LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT made and dated as of November
1, 2001, by and between
FIVE STAR GROUP, INC., a corporation of the State of Delaware
with its principal corporate place of business at 000 Xxxxxx
Xxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx 00000 with its
mailing address at 000 Xxxxxx Xxxx, X.X. Xxx 000, Xxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as
"BORROWER")
and
SUMMIT BUSINESS CAPITAL CORP., doing business as Fleet
Capital-Business Finance Division, a corporation organized and
existing under the laws of the State of New Jersey with offices
at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, in its
capacity as agent for the lenders who have executed the
signature page hereto (in such capacity being hereinafter
referred to as "AGENT")
and
the lenders that have executed the signature page hereto (each
being hereinafter called a "LENDER" and collectively called
"LENDERS")
WITNESSES THAT:
(1) WHEREAS, BORROWER is desirous of borrowing $25,000,000 from
the LENDERS in the form of a revolving loan (called the "Revolving Loan" in this
Agreement and more fully defined in Section 2.1 below);
(2) WHEREAS, BORROWER seeks to enter into a relationship with
AGENT and the LENDERS setting forth an understanding relating to the manner by
which BORROWER may obtain advances under such Revolving Loan from the LENDERS
and the time and the manner of the repayment of such advances;
2
(3) WHEREAS, AGENT and the LENDERS are willing to enter
into this Agreement but only if the conditions contained in this Agreement are
satisfied;
(4) WHEREAS, to induce AGENT and the LENDERS to enter into this
Agreement and to extend the benefits of the Revolving Loan to BORROWER, BORROWER
is willing to execute this Agreement and comply with the provisions of this
Agreement or cause them to be complied with;
NOW THEREFORE in consideration of the premises and the
covenants contained in this Agreement and for other good and valuable
consideration, BORROWER, LENDERS and AGENT do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 INCORPORATION OF CERTAIN DEFINITIONS. The terms
"AGENT", "BORROWER", "LENDER" and "LENDERS" shall have the meanings given
those terms in the Preamble and "Whereas" Clauses of this Agreement.
1.2 "ACCOUNTING TERMS". Any accounting terms used in this
Agreement that are not specifically defined herein shall have the meanings
customarily given to them in accordance with GAAP as in effect on the date of
this Agreement, except that references in Article V and/or Article VI to GAAP
shall be deemed to refer to generally accepted accounting principles as in
effect on the date of the financial statements delivered pursuant thereto and
consistently applied over the period to which they relate.
1.3 "ACCOUNTS" or "ACCOUNTS RECEIVABLE" means, in addition to
the definition of "account" as contained in the UCC, all of the accounts and
Contract Rights of BORROWER (including its rights as an unpaid vendor, or
lienor, including stoppage in transit, replevin and reclamation), instruments,
documents, chattel paper, notes, drafts, warehouse receipts and general
intangibles, whether secured or unsecured, and whether or not specifically
assigned hereunder to AGENT for the ratable benefit of the LENDERS, and includes
a right to payment which has been earned under a Contract Right and all
Inventory returned or reclaimed from Account Debtors and all rights to payment
of money for Goods sold or leased or services rendered.
1.4 "ACCOUNT DEBTOR" means, in addition to the definition of
"account debtor" as contained in the UCC, the person or persons obligated to
BORROWER on an Account, or Contract Right, or who is represented by BORROWER to
be so obligated.
1.5 "ADVANCES" is a collective term which means all cash
advances and extensions of monetary credit (including those reimbursable
expenses of AGENT and the LENDERS deemed to be Advances under this Agreement and
other amounts which AGENT or the LENDERS are authorized by this Agreement to
charge against the Revolving Loan) now or at any time hereafter made by AGENT
and the LENDERS to BORROWER under the Revolving Loan.
1.6 "AGENT" means FLEET CAPITAL CORPORATION, in its capacity as
Agent for the LENDERS hereunder, and shall include any successor thereof as
Agent, appointed as such pursuant to Section 9.10.
1.7 "AGREEMENT" is a collective term which means all of the
following:
(a) this Loan and Security Agreement; and
(b) all extensions, modifications (including
without limitation modifications increasing or
decreasing the amount of the Revolving Loan),
refinancings, renewals, substitutions,
replacements and/or redatings hereof.
1.8 "ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement dated August 31, 1998 between SELLER (as seller and under the name
"FIVE STAR GROUP, INC.") and BORROWER (as buyer and under the name "FIVE STAR
ACQUISITION CORP.") relating to the sale by SELLER and the purchase by BORROWER
of SELLER's assets, a copy of such Asset Purchase Agreement being attached to
the Certification Responsive to the Loan Agreement.
1.9 "ASSIGNMENT AND ACCEPTANCE" means an agreement in the form
of Exhibit "A" attached hereto.
1.10 "BLOCKED ACCOUNT" shall mean any one of the Blocked
Accounts.
1.11 "BLOCKED ACCOUNTS" means the checking/demand deposit
operating accounts (if more than one) which are maintained in BORROWER's name
for the benefit of AGENT or the LENDERS at one or more financial institutions
(including Fleet National Bank) of AGENT's choosing and into which are deposited
(a) all sums from any of the Lockboxes and/or (b) all Proceeds and other sums
which BORROWER receives from any sale, lease, transfer, exchange or other
disposition of any of its assets (whether tangible or intangible) or which
BORROWER receives for any other reason whatsoever, including, without limitation
(1) Proceeds received as payment for services rendered by BORROWER and/or
payment from sales of its Equipment, Goods, Inventory and/or services to Account
Debtors and/or other third parties, and/or (2) Proceeds of any insurance or
condemnation awards received by BORROWER.
1.12 "BOOKS AND RECORDS" means, in addition to the definition of
"General Intangibles" contained in the UCC, all books and records (including
such books and records as are contained in computerized storage media),
including, without limitation, all inventory, purchasing, accounting, sales,
export, import, manufacturing, banking and shipping records, all customer and
supplier lists, files, records, literature and correspondence and all
advertising, marketing and public relations materials, drawings, engineering,
manufacturing and assembly information, operating and training manuals,
quotations, bids, trade association membership, customer credit information and
pricing information, business plans, studies and analysis and personnel records.
1.13 "BORROWING BASE CERTIFICATE" means that certain
certification in the form attached hereto as Exhibit "B" for certifications
which are required to be submitted no less frequently than weekly, setting
forth, among other things, information relating to amounts and agings of
Eligible Receivables and/or amounts and values of Eligible Inventory.
1.14 "BUSINESS DAY" shall mean a day on which AGENT and its
affiliate Fleet National Bank are open for business during their usual business
hours and offering substantially all their services
1.15 "CERTIFICATION AS TO LIENS" means that certification given
by BORROWER setting forth the existence or non-existence of UCC liens filed
against BORROWER.
1.16 "CERTIFICATION RESPONSIVE TO THE GUARANTY" is a collective
term which means the certification of GUARANTOR as to the truth and accuracy of
certain representations and warranties set forth in the Guaranty, to which is
attached each of the following:
(a) Exhibit "A": the Certification of an assistant
corporate secretary or the corporate secretary of
GUARANTOR as to a true, complete and correct copy of
the resolutions adopted by GUARANTOR's Board of
Directors authorizing the execution, delivery and
performance of the Guaranty and any other documents
required thereunder or hereunder;
(b) Exhibit "B": the Certification of an assistant
corporate secretary or the corporate secretary of
GUARANTOR as to the true, complete and correct copy of
the incumbency and specimen signatures of those
officers of GUARANTOR who are to execute the Guaranty
and any other documents required thereunder or
hereunder;
(c) Exhibit "C": a true, complete and correct copy of
GUARANTOR's Certificate of Incorporation, as amended;
(d) Exhibit "D": a true, complete and correct copy of
GUARANTOR's By-Laws, as amended;
(e) Exhibit "E": the certificate as to the "Good Standing"
of GUARANTOR for the State of Delaware;
(f) Exhibit "F": the certificate as to the "Good Standing"
of GUARANTOR for the State of New York.
1.17 "CERTIFICATION RESPONSIVE TO THE LOAN AGREEMENT" is a
collective term which means the certification of BORROWER as to the truth and
accuracy of certain representations and warranties, to which is attached each of
the following:
(a) Exhibit "A": the Certification of an assistant
corporate secretary or the corporate secretary of
BORROWER as to a true, complete and correct copy of the
resolutions adopted by BORROWER's Board of Directors
authorizing the execution and delivery of this
Agreement, the borrowings hereunder, and the execution
and delivery of the other Loan Documents;
(b) Exhibit "B": the Certification of an assistant
corporate secretary or the corporate secretary of
BORROWER as to a true, complete and correct copy of the
incumbency and specimen signatures of those officers of
BORROWER who are to execute this Agreement and the
other Loan Documents; and
(c) Exhibit "C": a true, complete and correct copy of
BORROWER's Certificate of Incorporation, as amended
(including, the certificate of amendment changing
BORROWER's name from "FIVE STAR ACQUISITION CORP." to
"FIVE STAR GROUP, INC.");
(d) Exhibit "D": a true, complete and correct copy of
BORROWER's By-Laws, as amended;
(e) Exhibit "E": the certificate as to BORROWER's "Good
Standing" or authorization to do business in the State
of Connecticut;
(f) Exhibit "F": the certificate as to BORROWER's "Good
Standing" or authorization to do business in the State
of Massachusetts;
(g) Exhibit "G": the certificate as to BORROWER's "Good
Standing" or authorization to do business in the State
of New Jersey;
(h) Exhibit "H": the certificate as to BORROWER's "Good
Standing" or authorization to do business in the State
of New York;
(i) Exhibit "I": copies of the legal documents which
BORROWER will cause to be filed in the State of
Connecticut so as to qualify BORROWER to do business in
the State of Connecticut;
(j) Exhibit "J": copies of the legal documents which
BORROWER will cause to be filed in the State of
Massachusetts so as to qualify BORROWER to do business
in the State of Massachusetts;
(k) Exhibit "K": copies of the legal documents which
BORROWER will cause to be filed in the State of New
Jersey so as to qualify BORROWER to do business in the
State of New Jersey;
(l) Exhibit "L": copies of the legal documents which
BORROWER will cause to be filed in the State of New
York so as to qualify BORROWER to do business in the
State of New York;
(m) Exhibit "M": copy of the Asset Purchase Agreement;
(n) Exhibit "N": copy of the Xxxx of Sale transferring
assets sold by SELLER (under its current name "JL
DISTRIBUTORS, INC.") and bought by BORROWER (under the
name "FIVE STAR GROUP, INC.) pursuant to the Asset
Purchase Agreement.
1.18 "CHATTEL PAPER" means, in addition to the definition of
"chattel paper" as contained in the UCC, all writing or writings which evidence
both a money obligation and a security interest in, or a sale or lease of,
specific Equipment, Inventory or Goods. When a transaction is evidenced by such
a security agreement or a sale or a lease and by an Instrument or series of
Instruments, the group of writings taken together constitutes Chattel Paper.
Chattel Paper shall not include any "account" as that term is defined in the
UCC.
1.19 "COLLATERAL" is a collective term which means all of the
following:
(a) all property (including but not limited to all
Collateral described in Article III of this Agreement),
whether real, personal or mixed, or tangible or
intangible, now or at any time hereafter given,
assigned or pledged to AGENT to secure the Liabilities
by BORROWER or by GUARANTOR; and
(b) all products and Proceeds of the foregoing.
1.20 "COMMITMENT" of any LENDER means the amount set forth
opposite such LENDER's name on Schedule "A" attached hereto, as such schedule
may be amended from time to time, under the heading "Commitment", as such amount
may be reduced from time to time pursuant to the terms of this Agreement.
1.21 "CONTRACT RIGHTS" means any right of BORROWER to receive
payment or performance under a contract not yet earned by payment and/or
performance and any franchise right to operate a business.
1.22 "DEFAULT RATE" means a rate per annum equal to the lesser
of (a) 200 basis points in excess of the contractual rate of interest which
would otherwise be paid by BORROWER without giving effect to any reduction to
which BORROWER may be entitled by compliance with Performance Benchmark #1 or
Performance Benchmark #2 or Performance Benchmark #3 or (b) the maximum rate
allowed by law, it being intended that at no time shall the rate of interest
payable on the Revolving Loan be calculated at a rate higher than the maximum
rate allowed by law.
1.23 "DELINQUENCY NOTICE" shall have the meaning given that term
in Section 9.17(a)(1).
1.24 "DELINQUENT LENDER" shall have the meaning given that term
in Section 9.17(a).
1.25 "ELECTING LENDER" shall have the meaning given that term in
Section 9.17(a).
1.26 "ELECTION NOTICE" shall have the meaning given that term in
Section 9.17(a).
1.27 "ELECTION PERIOD" shall have the meaning given that term in
Section 9.17(a).
1.28 "ELIGIBLE ASSIGNEE" means a commercial bank or other
financial institution organized under the laws of the United States of America
or any state and having a combined capital and surplus of at least Five Hundred
Million ($500,000,000) Dollars.
1.29 "ELIGIBLE INVENTORY" is a collective term which means and
includes such of BORROWER's Inventory which is and at all times shall continue
in all respects to be acceptable and satisfactory to AGENT in its discretion,
exercised in good faith and using reasonable commercial judgment, and which, not
in limitation of the foregoing, also consists of the following:
(a) that portion of BORROWER's inventory of finished goods
held for sale by BORROWER, normally and currently
saleable in the ordinary course of BORROWER's business,
and which at all times pertinent hereto is of good and
merchantable quality, free from defects, as to which
AGENT has a perfected first priority lien, and which is
located at the location or locations set forth in
Section 4.5 hereof, and as to which BORROWER has
satisfied all terms, conditions, warranties and
representations of this Agreement and the other Loan
Documents and which is valued at the lower of (i) its
cost or (ii) its market value; but
(b) Eligible Inventory does not include any of the
following:
(1) catalogs and other promotional materials of any
kind;
(2) raw materials;
(3) work in process;
(4) any returned items unless returned in salable
condition;
(5) any damaged, defective or recalled items;
(6) any obsolete items;
(7) any items used as demonstrators, prototypes or
salesmen's samples;
(8) any items of Inventory which have been consigned
to BORROWER or as to which any third person
claims a lien;
(9) any items of Inventory which have been consigned
by BORROWER to a consignee;
(10) any items of Inventory which BORROWER maintains on
a "xxxx and hold" basis;
(11) packing and shipping materials;
(12) Inventory which in the reasonable judgment of
AGENT exercised in good faith using reasonable
commercial judgment is considered to be slow
moving or otherwise not merchantable.
1.30 "ELIGIBLE RECEIVABLES" is a collective term which means and
includes such of BORROWER's Accounts Receivable which are and at all times shall
continue in all respects to be acceptable and satisfactory to AGENT in its
discretion, exercised in good faith and using reasonable commercial judgment,
and which, not in limitation of the foregoing, also consist of Accounts
Receivable which are created by BORROWER in the ordinary course of business in
an arm's length third party transaction, are genuine and in all respects are
what they purport to be. In addition to the foregoing, an Account shall be
deemed to be an Eligible Receivable only if as of the date of computation of
Eligible Receivables, such Account shall not have been outstanding for more than
ninety (90) days from the date of the invoice, provided, however, that the
following shall apply:
(a) if the Account is in respect of goods to be sold by the
Account Debtor in a new retail establishment, then, such Account shall not have
been outstanding for more than two hundred seventy (270) days from the date of
invoice, provided, that the maximum amount of Accounts beyond 90 days from the
date of the invoice which shall be considered Eligible Receivables pursuant to
this subsection (a) shall not exceed $75,000 in the aggregate at any time; and
(b) in the case of a "dated sale", if the terms of sale were
otherwise entered into by BORROWER in respect of such invoice in the ordinary
course of BORROWER's business, (1) then, as of the date of computation of
Eligible Receivables, such Account shall not have been outstanding for more than
one hundred fifty (150) days from the date of the invoice related to such "dated
sale", (2) provided, however, that if the Account relates to the sale of
"Cabot's Stain", then such Account shall not have been outstanding for more than
one hundred eighty (180) days from the date of the invoice related to such
"dated sale", (3) further, provided, that the maximum amount of Accounts which
shall be considered Eligible Receivables pursuant to this Subsection (b) shall
not exceed $4,000,000 in the aggregate at any time, and of such amount, not more
than $1,500,000 in the aggregate of such Accounts shall at any time consist of
the Accounts referred to in subsection (b)(2) of this definition. 1.31
"EQUIPMENT" means, in addition to the definition of "equipment" contained in the
UCC, all of BORROWER's personal property, fixtures, machinery and equipment,
trailers, handling and delivery equipment, cranes and hoisting equipment, office
machines and furniture -- in all cases above, of every kind, nature and
description and whether affixed to realty or not.
1.32 "EVENT OF DEFAULT" has the meaning set forth in Article VII
of this Agreement.
1.33 "GAAP" means generally accepted accounting principles,
consistently applied over the period to which they relate.
1.34 "GENERAL INTANGIBLES" means, in addition to the definition
of "General Intangibles" contained in the UCC, each of the following:
(a) all rights of BORROWER, including but not limited to
all rights to property, choses in action and other
rights of BORROWER not otherwise specifically included
elsewhere in this Agreement, further including but not
limited to all present and future federal and state tax
refunds, trademarks, trade names, service marks,
copyrights and patents, all rights under license
agreements for the use of same, warranties, insurance
proceeds and condemnation awards; and
(b) (1) all inventions (whether patentable or unpatentable
and whether or not reduced to practice), all
improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof; (2)
all trademarks (including, without limitation, service
marks, trade dress, logos, trade names, together with
all translations, adaptations, derivations, and
combinations thereof and including all goodwill
associated therewith, and all applications,
registrations, and renewals in connection therewith;
(3) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection
therewith; (4) all mask works and all applications,
registrations, and renewals in connection therewith;
(5) all trade secrets and confidential business
information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data,
designs, drawings, specifications, customer and
supplier lists, pricing and cost information and
business and marketing plans and proposals, secret
processes and procedures, engineering, production,
assembly, design, installation, other technical
drawings and specifications, working notes and memos,
market studies, consultants' reports, technical and
laboratory data, competitive samples, engineering
prototypes, and all similar property of any nature,
tangible or intangible); (6) all computer software
(including data and related documentation), computer
applications software, owned or licensed, whether for
general business usage (e.g., accounting, word
processing, graphics, spreadsheet analysis, etc.) or
specific, unique-to-the-business usage (e.g., order
processing, manufacturing, process control, shipping,
etc.) and computer operating, security or programming
software; (7) all rights in and to any domain names and
url addresses ; (8) all other proprietary rights; and
(9) all copies and tangible embodiments thereof (in
whatever form or medium);
(c) all federal, foreign, state, local and other
governmental consents, licenses, permits, franchises,
approvals, notifications, numbers and identifiers
issued by governmental authorities, grants and other
authorizations required for the operation of BORROWER's
business;
(d) all unperformed commitments or obligations owing to
BORROWER which pertain to BORROWER's business;
(e) all other tangible and intangible assets (including the
telephone and facsimile numbers used in connection with
BORROWER's business, all causes of action, rights of
action (whether in tort, contract or otherwise),
contract rights and warranty and product liability
claims against third parties), unliquidated rights and
claims pursuant to warranties made by manufacturers,
suppliers or vendors, claims for refunds, rights of
off-set and credits of all kinds, which are used or
useful in or necessary to the operation of BORROWER's
business; and
(f) all of the goodwill associated with BORROWER's business
as a going concern.
1.35 "GOODS" means, in addition to the definition of "Goods" as
contained in the UCC, all articles of tangible personal property capable of
being sold, supplied, leased or otherwise disposed of and shall also mean and
include all of BORROWER's right, title and interest in and to the goods and
other property underlying or securing any of the Accounts Receivable.
1.36 "GUARANTOR" means "FIVE STAR PRODUCTS, INC." (formerly
known as "AMERICAN DRUG COMPANY, INC.", a corporation of the State of Delaware
with its principal corporate place of business at 0 Xxxx 00xx Xxxxxx, Xxxxx
0000, Xxx Xxxx (New York County), New York 10019.
1.37 "GUARANTY" is a collective term which means all of the
following:
(a) that certain unlimited guaranty (dated even
date herewith) given by GUARANTOR to AGENT for
the ratable benefit of the LENDERS
guaranteeing payment and performance of the
Liabilities; and
(b) all extensions, modifications, refinancings,
renewals, substitutions, replacements and/or
redatings of such certain guaranty.
1.38 "INSTRUMENT" means, in addition to the definition of
"instrument" as contained in the UCC, a negotiable instrument or a security, or
any other writing which evidences a right to the payment of money and is not
itself a security agreement or lease and is of the type which is, in the
ordinary course of business, transferred by delivery with any necessary
endorsement or assignment.
1.39 "INVENTORY" means, in addition to the definition of
"inventory" as contained in the UCC, all Equipment, Inventory or Goods held by
BORROWER for resale or lease or furnished or to be furnished under contracts of
service, and shall include all goods, materials and supplies (including but not
limited to incidentals, packaging materials and all other items which contribute
to the finished product or to the promotion or sale thereof) used or usable in
manufacturing, processing, packaging or shipping and shall also include raw
materials, goods and work in process and finished goods, and all goods returned
by or reclaimed from customers or Account Debtors of BORROWER.
1.40 "LANDLORD'S CONSENTS" is a collective term which means all
of the following (copies of the following appearing as Exhibit "C" attached
hereto and made a part hereof):
(a) those certain consents heretofore provided by the fee
owner or fee owners of the premises described in
Section 4.5(a) below;
(b) the acknowledgments given by such fee owner or fee
owners (and included as part of their consent to
BORROWER's assumption of the prior tenant's lease
obligations relating to such premises) that such
consents continue for the benefit of AGENT.
1.41 "LENDING FORMULA" shall have the meaning given that term in
Section 2.2(a).
1.42 "LIABILITIES" means all of the following:
(a) principal due on the Revolving Loan and the Revolving
Notes (including all Advances, re-Advances, borrowings
and re-borrowings under the Revolving Loan and the
Revolving Notes) to be paid with interest thereon as
required by this Agreement;
(b) Advances, re-Advances, borrowings and re-borrowings
which are and which may be made from time to time to
BORROWER under this Agreement not in compliance with
the Lending Formula or the "loan value" requirements of
Article II;
(c) Advances, re-Advances, borrowings and re-borrowings
which are and which may be made from time to time to
BORROWER under this Agreement over and above any
monetary limitation on the Revolving Loan and over and
above any other lending limitation contained in this
Agreement, and the interest thereon;
(d) any and all claims, damages, losses, liabilities,
reasonable costs or expenses whatsoever which AGENT or
any LENDER may incur (or which may be claimed against
AGENT or any LENDER by any person or entity whatsoever
including AGENT's affiliate Fleet National Bank) by
reason of or in connection with the execution and
delivery of, or payment or failure to pay under the
Revolving Loan and/or this Agreement;
(e) all other indebtedness, liabilities and obligations
owing, arising, due and payable from BORROWER to AGENT
and the LENDERS of every kind or nature, whether
absolute or contingent, due or to become due, joint or
several, liquidated or unliquidated, matured or
unmatured, primary or secondary, now existing or
hereafter incurred, purchase money or nonpurchase
money, arising under this Agreement or any of the other
Loan Documents, regardless of the form or purpose of
such indebtedness, liabilities or obligations,
including, without limitation, all interest,
commissions, checking account overdrafts, bank
overdrafts, charges, expenses, attorneys' fees and
obligations which BORROWER may have (under contract or
any applicable law) to reimburse AGENT in connection
with any hedge contract, foreign exchange contract,
Letter of Credit, indemnity or guaranty issued by AGENT
to BORROWER or for BORROWER's benefit pursuant hereto;
(f) the amount due upon any notes or other obligations
given to, or received by, any LENDER on account of any
of the foregoing; and
(g) the performance and fulfillment by BORROWER of all the
terms, conditions, promises, covenants and provisions
contained in this Agreement and the other Loan
Documents to which BORROWER is a party, whether now
existing or hereafter arising or created.
1.43 "LIBOR-RELATED DEFINITIONS": The following terms shall
have the meanings given to them in the Sections referenced below:
(a) "LIBR" shall have the meaning given that term in
Section 2.6(e)(1) below.
(b) "LIBOR Based Interest Period" shall have the meaning
given that term in Section 2.6(e)(2) below.
(c) "LIBOR Based Rate" shall have the meaning given that
term in Section 2.6(d) below.
(d) "LIBOR Option" shall have the meaning given that term
in Section 2.6(b) below.
(e) "LIBOR Reserve Percentage" shall have the meaning given
that term in Section 2.6(e)(3) below.
(f) "London Banking Day" shall have the meaning given that
term in Section 2.6(e)(4) below.
(g) "Principal Balance" shall have the meaning given that
term in Section 2.6(e)(5) below.
(h) "Roll over Date" shall have the meaning given that term
in Section 2.6(e)(6) below.
1.44 "LOAN DOCUMENTS" means this Agreement, the Certification
as to Liens, the Certification Responsive to the Loan Agreement, the
Certification Responsive to the Guaranty, the Guaranty, the Revolving Notes, the
Subordination Agreement, UCC-1 Financing Statements, and any agreements,
documents or instruments now or hereafter executed by BORROWER and delivered to
AGENT with respect to the transactions contemplated by this Agreement and all
extensions, modifications or renewals of any or all of the foregoing.
1.45 "LOAN VALUE" means:
(a) As it relates to Eligible Receivables: Eligible
Receivables shall normally have a "loan value" of
eighty percent (80%) of such Eligible Receivables,
provided, however, that AGENT in good faith and in the
exercise of its reasonable commercial judgment may on
prior notice to BORROWER fix the aforesaid advance rate
at some lesser percentage.
(b) As it relates to Eligible Inventory: Eligible Inventory
shall normally have a"loan value" of up to the lesser
of $12,500,000 or 50% of the value of Eligible
Inventory, provided, however, the following shall
apply:
(1) during any 4 periods of up to 60 days
each (each separated by periods of at
least 30 days each) during any one
calendar year and on notice to AGENT
given at least 3 Business Days prior
to the start of the applicable month
as to which BORROWER's election is
being made, BORROWER may elect to
have Eligible Inventory have a "loan
value" of the lesser of $15,000,000
or 55% of the value of Eligible
Inventory; and
(2) AGENT in good faith and in the exercise of
its reasonable commercial judgment may on prior
notice to BORROWER fix the aforesaid "loan
value" at some lesser amount or percentage.
1.46 "LOCKBOX" means the secured deposit box maintained in the
name of BORROWER for the benefit of LENDER at Fleet National Bank and/or at
another financial institution approved by LENDER into which BORROWER deposits
proceeds from its sale or other disposition of its assets.
1.47 "MATERIALLY ADVERSE EFFECT" shall mean a materially adverse
effect on the business, condition (financial or otherwise), operations,
performance or properties of BORROWER (and/or its Subsidiaries) taken as a whole
or GUARANTOR (and/or its Subsidiaries) taken as a whole.
1.48 "MATURITY DATE" shall mean September 30, 2004.
1.49 "OUTSTANDING" is an adjective which means "unpaid at any
one specific time", and has such meaning regardless whether the applicable
underlying obligations owed under the Revolving Loan and/or any of the other
Liabilities are matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, joint or several, accrued or not-yet-accrued
and/or due or not-yet-due.
1.50 "PARTICIPANT" shall have the meaning given that term in
Section 9.20 below.
1.51 "PERFORMANCE BENCHMARK #1" means the performance
achievements set forth in Section 5.21 below.
1.52 "PERFORMANCE BENCHMARK #2" means the performance
achievements set forth in Section 5.21 below.
1.53 "PERFORMANCE BENCHMARK #3" means the performance
achievements set forth in Section 5.21 below.
1.54 "PERMITTED LIENS" means, as of any particular time, any of
the following, so long as none of the following (except liens or security
interests held by or in favor of AGENT) constitutes a lien against BORROWER's
Accounts or Inventory: (a) liens at any time granted by BORROWER in favor of
AGENT pursuant hereto;
(b) liens for taxes, assessments and other governmental
charges not yet subject to penalties for non-payment or
the payment of which is being contested in food faith
and for which BORROWER has established cash reserves in
an amount satisfactory to AGENT;
(c) statutory liens of carriers, mechanics, materialmen,
landlords, warehouseman and other similar liens imposed
by law, which are incurred in the ordinary course of
business for sums not yet overdue by more than 90 days
or which, if due and payable, are being properly
contested and for which BORROWER has established cash
reserves in an amount satisfactory to AGENT;
(d) liens arising out of non-final judgments or awards
against BORROWER which are being properly contested and
for which BORROWER has established cash reserves in an
amount satisfactory to AGENT;
(e) liens resulting from pledges or deposits made by
BORROWER in the ordinary course of its business in
connection with workers' compensation laws,
unemployment insurance laws, social security laws, or
similar legislation, or good faith deposits or security
deposits in connection with bids, tenders, contracts
(other than for the payment of borrowed money), or
leases to which BORROWER is a party, or deposits to
secure public or statutory obligations of BORROWER or
deposits of cash or United States Government Bonds to
secure surety, appeal, performance or other similar
bonds to which BORROWER is a party, or deposits as
security for contested taxes or import duties or for
the payment of rent;
(f) survey exceptions, encumbrances, easements or
reservations of, or rights of, others for rights of
way, highways and railroad crossings, sewers, electric
lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use
of real properties.
(g) liens consented to by AGENT in writing.
1.55 "PRIME BASED RATE" shall have the meaning given that term
in Section 2.6(b) below.
1.56 "PRIME RATE" means the variable rate of interest set from
time to time by Fleet National Bank as its usual, short-term base lending rate
to its commercial borrowers. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate being charged to any customer. The
LENDERS make loans to certain customers at rates of interest below the Prime
Rate of Fleet National Bank.
1.57 "PROCEEDS" means, in addition to the definition of
"proceeds" given in the UCC, all additions, substitutions, replacements, and
increments to the Collateral, including cash and non-cash proceeds of all of the
Collateral in whatever form, including negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements or
other documents, insurance or condemnation awards and any Collateral purchased
with Proceeds.
1.58 "PRO RATA", "PRO RATA SHARE", "RATABLY" and
"PROPORTIONATE" and other words of like import shall, as to each LENDER, mean
and refer to the proportion which the Commitment of each such LENDER bears to
the Total Commitments.
1.59 "REGULATORY CHANGE" means as to any LENDER, any change
after the date of this Agreement in United States federal, or state, or foreign,
laws or regulations (including Regulation D and the laws or regulations that
designate any assessment rate relating to certificates of deposit or otherwise
(including the "Assessment Rate" if applicable to any Advance) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks, including such LENDER, of or under any United
States federal, or state, or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
1.60 "REPLACEMENT LENDER" shall have the meaning given that term
in Section 9.18(a).
1.61 "REQUIRED LENDERS" means LENDERS holding at least 66 2/3%
of the outstanding aggregate principal amount of the Revolving Loan hereunder.
1.62 "REQUIRED PAYMENT" shall have the meaning given that term
in Section 9.15.
1.63 "REVOLVING LOAN" has the meaning set forth in Section 2.1
of this Agreement.
1.64 "REVOLVING NOTE" means any one of the Revolving Notes.
1.65 "REVOLVING NOTES" means the master promissory notes
executed by BORROWER on the date hereof in favor of each LENDER so as to
evidence the indebtedness of BORROWER to such LENDER in respect of its Pro Rata
Share of any and all Advances made by such LENDER under the Revolving Loan and
all extensions, modifications or renewals of any such note, the form of each
such Revolving Note to be in the form of Exhibit "D" attached hereto and made a
part hereof.
1.66 "SELLER" means JL DISTRIBUTORS, INC. (formerly known as
FIVE STAR GROUP, INC.), a Delaware corporation whose name is to be changed to
and whose principal corporate place of business at 0 Xxxx 00xx Xxxxxx, Xxxxx
0000, Xxx Xxxx (New York County), New York 10019.
1.67 "SETTLEMENT DATE" shall mean (1) the Monday of each week,
unless such day is not a Business Day, then the next immediately following
Business Day and (2) any other Business Day chosen by AGENT so long as there
occurs at least one Settlement Date during any one calendar week.
1.68 "SUBORDINATION AGREEMENT" is a collective term which means
the agreement pursuant to which SELLER subordinates its right to repayment of
certain indebtedness owed to it by BORROWER to AGENT's right to repayment of the
Liabilities.
1.69 "SUBSIDIARY" means any corporation or other entity more
than a majority (by number of votes) of the voting interest therein is at the
time owned or controlled by BORROWER or a Subsidiary of BORROWER.
1.70 "TOTAL COMMITMENTS" at any time shall mean the aggregate of
the Commitments, as then in effect, of all LENDERS, provided that the total of
all of the foregoing cannot be more than a 100% interest in this Agreement, the
Revolving Loan and the other Loan Documents at any one time.
1.71 "UCC" shall mean the Uniform Commercial Code as now enacted
in the State of New Jersey, as from time to time hereafter amended.
1.72 UCC DEFINITIONS. All terms defined in Articles 1 or 9 of
the UCC shall have the meanings given therein unless otherwise defined herein.
END OF ARTICLE I
ARTICLE II
LOANS
2.1 THE REVOLVING LOAN.
(a) Upon BORROWER's request, made through AGENT pursuant to
Section 2.12, each LENDER hereby severally agrees, on the terms and subject to
the conditions of this Agreement, to make Advances and re-Advances to BORROWER
under the Revolving Loan, to be disbursed by AGENT in the manner specified in
Section 2.3, and thereafter, during the term of this Agreement in an aggregate
principal amount at any one time Outstanding up to, but not exceeding, such
LENDER's Pro Rata Share of the Revolving Loan according to the LENDERS'
respective Commitments.
(b) Such Advances and re-Advances and such borrowings and
re-borrowings constitute the "Revolving Loan" described throughout this
Agreement.
2.2 MAXIMUM PERMITTED REVOLVING LOAN BORROWINGS.
(a) The maximum which may be Outstanding under the Revolving Loan at
any one time cannot exceed the lesser of the following (the "Lending Formula"):
(1) $30,000,000; or
(2) the total of the "loan value" of Eligible Receivables and
Eligible Inventory.
(b) The "loan value" of Eligible Inventory and Eligible Receivables
will be determined by AGENT using the information supplied by BORROWER to AGENT
in the Borrowing Base Certificate, together with any other information which
BORROWER is required to give AGENT pursuant to Section 5.6 below.
(c) AGENT shall not have any liabilities or responsibilities to
BORROWER on account of the failure of any LENDER to perform any such LENDER's
funding obligations under this Agreement or under any of the other Loan
Documents or other document or instrument referred to or provided for herein or
therein.
2.3 DISBURSEMENT OF REVOLVING LOAN ADVANCES. BORROWER shall give AGENT
notice of each borrowing hereunder as provided in Section 2.12 hereof. AGENT,
upon its receipt thereof but only to the extent BORROWER is allowed to borrow
hereunder, shall disburse such sum to BORROWER by crediting BORROWER's demand
deposit operating account at Fleet National Bank (or other financial institution
acceptable to LENDER) and charging BORROWER's Revolving Loan account on AGENT's
books. Advances can be made, however, by means other than as aforesaid.
2.4 RIGHT TO RECEIVE REVOLVING LOAN ADVANCES.
(a) So long as the Advances Outstanding under the Revolving Loan do
not exceed the Lending Formula and so long as BORROWER is otherwise in
compliance with the terms and conditions of this Agreement, (1) BORROWER may
borrow, re-pay and re-borrow Advances under the Revolving Loan at any time
during the period from the date hereof up to the day before the Maturity Date
and (2) repayment by BORROWER of Advances Outstanding under the Revolving Loan
shall not affect the ability of BORROWER to borrow and re-borrow under this
Agreement.
(b) To the extent that by operation of any circumstance which causes
the amount of all Advances Outstanding under the Revolving Loan to violate the
Lending Formula, AGENT may in its discretion make no other Advances hereunder
until such Outstanding Advances are in compliance with the Lending Formula.
Nothing in the foregoing shall limit AGENT's right to declare an Event of
Default because of such non-compliance.
(c) In addition and notwithstanding anything in this Agreement to
the contrary, the obligation of AGENT and the LENDERS to continue making
advances under the Revolving Loan shall terminate upon the expiration of this
Agreement and shall be suspended upon written notice (except in the case of the
occurrence of an Event of Default described in Section 7.6, Section 7.7 and
Section 7.8 as to which no notice shall be required) from AGENT to BORROWER of
the occurrence and during the continuance of any of the following events:
(1) an Event of Default hereunder; or
(2) an event which, except for the passage of time or the giving
of notice, would be such an Event of Default.
2.5 REPAYMENT OF REVOLVING LOAN ADVANCES.
(a) Subject to the other provisions of this Section and this
Agreement and so long as (1) the Advances Outstanding under the Revolving Loan
do not exceed the Lending Formula, (2) BORROWER is otherwise in compliance with
the terms and conditions of this Agreement, any and all Advances shall be
repayable on the Maturity Date unless the term of this Agreement or AGENT's
Revolving Loan relationship with BORROWER is sooner accelerated or terminated or
modified as provided herein. On the Maturity Date, all Advances Outstanding
under the Revolving Loan, plus accrued interest and other amounts Outstanding
thereunder, shall be due and owing, unless sooner due or payable as provided
herein.
(b) Notwithstanding the foregoing provisions of subsection (a)
above, prior to the Maturity Date the principal owing on the Revolving Loan
shall be repaid on a continuing and continual basis as follows:
(1) (A) BORROWER agrees to and shall establish and maintain, or
permit AGENT to establish and maintain as determined from time to time by AGENT
in its discretion, one or more Lockboxes and/or Blocked Accounts.
(B) BORROWER agrees as follows:
(i) Each Lockbox is one of the Deposit Accounts described in
Article III of this Agreement.
(ii)Each Blocked Account is an account owned by AGENT for
the ratable benefit of the LENDERS and holding funds of
the AGENT and the LENDERS and not funds of BORROWER and
against which BORROWER has rights only to the extent
that funds in any such account exceeds the Liabilities
after this Agreement has been terminated and such
Liabilities have been paid in full.
(iii)Each Blocked Account is one of the Deposit Accounts
described in Article III of this Agreement.
(2) BORROWER agrees to and shall forthwith deposit into a Blocked
Account each of the following:
(A) all proceeds (including proceeds in the form of cash,
checks, notes, instruments for the payment of money,
remittances in kind, and the like) which BORROWER
receives from any sale, lease, transfer, exchange or
other disposition of any of its assets (whether tangible
or intangible) and from services rendered to Account
Debtors and other third parties and
(B) all other proceeds (including insurance proceeds and
condemnation awards) which BORROWER receives from any
sale, lease, transfer, exchange or other disposition of
any of its assets (whether tangible or intangible) or
which BORROWER receives for any other reason whatsoever.
(3) BORROWER agrees to and shall direct its Account Debtors and
other third parties to remit directly to one or more Lockboxes (if required by
AGENT or elected by BORROWER), Blocked Accounts and/or such other place
designated by AGENT all proceeds and amounts and items described in subsection
(b)(2)(A) above. As it relates to each Lockbox, BORROWER hereby authorizes AGENT
to, transfer or cause the transfer of (on a daily basis or other frequency
determined by AGENT) all amounts from each aforementioned Lockbox into one or
more of the aforementioned Blocked Accounts.
(4) BORROWER agrees to and shall forthwith transfer, assign,
endorse, deliver and turn over to AGENT for AGENT's deposit into any such
Blocked Account and/or such other place designated by AGENT all proceeds and
amounts and items described in subsection (b)(2)(A) above which, despite
BORROWER's aforementioned direction to its Account Debtors and other third
parties, are received by BORROWER.
(5) BORROWER shall in no case commingle any of the aforesaid
proceeds and amounts and items described in this Section with any other property
of BORROWER or any other person or entity, but shall keep such proceeds and
amounts and items segregated, held in trust for AGENT and the LENDERS as AGENT's
and the LENDERS' exclusive property and immediately transfer, assign, endorse,
deliver and/or turn such proceeds and amounts and items over to AGENT in the
identical form received (excluding endorsements necessary for collection for the
benefit of AGENT) to a Lockbox (if required by AGENT or elected by BORROWER),
Blocked Account and/or such other place designated by AGENT.
(6) BORROWER hereby authorizes AGENT to effect the repayment of the
Advances Outstanding on the Revolving Loan, the payment of interest thereon and
the other Liabilities on a continuing and continual basis, either daily or on
another frequency determined by AGENT, by AGENT's transfer, withdrawal or
"sweep" of all funds on deposit in such Blocked Accounts. Funds deposited by
BORROWER in a Blocked Account prior to 2 p.m. on any Business Day will normally
be transferred, withdrawn or "swept" by AGENT on the immediately following
Business Day and funds deposited by BORROWER in a Blocked Account at or after 2
p.m. on any Business Day will normally be transferred, withdrawn or "swept" by
AGENT on the second Business Day following said deposit. AGENT will apply the
funds so transferred, withdrawn or "swept" by LENDER to the repayment of
Advances Outstanding on the Revolving Loan on the applicable Business Day on
which AGENT's aforesaid transfer, withdrawal or "sweep" occurs.
(7) If notwithstanding the application of funds in the Blocked
Accounts as set forth above, BORROWER at any time is not in compliance with the
Lending Formula, BORROWER must, immediately upon the earlier of BORROWER's
knowledge that non-compliance exists or notice from AGENT to do so, bring the
Revolving Loan into compliance with the Lending Formula and BORROWER will be
able to draw under the Revolving Loan only to the extent that such borrowings
would be in compliance with the Lending Formula. In the event that BORROWER
fails to so bring balances Outstanding under the Revolving Loan into compliance
with the Lending Formula, such failure shall be an Event of Default hereunder
and AGENT and the LENDERS shall have all rights which arise therefrom.
(8) BORROWER recognizes that the amounts evidenced by checks, notes,
drafts or any other items of payment relating to and/or proceeds of Collateral
(other than payment via wire transfer or electronic depository check) may not be
collectible by AGENT on the date received. In consideration of AGENT's and the
LENDERS' agreement to conditionally afford BORROWER credit as of the Business
Day on which AGENT receives those items of payment, BORROWER agrees that, in
computing interest and the charges imposed under this Agreement, all items of
payment received by AGENT shall be deemed applied by AGENT on account of the
Liabilities (subject to final payment of such items) two Business Days after the
applicable Business Day on which AGENT transfers, withdraws or "sweeps" funds
from the corresponding Blocked Account. AGENT is not, however, required to give
BORROWER credit for the amount of any item of payment which is unsatisfactory to
AGENT and AGENT may charge BORROWER for the amount of any item of payment which
is returned unpaid to AGENT.
(c) Nothing in this Section 2.5 is intended to limit the rights of
AGENT and the LENDERS under Section 2.4(c).
(d) Unless BORROWER is otherwise given notice by AGENT in accordance
with this Agreement, all payments shall be made at the location that AGENT
designates by written notice to BORROWER given in accordance with this
Agreement.
2.6 PAYMENT OF REVOLVING LOAN INTEREST.
(a) (1) BORROWER shall pay to AGENT for the account of each LENDER
per annum interest on the unpaid principal amount of each Advance made by such
LENDER for the period commencing on the date of such Advance until such Advance
shall be paid in full.
(2) Subject to the other provisions of this Section 2.6,
interest shall be charged on the Advances Outstanding under the Revolving Loan
at (A) a per annum rate (the "Prime Based Rate" as more fully defined below)
based on the fluctuating Prime Rate or (B) at BORROWER's option (the "LIBOR
Option") to be exercised in the manner set forth below, a per annum rate (the
"LIBOR Based Rate" as more fully defined below) based on LIBOR (as defined
below). In no event, however, shall interest ever be calculated at a rate higher
than the maximum rate allowed by law.
(b) (1) The Prime Based Rate (the "Prime Based Rate") shall equal
the Prime Rate, floating, plus one-half of one percent, provided, however, that
notwithstanding the foregoing, the following shall apply:
(A) if BORROWER complies with and maintains Performance
Benchmark #1 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#1 but only during the term of such compliance, the
Prime Based Rate shall equal the Prime Rate, floating;
plus four-tenths of one percent,
(B) if BORROWER complies with and maintains Performance
Benchmark #2 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#2 but only during the term of such compliance, the
Prime Based Rate shall equal the Prime Rate, floating;
plus one-quarter of one percent;
(C) if BORROWER complies with and maintains Performance
Benchmark #3 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#3 but only during the term of such compliance, the
Prime Based Rate shall equal the Prime Rate, floating;
(D) in all events on and after the occurrence and
continuance of an Event of Default, per annum interest
shall be charged on the Advances Outstanding under the
Revolving Loan at the Default Rate.
(2) If the interest rate is determined at a Prime Based Rate,
then in the event there should be a change in the Prime Rate, the rate of
interest on the Revolving Loan shall be changed effective as of the effective
date of each such change in the Prime Rate, as established by AGENT, without
prior notice to BORROWER. Any change in the Prime Rate shall not affect or alter
any other terms or conditions of this Agreement. AGENT will use its best efforts
to provide BORROWER with notice of the amount of the Prime Rate or the interest
rate or rates being charged to BORROWER as part of the periodic statements of
account which AGENT provides to BORROWER hereunder but AGENT's failure to
provide such notice shall not result in any liability to AGENT or affect the
rights or remedies of AGENT or any LENDER hereunder or the obligations of
BORROWER hereunder.
(c) The LIBOR Based Rate (the "LIBOR Based Rate") shall be a
rate per annum equal to 225 basis points in excess of LIBOR (as defined below)
with respect to the applicable LIBOR Based Interest Period (as also defined
below), it being understood that each determination of a LIBOR Based Rate shall
be made by AGENT in its sole and absolute discretion and shall be conclusive and
binding upon BORROWER, absent manifest error. Notwithstanding the foregoing, the
following shall apply:
(1) if BORROWER complies with and maintains Performance
Benchmark #1 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#1 but only during the term of such compliance, the
LIBOR Based Rate shall be a rate per annum equal to 220
basis points in excess of LIBOR (as defined below) with
respect to the applicable LIBOR Based Interest Period
(as also defined below); and
(2) if BORROWER complies with and maintains Performance
Benchmark #2 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#2 but only during the term of such compliance, the
LIBOR Based Rate shall be a rate per annum equal to 210
basis points in excess of LIBOR (as defined below) with
respect to the applicable LIBOR Based Interest Period
(as also defined below); and
(3) if BORROWER complies with and maintains Performance
Benchmark #3 and so long as no Event of Default has
occurred, then effective upon LENDER's determination
that BORROWER has so complied with Performance Benchmark
#3 but only during the term of such compliance, the
LIBOR Based Rate shall be a rate per annum equal to 200
basis points in excess of LIBOR (as defined below) with
respect to the applicable LIBOR Based Interest Period
(as also defined below); and
(4) in all events on and after the occurrence and
continuance of an Event of Default, per annum interest
shall be charged on the Advances Outstanding under the
Revolving Loan at the Default Rate.
(d) (1) The determination whether BORROWER has met and
complied with Performance Benchmark #1 and/or Performance Benchmark #2 and/or
Performance Benchmark #3 for purposes of obtaining the interest rate reduction
allowed by this Section will be made quarterly (on a rolling four-quarter basis)
and determined by reference to the annual and quarterly-to-date financial
statements which BORROWER is required to submit under this Agreement and by
using GAAP and will be made by AGENT within 30 Business Days after AGENT's
receipt of all necessary financial statements and other information from
BORROWER and, if BORROWER meets and complies with Performance Benchmark #1
and/or Performance Benchmark #2 and/or Performance Benchmark #3, will be
effective commencing at the end of such 30 Business Days' review period unless
BORROWER is otherwise notified by AGENT in writing.
(2) The determination whether BORROWER remains in compliance
with Performance Benchmark #1 and/or Performance Benchmark #2 and/or Performance
Benchmark #3 for purposes of continuing the interest rate reduction allowed by
this Section will also be made quarterly (on a rolling four-quarter basis) and
determined by reference to the annual and quarterly-to-date financial statements
which BORROWER is required to submit under this Agreement and by using GAAP and
will be made by AGENT within 30 Business Days after AGENT's receipt of all
necessary financial statements and other information from BORROWER, provided,
however, that nothing in the foregoing shall prevent AGENT from discontinuing
such interest rate reduction prior to AGENT's receipt of any of the
aforementioned financial statements of BORROWER or prior to the end of such 30
Business Days' review period in the event AGENT obtains actual knowledge that
BORROWER is not in compliance with Performance Benchmark #1 and/or Performance
Benchmark #2 and/or Performance Benchmark #3 and nothing in the foregoing shall
prohibit LENDER from discontinuing such interest rate reduction after the
expiration of any 30 Business Day period referenced above.
(e) For purposes of the determination of any LIBOR Based Rate,
the following terms shall have the following meanings:
(1) (A) "LIBOR" means, as applicable to any LIBOR Based
Interest Period, the rate per annum (rounded upward, if
necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time
comparable to such LIBOR Based Interest Period which
appears on the Telerate page 3750 as of 11:00 a.m.
London time on the day that is two London Banking Days
preceding the first day of such LIBOR Based Interest
period; provided, however, if the rate described above
does not appear on the Telerate System on any applicable
interest determination date, then LIBOR shall be the
rate (rounded upwards as described above, if necessary)
for deposits in dollars for a period substantially equal
to the interest period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as of
11:00 a.m. (London Time), on the day that is two London
Banking Days prior to the beginning of such interest
period.
(B) If both the Telerate and Reuters system are unavailable,
then the rate for that date will be determined on the
basis of the offered rates for deposits in U.S. dollars
for a period of time comparable to such LIBOR Based
Interest Period which are offered by four major banks in
the London interbank market at approximately 11:00 a.m.
London time, on the day that is two London Banking Days
preceding the first day of such LIBOR Based Interest
Period as selected by AGENT. The principal London office
of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic
mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of
time comparable to such LIBOR Based Interest Period
offered by major banks in New York City at approximately
11:00 a.m. New York City time, on the day that is two
London Banking Days preceding the first day of such
LIBOR Based Interest Period. In the event that AGENT is
unable to obtain any such quotation as provided above,
it will be deemed that LIBOR pursuant to a LIBOR Based
Interest Period cannot be determined.
(C) In the event that the Board of Governors of the Federal
Reserve System shall impose a LIBOR Reserve Percentage
with respect to LIBOR deposits of AGENT or any LENDER
then for any period during which such LIBOR Reserve
Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1
minus the LIBOR Reserve Percentage.
(2) "LIBOR Based Interest Period" shall mean the period commencing
on the date so specified in BORROWER's notice to AGENT of any
election to exercise the LIBOR Option and ending on the date
specified in such notice, which ending date (A) shall be
either 1 month, 2 months, 3 months or 6 months after the
commencement of the LIBOR Based Interest Period, and (B) shall
in no event extend beyond the Maturity Date. No LIBOR Based
Interest Period shall commence other than on a London Banking
Day. If any LIBOR Based Interest Period shall end on a day
which is not a London Banking Day, such LIBOR Based Interest
Period shall be extended to the next succeeding London Banking
Day.
(3) "LIBOR Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in
New York City with deposits exceeding one billion dollars in
respect of Eurocurrency liabilities (as defined in Regulation
D of the Board of Governors of the Federal Reserve System) (or
in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on loans
covered by a LIBOR Based Rate is determined or any category of
extensions of credit or other assets which includes loans by a
non-United States office of LENDER to United States
residents). The LIBOR Based Rate shall be adjusted
automatically on and as of the effective date of any change in
the LIBOR Reserve Percentage.
(4) "London Banking Day" shall mean a day which is not a Saturday,
Sunday or day on which banks in London are required or
permitted to close.
(5) "Principal Balance" means, at any time, the portion or
portions of the Advances Outstanding under the Revolving Loan
as to which BORROWER has elected to have interest determined
or to be determined, as applicable, at a LIBOR Based Rate and
includes all amounts that are to be borrowed at a LIBOR Based
Rate, whether or not BORROWER actually borrows such amounts.
(6) "Roll Over Date" shall mean the day immediately following the
last day of a LIBOR Based Interest Period.
(f) If BORROWER wishes to exercise the LIBOR Option, BORROWER
shall give AGENT notice in writing or by telex or by facsimile (receipt of which
must be confirmed electronically or telephonically) of any election to exercise
the LIBOR Option at least two London Banking Days prior to the commencement of a
LIBOR Based Interest Period, which notice shall specify (1) the Principal
Balance with respect to which BORROWER is making such election, and (2) in
conformity with the definition of "LIBOR Based Interest Period" set forth above,
the date upon which such LIBOR Based Interest Period is to commence and (3) its
duration. AGENT shall, as soon as practical prior to or on the date of the
commencement of the LIBOR Based Interest Period, determine and quote to BORROWER
a LIBOR Based Rate with respect to the Principal Balance specified in such
notice, and notify BORROWER of the date and time by which BORROWER must accept
the quoted LIBOR Based Rate. If BORROWER rejects the quoted LIBOR Based Rate, or
if BORROWER does not inform AGENT of its acceptance of the quoted LIBOR Based
Rate by the date and time specified by AGENT, time being of the essence, the
Prime Based Rate shall apply, or continue to apply to the specified Principal
Balance. If BORROWER accepts the quoted LIBOR Based Rate by the date and time
specified by AGENT, the quoted LIBOR Based Rate shall be applicable to the
Principal Balance during the LIBOR Based Interest Period specified by BORROWER
in such notice. A quoted LIBOR Based Rate may be accepted by BORROWER either
orally or in writing, provided that any such oral acceptance shall be
immediately confirmed by BORROWER in writing or by telex or by facsimile
(receipt of which must be confirmed electronically or telephonically). The
interest rate applicable to the Principal Balance, with respect to which
BORROWER has accepted a quoted LIBOR Based Rate, shall revert from the LIBOR
Based Rate applicable thereto to the Prime Based Rate as of the Roll Over Date
applicable thereto. AGENT shall be under no duty or obligation to notify
BORROWER that the interest rate on the Principal Balance is about to revert from
a LIBOR Based Rate to the Prime Based Rate.
(g) The LIBOR Option may only be exercised by BORROWER if the
portion of the Revolving Loan to be affected by the LIBOR Option would bear
interest at the Prime Based Rate on the date of commencement of the applicable
LIBOR Based Interest Period, but for the exercise by BORROWER of the LIBOR
Option, and only if the following conditions are met:
(1) No Event of Default has occurred and is continuing.
(2) The LIBOR Based Interest Period must commence on a
London Banking Day.
(3) The LIBOR Based Interest Period shall extend either 1
month, 2 months, 3 months or 6 months after the
commencement of the LIBOR Based Interest Period.
(4) The LIBOR Based Interest Period shall in no event extend
beyond the termination date or any extended termination
date of the Revolving Loan.
(5) If any LIBOR Based Interest Period shall end on a day
which is not a London Banking Day, such LIBOR Based
Interest Period shall be extended to the next succeeding
London Banking Day.
(6) The LIBOR Option must be exercised for a minimum of
$1,000,000 and integral multiples of $100,000
thereafter.
(7) No more than $15,000,000 of the total Advances
Outstanding under the Revolving Loan may be the subject
of interest being determined at a LIBOR Based Rate or
LIBOR Based Rates at any one time.
(8) The exercise of the LIBOR Option will not result in more
than 3 separate LIBOR subcontracts in the collective
aggregate being in existence between BORROWER and AGENT
at any one time.
(h) In the event, and on each occasion, that on or before the
date upon which a LIBOR Based Interest Period is to commence, AGENT shall have
in its sole discretion exercised in good faith using reasonable commercial
judgment made a determination (which determination shall be conclusive and
binding upon BORROWER) that a LIBOR Based Rate cannot be determined or that the
current LIBOR Based Rate will not adequately and fairly reflect the cost to
AGENT or the LENDERS of making or maintaining any Principal Balance of any such
LIBOR Based Loan, AGENT shall so notify BORROWER and the Principal Balance with
respect to which BORROWER has exercised the LIBOR Option, shall, as applicable,
bear interest or continue to bear interest at the Prime Based Rate.
(i) In all events, interest shall be payable monthly on an
accrued basis on the last day of each and every calendar month and shall be
calculated on the basis of a year consisting of 360 days and paid for actual
days elapsed.
(j) (1) On and after the occurrence of an Event of Default
hereunder or after the Maturity Date, all Outstanding Advances shall, unless
otherwise agreed by AGENT, bear interest at the Default Rate.
(2) In addition, interest on the Revolving Loan will be
calculated at the Default Rate prior to the declaration of an Event of Default
in the event BORROWER does not supply or cause to be delivered to AGENT any
information required by this Agreement or any of the Loan Documents by the dates
such information is due (including any grace period allowed by this Agreement).
(3) It is nonetheless understood that AGENT's acceptance of
payment at the Default Rate does not otherwise prevent AGENT or the LENDERS from
otherwise declaring an Event of Default as a result of BORROWER's failure to
perform or observe any of the foregoing.
(k) All agreements between BORROWER and AGENT are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to AGENT for the use or
the forbearance of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement shall be governed by such new law as of
its effective date. In this regard, it is expressly agreed that it is the intent
of BORROWER and AGENT and each LENDER in the execution, delivery and acceptance
of this Agreement to contract in strict compliance with the laws of the State of
New Jersey from time to time in effect. If, under or from any circumstances
whatsoever, fulfillment of any provision hereof or of any of the Loan Documents
at the time of performance of such provision shall be due, shall involve
transcending the limit of such validity prescribed by applicable law, then the
obligation to be fulfilled shall automatically be reduced to the limits of such
validity, and if under or from circumstances whatsoever AGENT or any LENDER
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements
between BORROWER and AGENT.
2.7 PAYMENT OF LATE CHARGES. Any payment of interest received more than
10 days after the payment's due date, if accepted by AGENT, will be subject to a
late charge of 5% of the total interest installment due for the benefit of the
LENDERS. Nothing in the foregoing is intended to mean that AGENT will accept any
payment after the payment's due date (after any applicable "grace" period).
Nothing in the foregoing is intended to mean that AGENT's acceptance of any
payment more than 10 days after the payment's due date, other than acceptance of
payment of all sums outstanding under the Revolving Loan, is a cure of any
default.
2.8 AUTHORIZATION TO CHARGE ACCOUNTS: Although AGENT may xxxx BORROWER
monthly for accrued monthly interest and other amounts (including principal) due
under the Revolving Loan, it is understood that AGENT will, and BORROWER hereby
authorizes AGENT to, charge as of each due date such interest and any other
amounts (including principal)and effect payment by increasing the principal
balance of the Revolving Loan as though an Advance were taken by BORROWER
against the Revolving Loan in the amount of any payment effected by AGENT.
2.9 TERM OF THE REVOLVING LOAN AND PREPAYMENT.
(a) The Revolving Loan relationship shall continue in full
force and effect until the Maturity Date (unless the term of this Agreement or
AGENT's Revolving Loan relationship with BORROWER is sooner accelerated or
terminated or modified as provided herein).
(b) Subject to the provisions of subsection (c) below,
BORROWER may terminate its Revolving Loan relationship with AGENT at any time by
giving AGENT 60 days' prior written notice. Despite BORROWER's giving such
notice, AGENT's rights under this Agreement shall remain in full force and
effect until all Liabilities are paid in full.
(c) In the event that interest on any portion or portions of
the Revolving Loan is being determined at a LIBOR Based Rate, such portion or
portions may be prepaid at any time but such prepayment must be made for the
entirety of the portion for which AGENT has entered into contracts relating to
LIBOR pricing. Partial prepayments of any such portion or portions are not
allowed. In the event of any such prepayment, the provisions of Section 2.10
shall apply.
(d) Despite any modification or termination of the Revolving
Loan relationship, whether by BORROWER or by AGENT, AGENT's rights under this
Agreement shall continue to remain in full force and effect (as modified in the
case of any modification and despite any acceleration in the case of any
acceleration and despite any termination in the case of any termination) until
all Liabilities are paid in full.
2.10 YIELD MAINTENANCE AND INDEMNIFICATION RELATING TO LIBOR BASED
INTEREST:
(a) BORROWER hereby agrees to indemnify AGENT and each LENDER
against any loss or expense which AGENT or any LENDER may sustain or incur as a
consequence of (1) any failure by BORROWER to borrow all or any portion of any
Principal Balance (relating to Advances Outstanding under the Revolving Loan as
to which BORROWER has elected to have interest determined or to be determined,
as applicable, at a LIBOR Based Rate and as more fully defined above) or (2) the
receipt or recovery by AGENT or any LENDER of all or any part of any Principal
Balance prior to the maturity thereof whether by voluntary or involuntary
prepayment, acceleration or otherwise.
(b) Without limiting the effect of the foregoing, the amount
to be paid by BORROWER to AGENT and the LENDERS in order to indemnify AGENT and
the LENDERS for any loss occasioned by any of the events described in the
preceding provisions of this Section, and as liquidated damages therefor, shall
be equal to the following amount:
The current rate for United States Treasury securities (Bills
on a discounted basis shall be converted to a bond equivalent)
with a maturity closest to the maturity date of the LIBOR
Based Interest Period chosen pursuant to the LIBOR Option and
as to which the prepayment is made shall be subtracted from
the "cost of funds" component of the LIBOR Based Rate in
effect at the time of the prepayment. If the result is zero or
a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage
shall be multiplied by the amount of the Principal Balance
being prepaid. The resulting amount shall be divided by 360
and multiplied by the number of days remaining in the term of
the LIBOR Based Interest Period chosen pursuant to the LIBOR
Option as to which the prepayment is made. Said amount shall
be reduced to present value calculated by using the number of
days remaining in the designated term and using the above
referenced United States Treasury security rate and the number
of days remaining in the term of the LIBOR Based Interest
Period chosen pursuant to the LIBOR Option as to which the
prepayment is made. The resulting amount shall be the yield
maintenance fee due to AGENT (for the benefit of the LENDERS)
upon any prepayment of any Principal Balance. Such yield
maintenance fee shall be paid, if due under the formula set
forth above, upon the receipt or recovery by AGENT or a LENDER
of all or any part of any Principal Balance prior to the
maturity thereof whether by voluntary or involuntary
prepayment, acceleration or otherwise.
(c) A certificate as to any additional amounts payable
pursuant to this Section setting forth the basis and method of determining such
amounts shall be conclusive, absent manifest error, as to the determination by
AGENT set forth therein if made reasonably and in good faith. BORROWER shall pay
any amounts so certified to it by AGENT within 10 days of receipt of any such
certificate. For purposes of this Section 2.10, all references to "AGENT" shall
be deemed to include any of the LENDERS who have a Commitment in the Revolving
Loan.
(d) The indemnities provided for herein shall survive payment
in full of the principal amount of the Revolving Loan and the interest due
thereon.
2.11 EVIDENCE OF REVOLVING LOAN INDEBTEDNESS.
(a) The Advances made by each LENDER shall be evidenced by a
single promissory note, or from time to time a restated and/or amended note, of
BORROWER substantially in the form attached hereto as Exhibit "D". The aforesaid
note shall be payable to the order of such LENDER in a principal amount equal to
such LENDER's Commitment as originally in effect, and shall otherwise be duly
completed. The amounts due under such note shall be payable as provided in this
Agreement.
(b) AGENT is hereby authorized by BORROWER to record on
AGENT's records all advances made by each LENDER to BORROWER under such LENDER's
aforesaid note and all interest and other amounts due thereon and all payments
made on account of principal and/or interest and/or such other amounts. The
aggregate unpaid principal and/or interest and/or other amounts entered and
shown on AGENT's records shall further evidence the principal and/or interest
and/or other amounts owing and unpaid on the Revolving Loan. Each LENDER may
from time to time render, or cause AGENT to render, a statement of the
aforementioned records. AGENT will use good efforts to render such statement
monthly. If BORROWER fails to object to any such statement within sixty (60)
days after it is received by BORROWER, such statement shall be deemed to be an
account stated and binding upon BORROWER, provided, however, that nothing in the
foregoing shall prevent AGENT or BORROWER from correcting manifest errors in
such statements. Notwithstanding the foregoing, the following shall apply:
(1) any failure by AGENT to enter on its records the date and
amount of any advance or interest or other amount due on the Revolving Loan or
LENDER's and/or AGENT's failure to render any such statement shall not, however,
limit or otherwise affect the obligations of BORROWER under this Agreement or
under any LENDER's note to repay the principal amount of the advances,
re-advances, borrowings and re-borrowings made by any LENDER to BORROWER under
the Revolving Loan, together with all interest accruing and other amounts due
thereon. (2) AGENT's failure to enter on its records the date and amount of any
payment made by BORROWER shall not, however, limit or otherwise affect the right
of BORROWER under the Revolving Loan to demonstrate its payment of any Advance
or any interest accruing and other amounts due thereon. (c) The foregoing notes
(and any extension, modification or renewal thereof) and the records of AGENT
indicating Advances made hereunder, accrued interest and other charges due
thereon, and payments made by BORROWER on account of such Advances, interest and
charges are each referred to as a "Revolving Note" in this Agreement and
collectively referred to as the "Revolving Notes" in this Agreement. 2.12
NOTICES RELATING TO ADVANCES. (a) BORROWER shall give AGENT written notice of
each termination or reduction of the Total Commitment and, subject to any
special notice requirements relating to BORROWER's exercise of any LIBOR Option,
BORROWER shall give AGENT written notice of each borrowing and prepayment of
each Advance (in each case, a "Borrowing Notice"). Each such written notice
shall be irrevocable and shall be effective only if received by AGENT, subject
to any special notice requirements relating to BORROWER's exercise of any LIBOR
Option or termination or permanent reduction of the Revolving Loan, not later
than 11 a.m., New York City time, on the date that is one Business Day prior to
the date of the related termination, reduction or prepayment or on the date of
the related borrowing.
(b) Each such notice of termination or reduction shall specify
the amount thereof. Each such notice of borrowing or prepayment shall specify
the amount to be borrowed or prepaid, the date of borrowing or prepayment (which
shall be a Business Day).
(c) Notwithstanding the foregoing, as it relates to any
borrowing of an Advance, AGENT may in its discretion rely on and act on oral
requests made by BORROWER and the making of any requested Advance shall
conclusively establish BORROWER's obligation to repay such Advance in accordance
with this Agreement.
(d) Also notwithstanding the foregoing, unless payment is
otherwise timely made by BORROWER, the becoming due of any Advance or other
obligation required to be paid under this Agreement or any Loan Document shall
be deemed irrevocably to be a request by BORROWER for an Advance on the due date
of, and in the amount required to pay, such Advance or other obligation which
has become due. In addition, the presentation by BORROWER for payment by AGENT
of any check or other item of payment drawn on any demand deposit account of
BORROWER at AGENT shall be deemed irrevocably to be a request by BORROWER for an
Advance in the amount of such check or other item of payment, provided, however,
that BORROWER understands and agrees that AGENT has no obligation to honor
drafts presented against any demand deposit account having insufficient balances
even if BORROWER has the ability to borrow under the Revolving Loan.
(e) AGENT shall notify the LENDERS of the content of each such
Borrowing Notice on the next Settlement Date.
2.13 APPLICATION OF PAYMENTS.
(a) Prior to the occurrence of an Event of Default, payments
received by AGENT or any LENDER as payments due on the Revolving Loan shall be
applied against amounts owing under the Revolving Loan and this Agreement, in
the following order unless otherwise determined by AGENT in its discretion
(unless otherwise directed by the LENDERS): first to expenses of AGENT and the
LENDERS, then to principal and then to interest.
(b) On and after the occurrence of an Event of Default, AGENT
may apply all payments and other sums of money received by it from or on account
of BORROWER towards the satisfaction of those Liabilities which the LENDERS in
their sole discretion deem fit.
2.14 OBLIGATIONS ABSOLUTE. The obligations of BORROWER under this
Agreement shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, and such obligations shall not be affected, modified
or impaired upon the happening from time to time of any event, including without
limitation any of the following, whether or not with notice to, or consent of,
BORROWER:
(a) AGENT's or any LENDER's taking or not taking any of the
actions referred to in the Loan Documents;
(b) AGENT's or any LENDER's release (whether with or without
consideration), impairment, failure to perfect a security interest in, exchange,
surrender, substitution or modification of (1) any Collateral or (2) any other
collateral or security given by BORROWER or (3) any collateral or security given
by GUARANTOR or (4) any Proceeds of the foregoing;
(c) any failure, omission or delay on the part of AGENT or any
LENDER to enforce, assert or exercise any right, power or remedy conferred on it
in the Loan Documents or any other action or acts on the part of AGENT or any
LENDER;
(d) the voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment, or other similar proceedings which affect GUARANTOR or any of its
assets;
(e) AGENT's or any LENDER's compromise, settlement, release
(whether with or without consideration), discharge, change, modification,
amendment (whether material or otherwise) or termination of any or all of the
obligations, duties, covenants or agreements of GUARANTOR under any of the Loan
Documents;
(f) the default or failure of BORROWER or GUARANTOR fully to
perform any of the obligations set forth in the Loan Documents;
(g) AGENT's or any LENDER's inability to recover payment from
any person or entity under the Loan Documents; or
(h) the existence of any claim, setoff, defense or other
rights which BORROWER or GUARANTOR may have at any time against any person
whether in connection with this Agreement, the other Loan Documents or any
unrelated transactions.
2.15 FEES.
(a) Loan Closing Fee: BORROWER shall pay AGENT for the benefit
of the LENDERS pro rata, a Loan Closing Fee of $5,000. The aforementioned Loan
Closing Fee shall be considered earned and shall be paid to AGENT on the date
hereof.
(b) Revolving Loan Facility Fee: BORROWER shall pay AGENT for
the benefit of the LENDERS pro rata according to their respective Commitments a
one-time Revolving Loan facility fee in an aggregate amount equal to $25,000 for
all LENDERS. The aforementioned Revolving Loan facility fee shall be considered
earned and shall be paid on the date hereof.
(c) Unused Revolving Loan Facility Fee: In the event that
average daily usage under the Revolving Loan during any calendar month or part
thereof falls below the maximum amount which may be borrowed under the Revolving
Loan, BORROWER shall pay AGENT for the benefit of the LENDERS pro rata according
to their respective Commitments an unused Revolving Loan fee on the short fall
determined at a rate equal to 1/4 of one percent per annum. Following the end of
each calendar month, AGENT will xxxx BORROWER for the unused Revolving Loan
facility fee, if any, then due and BORROWER shall pay the fee within 10 days
after the receipt of such xxxx.
(d) Collateral Management Fee: BORROWER shall pay AGENT for
the benefit of AGENT, and not for the benefit of the LENDERS, a Collateral
Management Fee as more fully set forth in Article V.
(e) Verification Fee: BORROWER shall pay AGENT for the benefit
of AGENT, and not for the benefit of the LENDERS, an Accounts Verification Fee
as more fully set forth in Article V.
(f) Field Examination Fee: BORROWER shall pay AGENT for the
benefit of AGENT, and not for the benefit of the LENDERS, a Field Examination
Fees as more fully set forth in Article V.
2.16 ADDITIONAL COSTS; CAPITAL REQUIREMENTS.
(a) In the event that any existing or future law or
regulation, guideline or interpretation thereof, by any court or administrative
or governmental authority charged with the administration thereof, or compliance
by any LENDER with any request or directive (whether or not having the force of
law) of any such authority shall impose, modify or deem applicable or result in
the application of, any capital maintenance, capital ratio or similar
requirement against loan commitments or other obligations entered into by any
LENDER hereunder, and the result of any event referred to above is to impose
upon any LENDER or increase any capital requirement applicable as a result of
the making or maintenance of such LENDER's Commitment or the obligation of such
LENDER hereunder with respect to such Commitment or otherwise (which imposition
of capital requirements may be determined by each LENDER's reasonable allocation
of the aggregate of such capital increases or impositions), then, upon demand
made by such LENDER as promptly as practicable after it obtains knowledge that
such law, regulation, guideline, interpretation, request or directive exists and
determines to make such demand, BORROWER shall immediately pay to such LENDER
from time to time as specified by such LENDER additional commitment fees which
shall be sufficient to compensate such LENDER for such imposition of or increase
in capital requirements together with interest on each such amount from the date
demanded until payment in full thereof at the Default Rate. A certificate
setting forth in reasonable detail the amount necessary to compensate such
LENDER as a result of an imposition of or increase in capital requirements
submitted by such LENDER to BORROWER shall be conclusive, absent manifest error,
as to the amount thereof. For purposes of this Section, all references to any
"LENDER" shall be deemed to include any participant in such LENDER's Commitment,
provided, however, that the foregoing shall not require BORROWER to pay more
under this Section because of the existence of such participants than BORROWER
would pay to LENDER if there were no participants.
(b) In the event that any Regulatory Change shall: (1) change
the basis of taxation of any amounts payable to any LENDER under this Agreement
or the Notes in respect of any Advances (other than taxes imposed on the overall
net income of such LENDER for any such Advances by the United States of America
or the jurisdiction in which such LENDER has its principal office); or (2)
impose or modify any reserve, Federal Deposit Insurance Corporation premium or
assessment, special deposit or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities of, such
LENDER; or (3) impose any other conditions affecting this Agreement in respect
of Advances or any such extensions of credit, assets, deposits or liabilities;
and the result of any event referred to in clause (1), (2) or (3) above shall be
to increase such LENDER's costs of making or maintaining any Advances including,
without limitation, its Commitment, or to reduce any amount receivable by such
LENDER hereunder in respect of its Commitment (such increases in costs and
reductions in amounts receivable are hereinafter referred to as "Additional
Costs"), then, in each case, upon demand made by such LENDER as promptly as
practicable after it obtains knowledge that such a Regulatory Change exists and
determines to make such demand (a copy of which demand shall be delivered to
AGENT), BORROWER shall pay to such LENDER from time to time as specified by such
LENDER, additional commitment fees or other amounts which shall be sufficient to
compensate such LENDER for such increased cost or reduction in amounts
receivable by such LENDER from the date of such change, together with interest
on each such amount from the date demanded until payment in full thereof at the
Prime Based Rate and, if not paid within 30 days after demand, then with
interest at the Default Rate. All references to any "LENDER" shall be deemed to
include any participant in such LENDER's Commitment, provided, however, that the
foregoing shall not require BORROWER to pay more under this Section because of
the existence of such participants than BORROWER would pay to LENDER if there
were no participants.
(c) Determinations by any LENDER for purposes of this Section
of the effect of any Regulatory Change on its costs of making or maintaining
Advances or on amounts receivable by it in respect of Advances, and of the
additional amounts required to compensate such LENDER in respect of any
Additional Costs, shall be set forth in writing in reasonable detail and shall
be conclusive, absent manifest error.
(d) In the event that any LENDER demands compensation under
this Section 2.16, then without limiting or reducing the obligations of BORROWER
hereunder, such LENDER shall take reasonable steps to mitigate the circumstances
resulting in such demand, provided, however, that such LENDER shall not be
required to take such steps if, in its opinion, such steps (1) would be
inconsistent with such LENDER's internal policies, (2) would or might have an
adverse effect upon the LENDER's business, operations, or financial condition or
(3) would result in any cost, liability or exposure to such LENDER.
END OF ARTICLE II
ARTICLE III
3.1 CROSS COLLATERALIZATION. BORROWER agrees that payment and performance
of all Liabilities shall be secured by each and all of the following: (a) all
Collateral hereinafter set forth in this Article III, (b) all Collateral now or
hereafter given by BORROWER (i) to AGENT for the ratable benefit of the LENDERS
or (ii) to any of the LENDERS and (c) all Proceeds of the foregoing.
3.2 ACCOUNTS RECEIVABLE. To secure payment and performance of all
Liabilities, BORROWER hereby creates in favor of AGENT for the ratable benefit
of the LENDERS and hereby grants to AGENT for the ratable benefit of the LENDERS
a first security interest in all of BORROWER's Accounts, as defined herein,
presently owned by BORROWER or hereafter existing, created or acquired by it.
3.3 BOOKS AND RECORDS. To secure the payment and performance of all
Liabilities, BORROWER hereby creates in favor of AGENT for the ratable benefit
of the LENDERS and hereby grants to AGENT for the ratable benefit of the LENDERS
a first security interest in all of BORROWER's Books and Records.
3.4 CHATTEL PAPER. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby grants to AGENT for the ratable benefit of the LENDERS a first
security interest in all of BORROWER's Chattel Paper, as defined herein, whether
presently owned by BORROWER or hereafter acquired by it, including but not
limited to all such Chattel Paper, and now or hereafter left in the possession
of AGENT or any of the LENDERS for any purpose.
3.5 CONTRACT RIGHTS. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby grants to AGENT for the ratable benefit of the LENDERS a first
security interest in all of BORROWER's Contract Rights, as defined herein,
presently owned by BORROWER or hereafter acquired by it.
3.6 DEPOSIT ACCOUNTS. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby assigns to AGENT for the ratable benefit of the LENDERS and hereby
grants to AGENT for the ratable benefit of the LENDERS a first security interest
in each and all of the following:
(a) the balance of every demand or deposit account (including, without
limitation, each Cash Collateral Account), now or hereafter existing, of
BORROWER with AGENT or any of the LENDERS or any bank (including Fleet National
Bank) affiliated with AGENT or any of the LENDERS (or any successor-in-interest
to any of the foregoing) or in transit to any of them; and
(b) all money, instruments, securities, documents, credits, claims, and
other property of BORROWER, now or hereafter or for any purpose (including
safe-keeping or pledge or security for any of the Liabilities) in the
possession, custody, safekeeping or control of AGENT or any of the LENDERS or
any bank (including Fleet National Bank) affiliated with AGENT or any of the
LENDERS (or any successor-in-interest to any of the foregoing) or in transit to
any of them; and
(c) any sum now or hereafter owed by AGENT or any of the LENDERS in any
capacity to BORROWER whether due or not; and
(d) all proceeds of any of the foregoing, which, for purposes hereof,
means and includes all roll-overs, renewals, continuations, extensions,
additions, substitutions, replacements, modifications, and increments to the
foregoing Pledged Property, as well as all proceeds of the foregoing in whatever
form, including cash, marketable securities, negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements or
other documents, insurance or condemnation awards.
3.7 EQUIPMENT. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby grants to AGENT for the ratable benefit of the LENDERS a first
security interest in all of BORROWER's Equipment, as defined herein, of
BORROWER, whether presently owned by BORROWER or hereafter acquired by it, and
wherever located.
3.8 GENERAL INTANGIBLES. To secure payment and performance of all
Liabilities, BORROWER hereby creates in favor of AGENT for the ratable benefit
of the LENDERS and hereby grants to AGENT for the ratable benefit of the LENDERS
a first security interest in all of BORROWER's General Intangibles, as defined
herein, presently owned by BORROWER or hereafter acquired by it.
3.9 GOODS. To secure payment and performance of all Liabilities, BORROWER
hereby creates in favor of AGENT for the ratable benefit of the LENDERS and
hereby grants to AGENT for the ratable benefit of the LENDERS a first security
interest in all of BORROWER's Goods, as defined herein, presently owned by
BORROWER or hereafter acquired by it.
3.10 INSTRUMENTS. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby grants to AGENT for the ratable benefit of the LENDERS a first
security interest in all of BORROWER's Instruments as defined herein, of
BORROWER, whether presently owned by BORROWER or hereafter acquired by it,
including but not limited to all such Instruments now or hereafter left in the
possession of AGENT or any of the LENDERS for any purpose, including but not
limited for the purpose of collection.
3.11 INVENTORY. To secure payment and performance of all Liabilities,
BORROWER hereby creates in favor of AGENT for the ratable benefit of the LENDERS
and hereby grants to AGENT for the ratable benefit of the LENDERS a first
security interest in all of BORROWER's Inventory, as defined herein, of
BORROWER, whether presently owned by BORROWER or hereafter acquired by it, and
wherever located.
3.12 PRODUCTS AND PROCEEDS. To secure payment and performance of all
Liabilities, BORROWER hereby creates in favor of AGENT for the ratable benefit
of the LENDERS and hereby grants to AGENT for the ratable benefit of the LENDERS
a security interest in the products of the Collateral and all Proceeds thereof.
END OF ARTICLE III
ARTICLE IV
REPRESENTATIONS
In order to induce AGENT and the LENDERS to enter into this
Agreement and to perform their respective obligations hereunder, BORROWER makes
the following representations to AGENT and to each of the LENDERS, each and all
of which shall survive the execution and delivery of this Agreement for the
duration of the term, or the extended or renewed term or terms of, this
Agreement:
4.1 (a) BORROWER is a corporation of the State of Delaware with its
principal place of business at 000 Xxxxxx Xxxx, X.X. Xxx 000, Xxxx Xxxxxxx,
Xxxxxx Xxxxxx, Xxx Xxxxxx 00000.
(b) BORROWER's correct legal name is "FIVE STAR GROUP, INC."
(c) (1) On the date hereof, BORROWER uses no trade names except the
trade name "Decorating Group" in the State of New York. (2) BORROWER will not
use any trade name without first giving AGENT prior notice thereof.
(d) (1) On the date hereof, BORROWER owns no patents, trade names
(except as set forth above) or trade marks.
(2) BORROWER will advise AGENT of any patents, trade names or trade
marks which it acquires and, if requested by AGENT, will provide AGENT with a
security interest therein.
(e) BORROWER is engaged in the business of the wholesale distribution
of home decorating, hardware and finishing products and business directly
related thereto.
(f) The stock of BORROWER is wholly owned by GUARANTOR.
(g) BORROWER has no Subsidiaries.
4.2 BORROWER is in good standing under the laws of the State of Delaware,
the state of its incorporation.
4.3 BORROWER is qualified to do business and is in good standing in the
States of Connecticut, New Jersey, Massachusetts, New York and Maryland and in
each jurisdiction where the nature of its business requires it to be so
qualified except where the failure to so qualify would not have a Materially
Adverse Effect on the business, properties or financial condition of BORROWER.
4.4 BORROWER has the corporate power to execute, deliver and carry out this
Agreement and its Board of Directors has duly authorized and approved the terms
described herein and the taking of any and all action contemplated herein.
4.5 (a) On the date hereof, the Collateral given by BORROWER is located at
the following addresses:
(1) 903 Xxxxxx Road
East Hanover
Morris County, New Jersey 07936
Record Owner: Hanover Public Warehousing, L.L.C.
Address of
Record Owner: c/o Vornado Realty Trust
Park 00 Xxxx, Xxxxx XX
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Vice President, Real Estate
(2) 00 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Record Owner: Xxxxxx Company
Address of
Record Owner: 00 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
(b) In addition and on the date hereof, BORROWER maintains offices, but
no Collateral, at the following locations:
(1) 0 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx (New York County), New York 10019
Record Owner: Solow Company
Address of
Record Owner: 0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(2) 0000 Xxx Xxxxxxx Xxxx
Xxxxxxxxx (Xxxxxx Xxxxxx), Xxx Xxxx
Record Owner: R.G.E., Inc.
Address of
Record Owner: X.X. Xxx 00
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
4.6 BORROWER has full power and authority to execute, deliver and perform
this Agreement, each Revolving Note and all of the other Loan Documents to which
it is party and to perform and observe the terms and provisions hereof and
thereof.
4.7 This Agreement is a legal, valid and binding agreement of BORROWER
enforceable against BORROWER in accordance with its terms and each Revolving
Note and all of the other Loan Documents to which it is a party are similarly
valid, binding and enforceable against BORROWER in accordance with their
respective terms except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, relating to or affecting the enforcement of creditors'
rights generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
4.8 No consent or approval of any trustee or holder of any indebtedness or
obligation of BORROWER is necessary in connection with the execution and
delivery of this Agreement or any Revolving Note or any of the other Loan
Documents to which it is a party or any transaction contemplated hereby or
thereby.
4.9 No consent, permission, authorization, order or license of any
governmental authority is necessary in connection with the execution and
delivery of this Agreement or any Revolving Note or any of the other Loan
Documents to which it is a party or any transaction contemplated hereby or
thereby except where the failure to obtain any such consent, permission,
authorization, order or license would not create a Materially Adverse Effect on
the business, properties or financial condition of BORROWER.
4.10 There is no provision of any indenture or material agreement, written
or oral, to which to the best of BORROWER's knowledge, BORROWER is a party or
under which it is obligated which would be contravened in any material respect
by the execution and delivery of this Agreement or any Revolving Note or any of
the other Loan Documents to which it is a party or by the performance of any
material provision, condition, covenant or other term hereof or thereof except
where such contravention would not have a Materially Adverse Effect on the
business, properties or financial condition of BORROWER.
4.11 To the best of BORROWER's knowledge, there is no statute, rule or
regulation, or any judgment, decree or order of any court or agency binding on
BORROWER which would be contravened in any Materially Adverse Effect by the
execution and delivery of this Agreement or any Revolving Note or any of the
other Loan Documents to which it is a party or by the performance of any
material provision, condition, covenant or other term hereof or thereof except
where such contravention would not have a Materially Adverse Effect on the
business, properties or financial condition of BORROWER.
4.12 On the date of this Agreement, BORROWER has good and marketable title
to all of its properties and assets, real, personal and mixed, as reflected on
the most recent balance sheet of BORROWER, and none of said properties or assets
is subject to any mortgage, pledge, lien, security interest, encumbrance, charge
or title retention or other security agreement or arrangement of any character
whatsoever except for Permitted Liens and except as set forth on the
Certification as to Liens and except where the existence of such lien would not
otherwise violate Section 7.4 or Section 7.5 hereof and would also not have a
Materially Adverse Effect on the business, properties or financial condition of
BORROWER.
4.13 (a) BORROWER has timely filed all returns and information and other
reports required of it under all Federal, State, local and foreign tax laws to
which it is subject, except where failure to file would not have a Materially
Adverse Effect on the business, properties or financial condition of BORROWER;
(b) all such returns and reports are true, correct and complete in all
material respects;
(c) there are not now in effect any extensions of time in which to
assess additional taxes against BORROWER;
(d) BORROWER has paid or made adequate provision for the full payment
of all fees, taxes, interest and penalties which have been incurred or are due
and payable by it or which have been asserted or proposed to be asserted against
it, except for those taxes being contested in good faith and by appropriate
proceedings diligently pursued and for which BORROWER has established cash
reserves to the satisfaction of AGENT;
(e) the liability for taxes shown on the most current financial
statements of BORROWER submitted to AGENT is sufficient for the payment of all
material Federal, State, local and foreign taxes attributable or with respect to
all periods, or portions thereof, prior to the date of such financial statements
remaining unpaid as of such date and any interest thereon to such date; and
(f) BORROWER is not now being audited by any tax authority nor are
there pending any unresolved issues arising from prior audits, except as set
forth in the most current financial statements of BORROWER submitted to AGENT.
4.14 No material action or proceeding is now pending or, to the knowledge
of BORROWER is threatened, against BORROWER at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of any federal,
state or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, other than claims covered by insurance that
could reasonably be expected to have a Materially Adverse Effect on the
business, properties or financial condition of BORROWER. A summary of existing
litigation appears on Schedule 4.14.
4.15 (a) There are no collective bargaining agreements or other labor
contracts covering BORROWER other than the Agreement between Five Star Group,
Inc. and Local No. 11 affiliated with International Brotherhood of Teamsters
effective December 16, 2000 through December 20, 2003.
(b) Except as set forth in subsection (a) above, no such collective
bargaining agreement or other labor contract will expire during the term of this
Agreement.
(c) To the best of BORROWER's knowledge, no union or other labor
organization is seeking to organize, or to be recognized as bargaining
representative for, a bargaining unit of employees of BORROWER.
(d) To the best of BORROWER's knowledge, there is no pending or,
threatened strike, work stoppage, material unfair labor practice claim or
charge, arbitration or other material labor dispute against or affecting
BORROWER or its employees which would have a Materially Adverse Effect on the
business, properties or financial condition of the BORROWER.
(e) There has not been, during the five year period prior to the date
hereof, a strike, work stoppage, material unfair labor practice claim or charge,
arbitration or other material labor dispute against or affecting BORROWER or any
of its employees.
(f) There are no actions, suits, charges, demands, claims,
counterclaims or proceedings pending or, to the best of BORROWER's knowledge,
threatened against BORROWER, by or on behalf of, or with, its employees, other
than employee grievances arising in the ordinary course of business that are
not, in the aggregate, material.
4.16 No event has occurred and is continuing which would constitute an
Event of Default as defined in Article VII or which, upon a lapse of time and
notice, if applicable, would become such an Event of Default and no borrowing by
BORROWER under this Agreement constitutes an event of default under any
agreement to which BORROWER is a party.
4.17 All financial statements of BORROWER and all written information and
other written data furnished by BORROWER to AGENT are complete and correct in
all material respects, and such financial statements have been prepared in
accordance with GAAP and fairly represent the financial condition of BORROWER as
of such date subject to year-end audit adjustments in the case of interim
financial statements. Since such date there has been no material adverse change
in BORROWER's financial condition sufficient to impair its ability to repay all
of the Liabilities except for those taxes being contested in good faith and by
appropriate proceedings diligently pursued and for which BORROWER has
established reserves to the satisfaction of AGENT. BORROWER does not have any
material contingent obligations, liabilities for taxes or other outstanding
financial obligations which are material in the aggregate, except as disclosed
in such statements, information and data.
4.18 (a) Neither BORROWER nor any employee benefit plan maintained by
BORROWER is in violation of any of the provisions of the Employee Retirement
Income Security Act of 1974, 29 U.S.C. ss.1001 et seq., as from time to time
amended ("ERISA") or any regulations issued thereunder by the United States
Treasury Department, the Department of Labor and the Pension Benefit Guaranty
Corporation, and no prohibited transaction (within the meaning of Title I of
ERISA or the Internal Revenue Code of 1986, as amended (the "Code")) has
occurred and is continuing with respect to any such plan, in each instance where
such violation or prohibited transaction or any liabilities resulting directly
or indirectly therefrom individually or in the aggregate could reasonably be
expected to have a Materially Adverse Effect on the business, results of
operations, prospects, financial condition or any material asset of BORROWER or
on the ability of BORROWER to execute this Agreement or consummate any of the
transactions contemplated hereby. For purposes of this Agreement, the term
"employee benefit plan" means any plan of a type described in Section 3(3) of
ERISA in respect of which BORROWER is an "employer" as defined in Section 3(5)
of ERISA (herein called the "Benefit Plans" or individually the "Benefit Plan").
(b) With respect to each such Benefit Plan and any trusts created
thereunder:
(1) all reports, forms and other information required to be filed
with any government agency or to be distributed or made available to any Benefit
Plan participant or beneficiary of any Benefit Plan have been filed, distributed
or made available;
(2) all Benefit Plans have been amended to the extent currently
required by the applicable provisions of ERISA and the Code;
(3) BORROWER has made all contributions required to be made with
respect to each Benefit Plan;
(4) with respect to each group health plan maintained by BORROWER,
the requirements of Sections 601 through 608 of ERISA have been complied with;
(5) no Benefit Plan and no trust thereunder has been terminated;
(6) there has been no "reportable event", as defined in Section
4043 of ERISA, or any "accumulated funding deficiency";
(7) BORROWER has not incurred any liability to the Pension Benefit
Guaranty Corporation.
(c) Neither BORROWER nor any officer, director or other employee of
BORROWER, nor any "party in interest" or "disqualified person", as such terms
are defined in Section 3 of ERISA and Section 4975 of the Code, has, with
respect to any Benefit Plan, engaged in or been a party to any "prohibited
transaction", as such term is defined in Section 4975 of the Code or Section 406
of ERISA, in connection with which BORROWER or any officer, director or other
employee of BORROWER, or any Benefit Plan, could reasonably be expected to,
directly or indirectly, be subject to either a penalty, assessed pursuant to
Section 502(i) of ERISA, or a tax imposed by Section 4975 of the Code.
4.19 BORROWER is not engaged nor will it engage, principally or as
one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect. No part of the proceeds of the Revolving Loan will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of the Regulations
of such Board of Governors.
4.20 BORROWER is indebted to SELLER in the principal amount of
$5,000,000.
END OF ARTICLE IV
ARTICLE V POSITIVE COVENANTS BORROWER covenants and agrees that, until the
full and final payment of the Liabilities, unless AGENT waives compliance in
writing:
5.1 (a) BORROWER will repay the Revolving Loan, in accordance with the
terms of the Revolving Notes and this Agreement.
(b) Unless otherwise provided herein, BORROWER will repay AGENT's
customary service charges associated with any accounts maintained at AGENT.
(c) BORROWER will repay all other Liabilities in accordance with the
terms thereof and any note and/or notes and/or records of AGENT evidencing the
same.
5.2 BORROWER will maintain, preserve and keep its properties and assets or
cause the same to be maintained, preserved and kept, in good repair, working
order and condition excepting reasonable wear and tear; make or cause to be made
all necessary and proper repairs, replacements and renewals thereto as shall
from time to time be necessary; and make or cause to be made all necessary and
proper substitutions, additions, modifications and improvements as may be
necessary to preserve (a) the value of its properties and assets, (b) their
usefulness to BORROWER and (c) their fitness for their intended purposes,
provided that nothing in this Section 5.2 shall prevent BORROWER from
discontinuing the operation and maintenance of any of its properties and
disposing of same if in the judgment of BORROWER such is desirable in the
conduct of its business and such discontinuance and disposition do not in the
aggregate have a Materially Adverse Effect on BORROWER.
5.3 (a) BORROWER will pay as they become due, all taxes (or will provide
adequate reserves therefor), assessments, levies and other governmental charges,
by whatever name called, that may at any time be lawfully assessed or levied
against or with respect to BORROWER, the Collateral or any other property
acquired by BORROWER in substitution for, as a renewal or replacement of, or
modification, improvement or addition to the Collateral (including, but not by
way of limitation, any tax, assessment or other governmental charge which, if
not paid, will become a lien or charge upon the Collateral) and will also pay
all utilities and other charges incurred in the operation, maintenance, use and
upkeep of the Collateral or any part thereof.
(b) If any lien shall be claimed which in AGENT's opinion might
possibly create a valid obligation having priority over the rights granted to it
herein, AGENT may, on prior notice to BORROWER, pay such taxes, assessments,
charges or claims, and the amount thereof, together with interest at the Default
Rate, shall be added to the Liabilities hereby secured.
5.4 BORROWER will (a) preserve and maintain its corporate existence, (b)
maintain all of its rights, privileges and franchises necessary or desirable in
the normal conduct of its business except if no Materially Adverse Effect
results from the loss of any such rights, privileges and franchises and (c)
conduct its business in an orderly and regular manner.
5.5 At any time or from time to time when in the reasonable opinion of
AGENT or its counsel it shall be necessary or desirable, BORROWER will execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered any
supplement hereto or other mortgage, document, instrument, agreement, UCC-1
Financing Statement, UCC-3 Financing Statement, invoice, xxxx of lading,
shipping document and receipt or other writing as may reasonably be required for
perfecting the liens and security interests granted to AGENT hereunder,
correcting any inadequate or incorrect description of the Collateral or carrying
out the intention of or facilitating the performance of any term, covenant or
condition of this Agreement. In the event BORROWER fails to abide by this
Section within 10 days from AGENT's request, AGENT may execute all of the above
instruments on behalf of BORROWER.
5.6 Reporting Requirements.
(a) BORROWER shall maintain books and records in such detail, form and
scope as being currently maintained by BORROWER.
(b) In addition, BORROWER shall supply to AGENT on forms supplied by
AGENT or otherwise reasonably acceptable to AGENT, the information set forth in
the subsections below, it being understood that in the event that BORROWER does
not supply or cause to be delivered to AGENT the information set forth below
within 10 calendar days after BORROWER receives notice from AGENT that such
information is past due, interest on the Revolving Loan will be calculated at
the Default Rate during the time that BORROWER is not in compliance, it being
further understood that AGENT's acceptance of payment at the Default Rate does
not otherwise prevent AGENT from otherwise declaring an Event of Default as a
result thereof:
(1) At Least Weekly Collateral Reporting: Not in limitation of the
foregoing or of the right of AGENT to request other information in the exercise
of its reasonable commercial judgment, BORROWER shall submit at the time of each
request for an advance under the Revolving Loan but in no event less frequently
than weekly the information contained in the Borrowing Base Certificate, such
certificate to be submitted no later than Wednesday after the end of the
immediately preceding week and such information to include each of the following
to the extent not specifically provided for in the Borrowing Base Certificate:
(A) all deposit tickets (including collections in the form of
cash or checks);
(B) immediately upon their occurrences, reports and records of
merchandise returns or disputes, discounts, advertising allowances,
contraoffsets or any other offsets, volume discounts, rebate arrangements, sales
of samples, "xxxx and hold" transactions, and any other factor which would
dilute the value or reduce the amount of any Account Receivable.
(2) Monthly Collateral Reporting: Also not in limitation of the
foregoing or of the right of AGENT to reasonably request other information in
the exercise of its reasonable commercial judgment, BORROWER shall submit on a
monthly basis the following information, to be submitted no later than 15 days
after the end of each calendar month:
(A) detailed invoice date Accounts Receivable aging, which
detail individual Account Debtors' names, addresses, amounts owed and days
outstanding;
(B) aging schedules of accounts payable;
(C) Accounts Receivable/Loan Reconciliation, in the form
attached hereto as Exhibit "E"; and
(D) Collateral Update Certificate, in the form attached hereto
as Exhibit "F", including monthly Inventory reports showing the amount of
Inventory in stock and the location and cost thereof.
(c) Quarterly Financial Statements: Also not in limitation of the
foregoing or of the right of AGENT to reasonably request other information in
the exercise of its reasonable commercial judgment, BORROWER shall, so long as
any of the Liabilities remains outstanding (unless AGENT otherwise consents in
writing), deliver to AGENT as soon as available and in any event within 50 days
after the end of each fiscal quarter of BORROWER, each of the following:
(1) financial statements prepared internally by management
substantially in the same form (except for notes to the financial statements) as
required for GUARANTOR's consolidated annual financial statements with BORROWER
and NPD Trading (USA), Inc. (GUARANTOR's other subsidiary) and showing on a
consolidated basis the assets and liabilities of GUARANTOR, BORROWER and the
aforementioned NPD Trading (USA), Inc., at the end of said fiscal quarter and
the results of their consolidated operations during said fiscal quarter,
prepared in accordance with GAAP, all in reasonable detail and in each case duly
certified in the form attached hereto as Exhibit "G" by the principal financial
officer of BORROWER as having been prepared in accordance with GAAP and being
correct and complete in all material respects subject only to year end
adjustments, it being understood that, to the extent that GUARANTOR's quarterly
report on Form 10-Q contains any of the foregoing items, AGENT will accept
GUARANTOR's report on Form 10-Q in lieu of such items;
(2) a certificate of said officer in the form attached hereto as
Exhibit "G" (i) stating that such officer does not have any knowledge that an
Event of Default (or an event which, with notice or the lapse of time or both,
would constitute an Event of Default) exists or, if an Event of Default (or such
other event) does exist, a statement as to the nature thereof and the actions
which BORROWER proposes to take with respect thereto, and (ii) showing
calculations in reasonable detail of BORROWER's compliance at and as of the end
of each such fiscal quarter, with each financial ratio and requirement of
Article V and Article VI of this Agreement.
(d) Annual Financial Statements: Not in limitation of the foregoing or
of the right of AGENT to reasonably request other information in the exercise of
its reasonable commercial judgment, BORROWER shall, so long as any of the
Liabilities remains outstanding (unless AGENT otherwise consents in writing),
deliver to AGENT as soon as available and in any event within 95 days after the
end of each fiscal year of BORROWER, each of the following:
(1) an annual audit report for such year for GUARANTOR, including
(A) on a consolidated basis for BORROWER and the aforementioned NPD Trading
(USA), Inc., their balance sheet and statements of operations, their cash flows
and changes in stockholders' equity for such fiscal year, setting forth in
comparative form the corresponding figures for the preceding fiscal year,
prepared in accordance with GAAP and all in reasonable detail and in each case
duly certified by independent certified public accountants of recognized
standing acceptable to AGENT, and (B) on a consolidating basis for GUARANTOR,
BORROWER and the aforementioned NPD Trading (USA), Inc., their balance sheet and
statement of operations, all in reasonable detail and duly certified in the form
attached hereto as Exhibit "G" by the principal financial officer of BORROWER as
having been prepared in accordance with GAAP and being correct and complete in
all material respects, it being understood that, to the extent that GUARANTOR's
annual report on Form 10-K contains any of the foregoing items, AGENT will
accept GUARANTOR's report on Form 10-K in lieu of such items;
(2) a copy of the management letter, if any, issued by such
accounting firm to BORROWER; and
(3) a certificate of said accounting firm stating that, in the
course of auditing and reporting on the financial statements of BORROWER for
such fiscal year, they obtained no knowledge that BORROWER failed to comply with
the terms, covenants, provisions or conditions of Article V or Article VI hereof
insofar as such Articles relate to accounting matters or, if such accountants
shall have obtained knowledge of such failure, they shall disclose the failure
in such statement; and
(4) a certificate of the chief financial officer of BORROWER in the
form attached hereto as Exhibit "H" (A) stating that such officer does not have
any knowledge that an Event of Default (or an event which, with notice or the
lapse of time or both, would constitute an Event of Default) exists, or, if an
Event of Default (or such other event) does exist, a statement of the nature
thereof and the actions which BORROWER proposes to take with respect thereto and
(B) showing calculations in reasonable detail of BORROWER's compliance at and as
of the end of each such fiscal year with each financial ratio and requirement of
Article V and Article VI of this Agreement.
(e) Annual Tax Returns: BORROWER hereby covenants to furnish to AGENT,
no later than September 20 of each year, a true copy of the tax return of
BORROWER as filed with the Internal Revenue Service.
(f) Annual Projections: Not in limitation of the foregoing or of the
right of AGENT to request other information, each BORROWER shall, so long as any
of the Liabilities remains outstanding (unless AGENT otherwise consents in
writing), deliver to AGENT as soon as available and in any event within 60 days
prior to the end of each of its fiscal years, annual projections for the
immediately upcoming fiscal year, prepared on an annual basis, and including
balance sheet, profit and loss and cash flow and in form acceptable to AGENT.
(g) Notice of Default: As soon as possible and in any event within
three Business Days after it becomes aware of the occurrence of each Event of
Default (or each event which, with the giving of notice or lapse of time or
both, would constitute an Event of Default), the written statement of the chief
financial officer of BORROWER setting forth details of such Event of Default (or
such other event) and the action which BORROWER proposes to take with respect
thereto.
(h) Notice of Adverse Condition: As soon as possible, the written
statement of the chief financial officer of BORROWER setting forth details of
any action, event or condition of any nature of which BORROWER is aware, which
may reasonably be expected to have a Materially Adverse Effect upon the
business, assets or financial condition of BORROWER or the value of the
Collateral or the liens and security interests granted to AGENT herein and the
action which BORROWER proposes to take with respect thereto.
(i) Notice of Litigation: BORROWER will notify AGENT in writing within
a reasonable time (which shall in no event exceed ten business days after
BORROWER's knowledge) of the commencement or threat of any litigation against
BORROWER which, if determined adversely to it, would result in its dissolution
or liquidation, prevent or materially impair it from conducting its business
substantially as now conducted, prevent or materially impair BORROWER from
repaying the Revolving Loan and the other Liabilities or prevent or materially
impair BORROWER from otherwise faithfully performing its obligations under this
Agreement or result in a material adverse change in BORROWER's business or
financial condition or affairs or creditworthiness. Without intending to limit
the generality of the foregoing, any litigation which seeks monetary damages
(whether compensatory or punitive) from BORROWER in an aggregate amount in
excess of $150,000.00 which is not covered by insurance shall be deemed to
constitute litigation of a character which must be reported to AGENT.
(j) Other Information: BORROWER will promptly after a written request
therefor provide AGENT with: (1) such other information regarding the Collateral
(including, without limitation, Accounts Receivable and Inventory) or the
Proceeds thereof and the business, affairs and condition of BORROWER (including,
without limitation, projections) as AGENT may reasonably request from time to
time, and (2) such other financial data or information evidencing compliance
with the requirements of this Agreement, the Revolving Notes and the other Loan
Documents, as AGENT may reasonably request from time to time.
5.7 BORROWER will at all times comply with, or cause to be complied with,
all laws, statutes, rules, regulations, orders and directions of any
governmental authority having jurisdiction over it and its business except for
non-compliance that would not have singly or in the aggregate have a Materially
Adverse Effect on BORROWER.
5.8 (a) BORROWER shall maintain insurance coverage as follows:
(1) Casualty Insurance: At BORROWER's expense, an original policy
or policies of insurance issued by financially sound and reputable insurer or
insurers satisfactory to AGENT (in the exercise of its reasonable commercial
judgment) insuring BORROWER's machinery, equipment, fixtures and personal
property against such perils and on such terms and in such amounts as is
customarily maintained by similar businesses. Without limiting the generality of
the foregoing, said insurance shall in no event be less than that amount
necessary to prevent BORROWER and AGENT from being deemed co-insurers under
applicable law (and in no event less than the replacement value of the property
insured) and shall insure against the hazards of fire, extended coverage,
vandalism, malicious mischief and sprinkler leakage and shall name AGENT as
mortgagee and loss payee, as its interests may appear. Such policy shall contain
a 30 day notice of cancellation and non-renewal provision.
(2) Liability Insurance: At BORROWER's expense, an original policy
or policies of liability insurance issued by financially sound and reputable
insurer or insurers satisfactory to AGENT (in the exercise of its reasonable
commercial judgment) and in amounts not less than $1,000,000/$3,000,000. Such
policy shall name AGENT as an additional insured, as its interests may appear,
and shall contain a 30 day notice of cancellation and non-renewal provision.
(b) Certificates evidencing the coverage afforded under BORROWER's
policies of insurance and, if requested, copies of all policies are to be
delivered to AGENT.
(c) If BORROWER fails to take the action called for herein, AGENT may,
in its discretion upon 10 days prior notice to BORROWER or such shorter period
as may be necessary to prevent a gap in insurance protection and coverage,
obtain insurance covering AGENT's interest in the Collateral and the amount of
the premium for said insurance, together with per annum interest at the Default
Rate, shall be added to the Liabilities and the repayment thereof shall be
secured by the Collateral.
(d) All rights to insurance proceeds are hereby assigned to AGENT to
the extent of the unpaid Liabilities.
(e) Unless otherwise agreed in writing, AGENT shall have the sole
right, in its own name or in BORROWER's name, to file claims under any insurance
policies, to receive and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(f) BORROWER shall have no claim against insurance proceeds until all
of the Liabilities are paid in full. AGENT shall not be responsible for any
failure to collect any insurance proceeds, regardless of the cause of such
failure. Nothing herein shall in any way affect AGENT's lien against the
Collateral or the liability of any person responsible for the payment of the
balance of the Liabilities.
(g) In the event the Collateral or any part thereof shall be damaged or
destroyed, AGENT, at its election, may (1) apply the insurance proceeds or any
part thereof to the payment of the Liabilities, whether the indebtedness be
matured or not, (2) use the same or any part thereof to fulfill any of the
covenants contained herein or in the other Loan Documents as AGENT may
determine, (3) use the same or any part thereof to replace or restore the
Collateral to the extent satisfactory to AGENT, or (4) release the same to
BORROWER.
(h) BORROWER agrees that in the event that the Collateral or any part
thereof shall be damaged or partially or totally destroyed there shall be no
abatement or reduction in the amounts payable hereunder and BORROWER shall
continue to be obligated to make such payments.
(i) Any monies released by AGENT to BORROWER or paid or applied on the
cost of replacement or restoration shall in no event be deemed a payment on any
of the Liabilities.
(j) Anything to the contrary herein contained notwithstanding, any
proceeds paid over to AGENT and not used for replacement or restoration shall be
applied to pay accrued interest and any other sums then due and owing to AGENT
and the LENDERS, and any excess shall be paid over to BORROWER.
5.9 (a) BORROWER will safeguard, protect and hold all the Collateral for
AGENT's account and make no disposition thereof except in the regular course of
business as hereinafter provided in this Section.
(b) Until AGENT shall have given written notice to BORROWER that an
Event of Default has occurred and is continuing, any Collateral which may from
time to time remain in possession or control of BORROWER or any third party may
be sold and shipped to customers in the ordinary course of business, on open
account and on terms not exceeding the terms currently extended. AGENT shall
have the right to withdraw this permission at any time by written notice to
BORROWER after an Event of Default has occurred and is continuing, in which
event no further disposition shall be made of the Collateral without AGENT's
written approval.
(c) Upon the sale, lease, transfer, exchange, or other disposition of
the Collateral, the security interests and liens created and provided for herein
shall without break in continuity and without further formality or act continue
in and attach to the instruments for the payment of money, Accounts Receivable,
Contract Rights, documents of title, shipping documents, Chattel Paper and all
other cash and non-cash proceeds of such sale, lease, transfer, exchange or
disposition, including Collateral returned or rejected by customers or
repossessed by AGENT. As to any such sale, lease, transfer, exchange or
disposition, AGENT shall have all of the rights of an unpaid seller, including
stoppage in transit, replevin and reclamation.
(d) (1) The rights given BORROWER in subsection (b) above are expressly
conditioned on the requirement that BORROWER shall forthwith and immediately
transfer, assign, endorse, deliver and turn over to AGENT, or cause to be
forthwith and immediately transferred, assigned, endorsed, delivered and turned
over to AGENT, in accordance with the requirements of Section 2.5 above and in
the identical form received (excluding endorsements necessary for collection for
the benefit of AGENT) all of the proceeds described in Section 2.5(b) above.
Until so transferred, assigned, endorsed, delivered and/or turned over to AGENT
or to a Lockbox, Blocked Account and/or such other place designated by AGENT,
BORROWER shall not commingle any of the aforesaid proceeds and amounts and items
with any other property of BORROWER or any other person or entity, but shall
keep such proceeds and amounts and items segregated, held in trust for AGENT as
AGENT's exclusive property (subject to the ratable rights of the LENDERS
therein).
(2) BORROWER covenants and agrees that it will deposit all of the
aforesaid proceeds of sale, lease, transfer, exchange or other disposition into
a Blocked Account , such Blocked Account being one of the Deposit Accounts
described in Article III of this Agreement.
5.10 For purposes of implementing this Agreement and also for purposes of
paying and satisfying the Liabilities, BORROWER hereby designates AGENT or
AGENT's representative as its attorney-in-fact with power to endorse its name
upon any acceptances, cash equivalents, checks, drafts, money orders, notes,
instruments for the payment of money and other evidences of payment or
Collateral that may come into AGENT's possession. BORROWER also designates AGENT
or AGENT's representative as its attorney-in-fact to sign BORROWER's name on any
invoice or xxxx of lading relating to any of the Accounts Receivable, drafts
against Account Debtors, and assignments and verifications of Accounts
Receivable to any Account Debtor and to do all other acts and things necessary
to carry out this Agreement. All acts of said attorney or designee are hereby
ratified and approved. This power is coupled with an interest and is irrevocable
while any of the Liabilities remains unpaid. As it relates for to action taken
by AGENT or AGENT's representative while acting as the aforesaid
attorney-in-fact, neither AGENT nor AGENT's representative shall itself, nor
shall its respective directors, managers, officers, employees or agents, be
liable or responsible, directly or indirectly, to the other for any action
taken, or omitted to be taken by it in good faith, or for the consequences of
any oversight or error of judgment on its part occurring in good faith, unless
the taking of, or omitting to take, such action, or such oversight or error in
judgment by such party or its directors, managers, officers, employees or
agents, constitutes gross negligence or willful misconduct.
5.11 (a) AGENT shall have the right at BORROWER's expense but no more
frequently than quarterly (unless an Event of Default has occurred and is
continuing) to obtain verifications from Account Debtors relating to the amount
and validity of any Account Receivable.
(b) (1) Unless an Event of Default has occurred, BORROWER's
aforementioned expense shall be limited to $1,500 per month, payable monthly in
advance with the initial payment payable on the date hereof and on the first day
of each and every calendar month beginning November 1, 2001, so as to reimburse
AGENT for all expenses incurred by AGENT pursuant to the exercise of its rights
under this Section. If an Event of Default has occurred, there shall be no limit
on AGENT's right to reimbursement.
(2) The aforementioned reimbursement shall be paid to AGENT as
compensation to AGENT and not for the Pro Rata benefit of the LENDERS
(c) By its execution of this Agreement, BORROWER authorizes AGENT and
each LENDER to reimburse itself for any of its expenses associated with the
above in accordance with the general authorization provided to AGENT under
Section 2.8 of this Agreement.
(d) Any verifications prepared or conducted by BORROWER or its
accountants shall be supplied to AGENT.
5.12 (a) AGENT shall have full access during normal business hours to, and
the right, through its officers, agents, attorneys or accountants and at
BORROWER's expense to: examine, check, inspect and make abstracts and copies
from BORROWER's books, accounts, orders, records, audits, correspondence, and
all other papers; confirm and verify all Accounts Receivable and the other
Collateral; enter upon BORROWER's premises during business hours and from time
to time, for the purpose of examining BORROWER's records concerning the
Collateral and for inspecting the Collateral and any and all records. So long as
no Event of Default has occurred and is continuing, AGENT's access shall be upon
reasonable request and upon prior notice to BORROWER, provided, however, that
nothing in the foregoing shall operate to limit or diminish AGENT's right to
examine BORROWER's records concerning the Collateral and for inspecting the
Collateral and any and all records relating thereto.
(b) BORROWER will reimburse AGENT for all of its examination fees
incurred by AGENT pursuant to the exercise of its rights under this Section.
(c) (1) Unless an Event of Default has occurred, the reimbursement set
forth in subsection (b) above shall be paid at the rate of $833.34 per month,
payable on the first day of each and every calendar month beginning November 1,
2001, with a maximum of $10,000 being paid in any one calendar year. If an Event
of Default has occurred, there shall be no limit on AGENT's right to
reimbursement.
(2) The aforementioned reimbursement shall be paid to AGENT as
compensation to AGENT and not for the Pro Rata benefit of the LENDERS.
(d) By its execution of this Agreement, BORROWER authorizes AGENT and
each LENDER to effect payment for the expenses associated with the above in
accordance with the general authorization provided to AGENT under Section 2.8 of
this Agreement.
5.13 (a) (1) In order to compensate AGENT for its expenses in monitoring,
reviewing and analyzing BORROWER's records, financial statements and Collateral,
BORROWER will pay AGENT a Collateral Management Fee of $3,500 a month, payable
on the first day of each and every calendar month beginning November 1, 2001.
(2) The aforementioned Collateral Management Fee shall be paid to
AGENT as compensation to AGENT and not for the Pro Rata benefit of the LENDERS.
(b) By its execution of this Agreement, BORROWER authorizes AGENT and
each LENDER to effect payment for the expenses associated with the above in
accordance with the general authorization provided to AGENT under Section 2.8 of
this Agreement.
5.14 BORROWER shall authorize and direct all accountants and auditors
employed by it at any time during the term of this Agreement to exhibit and
deliver to AGENT copies of any of its financial statements, trial balances or
other accounting records of any sort in their possession, and to disclose to
AGENT any information they may have concerning its financial status and business
operations.
5.15 Except as may otherwise be specifically provided as to a particular
Eligible Receivable, warrants that as to each such Eligible Receivable:
(a) each such Account is a valid Account;
(b) no such Account is an Account with respect to which the Account
Debtor is an officer, director, employee, or agent of BORROWER or is an entity
related to or having common owners with BORROWER;
(c) no such Account is an Account arising from progress xxxxxxxx,
invoices for deposits, and rebills of amounts previously credited to the extent
of credits issued more than 15 days prior to such rebill;
(d) such Account represents a bona fide performed transaction and
AGENT maintains a fully perfected first lien therein;
(e) the delivery of the merchandise or the rendition of services
giving rise to the Account has been completed;
(f) no return, rejection or repossession has occurred;
(g) to the best of BORROWER's knowledge, the merchandise or services
giving rise to the Account have been finally accepted by the Account Debtor
without dispute, offset, contra-offset, defense or counter claim and the Account
Debtor has agreed to make payment in accordance with the specified terms of the
invoice, except for discounts, credits and allowances allowed by BORROWER in the
ordinary course of its business and disclosed by BORROWER to AGENT in writing;
(h) to the best of BORROWER's knowledge, the amount shown on
BORROWER's books and on any invoice or statement delivered to AGENT is owing to
BORROWER;
(i) no partial payment has been made unless such partial payment is
disclosed by BORROWER to AGENT on BORROWER's records submitted to AGENT;
(j) such Account continues to be in full conformity with the
representations and warranties made by BORROWER to AGENT with respect thereto,
except for non-conformances which would not have a Materially Adverse Effect on
the business, properties or financial condition of BORROWER and which are
disclosed to AGENT in writing;
(k) no such Account is an Account with respect to which BORROWER is or
may become liable to the Account Debtor for goods sold or services rendered by
the Account Debtor to BORROWER, to the extent of BORROWER's existing or
potential liability to such Account Debtor;
(l) to the best of BORROWER's knowledge, no such Account is an
Account with respect to which the Account Debtor has disputed any liability or
the Account Debtor has made any claim with respect to any other Account due to
BORROWER, or the Account is otherwise subject to any right of setoff, deduction,
breach of warranty or other defense, dispute or counterclaim by the Account
Debtor;
(m) no such Account is an Account as to which any agreement has been
made under which any deductions or discount may be claimed except regular
discounts in the usual course of business which have been disclosed on the face
of the invoice;
(n) the age of the Account conforms to the standards for eligibility
set forth in the definition of Eligible Receivables;
(o) to the best of BORROWER's knowledge, such Account is fully
collectible when due other than that portion of any Account representing late
fees, service charges or interest, as to which portion BORROWER has made
disclosure to AGENT;
(p) no such Account is based on a "xxxx and hold" transaction and/or
arises from promotional transactions or salesmen samples;
(q) no such Account is a guaranteed or consignment lease or sale;
(r) such Account arises from a lease or sale to an Account Debtor
whose principal place of business or whose place of incorporation is located
within the United States or Puerto Rico;
(s) no such Account arises from a lease or sale to a federal, state,
local or foreign governmental authority unless such governmental authority is
the United States of America or any department, agency or instrumentality of the
Untied States, unless BORROWER complied with the Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 203 et seq.);
(t) no such Account arises from an intra-company lease or sale or from
a sale or lease to any affiliated entity; and
(u) no such Account is payable in a currency other than the currency
of the United States.
5.16 If any of the Accounts Receivable includes a charge for any tax
payable to any governmental tax authority, AGENT is hereby authorized in AGENT's
reasonable discretion, to pay the amount thereof to the proper taxing authority
for BORROWER's account and to charge the amount of such tax against a specially
designated demand deposit account of BORROWER at AGENT or, in the absence of
such designation or in the event that there are insufficient funds in such
designated account, then to any demand deposit account of BORROWER at AGENT as
of each due date. In the event that there are insufficient funds in any such
account on any applicable payment due date, then AGENT is hereby authorized to
effect payment by charge against the Revolving Loan by increasing the principal
balance of the Revolving Loan as though an Advance were taken by BORROWER
against the Revolving Loan in the amount of any payment effected by AGENT.
BORROWER shall notify AGENT if any Accounts Receivable include any tax due to
any such taxing authority, and in the absence of notice to AGENT, AGENT shall
have the right to retain the full proceeds of such Accounts Receivable, and
shall not be liable for any taxes that may be due from BORROWER by reason of the
sale and delivery creating such Accounts Receivable.
5.17 Subordination Agreement. BORROWER will obtain the Subordination
Agreement required by this Agreement so as to postpone the payment of the
"Claims" specified in the Subordination Agreement to the extent specified
therein.
5.18 Minimum Tangible Net Worth.
(a) As at September 30, 2001 and continuing at all times thereafter,
BORROWER shall maintain its Tangible Net Worth at a minimum of $6,500,000.
(b) For purposes of this covenant, "Tangible Net Worth" shall be
determined by the following formula:
the sum on a consolidated basis of the par value of the capital stock
of GUARANTOR, BORROWER and NPD Trading (USA), Inc. +/-surplus/deficit
+ debt whose payment is subordinated to the prior payment of the
Liabilities
less
the sum on a consolidated basis of treasury stock of GUARANTOR,
BORROWER and NPD Trading (USA), Inc. + unamortized debt discount and
expense + book value of good will (excluding, however, any negative
good will) + book value of trademarks + book value of tradenames +
book value of patents + deferred charges + intangible assets + all
indebtedness due from BORROWER's officers or shareholders, provided,
however, that the effect of negative goodwill on the income statement
and balance sheet of GUARANTOR, BORROWER and NPD Trading (USA), Inc.
shall be excluded
(c) Compliance with this Section will be tested annually and quarterly
by reference to GUARANTOR's annual and quarterly financial statements required
to be submitted pursuant to Section 5.6 above and by using GAAP.
(d) Although compliance with this Section will be tested annually and
quarterly as aforesaid, nothing in the foregoing shall prevent AGENT from
determining that this covenant has been violated prior to AGENT's receipt of any
of the aforementioned financial statements in the event AGENT or any LENDER
obtains actual knowledge that BORROWER is not in compliance with this covenant.
5.19 Total Debt to Tangible Net Worth.
(a) As at September 30, 2001 and continuing at all times thereafter,
BORROWER shall maintain the ratio of its Total Debt to its Tangible Net Worth at
no more than 6.0 to 1.0.
(b) For purposes of this covenant, "Total Debt" shall include all debt
owed by BORROWER, including all debt owed by BORROWER to AGENT and the LENDERS
but excluding any debt whose payment has been subordinated to the prior payment
of the Liabilities. For purposes of this covenant, Tangible Net Worth shall have
the meaning given that term in Section 5.18(b) above.
(c) Compliance with this Section will be tested annually by reference
to GUARANTOR's annual consolidated financial statements required to be submitted
pursuant to Section 5.6 above and by using GAAP.
(d) Although compliance with this Section will be tested annually as
aforesaid, nothing in the foregoing shall prevent AGENT from determining that
this covenant has been violated prior to AGENT's receipt of any of the
aforementioned financial statements in the event AGENT or any LENDER obtains
actual knowledge that BORROWER is not in compliance with this covenant.
5.20 Fixed Charge Coverage:
(a) BORROWER must maintain its "Fixed Charge Coverage" at a ratio
greater than 1.1 to 1.0 as at the end of each of its fiscal quarters and years.
(b) This covenant shall be tested quarterly and annually, using a
rolling 12 month basis, by reference to BORROWER's financial statements required
to be submitted under this Agreement for each fiscal year and by using GAAP.
(c) (1) For purposes of this covenant, "Fixed Charge Coverage" means
the following ratio:
BORROWER's earnings before interest, taxes, depreciation and amortization
LESS BORROWER's"Unfunded Capital Expenditures"
LESS cash payment of income tax liabilities
LESS cash distributions to stockholders
LESS all payments paid as allowed by the Subordination Agreement
-divided by--
interest expense PLUS the current
maturities of long term debt as reported in
BORROWER's annual financial statements for its
fiscal year immediately preceding the
applicable test period
PLUS current maturities of Capital Lease
Obligations as reported in BORROWER's
annual financial statements for its
fiscal year immediately preceding the
applicable test period.
(2) For purposes of this covenant, "Unfunded Capital Expenditures"
means BORROWER's Capital Expenditures minus any loans and/or leases incurred in
financing any such Capital Expenditures.
(3) For purposes of this covenant, "Capital Expenditures" means
any expenditures (including deposits, and Capitalized Lease Obligations based
upon the present value of all future payments) for assets which the purchaser
contemplates will be used or usable in fiscal years subsequent to the year of
acquisition, all computed in accordance with GAAP.
(4) For purposes of this covenant, a "Capitalized Lease
Obligation" means an obligation to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real and/or personal property
which obligation is required to be classified and accounted for as a capital
lease on a balance sheet prepared in accordance with GAAP, and for purposes
hereof the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.
(d) Although compliance with this Section will be tested quarterly and
annually as aforesaid, nothing in the foregoing shall prevent AGENT from
determining that this covenant has been violated prior to AGENT's receipt of any
of the aforementioned financial statements in the event AGENT or any LENDER
obtains actual knowledge that BORROWER is not in compliance with this covenant.
5.21 Performance Benchmarks.
(a) (1) AGENT and LENDERS agree that BORROWER shall be entitled to the
reduced rate of interest set forth in Section 2.6 above in the event that
BORROWER achieves and maintains at certain levels certain performance benchmarks
relating to BORROWER's"Fixed Charge Coverage" (as defined in this Article V),
such performance benchmarks being referred to, as applicable, as "Performance
Benchmark #1" and "Performance Benchmark #2" and "Performance Benchmark #3" in
this Agreement.
(2) For purposes of determining BORROWER's "Fixed Charge
Coverage", such "Fixed Charge Coverage" shall be determined in accordance with
the definition set forth in the "Fixed Charge Coverage" covenant of this Article
V.
(b) (1) In order for BORROWER to meet Performance Benchmark #1,
BORROWER's Fixed Charge Coverage must, as at the end of BORROWER's applicable
fiscal quarter for the 12 months ending such fiscal quarter, be greater than
1.25 to 1.0.
(2) In order for BORROWER to meet Performance Benchmark #2,
BORROWER's Fixed Charge Coverage must, as at the end of BORROWER's applicable
fiscal quarter for the 12 months ending such fiscal quarter, be greater than
1.35 to 1.0.
(3) In order for BORROWER to meet Performance Benchmark #3,
BORROWER's Fixed Charge Coverage must, as at the end of BORROWER's applicable
fiscal quarter for the 12 months ending such fiscal quarter, be greater than
1.40 to 1.0.
(c) The determination whether BORROWER has satisfied Performance
Benchmark #1 or Performance Benchmark #2 or Performance Benchmark #3 for
purposes of obtaining the interest rate reduction allowed by Section 2.6 above
will be made as set forth in said Section 2.6.
(d) The determination whether BORROWER remains in compliance with
Performance Benchmark #1 and Performance Benchmark #2 and Performance Benchmark
#3 for purposes of continuing the interest rate reduction allowed by Section 2.6
above will be made as set forth in Section 2.6.
(e) In the event that BORROWER qualifies for the aforementioned
interest rate reduction, BORROWER must continue to satisfy the requisite
Performance Benchmark #1 and Performance Benchmark #2 and Performance Benchmark
#3 at all times or the interest rate reduction will be lost effective upon the
earlier to occur of LENDER's receipt of any financial statements indicating
non-compliance or LENDER's receipt of actual knowledge that BORROWER is not in
compliance with the requisite Performance Benchmark. In the event that BORROWER
loses its entitlement to an interest rate reduction as aforesaid, BORROWER will
not be entitled to again seek to qualify for an interest rate reduction until
LENDER's receipt of BORROWER's next quarterly financial statements.
5.22 Inventory Appraisals: On a frequency requested by AGENT but in no
event more frequently than once a year unless an Event of Default has occurred,
BORROWER shall provide AGENT at BORROWER's expense such an appraisal of
BORROWER's Inventory prepared on a "walk-through" basis (provided no Event of
Default has occurred, otherwise based on an appraisal quality specified by
AGENT) and otherwise in form and substance satisfactory to AGENT.
5.23 Landlord's Consents. BORROWER will obtain the Landlord's Consents for
the locations set forth in Section 4.5(a) above and any others which AGENT using
its reasonable commercial judgment deems necessary or desirable, provided,
however, that in the event that despite BORROWER's best efforts BORROWER is
unable to deliver to AGENT any Landlord's Consent required hereunder, AGENT and
the LENDERS will forbear from requiring such Landlord's Consent upon the
condition that BORROWER shall, from time to time upon the reasonable request of
AGENT (such request to be deemed reasonable if, so long as no Event of Default
has occurred and is continuing, made no more than twice a year), report to AGENT
all rent payments made by BORROWER to the owner or owners of the locations set
forth in Section 4.5 above, it being understood that BORROWER's failure to
provide AGENT with proof of any such rent payment within 15 days of AGENT's
request therefor will be sufficient evidence that an Event of Default has
occurred hereunder. During any period of time that BORROWER fails to provide
AGENT with proof of its rent payment as aforesaid and not in limitation of any
other right of AGENT hereunder, AGENT may reserve from BORROWER's availability
to borrow under the Revolving Loan the amount of rental which became due and
owing from the date of the last proof submission by BORROWER.
END OF ARTICLE V
ARTICLE VI
NEGATIVE COVENANTS
BORROWER covenants and agrees, that until the full and final payment of the
Liabilities, unless AGENT waives compliance in writing:
6.1 Change in Location: BORROWER will not (a) change the location of its
chief executive office or where its books and records are maintained or (b)
change the names currently used by it for billing or other business purposes or
(c) change or add to the location or locations of any Collateral as set forth in
Section 4.5 above unless in each case above (i) BORROWER shall have given AGENT
30 days written notice of such change and (ii) AGENT shall have received such
instruments or documents as AGENT may reasonably request so that such change
will not impair or negatively affect the security interests granted to AGENT
hereunder.
6.2 Changes in Business: Except as permitted by the proviso set forth in
Section 5.2 hereof, BORROWER will not (a) make any material change in its
business or in the nature of its operation, or (b) liquidate or dissolve itself
(or suffer any liquidation or dissolution) or (c) convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, assets or business except
sales of Inventory or other Collateral in the ordinary course of business and
for a fair consideration or (d) dispose of any shares of stock or any
indebtedness, whether now owned or hereafter acquired or (e) discount, sell,
pledge, hypothecate or otherwise dispose of Accounts Receivable.
6.3 Dissolution, Mergers, Acquisitions, Formation of Subsidiaries: BORROWER
will (a) not dissolve or otherwise dispose of all or a substantial part of its
assets, (b) not consolidate with or merge into another corporation or entity
permit one or more other corporations or entities to consolidate with or merge
into it (whether or not BORROWER or any Subsidiary is the surviving entity)
except that GUARANTOR may merge with and into BORROWER so long as BORROWER is
the survivor, (c) not acquire all or substantially all of the assets or any of
the capital stock of any corporation or other entity and (d) not form or create
or acquire any Subsidiary.
6.4 Liens: Except for Permitted Liens or as disclosed in the Certification
as to Liens, BORROWER will not suffer to exist any lien, encumbrance, mortgage
or security interest on property on which a lien has been given to AGENT
pursuant to this Agreement or any of the other Loan Documents.
6.5 Indebtedness: BORROWER will not create, incur, permit to exist or have
outstanding any indebtedness, except:
(a) indebtedness of BORROWER to AGENT and the LENDERS under this
Agreement and the Revolving Notes;
(b) accrued taxes, assessments and governmental charges not yet due
and payable, non-interest bearing accounts payable and accrued liabilities, and
non-interest bearing deferred liabilities other than for borrowed money (e.g.,
deferred ---- compensation and deferred taxes), in each case incurred and
continuing in the ordinary course of business;
(c) indebtedness secured by any purchase money security interests to
the extent this Agreement may expressly allow any such purchase money security
interest and Capitalized Lease Obligations (as defined below in this Article),
in each case incurred only if, after giving effect thereto, the limit on Capital
Expenditures set forth in this Article would not be breached;
(d) debt under the Subordination Agreement.
6.6 Guaranties:
(a) BORROWER will not assume, endorse, be or become liable for, or
guarantee, the obligations of any person or entity, except by the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
(b) For the purposes hereof, the term "guarantee" shall include any
agreement, whether such agreement is on a contingency or otherwise, to purchase,
repurchase or otherwise acquire indebtedness of any other person or entity, or
to purchase, sell or lease, as lessee or lessor, property or services, in any
such case primarily for the purpose of enabling another person to make payment
of any indebtedness, or to make any payment (whether as an advance, capital
contribution, purchase of an equity interest or otherwise) to assure a minimum
equity, asset base, working capital or other balance sheet or financial
condition, in connection with the indebtedness of another person or entity, or
to supply funds to or in any manner invest in another person or entity in
connection with the indebtedness of such person or entity.
6.7 ERISA:
(a) BORROWER will not permit the occurrence of any Termination Event
under ERISA, or the occurrence of a termination or partial termination of a
Defined Contribution Plan which would result in a liability to BORROWER or any
Subsidiary in excess of $150,000.
(b) BORROWER will not engage, or permit BORROWER or any Subsidiary to
engage, in any prohibited transaction under Section 406 of ERISA or Section 4975
of the Internal Revenue Code, for which a civil penalty pursuant to Section
502(i) of ERISA or a tax pursuant to Section 4975 of the Internal Revenue Code
is imposed in excess of $150,000.
(c) BORROWER will not engage or permit BORROWER or any Subsidiary to
engage, in any breach of fiduciary duty under Part 4 of Title I of ERISA; or
(d) BORROWER will not permit the establishment of any Employee Benefit
Plan providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in liability
to BORROWER or any Subsidiary individually or together with all similar
liabilities and increases, is material to BORROWER or any Subsidiary; or
(e) BORROWER will not fail, or permit BORROWER or any Subsidiary to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the Internal
Revenue Code and all other applicable laws and the regulations and
interpretations thereof.
6.8 Compromise of Claims: BORROWER will not compromise, settle or adjust
any claims which are part of or which affect the Collateral except in the
ordinary course of business.
6.9 Bank Accounts: BORROWER will not establish any deposit or other bank
account with any financial institution unless such account is approved in
writing by AGENT.
6.10 Subordinated Debt:
(a) BORROWER will not amend or change, or consent to any amendment or
change, with respect to, the Subordination Agreement or any other document
evidencing or securing the debt subordinated thereby.
(b) BORROWER will not directly or indirectly, make any principal
payment or distribution of or on account of any debt subordinated by the
Subordinated Debt except to the extent expressly allowed therein.
6.11 Loans and Investments: BORROWER will not make loans or advances or
make or suffer to exist, any investment in any person or entity, including,
without limitation, any loans to or investments in GUARANTOR and/or NPD Trading
(USA), Inc., or any shareholder, director, officer or employee of BORROWER,
GUARANTOR and NPD Trading (USA), Inc., provided however, that notwithstanding
the foregoing, BORROWER may make investments in:
(a) obligations issued or guaranteed by the United States of America;
(b) certificates of deposit, bankers acceptances and other "money
market instruments" issued by any bank or trust company organized under the laws
of the United States of America or any State thereof and having capital and
surplus in an aggregate amount of not less than $100,000,000;
(c) open market commercial paper bearing the highest credit rating
issued by Standard & Poor's Corporation or by another nationally recognized
credit rating agency;
(d) repurchase agreements entered into with any bank or trust company
organized under the laws of the United States of America or any State thereof
and having capital and surplus in an aggregate amount of not less than
$100,000,000 relating to United States of America government obligations; and
(e) shares of "money market funds", each having net assets of not less
than $100,000,000;
in each case maturing or being due or payable in full not more than
365 days after BORROWER's acquisition thereof.
6.12 Fiscal Year: BORROWER will not change its fiscal year without the
prior written consent of AGENT, which consent shall not be unreasonably
withheld.
6.13 Amendment of Corporate Documents: BORROWER will not modify, amend,
supplement or terminate, or agree to modify, amend, supplement or terminate, its
certificate of incorporation or by-laws except for amendments that would not
adversely affect any Liabilities, any Collateral, any rights or remedies of
AGENT or the LENDERS hereunder or the ability of BORROWER to perform its
obligations, or conduct its business as previously conducted.
6.14 No Year-to-Date Net Loss in Excess of $300,000:
(a) BORROWER will not suffer a year-to-date Net Loss of $300,000 or
more in any fiscal year.
(b) AGENT will determine compliance with this Section on a quarterly
basis (commencing with the fiscal quarter ending September 30, 2001) using the
consolidated financial information required to be submitted by BORROWER under
this Agreement and by using GAAP
(c) Although compliance with this Section will be tested quarterly as
aforesaid, nothing in the foregoing shall prevent AGENT from determining that
this covenant has been violated prior to AGENT's receipt of any of the
aforementioned financial statements in the event AGENT or any LENDER obtains
actual knowledge that BORROWER is not in compliance with this covenant.
6.15 Losses in Any Two Consecutive Fiscal Quarters:
(a) BORROWER will not suffer a Net Loss for any two consecutive fiscal
quarters.
(b) AGENT will determine compliance with this Section on a quarterly
basis (commencing with the fiscal quarter ending September 30, 2001) using the
consolidated financial information required to be submitted by BORROWER under
this Agreement and by using GAAP.
(c) Although compliance with this Section will be tested quarterly as
aforesaid, nothing in the foregoing shall prevent AGENT from determining that
this covenant has been violated prior to AGENT's receipt of any of the
aforementioned financial statements in the event AGENT or any LENDER obtains
actual knowledge that BORROWER is not in compliance with this covenant.
6.16 Capital Expenditures:
(a) BORROWER will not incur Capital Expenditures in an amount
exceeding $500,000 in any fiscal year.
(b) For purposes of this covenant, the following terms shall have the
following meanings:
(1) "Capital Expenditures" - aggregate expenditures made or
liabilities incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including the direct or indirect acquisition of such assets
by way of increased product or service charges, offset items or otherwise and
the principal portion of payments with respect to Capitalized Lease Obligations.
(2) "Capital Lease" - any lease of property which would be
capitalized on the lessee's balance sheet or for which the amount of the asset
or liability thereunder, if so capitalized, should be disclosed in a note to
such balance sheet.
(3) "Capitalized Lease Obligation" - any obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
(c) AGENT will determine compliance with this Section on an annual
basis (commencing with the fiscal year ending December 31, 2000) using the
consolidated financial information required to be submitted by BORROWER under
this Agreement and by using GAAP.
(d) Although compliance with this Section will be tested annually as
aforesaid, nothing in the foregoing shall prevent AGENT from determining that
this covenant has been violated prior to AGENT's receipt of any of the
aforementioned financial statements in the event AGENT or any LENDER obtains
actual knowledge that BORROWER is not in compliance with this covenant.
6.17 Margin Securities: BORROWER will not own, purchase or acquire (or
enter into any contract to purchase or acquire) any "margin security" as defined
by any regulation of the Board of Governors as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, AGENT is to have received an opinion of counsel
satisfactory to AGENT to the effect that such purchase or acquisition will not
cause this Agreement to violate Regulations G or U or any other regulation of
the Board of Governors then in effect.
END OF ARTICLE VI
ARTICLE VII
EVENTS OF DEFAULT
Regardless of the terms of any of the other Loan Documents, the occurrence
of any of the following events shall be deemed an event of default (an "Event of
Default") hereunder:
7.1 (a) BORROWER shall fail to pay on its due date any interest or
principal or premium due on the Revolving Loan or any Revolving Note;
(b) BORROWER shall fail to pay within 10 days of its due date any other
payment due under this Agreement;
7.2 BORROWER shall fail to perform or observe any covenant of BORROWER
contained in Section 5.6, Section 5.19 or Section 5.20 or Article VI of this
Agreement;
7.3 (a) any representation or warranty herein or in any of the other Loan
Documents or in connection with any transaction contemplated hereby or thereby
shall prove to have been false or misleading in any material respect when made;
(b) to the extent that any aforementioned representation is made to the
best of the information, knowledge or belief of BORROWER but the underlying
representation is nonetheless false or misleading in any material respect, an
Event of Default will be deemed to have occurred hereunder if BORROWER fails to
make correct the underlying representation 30 Business Days after notice from
AGENT to do so;
7.4 (a) AGENT shall fail to have a legal, valid and binding first lien on
the Accounts Receivable and Inventory;
(b) Except for Permitted Liens and except as may be set forth on the
Certification as to Liens, AGENT shall fail to have a legal, valid and binding
first lien on any of the other Collateral;
7.5 (a) any consensual lien or encumbrance or any security interest,
perfected or otherwise, other than the security interests specifically provided
for or permitted hereunder, shall be created in the Collateral;
(b) any non-consensual lien, including but not limited to any judgment
against BORROWER or GUARANTOR, becomes an encumbrance against BORROWER's
Accounts or Inventory and BORROWER does not remove or discharge such lien within
10 days after notice from AGENT to do so;
(c) any non-consensual lien, including but not limited to any judgment
against BORROWER or GUARANTOR in any amount in excess of $50,000 becomes an
encumbrance against any of the other Collateral and BORROWER does not remove or
discharge such lien within 30 days after notice from AGENT to do so;
7.6 BORROWER or GUARANTOR shall admit in writing an inability to pay debts
as they come due or shall file any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any other law or
laws for the relief of, or relating to, debtors;
7.7 an involuntary petition shall be filed under any bankruptcy or
insolvency statute against BORROWER or GUARANTOR and such petition is not
discharged or stayed within 60 days from the date of the filing of the petition;
7.8 a receiver or trustee shall be appointed to take possession of the
properties of BORROWER or GUARANTOR;
7.9 BORROWER or GUARANTOR ceases all or substantially all of its
operations;
7.10 any default shall occur under any other loan agreement involving
either the borrowing of money or the advance of credit to which BORROWER or
GUARANTOR may be a party as borrower or guarantor and such default results in
the acceleration of the money owing under such other loan agreement;
7.11 BORROWER or GUARANTOR shall breach, violate or default under, any
term, condition, provision, representation or warranty contained in this
Agreement not specifically referred to in this Article VII and such breach,
default or violation is not cured within the earlier of (a) the time period
given by this Agreement for cure or (b) in the absence of this Agreement's
giving any such time period for cure, 30 Business Days after notice from BANK to
do so;
7.12 any breach, default or violation shall occur under any of the terms,
conditions, representations, warranties or covenants contained in any of the
other Loan Documents and such breach, default or violation is not cured within
the earlier of (a) the time period given by any such other Loan Document for
cure or (b) in the absence of any such other Loan Document's giving any such
time period for cure, 30 Business Days after notice from BANK to do so;
7.13 any of the Loan Documents (or any provision thereof) is claimed by
BORROWER or by GUARANTOR to be invalid or unenforceable;
7.14 BORROWER or GUARANTOR shall fail to obtain and deliver to AGENT any
mortgage, financing statement, subordination agreement or any other
documentation required to be signed or obtained as part of this Agreement or
shall have failed to take any action requested by AGENT to perfect or protect
the security interests provided for herein and such failure is not cured within
the earlier of (a) the time period given by this Agreement for cure or (b) in
the absence of this Agreement's giving any such time period for cure, 30
Business Days after notice from BANK to do so;
7.15 BORROWER obtains any loan secured by Accounts Receivable or Inventory
from any source other than AGENT; 7.16 if BORROWER is not in compliance with the
Lending Formula and BORROWER fails to come into compliance with such Lending
Formula immediately after BORROWER receives notice that it is required to do so;
7.17 BORROWER shall fail to timely remit payment to any of the landlords of
any of the properties described in Section 4.5 of this Agreement where BORROWER
maintains Collateral or any default shall occur under any lease at such
location;
7.18 any other event occurs or condition exists which, in the opinion of
AGENT, constitutes a Materially Adverse Effect in the business condition or
financial status of BORROWER or which, in the opinion of AGENT, impairs the
ability of BORROWER to discharge its obligations hereunder or which causes AGENT
to deem itself insecure;
7.19 any other event occurs or condition exists which, in the opinion of
AGENT, constitutes a Materially Adverse Effect in the business condition or
financial status of GUARANTOR or which, in the opinion of AGENT, impairs the
ability of GUARANTOR to discharge its obligations under the Guaranty or which
causes AGENT to deem itself insecure.
END OF ARTICLE VII
ARTICLE VIII
REMEDIES
8.1 Upon the occurrence and continuance of an Event of Default, AGENT may
and, at the direction of the Required Lenders, AGENT shall do any or all of the
following at the same time or at different times:
(a) AGENT may, by written notice to BORROWER, declare the entire
principal amount of the Revolving Loan, or the unpaid balance thereof, together
with all accrued interest and all other lawful and proper charges thereon,
immediately due and payable whereupon all such sums shall become immediately due
and payable with interest thereafter at the Default Rate, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by BORROWER.
(b) AGENT may, by written notice to BORROWER, declare all other
Liabilities, together with all accrued interest and all other lawful and proper
charges thereon, to be forthwith due and payable with interest thereafter at the
Default Rate, whereupon all such sums shall become immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by BORROWER.
(c) AGENT may proceed with or without judicial process to take
possession of all or any part of the Collateral not already in the possession of
AGENT. BORROWER agrees that upon receipt of notice of AGENT's intention to take
possession of all or any part of said Collateral, BORROWER will do everything
reasonably necessary to make same available to AGENT.
(d) AGENT may assign, transfer and deliver at any time or from time to
time, in accordance with the Uniform Commercial Code, the whole or any portion
of any Collateral which is subject to the Uniform Commercial Code or any rights
or interests therein; and without limiting the scope of AGENT's rights
thereunder, sell such Collateral at a public or private sale, or in any other
manner, at such price or prices as AGENT may deem best, and either for cash or
credit, or for future delivery, at the option of AGENT, in bulk or in parcels
and with or without having such Collateral at the sale or other disposition.
AGENT shall have the right to be the purchaser at any public sale. Any
notification of a sale or other disposition of the Collateral or of any other
action by AGENT required to be given by AGENT to BORROWER will be sufficient if
given not less than ten (10) days prior to the day on which such sale or other
disposition will be made and in the manner set forth in Section 10.1; such
notification shall be deemed reasonable notice. In the event of a sale of such
Collateral, or any other disposition thereof, AGENT shall apply all proceeds
first to all costs and expenses of disposition, including attorneys' fees, and
then to the Liabilities of BORROWER to AGENT.
(e) AGENT may immediately, and without notice or other action, set-off
and apply against the Liabilities (1) any and all deposits and all other items
described in Section 3.6 hereof and/or (2) any sum owed by AGENT or any LENDER
in any capacity to BORROWER whether due or not. ANY AND ALL RIGHTS TO REQUIRE
AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE REVOLVING LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO THE FOREGOING, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED. AGENT may do the foregoing even though some or all of the Liabilities
may be unmatured and regardless of the adequacy of any other Collateral securing
the Liabilities. AGENT shall be deemed to have exercised such right of set-off
and to have made a charge against any such sum immediately upon the occurrence
of such Event of Default, even though the actual book entries may be made at
some time subsequent thereto.
(f) AGENT may send notice of assignment and/or notice of AGENT's
security interest to any and all Account Debtors or any third party holding or
otherwise concerned with any of the Collateral, and thereafter, AGENT shall have
the sole right to collect the Accounts Receivable and/or take possession of the
Collateral. Any and all of AGENT's reasonable collection expenses, including but
not limited to stationery and postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection agencies or attorneys
utilized, shall be added to the Liabilities and charged against a specially
designated demand deposit account of BORROWER at AGENT or, in the absence of
such designation or in the event that there are insufficient funds in such
designated account, then to any demand deposit account of BORROWER at AGENT as
of each due date.
(g) AGENT may without notice to or consent from BORROWER, xxx upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise, upon any terms, any of the Accounts Receivable or any
securities, instruments or insurance applicable thereto and/or release the
Account Debtor thereon. AGENT is authorized and empowered to accept the return
of the Goods represented by any of the Accounts Receivable, without notice to or
consent by BORROWER all without discharging or in any way affecting BORROWER's
liability hereunder. AGENT does not, by anything herein or in any assignment or
otherwise, assume any obligations of BORROWER under any Account, contract or
agreement assigned to AGENT, and AGENT shall not be responsible in any way for
the performance by BORROWER of any of the terms and conditions thereof.
(h) AGENT may notify the Post Office authorities to change the address
for delivery of mail addressed to BORROWER to such address as AGENT may
designate.
(i) AGENT may add to the Liabilities AGENT's reasonable expenses to
obtain or enforce payment of any Liabilities hereunder and the enforcement or
liquidation of any debt hereunder shall include reasonable attorneys' fees, plus
other legal expenses incurred by AGENT.
8.2 AGENT is hereby further granted a license or other right to use,
without charge at all times on and after the occurrence and continuance of an
Event of Default, BORROWER's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and BORROWER's rights under all licenses
and franchise agreements are to inure to AGENT's benefit.
8.3 (a) Upon the occurrence and continuance of an Event of Default, each
LENDER may, with the consent of the Required Lenders, declare all Liabilities
owed to any such LENDER, together with all accrued interest and all other lawful
and proper charges thereon, to be forthwith due and payable, whereupon all such
sums shall become immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
BORROWER.
(b) Upon the occurrence and continuance of an Event of Default, each
LENDER may, with the consent of the Required Lenders, immediately and without
notice or other action, set-off and apply against the Liabilities (1) any and
all deposits and all other items described in Section 3.6 hereof and/or (2) any
sum owed by any such LENDER in any capacity to BORROWER whether due or not. ANY
AND ALL RIGHTS TO REQUIRE any LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE REVOLVING LOAN, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO THE FOREGOING, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each LENDER may do the foregoing
even though some or all of the Liabilities may be unmatured and regardless of
the adequacy of any other Collateral securing the Liabilities. Each LENDER shall
be deemed to have exercised such right of set-off and to have made a charge
against any such sum immediately upon the occurrence of such Event of Default,
even though the actual book entries may be made at some time subsequent thereto.
8.4 BORROWER shall remain liable for any deficiency resulting from a sale,
lease, foreclosure or other disposal of the Collateral and shall pay any such
deficiency forthwith on demand, together with per annum interest at the Default
Rate. 8.5 The rights of AGENT and each LENDER under this Article are in addition
to all other remedies, statutory and otherwise, which are available to it at law
or in equity or otherwise and whether or not under the terms of any of the other
Loan Documents.
END OF ARTICLE VIII
ARTICLE IX
AGENT; RELATIONS AMONG LENDERS
9.1 APPOINTMENT OF AGENT. Each LENDER hereby irrevocably appoints and
authorizes AGENT to act as its exclusive agent and the administrator of its
rights hereunder and under any of the other Loan Documents or other documents or
instruments referred to or provided for herein or therein with such powers as
are specifically delegated to AGENT by the terms of this Agreement and any of
the other Loan Documents, together with such other powers as are reasonably
incidental thereto.
9.2 POWERS OF AGENT; CONSENT AND WAIVER.
(a) Subject to the provisions of subsections (d) below, AGENT shall
have the power to do each and all of the following:
(1) except for the original of any Revolving Note the possession of
which is to be maintained by each LENDER, (i) hold in AGENT's possession all of
the other Loan Documents or other documents or instruments referred to or
provided for herein or therein and (ii) maintain separate records and accounts
with respect to the Revolving Loan, reflecting the interests of LENDERS in the
Revolving Loan;
(2) service and control the administration of the Revolving Loan
(including, without limitation, the disbursement of Revolving Loan monies);
(3) manage and perform the terms of the Loan Documents; provided,
however, that as it relates to the disbursement of Revolving Loan monies, AGENT
shall be under no obligation to disburse such monies until after receipt of such
monies from LENDERS. In the absence of receipt of each LENDER's Pro Rata Share
of such Revolving Loan monies, AGENT may, but is not obligated to, make an
Advance to BORROWER attributable to the non-paying LENDER's Pro Rata Share of
the total Advance requested under the Revolving Loan;
(4) retain possession of the Loan Documents for itself and as agent
for the LENDERS to the extent of their Pro Rata Share;
(5) afford each LENDER the right, at its own expense and through
employees, agents or counsel, to examine the original Loan Documents, or
original counterparts thereof, and other documents and information relating to
the transactions contemplated thereby contained in AGENT's files during normal
business hours at the office of AGENT noted in this Agreement, or at such other
place as may be designated from time to time, upon a LENDER's delivery of
reasonable prior notice to AGENT;
(6) at the requesting LENDER's expense, furnish copies of any
documents reasonably requested by the requesting LENDER;
(7) upon the request of a LENDER, allow the requesting LENDER, at
requesting LENDER's expense, to join in the exercise of AGENT's right pursuant
to the Loan Documents to inspect and examine the books of BORROWER and other
related parties, upon the requesting LENDER's delivery of reasonable prior
notice to AGENT;
(8) without charge or fee to the LENDERS, issue statements for and
collect all collections under the Revolving Loan as trustee for the LENDERS and
retain records of all amounts as the same are received in connection with or
arising out of the Revolving Loan, whether as principal, interest or otherwise,
and including (without limiting the generality hereof) each of the following:
(A) proceeds of or recoveries under insurance and/or title policies; (B) amounts
payable by third parties; (C) amounts payable by reason of total or partial
condemnation or taking by governmental authority; (D) amounts realized as the
result of enforcement under this Agreement or of Collateral; and (E) amounts
received as proceeds of one or more foreclosure sales;
(9) hold each LENDER's Pro Rata Share of the above amounts in trust
for and (but only to the extent that AGENT has received good funds of such
amounts) pay to the LENDERS Ratably any amounts described above on the
applicable Settlement Date.
(b) AGENT shall perform its obligations under this Agreement
and the other Loan Documents in good faith according to the same standard of
care as that customarily exercised by AGENT in administering its own loans
similar to the Revolving Loan.
(c) Subject to the provisions of subsection (d) below, AGENT:
(1) shall have no duties or responsibilities except those expressly set forth in
this Agreement (together with such other powers as are reasonably incidental
thereto) and any of the other Loan Documents or other documents or instruments
referred to or provided for herein or therein or required by law; and (2) shall
not by reason of this Agreement be a fiduciary or trustee for any LENDER, except
to the extent that AGENT acts as an agent with respect to the receipt or payment
of funds.
(d) (1) Except as otherwise expressly provided in this
Agreement, any consent or approval required or permitted by this Agreement may
be given, and any term of this Agreement or of any of the other Loan Documents
may be amended, and the performance or observance by BORROWER or any guarantor
of any terms of this Agreement or the other Loan Documents or the continuance of
any Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of AGENT.
(2) Notwithstanding the foregoing, approval of all LENDERS
shall be required for any amendment, modification or waiver of this Agreement
that:
(A) reduces or forgives any principal of any unpaid Advance
or any interest thereon (including all interest and costs
associated with an Event of Default or non-payment by a
Delinquent Lender as defined below) or any fees due any
LENDER hereunder, or permits any prepayment not otherwise
permitted hereunder; or
(B) changes the unpaid principal amount of, or the rate of
interest on, any Advance; or
(C) changes the date fixed for any payment of principal of
or interest on any Advance (including, without limitation,
any extension of the Maturity Date) or any fees payable
hereunder; or
(D) changes the amount of any LENDER's Pro Rata Share of the
Total Commitments (other than pursuant to an assignment
permitted under Section 9.19 hereof) or increases the amount
of the Total Commitments; or
(E) amends any of the financial covenants contained in
Article V and Article VI of this Agreement; or
(F) releases or reduces the liability of any guarantor or
other obligor (if any) other than as may be expressly
permitted under this Agreement; or
(G) amends or modifies any other covenants of this Agreement
and or any other provision herein or in any of the other
Loan Documents unless such covenant or provision expressly
allows approval by only the REQUIRED LENDERS; or
(H) amends any of the provisions governing funding contained
in Article II and Article IX hereof; or
(I) changes the rights, duties or obligations of AGENT
specified in this Article IX (provided that no amendment or
modification to AGENT's rights, duties or obligations or to
the fees payable to AGENT under this Agreement may be made
without the prior written consent of AGENT); or
(J) changes the definition of REQUIRED LENDERS or alters
provisions calling for approval of the REQUIRED LENDERS; or
(K) releases any Collateral (except as expressly permitted
by this Agreement), or agrees to the release or modification
of any rights or powers with respect to the Collateral, or
agrees to or accepts any other collateral in substitution
for the Collateral (except, in all of the foregoing cases,
upon satisfaction of conditions as set forth in this
Agreement).
(3) No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
delay or omission on the part of AGENT or the LENDERS or any LENDER in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial to such right or any other rights of AGENT or the LENDERS. No notice
to or demand upon BORROWER shall entitle BORROWER to other or further notice or
demand in similar or other circumstances.
9.3 DELEGATION OR TRANSFER OF AGENCY FUNCTION.
(a) Without the consent of BORROWER or any LENDER, AGENT may at any
time or from time to time transfer its functions as AGENT hereunder to any of
its offices wherever located in the United States, provided that AGENT shall
promptly notify BORROWER and LENDERS thereof.
(b) AGENT may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
9.4 IMMUNITIES OF AGENT; EXCULPATION.
(a) AGENT shall not be responsible to LENDERS:
(1) for any recitals, statements, representations or warranties
made by BORROWER or any officer, partner or official of BORROWER or any other
person contained in this Agreement or any of the other Loan Documents, or in any
certificate or other documents or instruments referred to or provided for in, or
received by any of them under, this Agreement or any of the other Loan Documents
or other documents or instruments referred to or provided for herein or therein;
or
(2) for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any of the other Loan
Documents or any other document or instrument referred to or provided for herein
or therein; or
(3) for the perfection or priority of any lien or pledge securing
the obligations hereunder or thereunder; or
(4) for any failure by BORROWER to perform any of its obligations
hereunder or thereunder.
(b) Neither AGENT nor any of its directors, officers, employees or
agents shall be liable or responsible for any action taken or omitted to be
taken by it or them hereunder or under any of the other Loan Documents or other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its or their own gross negligence
or willful misconduct.
9.5 RELIANCE BY AGENT. AGENT shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram, telecopier or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper person
or persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by AGENT. AGENT may deem and treat each
LENDER as the holder of the Pro Rata Share of the Revolving Loan made by it for
all purposes hereof and shall not be required to deal with any person who has
acquired a participation interest in the Revolving Loan from a LENDER. As to any
matters not expressly provided for by this Agreement or any of the other Loan
Documents or other documents or instruments referred to or provided for herein
or therein, AGENT shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
REQUIRED LENDERS, and such instructions of the REQUIRED LENDERS and any action
taken or failure to act pursuant thereto shall be binding on all of the LENDERS
and any other holder of all or any portion of the Revolving Loan or
participation therein.
9.6 DEFAULTS. AGENT shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default unless AGENT has actual knowledge of the same
or has received notice from a LENDER or BORROWER referring to this Loan
Agreement, describing such Event of Default and stating that such notice is
"notice of default". In the event that AGENT obtains such actual knowledge or
receives such a notice, AGENT shall give prompt notice thereof to each of the
LENDERS. AGENT shall take such action with respect to such Event of Default as
shall be reasonably directed by the REQUIRED LENDERS. Unless and until AGENT
shall have received such direction, AGENT may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to any such
Event of Default as it shall deem advisable in the best interest of the LENDERS,
provided, however, that AGENT shall not accelerate the indebtedness under this
Agreement without the prior written consent of the REQUIRED LENDERS.
9.7 NON-RELIANCE ON AGENT AND OTHER LENDERS.
(a) Each LENDER agrees that it has, independently and without reliance
on AGENT or any other LENDER, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of BORROWER and its
Subsidiaries and the decision to enter into this Agreement and that it will,
independently and without reliance upon AGENT or any other LENDER, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Loan Documents or other documents or
instruments referred to or provided for herein or therein. AGENT shall not be
required to keep itself informed as to the performance or observance by BORROWER
of this Agreement or any of the other Loan Documents or any other documents or
instruments referred to or provided for herein or therein or to inspect the
Collateral (including, without limitation, any tangible property) or books of
BORROWER. Except for notices, reports and other documents and information
expressly required to be furnished to LENDERS by AGENT hereunder, AGENT shall
not have any duty or responsibility to provide the LENDERS with any credit or
other information concerning the affairs, financial condition or business of
BORROWER or any of its Subsidiaries or any guarantor of the Liabilities
hereunder (or any affiliate of them) which may come into the possession of AGENT
or any of its affiliates.
(b) AGENT shall not be required to file this Agreement, any of the
other Loan Documents or any other documents or instruments referred to herein or
therein, for record or give notice of this Agreement, any of the other Loan
Documents or any other documents or instruments referred to herein or therein,
to anyone.
9.8 SHARING OF COSTS BY LENDERS; INDEMNIFICATION OF AGENT. (a) Each LENDER
agrees to pay its Pro Rata Share, based on the amount of its respective
Outstanding Advances due under its Revolving Note, of any expenses incurred (and
not paid or reimbursed by BORROWER after demand for payment is made by AGENT) by
or on behalf of LENDERS in connection with any Event of Default, including,
without limitation, costs of enforcement of the Loan Documents and any advances
to pay taxes or insurance premiums or otherwise to preserve its lien against the
Collateral or to preserve or protect the Collateral. In the event a LENDER fails
to pay its Pro Rata Share of expenses as aforesaid, and all or a portion of such
unpaid amount is paid by AGENT, then the defaulting LENDER shall reimburse AGENT
for the portion of such unpaid amount paid by it, together with interest thereon
at the Prime Based Rate from the date of payment by AGENT.
(b) In addition, each LENDER agrees to reimburse and indemnify AGENT
(to the extent it is not paid by on or behalf of BORROWER, after demand for
payment is made by AGENT) for such LENDER's Pro Rata Share, based upon the
amount of its respective Outstanding Advances due under its Revolving Note, of
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against AGENT in any
way relating to or arising out of this Agreement, any of the other Loan
Documents or any other documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby (including, without limitation, any
costs and expenses which BORROWER is obligated to pay under this Agreement), or
as a result of the enforcement of any of the terms of this Agreement, the other
Loan Documents, or of any such other documents or instruments contemplated by or
referred to herein or therein; provided that no LENDER shall be liable for (1)
any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified, (2) any loss of principal or
interest with respect to AGENT's Pro Rata Share of the Revolving Loan (except,
in the case of a particular LENDER, any loss suffered by AGENT in connection
with a swap or other interest rate hedging arrangement entered into between
AGENT and BORROWER for the benefit of or for the account of such LENDER).
9.9 RIGHTS OF AGENT AS LENDER. With respect to AGENT's individual
Commitment and its Pro Rata Share of the Revolving Loan, AGENT in its capacity
as a LENDER hereunder shall have the same rights and powers hereunder as any
other LENDER and may exercise the same as though it were not acting as AGENT,
and the term "LENDER" or "LENDERS" shall, unless the context otherwise
indicates, include AGENT in its capacity as a LENDER. AGENT and its affiliates
may (without having to account therefor to any LENDER) accept deposits from,
lend money to (on a secured or unsecured basis), and generally engage in any
kind of banking, trust or other business with BORROWER or any of its
Subsidiaries or any guarantor of the Liabilities hereunder (and any affiliates
of them) as if it were not acting as AGENT and AGENT may accept fees and other
consideration from BORROWER or its Subsidiaries, for services in connection with
this Agreement or any of the other Loan Documents or otherwise without having to
account for the same to the LENDERS.
9.10 RESIGNATION OR REMOVAL OF AGENT; SUCCESSOR AGENT.
(a) Subject to the appointment and acceptance of a successor AGENT as
provided below, AGENT may resign at any time by giving not less than 30 days'
prior written notice thereof to the LENDERS and BORROWER and AGENT may be
removed at any time with cause by a unanimous vote of the LENDERS other than
AGENT, provided that BORROWER shall be promptly notified thereof. Upon any such
resignation or removal, the REQUIRED LENDERS shall have the right to appoint a
successor AGENT which shall be a LENDER or another bank or financial institution
reasonably acceptable to BORROWER and having a combined capital and surplus of
at least $500,000,000, provided, however, that if an Event of Default shall have
occurred and is continuing, any such other bank or financial institution need
not be acceptable to BORROWER. If no successor AGENT shall have been so
appointed by the REQUIRED LENDERS and shall have accepted such appointment
within thirty days after the REQUIRED LENDERS' removal of the retiring AGENT,
then the retiring AGENT may, after consultation with BORROWER and within ten
days thereafter, on behalf of and on notice to the LENDERS, appoint a successor
AGENT, which shall be one of the LENDERS. (b) The REQUIRED LENDERS or the
retiring AGENT, as the case may be, shall upon the appointment of a successor
AGENT promptly so notify BORROWER. (c) Upon the acceptance of any appointment as
AGENT hereunder by a successor AGENT, such successor AGENT shall thereupon
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.
(d) After any retiring AGENT's removal hereunder as AGENT, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
AGENT.
9.11 ACTIONS OF AGENT; FAILURE OF AGENT TO ACT.
(a) Subject to the provisions of Section 9.6, AGENT will, upon the
occurrence of an Event of Default, act in accordance with the decisions of the
REQUIRED LENDERS.
(b) Except for action expressly required of AGENT hereunder, AGENT
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall have received further assurances (which may include cash
collateral) of the indemnifica-tion obligations of LENDERS under Section 9.8(b)
hereof in respect of any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
(c) AGENT shall not have any liabilities or responsibilities to
BORROWER on account of the failure of any LENDER to perform its obligations
hereunder or to any LENDER on account of the failure of BORROWER or the other
LENDER to perform its obligations hereunder or under any of the other Loan
Documents or other document or instrument referred to or provided for herein or
therein.
(d) Notwithstanding any other provision of this Agreement to the
contrary, AGENT shall not itself, nor shall its directors, managers, officers,
employees or agents, be liable or responsible, directly or indirectly, to the
LENDERS for any action taken, or omitted to be taken by it in good faith, or for
the consequences of any oversight or error of judgment on its or their part
occurring in good faith, unless the taking of, or omitting to take, such action
on the part of AGENT, or such oversight or error in judgment on the part of
AGENT or its directors, managers, officers, employees or agents, constitutes
willful misconduct or gross negligence. In the absence of such willful
misconduct or gross negligence by or on behalf of AGENT, but subject to the
provisions of subsection (e) below, the LENDERS hereby ratably indemnify AGENT
(to the extent not reimbursed by BORROWER) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses which may be imposed on, incurred by or against AGENT in any way
relating to or arising out of this Agreement or the Loan Documents or any action
taken or omitted to be taken by AGENT under or pursuant to this Agreement or the
Loan Documents, excluding the normal cost to AGENT in connection with the
administration of the Revolving Loan.
(e) No LENDER makes any representation of any kind to any other present
or future party to this Agreement as it relates to the perfection or priority of
any security interest in the Collateral and no LENDER will have any rights
against any present or future party to this Agreement or the agents of any
LENDER for any cause of action arising out of the lack of perfection or the
priority of any lien on the Collateral.
9.12 AMENDMENTS CONCERNING AGENCY FUNCTION. Notwithstanding anything to the
contrary contained in this Agreement, AGENT shall not be bound by any waiver,
amendment, supplement or modification of this Agreement or any of the other Loan
Documents or other documents or instruments referred to or provided herein or
therein which affects its duties, rights, and/or function hereunder or
thereunder unless it shall have given its prior written consent thereto.
9.13 PROCEDURES FOR LENDERS FUNDING ADVANCES.
(a) AGENT shall give written notice to each LENDER of each request for
an Advance under the Revolving Loan, by telephone, facsimile transmission, hand
delivery or overnight courier. Each such notice shall summarize the request for
an Advance under the Revolving Loan and shall specify (1) the date of the
requested Advance, (2) the aggregate amount of the requested Advance, (3) the
applicable LENDER's Pro Rata Share of the requested Advance, and (4) the
applicable interest rate selected by BORROWER with respect to such Advance, or
any portion thereof, and, in the case of the LIBOR Option, the applicable LIBOR
Based Interest Period, selected, or deemed selected, by BORROWER. Each LENDER
shall, before 11:00 a.m. (New York time) on the date set forth in any such
request for an Advance, make available to AGENT, at an account to be designated
by AGENT, in same day funds, each LENDER's Ratable portion of the requested
Advance. After AGENT's receipt of such funds and upon AGENT's determination that
the applicable conditions to make the requested Advance have been fulfilled,
AGENT shall make such funds available to BORROWER as provided for in this
Agreement. Promptly after receipt by AGENT of written request from any LENDER,
AGENT shall deliver to the requesting LENDER a copy of BORROWER's request for an
Advance, provided, however, that AGENT's providing proof of its funding of such
Advance shall presumptively and without more evidence that BORROWER made request
for such Advance in the aggregate amount of the funded Advance and that such
Advance was timely made. Also promptly after receipt by AGENT of written request
from any LENDER, AGENT shall deliver to the requesting LENDER the accompanying
certifications and such other instruments, documents, certifications and
approvals delivered by or on behalf of BORROWER to AGENT in support of the
requested Advance.
(b) (1) The Outstanding amount of the Advances may fluctuate through
AGENT's disbursement of funds to, and receipt of funds from, BORROWER. Payments
shall be made by AGENT to the LENDERS or by the LENDERS to AGENT by wire
transfer or otherwise, but in any event in immediately available funds.
(2) The obligation of AGENT and the LENDERS to make settlement on
the Settlement Date as set forth above shall exist and continue notwithstanding
(A) the amount of any Advance may not comply with any minimum amount for
borrowings that may be required hereunder, (B) whether any conditions specified
in Article II are then satisfied, (C) whether an Event of Default (or events
which but for the passage of time or the giving of notice would be such an Event
of Default) exists on the Settlement Date, (D) the date of such Advance, (E) any
reduction in the Total Commitments after any such Advances were made, (F) any
set-off, counterclaim, recoupment, defense or other right which such LENDER may
have against AGENT, BORROWER, or any other person for any reason whatsoever; (G)
any adverse change in the condition (financial or otherwise) of BORROWER or any
of its Subsidiaries; (H) the acceleration or maturity of any Advances or the
termination of the Commitments after the making of any Advance; (I) any breach
of this Agreement by any party to this Agreement, AGENT, or any LENDER; or (J)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
(3) In the event that any settlement cannot for any reason take
place on the Settlement Date set by AGENT (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to BORROWER), then each LENDER shall forthwith purchase, without
recourse or warranty (as of the Settlement Date which would otherwise have
occurred, but adjusted for any payments received from BORROWER on or after such
date and prior to such purchase) from AGENT such participation in the
Outstanding Advances as shall be necessary to cause all of the LENDERS to share
in such Advances ratably based upon their respective Pro Rata Share of the Total
Commitments, provided that all interest payable on any such Pro Rata Share shall
be for the account of AGENT until the date on which the respective participation
is purchased and, to the extent attributable to the purchased participation,
shall be payable to the participant from and after such date.
(4) If any portion of any amount paid (or deemed to be paid) to
AGENT should be recovered from AGENT by or on behalf of BORROWER in bankruptcy,
by assignment for the benefit of creditors or otherwise, the loss of the amount
so recovered shall be ratably shared among all LENDERS as shall be necessary to
cause all of the LENDERS to share in such Advances ratably based upon their
respective Pro Rata Share of the Total Commitments.
9.14 NATURE OF OBLIGATIONS OF LENDERS. The obligations of the LENDERS
hereunder are several and not joint. Failure of any LENDER to fulfill that
LENDER's obligations hereunder shall not result in any other LENDER becoming
obligated to advance more than its Pro Rata Share of an Advance, nor shall such
failure release or diminish the obligations of any other Lender to fund its Pro
Rata Share of an Advance.
9.15 NON-RECEIPT OF FUNDS BY AGENT. Unless AGENT shall have received notice
from a LENDER or BORROWER (either one as appropriate being the "Payor") prior to
the date on which such LENDER is to make payment hereunder to AGENT of Revolving
Loan proceeds or BORROWER is to make payment to AGENT, as the case may be
(either such payment being a "Required Payment"), which notice shall be
effective upon receipt, that the Payor will not make the Required Payment in
full to AGENT, AGENT may assume that the Required Payment has been made in full
to AGENT on such date, and AGENT in its sole discretion may, but shall not be
obligated to, in reliance upon such assumption, make the amount thereof
available to the intended recipient on such date. If and to the extent the Payor
shall not have in fact so made the Required Payment in full to AGENT, the
recipient of such payment shall repay to AGENT forthwith on demand such amount
made available to it together with interest thereon, for each day from the date
such amount was so made available by AGENT until the date AGENT recovers such
amount, at the Default Rate.
9.16 SHARING OF PAYMENTS AMONG LENDERS.
(a) (1) The calculation of each LENDER's Pro Rata Share of interest on
any Advance shall (i) commence on the date of its funding of its Pro Rata Share
of an Advance under the Revolving Loan on the Settlement Date and (ii) end on
the date that the LENDER receives funds in payment of its Pro Rata portion of
such Advance; provided, however, that as it relates to AGENT, AGENT shall only
be liable for the payment of interest actually received by it from BORROWER and
also for interest due during the period of time between the date of AGENT's
aforesaid receipt of such interest and the time AGENT makes settlement as
required by this Agreement.
(2) Nothing in the foregoing shall be deemed to relieve any LENDER
from any obligation imposed upon it under this Agreement to make its pro rata
share of Loans.
(b) If a LENDER shall obtain payment of any principal of its Revolving
Note or interest thereon, or shall receive any Collateral or proceeds thereof
with respect to any Revolving Note or any interest to which it is entitled,
whether voluntarily or involuntarily, and whether through the exercise of any
right of setoff, banker's lien, counterclaim, or by any other means (including
direct payment), and such payment results in such LENDER receiving a greater
payment than it would have been entitled to had such payment been paid directly
to AGENT for disbursement to LENDERS, then such LENDER shall promptly purchase
for cash from the other LENDERS participations in the Revolving Loan in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all LENDERS shall share Ratably the benefit of such
payment. To such end, LENDERS shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored. BORROWER agrees that any LENDER so
purchasing a participation in the Revolving Loan may exercise all rights of
setoff, banker's lien, counterclaim or similar rights with respect to such
participation. Nothing contained herein shall require any LENDER to exercise any
such right or shall affect the right of any LENDER to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness of
BORROWER.
9.17 EFFECT OF A LENDER'S FAILURE TO MAKE AN ADVANCE.
(a) Failure to Fund: In the event any LENDER fails for any reason to
fund the portion it is required to fund of any Advance of Revolving Loan
proceeds by 3:00 p.m. on the second Business Day after the date established by
AGENT as the date such Advance is to be made, such LENDER shall be a "Delinquent
Lender" for all purposes hereunder until and unless such delinquency is cured in
accordance with the terms and by the time permitted under subsection (b) below,
and the following provisions shall apply:
(1) AGENT shall notify (such notice being referred to as the
"Delinquency Notice") each LENDER and BORROWER of any LENDER's failure to fund.
Each LENDER who is not a Delinquent Lender shall have the right, but in no event
or under any circumstance the obligation, to fund such Delinquent Lender's
portion of such Advance, provided that, within twenty (20) days of the date of
the Delinquency Notice (the "Election Period"), such non-Delinquent Lender (the
"Electing Lender") irrevocably commits by notice in writing (an "Election
Notice") to AGENT, the other LENDERS and BORROWER to fund the Delinquent
Lender's portion of the Advance that is the subject of the delinquency and to
assume the Delinquent Lender's obligations with respect to the advancing of the
entire undisbursed portion of the Delinquent Lender's individual Commitment
(such entire undisbursed portion of the Delinquent Lender's individual
Commitment, including its portion of the Advance that is the subject of the
delinquency, the "Delinquency Amount"). If AGENT receives more than one Election
Notice within the Election Period, then all LENDERS who are not Delinquent
Lenders and who have so elected (collectively, the "Electing Lenders") shall be
deemed to have committed Ratably to fund shares of the Delinquency Amount based
upon the amounts of their respective individual Commitments. If there are one or
more Electing Lenders and the Delinquent Lender fails to cure during the
Election Period as provided in subsection (b) below, then upon the expiration of
the Election Period, each Electing Lender's individual Commitment shall be
automatically increased by the Delinquency amount (if there is only one Electing
Lender) or such Electing Lender's Pro Rata Share, determined as aforesaid, of
the Delinquency Amount (if there are two or more Electing Lenders), and the
Delinquent Lender's individual Commitment shall automatically be reduced by the
Delinquency Amount. AGENT shall thereupon notify BORROWER and each LENDER of (i)
the adjusted amounts of the individual Commitments and (ii) if the Advance that
was the subject of the delinquency was not made pursuant to Section 9.15 hereof
or was refunded by BORROWER pursuant to subsection (a)(5) of this Section, the
rescheduled date of such Advance (which shall be no sooner than three Business
Days after such notice). In the event AGENT shall have funded, pursuant to
Section 9.15 hereof, the entire Advance that was the subject of the delinquency
(including the Delinquent Lender's portion), and BORROWER shall not have
refunded such advance pursuant to subsection (a)(5) of this Section, the
Electing Lender(s) shall remit to AGENT the Delinquent Lender's portion of the
Advance, or their Pro Rata Share thereof, as the case may be, within three
Business Days of the notice provided for in the immediately preceding sentence,
and AGENT shall reimburse itself from such funds for making the Delinquent
Lender's portion of the Advance. Notwithstanding anything to the contrary
contained herein, if AGENT advances its own funds in respect of a Delinquent
Lender's portion of an Advance, AGENT shall be entitled to the interest at the
applicable Default Rate on the portion of the principal amount represented
thereby, from the date AGENT makes such Advance until the date it is reimbursed
therefor.
(2) In connection with the adjustment of the amounts of the
individual Commitments of the Delinquent Lender and Electing Lender(s) upon the
expiration of the Election Period as aforesaid, BORROWER covenants that it
shall, promptly following the request of the Electing Lender(s), execute and
deliver to each Electing Lender and the Delinquent Lender replacement Revolving
Notes substantially in the form of the Revolving Note or Revolving Notes being
replaced and stating:
"This Note is a replacement Revolving Note as contemplated by
Section 9.17 of the Loan Agreement; it replaces and is in lieu
of that certain Revolving Note made by Maker dated [Closing
Date] to the order of [Delinquent Lender] in the principal sum
of [Delinquent Lender's] original individual Revolving Loan
Commitment]."
Such replacement Revolving Notes shall be in amounts equal to such LENDERS'
respective individual Commitments, as adjusted. All such replacement Revolving
Notes shall constitute "Revolving Notes" for purposes of this Agreement and the
Loan Documents or other documents or instruments referred to or provided for
herein or therein. The execution and delivery of replacement Revolving Notes as
required above shall be a condition precedent to any further advances of
Revolving Loan proceeds.
(3) In the event that no LENDER elects to commit to fund the
Delinquency Amount within the Election Period as provided in subsection (a) of
this Section, AGENT shall, upon the expiration of the Election Period, so notify
BORROWER and each LENDER and the provisions of Section 9.18 hereof shall apply.
(4) Subject to a Delinquent Lender's right to cure as provided in
subsection (b) below, but notwithstanding anything else to the contrary
contained in this Agreement, if any LENDER fails (i) to make available to AGENT
its Pro Rata Share of any Advance under the Revolving Loan or (ii) to purchase
its Pro Rata Share of any other obligation arising under the Total Commitments
or (iii) to comply with the provisions in this Agreement with respect to making
dispositions and arrangements with the other LENDERS, where such LENDER's share
of any payment received, whether by setoff or otherwise, is in excess of its Pro
Rata Share of such payments due and payable to all of the LENDERS, in each case
as, when and to the full extent required by the provisions of this Agreement, or
(iv) to adjust promptly the amount of such LENDER's Outstanding Advances and its
Pro Rata Share of the other obligations (if any) arising under the Total
Commitments, then such LENDER shall be deemed a Delinquent Lender until such
time as such delinquency is satisfied. In addition, the Delinquent Lender's
interest in, and any and all amounts due to a Delinquent Lender under, the Loan
Documents or other documents or instruments referred to or provided for herein
or therein (including, without limitation, all principal, interest, fees and
expenses) shall be subordinate in lien priority and to the repayment of all
amounts (including, without limitation, interest) then or thereafter due or to
become due to the non-Delinquent Lenders under the Loan Documents or other
documents or instruments referred to or provided for herein or therein
(including future Advances). In furtherance of the foregoing, the Delinquent
Lender shall be deemed to have assigned any and all payments due to it from
BORROWER, whether on account of Outstanding Advances, interest, fees or
otherwise, to the remaining non-Delinquent Lenders for application to, and
reduction of, their respective Pro Rata Shares of all Outstanding Advances and
the Delinquent Lender hereby authorizes AGENT to distribute all payments from or
on behalf of BORROWER to the non-Delinquent Lenders in proportion to their
re-adjusted respective Pro Rata Shares of all Outstanding Advances. Also, the
Delinquent Lender shall have no right to participate in any discussions among
and/or decisions by the LENDERS hereunder and/or under the other Loan Documents
or other documents or instruments referred to or provided for herein or therein
and the Delinquent Lender shall be bound by any amendment to, or waiver of, any
provision of, or any action taken or omitted to be taken by AGENT and/or the
non-Delinquent Lenders under, any of the Loan Documents or other documents or
instruments referred to or provided for herein or therein which is made
subsequent to the Delinquent Lender's becoming a Delinquent Lender.
(5) If, pursuant to the operation of Section 9.15 hereof, an
Advance of Revolving Loan proceeds is made without AGENT's receipt of a
Delinquent Lender's portion thereof, BORROWER shall, upon demand of AGENT,
refund the entire such advance to AGENT. BORROWER's failure to do so within ten
(10) days of such demand shall, notwithstanding anything to the contrary
contained in any of the Loan Documents, constitute an Event of Default under
this Agreement and the other Loan Documents. Upon its receipt of such funds from
BORROWER, AGENT shall promptly remit to each non-Delinquent Lender its
appropriate share thereof.
(b) Cure by Delinquent Lender.
(1) A Delinquent Lender may cure a delinquency arising out of its
failure to fund its required portion of any Advance if, within the Election
Period, it remits to AGENT its required portion of such Advance (together with
interest thereon at the Default Rate from the date such Advance was to have been
made if such Advance was made by AGENT and not refunded by BORROWER pursuant to
subsection (a)(5) of this Section above), in which event AGENT shall so notify
BORROWER and the LENDERS who are not Delinquent Lenders: (i) of its receipt of
such funds; and (ii)(A) if the Advance that was the subject of the delinquency
shall not have been made (or shall have been refunded by BORROWER pursuant to
subsection (a)(5) of this Section above), of the rescheduled date of the Advance
(which shall be no sooner than 3 Business Days after such notice) or (B) if
AGENT shall have funded the entire Advance that was the subject of the
delinquency (including the Delinquent Lender's portion) and BORROWER shall not
have refunded such advance pursuant to subsection (a)(5) of this Section above,
of its intention to reimburse itself from funds received from the Delinquent
Lender (which reimbursement is hereby authorized) for funding the Delinquent
Lender's required portion of the Advance. In the event any Delinquent Lender
cures a delinquency prior to the expiration of the Election Period (or
thereafter with the consent of all of the non-Delinquent Lenders), such
Delinquent Lender nonetheless shall be bound by any amendment to or waiver of
any provision of, or any action taken or omitted to be taken by AGENT and/or the
non-Delinquent Lenders under, any of the Loan Documents or other documents or
instruments referred to or provided for herein or therein which is made
subsequent to that LENDER's becoming a Delinquent Lender and prior to its curing
the delinquency as provided in this subsection, provided that such amendment or
waiver of action was taken in accordance with the provisions of this Agreement.
A Delinquent Lender shall have absolutely no right to cure any delinquency after
the expiration of the Election Period unless all LENDERS in their sole
discretion elect to permit such cure.
(2) If not previously satisfied directly by the Delinquent Lender,
a Delinquent Lender shall also be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
Outstanding Advances and of the non-Delinquent Lenders (as set forth in
subsection (a)(4) above), the LENDERS' respective Pro Rata Shares of all
Outstanding Advances have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such
delinquency, provided, however, that (i) any cure under this subsection (2)
shall not reinstate the Delinquent Lender's right to participate in any
discussions among and/or decisions by the LENDERS hereunder and/or under the
other Loan Documents or other documents or instruments referred to or provided
for herein or therein and (ii) the Delinquent Lender shall be bound by any
amendment to, or waiver of, any provision of, or any action taken or omitted to
be taken by AGENT and/or the non-Delinquent Lenders under, any of the Loan
Documents or other documents or instruments referred to or provided for herein
or therein which may be made subsequent to a satisfaction of any deficiency
pursuant to this subsection (2).
(c) Delinquent LENDER Not Excused. Nothing contained in the foregoing
subsections (a) and (b) above shall release, or in any way limit, a Delinquent
Lender's obligations as a LENDER hereunder and/or under any of the other of the
Loan Documents or other documents or instruments referred to or provided for
herein or therein. Further, a Delinquent Lender shall indemnify and hold
harmless AGENT and each of the non-Delinquent Lenders from any claim, loss, or
costs incurred by AGENT and/or the non-Delinquent Lenders as a result of a
Delinquent Lender's failure to comply with the requirements of this Agreement,
including, without limitation, any and all additional losses, damages, costs and
expenses (including, without limitation, attorneys' fees) incurred by AGENT and
any LENDER as a result of and/or in connection with (1) a non-Delinquent
Lender's acting as an Electing Lender, (2) any enforcement action brought by
AGENT against a Delinquent Lender, and (3) any action brought against AGENT
and/or LENDERS. The indemnification provided above shall survive any termination
of this Agreement.
(d) Notices Regarding Delinquent Lender. Notices by AGENT or LENDERS
pursuant to subsections (a) and (b) above may be by telephone (to be promptly
confirmed in writing).
9.18 REPLACEMENT LENDER.
(a) In the event a LENDER becomes a Delinquent Lender and no other
LENDER elects to make Advances to meet the Pro Rata Share of Advances that were
to have been made by the Delinquent Lender, BORROWER shall have the right, at
any time provided there exists no Event of Default or event which, but for the
passage of time or the giving of notice, would be such an Event of Default, to
cause another financial institution reasonably acceptable to the REQUIRED
LENDERS to assume the Delinquent Lender's obligations with respect to the
Delinquency Amount on the then-existing terms and conditions of the Loan
Documents (such replacement institution, a "Replacement Lender"). Such
assumption shall be pursuant to a written instrument reasonably satisfactory to
the REQUIRED LENDERS. Upon such assumption, the Replacement Lender shall become
a "LENDER" for all purposes hereunder, with all Individual Loan Commitment in an
amount equal to the Delinquency Amount, and the Delinquent Lender's individual
Commitment shall automatically be reduced by the Delinquency Amount. In
connection with the foregoing, BORROWER shall execute and deliver to the
Replacement Lender and the Delinquent Lender a replacement Revolving Note
substantially in the form of the Revolving Note held by the Delinquent Lender
and stating:
"This Note is a replacement Revolving Note as contemplated by
Section 9.18 of the Loan Agreement; it replaces and is in lieu
of that certain note made by Maker dated [Closing Date] to the
order of [Delinquent Lender] in the principal sum of
[Delinquent Lender's original individual Revolving Loan
Commitment]."
Such replacement Revolving Note shall be in amounts equal to, in the case of the
Replacement Lender's Revolving Note, the Delinquency Amount and, in the case of
the Delinquent Lender's Revolving Note, its individual Commitment, as reduced as
aforesaid. Such replacement Revolving Notes shall constitute a "Revolving Note"
for purposes of this Agreement and the other Loan Documents.
(b) LENDERS shall reasonably cooperate with BORROWER's attempts to obtain a
Replacement Lender, but they shall not be obligated to modify the Loan Documents
in connection therewith, other than such modifications as may be required to
reflect the admission of the Replacement Lender as a LENDER.
9.19 ASSIGNMENTS BY LENDERS.
(a) (1) Each LENDER may assign to one or more banks or other entities all
or a portion of its rights and obligations under this Agreement upon consent of
BORROWER (so long as no Event of Default has occurred and is continuing) and
AGENT, which consent shall not be unreasonably withheld (including, without
limitation, all or a portion of its Commitment, the Advances owing to it, and
the Revolving Note or Revolving Notes held by it); provided, however, that the
following shall apply:
(A) no such consent shall be required in the case of any
assignment to the Federal Reserve Bank;
(B) each such assignment shall be of a constant, and not a
varying, percentage of all of the assigning LENDER's rights and
obligations under this Agreement;
(C) the amount of the Commitment of the assigning LENDER being
assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than Five Million
($5,000,000) Dollars, must be in an integral multiple of One
Million ($1,000,000) Dollars thereafter, and the assigning
LENDER must retain at least Five Million ($5,000,000) Dollars
of its Commitment provided, however, that any LENDER may assign
any portion of its Commitment to another LENDER, provided the
assigning LENDER retains at least Five Million ($5,000,000)
Dollars of its Commitment) and provided further, however, that
in the event that any LENDER is the holder of a Commitment in
an amount less than $5,000,000, such LENDER's assignment must
be for the entirety of its Commitment; and
(D) each such assignment shall be to an Eligible Assignee.
(2) Upon such execution, delivery, acceptance and recording (if
applicable), from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least fifteen Business Days after
the execution thereof, the following shall apply:
(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 and Acceptance, have the
rights and obligations of a LENDER hereunder, and
(B) the LENDER assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning LENDER's
rights and obligations under this Agreement, such LENDER shall
cease to be a party hereto).
(3) By executing and delivering an Assignment and Acceptance, the
LENDER assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows:
(A) other than as provided in such Assignment and Acceptance,
such assigning LENDER makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with
this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished
pursuant hereto;
(B) such assigning LENDER makes no representation or warranty
and assumes no responsibility with respect to the financial
condition of BORROWER or the performance or observance by
BORROWER of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto;
(C) such assignee confirms that it has received a copy of this
Agreement, together with copies of such financial statements
and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance;
(D) such assignee will, independently and without reliance upon
AGENT, such assigning LENDER or any other LENDER and based on
such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking
or not taking action under this Agreement;
(E) such assignee confirms that it is an Eligible Assignee;
(F) such assignee appoints and authorizes AGENT to take such
action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to AGENT by the terms hereof,
together with such powers as are reasonably incidental thereto;
and
(G) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a LENDER.
(4) Upon its receipt of an Assignment and Acceptance executed by an
assigning LENDER and an assignee representing that it is an Eligible Assignee,
together with any Revolving Note subject to such assignment, AGENT shall (A)
accept such Assignment and Acceptance, and (B) give prompt notice thereof to
BORROWER.
(5) Within five Business Days after its receipt of such notice,
BORROWER, at its own expense, shall execute and deliver to AGENT in exchange for
the surrendered Revolving Note a new Revolving Note to the order of such
Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning LENDER has retained a
Commitment hereunder, a new Revolving Note to the order of the assigning LENDER
in an amount equal to the Commitment retained by it hereunder. Such new
Revolving Note shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Revolving Note, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit "A" hereto.
(b) Any LENDER may, in connection with any assignment or proposed
assignment pursuant to this Section, disclose to the assignee or proposed
assignee, any information relating to BORROWER furnished to LENDER by or on
behalf of BORROWER; provided that, prior to any such disclosure, the assignee or
proposed assignee shall agree to preserve the confidentiality of any
confidential information relating to BORROWER received by it from such LENDER to
the same extent as AGENT and the LENDERS.
9.20 PARTICIPATIONS.
(a) BORROWER, AGENT and LENDERS agrees that any LENDER may (without the
consent of any other party hereto) sell participations to one or more banks or
other entities (each a "Participant") in a portion of its rights and obligations
under this Agreement (including, without limitation, a portion of its
Commitment, the Advances owing to it, and the Revolving Note held by it);
provided, however, that the following shall apply:
(1) such LENDER's obligations under this Agreement (including,
without limitation, its Commitment hereunder) shall remain unchanged,
(2) such LENDER shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(3) such LENDER shall retain a controlling interest over its
Participants in its Commitment,
(4) such LENDER shall remain the holder of any such Revolving Note
for all purposes of this Agreement, and BORROWER, AGENT and the other LENDER
shall continue to deal solely and directly with such LENDER in connection with
such LENDER's rights and obligations under this Agreement, and
(5) no Participant (other than an affiliate of a LENDER which is a
party hereto) shall be entitled under the relevant participation agreement or
any associated agreement to require such LENDER to take or omit to take any
action hereunder, except, to the extent that any Participant has any interest
directly affected thereby, action that extends the final maturity of any
Advance, reduces the rate or extends the time of payment of interest on any
Advance, extends the time for payment, or reduces any payment or fee payable to
such LENDER hereunder.
(b) As part of such sale of participations, the selling LENDER may
without the consent of any party hereto xxxxx xxxx passu interests in the
Advances, this Agreement, the Revolving Note applicable to such LENDER, and the
other Loan Documents to any such person, firm or corporation. So long as the
selling LENDER remains a LENDER under this Agreement, such person, firm or
corporation shall through its participation with LENDER share on a derivative
basis and on a pari passu basis all the powers and rights given to LENDER in
respect thereof but neither AGENT nor any other party hereto shall be required
to deal in any way with any such participant. AGENT and other parties to this
Agreement will continue to deal in all respects with the selling LENDER as
though no sale of a participation had been made by such selling LENDER.
(c) Any LENDER may, in connection with any participation or proposed
participation pursuant to this Section, disclose to the participant or proposed
participant, any information relating to BORROWER furnished to LENDER by or on
behalf of BORROWER; provided that, prior to any such disclosure, the participant
or proposed participant shall agree to preserve the confidentiality of any
confidential information relating to BORROWER received by it from such LENDER to
the same extent as AGENT and the LENDERS.
9.21 BENEFITS RESTRICTED. Except as expressly provided in this Article IX,
neither BORROWER nor any of its Subsidiaries shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement, AGENT shall act solely as agent for LENDERS and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with BORROWER or any of its Subsidiaries.
9.22 WITHHOLDING TAXES. Each LENDER represents that it is entitled to
receive any payments to be made to it hereunder without the withholding of any
tax and will furnish to AGENT such forms, certifications, statements and other
documents as AGENT may reasonably request from time to time: (a) to evidence
such LENDER's exemption from the withholding of any tax imposed by any
jurisdiction, or (b) to enable AGENT to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any LENDER is not created or organized under the laws of the United States or
any state thereof, such LENDER will furnish to AGENT Form 4224 or Form 1001 of
the Internal Revenue Service, or such other forms, certifications, statements or
documents, duly executed and completed by such LENDER as evidence of such
LENDER's exemption from the withholding of United States tax with respect
thereto. AGENT shall not be obligated to make any payments hereunder to such
LENDER in respect of the Revolving Loan until such LENDER shall have furnished
to AGENT the requested form, certification, statement or document.
9.23 DELIVERY OF REVOLVING LOAN DOCUMENTS.
(a) AGENT represents that it has delivered true and complete copies of
all Loan Documents which have been executed in connection with the Revolving
Loan. A list of said Loan Documents are identified on the Closing Statement
delivered to each LENDER on the date hereof.
(b) Each LENDER acknowledges receipt and approval of copies of all said
documents.
9.24 DEEMED CONSENT OR APPROVAL. With respect to any requested amendment,
waiver, consent or other action which requires the approval of the REQUIRED
LENDERS or all of the LENDERS, as the case may be, in accordance with the terms
of this Agreement, or if AGENT is required hereunder to seek, or desires to
seek, the approval of the REQUIRED LENDERS or all of the LENDERS, as the case
may be, prior to undertaking a particular action or course of conduct, AGENT in
each such case shall provide each LENDER with written notice of any such request
for amendment, waiver or consent or any other requested or proposed action or
course of conduct, accompanied by such detailed background information and
explanations as may be reasonably necessary to determine whether to approve or
disapprove such amendment, waiver, consent or other action or course of conduct.
AGENT may (but shall not be required to) include in any such notice, printed in
capital letters or boldface type, a legend substantially to the following
effect:
"THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO
RESPOND WITHIN TEN (10) CALENDAR DAYS FROM THE RECEIPT OF THIS
COMMUNICATION SHALL CONSTITUTE A DEEMED APPROVAL BY THE
ADDRESSEE OF THE ACTION REQUESTED BY BORROWER OR THE COURSE OF
CONDUCT PROPOSED BY AGENT AND RECITED ABOVE."
and if the foregoing legend is included by AGENT in its communication, a LENDER
shall be deemed to have approved or consented to such action or course of
conduct for all purposes hereunder if such LENDER fails to object to such action
or course of conduct by written notice to AGENT within ten (10) calendar days of
such LENDER's receipt of such notice.
9.25 COMPENSATION OF AGENT.
(a) It is understood that AGENT will receive for its benefit and not
for the benefit of the LENDERS each of the following:
(1) the Loan Closing Fee set forth in Section 2.15(a) above;
(2) the Verification Fees payable under Section 5.11 above;
(3) the field examination fees payable under Section 5.12 above;
(4) the Collateral Management Fees payable under Section 5.13
above; and
(5) any increased interest payable by virtue of the two collection
days described in Section 2.5(b)(8) above
(b) In addition, AGENT shall receive the compensation set forth in the
letter or other understanding relating to AGENT's fees or "override" delivered
or communicated to the LENDERS prior to the date hereof.
END OF ARTICLE IX
ARTICLE X
MISCELLANEOUS
10.1 COMMUNICATIONS AND NOTICES:
(a) Any communications between the parties hereto or notices provided
herein to be given may be given by mailing the same, certified mail, return
receipt requested, postage prepaid or by confirmed facsimile transmission or
hand delivery or by an overnight delivery service, as follows: (1) to AGENT at:
000 Xxxxxx Xxxxxx Xxxxxxxx, Xxx Xxxxxx 00000 Attn: Account Officer for Five Star
Group, Inc.;
(2) to BORROWER at the address first above given for BORROWER in
this Agreement;
(3) to any LENDER at the address given for any such LENDER in this
Agreement;
(4) to such other addresses as any party may in writing hereafter
indicate by notice given in conformity with this Section.
(b) Notices sent by certified mail shall be deemed received when
accepted. Notices sent by confirmed facsimile transmission or hand delivery
shall be deemed received when delivered to the address and/or person designated
in this Section. Notices sent by overnight delivery service shall be deemed
received upon delivery.
10.2 LENDER MAY PAY, SATISFY, DISCHARGE OR BOND CERTAIN OF BORROWER'S
OBLIGATIONS: In the event that BORROWER shall default in the performance of any
of the provisions of this Agreement or in the event that BORROWER shall fail to
pay any tax, assessment, government charge or levy, except as the same are being
contested in good faith by appropriate proceedings, or shall fail to discharge
any lien, encumbrance or security interest prohibited hereby, or shall fail to
comply with any other obligation of BORROWER to AGENT or any LENDER hereunder,
AGENT may, but shall not be required to, pay, satisfy, discharge or bond the
same for the account of BORROWER and all moneys so paid out shall be an
obligation of BORROWER hereunder, repayable on demand, together with per annum
interest at the Default Rate.
10.3 PLEDGE TO FEDERAL RESERVE: Any LENDER may at any time pledge all or
any portion of its rights under the Loan Documents including its Revolving Note
to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release any such LENDER from its obligations under any of the Loan
Documents.
10.4 PAYMENTS IN LAWFUL MONEY OF THE UNITED STATES: All payments shall be
in lawful money of the United States in immediately available funds unless
otherwise provided in this Agreement.
10.5 SUCCESSORS AND ASSIGNS: This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that BORROWER shall not assign this Agreement or any of its
rights, duties or obligations hereunder without the prior written consent of
AGENT and all LENDERS and any purported assignment or delegation without such
consent shall be void.
10.6 AGENT'S/LENDERS' RIGHTS NOT IMPAIRED BY DELAY IN EXERCISING RIGHTS: No
delay or omission to exercise any right, power or remedy accruing to AGENT or
any LENDER upon any breach or default (whether such breach or default is now or
hereafter occurring) of BORROWER under this Agreement, any Revolving Note or any
of the other Loan Documents shall (a) impair any such right, power or remedy of
AGENT or any such LENDER, (b) be construed to be a waiver of any such breach or
default, or an acquiescence therein, or (c) be construed to be a waiver of or an
acquiescence in any similar breach or default thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of AGENT or any
such LENDER of any breach or default under this Agreement, any Revolving Note or
any of the other Loan Documents, or any waiver on the part of AGENT or any
LENDER of any provision or condition of this Agreement or any of such other Loan
Documents, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Revolving Notes or any of the other Loan Documents, or by law or
otherwise afforded to of AGENT or any LENDER shall be cumulative and not
alternative.
10.7 LENDER'S COSTS AND EXPENSES:
(a) BORROWER will pay the reasonable fees and the reasonable
out-of-pocket expenses incurred by AGENT in connection with (1) the preparation
of this Agreement and other related documents, whether or not the transactions
hereby contemplated shall be consummated, (2) the making of the Revolving Loan
hereunder and (3) the determination and/or enforcement of the rights of AGENT in
connection with such documents and/or with the Revolving Loan. Such
out-of-pocket expenses include but are not limited to, charges for the
examination of title, inspections and drawings of paper, recording and filing
fees, and all reasonable attorneys' fees, including the fees and disbursements
of AGENT's counsel.
(b) Whenever any attorney is used to provide advice to AGENT regarding
AGENT's relationship with BORROWER or whenever any attorney is used to collect
any obligation or to determine, preserve or enforce any right of AGENT or any
LENDER against BORROWER or against the Collateral under this Agreement, any
Revolving Note or any of the other Loan Documents, whether by suit or other
means, BORROWER agrees to pay the reasonable attorney's fees and other costs and
expenses incurred by AGENT or such LENDER. BORROWER also agrees to pay AGENT's
attorneys a reasonable fee and costs and expenses for enforcing against third
parties any other rights of AGENT pertaining hereto including AGENT's defending
against any claim pertaining to the Collateral, provided, however, that BORROWER
shall not be obligated to pay for more than one attorney representing AGENT and
the LENDERS except during such period of time as an Event of Default may have
occurred and is continuing.
(c) Any payment required of BORROWER hereunder shall be made within 10
days of AGENT's request that BORROWER do so. The amount of all such expenses
may, at the option of AGENT, either be directly charged against a specially
designated demand deposit account of BORROWER at AGENT or, in the absence of
such designation or in the event that there are insufficient funds in such
designated account, then to any demand deposit account of BORROWER at AGENT as
of each due date. In the event that there are insufficient funds in any such
account on any applicable payment due date, then AGENT is hereby authorized to
effect payment by charge against the Revolving Loan by increasing the principal
balance of the Revolving Loan as though an Advance were taken by BORROWER
against the Revolving Loan in the amount of any payment effected by AGENT.
BORROWER's failure to make any such payment or AGENT's inability to charge
against or add to the Revolving Loan shall be an Event of Default hereunder.
(d) Until paid by BORROWER, all of the expenses set forth in this
Section above shall bear interest at the Default Rate and all such amounts shall
be added to the Revolving Loan and shall be secured by the Collateral.
10.8 NO WAIVER OF LENDER'S RIGHT OF SET-OFF: Nothing in this Agreement
shall be deemed any waiver or prohibition of AGENT's or any LENDER's right of
set-off.
10.9 GOVERNING LAW: This Agreement and each of the other Loan Documents
shall be governed by, and construed under, the laws of the State of New Jersey.
10.10 FORUM FOR LITIGATION: BORROWER agrees that, in addition to any other
available forum, any suit, action or proceeding against it arising under or
growing out of, or relating to this Agreement or any note or other instrument or
agreement required hereunder, or any other instrument executed by BORROWER for
the benefit of AGENT or any LENDER, may be instituted in any Federal court in
the State of New Jersey or any State court in the State of New Jersey or in any
other court having jurisdiction, and BORROWER hereby waives any objection which
it might have now or hereafter to the laying of the venue of any such suit,
action or proceeding, and irrevocably submits to the jurisdiction of any such
court in any suit, action or proceeding and waives any claim or defense of
inconvenient forum.
10.11 AGREEMENT MUST BE SIGNED BY AGENT AND LENDER:
(a) This Agreement shall not be effective against AGENT unless signed
by an officer of AGENT. (b) This Agreement shall not be effective against any
LENDER unless signed by an officer of such LENDER.
10.12 ENTIRE UNDERSTANDING: This Agreement contains the entire
understanding of the parties and any promises or representations not herein
contained shall have no force and effect, unless in writing, duly signed by the
party to be charged.
10.13 MODIFICATIONS: As it relates to AGENT, neither this Agreement nor any
portion or provision hereof may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing, signed by
AGENT.
10.14 CONTINUATION OF SECURITY INTERESTS: The security interests, liens,
and rights granted to AGENT and each LENDER hereunder shall continue in full
force and effect notwithstanding the fact that BORROWER's account may, from time
to time, be temporarily in a credit position.
10.15 SURVIVAL OF REPRESENTATIONS: All representations, warranties,
covenants, waivers and agreements contained herein shall survive execution
hereof, unless otherwise provided.
10.16 SEVERABILITY: The provisions of this Agreement are severable, and if
any clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision in this Agreement in any
jurisdiction. Each of the covenants, agreements and conditions contained in this
Agreement is independent and compliance by BORROWER with any of them shall not
excuse non-compliance by BORROWER with any other. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default if such action is taken or
condition exists.
10.17 ACTIONS OF LENDER: Any requirement in this Agreement that AGENT or
any LENDER act reasonably or any requirement in this Agreement that AGENT or any
LENDER show materiality shall be broadly and liberally construed in favor of
AGENT and each such LENDER bearing in mind the need of AGENT and each LENDER to
protect its security interests and to realize upon the Collateral.
10.18 RESTATEMENT OF PRIOR AGREEMENTS:
(a) (1) This Agreement and the other Loan Documents restate and amend
the obligations of BORROWER under the "Prior Agreements", such Prior Agreements
consisting of that certain September 30, 1998 Loan and Security Agreement by and
among BORROWER and Fleet Bank, National Association (as agent, and now known as
Fleet National Bank) and the Banks named therein as Lenders and the Loan
Documents referred to therein, as from time to time amended.
(b) This Agreement and the other Loan Documents are intended to
restate, amend, substitute for and replace in their entirety the Prior
Agreements.
(c) All sums outstanding on the date hereof under the Prior Agreements
shall be and hereby are restated and recast, without more, as an Advance under
the Revolving Loan.
(d) BORROWER stipulates and agrees that all sums now owing under the
Prior Agreements are due and payable to AGENT for the ratable benefit of the
LENDERS without defense, setoff, recoupment or counterclaim or charge of any
type or nature, whether asserted or unasserted.
10.19 INCONSISTENCIES: In the event of any inconsistency between
this Agreement and any of the other Loan Documents affording AGENT or any LENDER
rights and remedies, such inconsistency shall be resolved by an
interpretation
which expands such rights rather than limits such rights.
10.20 CONFIRMATORY SEARCHES: BORROWER understands that AGENT may order
confirmatory searches after the date of this Agreement in order to verify that
all UCC-1 Financing Statements have been filed and that AGENT holds the lien
priorities against the Collateral as required by this Agreement. BORROWER agrees
to pay all of AGENT's expenses, including reasonable attorneys' fees, incurred
in procuring and reviewing such searches. By its execution of this Agreement,
BORROWER authorizes AGENT and each LENDER to reimburse itself for any of its
expenses associated with the above in accordance with the general authorization
provided to AGENT under Section 2.8 of this Agreement.
10.21 AGENT/LENDERS NOT BORROWER'S AGENT: Nothing herein contained shall be
construed to constitute AGENT or any LENDER as BORROWER's agent for any purpose
whatsoever. In addition, neither AGENT nor any LENDER shall be responsible or
liable for (a) any acts of omission or commission, (b) any error of judgment,
(c) any mistake of fact, (d) any shortage, discrepancy, impairment, damage, loss
or destruction of any part of the Collateral wherever the same may be located
and regardless of the cause thereof or (e) any error or omission or delay of any
kind occurring in the settlement, collection or payment of any of the Accounts
Receivable or any instrument received in payment thereof or for any damage
resulting therefrom.
10.22 LOST LOAN DOCUMENTS: Upon receipt of an affidavit of an officer of
AGENT as to the loss, theft, destruction or mutilation of any Revolving Note or
any other security document which is not of public record, BORROWER will issue,
in lieu thereof, a replacement Revolving Note or other security document in the
same principal amount thereof and otherwise of like tenor.
10.23 COUNTERPARTS: This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be as
effective as delivery of a manually executed counterpart of this Agreement.
10.24 WAIVER OF JURY TRIAL: BORROWER AND AGENT AND EACH LENDER MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR AGENT AND EACH LENDER TO ENTER INTO THIS
AGREEMENT AND MAKE THE REVOLVING LOAN.
END OF ARTICLE X
-155-
IN WITNESS WHEREOF, BORROWER and AGENT and LENDERS have caused this Loan
and Security Agreement to be executed by their respective duly authorized
officers on the date and year first above written.
WITNESS: FIVE STAR GROUP, INC.
By:
Xxxxxxx Grad, President
SUMMIT BUSINESS CAPITAL CORP.,
doing business as Fleet Capital-Business
Finance Division
By: Xxxxxxx X. Xxxxxx, Senior Vice President
Address: 000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
DIME COMMERCIAL CORP.
By: Xxxxxx Xxxxxx, Vice President
Address: 1180 Avenue of the Americas,
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
INDEPENDENCE COMMUNITY BANK
By:
Xxxxxxx Xxxxxx, Senior Vice President
Address: Independence Community Bank
000 Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
