Collection of Trade Accounts Receivable..................................................31
Section 5.04 Delivery of Information Concerning Trade Accounts Receivable and
Inventory................................................................................32
Section 5.05 Representations and Covenants With Respect to Trade Accounts
Receivable and Inventory.................................................................32
Section 5.06 Additional Representations and Covenants With Respect to Trade
Accounts Receivable and Inventory........................................................33
Section 5.07 Representations and Covenants With Respect to Equipment..................................34
Section 5.08 Representations and Covenants with Respect to General Intangibles........................34
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Section 5.09 Continuing Security Interest.............................................................34
Section 5.10 No Marshalling...........................................................................35
Section 5.11 Credit Balances..........................................................................35
Section 5.12 Mortgages................................................................................35
ARTICLE VI Representations and Warranties........................................................................35
Section 6.01 Organization; Powers.....................................................................35
Section 6.02 Authorization; Enforceability............................................................35
Section 6.03 Governmental Approvals; No Conflicts.....................................................36
Section 6.04 Financial Condition; No Material Adverse Change..........................................36
Section 6.05 Properties...............................................................................36
Section 6.06 Litigation and Environmental Matters.....................................................36
Section 6.07 Compliance with Laws and Agreements......................................................37
Section 6.08 Investment and Holding Company Status....................................................37
Section 6.09 Taxes....................................................................................37
Section 6.10 ERISA....................................................................................37
Section 6.11 Disclosure...............................................................................37
Section 6.12 Security Interest........................................................................38
Section 6.13 Use of Proceeds..........................................................................38
Section 6.14 Subsidiaries.............................................................................38
Section 6.15 Solvency.................................................................................38
Section 6.16 Permits, Etc.............................................................................39
ARTICLE VII Affirmative Covenants................................................................................39
Section 7.01 Financial Statements, Projections, Borrowing Base Certificates and
Other Information........................................................................39
Section 7.02 Notices of Material Events...............................................................41
Section 7.03 Existence; Conduct of Business...........................................................42
Section 7.04 Payment of Obligations...................................................................42
Section 7.05 Maintenance of Properties; Insurance.....................................................42
Section 7.06 Books and Records; Inspection Rights.....................................................42
Section 7.07 Compliance with Laws.....................................................................43
Section 7.08 Use of Proceeds and Letters of Credit....................................................43
Section 7.09 Lock Boxes and Blocked Account Agreements................................................43
Section 7.10 New Subsidiaries.........................................................................43
Section 7.11 New Collateral Locations.................................................................43
Section 7.12 Appraisals...............................................................................44
ARTICLE VIII Negative Covenants and Financial Covenants..........................................................44
Section 8.01 Indebtedness.............................................................................44
Section 8.02 Liens....................................................................................46
Section 8.03 Fundamental Changes; Prohibited Amendments...............................................46
Section 8.04 Investments, Loans, Advances, Guarantees and Acquisitions................................47
Section 8.05 Restricted Payments; Payments of Certain Indebtedness....................................48
Section 8.06 Transactions with Subsidiaries and Affiliates............................................50
Section 8.07 Restrictive Agreements...................................................................50
Section 8.08 Net Worth................................................................................51
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Section 8.09 Fixed Charge Coverage Ratio..............................................................51
Section 8.10 Consolidated Fixed Charge Coverage Ratio.................................................52
Section 8.11 EBITDA...................................................................................52
Section 8.12 EBITDA of Motor Sports Division..........................................................53
Section 8.13 Availability.............................................................................54
Section 8.14 Capital Expenditures.....................................................................54
Section 8.15 Revisions to Certain Financial Covenants.................................................54
ARTICLE IX Interest, Fees and Expenses; LIBOR Provisions.........................................................54
Section 9.01 Interest Generally.......................................................................54
Section 9.02 Default Charges..........................................................................55
Section 9.03 Letter of Credit Fees....................................................................55
Section 9.04 Authorization to Charge Revolving Loan Account for Letter of Credit
Fees, etc................................................................................55
Section 9.05 Reimbursement of Out-of-Pocket Expenses; Documentation Fee...............................55
Section 9.06 Line of Credit Fee.......................................................................55
Section 9.07 Loan Facility Fee........................................................................55
Section 9.08 Administrative Management Fee............................................................55
Section 9.09 Collateral Management Fee................................................................56
Section 9.10 Field Examination Fees...................................................................56
Section 9.11 LIBOR Loan Administration Fee............................................................56
Section 9.12 Authorization to Charge Revolving Loan Account for all Payments..........................56
Section 9.13 Changes In Law...........................................................................56
Section 9.14 Increased Costs..........................................................................57
Section 9.15 LIBOR Provisions Generally...............................................................58
Section 9.16 LIBOR Unascertainable....................................................................59
Section 9.17 Extension For Payment....................................................................59
Section 9.18 Unlawfullness............................................................................59
Section 9.19 Indemnification..........................................................................60
Section 9.20 Regulatory Changes.......................................................................60
ARTICLE X Powers.................................................................................................61
ARTICLE XI Events of Default and Remedies........................................................................61
Section 11.01 Events of Default........................................................................61
Section 11.02 Termination of Commitments; Acceleration.................................................63
Section 11.03 Exercise of Remedies.....................................................................63
ARTICLE XII Termination..........................................................................................65
ARTICLE XIII The Agent...........................................................................................65
Section 13.01 Appointment..............................................................................65
Section 13.02 Agent as a Lender........................................................................65
Section 13.03 Scope of Duties..........................................................................66
Section 13.04 Reliance.................................................................................66
Section 13.05 Sub-Agents...............................................................................66
Section 13.06 Successors...............................................................................66
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Section 13.07 Independent Credit Analysis of Lenders...................................................67
ARTICLE XIV Miscellaneous........................................................................................67
Section 14.01 Notices..................................................................................67
Section 14.02 Waivers; Amendments......................................................................68
Section 14.03 Expenses; Indemnity; Damage Waiver.......................................................69
Section 14.04 Successors and Assigns...................................................................70
Section 14.05 Survival.................................................................................71
Section 14.06 Counterparts; Integration; Effectiveness.................................................71
Section 14.07 Severability.............................................................................72
Section 14.08 Right of Setoff..........................................................................72
Section 14.09 Governing Law; Jurisdiction; Consent to Service of Process...............................72
Section 14.10 WAIVER OF JURY TRIAL.....................................................................73
Section 14.11 Headings.................................................................................73
Section 14.12 Confidentiality..........................................................................73
Section 14.13 Interest Rate Limitation.................................................................74
Section 14.14 No Novation..............................................................................74
Section 14.15 Waiver of Certain Existing Events of Default.............................................74
EXHIBITS
Exhibit A - Form of Amended and Restated Revolving Note
Exhibit B - Form of Assignment and Transfer Agreement
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - 1 - Form of Warehouseman's Waiver
Exhibit D - 2 - Form of Processor's Waiver
SCHEDULES
Schedule 8.01 - Existing Indebtedness
Schedule 8.02 - Existing Liens
Schedule 8.04 - Existing Investments
Schedule 8.07 - Restrictive Agreements
ANNEXES
Annex I - Commitments
Annex II - Lien Perfection Information
Annex III - Closing Document Checklist
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AMENDED AND RESTATED FINANCING AGREEMENT ("Financing Agreement") dated
as of July 26, 2002 among CANNONDALE CORPORATION, a Delaware corporation, as
Borrower (the "Borrower"), the financial institutions from time to time party
hereto, as lenders (each a "Lender" and collectively the "Lenders") and THE CIT
GROUP/BUSINESS CREDIT, INC. ("CIT"), in its capacity as agent for the Lenders
(in such capacity, the "Agent").
WHEREAS, the Borrower, CIT and certain other financial institutions, as
lenders (the "Original Lenders"), and CIT, as the agent for the Original Lenders
(the "Original Agent"), are parties to a certain Financing Agreement, dated as
of June 27, 2000 (as amended through the date hereof, the "Original Financing
Agreement"); and
WHEREAS, the Borrower and CIT, as the sole remaining Original Lender
and the Original Agent, desire to amend and restate the Original Financing
Agreement in its entirety, in the form of this Financing Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Agent hereby agree to amend and restate the Original Financing Agreement in its
entirety, effective as of the Effective Date, as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINED TERMS. As used in this Financing Agreement, the
following terms shall have the following meanings:
ACCOUNTS shall mean all of the Borrower's 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 the Borrower's
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of the Borrower's
trade names or styles, or through any of the Borrower's 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 Borrower; and (j) cash and non-cash proceeds (as defined
in the UCC) of any and all of the foregoing.
ADMINISTRATIVE MANAGEMENT FEE shall mean the fee payable to the Agent
for its own account in accordance with Section 9.08 hereof to offset the costs
and expenses (excluding Out-
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of-Pocket Expenses and auditor fees) of the Agent in connection with the
administration of this Financing Agreement.
AFFILIATE shall mean, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
ANNIVERSARY DATE shall mean the earlier of: (a) the date occurring five
(5) years from the Closing Date; and (b) the date which is 90 days prior to the
stated maturity of the Pegasus Debt, as set forth in the Pegasus Financing
Agreement, as in effect on the Closing Date, unless the stated maturity of the
Pegasus Debt is extended or the Pegasus Debt refinanced (i) with a maturity on
or after the date referred to in the preceding clause (a) and (ii) on terms that
are (x) more advantageous to the Borrower or substantially the same, and no less
favorable to the Agent and the Lenders, as the terms of the Pegasus Debt in
effect on the Closing Date and (y) otherwise acceptable to the Agent.
APPLICABLE INCREMENT shall mean on any date of determination, with
respect to any Revolving Loan bearing interest based on the Base Rate or LIBOR,
the applicable rate per annum set forth below under the applicable caption,
based upon the average daily Availability corresponding thereto for the Fiscal
Quarter ended immediately prior to such date of determination; PROVIDED,
HOWEVER, that (a) for the period beginning on and including the Closing Date and
ending on and including the last day of the Fiscal Quarter ending in September
2002, the Applicable Increment for Revolving Loans based on the Base Rate shall
be 1.50% and (b) so long as any Default or Event of Default shall have occurred
and be continuing, the Applicable Increment shall be those set forth below
opposite Case 1.
Applicable Increment Applicable Increment for
Average Daily for Revolving Loans Revolving Loans based on
Availability based in the Base Rate LIBOR
----------------------------- ------------------------------ ----------------------------------
Case 1 1.75% Not Applicable
Case 2 1.50% 3.50%
Case 3 1.25% 3.25%
APPLICABLE FEE PERCENTAGE shall mean on any date of determination, with
respect to the Letter of Credit Fee or the Line of Credit Fee, the applicable
rate per annum set forth below under the applicable caption, based upon the
average daily Availability corresponding thereto for the Fiscal Quarter ended
immediately prior to such date of determination; PROVIDED, HOWEVER, that (a) for
the period beginning on and including the Closing Date and ending on and
including the last day of the Fiscal Quarter ending in September 2002, the
Applicable Fee Percentage shall be those set forth below opposite Case 2 and (b)
so long as a Default or Event of Default shall have occurred and be continuing,
the Applicable Fee Percentage shall be those set forth below opposite Case 1.
Percentage for Percentage for Percentage for
Average Daily Documentary Letters Standby Letters of Line of Credit
Availability of Credit Credit Fee
---------------------------- --------------------------- ------------------------ ---------------------
Case 1 1.50% 2.50% .50%
Case 2 1.25% 2.25% .375%
Case 3 1.00% 2.00% .25%
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ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and
Transfer Agreement in the form of Exhibit B hereto.
AUTHORIZED OFFICER shall mean the Chief Executive Officer or Chief
Financial Officer of the Borrower, or any other officer of the Borrower duly
authorized by its Board of Directors to discharge some or all of the
responsibilities of the Chief Financial Officer.
AVAILABILITY shall mean at any time the amount by which: (a) the lesser
of the Line of Credit or the Borrowing Base exceeds (b) the sum of (i) the
aggregate principal amount of all outstanding Revolving Loans and (ii) the
Availability Reserve.
AVAILABILITY RESERVE shall mean the sum of: (a) any reserve in such
amount and with respect to such risks as the Agent may reasonably require from
time to time pursuant to this Financing Agreement, including without limitation,
for Letter of Credit Exposure pursuant to Section 4.01; and (b) a reserve in an
amount equal to the product of (x) Eligible Accounts Receivable, as of any date
of determination, multiplied by (y) the historic dilution for the period of six
months preceding such date of determination of Trade Accounts Receivable,
expressed as a percentage, as determined and adjusted from time to time by the
Agent in its reasonable discretion, pursuant to its periodic examination of the
Borrower's books and records, MINUS three percent (3%).
BASE RATE shall mean the rate of interest per annum announced by
JPMorgan Chase 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 JPMorgan Chase Bank to its
borrowers).
BASE RATE LOANS shall mean any Revolving Loans which are made or
maintained at a rate of interest based upon the Base Rate.
BLOCKED ACCOUNT AND BLOCKED ACCOUNT AGREEMENT shall have the meanings
given to such terms in Section 5.03.
BORROWING BASE shall mean the sum of (a) eighty-five percent (85%) of
the Borrower's aggregate outstanding Eligible Accounts Receivable, plus (b) the
lesser of (i) thirty-two percent (32%) of the aggregate value of the Borrower's
Eligible Inventory consisting of raw materials and sixty percent (60%) of the
aggregate value of the Borrower's Eligible Inventory consisting of finished
goods, where value in each such case shall be based on the lower of cost, on a
basis consistent with the costing standards established by the Borrower at the
beginning of each Fiscal Year (provided such standards are commercially
reasonable and are applied consistently), or market, or (ii) the Inventory Loan
Cap.
BORROWING BASE CERTIFICATE means a certificate of an Authorized Officer
substantially in the form of Exhibit C hereto appropriately completed.
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BREAKAGE COSTS shall mean the costs and expenses described in Section
9.18.
BUSINESS DAY shall mean any day on which both the Agent and JPMorgan
Chase Bank are open for business in New York City.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate
expenditures of the Borrower during such period on account of, property, plant,
equipment or similar fixed assets that, in conformity with GAAP, are required to
be reflected in the balance sheet of the Borrower, including without limitation
the portion of each Capital Lease that is or should be capitalized in accordance
with GAAP.
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 on the balance sheet of the Borrower.
CASE 1 shall mean average daily Availability of less than $6,500,000.
CASE 2 shall mean average daily Availability of equal to or greater
than $6,500,000, and less than $8,500,000.
CASE 3 shall mean average daily Availability of equal to or greater
than $8,500,000.
CLOSING DATE shall mean the date first set forth in the preamble to
this Financing Agreement.
COLLATERAL shall mean all present and future Accounts, Documents of
Title, Equipment, General Intangibles, Intellectual Property, Inventory, Pledged
Stock, Real Estate and Other Collateral.
COMMITMENT shall mean each Lender's commitment in accordance with this
Financing Agreement to make Revolving Loans and to purchase a participation
interest in Letters of Credit, in each case in the amount of such Lender's PRO
RATA share, as set forth in Annex I to this Financing Agreement, as such Annex I
may be amended from time to time by the Agent.
CONSOLIDATED shall mean, with respect to any financial statement of the
Borrower, the preparation of such financial statement on a consolidated basis
for the Borrower and its consolidated subsidiaries, eliminating all
inter-company transactions and prepared in accordance with GAAP.
CONSOLIDATING shall mean, with respect to any financial statement of
the Borrower, the preparation of such financial statement on a consolidated
basis plus individual balance sheets for the Borrower and its consolidated
subsidiaries, showing all eliminations of inter-company transactions, including
a balance sheet for the Borrower exclusively, all prepared in accordance with
GAAP.
CONTROL shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise
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voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have
meanings correlative thereto.
COPYRIGHTS shall mean all of the Borrower's 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.
DEFAULT shall mean any event specified in Article XI, or which, with
the giving of notice, the lapse of time, or both, or any other condition, event
or act, would become an Event of Default.
DEFAULT CHARGES shall mean (i) with respect to Revolving Loans, a rate
of interest per annum equal to the sum of two percent (2%) PLUS the Applicable
Increment over the Base Rate PLUS the Base Rate, in the case of Base Rate Loans,
or two percent (2%) PLUS the Applicable Increment over the LIBOR Rate PLUS the
LIBOR Rate, in the case of LIBOR Loans, and (ii) with respect to Letters of
Credit, a rate of interest per annum equal to the sum of two percent (2%) PLUS
the applicable Letter of Credit Fee. All Default Charges shall be calculated
based on a 360-day year.
DOCUMENTATION FEE shall mean the Agent's standard fees relating to any
and all modifications, waivers, releases or amendments with respect to this
Financing Agreement, the Collateral and/or the Obligations, or the perfection of
the Agent's security interest in additional collateral, in each case after the
Closing Date.
DOCUMENTS OF TITLE shall mean all 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 Borrower
terminates this Financing Agreement or the Line of Credit, and which is prior to
the fourth anniversary of the Closing Date.
EARLY TERMINATION FEE shall: (a) mean the fee chargeable to the
Borrower by the Agent in the event the Borrower terminates the Line of Credit or
this Financing Agreement on a date prior to the fourth anniversary of the
Closing Date; and (b) be determined by multiplying the Line of Credit by: (i)
two percent (2%) if the Early Termination Date occurs before the second
anniversary of the Closing Date; (ii) one percent (1%) if the Early Termination
Date occurs on or after the second anniversary of the Closing Date but before
the third anniversary of the Closing Date; and (iii) one half of one percent
(.50%) if the Early Termination Date occurs on or after the third anniversary of
the Closing Date but before the fourth anniversary of the Closing Date.
Notwithstanding the foregoing, if, at any time (a) the Borrower desires to
prepay principal of the Pegasus Debt and such payment is not permitted under
Section 8.05(b) hereof, (b) the Agent will not otherwise consent to such
prepayment and (c) due to the foregoing, the Borrower terminates the Line of
Credit or this Financing Agreement, then, in such event, the Early Termination
Fee will be determined by multiplying the Line of Credit by: (i) one percent
(1%) if the Early
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Termination Date occurs before the first anniversary of the Closing Date; (ii)
three-quarters of one percent (.75%) if the Early Termination Date occurs on or
after the first anniversary of the Closing Date but before the second
anniversary of the Closing Date; (iii) one-half of one percent (.50%) if the
Early Termination Date occurs on or after the second anniversary of the Closing
Date but before the third anniversary of the Closing Date; and (iv) one-quarter
of one percent (.25%) if the Early Termination Date occurs on or after the third
anniversary of the Closing Date but before the fourth anniversary of the Closing
Date, PROVIDED, HOWEVER, that, if the Early Termination Date occurs at any time
following the date that is 270 days after the Closing Date and the source of the
funds utilized by the Borrower to effectuate the repayment of the Obligations in
connection with such termination of this Financing Agreement is Pegasus or any
of its Affiliates, whether directly or indirectly, then the Early Termination
Fee shall be zero (-0-).
EBITDA shall mean, for any period, Net Income for such period PLUS, to
the extent deducted in determining Net Income for such period and without
duplication, Interest Expense, income tax expense, depreciation, amortization
and other non-cash charges for such period, including non-cash charges in
respect of (w) write offs of fees and expenses incurred in connection with the
prepayment of all or any portion of the principal of the Term Loan or the
Mezzanine Debt (each as defined in the Original Financing Agreement), (x) write
offs of deferred taxes, (y) write downs to the lower of cost or market value of
the inventory of the Motor Sports Division to the extent required by GAAP and
(z) any beneficial conversion premium arising from the difference, if any,
between the market price of the Borrower's common stock and the conversion price
of the Borrower's common stock into which the Xxxx Debt or the Xxxxxxxxxx Debt,
as the case may be, may be converted (the date on which the Xxxx Debt or the
Xxxxxxxxxx Debt, as applicable, was initially incurred being the date upon which
the amount of such premium shall be calculated, and the date on which such
conversion price shall be determined), MINUS, to the extent included in
determining Net Income for such period, without duplication (i) interest income
for such period that has been deferred or has not been paid in cash and (ii)
dividends paid in cash to the Borrower by any Subsidiary during such period,
except to the extent such dividends are payable solely from the earnings of
operations of such Subsidiary for the twelve month period immediately preceding
the date of payment of such dividends, all determined in accordance with GAAP on
a consistent basis, but excluding the effect of extraordinary or non-recurring
gains or losses for such period.
EFFECTIVE DATE shall mean the date upon which each condition set forth
in Section 2.01 is satisfied or waived by the Agent (in writing).
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of the
Borrower's Trade Accounts Receivable that are subject to a valid, 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, any returns, discounts, claims,
credits and allowances of any nature (whether issued, owing, granted, claimed or
outstanding). Trade Accounts Receivable that arise from or are subject to or
include any of the following shall not be considered Eligible Accounts
Receivable:
(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 the
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Borrower 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, PROVIDED THAT (1) the
Accounts on which the customers referred to in the foregoing clause (y) are
obligated are by their terms payable in U.S. Dollars, or payable in Canadian
dollars and the risk in fluctuation of currency value between Canadian and U.S.
Dollars is hedged in a manner that is reasonably satisfactory to the Agent and
(2) the aggregate amount of sales included in Eligible Accounts Receivable
pursuant to the foregoing clause (y) shall not at any time exceed $2,000,000;
(iii) Trade Accounts Receivable that remain unpaid beyond the
sooner to occur of the date which is sixty (60) days from due date or (A) in the
case of all Trade Accounts Receivable other than those described in the
following clause (B), one hundred eighty (180) days from invoice date and (B) in
the case of those Trade Accounts Receivable arising from sales made on extended
terms during the month of October, two hundred ten (210) days from invoice date,
PROVIDED THAT (1) the payment of each such Trade Account Receivable is secured
by a perfected Lien on the inventory, the sale of which gave rise to such Trade
Account Receivable, and (2) the face amount of all such Trade Accounts
Receivable does not exceed $1,000,000 in the aggregate at any one time
outstanding;
(iv) contra accounts;
(v) sales to any employee, Affiliate or Subsidiary of the
Borrower;
(vi) xxxx 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, (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 beyond the sooner to occur of the date which is sixty (60) days from due
date or one hundred eighty (180) days (or two hundred ten (210) days, if
applicable) from invoice date;
(ix) pre-billed Trade Accounts Receivable and Trade Accounts
Receivable arising from progress billing;
(x) an amount representing, historically, returns, warranty
reserves, discounts, claims, credits, allowances and applicable terms, samples,
and an amount representing late charges or finance charges;
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(xi) sales not payable in United States currency, other than as
provided in clause (ii) (y) above;
(xii) sales to any single customer, to the extent that the
aggregate amount of such sales exceeds ten percent (10%) of the aggregate amount
of Eligible Accounts Receivable;
(xiii) sales to the ten largest customers (ranked according to
the amount of outstanding Trade Accounts Receivable), to the extent that the
aggregate amount of such sales exceeds fifty percent (50%) of the aggregate
amount of Eligible Accounts Receivables; and
(xiv) any other reasons deemed necessary by the Agent in its
reasonable judgment, including without limitation those 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 the gross amount of the Borrower's
Inventory that is subject to a valid, first priority and fully perfected
security interest in favor of the Agent, 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, without duplication, any (a) work-in-process, (b) supplies
(other than raw materials), (c) Inventory not present in the United States of
America, other than Inventory in transit to the Borrower which is being imported
pursuant to a Letter of Credit, (d) Inventory repossessed by the Borrower or
returned or rejected by the Borrower's customers (other than goods that are
undamaged and resalable in the normal course of business) and goods to be
returned to the Borrower's suppliers, (e) Inventory in transit to third parties
(other than the Borrower'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 of security interest
agreement in substantially the form of Exhibit E-1 or E-2 hereto (as
applicable), or is otherwise in form and substance satisfactory to the Agent,
(f) Inventory which does not meet standards imposed by any applicable
Governmental Authority, and (g) 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, xxxx
and hold (deferred shipment), consignment sales, shrinkage and any applicable
customs, freight, duties and Taxes.
ENVIRONMENTAL LAW shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions or binding agreements
issued, promulgated or entered into by any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, release or threatened release of any Hazardous Material.
ENVIRONMENTAL LIABILITY shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release of any Hazardous Materials into the environment or
(e) any contract, agreement or other consensual
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arrangement pursuant to which liability is assumed by or imposed upon, the
Borrower with respect to any of the foregoing.
EQUIPMENT shall mean all present and hereafter acquired equipment (as
defined in the UCC) of the Borrower 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.
ERISA AFFILIATE shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Internal Revenue Code of 1986 (the "Code") as
amended from time to time or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
ERISA EVENT shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any material
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR
Loan, shall mean the aggregate (without duplication) of the maximum rates of
reserve requirements (expressed as a decimal) in effect with respect to the
Agent and/or any present or future Lender or participant on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
Regulation D or any other applicable regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having jurisdiction
with respect thereto, as now and from time to time in effect, dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by the
Agent and/or any such Lenders or participants (such rate to be adjusted to the
nearest one sixteenth of one percent (1/16 of 1%) or, if there is not a nearest
one sixteenth of one percent (1/16 of 1%), to the next higher one sixteenth of
one percent (1/16 of 1%)).
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EVENT(S) OF DEFAULT shall have the meaning provided for in Article XI.
FEDERAL FUNDS EFFECTIVE RATE shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
FISCAL QUARTER shall mean, with respect to the Borrower, each three (3)
month period ending on the Saturday closest to September 30, December 31, March
31 and June 30 of each Fiscal Year.
FISCAL YEAR shall mean, with respect to the Borrower, the period of
four consecutive Fiscal Quarters commencing on the Sunday closest to July 1 of
each year and ending on the Saturday closest to June 30 of the following year,
determined in a manner consistent with the Borrower's past practices.
FIXED CHARGE COVERAGE RATIO shall mean, for the relevant period, the
ratio determined by dividing (i) EBITDA for such period, by (ii) the sum of (a)
Interest Expense paid or due, in cash, during such period, PLUS (b) the amount
of principal of any Indebtedness (other than the Revolving Loans and Letters of
Credit) repaid or scheduled to be repaid during such period (including the
portion of payments made during such period under Capitalized Leases that are
allocable to the repayment of principal), PLUS (c) Capital Expenditures made by
the Borrower during such period which were not financed, PLUS (d) all dividends
and other distributions of a similar nature made in cash during such period,
PLUS (e) all federal, state and local income tax expenses due and payable by the
Borrower during such period.
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.
GENERAL INTANGIBLES shall mean all present and hereafter acquired
general intangibles (as defined in the UCC) of the Borrower, 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, blueprints,
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 the
Borrower and any licensee of any of the Borrower's General Intangibles.
- 10 -
GOVERNMENTAL AUTHORITY shall mean the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
HAZARDOUS MATERIALS shall mean all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls or radon gas and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.
HEDGING OBLIGATIONS shall mean any obligation or liability arising
under or relating to an interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement, or any
arrangement which is derivative thereof.
INDEBTEDNESS of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of business
and excluding installments of premiums payable with respect to policies of
insurance contracted for in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all guarantees by such Person of
Indebtedness of others, (h) all obligations under Capital Leases of such Person
attributable to the payment of principal, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance
carrier with respect to any loss, casualty or damage to Collateral.
INTELLECTUAL PROPERTY shall mean all property and all interests in
property described in the Intellectual Property Agreements in which the Borrower
has granted security interests to the Agent for the benefit of the Lenders.
INTELLECTUAL PROPERTY AGREEMENTS shall mean, collectively, the
Trademark Security Agreement and the Patent Security Agreement, in each case
dated as of June 30, 2000 and executed by the Borrower in favor of the Agent,
pursuant to which the Borrower shall have granted to the Agent for the benefit
of the Lenders a Lien on and security interest in the property,
- 11 -
and interests in property, described in each such Agreement as security for the
payment and performance of the Obligations.
INTERCREDITOR AGREEMENT shall mean that certain Intercreditor
Agreement, dated as of July 26, 2002, among the Agent, the Lenders and Pegasus,
as the same may be hereafter amended, modified, supplemented or restated from
time to time.
INTEREST EXPENSE shall mean the total interest obligations (paid or
accrued) of the Borrower, determined on a non-consolidated basis in accordance
with GAAP, consistently applied.
INTEREST PERIOD shall mean:
(a) with respect to any initial request by the Borrower for a LIBOR
Loan, a one month, two month, three month or six month period commencing on the
borrowing or conversion date with respect to a LIBOR Loan and ending one, two or
three months thereafter, as applicable; and
(b) thereafter with respect to any continuation of, or conversion to,
a LIBOR Loan, at the option of the Borrower, any one month, two month or three
month period commencing on the last day of the immediately preceding Interest
Period applicable to such LIBOR Loan and ending one, two or three months
thereafter, as applicable; PROVIDED THAT, the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Working Day, that Interest Period shall be extended to the next succeeding
Working Day, unless the result of such extension would extend such payment into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Working Day;
(ii) any Interest Period that begins on the last Working Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month, at the end of such Interest Period) shall end on the last
Working Day of a calendar month; and
(iii) for purposes of determining the availability of Interest
Periods, such Interest Periods shall be deemed available if (x) JPMorgan Chase
Bank quotes an applicable rate or the Agent determines LIBOR, as provided in the
definition of LIBOR, (y) the LIBOR determined by JPMorgan Chase Bank or the
Agent will adequately and fairly reflect the cost of maintaining or funding
Loans bearing interest at LIBOR, for such Interest Period, and (z) such Interest
Period will end on or before the Anniversary Date. If a requested Interest
Period shall be unavailable in accordance with the foregoing sentence, the
Borrower shall continue to pay interest on the Obligations at the applicable per
annum rate based upon the Base Rate.
INVENTORY shall mean all of the Borrower's present and hereafter
acquired inventory (as defined in the UCC) and including, without limitation,
all merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods 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.
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INVENTORY LOAN CAP shall mean, as of any date of determination, the
product of .75 multiplied by the amount obtained after subtraction of (i) the
sum calculated pursuant to clause (b) of the term Availability Reserve from (ii)
the sum calculated pursuant to clause (a) of the term Borrowing Base.
ISSUING BANK shall mean the bank issuing Letters of Credit.
LC DISBURSEMENT shall mean (i) a payment made by the Issuing Bank
pursuant to a Letter of Credit, or (ii) a payment made by the Agent pursuant to
any indemnification agreement described in clause (ii) of the defined term
Letter of Credit Guaranty.
LETTER OF CREDIT EXPOSURE shall mean, as of any date of determination,
without duplication, the sum of (i) the aggregate undrawn amount of all
outstanding Letters of Credit, (ii) the aggregate unreimbursed amount of all
drawn Letters of Credit and (iii) any other unreimbursed LC Disbursement.
LETTER OF CREDIT FEE shall mean the fee chargeable to the Borrower by
the Agent, for the ratable benefit of the Lenders, pursuant to Section 9.03,
for: (a) issuing a Letter of Credit Guaranty, and/or (b) otherwise aiding the
Borrower in obtaining Letters of Credit.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the
Agent, on behalf of the Lenders, to the Issuing Bank of the Borrower's
reimbursement obligations under the Issuing Bank's reimbursement agreement,
application for Letter of Credit or other like document.
LETTER OF CREDIT SUB-LINE shall mean the commitment of the Lenders,
pursuant to Section 4.01, to assist the Borrower in obtaining Letters of Credit
having an aggregate undrawn amount, together with an aggregate drawn but
unreimbursed amount, not to exceed $5,000,000.
LETTERS OF CREDIT shall mean (a) all letters of credit issued by the
Issuing Bank, for or on behalf of the Borrower, with the assistance of the
Agent, on behalf of the Lenders, in accordance with Article IV and (b) all
existing letters of credit issued by the Issuing Bank under the Original
Financing Agreement.
LIBOR shall mean, at any time of determination, and subject to
availability, for each applicable Interest Period, a variable rate of interest
equal to: (a) at the Agent's election (i) the applicable LIBOR quoted to the
Agent by JPMorgan Chase Bank (or any successor thereof), or (ii) the rate of
interest determined by the Agent at which deposits in U.S. dollars are offered
for the relevant Interest Period based on information presented on Telerate
Systems at Page 3750 as of 11:00 A.M. (London time) on the day which is two (2)
Business Days prior to the first day of such Interest Period, PROVIDED THAT, if
at least two such offered rates appear on the Telerate System at Page 3750 in
respect of such Interest Period, the arithmetic mean of all such rates (as
determined by the Agent) will be the rate used; divided by (b) a number equal to
1.0 minus the aggregate (but without duplication) of the rates (expressed as a
decimal) of Eurocurrency Reserve Requirements in effect on the day which is two
(2) Business Days prior to the beginning of such Interest Period.
LIBOR LENDING OFFICE shall mean, with respect to the Agent, the office
of JPMorgan Chase Bank, or any successor thereof, maintained at 000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000.
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LIBOR LOANS shall mean any Revolving Loans which are made or maintained
at a rate of interest based upon LIBOR, provided that (a) no Default or Event of
Default has occurred hereunder, which has not been waived in writing by the
Required Lenders and (b) no LIBOR Loan shall be made with an Interest Period
that ends subsequent to the Anniversary Date or any applicable Early Termination
Date.
LIEN shall mean with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
LINE OF CREDIT shall mean, as of any relevant date, the sum of the
Commitments of the Lenders which, as of the Closing Date, shall equal
$35,000,000.
LINE OF CREDIT FEE shall: (a) mean the fee payable to the Agent, for
the ratable benefit of the Lenders, due at the end of each month for the Line of
Credit, and (b) be determined by multiplying the difference between (i) the Line
of Credit and (ii) the sum, for such month, of (x) the average daily balance of
Revolving Loans plus (y) the average daily undrawn balance of Letters of Credit,
in each case outstanding during such month, by the Applicable Fee Percentage for
the Line of Credit Fee for the number of days in such month.
LOAN DOCUMENTS shall mean this Financing Agreement, all Revolving
Notes, the Intellectual Property Agreements, the Stock Pledge Agreement, the
Mortgages, the other closing documents and any other ancillary documents,
instruments and agreements executed from time to time in connection with the
Original Financing Agreement or this Financing Agreement, all as may be renewed,
amended, extended, increased or supplemented from time to time.
LOAN FACILITY FEE shall mean the fee payable to the Agent, for the
ratable benefit of the Lenders, in accordance with, and pursuant to, the
provisions of Section 9.07.
LOCK BOX shall have the meaning given such term in Section 5.03.
MATERIAL ADVERSE CHANGE shall mean a material adverse change in the
business, assets, operations, prospects, profitability or condition, financial
or otherwise, of the Borrower, or of the Borrower and the Subsidiaries, taken as
a whole.
MATERIAL ADVERSE EFFECT shall mean a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower, or of the Borrower and the Subsidiaries, taken as a whole, (b) the
ability of the Borrower to perform any of its material obligations under this
Financing Agreement or any of the other Loan Documents or (c) the rights of or
benefits available to the Lenders under this Financing Agreement or any of the
other Loan Documents.
MATERIAL INDEBTEDNESS shall mean any Indebtedness (other than the
Revolving Loans, Letters of Credit and other Obligations) of any one or more of
the Borrower and its Subsidiaries in a principal amount, as of any date of
determination, exceeding $5,000,000.
- 14 -
XXXXXXXXXX DEBT shall mean the Indebtedness of the Borrower incurred
pursuant to that certain 8% Convertible Subordinated Debenture due June 28,
2005, dated April 27, 2001, in the original principal amount of $2,000,000,
issued by the Borrower and payable to Xxxxxx X. Xxxxxxxxxx.
MORTGAGES shall mean those mortgages, each dated as of June 30, 2000,
executed by the Borrower, as mortgagor, in favor of the Agent, as mortgagee, to
secure the Borrower's payment and performance of the Obligations and encumbering
those certain parcels of land, and the improvements thereon, owned by the
Borrower and located in (i) Bethel, Connecticut and captioned "Open-End Fourth
Mortgage Deed and Security Agreement", and (ii) Bedford, Pennsylvania, and
captioned "Open-End Mortgage and Security Agreement", in each case as such
Mortgage has heretofore been amended and may hereafter be amended, modified,
supplemented or restated from time to time.
MOTOR SPORTS DIVISION shall mean the division of the Borrower pursuant
to which the manufacture and distribution of motorcycles and related products,
and the rendition of services associated therewith, is conducted.
NET CASH PROCEEDS shall mean, with respect to any property, the
aggregate amount of all proceeds, payable in cash, arising from the sale,
transfer or other disposition of such property, MINUS the usual and customary
out-of-pocket costs and expenses payable by the seller of such property, the
principal amount of Indebtedness that is mandatorily payable by such seller upon
the disposition of such property (other than Indebtedness incurred under this
Financing Agreement), and the amount of taxes paid (or reasonably estimated to
be payable) by such seller in connection with such disposition.
NET INCOME shall mean, for any period, the net after tax income (or
loss) of the Borrower for such period, determined on a non-consolidated basis in
accordance with GAAP.
NET WORTH shall mean, at any date of determination, an amount equal to
(a) Total Assets of the Borrower minus (b) Total Liabilities of the Borrower,
and shall be determined on a non-consolidated basis in accordance with GAAP,
consistently applied.
OBLIGATIONS shall mean all loans, advances and extensions of credit
made or to be made by the Agent and/or the Lenders to the Borrower, or to others
for the Borrower's account, pursuant to this Financing Agreement (including,
without limitation, all Revolving Loans and Letter of Credit Guaranties; and any
and all indebtedness, liabilities and obligations which may at any time be owing
by the Borrower to the Agent and/or the Lenders arising under or relating to
this Financing Agreement, whether now in existence or incurred by the Borrower
from time to time hereafter; whether principal, interest, fees, costs, expenses
(including reasonable attorney's fees and disbursements) or otherwise; whether
secured by Lien upon any of the Borrower's Collateral, assets or property or the
assets or property of any other Person; whether such indebtedness is absolute or
contingent, joint or several, matured or unmatured, direct or indirect and
whether the Borrower is liable to the Agent and/or the Lenders for such
indebtedness as principal, surety, endorser, guarantor or otherwise. Obligations
shall also include indebtedness, obligations and liabilities owing to the Agent
and/or the Lenders by the Borrower under any Loan Document or under any other
agreement or arrangement now or hereafter entered into
- 15 -
between the Borrower and the Agent and/or the Lenders pursuant to or in
connection with the transactions contemplated to occur under or in respect of
this Financing Agreement; and all Out-of-Pocket Expenses.
OTHER COLLATERAL shall mean all now owned and hereafter acquired
lockboxes, blocked accounts 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 out-of-pocket costs and
expenses incurred pursuant to this Financing Agreement or any other Loan
Documents by the Agent, and, at any time after the occurrence of an Event of
Default which has occurred and is continuing, the Lenders, 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 the
Borrower's reimbursement agreement, application for Letters of Credit or other
like document which pertain either directly or indirectly to such Letters of
Credit, and 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 reasonable counsel fees and disbursements, fees and
taxes relative to the filing of financing statements, all expenses, costs and
fees set forth in Section 11.03, and title insurance premiums, real estate
survey costs, costs of preparing and recording the Mortgages.
PATENTS shall mean all of the Borrower's 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
Borrower, and all income, royalties, cash and non-cash proceeds thereof.
PEGASUS shall mean Pegasus Partners II, L.P., a Delaware limited
partnership, and its successors and assigns.
PEGASUS DEBT shall mean the Indebtedness of the Borrower incurred
pursuant to the Pegasus Debt Documents.
PEGASUS DEBT DOCUMENTS shall mean the "Loan Documents" as defined in
the Pegasus Financing Agreement.
PEGASUS FINANCING AGREEMENT shall mean the Note Purchase Agreement,
dated as of July 26, 2002 between Cannondale Corporation, as borrower, and
Pegasus, as lender, as the same
- 16 -
may be hereafter amended, modified, supplemented or restated from time to time,
as permitted under this Agreement and under the Intercreditor Agreement.
PEGASUS PRIORITY COLLATERAL shall have the meaning ascribed to such
term in the Intercreditor Agreement.
PERMITS shall have the meaning given to such term in Section 6.16.
PERMITTED ENCUMBRANCES shall mean: (a) liens of local or state
authorities for franchise or other like Taxes, provided that the aggregate
amounts of such liens shall not exceed $500,000 in the aggregate at any one
time; (b) statutory liens of landlords and liens of carriers, warehousemen,
bailees, mechanics, materialmen and other like liens imposed by law, created in
the ordinary course of business and 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 Borrower in accordance with GAAP; (c) pledges or deposits made
(and the liens thereon) in the ordinary course of business of the Borrower
(including, without limitation, security deposits for leases, indemnity bonds,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements or to secure the performance of tenders, bids, contracts (other
than for the repayment or guarantee of borrowed money or purchase money
obligations), statutory obligations and other similar obligations; (d) 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 (i) do not
materially interfere with the occupation, use or enjoyment by the Borrower of
its business or property so encumbered and (ii) in the reasonable business
judgment of the Agent do not materially and adversely affect the value of such
Real Estate; (e) tax liens which are not yet due and payable or which are being
diligently contested in good faith by the Borrower by appropriate proceedings;
(f) liens created in favor of a bank at which a deposit account, other than a
Blocked Account, is maintained, including set off rights in favor of such bank;
and (g) the items identified in Schedules A, B and C of each of the Mortgages.
PERMITTED INVESTMENTS shall mean (a) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof; (b) investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from Xxxxx'x; (c)
investments in certificates of deposit, banker's acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; and (d)
fully collateralized repurchase agreements with a term of not more than 30
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days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above.
PERSON shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, or other
entity.
PLAN shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
PLEDGED STOCK shall mean the securities pledged pursuant to the Stock
Pledge Agreement by the Borrower to the Agent, for the benefit of the Lenders,
as security for the payment and performance of all Obligations.
PRO RATA SHARE shall mean, with respect to each Lender, the percentage
of the total Commitments represented by such Lender's Commitment.
XXXX DEBT shall mean the Indebtedness of the Borrower incurred pursuant
to that certain 8% Convertible Subordinated Debenture due April 28, 2004, dated
April 27, 2001, in the original principal amount of $2,000,000, issued by the
Borrower and payable to Xxxxx X. Xxxx.
REAL ESTATE shall mean the Borrower's fee and/or leasehold interests in
the real property described in the Mortgages.
REQUIRED LENDERS shall mean the Lenders holding aggregate Commitments
under this Financing Agreement in an amount of 66 2/3% or more of the total
Commitments.
RESTRICTED PAYMENT shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
the Borrower or any option, warrant or other right to acquire any such shares of
capital stock of the Borrower.
REVOLVING LOAN ACCOUNT shall mean the account on the Agent's books, in
the Borrower's name, against which the Borrower will be charged with all
Obligations under this Financing Agreement, as and when payable.
REVOLVING LOANS shall have the meaning given to such term in Section
3.01.
REVOLVING NOTE shall mean each promissory note of the Borrower in the
form of Exhibit A to this Financing Agreement, delivered by the Borrower to a
Lender to evidence such Lender's PRO RATA share of the Revolving Loans, in
accordance with such Lender's Commitment, pursuant to, and repayable in
accordance with, the provisions of this Financing Agreement.
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SETTLEMENT PERIOD shall have the meaning given to such term in Section
3.05.
STOCK PLEDGE AGREEMENT shall mean the Stock Pledge Agreement, dated
June 30, 2000, executed by the Borrower in favor of the Agent, pursuant to which
the Borrower shall have pledged and collaterally assigned the Pledged Stock as
security for the payment and performance of the Obligations.
SUBSIDIARY shall mean with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
SUBSIDIARY shall mean any subsidiary of the Borrower.
TAXES shall mean all federal, state, municipal and other governmental
taxes, levies, charges, claims and assessments which are or may be due by the
Borrower with respect to its business, operations, Collateral or otherwise.
TOTAL ASSETS shall mean total assets determined in accordance with
GAAP, consistently applied.
TOTAL LIABILITIES shall mean total liabilities determined in accordance
with GAAP, consistently applied.
TRADE ACCOUNTS RECEIVABLE shall mean the accounts (as defined in the
UCC) of the Borrower which arise from the sale of Inventory or the rendition of
services in the ordinary course of the Borrower's business.
TRADEMARKS shall mean all of the Borrower's 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 and 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.
UCC shall mean the Uniform Commercial Code as the same may be amended
and in effect from time to time in the State of New --- York.
WORKING DAY shall mean any Business Day on which dealings in foreign
currencies and exchanges between banks may be transacted.
Section 1.02 TERMS GENERALLY. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any
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pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". The word "will" shall be construed to have
the same meaning and effect as the word "shall". Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Financing Agreement in its entirety and not to any
particular provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Financing Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
Section 1.03 ACCOUNTING TERMS; GAAP. Except as otherwise expressly
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE II
CONDITIONS PRECEDENT
Section 2.01 CONDITIONS TO EFFECTIVENESS. This Financing
Agreement shall become effective upon the satisfaction or waiver by the Agent
(in writing) of each of the following conditions precedent:
(a) LIEN SEARCHES - The Agent shall have received and reviewed to its
satisfaction, as of a recent date, tax, judgment and Uniform Commercial Code
searches for all locations presently occupied or used by the Borrower.
(b) CASUALTY INSURANCE - The Borrower 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, PROVIDED that any certificate that
evidences such insurance shall be in the form of "Accord 27".
(c) UCC FILINGS - All financing statements required to be filed in
order to perfect, in favor of the Agent, on behalf of the Lenders, a first
priority security interest in the Collateral, subject only to the Permitted
Encumbrances and the Intercreditor Agreement, shall have been
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properly filed in each such office in each jurisdiction. The Agent shall have
received acknowledgment copies of all such filings (or, in lieu thereof, the
Agent shall have received other evidence 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 RESOLUTIONS - The Agent shall have received a copy of the
resolutions of the Board of Directors of the Borrower authorizing the execution,
delivery and performance of this Financing Agreement, and all other Loan
Documents to which the Borrower is a party, and the consummation of the
transactions contemplated to occur hereunder and thereunder, in each case
certified by the Secretary or Assistant Secretary of the Borrower as of the date
hereof, together with a certificate of the Secretary or Assistant Secretary of
the Borrower as to the incumbency and validity of the signature of the officers
of the Borrower executing this Financing Agreement and such other 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, GOOD STANDING AND QUALIFICATION - The
Agent shall have received (i) a copy of the Certificate of Incorporation of the
Borrower certified by the Secretary of State of the state of its incorporation,
(ii) a copy of the By-Laws of the Borrower certified by the Secretary or
Assistant Secretary thereof, all as amended through the date hereof, (iii) a
Certificate of Good Standing from the Secretary of State of the state of the
Borrower's incorporation and (iv) a Certificate of Qualification from the
Secretary of State of each other state in which the Borrower is doing business,
except where the failure to be so qualified would not have a Material Adverse
Effect.
(f) SOLVENCY CERTIFICATE AND OFFICER'S CERTIFICATE - The Agent shall
have received (x) an executed Solvency Certificate of the Borrower, satisfactory
in form and substance to the Agent, certifying the Borrower's solvency as of the
Closing Date and such related matters as the Agent shall deem necessary and (y)
an executed Officer's Certificate of the Borrower, satisfactory in form and
substance to the Agent, certifying that: (i) the representations and warranties
contained herein are true and correct in all material respects on and as of the
Closing Date; (ii) the Borrower is in compliance with all of the terms and
provisions set forth herein; and (iii) no Default or Event of Default has
occurred.
(g) OPINION - the Agent on behalf of the Lenders shall have received
and reviewed to its satisfaction a legal opinion from the law firm of Xxxxxx
Xxxx & Xxxxxx LLP, as general counsel to the Borrower.
(h) ABSENCE OF DEFAULT; NO MATERIAL ADVERSE CHANGE - No Default or
Event of Default shall have occurred and no Material Adverse Change shall have
occurred since December 31, 2001.
(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 Borrower or its 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
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order restraining or prohibiting the financing arrangements contemplated under
this Financing Agreement; or (z) suit, action, investigation or proceeding
(judicial or administrative) pending against the Borrower or its assets, which,
in the opinion of the Agent, if adversely determined, would be reasonably likely
to have a Material Adverse Effect.
(j) GUARANTEES OF SUBSIDIARY DEBT - The Agent and its legal counsel
shall have received and reviewed to their satisfaction all documents and
agreements pursuant to which the Borrower shall have guaranteed or in any manner
agreed to be liable or responsible for the payment of the indebtedness of any
Subsidiary.
(k) FLOOR PLANNING - The Agent and its legal counsel shall have
received and reviewed to their satisfaction any document or agreement between a
customer of the Borrower and the bank or other financial institution which
provides inventory or floor planning financing to such customer, to the extent
the Borrower is a party to any such document or agreement.
(l) BUSINESS PLAN; PROJECTIONS - The Agent shall have received and
reviewed to its satisfaction (i) a comprehensive business plan for the Borrower
and its Subsidiaries, (ii) twelve (12) month projected balance sheets, income
statements and cash budgets for the Borrower and its Subsidiaries, each in
reasonable detail, prepared on a consolidated and consolidating basis for each
of Fiscal Year 2002, Fiscal Year 2003, Fiscal Year 2004 and Fiscal Year 2005,
which represent the Borrower's good faith projections and indicate that the
Borrower will have Availability of at least $3,500,000 at all times, (iii) a
certificate of the Borrower's chief financial officer certifying that the
projections delivered to the Agent pursuant to the preceding clause (ii) are the
most accurate projections available and are identical to the projections used by
the Borrower for internal planning purposes and (iv) all supporting schedules
and information as the Agent may in its discretion require.
(m) FINANCING AGREEMENT AND ADDITIONAL DOCUMENTS - The Borrower shall
have executed and delivered to the Agent this Financing Agreement, the Revolving
Notes and all other Loan Documents to which it is a party. Concurrently with its
receipt of the Revolving Notes, the Agent will return the "Revolving Notes"
issued pursuant to the Original Financing Agreement to the Borrower.
(n) PLEDGED STOCK - The Borrower shall have delivered to the Agent, on
behalf of the Lenders, possession of the stock certificates evidencing all of
the certificated shares of Pledged Stock required to be pledged and collaterally
assigned to the Agent pursuant to the Stock Pledge Agreement, together with duly
executed stock powers (undated and in-blank) with respect thereto, all in form
and substance satisfactory to the Agent.
(o) BLOCKED ACCOUNTS AND BLOCKED ACCOUNT AGREEMENTS - The Borrower
shall have established a system of lockboxes and Blocked Accounts with respect
to the collection of Trade Accounts Receivable and the deposit of proceeds of
Collateral, and the Agent, the Borrower and each bank at which a Blocked Account
is maintained shall have entered into a Blocked Account Agreement in form and
substance satisfactory to the Agent.
(p) DISBURSEMENT AUTHORIZATION - The Borrower shall have delivered to
the Agent all information necessary for the Agent and the Lenders to issue wire
transfer instructions on behalf
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of the Borrower 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 acceptable to the Agent.
(q) EXAMINATION AND VERIFICATION; OPENING AVAILABILITY - The Agent and
each of the Lenders shall have completed, to their respective satisfaction, an
examination and verification of the Trade Accounts Receivable, Inventory,
financial statements, and books and records of the Borrower, which examination
shall indicate that, after giving effect to all Revolving Loans, advances and
extensions of credit to be made on the Closing Date, the Borrower shall have
Availability of at least $7,500,000, as evidenced by a Borrowing Base
Certificate delivered by the Borrower to the Agent as of the Closing Date. 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
Borrower's business and consistent with the practice in the Borrower's industry.
(r) PAYMENT OF TERM LOAN - The outstanding principal balance of the
Term Loan (as defined in the Original Financing Agreement) plus all accrued and
unpaid interest thereon shall have been paid to the Agent in full. Concurrently
with its receipt of such payment, the Agent will deliver the "Term Notes" issued
pursuant to the Original Financing Agreement to the Borrower stamped "paid".
(s) PAYMENT OF MEZZANINE DEBT - The Agent shall have received evidence
satisfactory to it that the Mezzanine Debt (as defined in the Original Financing
Agreement) has been paid in full, all of the related "Mezzanine Debt Documents"
have been terminated and all Liens on the Collateral securing such Mezzanine
Debt have been released.
(t) PAYMENT OF FEES - The Agent and the Lenders shall have received
payment in full, in cash, of all fees for which the Borrower is obligated to
make payment on or before the Closing Date.
(u) PEGASUS DEBT; INTERCREDITOR AGREEMENT WITH PEGASUS - The Agent
shall have received and reviewed to its satisfaction all of the Pegasus Debt
Documents, the transactions contemplated to occur thereunder shall have been
satisfied and all conditions precedent to the effectiveness of the Pegasus Debt
Documents shall have occurred; the Borrower shall have received in cash the
proceeds of the Pegasus Debt in an amount of not less than $25,000,000 and the
Agent on behalf of the Lenders and Pegasus shall have entered into an
intercreditor agreement satisfactory to the Lenders.
(v) CLOSING DOCUMENT CHECKLIST - The Borrower shall have delivered to
the Agent all documents listed on the Closing Document Checklist attached to
this Financing Agreement as Annex III for which the Borrower is responsible.
Upon the execution of this Financing Agreement and the initial disbursement of
Revolving Loans hereunder, all of the above Conditions Precedent shall have been
deemed satisfied except as otherwise set forth hereinabove or as the Borrower,
the Required Lenders and the Agent shall otherwise agree in writing.
Section 2.02 CONDITIONS TO EACH EXTENSION OF CREDIT. Subject to
the terms of this Financing Agreement, the Commitment of each Lender to fund its
PRO RATA share, after the
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Closing Date, of Revolving Loans, and to purchase a participation in Letters of
Credit, is subject to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by the Borrower 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, except for any such representation or warranty which by
its terms speaks only as of an earlier 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 Lenders and the Borrower in writing, after giving effect to the
extension of credit requested to be made by the Borrower on such date, the
aggregate outstanding balance of the Revolving Loans and Letter of Credit
Exposure will not exceed the lesser of (i) the Line of Credit or (ii) the
Borrowing Base, minus the amount calculated pursuant to clause (b) of
Availability Reserve. Each borrowing of a Revolving Loan by the Borrower
hereunder, and each request by the Borrower for the issuance of a Letter of
Credit, shall constitute a representation and warranty by the Borrower as of the
date of such borrowing or request that each of the representations and
warranties contained in this Financing Agreement have been satisfied and are
true and correct, except as the Borrower and the Agent and/or the Required
Lenders shall otherwise agree herein or in a separate writing.
ARTICLE III
REVOLVING LOANS
Section 3.01 REVOLVING LOANS GENERALLY. The Agent and the Lenders
agree, subject to the terms and conditions of this Financing Agreement, from
time to time to make loans and advances to the Borrower on a revolving basis
(each a "Revolving Loan" and collectively the "Revolving Loans"). Subject to the
limitations set forth herein, the Borrower may borrow, repay and re-borrow
Revolving Loans. Requests for Revolving Loans shall be in amounts not to exceed
(a) the lesser of (i) the Borrowing Base or (ii) the Line of Credit, MINUS,
until such time as the Pegasus Debt shall have been paid in full or otherwise
satisfied in a manner acceptable to Pegasus, the sum of $3,500,000, MINUS (b)
the aggregate principal amount of all the outstanding Revolving Loans and MINUS
the Availability Reserve. All requests for Revolving Loans must be received by
an officer of the Agent no later than (i) 1:00 p.m., New York time, of the
Business Day on which any Revolving Loans based on the Base Rate are required or
(ii) 11:00 a.m., New York time, on the third Business Day prior to the Business
Day on which any Revolving Loans based on LIBOR are required. In the event that
after making a requested Revolving Loan, such Revolving Loan exceeds the
Availability existing immediately prior to the making of such Revolving Loan or
the sum of (i) the outstanding balance of Revolving Loans and (ii) outstanding
Letter of Credit Exposure exceeds (x) the Borrowing Base or (y) the Line of
Credit, the amount of such excess shall, in each case, be immediately due and
payable to the Agent on behalf of the Lenders.
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Section 3.02 NOTICE OF BORROWING REQUEST. Whenever the Borrower
requests the Agent, on behalf of the Lenders, to make a Revolving Loan pursuant
to Section 3.01, 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 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), and (C) specify whether the
requested Revolving Loan shall bear interest at the Base Rate or at LIBOR, as
further set forth herein. Proceeds of Revolving Loans shall be disbursed by the
Agent to a bank account of the Borrower designated by it. Requests for Revolving
Loans shall be made solely by the Borrower and shall be directed solely to the
Agent.
Section 3.03 AGENT MAY FUND REVOLVING LOANS. Notwithstanding any
other provision of this Financing Agreement, in order to reduce the number of
fund transfers among the Borrower, the Lenders and the Agent, the Borrower, the
Lenders and the Agent agree that the Agent may, but shall not be obligated to
fund, and the Borrower and the Lenders hereby irrevocably authorize the Agent to
fund, on behalf of the Lenders, Revolving Loans pursuant to Section 3.01,
subject to the procedures for settlement set forth below, PROVIDED, HOWEVER,
that (i) the Agent shall in no event fund such Revolving Loan or request that
any Lender so fund such Revolving Loan if the Agent shall have received written
notice from the Required Lenders on the Business Day prior to the date of the
proposed Revolving Loan that one or more of the conditions precedent contained
in Section 2.02 hereof will not be satisfied on the date of the proposed
Revolving Loan and (ii) the Agent shall not otherwise be required to determine
that, or take notice whether, the conditions precedent in Section 2.02 have been
satisfied. If the Agent elects not to fund a requested Revolving Loan on behalf
of the Lenders promptly after receipt of a request for a Revolving Loan pursuant
to this Section 3.03, the Agent shall so notify each Lender. If the Agent
notifies the Lenders that it will not fund a request for a Revolving Loan on
behalf of the Lenders, each Lender shall make its PRO RATA share of the
Revolving Loan so requested available to the Agent, in immediately available
funds, at the payment office of the Agent designated by it, no later than 2:00
p.m. (New York time) on the date of the Revolving Loan so requested, in which
case the Agent will then disburse to the Borrower the proceeds of all amounts so
received by the Agent in accordance with Sections 3.01 and 3.02.
Section 3.04 AGENT'S ASSUMPTIONS. If the Agent has notified the
Lenders that the Agent will not fund a particular Revolving Loan pursuant to
Section 3.03 on behalf of the Lenders, the Agent may assume that each such
Lender will make such amount available to the Agent on such day and the Agent,
in its sole and absolute discretion, may, but shall not be obligated to, cause a
corresponding amount to be made available to the Borrower on such day. If, in
such case, the Agent makes such corresponding amount available to the Borrower
and such corresponding amount is not in fact made available to the Agent by any
such Lender, such Lender and the Borrower agree to repay to the Agent forthwith
on demand such corresponding amount together with interest thereon for each day
from the date such amount is made available to the Borrower to and including the
date such amount is repaid to the Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Effective Rate during
such period as quoted by the Agent and the Base Rate then in effect and (ii) in
the case of such Lender, at the Federal Funds Effective Rate during such period
as quoted by the Agent for three Business Days and thereafter at the Base Rate
then in effect. If such Lender shall repay to the Agent such corresponding
amount such amount so repaid shall constitute such Lender's pro rata share of
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such Revolving Loan. Nothing in this Section shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment or to prejudice any rights
that the Agent or the Borrower may have against any Lender as a result of any
default by such Lender hereunder.
Section 3.05 SETTLEMENT PROCEDURE. With respect to all periods
for which the Agent, on behalf of the Lenders, has funded Revolving Loans
pursuant to Section 3.03, on the first Business Day after the last day of each
week, or such shorter period as the Agent may from time to time select (any such
week or shorter period being herein called a "SETTLEMENT PERIOD"), the Agent
shall notify each Lender of the unpaid principal amount of the Revolving Loans
outstanding at the close of business on the last Business Day of such Settlement
Period. In the event that such amount is greater than the unpaid principal
amount of the Revolving Loans outstanding at the close of business on the last
Business Day of the Settlement Period immediately preceding such Settlement
Period (or, if there has been no preceding Settlement Period, the amount of the
Revolving Loans made on the date of such Lender's initial funding) each Lender
shall promptly make available to the Agent such Lender's pro rata share of the
difference in immediately available funds. In the event that such amount is less
than such unpaid principal amount, the Agent shall promptly pay over to each
other Lender such Lender's pro rata share of the difference in immediately
available funds. In addition, if the Agent shall so request at any time when a
Default or an Event of Default shall have occurred and be continuing or any
other event shall have occurred as a result of which the Agent shall determine
that it is desirable to present claims against the Borrower for repayment, each
Lender shall promptly remit to the Agent or, as the case may be, the Agent shall
promptly remit to each Lender, sufficient funds to adjust the interests of the
Lenders in the then outstanding Revolving Loans to such an extent that, after
giving effect to such adjustment, each Lender's interest in the then outstanding
Revolving Loans will be equal to its pro rata share thereof. The obligations of
the Agent and each Lender under this Section shall be absolute and
unconditional. Each Lender shall only be entitled to receive interest on its PRO
RATA share of the Revolving Loans which have been actually funded by such
Lender.
Section 3.06 DEFAULTING LENDERS. In the event that any Lender
fails to make any payment required to be made by it pursuant to Section 3.05,
the Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from the date such
payment was due to and including the date such amount is paid to the Agent, at
the Federal Funds Effective Rate during each period as quoted by the Agent for
three Business Days and thereafter at the Base Rate then in effect. During the
period in which such Lender has not paid such corresponding amount to the Agent,
notwithstanding anything to the contrary contained in this Financing Agreement
or any other Loan Document, the amount so advanced by the Agent to the Borrower
shall, for all purposes hereof, be deemed to be a Revolving Loan made by the
Agent for its own account. Upon any such failure by a Lender to pay the Agent,
the Agent shall promptly thereafter notify the Borrower of such failure and the
Borrower shall immediately pay such corresponding amount to the Agent for its
own account.
Section 3.07 REVOLVING LOAN ACCOUNT. The Agent shall maintain a
Revolving Loan Account on its books in which the Borrower will be charged with
all Revolving Loans and with any other Obligations, as and when payable,
including any and all Out-of-Pocket Expenses 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
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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 the Borrower. The Borrower will be
credited with all amounts received by the Agent and/or the Lenders from the
Borrower or from others for the Borrower's 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. The
Borrower hereby authorizes the Agent to charge its Revolving Loan Account with
the amount of all Obligations, as such amounts become due. The Borrower confirms
that any charges which the Agent may so make to its Revolving Loan Account as
herein provided will be made as an accommodation to the Borrower and solely at
the Agent's discretion.
Section 3.08 STATEMENT OF ACCOUNT. After the end of each month,
the Agent shall promptly send the Borrower a statement showing the accounting
for the charges, loans, advances and other transactions occurring between the
Agent and the Borrower during that month. The monthly statements shall be deemed
correct and binding upon the Borrower and shall constitute an account stated
between the Borrower and the Agent unless the Agent receives a written statement
of the exceptions within thirty (30) days after the Borrower's receipt of the
monthly statement (it being understood that the Borrower shall be deemed to have
received such monthly statement if it shall not have given the Agent written
notice of non-receipt within ten (10) days after the end of such month).
Section 3.09 MANDATORY PREPAYMENTS. Subject to (a) the terms of
Section 8.03 and (b) so long as all or any portion of the Pegasus Debt shall
remain outstanding, the Intercreditor Agreement, if the Borrower sells any
Equipment or other tangible personal property (other than Inventory in the
ordinary course of business), or if any Equipment or such other property is
lost, destroyed, or taken by condemnation, the Borrower shall pay to the Agent,
for the ratable benefit of the Lenders, unless otherwise agreed by the Required
Lenders, or as otherwise set forth in this Financing Agreement, as and when
received by the Borrower and as a mandatory prepayment of the Revolving Loans, a
sum equal to the Net Cash Proceeds (including Insurance Proceeds) received by
the Borrower from such sale, loss, destruction or condemnation, PROVIDED,
HOWEVER, that so long as no Event of Default has occurred and is continuing, the
proceeds of any Equipment or other such property so lost, destroyed or taken by
condemnation, to the extent such proceeds are equal to or less than $500,000 in
the aggregate, may be used to replace or restore such Equipment or other
property, as the case may be, so long as such Net Cash Proceeds are so used
within 60 days of receipt thereof, PROVIDED, FURTHER, that if the nature of such
Equipment or such other property precludes the likelihood of such replacement or
restoration within such 60 day period, then the Borrower and the Agent shall
meet and confer in good faith for the purpose of determining a reasonable time
period within which such replacement or restoration shall occur, or such other
application of such Net Cash Proceeds.
ARTICLE IV
LETTERS OF CREDIT
In order to assist the Borrower in establishing or opening Letters of
Credit with an Issuing Bank, the Borrower has 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 Letters of Credit and any drafts or
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acceptances thereunder through the issuance of the Letters of Credit Guaranty,
thereby lending the Agent's credit to the Borrower 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.
Section 4.01 LETTERS OF CREDIT GENERALLY. Within the Line of
Credit, the Agent on behalf of the Lenders shall assist the Borrower in
obtaining Letters of Credit from time to time, so long as after giving effect to
the issuance of any requested Letter of Credit, the Letter of Credit Exposure
shall not exceed the lesser of (a) the Letter of Credit Sub-Line and (b)
Availability. 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 Borrower, 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 shall
be reserved dollar for dollar from Availability as an Availability Reserve.
Section 4.02 AUTHORIZATION TO CHARGE REVOLVING LOAN ACCOUNT. The
Agent shall have the right, without notice to the Borrower, to charge the
Borrower'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 Borrower's Revolving Loan Account shall be deemed a Revolving Loan
hereunder and shall incur interest at the Base Rate PLUS the Applicable
Increment.
Section 4.03 INDEMNIFICATION. The Borrower 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 the Borrower'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 Borrower agrees that any
charges incurred by the Agent and/or the Lenders for the Borrower account by the
Issuing Bank shall be conclusive on the Agent and may be charged to the
Borrower's Revolving Loan Account.
Section 4.04 PARTICIPATION. By the issuance by the Agent of a
Letter of Credit Guaranty, and without any further action on the part of the
Agent or the Lenders, the Agent hereby grants to each Lender, and each Lender
hereby acquires from the Agent, a participation in such Letter of Credit
Guaranty equal to such Lender's PRO RATA share of the aggregate amount available
to be drawn under all Letters of Credit. By the payment by the Agent of an LC
Disbursement pursuant to clause (ii) of the definition thereof, or by the
reimbursement by the Agent to the Issuing Bank of an LC Disbursement pursuant to
clause (i) of the definition thereof, and without any further action on the part
of the Lenders, the Agent hereby grants to each Lender, and each Lender hereby
acquires from the Agent, a participation in such LC
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Disbursement, equal to such Lender's PRO RATA share of the amount of such LC
Disbursement. In consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the Agent, without
duplication, (i) for its own account, such Lender's PRO RATA share of each LC
Disbursement made by the Agent and not reimbursed by the Borrower on the date
due as provided herein and (ii) for the account of the Issuing Bank, such
Lender's PRO RATA share of each LC Disbursement made by the Issuing Bank and not
reimbursed by the Borrower on the date due as provided in herein, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of LC Disbursements and the
Letter of Credit Guaranty is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
Section 4.05 LIMITATION ON AGENT'S RESPONSIBILITY. The Agent
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) 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
connection with the goods or the shipping thereof; or (h) any breach of contract
between the shipper or vendors and the Borrower.
Section 4.06 FURTHER PROVISIONS. The Borrower agrees 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 Guarantees, the drafts or acceptances, or the
Collateral, shall be binding on the Borrower and shall not result in any
liability whatsoever of the Issuing Bank, the Agent or the Lenders to the
Borrower. In furtherance thereof, the Agent shall have the full right and
authority, in good faith, 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) grant any extensions of the maturity
of, time of payment for, or time of presentation of, any drafts, acceptances, or
documents; and (d) 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 Borrower. Notwithstanding any
prior course of conduct or dealing with respect to the foregoing including
amendments and non-compliance with documents and/or the Borrower's instructions
with respect thereto, the Agent may exercise its rights hereunder in its sole
and reasonable judgment. In addition, without the Agent's express consent and
endorsement in writing, the Borrower agrees: (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,
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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 Required Lenders, not to (i) clear and resolve
any questions of non-compliance of documents, (ii) give any instructions as to
acceptances or rejection of any documents or goods or (iii) execute any and all
steamship or airways guaranties (and applications therefor), indemnities or
delivery orders.
Section 4.07 LICENSES; RISK. The Borrower agrees that: (a) any
necessary import, export or other licenses or certificates for the import or
handling of the Collateral will have been promptly procured; (b) all foreign and
domestic governmental laws and regulations in regard to the shipment and
importation of the Collateral, or the financing thereof will 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
Borrower warrants and represents 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. The Borrower 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. 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 Borrower's risk, liability and responsibility.
Section 4.08 SUBROGATION. 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 Borrower 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.
ARTICLE V
COLLATERAL
Section 5.01 GRANT OF SECURITY INTEREST. As security for the
prompt payment in full of all Obligations, the Borrower 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;
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(f) Equipment; and
(g) Real Estate
Section 5.02 SECURITY INTEREST GENERALLY.
The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is owned by the Borrower or in which the
Borrower has any interest, whether held by the Borrower or others for its
account, and, if any Collateral is Equipment, whether the Borrower's 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 Borrower from the
Borrower's 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 Borrower, or to the sale, promotion or
shipment thereof.
Section 5.03 COLLECTION OF TRADE ACCOUNTS RECEIVABLE. The
Borrower shall establish and maintain, in its name and at its expense, a system
of lock boxes ("Lock Boxes") and deposit accounts ("Blocked Accounts"), in each
case with such banks as are acceptable to the Agent. The Borrower shall: (i)
indicate on all of its invoices that funds should be delivered to and deposited
to a Lock Box; (ii) direct all of its account debtors to deposit any and all
payments, remittances, checks, collections and proceeds of Trade Accounts
Receivable and other Collateral into a Lock Box; (iii) irrevocably authorize and
direct any bank which maintains a Lock Box or otherwise maintains the Borrower's
initial receipt of cash, checks and other items to promptly transfer all
available funds to a Blocked Account; and (iv) advise all such banks of the
Agent's security interest in such funds. The Borrower shall promptly cause to be
deposited into a Blocked Account all proceeds of Collateral received by the
Borrower. Each bank at which a Lock Box and Blocked Account are established
shall enter into a written agreement among the Borrower, the Agent and such
bank, in form and substance satisfactory to the Agent (the "Blocked Account
Agreements"), providing that all cash, checks and items received or deposited in
the Lock Box and Blocked Account are the property of the Agent, that the
depository bank has no lien upon, or right of set off against, the Lock Box and
Blocked Accounts or 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 automatically, on a daily basis the depository bank will
wire, or otherwise transfer, in immediately available funds, 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 Borrower hereby confirms and
agrees that all amounts deposited in such Lock Box and Blocked Accounts and any
other funds received and
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collected by the Agent, whether as proceeds of Inventory or other Collateral or
otherwise, shall be the property of the Agent. Without in any way waiving or
limiting the Agent's right to require the Borrower to strictly comply with this
Section, the Borrower hereby agrees to take the following actions with respect
to each account of the Borrower held at a bank or other depository institution
located in Canada, into which any proceeds of Collateral may be deposited at any
time (each, a "Canadian Account"): (a) the Borrower shall deliver to the Agent,
together with each Borrowing Base Certificate, a report setting forth the amount
on deposit in each Canadian Account on the date of such Borrowing Base
Certificate; (b) the Borrower shall deliver to the Agent copies of all periodic
account statements with respect to each Canadian Account, promptly upon the
Borrower's receipt thereof; and (c) on Monday of each week (or on the next
Business Day, if such Monday is not a Business Day) the Borrower shall cause to
be transferred, by wire or book-entry transfer, in immediately available funds,
all funds on deposit in each Canadian Account to a Blocked Account or to such
other bank account as the Agent may from time to time designate for such
purpose. The Borrower hereby confirms and agrees that all amounts deposited in
each Canadian Account, whether as proceeds of Inventory or other Collateral or
otherwise, shall be the property of the Agent.
Section 5.04 DELIVERY OF INFORMATION CONCERNING TRADE ACCOUNTS
RECEIVABLE AND INVENTORY. In furtherance of the continuing assignment and
security interest in the Borrower's Accounts and Inventory, the Borrower will,
upon the creation of Accounts and purchase or acquisition of Inventory, execute
and deliver to the Agent in such form and manner as the Agent may reasonably
require, solely for the Agent's convenience in maintaining records of
Collateral, such confirmatory schedules of Trade Accounts Receivable and
Inventory as the Agent may reasonably request, including, without limitation,
weekly schedules of Trade Accounts Receivable and monthly schedules of
Inventory, all in form and substance satisfactory to the Agent, and such other
appropriate reports designating, identifying and describing the Trade Accounts
Receivable and Inventory as the Agent may reasonably request, and provided
further that the Agent may request any such information more frequently, from
time to time, upon its reasonable prior request. In addition, upon the Agent's
request, the Borrower shall provide the Agent with copies of agreements with, or
purchase orders from, the Borrower's customers, and copies of invoices to
customers, proof of shipment or delivery, access to its computers, electronic
media and software programs associated therewith (including any electronic
records, contracts and signatures) and such other documentation and information
relating to such Trade Accounts Receivable and other Collateral as the Agent may
reasonably require. Failure to provide the Agent with any of the foregoing shall
in no way affect, diminish, modify or otherwise limit the security interests
granted herein. The Borrower hereby authorizes the Agent to regard the
Borrower's printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by one of the Borrower's
Authorized Officers or agents.
Section 5.05 REPRESENTATIONS AND COVENANTS WITH RESPECT TO TRADE
ACCOUNTS RECEIVABLE AND INVENTORY. The Borrower hereby represents and warrants
that: each Trade Account Receivable is based on an actual and bona fide sale and
delivery of Inventory or rendition of services to its customers, made by the
Borrower in the ordinary course of its business; the Inventory being sold, and
the Trade Accounts Receivable created, are the exclusive property of the
Borrower and are not and shall not be subject to any Lien whatsoever, other than
Liens in favor of the Agent, Liens which secure the Pegasus Debt and the
Permitted Encumbrances; the invoices evidencing such Trade Accounts Receivable
are in the name of the
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Borrower; and the customers of the Borrower have accepted the Inventory or
services, owe and are obligated to pay the full amounts stated in the invoices
according to their terms, without dispute, offset, defense, counterclaim or
contra, except for disputes and other matters arising in the ordinary course of
business with respect to which the Borrower has complied with the following
notification requirements. The Borrower agrees to notify the Agent promptly of:
(a) any matters affecting the enforceability or collectibility of any Trade
Account Receivable; (b) with respect to any Trade Account Receivable in the face
amount of $200,000, or greater, all customer disputes, offsets, defenses,
counterclaims, returns, rejections, (c) all reclaimed or repossessed merchandise
or goods, (d) any adverse effect in the value of Inventory, or of any matter
which materially and adversely affects the Borrower's 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 (e)
any such matters which are material, as a whole, to the Trade Accounts
Receivables and/or the Inventory. The Borrower agrees to issue credit memoranda
promptly (with duplicates to the Agent upon request after the occurrence of an
Event of Default) upon accepting returns or granting allowances. Upon the
occurrence of an Event of Default (which is not waived in writing by the
Required Lenders) and on notice from the Agent, the Borrower agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set aside by
the Borrower, marked with the Agent's name (as secured party) and held by the
Borrower for the Agent's account. The Borrower confirms to the Agent that any
and all Taxes or fees relating to its business, its sales, the Accounts or
Inventory relating thereto, are its sole responsibility and that same will be
paid by the Borrower when due, and that none of said Taxes or fees represent a
Lien on the Accounts. The Borrower hereby further represents and warrants that
(i) any Inventory it may acquire on a consignment basis shall be segregated and
set apart from all other Inventory, shall under no circumstances be included in
any Borrowing Base Certificate as Eligible Inventory or otherwise be deemed to
be Eligible Inventory, and is not subject to any Lien in favor of the consignor
of such Inventory, (ii) it shall not co-mingle its Inventory with the inventory
of any of its customers or the inventory of any other Person, including pursuant
to any xxxx and hold sale or otherwise, and (iii) its Inventory is marketable to
its customers in the ordinary course of business of the Borrower, except as it
may otherwise report in writing to the Agent pursuant to this Section from time
to time. The Borrower agrees to maintain such books and records regarding
Accounts and Inventory as the Agent may reasonably require and agrees that the
books and records of the Borrower will reflect the Agent's interest in the
Accounts and Inventory.
Section 5.06 ADDITIONAL REPRESENTATIONS AND COVENANTS WITH
RESPECT TO TRADE ACCOUNTS RECEIVABLE AND INVENTORY. The Borrower agrees to
safeguard, protect and hold all Inventory for the Agent's account and make no
disposition thereof except in the ordinary course of its business of the
Borrower, as herein provided. The Borrower represents and warrants that
Inventory will be sold and shipped by the Borrower to its customers only in the
ordinary course of the Borrower's business, and then only on open account and on
terms currently being extended by the Borrower to its customers, and absent the
prior written consent of the Agent, the Borrower shall not sell Inventory on a
consignment basis. Upon the sale, exchange, or other disposition of Inventory,
as herein provided, the security interest in the 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, Trade Accounts Receivable, 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, the
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Agent shall have all of the rights of an unpaid seller, including stoppage in
transit, replevin, rescission and reclamation. The Borrower hereby agrees to
immediately forward any and all proceeds of Collateral to a Blocked Account, and
to hold any such proceeds (including any notes and instruments), in trust for
the Agent, on behalf of the Lenders, pending delivery to the Agent. Irrespective
of the Agent's perfection status in any and all of the General Intangibles,
including, without limitation, any Patents, Trademarks, Copyrights or licenses
with respect thereto, the Borrower hereby irrevocably grants the Agent a royalty
free license to sell, or otherwise dispose or transfer, in accordance with
Section 11.03, and the applicable terms hereof, any of the Inventory upon the
occurrence of an Event of Default which has not been waived in writing by the
Agent.
Section 5.07 REPRESENTATIONS AND COVENANTS WITH RESPECT TO
EQUIPMENT. The Borrower agrees at its own cost and expense to keep the Equipment
in satisfactory operating condition, reasonable wear and tear excepted, making
any and all repairs and replacements when and where necessary. The Borrower also
agrees to safeguard, protect and hold all Equipment in accordance with the terms
hereof and subject to the Agent's security interest.
Section 5.08 REPRESENTATIONS AND COVENANTS WITH RESPECT TO
GENERAL INTANGIBLES. The Borrower possess all General Intangibles and rights
thereto necessary to conduct its business as conducted as of the Closing Date
and the Borrower shall maintain its rights in, and the value of, the foregoing
in the ordinary course of its business, including, without limitation, by making
timely payment with respect to any applicable licensed rights. The Borrower
shall deliver to the Agent, and/or shall cause the appropriate party to deliver
to the Agent, from time to time such pledge or security agreements with respect
to General Intangibles (now or hereafter acquired) of the Borrower as the Agent
shall require to obtain valid first liens thereon. In furtherance of the
foregoing, the Borrower shall provide timely notice to the Agent of any
additional Patents, Trademarks, tradenames, service marks, Copyrights, brand
names, trade names, logos and other trade designations acquired or applied for
subsequent to June 30, 2000 and the Borrower shall execute such documentation as
the Agent may reasonably require to obtain and perfect its lien thereon. The
Borrower hereby confirms that it shall deliver, or cause to be delivered, any
Pledged Stock issued subsequent to June 30, 2000 to the Agent in accordance with
the applicable terms of the Stock Pledge Agreement and prior to such delivery,
shall hold any such stock in trust for the Agent. The Borrower hereby
irrevocably 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, 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.
Section 5.09 CONTINUING SECURITY INTEREST. The rights and
security interests granted to the Agent and the Lenders hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the Revolving Loan Account may from
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time to time be temporarily in a credit position, until the final payment in
full to the Lenders of all Obligations and the termination of this Financing
Agreement. Any delay, or omission by the 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 shall be in writing and signed by the 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.
Section 5.10 NO MARSHALLING. 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.
Section 5.11 CREDIT BALANCES. Any balances to the credit of the
Borrower and any other property or assets of the Borrower 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 security interests granted herein, and any other Lien the Agent
and/or the Lenders may have in any other assets of the Borrower, 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 Account when due.
Section 5.12 MORTGAGES. The Borrower's Obligations are further
secured by the Mortgages on the Real Estate.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
Section 6.01 ORGANIZATION; POWERS. The Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted. Except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the Borrower is qualified to do business in, and is
in good standing in, every jurisdiction where such qualification is required, or
where the failure to so qualify would have a material adverse effect on the
ability of the Borrower to enforce collection of Trade Accounts Receivable due
from customers residing in that jurisdiction.
Section 6.02 AUTHORIZATION; ENFORCEABILITY. This Financing
Agreement, the other Loan Documents to which the Borrower is a party, and the
transactions contemplated to occur hereunder and thereunder are within the
Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Financing Agreement and
each such Loan Document has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization,
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moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
Section 6.03 GOVERNMENTAL APPROVALS; NO CONFLICTS. The
transactions contemplated to occur under this Financing Agreement and under the
other Loan Documents to which the Borrower is a party (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
its assets, or give rise to a right thereunder to require any payment to be made
by the Borrower, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower other than Liens in favor of the Agent, and
Liens in favor of Pegasus, pursuant to the Pegasus Debt Documents, to secure the
Pegasus Debt.
Section 6.04 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
The Borrower has heretofore furnished to the Agent its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of and
for the fiscal year ended June 30, 2001, reported on by Ernst & Young,
independent public accountants, and (ii) as of and for the first nine fiscal
months (ended in March 2002) of the fiscal year ending in June, 2002, certified
by an Authorized Officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) Since the date of the financial statements referred to in Section
6.04(a)(ii), there has been no Material Adverse Change.
Section 6.05 PROPERTIES. (a) The Borrower has good title to, or
valid leasehold interests in, all its real and personal property material to its
business, except for the Permitted Encumbrances and minor defects or
encumbrances in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes.
(b) The Borrower owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Borrower does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) As of the Closing Date, the information contained in Annex II to
this Financing Agreement is true and correct in all respects.
Section 6.06 LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
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determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve this Financing
Agreement or the transactions contemplated to occur hereunder.
(b) Except with respect to any other matters that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, the Borrower (i) has not failed to comply with any Environmental Law or
to obtain, maintain or comply with any material and necessary permit, license or
other approval required under any Environmental Law, (ii) has not become subject
to any Environmental Liability, (iii) has not received notice of any claim with
respect to any Environmental Liability or (iv) does not know of any basis for
any Environmental Liability.
Section 6.07 COMPLIANCE WITH LAWS AND AGREEMENTS. The Borrower is
in compliance with all laws, regulations and orders of any Governmental
Authority applicable to it or its property and all indentures, agreements and
other instruments binding upon it or its property, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is continuing.
Section 6.08 INVESTMENT AND HOLDING COMPANY STATUS. The Borrower
is not (a) an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940 or (b) a "holding company" as defined
in, or subject to regulation under, the Public Utility Holding Company Act of
1935.
Section 6.09 TAXES. The Borrower has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
Section 6.10 ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount which could reasonably be
expected to result in a Material Adverse Effect, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount which could reasonably be expected to result in a Material
Adverse Effect.
Section 6.11 DISCLOSURE. The Borrower has disclosed to the Agent
and the Lenders all agreements, instruments and corporate or other restrictions
to which it or any of its Subsidiaries is subject, and all other matters known
to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial
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statements, certificates or other information furnished by or on behalf of the
Borrower to the Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time.
Section 6.12 SECURITY INTEREST. Each Loan Document that purports
to create or grant in favor of the Agent a security interest in or other Lien on
any property creates and grants to the Agent, for the benefit of the Lenders, a
legal and valid security interest in or other Lien on the collateral identified
therein. Such security interest or Lien is a perfected and, except as permitted
hereby or by such Loan Document, or pursuant to the terms of the Intercreditor
Agreement, first priority security interest in or Lien on the collateral
identified in such Loan Document. Such collateral or property is not subject to
any other Liens whatsoever, except Liens permitted by Section 8.02.
Section 6.13 USE OF PROCEEDS. All proceeds of the Revolving Loans
shall be used to pay the transaction costs and expenses relating to the
consummation of the transactions contemplated to occur under this Financing
Agreement and the Pegasus Financing Agreement and to provide for the Borrower's
ongoing working capital requirements, general operating requirements and other
proper corporate purposes of the Borrower not otherwise prohibited by the terms
hereof.
Section 6.14 SUBSIDIARIES. As of the Closing Date, the following
are the exact names and respective countries of incorporation of each
Subsidiary: Cannondale Europe B.V. - Netherlands; Cannondale Japan K.K. - Japan
and Cannondale Australia Pty Limited - Australia. As of the Closing Date, all of
the outstanding shares of securities having ordinary voting power issued by each
Subsidiary are owned beneficially and of record by the Borrower.
Section 6.15 SOLVENCY. (a) The fair salable value of the assets
of the Borrower is not less than the amount that will be required to be paid on
or in respect of the probable liability on the existing debts and other
liabilities (including contingent liabilities) of the Borrower, as they become
absolute and mature.
(b) The assets of the Borrower do not constitute unreasonably small
capital for the Borrower to carry out its business as now conducted and as
proposed to be conducted, including the capital needs of the Borrower, taking
into account the particular capital requirements of the business conducted by
the Borrower and projected capital requirements and capital availability
thereof.
(c) The Borrower does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by the Borrower, and of amounts to be payable on or in
respect of the debts of the Borrower).
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Section 6.16 PERMITS, ETC. The Borrower possesses all material
licenses, permits, approvals and consents, including, without limitation, all
environmental, health and safety licenses, permits, approvals and consents
(collectively, "Permits") of all Federal, state and local governmental
authorities as required to conduct properly its business, each such Permit is
and will be in full force and effect, and the Borrower is in compliance in all
material respects with all such Permits, and no event (including, without
limitation, any violation of any law, rule or regulation) has occurred which
allows the revocation or termination of any such Permit or any restriction
thereon, except where non-compliance or such revocation or termination,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated, the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full, all Letters of Credit shall have expired or terminated (or Agent shall
have received all of the L/C Cash Collateral), all LC Disbursements shall have
been reimbursed and all other Obligations paid in full, the Borrower covenants
and agrees with the Lenders that:
Section 7.01 FINANCIAL STATEMENTS, PROJECTIONS, BORROWING BASE
CERTIFICATES AND OTHER INFORMATION. The Borrower will furnish to the Agent (and
upon its receipt thereof, the Agent will promptly furnish to each Lender):
(a) as soon as available but in any event within 90 days after the end
of each Fiscal Year of the Borrower, its audited consolidated balance sheet,
consolidating balance sheet and related audited consolidated and consolidating
statements of operations, stockholders' equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by Ernst & Young or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) as soon as available but in any event within 45 days after
the end of the first, second and third Fiscal Quarters of each Fiscal Year and
within 90 days after the end of the fourth Fiscal Quarter of each Fiscal Year,
the Borrower's consolidated balance sheet, consolidating balance sheet and
consolidated and consolidating related statements of operations, stockholders'
equity and cash flows as of the end of and for such Fiscal Quarter, and the then
elapsed portion of the Fiscal Year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous Fiscal Year, all certified by
an Authorized Officer as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes. In addition to the foregoing, within 60 days
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after the end of the fourth Fiscal Quarter of each Fiscal Year, the Borrower
shall furnish to the Agent all of the financial statements referred to in this
clause (b) in draft form;
(c) as soon as available but in any event within 30 days after
the end of each of the first eleven fiscal months of the Borrower (except for
the third fiscal month of each of the first three Fiscal Quarters, which shall
be within 45 days after the end of each such fiscal month) and within 90 days
after the end of the last fiscal month of the Borrower, its consolidated balance
sheet, consolidating balance sheet and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal month, and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or in the case of the balance sheet, as of the end of) the
previous Fiscal Year, all certified by an Authorized Officer as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a), (b) or (c) above, a certificate of an Authorized Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations (A) in the case of quarterly financial statements, of (1) EBITDA
(both for the Borrower and for the Motor Sports Division, as if the Motor Sports
Division were a separate financial reporting entity), (2) Availability, (3) the
Fixed Charge Coverage Ratio for the applicable measuring period under Section
8.09 then ended and (4) all non-cash charges deducted in determining Net Income
for the applicable Fiscal Quarter, including without limitation all of the
non-cash charges described in clauses (w), (x), (y) and (z) of the defined term
EBITDA and (B) demonstrating compliance with Sections 8.08 through and including
8.13, and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the audited financial statements referred to in
clause (a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines), together with a copy of such accounting firm's "management letter",
if any;
(f) promptly after the same become publicly available, copies of
all periodic and other reports, financial statements, proxy statements and other
materials filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;
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(g) no later than ten (10) days prior to the end of each Fiscal
Year, the Borrower's forecasted consolidated balance sheet, consolidating
balance sheet and related consolidated statements of operations, stockholders'
equity and cash flows (all prepared on a consistent basis with the Borrower's
historical consolidated financial statements) together with appropriate
supporting details and a statement of underlying assumptions for the forthcoming
Fiscal Year, prepared on a month-by-month basis;
(h) (i) Daily, a report of the Borrower's sales, collections and
debit and credit adjustments for the previous day, such report to contain such
level of detail and to otherwise be in such scope, form and substance as the
Agent may reasonably require and to be delivered together with such supporting
documentation as the Agent may reasonably request, (ii) on Monday of each week
(or on the next Business Day, if such Monday is not a Business Day, (x) a
Borrowing Base Certificate as of the last day of the preceding week, which
Borrowing Base Certificate shall reflect the Borrower's total Eligible Inventory
as of the last day of the preceding week, (y) a report, in form and substance,
and in such detail, as shall be satisfactory to the Agent, of (1) all sales,
collections and debit and credit adjustments for the preceding week, (2) the
amount and value, by location and type (e.g., bicycle or motorcycle), of the
total Inventory and Eligible Inventory as of the end of the preceding week and
(3) of the total number of motorcycles and related products shipped during the
preceding week and the total number of dealers being utilized for such shipments
as of the end of the preceding week and (z) a reconciliation to the Trade
Accounts Receivable outstanding as of the prior Monday (or the next Business Day
of the prior week, if such prior Monday is not a Business Day), and (iii) within
fifteen (15) days after the end of each month, a Borrowing Base Certificate as
of the last day of such month, together with a report, in form and substance,
and in such detail, as shall be satisfactory to the Agent, of (1) the amount and
value, by location, of the total Inventory and Eligible Inventory as of the end
of such month, (2) an aging of the Trade Accounts Receivable as of the end of
such month, (3) an aging of the Borrower's accounts payable as of the end of
such month, (4) the concentration of Borrower's customers, and (5) a work-up of
ineligible Trade Accounts Receivable and ineligible Inventory as of the end of
such month; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Financing Agreement, as the Agent or any Lender may reasonably request.
Section 7.02 NOTICES OF MATERIAL EVENTS. The Borrower will
furnish to the Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
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(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(d) the receipt of any material notice or other communication
from the Securities Exchange Commission; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
an Authorized Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
Section 7.03 EXISTENCE; CONDUCT OF BUSINESS. The Borrower
will do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, Permits,
privileges and franchises material to the conduct of its business.
Section 7.04 PAYMENT OF OBLIGATIONS. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
Section 7.05 MAINTENANCE OF PROPERTIES; INSURANCE. The
Borrower will (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations, each policy in respect of which shall list the Agent as loss
payee and/or additional insured as applicable.
Section 7.06 BOOKS AND RECORDS; INSPECTION RIGHTS. The
Borrower will keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities. The Borrower will permit any representatives designated
by the Agent or any Lender, upon reasonable prior notice, to visit and inspect
its properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
If the Borrower reasonably believes that any material interests of the Borrower
or any of its Subsidiaries relating to any non-public, confidential or
proprietary information which could become available to the Agent or any Lender
during the course of such inspections or such discussions are not adequately
protected by any then existing confidentiality agreements entered into by the
Agent and such Lender with respect to the Borrower and its Subsidiaries, then
any such visit and examination or discussions shall be
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performed in compliance with reasonable and customary security procedures
mutually agreeable to the Agent and the Lenders, as applicable, and the
Borrower.
Section 7.07 COMPLIANCE WITH LAWS. The Borrower will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where any single failure to do so, or any series of failures to do so,
could not reasonably be expected to result in a Material Adverse Effect.
Section 7.08 USE OF PROCEEDS AND LETTERS OF CREDIT. The
proceeds of the Revolving Loans will be used only for the Borrower's working
capital needs and for the other purposes described in the last sentence of
Section 6.13. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Federal Reserve Board, including Regulations U and X.
Documentary or commercial Letters of Credit will be issued only to support the
Borrower's importation of merchandise and inventory. Standby Letters of Credit
will be issued only to support the Borrower's insurance obligations and its
Hedging Obligations.
Section 7.09 LOCK BOXES AND BLOCKED ACCOUNT AGREEMENTS. The
Borrower will maintain at all times a Lock Box, Blocked Account and Blocked
Account Agreement, containing terms and conditions reasonably satisfactory to
the Agent, among the Borrower, the Agent, and each bank at which a Lock Box is
maintained to which the Borrower's customers remit their payments and
collections.
Section 7.10 NEW SUBSIDIARIES. The Borrower shall give the
Agent and the Lenders not less than thirty (30) days prior written notice of the
Borrower's intention to create or acquire a Subsidiary. In connection with any
establishment, creation or acquisition of any Subsidiary, it is understood that
the Required Lenders may require that (a) any such new Subsidiary to execute and
deliver to the Agent promptly, and in any event within three (3) days after such
establishment, creation or acquisition thereof a guaranty in form and substance
satisfactory to the Agent, a security agreement in form and substance
satisfactory to the Agent and such other agreements, instruments and other
documents reasonably requested by the Agent and (b) each owner of the capital
stock or other equity interests of any such Subsidiary execute and deliver
promptly, and in any event within three (3) days after such establishment,
creation or acquisition thereof, (i) a pledge agreement in form and substance
satisfactory to the Agent, (ii) certificates evidencing such capital stock or
other equity interests of such Subsidiary, (iii) undated stock powers or other
appropriate instruments of assignment executed in blank with signature
guaranteed and (iv) such other agreements, instruments and other documents
reasonably requested by the Agent, including without limitation an amendment to
this Financing Agreement, the primary purpose of which would be to effect a
modification of certain of the representations, warranties, covenants (including
financial covenants) and events of default contained herein so as to make such
time representations, warranties, covenants and events of default applicable to
such new Subsidiary.
Section 7.11 NEW COLLATERAL LOCATIONS. As soon as possible
and in any event no later than ten (10) days after the date on which any of the
Borrower's goods, as defined in the UCC, are held at a location that is not set
forth on Annex II (whether such location constitutes leased premises, a
warehouse, a processor's location or other location), the Borrower shall (a)
notify the
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Agent of the address of such location and the type and value of the Collateral
being held at such location and (b) deliver to the Agent a warehouseman's or
processor's waiver substantially in the form of Exhibit D-1 or Exhibit D-2, as
applicable, duly executed by the lessor or owner of such location.
Section 7.12 APPRAISALS. The Borrower shall cause to be
performed, at the Agent's request, which request may be made by the Agent not
more than once during each period of 365 days commencing on the Closing Date
(unless an Event of Default shall have occurred and be continuing, in which case
such restriction shall not apply), at such time as the Agent in its discretion
shall require, an appraisal of the net orderly liquidation value of the
Inventory, each such appraisal to be conducted by an appraiser acceptable to the
Agent and at the sole cost and expense of the Borrower.
ARTICLE VIII
NEGATIVE COVENANTS AND FINANCIAL COVENANTS
Until the Commitments have expired or terminated, the principal of and
interest on each Revolving Loan and all fees payable hereunder have been paid in
full, all Letters of Credit have expired or terminated, all LC Disbursements
shall have been reimbursed and all other Obligations paid in full, the Borrower
covenants and agrees with the Lenders that:
Section 8.01 INDEBTEDNESS. The Borrower will not create,
incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 8.01, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Subsidiary, provided that
such Indebtedness is (i) unsecured, (ii) subordinated in right of payment to the
prior payment and satisfaction in full in cash of the Obligations and (iii)
incurred on terms and conditions satisfactory to the Agent;
(d) Indebtedness of the Borrower arising under (i) that certain
Letter of Comfort dated February 17, 2000 executed by the Borrower in favor of
ABN AMRO Bank N.V. in respect of the Indebtedness owing to such bank by
Cannondale Europe B.V., a Subsidiary organized under the laws of Netherlands,
and (ii) that certain Guarantee Agreement dated August 7, 1992 executed by the
Borrower in favor of The Dai-Ichi Kangyo Bank, Ltd. in respect of the
Indebtedness owing to such bank by Cannondale Japan K.K., a Subsidiary organized
under the laws of Japan, and any extension, renewal or replacement of such
Letter of Comfort or Guarantee Agreement, provided that the terms of any such
extension, renewal or replacement do not materially differ from the terms
contained in the original Letter of Comfort or Guarantee Agreement, and provided
further that the principal amount of the revolving Indebtedness of the relevant
Subsidiary is not increased beyond the maximum amount originally incurred by it,
and the principal amount of the term Indebtedness of the relevant
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Subsidiary is not increased beyond the unpaid principal balance thereof
outstanding on the date of such extension, renewal or replacement;
(e) Indebtedness of the Borrower arising under that certain
Vendor Agreement dated as of February 11, 1999 between the Borrower and Deutsche
Financial Services Corporation and any extension or renewal of such Vendor
Agreement, provided that the terms of such extension or renewal do not
materially differ from the terms contained in the original Vendor Agreement;
(f) Indebtedness of the Borrower incurred to finance the
acquisition, construction or improvement of any real property or the fixed or
capital assets, including pursuant to Capital Leases, and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (i) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (f) shall not exceed $3,000,000 at any
time outstanding;
(g) Indebtedness consisting of Hedging Obligations, provided that
as of any date of determination, the notional amount of such Indebtedness shall
not exceed $8,000,000 in the aggregate;
(h) unsecured Indebtedness, the payment of which is subordinated
to the prior payment and satisfaction in full, in cash, of all Obligations,
provided that (i) the terms and conditions governing such Indebtedness
(including without limitation the amortization terms, if any) are satisfactory
to the Agent and (ii) the holder of such Indebtedness and the Agent, on behalf
of the Lenders, shall have entered into a subordination agreement containing
terms and conditions satisfactory to the Agent;
(i) the Pegasus Debt up to an aggregate principal amount of
$25,000,000 (plus such amounts that may be added to the original principal
amount of the Pegasus Debt on account of (x) interest that is paid-in-kind, (y)
fees payable in connection with the Pegasus Debt, up to $2,750,000, and (z)
certain warrants issued by the Borrower to Pegasus, in each case solely to the
extent, and in accordance with the terms, set forth in the Pegasus Debt
Documents, as in effect on the Closing Date), and any replacement or refinancing
of the Pegasus Debt, as the same now exists or may hereafter be amended,
modified, supplemented, extended or restated, as permitted hereby or pursuant to
the Intercreditor Agreement, provided that (i) the terms and conditions which
govern the Indebtedness, the proceeds of which are used to replace or refinance
the Pegasus Debt, do not materially differ from the terms and conditions
contained in the Pegasus Debt Documents, (ii) the principal amount of such
Indebtedness is no greater than the unpaid principal balance of the Pegasus Debt
as of the date of such replacement or refinancing and (iii) the holder of such
Indebtedness and the Agent, on behalf of the Lenders, shall have entered into an
intercreditor agreement containing terms and conditions reasonably satisfactory
to the Agent; and
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(j) the Xxxx Debt and the Xxxxxxxxxx Debt, up to an aggregate
principal amount of $4,000,000.
Section 8.02 LIENS. The Borrower will not create, incur,
assume or permit to exist any Lien on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower existing on
the date hereof and set forth in Schedule 8.02; provided that (i) such Lien
shall not apply to any other property or asset of the Borrower and (ii) such
Lien shall secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(c) Liens on fixed or capital assets acquired, leased,
constructed or improved by the Borrower; provided that (i) such security
interests secure Indebtedness permitted by clause (f) of Section 8.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of the
Borrower;
(d) Liens that secure the Pegasus Debt; and
(e) Liens in favor of the Agent.
Section 8.03 FUNDAMENTAL CHANGES; PROHIBITED AMENDMENTS. (a)
The Borrower will not merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or any substantial part of its assets, or any real property owned by it, or all
or substantially all of the stock of any of its Subsidiaries (in each case,
whether now owned or hereafter acquired), or liquidate or dissolve, PROVIDED,
HOWEVER, that during each Fiscal Year, the Borrower may sell, transfer, or
otherwise dispose of (i) Inventory in the ordinary course of its business, (ii)
Equipment no longer used or useful in the conduct of its business and (iii)
except as otherwise provided in the Intercreditor Agreement, other Equipment, so
long as the fair market value of such Equipment does not exceed, in the
aggregate, $500,000 during any such Fiscal Year, and the Net Cash Proceeds
received in connection with any such disposition are promptly reinvested in the
Borrower or, within sixty (60) days from receipt thereof, is used to purchase
Equipment in replacement of such disposed Equipment.
(b) The Borrower will not engage to any material extent in any
business other than businesses of the type conducted by the Borrower on the date
of execution of this Agreement and businesses reasonably related thereto.
(c) Except as otherwise permitted under the terms of the
Intercreditor Agreement, without the prior written consent of the Agent, the
Borrower will not consent to any amendment or other modification of the Pegasus
Financing Agreement or any of the other Pegasus Debt
- 46 -
Documents resulting in (A) an increase in the principal amount of the Pegasus
Debt, (B) a change (other than by postponement) in any scheduled payment or
prepayment of the Pegasus Debt, (C) an increase in any interest rate applicable
to the Pegasus Debt, or (D) the addition of new financial covenants or new
events of default or the imposition of stricter levels or ratios with respect to
existing financial covenants applicable to the Pegasus Debt.
(d) Without the prior written consent of the Agent, the Borrower
will not consent to any amendment or other modification of any instrument
evidencing the Xxxx Debt, or any agreements or documents pursuant to which any
such instrument was issued or is governed, which amendment or modification
results in (A) an increase in the principal amount of the Xxxx Debt, (B) a
change (other than by postponement) in any scheduled payment or prepayment of
the Xxxx Debt, (C) an increase in any interest rate applicable to the Xxxx Debt
or (D) the addition of new financial covenants or new events of default or the
imposition of stricter levels or ratios with respect to existing financial
covenants applicable to the Xxxx Debt.
(e) Without the prior written consent of the Agent, the
Borrower will not consent to any amendment or other modification of any
instrument evidencing the Xxxxxxxxxx Debt, or any agreements or documents
pursuant to which any such instrument was issued or is governed, which amendment
or modification results in (A) an increase in the principal amount of the
Xxxxxxxxxx Debt, (B) a change (other than by postponement) in any scheduled
payment or prepayment of the Xxxxxxxxxx Debt, (C) an increase in any interest
rate applicable to the Xxxxxxxxxx Debt or (D) the addition of new financial
covenants or new events of default or the imposition of stricter levels or
ratios with respect to existing financial covenants applicable to the Xxxxxxxxxx
Debt.
Section 8.04 INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Borrower will not purchase, hold or acquire (including
pursuant to any merger with any Person) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guaranty any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) endorsements of instruments for collection or deposit, in the
ordinary course of the Borrower's business;
(c) loans and advances in existence on the Closing Date in the
aggregate principal amount of $1,368,658 made by the Borrower to employees of
the Borrower or to employees of its Subsidiaries, but not any refinancing or
refunding of any such loans or advances;
(d) loans and advances made by the Borrower to employees of the
Borrower or to employees of its Subsidiaries (other than loans and advances
described in clause (c) above), provided that (i) each such loan or advance is
made in the ordinary course of the
- 47 -
Borrower's business and (ii) the principal amount of all such loans and advances
outstanding shall not exceed $750,000 at any time;
(e) guarantees constituting Indebtedness permitted by Section
8.01; and
(f) investments by the Borrower existing on the date hereof and
identified on Schedule 8.04.
Section 8.05 RESTRICTED PAYMENTS; PAYMENTS OF CERTAIN
INDEBTEDNESS.
(a) The Borrower will not declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except that the Borrower
may declare and pay dividends with respect to its capital stock payable solely
in additional shares of its common stock, and the Borrower may issue the
"Warrants", as defined in the Pegasus Financing Agreement, in accordance with
the terms thereof, and may consummate the transactions contemplated to occur
thereunder.
(b) The Borrower will not make any payment of the Pegasus Debt,
except that (i) the Borrower may make regularly scheduled payments of interest
on the Pegasus Debt (but only to the extent required by the Pegasus Debt
Documents as in effect on the date the Pegasus Debt was first incurred) and (ii)
the Borrower may, at any time and from time to time, on not less than ten (10)
days prior written notice to the Agent, pay the amount of any interest which
would otherwise be capitalized in accordance with the terms of the Pegasus Debt
or prepay all or any portion of the principal of the Pegasus Debt, so long as,
at the time of any such principal payment (A) no Event of Default shall have
occurred and be continuing, (B) the Borrower's average daily Availability for
the period of 90 consecutive days ending on the day immediately preceding the
day of such principal payment, on a PRO FORMA basis, calculated as if a
Revolving Loan in the amount of such principal payment had been made on the
first day of such period and been outstanding on each day during such period,
shall be not less than $8,500,000, (C) the Agent shall have received, in
accordance with Section 7.01 (c), the Borrower's consolidated and consolidating
financial statements for the most recently ended fiscal month, and (D) on or
before the date of such payment, the Agent shall have received a certificate,
duly executed by an Authorized Officer, setting forth in reasonable detail the
calculation of the minimum PRO FORMA Availability required pursuant to clause
(B) hereof, PROVIDED, HOWEVER, that solely for the purpose of determining the
Borrower's compliance with the test set forth in clause (B) hereof, the
calculation of Availability (1) shall be made without giving effect to any
"reserve", within the meaning of the defined term Availability Reserve, created
or established with respect to a specific type or category of risk, which
reserve was not in effect on the Closing Date and (2) shall not be reduced by
the dollar amount set forth in clause (a)(ii) of Section 3.01.
(c) The Borrower will not make any payment of the Xxxx Debt,
except that: (i) the Borrower may make regularly scheduled payments of interest
on the Xxxx Debt (but only to the extent required by the documents evidencing
the Xxxx Debt or the agreements pursuant to which the Xxxx Debt was issued or is
governed, as in effect on the date the Xxxx Debt was first incurred), so long as
no Event of Default has occurred and is continuing under Section 11.01 (a), (b),
(g) or (h) of this Financing Agreement or under Section 10 (a), (b), (g) or (h)
of the Pegasus Financing Agreement; (ii) on not less than ten (10) days prior
written notice to the Agent in each
- 48 -
case, the Borrower may make up to $2,000,000 of prepayments of principal on the
Xxxx Debt, together with interest accrued thereon and any premium included in
the applicable Redemption Price (as defined in the documents evidencing the Xxxx
Debt as in effect on the date the Xxxx Debt was incurred), so long as, at the
time of any such payment (A) no Event of Default shall have occurred and be
continuing, (B) after giving effect to such proposed prepayment, the Borrower's
Availability, on a PRO FORMA basis, shall be not less than $10,400,000, (C) the
Fixed Charge Coverage Ratio of the Borrower, on a consolidated basis with its
consolidated Subsidiaries, for the most recently ended period of twelve
consecutive fiscal months, shall be greater than 1.00 to 1.00, (D) the Agent
shall have received, in accordance with Section 7.01(c), the Borrower's
consolidated and consolidating financial statements for the most recently ended
fiscal month, (E) with respect to any Fiscal Year in which such payment is
proposed to be made, the net shipments, expressed in dollars, for the prior
Fiscal Year made by the Borrower's domestic bicycle division shall be not less
than $103,839,000, and (F) on or before the date of such payment, the Agent
shall have received a certificate, duly executed by an Authorized Officer,
setting forth in reasonable detail the calculation of (1) the consolidated Fixed
Charge Coverage Ratio required pursuant to clause (C) hereof, (2) the minimum
PRO FORMA Availability required pursuant to clause (B) hereof and (3) the amount
of the net shipments required pursuant to clause (E) hereof; and (iii) the
Borrower may repay the principal of the Xxxx Debt on the maturity date thereof
(in accordance with the terms of the Xxxx Debt as in effect on the date on which
the Xxxx Debt was first incurred), so long as (A) no Event of Default has
occurred and is continuing under Section 11.01 (a), (b), (g) or (h) of this
Financing Agreement or under Section 10 (a), (b), (g) or (h) of the Pegasus
Financing Agreement and (B) such maturity date is at least one (1) Banking Day
after June 30, 2003.
(d) The Borrower will not make any payment of the Xxxxxxxxxx
Debt, except (i) that the Borrower may pay interest on the Xxxxxxxxxx Debt on
the first day of each calendar quarter in arrears for the previous calendar
quarter and upon the full conversion of the entire unpaid principal balance
thereof into equity in accordance with the terms thereof (but only to the extent
required by the documents evidencing the Xxxxxxxxxx Debt or the agreements
pursuant to which the Xxxxxxxxxx Debt was issued or is governed, as in effect on
the date the Xxxxxxxxxx Debt was first incurred), so long as, at the time of any
such interest payment (A) no Event of Default shall have occurred and be
continuing, (B) the Borrower's average daily Availability for the period of 90
consecutive days ending on the day immediately preceding the day of such
interest payment, on a PRO FORMA basis, calculated as if a Revolving Loan in the
amount of such interest payment had been made on the first day of such 90-day
period and been outstanding on each day during such period, shall be not less
than $5,000,000; (C) the Fixed Charge Coverage Ratio of the Borrower, on a
consolidated basis with its consolidated Subsidiaries, for the most recently
ended period of twelve consecutive fiscal months shall be greater than 1.00 to
1.00 and (D) on or before the date of such interest payment, the Agent shall
have received a certificate, duly executed by an Authorized Officer, setting
forth in reasonable detail the calculation of (1) the minimum PRO FORMA
Availability required pursuant to clause (B) hereof and (2) the consolidated
Fixed Charge Coverage Ratio required pursuant to clause (C) hereof and (ii) at
any time after the date on which the Xxxx Debt shall have been paid or otherwise
satisfied in full (including all accrued interest thereon), or converted in full
to equity, the Borrower may make up to $2,000,000 of principal payments on the
Xxxxxxxxxx Debt (but only to the extent required by the documents evidencing the
Xxxxxxxxxx Debt or the agreements pursuant to which the Xxxxxxxxxx Debt was
first incurred), together with accrued interest
- 49 -
thereon and any premium included in the applicable Redemption Price (as defined
in the documents evidencing the Xxxxxxxxxx Debt as in effect on the date the
Xxxxxxxxxx Debt was first incurred) so long as, at the time of any such
principal payment, (A) no Event of Default shall have occurred and be
continuing, (B) the Fixed Charge Coverage Ratio of the Borrower, on a
consolidated basis with its consolidated Subsidiaries, for the most recently
ended period of twelve consecutive fiscal months, shall be greater than 1.00 to
1.00, (C) the Agent shall have received, in accordance with Section 7.01(c), the
Borrower's consolidated and consolidating financial statements for the most
recently ended fiscal month, (D) the Borrower's average daily Availability for
the 90 consecutive days ending on the day immediately preceding the day of such
principal payment, on a PRO FORMA basis, calculated as if a Revolving Loan in
the amount of such principal payment had been made on the first day of such
90-day period and been outstanding on each day during such period, shall be not
less than $10,000,000, (E) with respect to any Fiscal Year in which such payment
is proposed to be made, the net shipments, expressed in dollars, for the prior
Fiscal Year made by the Borrower (not including shipments attributable to the
Motor Sports Division) shall be not less than (x) $100,000,000, with respect to
any payments made in Fiscal Year 2004, (y) $107,500,000, with respect to any
payments made in Fiscal Year 2005 and (y) $112,500,000, with respect to any
payments made in Fiscal Year 2006 and any Fiscal Year thereafter and (F) on or
before the date of such payment, the Agent shall have received a certificate,
duly executed by an Authorized Officer, setting forth in reasonable detail the
calculation of (1) the consolidated Fixed Charge Coverage Ratio required
pursuant to clause (B) hereof, (2) the minimum PRO FORMA Availability required
pursuant to clause (D) hereof and (3) the amount of the net shipments required
pursuant to clause (E) hereof.
Section 8.06 TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES.
The Borrower will not sell, lease or otherwise transfer any property or assets
to, or purchase, lease or otherwise acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Subsidiaries and
Affiliates, except (i) as otherwise permitted under Section 8.04 or (ii) in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower than could be obtained on an arm's-length basis from
unrelated third parties, PROVIDED, HOWEVER, that the Borrower may sell Inventory
from time to time to its Subsidiaries at prices less than prices charged to the
Borrower's regular customers, so long as such prices to such Subsidiaries are
(x) consistent with past practices and (y) not less than the net book value of
the item so sold.
Section 8.07 RESTRICTIVE AGREEMENTS. The Borrower will not
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a)
the ability of the Borrower to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrower or any other Subsidiary or
to guaranty Indebtedness of the Borrower or any other Subsidiary; PROVIDED that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by or in connection with this Agreement or the Pegasus Debt Documents, (ii)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof identified on Schedule 8.07 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to
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the property or assets securing such Indebtedness and (iv) clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts
restricting the assignment thereof.
Section 8.08 NET WORTH. The Borrower shall maintain at all
times during and as of the end of each (i) period set forth in subsections (a)
through (d) below and (ii) Fiscal Quarter set forth in subsections (e) through
(l) below, a Net Worth of not less than the amount set forth below opposite such
period or Fiscal Quarter, as the case may be. For purposes of calculating the
Borrower's compliance with this covenant, Net Worth shall not be reduced by (i)
non-cash write offs of fees and expenses incurred in connection with the
prepayment of all or any portion of the principal of the Term Loan or the
Mezzanine Debt (as each such term is defined in the Original Financing
Agreement), or (ii) non-cash write offs of deferred taxes:
Minimum
Measuring Period Net Worth
--------------------------------------------------------- ---------------------------
(a) three calendar months ending in November 2002 $16,800,000
(b) six calendar months ending in February 2003 17,100,000
(c) nine calendar months ending in May 2003 16,900,000
(d) twelve calendar months ending in August 2003 19,500,000
(e) September 2003 20,600,000
(f) December 2003 21,900,000
(g) March 2004 24,000,000
(h) June 2004 28,200,000
(i) September 2004 29,500,000
(j) December 2004 31,000,000
(k) March 2005 33,200,000
(l) June 2005, and each Fiscal Quarter thereafter 36,700,000
Section 8.09 FIXED CHARGE COVERAGE RATIO. The Borrower shall
have a Fixed Charge Coverage Ratio, for each period set forth below, of not less
than the ratio set forth below opposite such period:
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Minimum Fixed
Charge Coverage
Measuring Period Ratio
--------------------------------------------------------- ---------------------------
(a) three calendar months ending in November 2002 .50 to 1.00
(b) six calendar months ending in February 2003 .67 to 1.00
(c) nine calendar months ending in May 2003 .69 to 1.00
(d) 12 calendar months ending in August 2003, and 1.01 to 1.00
each Fiscal Quarter thereafter, beginning with the
Fiscal Quarter ending in September 2003, in each
case together with the three preceding Fiscal
Quarters
Section 8.10 CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The
Borrower shall have, on a consolidated basis with its consolidated
Subsidiaries, a Fixed Charge Coverage Ratio, for each period set forth
below, of not less than the ratio set forth below opposite such
period:
Minimum
Consolidated Fixed
Charge Coverage
Measuring Period Ratio
--------------------------------------------------------- ---------------------------
(a) three calendar months ending in November 2002 .50 to 1.00
(b) six calendar months ending in February 2003 .63 to 1.00
(c) nine calendar months ending in May 2003 .69 to 1.00
(d) 12 calendar months ending in August 2003, and 1.01 to 1.00
each Fiscal Quarter thereafter, beginning with the
Fiscal Quarter ending in September 2003, in each
case together with the three preceding Fiscal
Quarters
Section 8.11 EBITDA. The Borrower shall have EBITDA, as of
the end of each period set forth below, of not less than the amount
set forth below opposite such period:
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Minimum
Measuring Period EBITDA
--------------------------------------------------------- -----------------------------
(a) three calendar months ending in November 2002 $1,200,000,
(b) six calendar months ending in February 2003 3,950,000
(c) nine calendar months ending in May 2003 6,200,000
(d) twelve calendar months ending in August 2003 11,100,000
(e) four Fiscal Quarters ending in September 2003 13,100,000
(f) four Fiscal Quarters ending in December 2003 13,600,000
(g) four Fiscal Quarters ending in March 2004 15,400,000
(h) four Fiscal Quarters ending in June 2004 16,400,000
(i) four Fiscal Quarters ending in September 2004 16,750,000
(j) four Fiscal Quarters ending in December 2004 17,150,000
(k) four Fiscal Quarters ending in March 2005 17,650,000
(l) four Fiscal Quarters ending in June 2005, and 18,000,000
each Fiscal Quarter thereafter, in each case
together with the three (3) preceding Fiscal
Quarters
Section 8.12 EBITDA OF MOTOR SPORTS DIVISION. The Borrower
shall have EBITDA, calculated solely with respect to the financial performance
and results of operations of the Motor Sports Division, as if the Motor Sports
Division were a separate financial reporting entity, as of the end of each
period set forth below, of not less than the amount set forth below opposite
such period:
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Minimum
Adjusted
Measuring Period EBITDA
--------------------------------------------------------- ----------------------------
(a) six calendar months ending in February 2003 $0
(b) twelve calendar months ending in August 2003, $2,000,000
and each Fiscal Quarter thereafter, beginning
with the Fiscal Quarter ending in September 2003,
in each case together with the three preceding
Fiscal Quarters
Section 8.13 AVAILABILITY. The Borrower's Availability at
the end of each day shall not be less than $3,500,000.
Section 8.14 CAPITAL EXPENDITURES. The Borrower will not
make Capital Expenditures during any Fiscal Year (including those made in
connection with Indebtedness permitted to be incurred pursuant to Section
8.01(f)) in an aggregate amount in excess of $4,500,000 during any Fiscal Year.
Section 8.15 REVISIONS TO CERTAIN FINANCIAL COVENANTS. The
Borrower and the Agent agree to meet and confer in good faith for the purpose of
discussing revisions to the financial covenants set forth in Sections 8.08 and
8.11, for the periods occurring after the Fiscal Quarter ending in June 2005.
The Borrower shall deliver to the Agent revised financial projections, in form
and substance satisfactory to the Agent, at least 180 days prior to the last day
of the Fiscal Quarter ending in June 2005. The Borrower's failure to deliver
such projections to the Agent on or before the date required shall constitute an
Event of Default hereunder. If, with respect to Section 8.08 and/or Section
8.11, such revisions cannot be mutually agreed to within 90 days of the Agent's
receipt of the applicable projections, then the amount set forth in clause (l)
of Section 8.08 or Section 8.11, as the case may be, for each Fiscal Quarter
after the Fiscal Quarter ending in June 2005 shall equal 110% of the amount
applicable to the prior Fiscal Quarter. For example, (a) the minimum Net Worth
required under Section 8.08 for the Fiscal Quarter ending in September 2005
would be $40,370,000 and for the Fiscal Quarter ending in December 2005 would be
$44,407,000 and (b) the minimum EDITDA required under Section 8.11 for the
Fiscal Quarter ending in September 2005 (together with the three preceding
Fiscal Quarters) would be $19,800,000 and for the Fiscal Quarter ending in
December 2005 (together with the three preceding Fiscal Quarters) would be
$21,780,000.
ARTICLE IX
INTEREST, FEES AND EXPENSES; LIBOR PROVISIONS
Section 9.01 INTEREST GENERALLY. Interest on all Revolving
Loans (including, without limitation, all LIBOR loans) shall be payable monthly
as of the end of each month. Base Rate Loans shall bear interest at a variable
per annum rate of the Base Rate PLUS the
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Applicable Increment, and LIBOR Loans shall bear interest at a fixed per annum
rate of LIBOR PLUS the Applicable Increment. Interest on Revolving Loans shall
be charged on the average of the net balances owing by the Borrower to the
Lenders in the Revolving Loan Account at the close of each day during such
month. In the event of any change in the Base Rate, the rate hereunder with
respect to Base Rate Loans shall change, as of the date of such change, so as to
remain equal to the Applicable Increment plus the new Base Rate then in effect.
The rate hereunder for Base Rate Loans and LIBOR Loans shall be calculated based
on a 360-day year.
Section 9.02 DEFAULT CHARGES. Upon and after the occurrence
of an Event of Default and the giving of any required notice by the Agent in
accordance with the terms of this Financing Agreement, all Revolving Loans shall
bear interest at the rate set forth in clause (i) of the term Default Charges,
and fees shall be charged on all Letters of Credit based on the rate set forth
in clause (ii) of the term Default Charges.
Section 9.03 LETTER OF CREDIT FEES. In consideration of the
Letter of Credit Guaranty of the Agent, the Borrower shall pay the Agent, for
the ratable benefit of the Lenders, the Letter of Credit Fee which shall be an
amount equal to (a) the product of the Applicable Fee Percentage for documentary
Letters of Credit multiplied by the face amount of each documentary Letter of
Credit, calculated based on a 360-day year, payable monthly, commencing upon
issuance thereof and (b) the product of the Applicable Fee Percentage for
standby Letters of Credit multiplied by 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, calculated based on a 360-day year, payable monthly,
commencing upon issuance thereof.
Section 9.04 AUTHORIZATION TO CHARGE REVOLVING LOAN ACCOUNT
FOR LETTER OF CREDIT FEES, ETC. Any and all charges, fees, commissions, costs
and expenses charged to the Agent for the Borrower's 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.
Section 9.05 REIMBURSEMENT OF OUT-OF-POCKET EXPENSES;
DOCUMENTATION FEE. The Borrower shall reimburse or pay the Agent, as the case
may be, for: (a) all Out-of-Pocket Expenses and (b) any applicable Documentation
Fee.
Section 9.06 LINE OF CREDIT FEE. Upon the last Business Day
of each month, commencing with the month of July, 2000, the Borrower shall pay
to the Agent the Line of Credit Fee, which shall be calculated based on a
360-day year.
Section 9.07 LOAN FACILITY FEE. To induce the Lenders to
enter into this Financing Agreement, the Borrower shall pay to the Agent, for
the ratable benefit of the Lenders, a Loan Facility Fee in the aggregate amount
of $525,000, which fee shall be fully earned and payable upon execution of this
Financing Agreement.
Section 9.08 ADMINISTRATIVE MANAGEMENT FEE. On the Closing
Date and on each anniversary of the Closing Date thereafter, the Borrower shall
pay to the Agent for its own
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account an Administrative Management Fee in the amount of $50,000, which shall
be deemed fully earned on each such date.
Section 9.09 COLLATERAL MANAGEMENT FEE. On the first
Business Day of each month, the Borrower shall pay to the Agent for the Agent's
own account a non-refundable collateral management fee in the amount of
$4,166.67, which fee shall be deemed fully earned on each such date.
Section 9.10 FIELD EXAMINATION FEES. The Borrower shall pay
the Agent's standard charges and fees for any personnel engaged or employed by
the Agent for reviewing the books and records of the Borrower and for verifying,
testing, protecting, safeguarding, preserving or disposing of all or any part of
the Collateral (which fees shall be in addition to the Administrative Management
Fee and any Out-of-Pocket Expenses).
Section 9.11 LIBOR LOAN ADMINISTRATION FEE. For each LIBOR
Loan, the Borrower shall pay to the Agent for the Agent's account the then
current administration fee charged by the Agent for LIBOR Loans. Such fee shall
be payable for each LIBOR Loan on the date on which such LIBOR Loan is made or
created by the conversion of a Base Rate Loan and on each date on which such
LIBOR Loan is continued. The amount of such administration fee is currently
$500, but may be changed from time to time in the Agent's sole discretion.
Section 9.12 AUTHORIZATION TO CHARGE REVOLVING LOAN ACCOUNT
FOR ALL PAYMENTS. The Borrower hereby authorizes the Agent to charge the
Revolving Loan Account with the amount of all payments due hereunder as such
payments become due. The Borrower confirms that any charges which the Agent may
so make to the Revolving Loan Account as herein provided will be made as an
accommodation to the Borrower and solely at the Agent's discretion.
Section 9.13 CHANGES IN LAW. In the event that the Agent,
any Lender 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 judgment 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, such Lender 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, such Lender's or such participant's capital as a consequence of
its obligations hereunder to a level below that which the Agent, such Lender or
such participant could have achieved but for such adoption, change or compliance
(taking into consideration the policies of the Agent, such Lender or such
Participant 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
Borrower shall pay, no later than ten (10) days following demand and receipt of
the certificate described below, to the Agent, such Lender or such participant
such additional amount or amounts as will compensate the Agent, such Lender or
such participant for such reduction. In determining such amount or amounts, the
Agent, such Lender or such participant may use any reasonable averaging or
attribution methods. The protection of this Section 9.12 shall be available to
the Agent, such Lender or such participant regardless of any possible contention
of invalidity or inapplicability with respect to the applicable law, regulation
or condition. A
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certificate of the Agent, such Lender or such participant setting forth such
amount or amounts as shall be necessary to compensate the Agent, such Lender or
such participant with respect to this Section 9.12 and the calculation thereof
when delivered to the Borrower shall be conclusive on the Borrower absent
manifest error. Notwithstanding anything in this section, to the contrary, in
the event the Agent, such Lender or such participant has exercised its rights
pursuant to this section, and subsequent thereto determines that the additional
amounts paid by the Borrower in whole or in part exceed the amount which the
Agent, such Lender or such participant actually required to be made whole, the
excess, if any, shall be returned to the Borrower by the Agent, such Lender or
such participant.
Section 9.14 INCREASED COSTS. In the event that any change
in (i) any applicable law, treaty or governmental regulation not in effect as of
the date of this Agreement, or as of the date a Lender becomes a party to this
Agreement, or, (ii) any existing law, treaty or governmental regulation, or in
the interpretation or application thereof, or compliance by the Agent or any
Lender (each an "Affected Party") with any request or directive (whether or not
having the force of law) from any central bank or other financial, monetary or
other authority, shall:
(a) subject the Affected Party to any tax of any kind whatsoever
with respect to this Financing Agreement or change the basis of taxation of
payments to the Affected Party 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 Affected Party 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
Affected Party 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 Affected Party any other condition with respect
to this Financing Agreement or any other document, and the result of any of the
foregoing is to increase the cost to the Affected Party of making, renewing or
maintaining its Revolving Loans hereunder by an amount that the Affected Party
deems to be material in the exercise of its reasonable business judgment or to
reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the Revolving Loans by an amount that the Affected Party
deems to be material in the exercise of its reasonable business judgment, then,
in any case the Borrower shall pay the Affected Party, within five (5) days
following its demand and receipt of the certificate described below, such
additional cost or such reduction, as the case may be. In the event that such
additional cost or such reduction results from a change in tax law the effect of
which can be mitigated or eliminated by filing with the applicable tax
authorities a form or certificate, and the filing of such form or certificate is
not, in the sole determination of the Affected Party, unreasonably burdensome
and will not have any adverse consequence on the Affected Party, the Affected
Party shall file such form or certificate and provide a copy thereof to the
Borrower. The Affected Party shall certify the amount of such additional cost or
reduced amount to the Borrower and the calculation thereof and such
certification shall be conclusive upon the Borrower absent manifest error.
Notwithstanding anything in this paragraph to the contrary, in the event the
Affected Party has exercised its rights pursuant to this Section, and subsequent
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thereto determine that the additional amounts paid by the Borrower in whole or
in part exceed the amount which the Affected Party actually required pursuant
hereto, the excess, if any, shall be returned to the Borrower by the Affected
Party.
Section 9.15 LIBOR PROVISIONS GENERALLY. The Borrower may
request LIBOR Loans on the following terms and conditions:
(a) The Borrower may elect from time to time (i) to request any
Revolving Loan made hereunder to be a LIBOR Loan as of the date of such
Revolving Loan or (ii) to convert Base Rate Loans to LIBOR Loans, and may elect
from time to time to convert LIBOR Loans to Base Rate Loans by giving the Agent
at least three (3) Business Days' prior irrevocable notice of such election,
PROVIDED that any such conversion of LIBOR Loans to Base Rate Loans shall only
be made, subject to the second following sentence, on the last day of an
Interest Period with respect thereto. Should the Borrower elect to convert Base
Rate Loans to LIBOR Loans, it shall give the Agent at least four Business Days'
prior irrevocable notice of such election. If the last day of an Interest Period
with respect to a Revolving Loan that is to be converted is not a Business Day
or Working Day, then such conversion shall be made on the next succeeding
Business Day or Working Day, as the case may be, and during the period from such
last day of an Interest Period to such succeeding Business Day, as the case may
be, such Revolving Loan shall bear interest as if it were an Base Rate Loan. All
or any part of outstanding Base Rate Loans then outstanding may be converted to
LIBOR Loans as provided herein, PROVIDED that partial conversions shall be in
multiples in an aggregate principal amount of $1,000,000 or more.
(b) Any LIBOR Loan may be continued as such upon the expiration
of an Interest Period, PROVIDED the Borrower so notifies the Agent, at least
three (3) Business Days' prior to the expiration of said Interest Period, and
PROVIDED FURTHER that no LIBOR Loan may be continued as such upon the occurrence
of any Default or Event of Default under this Financing Agreement, but shall be
automatically converted to a Base Rate Loan on the last day of the Interest
Period during which occurred such Default or Event of Default. Absent such
notification, LIBOR Rate Loans shall convert to Base Rate Loans on the last day
of the applicable Interest Period. Each notice of election, conversion or
continuation furnished by the Borrower pursuant hereto shall specify whether
such election, conversion or continuation is for a one, two or three month
period. Absent such specification, the Interest Period shall be a one month
period. Notwithstanding anything to the contrary contained herein, the Agent (or
any Lender or participant, if applicable) shall not be required to purchase
United States Dollar deposits in the London interbank market or from any other
applicable LIBOR Rate market or source or otherwise "match fund" to fund LIBOR
Rate Loans, but any and all provisions hereof relating to LIBOR Rate Loans shall
be deemed to apply as if the Agent (and such Lender and participant, if
applicable) had purchased such deposits to fund any LIBOR Rate Loans.
(c) The Borrower may request a LIBOR Loan, convert any Base Rate
Loan or continue any LIBOR Loan provided there is then no Default or Event of
Default in effect.
(d) If all or a portion of the outstanding principal amount of
the Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Base Rate Loan at the end of the last Interest
Period therefor.
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(e) The Borrower may not have more than five (5) LIBOR Loans
outstanding at any given time.
(f) If, with respect to any Fiscal Quarter (the "Current Fiscal
Quarter"), the average daily Availability for the Fiscal Quarter ended
immediately prior to such Fiscal Quarter was less than $6,500,000, then: (i) no
LIBOR Loans may be made during such Current Fiscal Quarter and any LIBOR Loans
requested to be made during such Current Fiscal Quarter shall be made as Base
Rate Loans; (ii) no Base Rate Loans may be converted to LIBOR Loans during such
Current Fiscal Quarter; and (iii) on the first day of such Current Fiscal
Quarter, all outstanding LIBOR Loans shall be immediately prepaid or converted
to Base Rate Loans, at the Borrower's option. The Borrower shall pay all losses
and expenses pursuant to Section 9.19 resulting from any prepayment or
conversion of a LIBOR Loan pursuant to the preceding clause (iii).
Section 9.16 LIBOR UNASCERTAINABLE. In the event that the
Agent or any other Affected Party shall have determined in the exercise of its
reasonable business judgment (which determination shall be conclusive and
binding upon the Borrower) that by reason of circumstances affecting the
interbank LIBOR market, adequate and reasonable means do not exist for
ascertaining LIBOR applicable for any Interest Period with respect to: (a) a
proposed Loan that the Borrower has requested be made as a LIBOR Loan; (b) a
LIBOR Loan that will result from the requested conversion of a Base Rate Loan
into a LIBOR Loan; or (c) the continuation of LIBOR Loans beyond the expiration
of the then current Interest Period with respect thereto, the Agent shall
forthwith give written notice of such determination to the Borrower at least one
day prior to, as the case may be, the requested borrowing date for such LIBOR
Loan, the conversion date of such Base Rate Loan or the last day of such
Interest Period. If such notice is given (i) any requested LIBOR Loan shall be
made as a Base Rate Loan, (ii) any Base Rate Loan that was to have been
converted to a LIBOR Loan shall be continued as a Base Rate Loan, and (iii) any
outstanding LIBOR Loan shall be converted, on the last day of then current
Interest Period with respect thereto, to a Base Rate Loan. Until such notice has
been withdrawn by the Agent, no further LIBOR Loan shall be made nor shall the
Borrower have the right to convert a Base Rate Loan to a LIBOR Loan.
Section 9.17 EXTENSION FOR PAYMENT. If any payment on a
LIBOR Loan becomes due and payable on a day other than a Business Day or Working
Day, the maturity thereof shall be extended to the next succeeding Business Day
or Working Day unless the result of such extension would be to extend such
payment into another calendar month in which event such payment shall be made on
the immediately preceding Business Day or Working Day.
Section 9.18 UNLAWFULLNESS. Notwithstanding any other
provisions herein, if any law, regulation, treaty or directive or any change
therein or in the interpretation or application thereof, shall make it unlawful
for any Lender to make or maintain LIBOR Loans as contemplated herein, the then
outstanding LIBOR Loans, if any, shall be converted automatically to Base Rate
Loans as of the end of the Interest Period applicable thereto, or within such
earlier period as required by law. The Borrower hereby agrees promptly to pay
the Agent, upon demand, any additional amounts necessary to compensate the
Lenders for any costs incurred by the Lenders in making any conversion in
accordance with this Section, including, but not limited to, any interest or
fees payable by the Agent to lenders of funds obtained by the Agent in order to
make or maintain LIBOR Loans hereunder.
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Section 9.19 INDEMNIFICATION. The Borrower agrees to
indemnify and to hold the Agent and all other Affected Parties harmless from any
loss or expense which such Affected Party may sustain or incur as a consequence
of: (a) Default by the Borrower in payment of the principal amount of or
interest on any LIBOR Loans, as and when the same shall be due and payable in
accordance with the terms of this Financing Agreement, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Affected Party to lenders of funds obtained by any of them in order to
maintain the LIBOR Loans hereunder; (b) default by the Borrower in making a
borrowing or conversion after the Borrower has given a notice in accordance with
Section 9.14; (c) any prepayment of LIBOR Loans on a day which is not the last
day of the Interest Period applicable thereto, including, without limitation,
prepayments arising as a result of the application of the proceeds of Collateral
to the Revolving Loans; and (d) default by the Borrower in making any prepayment
after the Borrower had given notice to the Agent thereof. The determination by
the Agent of the amount of any such loss or expense, when set forth in a written
notice to the Borrower, containing the Agent's calculations thereof in
reasonable detail, shall be conclusive on the Borrower in the absence of
manifest error. Calculation of all amounts payable under this paragraph with
regard to LIBOR Loans shall be made as though the Lenders had actually funded
the LIBOR Loans through the purchase of deposits in the relevant market and
currency, as the case may be, bearing interest at the rate applicable to such
LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a
maturity comparable to the relevant Interest Period; PROVIDED, HOWEVER, that the
Lenders may fund each of the LIBOR Loans in any manner the Lenders sees fit and
the foregoing assumption shall be used only for calculation of amounts payable
under this paragraph. In addition, notwithstanding anything to the contrary
contained herein, the Agent shall apply all proceeds of Collateral and all other
amounts received by it from or on behalf of the Borrower (i) initially to the
Base Rate Loans and (ii) subsequently to LIBOR Loans; PROVIDED, HOWEVER, (x)
upon the occurrence of an Event of Default or (y) in the event the aggregate
amount of outstanding LIBOR Rate Loans exceeds Availability or the applicable
maximum levels set forth therefor, the Agent may apply all such amounts received
by it to the payment of Obligations in such manner and in such order as the
Agent may elect in its reasonable business judgment. In the event that any such
amounts are applied to Revolving Loans which are LIBOR Loans, such application
shall be treated as a prepayment of such Revolving Loans and the Lenders shall
be entitled to indemnification hereunder. This covenant shall survive
termination of this Financing Agreement and payment of the outstanding
Obligations.
Section 9.20 REGULATORY CHANGES. Notwithstanding anything to
the contrary in this Agreement, in the event that, by reason of any Regulatory
Change (for purposes hereof "Regulatory Change" shall mean, with respect to the
Lenders, any change after the date of this Financing Agreement in United States
federal, state or foreign law or regulations (including, without limitation,
Regulation D) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks including the Lenders of or
under any United States federal, state or foreign law or regulations (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful), the Lenders, or any one of them, either (a) incurs any material
additional costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Financing Agreement or a category of extensions
of credit or other assets of the Agent which includes LIBOR Loans, or (b)
becomes subject to any material restrictions on the
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amount of such a category of liabilities or assets which it may hold, then, if
such Lenders so elects by notice to the Borrower, the obligation of such Lender
to make or continue, or to convert Base Rate Loans into LIBOR Loans hereunder
shall be suspended until such Regulatory Change ceases to be in effect.
ARTICLE X
POWERS
The Borrower hereby constitutes the Agent, or any Person the Agent may
designate, as its attorney-in-fact, at the Borrower's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in
the name of the Agent or the Borrower, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the
Borrower 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 Accounts at any time in
the name of the Agent information concerning the amounts owing on the Accounts;
(d) To request from customers indebted on Accounts at any time,
in the name of the Borrower, in the name of certified public accountant
designated by the Agent or in the name of the Agent's designee, information
concerning the amounts owing on the Accounts;
(e) To transmit to customers indebted on Accounts notice of the
Agent's interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent's for the Borrower's account; and
(f) To take or bring, in the name of the Agent or the Borrower,
all steps, actions, suits or proceedings 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 (b), (c), (e) and (f) above may only be exercised after the occurrence
and during the continuance of an Event of Default, or until such time as such
Event of Default is waived in writing by the Agent.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
Section 11.01 EVENTS OF DEFAULT. Each of the following shall
be an Event of Default:
(a) the Borrower shall fail to pay any principal of any Revolving
Loan or any reimbursement obligation in respect of any Letter of Credit when and
as the same shall become
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due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Revolving
Loan or any fee, other amount or other Obligation (other than an amount or
Obligation referred to in clause (a) of this Section) payable under this
Financing Agreement, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with this Financing
Agreement or any amendment or modification hereof or waiver hereunder, or in any
other Loan Document, or under any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Financing
Agreement or any amendment or modification thereof or waiver thereunder, shall
prove to have been incorrect in any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.03 or 5.06, Article VII or Article
VIII;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Financing Agreement (other than those
specified in clause (a), (b) or (d) of this Section), or contained in any other
Loan Document, and such failure shall continue unremedied for a period of 30
days after notice thereof from the Agent to the Borrower (which notice will be
given at the request of any Lender);
(f) any "Event of Default", as such term is defined in the
Pegasus Financing Agreement shall have occurred and be continuing, or any event
or condition occurs that results in (i) the Pegasus Debt, (ii) the Indebtedness
secured by the CDA Mortgage, as defined in the Mortgage described in clause (i)
of the defined term Mortgages, (iii) the Indebtedness secured by the Prior
Mortgage, as defined in the Mortgage described in clause (ii) of the defined
term Mortgage, (iv) Indebtedness owing by the Borrower to any Subsidiary, or (v)
(without duplication) any Material Indebtedness, in each case becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any Indebtedness,
described in clauses (i) through (v) hereof, or any trustee or agent on its or
their behalf, to cause such Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof prior to its scheduled
maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestration, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
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(h) the Borrower or any Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Section, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestration, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the Borrower,
any Subsidiary or any combination thereof and the same shall remain undischarged
or unsatisfied for a period of 30 consecutive days during which execution shall
not be effectively stayed or bonded pending appeal, or for which such judgment
is not covered by insurance to an extent deemed adequate by the Agent, in its
commercially reasonable judgment, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment; or
(k) either of Xxxxxxx Xxxx or Xxxxxx Xxxxxxxxxx shall cease for
any reason whatsoever to be actively engaged in the management of the Borrower's
affairs, and such individual shall not have been replaced immediately
thereafter, on an interim basis and within 150 days thereafter, on a permanent
basis, in each case by the Board of Directors of the Borrower with an individual
acceptable to the Required Lenders.
Section 11.02 TERMINATION OF COMMITMENTS; ACCELERATION.
Upon the occurrence of any Event of Default (other than an Event
of Default with respect to the Borrower described in clause (g) or (h) of
Section 11.01), and at any time thereafter during the continuance of such event,
the Agent may, and at the request of the Required Lenders shall, by notice to
the Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments and thereupon the Commitments
shall terminate immediately, and (ii) declare the Revolving Loans and all other
Obligations then outstanding to be due and payable in whole (or in part, in
which case any principal or other Obligation not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Revolving Loans and all other Obligations so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
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Section 11.03 EXERCISE OF REMEDIES.
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 each Borrower's expense, such of each
Borrower's personnel, supplies or space at each Borrower's places of business or
otherwise, as may be necessary to properly administer and control the Accounts
or the handling of collections and realizations thereon; (b) bring suit, in the
name of each applicable Borrower 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 Borrower 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 the Agent may bid or become a purchaser at any such
sale, free from any right of redemption, which right is hereby expressly waived
by the Borrowers; (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. 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
applicable Borrower 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. Each Borrower agrees, at the request of the Agent, to assemble the
Inventory and Equipment and to make it available to the Agent at premises of
such Borrower or elsewhere and to make available to the Agent the premises and
facilities of such Borrower for the purpose of the Agent's taking possession of,
removing or putting the Inventory and Equipment in saleable form. The Agent
agrees to give each Borrower ten (10) days prior notice of intended disposition
of any Collateral, and each Borrower agrees that ten (10) days prior notice
shall constitute reasonable notification and full compliance with all applicable
laws. 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 of the applicable Borrower, whether due or to become due, in such
order as the Agent may elect, and such Borrower shall remain liable to the Agent
for any deficiencies, and the Agent in turn agrees to remit to such Borrower or
its successors or assigns, any surplus resulting therefrom. The enumeration of
the foregoing rights is not intended to be exhaustive and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall
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be cumulative. Each Borrower 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 Borrower, the Borrower as
debtor-in-possession, any secured or unsecured creditors of the Borrower, any
trustee or receiver in bankruptcy, or otherwise), and each Borrower hereby
agrees 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
judgment.
ARTICLE XII
TERMINATION
This Financing Agreement shall terminate on the Anniversary Date.
Notwithstanding the foregoing, the Agent may, and at the request of the Required
Lenders shall, on behalf of the Lenders, terminate the Financing Agreement
immediately upon the occurrence of an Event of Default. The Borrower may
terminate this Financing Agreement at any time upon sixty (60) days' prior
written notice to the Agent, provided that the Borrower pays to the Agent for
the ratable benefit of the Lenders, on or before the effective date of
termination, an Early Termination Fee, if applicable. All Obligations shall
become due and payable as of any termination hereof and, pending a final
accounting, the Agent may withhold any balances in the Blocked 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 equal to 110% of
the undrawn face amount of any outstanding Letters of Credit (the "L/C Cash
Collateral"). 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, unless the Agent shall have received from or on behalf of the
Borrower cash collateral in aggregate amount equal to 110% of the amount of such
Obligations.
ARTICLE XIII
THE AGENT
Section 13.01 APPOINTMENT. Each of the Lenders hereby
irrevocably appoints the Agent as its agent and authorizes the Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
Section 13.02 AGENT AS A LENDER. The financial institution
serving as the Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Agent, and such financial institution and its Affiliates may lend
money to and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Agent hereunder.
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Section 13.03 SCOPE OF DUTIES. The Agent shall not have any
duties or obligations except those expressly set forth herein. Without limiting
the generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing,(b) the Agent shall not have any duty to take any
discretionary powers, expressly contemplated hereby that the Agent is required
to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 14.02), and (c) except as expressly set forth herein, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is communicated to or obtained by the financial institution
serving as Agent or any of its Affiliates in any capacity. The Agent shall not
be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
14.02) or in the absence of its own gross negligence or wilful misconduct. The
Agent shall be deemed not to have knowledge of any Default unless and until
written notice thereof is given to the Agent by the Borrower or a Lender, and
the Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Financing Agreement, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants contained in this Financing Agreement or
other terms or conditions set forth herein (iv) the validity, enforceability,
effectiveness or genuineness of this Financing Agreement or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article II or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Agent.
Section 13.04 RELIANCE. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Agent may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of such counsel, accountants or experts.
Section 13.05 SUB-AGENTS. The Agent may perform any and all
its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Agent. The Agent and any such sub-agent may perform
any and all its duties and exercise its rights and powers through their
respective directors, officers, employees, agents and advisors. The exculpatory
provisions of the preceding paragraph shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Section 13.06 SUCCESSORS. Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, the Agent may
resign at any time by notifying the Lenders, and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor from among the Lenders. If no successor shall
have been so appointed by the Required Lenders or shall have accepted such
appointment
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within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a financial institution with an office in New York, New York, or
an Affiliate of any such financial institution, PROVIDED that such financial
institution is a financial institution organized under the laws of the United
States of America or any State thereof, and has a combined capital and surplus
and undivided profits of not less than $100,000,000. Upon the acceptance of its
appointment as an Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Agent's resignation
hereunder, the provisions of this Article and Section 14.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective directors, officers, employees, agents and advisors in respect of any
actions taken or omitted to be taken by any of them while it was acting as
Agent.
Section 13.07 INDEPENDENT CREDIT ANALYSIS OF LENDERS. Each
Lender acknowledges 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 credit analysis and decision to enter into this
Financing Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Financing Agreement, any related agreement or any document furnished
hereunder or thereunder.
ARTICLE XIV
MISCELLANEOUS
Section 14.01 NOTICES. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at:
Cannondale Corporation
00 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxx
Fax No.: (000) 000-0000
With a copy to:
Xxxxxx Xxxx & Xxxxxx XXX
0 Xxxxxxxx Xxxxx
000 Xxxxxx Xxxxxxxxx - 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax No.: (000) 000-0000
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and
(b) if to the Agent, to:
The CIT Group / Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxxxxx
Fax No.: (000) 000-0000
With a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxx, Esq.
Fax No.: (000) 000-0000
and
(c) if to any other Lender, to its address (or telecopy number)
as it may specify in writing to the Agent, from time to time. Any party hereto
may change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of
this Financing Agreement shall be deemed to have been given on the date of
receipt.
Section 14.02 WAIVERS; AMENDMENTS. (a) No failure or delay by
the Agent, or the Issuing Bank or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agent, and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Financing Agreement or consent to any departure by the Borrower therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan, or issuance of a Letter of
Credit, shall not be construed as a waiver of any Default, regardless of whether
the Agent, any Lender or the Issuing Bank may have had notice or knowledge of
such Default at the time.
(b) Neither this Financing Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Agent with the consent of the Required
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Lenders, PROVIDED that no such agreement, unless it shall have been agreed to by
all of the Lenders, shall: (a) amend the Financing Agreement so as 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;
(v) alter or amend (x) this Section 14.02 (b) or (y) the definitions of Eligible
Accounts Receivable, Eligible Inventory, Inventory Loan Cap, Collateral or
Required Lenders, or (vi) increase the advance percentages against Eligible
Accounts Receivable or Eligible Inventory or alter or amend the Agent's criteria
for determining compliance with such definitions of Eligible Accounts Receivable
and/or Eligible Inventory if the effect thereof is to increase Availability; (b)
except as otherwise required in this Financing Agreement, release any guaranty
or Collateral in excess of $500,000 during any year, or (c) cause or permit the
Agent or any Lender to knowingly make, in their sole discretion, any Revolving
Loan 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
Borrower 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 any 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.
Section 14.03 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Agent, including the reasonable fees, charges and disbursements of counsel for
the Agent, in connection with the syndication of the credit facilities provided
for herein, the preparation, negotiation and administration of this Financing
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder, and (iii) all reasonable
out-of-pocket expenses incurred by the Agent, the Issuing Bank or any Lender,
including the reasonable fees, charges and disbursements of any counsel
(including the allocated costs of internal counsel) for the Agent, the Issuing
Bank or any Lender, in connection with the enforcement or protection of its
rights in connection with this Financing Agreement, including its rights under
this Section, or in connection with the Revolving Loans made or Letters of
Credit issued hereunder, including all such reasonable out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Revolving Loans or Letters of Credit.
(b) The Borrower shall indemnify the Agent, the Issuing Bank and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Financing
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of transactions contemplated hereby, (ii) any Loan, Letter of Credit, or the use
of the proceeds therefrom (including any refusal by the
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Issuing Bank to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), (iii) any actual presence or release of
Hazardous Materials from any property owned or operated by the Borrower or any
of its Subsidiaries in violation of applicable Environmental Laws and resulting
in Environmental Liability, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Agent or the Issuing Bank under paragraph (a)
or (b) of this Section, each Lender severally agrees to pay to the Agent or the
Issuing Bank, as the case may be, such Lender's PRO RATA share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; PROVIDED that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent or the Issuing Bank in its
capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall
not assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Financing Agreement or the transactions contemplated hereby, any
Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
Section 14.04 SUCCESSORS AND ASSIGNS. (a) The provisions of
this Financing Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
except that the Borrower may not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent shall
be null and void). Nothing in this Financing Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby) any legal or equitable
right, remedy or claim under or by reason of this Financing Agreement.
(b) CIT 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, 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 CIT as the case may be
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hereunder and (b) CIT 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 Borrower
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 CIT. In
the event that CIT 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 CIT an Assignment and Transfer Agreement, and, at CIT's
election, a processing and recording fee of $1,000 payable by the assigning
Lender to CIT for its own account.
(c) The Borrower acknowledges that the Lenders with the prior
written consent of the Agent may sell participations in the Revolving Loans and
extensions of credit made and to be made to the Borrower hereunder. The Borrower
further acknowledges that in doing so, the Lenders may grant to any such
participant certain rights which would require such 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 14.02 (b).
Section 14.05 SURVIVAL. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Financing Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
Financing Agreement and the making of any Revolving Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agent, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Revolving Loan or any fee or any other amount payable
under this Financing Agreement is outstanding and unpaid or any Letter of Credit
is outstanding (unless such Letter of Credit has been collateralized by cash
pursuant to Article XII) and so long as the Commitments have not expired or
terminated. Each provision contained in this Financing Agreement pursuant to
which the Borrower indemnifies, or agrees to be liable for any loss suffered by,
the Agent, the Issuing Bank or any Lender, shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Revolving Loans, the expiration or termination of
the Letters of Credit and the Commitments or the termination of this Financing
Agreement or any provision hereof.
Section 14.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. (a)
This Financing Agreement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Financing Agreement constitutes the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in
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Section 2.01, this Financing Agreement shall become effective when it shall have
been executed by the Agent and when the Agent shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Financing Agreement by telecopy
shall be effective as delivery of a manually executed counterpart of this
Financing Agreement.
(b) The priority of the liens and security interests granted
hereby, and pursuant to the other Loan Documents, the exercise by the Agent of
any of its rights or remedies hereunder or thereunder, and the covenants of the
Borrower contained herein or therein, to the extent applicable to the
Collateral, the Agent's Lien thereon, the perfection and priority of any such
Lien, and the exercise of remedies with respect thereto (in each case whether or
not so expressed) are subject in all respects to the Intercreditor Agreement.
Any reference to property in the possession or control of the Agent, or to
property in which the Agent has been or may be granted a security interest to be
perfected by possession or control, in each case to secure the Obligations
arising hereunder, shall be deemed to refer to, or to be satisfied by, property
in the possession and control of the "Lenders" or the "CIT Group Agent" with the
senior "Lien" thereon (as such terms are defined in the Intercreditor
Agreement), if in fact such Person has possession or control, as the case may
be, of such property. To the extent that any provision contained in this
Financing Agreement shall conflict with the provisions contained in the
Intercreditor Agreement, so long as the Intercreditor Agreement shall remain in
effect, the terms of the Intercreditor Agreement shall control.
Section 14.07 SEVERABILITY. Any provision of this Financing
Agreement held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
Section 14.08 RIGHT OF SETOFF. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by such Lender or Affiliate to or for the credit or the account
of the Borrower against any of and all the obligations of the Borrower now or
hereafter existing under this Financing Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Financing Agreement and although such obligations may be unmatured. The rights
of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
Section 14.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS. (a) This Financing Agreement shall be construed in accordance with
and governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New
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York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Financing Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Financing Agreement shall affect any right that
the Agent, the Issuing Bank or any Lender may otherwise have to bring any action
or proceeding relating to this Financing Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Financing Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Financing Agreement irrevocably consents
to service of process in the manner provided for notices in Section 14.01.
Nothing in this Financing Agreement will affect the right of any party to this
Financing Agreement to serve process in any other manner permitted by law.
Section 14.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS FINANCING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
FINANCING AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
Section 14.11 HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Financing Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Financing Agreement.
Section 14.12 CONFIDENTIALITY. Each of the Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the
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extent required by applicable laws or regulations or by any subpoena or similar
legal process, (d) to any other party to this Financing Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Financing Agreement or the enforcement of rights
hereunder, (f) subject to a confidentiality agreement containing provisions
substantially the same as those of this Section, to any participant or
prospective participant of a Agent or to any assignee of, or any prospective
assignee of, any of its rights or obligations under this Financing Agreement,
(g) with the consent of the Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Agent or any Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section,
"INFORMATION" means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to
the Agent or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; PROVIDED that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
Section 14.13 INTEREST RATE LIMITATION. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "CHARGES"), shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Revolving Loans or periods
shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
Section 14.14 NO NOVATION. On the Effective Date, this
Financing Agreement shall amend, restate and supercede the Original Financing
Agreement in its entirety; PROVIDED, HOWEVER, that nothing contained herein
shall be deemed to constitute a novation of the obligations, liabilities and
indebtedness owing by the Borrower to the Lenders and the Agent under the
Original Financing Agreement, and the Borrower confirms and reaffirms its
continuing liability for the payment and performance of all such obligations,
liabilities and indebtedness, in accordance with the terms of this Financing
Agreement.
Section 14.15 WAIVER OF CERTAIN EXISTING EVENTS OF DEFAULT.
The Agent and the Lenders hereby waive each existing Event of Default which
resulted from Borrower's failure to comply with Section 9.10, Section 9.11 or
Section 9.15 of the Original Financing Agreement; PROVIDED, HOWEVER, that
nothing contained herein shall be deemed to be a waiver of any other Event of
Default, whether under the Original Financing Agreement or hereunder, and
whether or not any
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Lender or Agent has knowledge thereof, nor shall anything contained herein be
deemed to be a waiver of any future Event of Default
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CANNONDALE CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
____________________________________
Name: Xxxx X. Xxxxxxxx
Title: Assistant Treasurer
THE CIT GROUP/ BUSINESS CREDIT, INC.,
as Agent and as a Lender
By: /s/ Xxxx Xxxxxxxxxxxx
____________________________________
Name: Xxxx Xxxxxxxxxxxx
Title: Vice President, Team Leader
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ANNEX I
COMMITMENTS
Commitment
------------------------------------------- --------------------------
The CIT Group/Business Credit, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000 $35,000,000
--------------------------
$35,000,000
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ANNEX II
LIEN PERFECTION INFORMATION
Exact Name of the Borrower in its State of
Organization: Cannondale Corporation
State of Incorporation or Formation: Delaware
Federal Tax I.D. No.:
Chief Executive Office: 00 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Collateral Locations: See Attached
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EXHIBIT A
FORM OF AMENDED AND RESTATED REVOLVING NOTE
Original date of execution: June 30, 2000
$_______________ Date of amendment and restatement: July __, 2002
FOR VALUE RECEIVED, the undersigned, CANNONDALE CORPORATION, a Delaware
corporation (the "Borrower") hereby absolutely and unconditionally promises to
pay to the order of ________________________ (the "Lender"), at the office of
THE CIT GROUP/BUSINESS CREDIT, INC. (the "Agent") located at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in lawful money of the United States of
America and in immediately available funds, the principal amount of
__________________ Dollars ($______________), or such other principal amount of
the Revolving Loans as may be advanced and outstanding pursuant to Section 3.01
of the Financing Agreement. Such Revolving Loans shall be repaid on a daily
basis as a result of the application of the proceeds of collections of the
Accounts and the making of additional Revolving Loans. Subject to the terms of
the Financing Agreement, the Revolving Loans may be borrowed, repaid and
reborrowed by the Borrower. A final balloon payment in an amount equal to the
outstanding aggregate balance of principal and interest remaining unpaid, if
any, under this Amended and Restated Revolving Note (the "Revolving Note") as
shown on the books and records of the Agent shall be due and payable on the
termination of the Financing Agreement, as set forth in Article XII thereof.
The Borrower further absolutely and unconditionally promises to pay to
the order of the Lender, at said office, interest, in like money, on the unpaid
principal amount owing hereunder from time to time from the date hereof on the
dates and at the rates specified in Article IX of the Financing Agreement.
If any payment on this Revolving 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 Revolving Note is one of the Revolving Notes referred to in the
Amended and Restated Financing Agreement, dated as of the date hereof, as the
same may be amended and restated and in effect from time to time, among the
Borrower, the Agent, and the Lenders party thereto from time to time (the
"Financing Agreement"), and is subject to, and entitled to, all of the terms,
provisions and benefits thereof and is subject to optional and mandatory
prepayment, in whole or in part, as provided therein. This Revolving Note
amends, supercedes and replaces in its entirety that certain Revolving Note,
dated as of June 30, 2000, in the principal amount of $__________, executed by
the Borrower and payable to the Lender (the "Original Note"); PROVIDED, HOWEVER,
that all Obligations outstanding under the Original Note continue to be
outstanding as of the date hereof, under this Revolving Note. This Revolving
Note is not and shall not be deemed to be a cancellation or novation with
respect to any Obligations under the Original Note and the Borrower's execution
and delivery of this Revolving Note shall constitute an express acknowledgement
and confirmation of, and agreement with, the foregoing.
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Payment and performance of this Revolving Note is secured by, among
other things, (i) an Open-End Mortgage and Security Agreement encumbering
certain real property, and the improvements thereon, owned by the Borrower and
located in Bedford, Pennsylvania and (ii) an Open-End Fourth Mortgage Deed and
Security Agreement, in each case encumbering certain real property, and the
improvements thereon, owned by the Borrower and located in Bethel, Connecticut.
All capitalized terms used herein shall have the meanings ascribed to
them in the Financing Agreement, unless otherwise defined herein.
The date and amount of the Revolving Loans made hereunder may be
recorded on the ledgers maintained by the Agent. The aggregate unpaid principal
amount of all Revolving Loans made pursuant hereto may be set forth in the
balance column on such ledgers maintained by the Agent. All such Revolving
Loans, whether or not so recorded, shall be due as part of this Revolving Note.
The Borrower confirms that any amount received by or paid to the Agent
in connection with the Financing Agreement and/or any balances standing to its
credit on any of its accounts on the Agent's books under the Financing Agreement
may be applied, in accordance with the terms of the Financing Agreement in
reduction of this Revolving Note, but no balance or amounts shall be deemed to
effect payment in whole or in part of this Revolving Note unless the Agent shall
have actually charged such account or accounts for the purposes of such
reduction or payment of this Revolving Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Financing Agreement or upon termination of the Financing
Agreement, all amounts then remaining unpaid under this Revolving Note may
become, or be declared to be, immediately due and payable as provided in the
Financing Agreement.
The Revolving Note shall be governed by, and construed in accordance
with, the substantive laws of (other than the conflicts of law provisions of)
the State of New York.
CANNONDALE CORPORATION
By:____________________________________
Name:
Title:
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EXHIBIT B
FORM OF ASSIGNMENT AND TRANSFER AGREEMENT
This Assignment and Transfer Agreement is dated as of the Effective
Date (as set forth on Schedule 1 hereto and made a part hereof), and is entered
into between __________ (herein the "Assignor," as further defined and set forth
on Schedule 1 hereto) and ____________ (herein the "Assignee," as further
defined and set forth on Schedule 1 hereto). This Assignment and Transfer
Agreement is executed in connection with the Financing Agreement dated as of
_________, 200_ (as amended, modified, supplemented and in effect from time to
time, the "Financing Agreement"), among Cannondale Corporation, a Delaware
corporation (the "Company"), the Lender named therein, and The CIT
Group/Business Credit, Inc., as Agent (the "Agent"). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Financing Agreement.
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the
Assignor, as of the Effective Date, an undivided interest (the
"Assigned Interest") in and to all the Assignor's rights and
obligations under the Financing Agreement respecting those, and only
those, financing facilities contained in the Financing Agreement as are
set forth on Schedule 1 (collectively, the "Assigned Facilities" and
individually, an "Assigned Facility"), in a principal amount for each
Assigned Facility as set forth on Schedule 1.
2. The Assignor (i) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or
representations made in or in connection with the Financing Agreement
or any other instrument, document or agreement executed in conjunction
therewith (collectively the "Ancillary Documents") or the execution,
legality, validity, enforceability, genuiness, sufficiency or value of
the Financing Agreement, any Collateral thereunder or any of the
Ancillary Documents furnished pursuant thereto, other than that it is
the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim and (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company
or any guarantor or the performance or observance by the Company or
any guarantor of any of its respective obligations under the Financing
Agreement or any of the Ancillary Documents furnished pursuant
thereto.
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Transfer Agreement; (ii) confirms
that it has received a copy of the Financing Agreement, together with
the copies of the most recent financial statements of the Company, and
such other documents and information as it has deemed appropriate to
make its own credit analysis; (iii) agrees that it will, independently
and without reliance upon the Agent, the Assignor or any other Agent
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Financing Agreement; (iv)
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Financing Agreement as
are delegated to the Agent by the terms
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thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will be bound by the provisions of the
Financing Agreement and will perform in accordance with its terms all
the obligations which by the terms of the Financing Agreement are
required to be performed by it as Agent; and (vi) if the Assignee is
organized under the laws of a jurisdiction outside the United States,
attaches the forms prescribed by the Internal Revenue Service of the
United States certifying as to the Assignee's exemption from United
States withholding taxes with respect to all payments to be made to
the Assignee under the Financing Agreement or such other documents as
are necessary to indicate that all such payments are subject to such
tax at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Transfer Agreement, such
agreement will be delivered to the Agent for acceptance by it and the
Company, effective as of the Effective Date.
5. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments in respect of the assigned interest (including
payments of principal, interest, fees and other amounts) to the
Assignee, whether such amounts have accrued prior to the Effective Date
or accrue subsequent to the Effective Date. The Assignor and Assignee
shall make all appropriate adjustments in payments for periods prior to
the Effective Date made by the Agent or with respect to the making of
this assignment directly between themselves.
6. From and after the Effective Date, (i) the Assignee shall be a party to
the Financing Agreement and, to the extent provided in this Assignment
and Transfer Agreement, have the rights and obligations of a Agent
thereunder, and (ii) the Assignor shall, to the extent provided in this
Assignment and Transfer Agreement, relinquish its rights and be
released from its obligations under the Financing Agreement.
7. THIS ASSIGNMENT AND TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
-------------------------.
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IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule 1 hereto. Accepted:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent _________________________, Assignor
By:____________________________________ By:________________________________
Name: Name:
Title: Title:
Acknowledged:
_________________________, Assignee
CANNONDALE CORPORATION
By:____________________________________ By:________________________________
Name: Name:
Title: Title:
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SCHEDULE 1 TO ASSIGNMENT AND TRANSFER AGREEMENT
Name of Assignor: ___________________________________________
Name of Assignee: ___________________________________________
Effective Date of Assignment: ___________________________________________
Percentage Assigned
of Each Facility
(Shown as a
percentage of
aggregate original
principal amount [or,
Principal Amount (or, with respect to
with respect to Letters Letters of Credit,
of Credit face face amount] of all
Assigned Facilities amount) Assigned Agents)
------------------------------------------------------------ ------------------------------ --------------------------
Revolving Loans $__________ __________%
Letter of Credit participation interest $__________ __________%
Total $__________ __________%
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EXHIBIT C
BORROWING BASE CERTIFICATE
This Borrowing Base Certificate is calculated using interim A/R and Inventory
data as of _____, and the Outstanding Revolver Data as of ______, under and
pursuant to the Financing Agreement dated as of June __, 2000 (as amended,
restated, supplemented or otherwise modified from time to time, the "Financing
Agreement"), by and among Cannondale Corporation, a Delaware corporation
("Borrower"), certain financial parties thereto (the "Lenders") and The CIT
Group/Business Credit, Inc., as Agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Financing Agreement.
This Borrowing Base Certificate and attached calculation are tendered for the
purpose of inducing Lenders to advance funds to the Borrower, and is certified
to be true and correct in all particulars and, without limiting the generality
of the foregoing, the Eligible Accounts Receivable and Eligible Inventory of
Borrower set forth below represent "Eligible Accounts Receivable" and "Eligible
Inventory" pursuant to the terms of the Financing Agreement.
(IN THOUSANDS)
1. Prior Ending Gross Accounts Receivable ________
2. Add: Current Invoice Issued ________
3. Add: Current Debit Memos Issued ________
4. Add: Adjustments (explain: _______)
5. Less current Credit Memos Issued ________
6. Less: Current Collections ________
7. Less Other Adjustments (explain: _______) ________
8. Gross Accounts Receivable (1+2+3+4-5-6-7) ________
9. Less: Ineligibles ________
10. Gross Eligible Accounts Receivable ________
11. Less: Dilution Reserve ________
12. Net Eligible Accounts Receivable ________
13. Total Availability provided by Accounts
Receivable (85% of Net Eligible Accounts
Receivable) ________
14. Gross Raw Material Inventory ________
15. Less: Raw Material Ineligibles ________
16. Gross Eligible Raw material Inventory ________
17. Total Raw Material Inventory Availability (40% of
Eligible Raw Material Inventory) ________
18. Work In Process Inventory ________
19. Gross Finished Goods Inventory ________
20. Less: Finished Goods Ineligibles ________
21. Gross Eligible Finished Goods Inventory ________
22. Total Finished Goods Inventory (60% of Eligible
Finished Goods Inventory) ________
23. Total Inventory Availability (The lesser of (i)
the sum of Line 17 + Line 22 or (ii) 75% of line
13.) ________
24. Current Mid-Month Borrowing Base ________
25. Current Commitment $45,000
26. Lesser of Current Mid-Month Borrowing Base or
Current Commitment ________
Less:
27. Outstanding Revolving Loans
28. Letter of Credit Obligations _________
29. AVAILABILITY _________
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Prepared by: __________________________________________________
Certified by: __________________________________________________
Date: __________________________________________________
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EXHIBIT D-1
THIS WAREHOUSEMAN'S WAIVER, AGREEMENT AND CONSENT (this "Agreement") is
made and delivered as of this __________day of __________2000, by [NAME OF
WAREHOUSEMAN] (the "Lessor"), to and for the benefit of THE CIT GROUP/BUSINESS
CREDIT, INC., having offices at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 in its capacity as agent for the Lenders, as hereinafter defined (in such
capacity, the "Agent").
RECITALS
WHEREAS, Lessor is the record title holder and owner of the warehouse
and property located at 0 Xxxx Xxxxx, Xxxxxxx Xxxx Industrial Park, Xxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Real Estate");
WHEREAS, a portion of the Real Estate (the "Leased Premises") is leased
to Cannondale Corporation, a Delaware corporation (the "Lessee"), by Lessor
pursuant to a certain lease agreement between them, dated as of __________ (the
"Lease");
WHEREAS, the Lessee is a party to and a borrower under a certain
Financing Agreement among the Lessee, the financial institutions party thereto
(the "Lenders") and the Agent, dated as of June __, 2000 (as hereafter amended,
modified, supplemented or restated from time to time, the "Credit Facility").
WHEREAS, from time to time the Lenders will make loans and advances and
extend certain financial accommodations (collectively, the "Loans") to the
Lessee pursuant to the terms of the Credit Facility, which Loans will be
secured, in part, by all accounts receivable, books and records, merchandise,
inventory, machinery and equipment of the Lessee, including, without limitation,
all such property of the Lessee now or hereafter located on the Leased Premises
(the "Collateral"); and
WHEREAS, the Agent has requested that the Lessor execute this Agreement
as a condition precedent to the continuing extension of the Loans to the Lessee
under the Credit Facility.
NOW, THEREFORE, for and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lessor hereby represents and warrants to and covenants and
agrees with the Agent as follows:
1. The Lessor hereby waives and releases unto the Agent and its successors
and assigns: (i) any contractual landlord's lien, warehouseman's lien
and any other lien which the Lessor may be entitled to assert or
enforce, whether at law or in equity, against the Collateral, (ii) any
and all rights granted by or under any present or future laws to levy
or distrain for rent (or any other charges which may be due to the
Lessor) against the Collateral and (iii) any and all other claims,
liens and demands of every kind which the Lessor has or may hereafter
have against the Collateral. The Lessor acknowledges that the
Collateral is and will remain personal property and not fixtures even
though it may be affixed to or placed on the Real Estate.
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2. The Lessor certifies that: (i) the Lessor is the lessor under the
Lease, (ii) the Lease is in full force and effect and has not been
amended, modified, or supplemented, (iii) there is no defense, offset,
claim or counterclaim by or in favor of the Lessor against the Lessee
under the Lease or against the obligations of the Lessor under the
Lease, and (iv) no notice of default has been given under or in
connection with the Lease which has not been cured, and the Lessor has
no knowledge of any occurrence of any other default by the Lessee under
or in connection with the Lease.
3. The Lessor agrees that the Agent has the right to remove the Collateral
from the Leased Premises at any time prior to the occurrence of a
default under the Lease and, after the occurrence of such default,
during the Standstill Period (as hereinafter defined). The Lessor
further agrees that, during the foregoing periods, the Lessor will not:
(i) remove any of the Collateral from the Leased Premises or (ii)
hinder the Agent's actions in removing the Collateral from the Leased
Premises or the Agent's actions in otherwise enforcing its security
interest in the Collateral. The Lessor acknowledges that the Agent
shall have no obligation to remove the Collateral from the Leased
Premises.
4. The Lessor acknowledges and agrees that (a) the Lessee's granting of a
security interest to the Agent, for the benefit of the Lenders, in the
Collateral shall not constitute a default under the Lease and the
Lessor hereby expressly consents to the granting of such security
interest and (b) nothing contained herein shall be construed to imply
or suggest that the Agent is, or shall have any obligations of, the
Lessee.
5. The Lessor shall send to the Agent a copy of any notice of default
under the Lease sent by the Lessor to the Lessee. In addition, the
Lessor shall send to the Agent a copy of any notice received by the
Lessor of a breach or default under any mortgage, deed of trust,
security agreement or other instrument to which the Lessor is a party
which may affect the Lease or the Leased Premises.
6. Notwithstanding anything to the contrary contained in this Agreement
or the Lease, in the event of a default by the Lessee under the Lease,
the Lessor shall forbear from exercising any of its remedies against
the Lessee provided in favor of Lessor under the Lease or at law or in
equity until the date which is 90 days after the date the Lessor
delivers written notice of such default to the Agent (such 90 day
period being referred to herein as the "Standstill Period"). The Agent
shall have the right, but not the obligation, during the Standstill
Period, to cure such default and the Lessor shall accept any such cure
by the Agent. If, during the Standstill Period, the Agent or the
Lessee cures the default, then the Lessor shall rescind the notice of
default. The Lessor shall not, after the expiration of the Standstill
Period, terminate the Lease or exercise any other remedies available
to it thereunder or at law or in equity, so long as the Agent
continues to pay rent to the Lessor, in accordance with the terms of
the Lease, on a PER DIEM basis for each day after the expiration of
the --- ---- Standstill Period during which the Agent is in use or
occupancy of the Leased Premises.
7. The Lessor hereby acknowledges and agrees that, notwithstanding any
provision of the Lease to the contrary, no material modification,
change, supplement or amendment of any material term or provision of
the Lease shall be effective without the prior written
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consent of the Agent, and no termination or cancellation of the Lease
shall be effective unless the Lessor shall have given to the Agent at
least ten (10) days prior written notice thereof.
8. The terms and provisions of this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of the Lessor and the
Agent.
9. All notices to the Agent under this Agreement shall be in writing and
sent to the Agent at its address set forth above by certified mail,
postage prepaid, return receipt requested or by overnight delivery
service.
10. The provisions of this Agreement shall continue in full force and
effect until the earliest to occur of the following events: (a) the
Lessor shall have received the Agent's written certification that the
Loans have been paid in full; (b) the Lease shall have terminated or
expired in accordance with its terms and the Lessee shall have vacated
the Leased Premises; or (c) the Agent shall have otherwise consented in
writing to the termination of this Agreement.
11. The interpretation, validity and enforcement of this Agreement shall be
governed by and construed in accordance with the laws of the State of
New York without giving effect to the conflicts of the laws principles
thereof.
12. The Lessor agrees to execute, acknowledge and deliver such further
instruments as the Agent may reasonably request to allow for the proper
recording of this Agreement (including, without limitation, a revised
agreement in form and substance sufficient for recording) or to
otherwise accomplish the purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned Lessor has executed this Agreement
as of the day and year first set forth above.
[NAME OF WAREHOUSEMAN]
By:___________________________________
Name:
Title:
Accepted:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
By:____________________________________
Name:
Title:
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EXHIBIT D-2
PROCESSOR'S WAIVER
WHEREAS, CANNONDALE CORPORATION, a Delaware corporation (the
"Borrower") has heretofore granted a security interest to THE CIT GROUP/BUSINESS
CREDIT, INC., as Agent (in such capacity, the "Agent") in, INTER ALIA, all of
its now owned and hereafter acquired inventory, including inventory which from
time to time may be located at or on premises owned or operated by the
undersigned (the "Processor") or which at any time may be delivered to the
Processor for servicing or processing (collectively "Inventory").
NOW, THEREFORE, the Processor, intending to be legally bound, does
hereby waive, relinquish and release unto the Agent, its successors and assigns,
all right of levy or distraint for processing, servicing or warehouse charges
and all claims, liens and demands of every kind which the Processor has or will
hereafter have against the Inventory. This waiver shall continue in effect until
the Agent has terminated its security interest in the Inventory. In the event
that the Agent deems it necessary to exercise any rights and remedies it may
have with respect to the Inventory, the Processor hereby agrees, upon written
notice from the Agent, to assemble and make the Inventory available to the
Agent, and not to make any further disposition thereof, provided that the Agent
will pay to the Processor all unpaid charges payable by the Borrower to the
Processor for its services with respect to the Inventory, provided for in the
agreement then existing between the Borrower and the undersigned.
IN WITNESS WHEREOF, the Processor has executed this Agreement to be
executed by its thereunto duly authorized officers this __________ day of
__________ 200__.
[NAME OF PROCESSOR]
By:____________________________________
Name:
Title:
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