Exhibit 99.5
$60,000,000
LOAN AND SECURITY AGREEMENT
Dated as of June 17, 2004
Among
TROPICAL SPORTSWEAR INT'L CORPORATION, TROPICAL SPORTSWEAR COMPANY, INC., SAVANE INTERNATIONAL CORP., APPAREL
NETWORK CORP., TSI BRANDS, INC. and TSIL, INC.
(each, a Borrower and collectively, the Borrowers)
and
THE FINANCIAL INSTITUTIONS PARTY
HERETO FROM TIME TO TIME
(collectively, the Lenders)
and
THE CIT GROUP/COMMERCIAL SERVICES, INC.
(the Agent)
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS............................................................................................2
SECTION 1.1 DEFINITIONS..................................................................................2
SECTION 1.2 OTHER REFERENTIAL PROVISIONS................................................................26
SECTION 1.3 EXHIBITS AND SCHEDULES......................................................................27
ARTICLE II. REVOLVING CREDIT LOANS...............................................................................27
SECTION 2.1 REVOLVING CREDIT LOANS......................................................................27
SECTION 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS..................................................28
SECTION 2.3 REPAYMENT OF REVOLVING CREDIT LOANS; REDUCTION OF COMMITMENTS...............................29
SECTION 2.4 REVOLVING CREDIT NOTE.......................................................................29
ARTICLE III. LETTER OF CREDIT FACILITY...........................................................................29
SECTION 3.1 ISSUANCE....................................................................................30
SECTION 3.2 ADVANCES AUTOMATIC; PARTICIPATIONS..........................................................30
SECTION 3.3 CASH COLLATERAL.............................................................................30
SECTION 3.4 FEES AND EXPENSES...........................................................................31
SECTION 3.5 REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS......................................31
SECTION 3.6 OBLIGATION ABSOLUTE.........................................................................31
SECTION 3.7 INDEMNIFICATION; NATURE OF LENDERS' DUTIES..................................................32
ARTICLE IV. GENERAL LOAN PROVISIONS..............................................................................33
SECTION 4.1 INTEREST....................................................................................33
SECTION 4.2 FEES........................................................................................34
SECTION 4.3 MANNER OF PAYMENT; APPLICATION OF PROCEEDS..................................................35
SECTION 4.4 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT........................................................36
SECTION 4.5 TERMINATION OF AGREEMENT....................................................................36
SECTION 4.6 MAKING OF ADVANCES..........................................................................37
SECTION 4.7 SETTLEMENT AMONG LENDERS....................................................................38
SECTION 4.8 CHANGED CIRCUMSTANCES.......................................................................40
SECTION 4.9 OBLIGATIONS ABSOLUTE........................................................................41
SECTION 4.10 BORROWERS' REPRESENTATIVE...................................................................41
SECTION 4.11 AGENT ADVANCES..............................................................................42
SECTION 4.12 OVERADVANCES................................................................................42
SECTION 4.13 RESERVED....................................................................................43
SECTION 4.14 JOINT AND SEVERAL LIABILITY.................................................................43
SECTION 4.15 WAIVER OF SURETYSHIP DEFENSES...............................................................44
SECTION 4.16 CONTRIBUTION AND INDEMNIFICATION AMONG THE BORROWERS........................................44
ARTICLE V. CONDITIONS PRECEDENT..................................................................................45
SECTION 5.1 CONDITIONS PRECEDENT TO REVOLVING CREDIT LOANS AND LETTERS OF CREDIT........................45
SECTION 5.2 ALL ADVANCES; LETTERS OF CREDIT.............................................................49
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BORROWERS..........................................................49
SECTION 6.1 REPRESENTATIONS AND WARRANTIES..............................................................49
SECTION 6.2 SURVIVAL OF REPRESENTATION AND WARRANTIES, ETC..............................................57
ARTICLE VII. SECURITY INTEREST...................................................................................58
SECTION 7.1 SECURITY INTEREST...........................................................................58
SECTION 7.2 CONTINUED PRIORITY OF SECURITY INTEREST.....................................................58
ARTICLE VIII. COLLATERAL COVENANTS...............................................................................60
SECTION 8.1 COLLECTIONS; PAYMENTS.......................................................................60
SECTION 8.2 INSPECTION, VERIFICATION AND NOTIFICATION...................................................61
SECTION 8.3 INVENTORY COVENANTS.........................................................................61
SECTION 8.4 RETURNED INVENTORY..........................................................................62
SECTION 8.5 OWNERSHIP AND DEFENSE OF TITLE..............................................................62
SECTION 8.6 INSURANCE...................................................................................62
SECTION 8.7 RECORDS RELATING TO COLLATERAL; LOCATION OF OFFICES AND COLLATERAL..........................63
SECTION 8.8 INFORMATION AND REPORTS.....................................................................64
SECTION 8.9 COVENANTS REGARDING INTELLECTUAL PROPERTY COLLATERAL........................................65
SECTION 8.10 LANDLORD AND OTHER WAIVERS..................................................................66
SECTION 8.11 CONTROL AGREEMENTS..........................................................................66
SECTION 8.12 REAL ESTATE AND FIXTURES....................................................................66
ARTICLE IX. AFFIRMATIVE COVENANTS................................................................................66
SECTION 9.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.....................................66
SECTION 9.2 COMPLIANCE WITH APPLICABLE LAW..............................................................67
SECTION 9.3 MAINTENANCE OF PROPERTY.....................................................................67
SECTION 9.4 CONDUCT OF BUSINESS.........................................................................67
SECTION 9.5 INSURANCE...................................................................................67
SECTION 9.6 PAYMENT OF TAXES AND CLAIMS.................................................................67
SECTION 9.7 ACCOUNTING METHODS AND FINANCIAL RECORDS....................................................67
SECTION 9.8 USE OF PROCEEDS.............................................................................67
SECTION 9.9 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS..................................68
SECTION 9.10 FURTHER ASSURANCES..........................................................................68
ARTICLE X. INFORMATION...........................................................................................68
SECTION 10.1 FINANCIAL STATEMENTS........................................................................68
SECTION 10.2 ACCOUNTANTS' CERTIFICATE....................................................................69
SECTION 10.3 OFFICER'S CERTIFICATE.......................................................................69
SECTION 10.4 COPIES OF OTHER REPORTS.....................................................................69
SECTION 10.5 NOTICE OF LITIGATION AND OTHER MATTERS......................................................70
SECTION 10.6 ERISA.......................................................................................70
SECTION 10.7 ACCURACY OF INFORMATION.....................................................................70
SECTION 10.8 REVISIONS OR UPDATES TO SCHEDULES...........................................................71
ARTICLE XI. NEGATIVE COVENANTS...................................................................................72
SECTION 11.1 FINANCIAL COVENANTS.........................................................................72
SECTION 11.2 INDEBTEDNESS FOR MONEY BORROWED.............................................................73
SECTION 11.3 GUARANTIES..................................................................................73
SECTION 11.4 RESTRICTED INVESTMENTS......................................................................73
SECTION 11.5 CAPITAL EXPENDITURES........................................................................73
SECTION 11.6 RESTRICTED DISTRIBUTIONS AND PAYMENTS.......................................................74
SECTION 11.7 MERGER, CONSOLIDATION AND SALE OF ASSETS....................................................74
SECTION 11.8 TRANSACTIONS WITH AFFILIATES................................................................74
SECTION 11.9 LIENS.......................................................................................74
SECTION 11.10 OPERATING LEASES............................................................................74
SECTION 11.11 BENEFIT PLANS...............................................................................74
SECTION 11.12 SALES AND LEASEBACKS........................................................................74
SECTION 11.13 CAPITAL STRUCTURE AND BUSINESS..............................................................74
SECTION 11.14 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS.....................................................74
SECTION 11.15 NO SPECULATIVE TRANSACTIONS.................................................................74
SECTION 11.16 SUBORDINATED INDEBTEDNESS...................................................................75
SECTION 11.17 TERMINATIONS; AMENDMENTS NOT AUTHORIZED.....................................................75
SECTION 11.18 NO RESTRICTION ON PAYMENTS TO AGENT.........................................................75
ARTICLE XII. DEFAULT.............................................................................................75
SECTION 12.1 EVENTS OF DEFAULT...........................................................................75
SECTION 12.2 REMEDIES....................................................................................78
SECTION 12.3 APPLICATION OF PROCEEDS.....................................................................79
SECTION 12.4 MISCELLANEOUS PROVISION CONCERNING REMEDIES.................................................80
SECTION 12.5 TRADEMARK LICENSE...........................................................................82
ARTICLE XIII. ASSIGNMENTS........................................................................................82
SECTION 13.1 SUCCESSORS AND ASSIGNS......................................................................82
SECTION 13.2 ASSIGNMENTS; PARTICIPATIONS.................................................................82
SECTION 13.3 REPRESENTATION OF LENDERS...................................................................84
ARTICLE XIV. THE AGENT...........................................................................................84
SECTION 14.1 APPOINTMENT OF AGENT........................................................................84
SECTION 14.2 DELEGATION OF DUTIES........................................................................84
SECTION 14.3 EXCULPATORY PROVISIONS......................................................................84
SECTION 14.4 RELIANCE BY AGENT...........................................................................85
SECTION 14.5 NOTICE OF DEFAULT...........................................................................85
SECTION 14.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.....................................................85
SECTION 14.7 INDEMNIFICATION.............................................................................86
SECTION 14.8 AGENT IN ITS INDIVIDUAL CAPACITY............................................................86
SECTION 14.9 SUCCESSOR AGENT.............................................................................86
SECTION 14.10 NOTICES FROM AGENT TO LENDERS...............................................................86
SECTION 14.11 AGENCY FOR PERFECTION.......................................................................86
ARTICLE XV. MISCELLANEOUS........................................................................................86
SECTION 15.1 NOTICES.....................................................................................86
SECTION 15.2 EXPENSES....................................................................................87
SECTION 15.3 STAMP AND OTHER TAXES.......................................................................88
SECTION 15.4 SETOFF; PRO RATA PARTICIPATION..............................................................88
SECTION 15.5 LITIGATION..................................................................................89
SECTION 15.6 RESERVED....................................................................................90
SECTION 15.7 REVERSAL OF PAYMENTS........................................................................90
SECTION 15.8 INJUNCTIVE RELIEF...........................................................................90
SECTION 15.9 AMENDMENTS..................................................................................90
SECTION 15.10 PERFORMANCE OF EACH BORROWER'S DUTIES.......................................................91
SECTION 15.11 INDEMNIFICATION.............................................................................91
SECTION 15.12 ALL POWERS COUPLED WITH INTEREST............................................................91
SECTION 15.13 SURVIVAL....................................................................................91
SECTION 15.14 SEVERABILITY OF PROVISIONS..................................................................92
SECTION 15.15 GOVERNING LAW...............................................................................92
SECTION 15.16 COUNTERPARTS................................................................................92
SECTION 15.17 REPRODUCTION OF DOCUMENTS...................................................................92
SECTION 15.18 TERM OF AGREEMENT...........................................................................92
SECTION 15.19 CONFIDENTIALITY.............................................................................92
EXHIBITS-1
EXHIBITS
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF NOTICE OF PROPOSED ADVANCE/CONVERSION/ CONTINUATION
EXHIBIT C FORM OF POWER OF ATTORNEY
EXHIBIT D FORM OF ASSIGNMENT AND TRANSFER AGREEMENT
EXHIBIT E .........FORM OF ACCOUNTS BORROWING BASE CERTIFICATE
EXHIBIT F .........FORM OF INVENTORY BORROWING BASE CERTIFICATE
EXHIBIT G .........EXISTING LETTERS OF CREDIT
SCHEDULES-1
SCHEDULES
SCHEDULE 1.1: Commercial Tort Claims
SCHEDULE 1.2: Mortgaged Properties
SCHEDULE 2.2: Authorized Officers
SCHEDULE 6.1(a): Organization; Power; Qualification; FEIN
SCHEDULE 6.1(b): Subsidiaries and Ownership of the Borrowers
SCHEDULE 6.1(e): Business Description
SCHEDULE 6.1(f): Compliance with Law; Government Approvals
SCHEDULE 6.1(g): Titles to Properties
SCHEDULE 6.1(h): Liens
SCHEDULE 6.1(i): Indebtedness and Guaranties
SCHEDULE 6.1(j): Litigation
SCHEDULE 6.1(k): Tax Returns and Payments
SCHEDULE 6.1(o): Benefit Plans; ERISA
SCHEDULE 6.1(s): Inventory
SCHEDULE 6.1(u): Chief Executive Office
SCHEDULE 6.1(v): Real Property
SCHEDULE 6.1(w): Corporate and Fictitious Names
SCHEDULE 6.1(z): Employee Relations
SCHEDULE 6.1(aa): Intellectual Property
SCHEDULE 6.1(bb): Trade Names
SCHEDULE 6.1(cc): Brokers
SCHEDULE 6.1(dd): Insurance
SCHEDULE 6.1(ee): Deposit and Disbursement Accounts
SCHEDULE 6.1(ff): Government Contracts
SCHEDULE 6.1(gg): Trade Relations
SCHEDULE 6.1(hh): Agreements and other Documents
SCHEDULE 9.8: Use of Proceeds
SCHEDULE 11.6: Restricted Distributions and Payments
SCHEDULE 11.7: Merger, Consolidation and Sale of Assets
LOAN AND SECURITY AGREEMENT
Dated as of June 17, 2004
TROPICAL SPORTSWEAR INT'L CORPORATION, a Florida corporation ("Parent"), TROPICAL SPORTSWEAR
COMPANY, INC., a Delaware corporation ("TSCI"), SAVANE INTERNATIONAL CORP., a Texas corporation ("Savane"),
APPAREL NETWORK CORP., a Florida corporation ("Apparel"), TSI BRANDS, INC., a Delaware corporation ("TSI"), and
TSIL, INC., a Delaware corporation ("TSIL"; and together with Parent, TSCI, Savane, Apparel and TSI, the
"Borrowers" and each, a "Borrower"), the financial institutions party to this Agreement from time to time
(collectively, the "Lenders"), and THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation, as agent for
the Lenders (in such capacity, the "Agent") agree as follows:
RECITALS:
A........The Borrowers, Duck Head Apparel Company, LLC, a Georgia limited liability company
("Duck Head"), and Delta Merchandising, Inc, a South Carolina corporation ("Delta"), are parties to a certain
Second Amended and Restated Loan and Security Agreement, dated January 12, 2004 (the "Existing Loan Agreement"),
with Fleet Capital Corporation, a Rhode Island corporation ("FCC"), in its capacity as agent (in such capacity,
the "Existing Agent") for the lenders (the "Existing Lenders") party to the Existing Loan Agreement from time to
time, and the Existing Lenders.
B........CIT (as hereinafter define) has purchased from the Existing Lenders all of the
commitments and loans of such Existing Lenders to the Borrowers, Duck Head and Delta under the Existing Loan
Agreement, and the Agent has been appointed successor agent to the Existing Agent under the Old Loan Agreement.
C........The Borrowers, CIT and the Agent desire to make substantial amendments to the Existing
Loan Agreement, including, without limitation, making available to the Borrowers a revolving credit facility in
an aggregate amount up to $60,000,000 (including a letter of credit subline in an aggregate amount of up to
$40,000,000) and eliminating Duck Head and Delta as borrowers thereunder, and simultaneously therewith to cause a
portion of the commitments thereunder to be assigned to FCC.
D........To accomplish the foregoing, the Borrowers, the Agent and the Lenders hereby agree, in
consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which
are hereby expressly acknowledged, that the Existing Loan Agreement is hereby amended and restated in its
entirety as set forth in the introductory paragraph and recitals hereto and as follows.
E........The Borrowers' business is a mutual and collective enterprise, and the consolidation
of all loans and other accommodations under this Agreement will enhance the Borrowers' aggregate borrowing
powers, all to the Borrowers' respective individual and mutual advantage.
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. For the purposes of this Agreement:
"Accounts" means, as to any Person, all of such Person's then owned or existing and future
acquired or arising (a) "accounts", as such terms is defined in the Uniform Commercial Code, and any and all
other receivables (whether or not specifically listed on schedules furnished to Agent), including, without
limitation, all accounts created by, or arising from, all of any Borrower's sales, leases, rentals or other
dispositions of goods or renditions of services to its customers (whether or not they have been earned by
performance), including but not limited to, those accounts arising from sales, leases, rentals or other
dispositions of goods or rendition of services made under any of the trade names, logos or styles of any
Borrower, or through any division of any Borrower; (b) Instruments, Documents, Chattel Paper, Contracts, Contract
Rights, acceptances, and tax refunds relating to any of the foregoing or arising therefrom; (c) unpaid seller's
rights (including rescission, replevin, reclamation, repossession and stoppage in transit) relating to any of the
foregoing or arising therefrom; (d) rights to any Goods relating to any of the foregoing or arising therefrom,
including rights to returned, reclaimed or repossessed Goods; (e) reserves and credit balances relating to any of
the foregoing or arising therefrom; (f) Supporting Obligations and Letter of Credit Rights relating to any of
the foregoing or arising therefrom; (g) insurance policies or rights relating to any of the foregoing; (h)
General Intangibles relating to any of the foregoing or arising therefrom including, without limitation, all
payment intangibles and other rights to payment (including, but not limited to, those arising in connection with
bank and non-bank credit card receivables) and books and records and any electronic media and software relating
thereto; (i) notes, deposits or property of Account Debtors relating to any of the foregoing or arising therefrom
securing the obligations of any such Account Debtors to the Borrowers; and (l) cash and non-cash Proceeds of any
and all the foregoing.
"Accounts Borrowing Base" means at any time, for the Borrowers in the aggregate, an amount
equal to the sum of (A) ninety percent (90%) of Eligible Credit Approved Accounts plus (2) eighty-five percent
(85%) of Eligible Non-Credit Approved Accounts.
The Agent shall have, and reserves, the right at any time, in its reasonable credit judgment,
to adjust the foregoing advance rate percentages.
"Accounts Borrowing Base Certificate" means a certificate in the form attached hereto as
Exhibit E (or another form acceptable to the Agent) setting forth the calculation of the Accounts Borrowing Base,
including a calculation of each component thereof, in sufficient detail by Borrowers or otherwise in such detail
as shall be reasonably satisfactory to the Agent. All calculations of the Accounts Borrowing Base in connection
with the preparation of any Accounts Borrowing Base Certificate shall originally be made by the Borrowers and
certified to the Agent; provided, that the Agent shall have the right to review and adjust, in the exercise of
its reasonable credit judgment, any such calculation (a) to reflect its reasonable estimate of declines in value
of any of the Collateral described therein, and (b) to the extent that such calculation is not in accordance with
this Agreement.
"Account Debtor" means a Person who is obligated on or in connection with an Account.
"ACH Transactions" means any cash management or related services including the automatic
clearing house transfer of funds by a Lender for the account of the Borrowers pursuant to agreement or overdrafts.
"Advance" means an amount or amounts advanced or to be advanced, as the context requires, by
the Lenders to the Borrowers under the Revolving Credit Facility pursuant to Article 2 hereof.
"Affiliate" means, with respect to a Person, (a) any partner, officer, manager, director,
employee or managing agent of such Person or such Person's Affiliates; and (b) any other Person (other than a
Subsidiary) that, (i) directly or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly beneficially owns or holds 20% or
more of any class of voting stock or partnership or other voting interest of such Person or any Subsidiary of
such Person, or (iii) 20% or more of the voting stock or partnership or other voting interest of which is
directly or indirectly beneficially owned or held by such Person or a Subsidiary of such Person. The term
"control" means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting securities or partnership or other
voting interest, by contract or otherwise; provided, however, that the term "Affiliate" shall specifically
exclude the Agent and each Lender.
"Agent" shall have the meaning ascribed to such term in the Recitals to this Agreement.
"Agent's Office" means the office of the Agent specified in or determined in accordance with
the provisions of Section 15.1(c) hereof.
"Agreement" means this Loan and Security Agreement, including all Schedules, Exhibits and other
attachments hereto, and all amendments, modifications and supplements hereto and thereto and shall mean and refer
to this Agreement as the same may be in effect at the time such reference becomes operative.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Law" means all applicable provisions of constitutions, statutes, rules, regulations
and orders of all governmental bodies and of all orders and decrees of all courts and arbitrators, including,
without limitation, applicable Environmental Laws.
"Applicable Margin" means, the percentage per annum set forth below opposite the Average Excess
Availability for the respective type of Loan below, to be determined (a) on October 1, 2004 based on Average
Excess Availability for the period of time elapsed since the Effective Date and (b) on the first Business Day of
each third month thereafter based on Average Excess Availability for the immediately preceding three months:
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Prime Advance
Level Average Excess Availability Margin LIBOR Advance Margin
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I > $17,500,000 0% 2.5%
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II > $13,500,000 0.5% 2.75%
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III > $10,000,000 1.0% 3.0%
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IV = $10,000,000 1.5% 3.25%
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A downward adjustment in the Applicable Margin shall take place only if no Default or Event of
Default has occurred and is continuing. The initial Applicable Margin shall be based on Level II until October
1, 2004. Any adjustment in the Applicable Margin shall be applicable to all existing Revolving Credit Loans
outstanding, as well as, any new Advances made or issued.
"Applicable Percentage" means, the percentage per annum set forth below opposite the Average
Excess Availability, to be determined (a) on October 1, 2004 based on Average Excess Availability for the period
of time elapsed since the Effective Date and (b) on the first Business Day of each third month thereafter based
on Average Excess Availability for the immediately preceding three months:
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Level Average Excess Availability Applicable Percentage
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I > $17,500,000 0.20%
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II > $13,500,000 0.25%
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III > $10,000,000 0.30%
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IV = $10,000,000 0.35%
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A downward adjustment in the Applicable Percentage shall take place only if no Default or Event
of Default has occurred and is continuing. The initial Applicable Percentage shall be based on Level II until
October 1, 2004.
"Appraised FM Value" means the fair market value of the relevant property determined from time
to time pursuant to periodic appraisals (i) conducted by an appraiser satisfactory to the Agent, in its sole
discretion, (ii) which contain results and values which are satisfactory to the Agent, in its sole discretion,
and (iii) which have been accepted by the Agent, in its sole discretion, and such acceptance has been
communicated to the Borrowers.
"Appraised OL Value" means the net "orderly liquidation" value of the relevant property
determined from time to time pursuant to periodic appraisals (i) conducted by an appraiser satisfactory to the
Agent, in its sole discretion, (ii) which contain results and values which are satisfactory to the Agent, in its
sole discretion, and (iii) which have been accepted by the Agent, in its sole discretion, and such acceptance has
been communicated to the Borrowers.
"Asset Disposition" means the sale, transfer, conveyance or other disposition (including,
without limitation, pursuant to any merger, consolidation or sale-leaseback transaction) of any asset or property
of any of the Borrowers including, but not limited to, the capital stock of any Borrower or any Subsidiary of any
Borrower, but excluding sales of Inventory in the ordinary course of business.
"Assignment and Transfer" means an assignment and transfer, substantially in the form of
Exhibit D hereto, assigning all or a portion of a Lender's interests, rights and obligations under this Agreement
pursuant to Section 13.2.
"Audited Financial Statements" shall have the meaning assigned to such term in Section 10.1(a)
hereof.
"Availability Reserve" means an amount equal to (a) the Inventory Reserves plus (b) the Minimum
Excess Availability Reserve plus (c) three (3) months rental payments or similar charges for any Borrower's
leased premises or other Collateral locations (other than show rooms and sales offices with an amount of
Inventory deemed by the Agent to be immaterial) for which such Borrower has not delivered to the Agent a Waiver
and Consent plus (d) the amount of such other reserve or reserves as the Agent may establish or deem necessary
from time to time in the exercise of its reasonable credit judgment including, without limitation, as a result of
(i) any reserve established by Agent, in its discretion, pursuant to Sections 8.1, 8.10, and 8.11 hereof, (ii)
any negative forecasts and/or trends in the business, prospects, operation or financial condition of the
Borrowers (iii) the occurrence of any event or existence of any condition which has adversely impacted or is
reasonably anticipated to adversely impact the perfection, priority, validity or enforceability of the Security
Interest or Agent's and Lenders' ability to realize on the value of the Collateral or which is otherwise expected
to have a Materially Adverse Effect, (iv) the existence of any material and unanticipated cash requirement or
liability of the Borrowers, or (v) any other issues, circumstances or facts that could otherwise negatively
impact the Borrowers or the business, prospects, operations, financial condition or assets of the Borrowers.
"Average Excess Availability" means, for any period, an amount equal to the sum of the actual
amount of Excess Availability on each day during such period, as determined by the Agent, divided by the number
of days in such period.
"Bank Products" means any one or more of the following types of services or facilities extended
to the Borrowers by FCC or any Affiliate of FCC in reliance on FCC's agreement to indemnify such Affiliate: (i)
ACH Transactions and (ii) cash management, including controlled disbursement services.
"Bank Products Liabilities" means Liabilities of a Borrower to FCC or any Affiliate of FCC
arising out of or relating to Bank Products.
"Benefit Plan" or "Plan" means an "employee benefit plan" as defined in Section 3(3) of ERISA
(other than a Multi-Employer Plan) in respect of which a Borrower or any Related Company is, or with respect to
defined benefit plans (as defined under ERISA) within the immediately preceding six years was, an "employer" as
defined in Section 3(5) of ERISA, including such plans as may be established after the Agreement Date.
"Blocked Account" shall have the meaning ascribed to such term in Section 8.1(a)(i) of this
Agreement.
"Borrower" and "Borrowers" shall have the meanings ascribed to such terms in the preamble of
this Agreement.
"Borrowing Base" means at any time, for the Borrowers in the aggregate, an amount equal to the
lesser of:
(a) an amount equal to (i) the Revolving Credit Facility Amount minus (ii) an amount equal to the sum of (A)
the Letter of Credit Reserve, and (B) the amount of any Availability Reserves,
or
(b) an amount equal to (i) the sum of (A) the Accounts Borrowing Base; (B) the Inventory Borrowing Base; and
(C) the Fixed Asset Borrowing Base; minus (ii) an amount equal to the sum of (A) the Letter of Credit
Reserve, and (B) the amount of any Availability Reserves.
"Borrowing Notice" shall have the meaning assigned to such term in Section 2.2(a)(i).
"Business Day" means any day other than a Saturday, Sunday or other day on which either (i) the
office of Chase Bank, in New York, New York or (ii) the Agent's office in Charlotte, North Carolina, is
authorized to close.
"Capital Expenditures" means, with respect to any Person, all expenditures made and liabilities
incurred for the acquisition of assets which are not, in accordance with GAAP, treated as expense items for such
Person in the year made or incurred or as a prepaid expense applicable to a future year or years.
"Capitalized Lease" means a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
"Capitalized Lease Obligation" means Indebtedness represented by obligations under a
Capitalized Lease, and the amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"CARPA" means the Credit Approved Receivables Purchase Agreement dated November 1, 2003 between
CIT and the Parent, as the same may be amended, modified or supplemented from time to time.
"Cash Collateral" means collateral consisting of cash or Cash Equivalents on which the Agent,
for the benefit of itself as Agent and the Lenders, has a first priority Lien.
"Cash Collateral Account" shall have the meaning assigned to such term in Section 3.3(a) hereof.
"Cash Equivalents" means
(a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or
issued by any agency thereof and backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(b) commercial paper maturing no more than one year from the date issued and, at the time of acquisition
thereof, having a rating of at least A-2 from Standard & Poor's Corporation or at least P-1 from Xxxxx'x
Investors Service, Inc.;
(c) certificates of deposit or bankers' acceptances issued in Dollar denominations and maturing within one
year from the date of issuance thereof issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having combined capital and
surplus of not less than $250,000,000.00 and, unless issued by the Agent or a Lender, not subject to
set-off or offset rights in favor of such bank arising from any banking relationship with such bank; and
(d) repurchase agreements in form and substance and for amounts satisfactory to the Agent with a term of not
more than seven days for underlying securities of the types described in clauses (a), (b) and (c) above,
entered into with any financial institution meeting the qualifications specified in clause (c).
"Change of Control" means any of the following: (a) any person or group of persons (within the
meaning of the Securities Exchange Act of 1934,) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934,) of
40% or more of the issued and outstanding shares of capital stock of Parent having the right to vote for the
election of directors of Parent under ordinary circumstances; (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted the board of directors of Parent
(together with any new directors whose election by the board of directors of Parent or whose nomination for
election by the Stockholders of Parent was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason other than death or disability to constitute a majority of the
directors then in office; (c) Parent ceases to own and control, directly or indirectly, all of the economic and
voting rights associated with all of the outstanding capital stock of the other Borrowers or (d) Borrowers cease
to own and control, directly or indirectly, all of the economic and voting rights associated with all of the
outstanding capital stock of any of its Subsidiaries.
"Charges" means all Federal, state, county, city, municipal, local, foreign or other
governmental taxes (including, without limitation, taxes owed to PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i) the Collateral, (ii) the Secured
Obligations, (iii) the employees, payroll, income or gross receipts of a Borrower, (iv) the ownership or use of
any assets by a Borrower, or (v) any other aspect of a Borrower's business.
"Chase Bank" means JPMorgan Chase Bank, N.A., a national banking association.
"Chase Bank Rate" means the rate of interest per annum announced by Chase Bank from time to
time as its prime rate in effect at its principal office in the City of New York. Such rate is not intended to
be the lowest rate of interest charged by Chase Bank to its borrowers.
"Chattel Paper" means as to any Person, any "chattel paper," as such term is defined in the
Uniform Commercial Code, including electronic chattel paper, now owned or hereafter acquired by such Person.
"CIT" means The CIT Group/Commercial Services, Inc., a New York corporation, in its capacity
other than as Agent.
"Clearing Bank" means any banking institution with which a Blocked Account has been established
pursuant to a Lockbox Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" means all of each Borrower's right, title and interest in and to each of the
following (whether in the name of such Borrower or under any of such Borrower's Trade Names), wherever located
and whether now or hereafter existing or now owned or hereafter acquired or arising:
(a) all Accounts,
(b) all Chattel Paper,
(c) all Contracts,
(d) all Contract Rights,
(e) all Deposit Accounts,
(f) all Documents,
(g) all Equipment,
(h) all Fixtures,
(i) all General Intangibles (including payment intangibles and Software),
(j) all Instruments,
(k) all Inventory,
(l) all Investment Property,
(m) all Mortgaged Properties,
(n) all commercial tort claims (which are specifically described on Schedule 1.1),
(o) all Supporting Obligations and Letter of Credit Rights,
(p) all other Goods and property, whether or not delivered, including, without limitation, such other goods
and property (i) the sale or lease of which gives or purports to give rise to any Account or other
Collateral, including, but not limited to, all Inventory and other merchandise returned or rejected by
or repossessed from customers, or (ii) securing any Account or other Collateral, including, without
limitation, all rights as an unpaid vendor or lienor (including, without limitation, stoppage in
transit, replevin and reclamation) with respect to such other Goods and properties,
(q) all substitutes and replacements for, accessories, attachments, and other additions to, any of the above
and any and all products or masses into which any Goods are physically united such that their identity
is lost,
(r) all policies and certificates of insurance relating to any of the foregoing, now owned or hereafter
acquired, evidencing or pertaining to any and all items of Collateral,
(s) all files, correspondence, computer programs, tapes, discs and related data processing software which
contain information identifying or pertaining to any of the Collateral or any Account Debtor, or showing
the amounts thereof or payments thereon or otherwise necessary or helpful in the realization thereon or
the collection thereof,
(t) all cash deposited with the Agent or any Lender or any Affiliate of the Agent or any Lender or which the
Agent, for the benefit of the Lenders, or any Lender or such Affiliate is entitled to retain or
otherwise possess as Collateral pursuant to the provisions of this Agreement or any of the Security
Documents or any agreement relating to any Letters of Credit, and
(u) any and all products and Proceeds of the foregoing (including, but not limited to, any claim to any item
referred to in this definition, and any claim against any third party for loss of, damage to or
destruction of any or all of, the Collateral or for proceeds payable under, or unearned premiums with
respect to, policies of insurance) in whatever form, including, but not limited to, cash, Instruments,
Chattel Paper, security agreements and other documents.
"Collection Account" means the Agent's account, currently at Wachovia Bank, National
Association, Charlotte, North Carolina.
"Collection Report" means a report delivered by the Borrowers to the Agent, from time to time,
pursuant to the provisions of Section 8.8(b).
"Commitment" means, as to each Lender, the amount set forth opposite such Lender's name on the
signature pages hereof (or in the Register), representing such Lender's obligation, upon and subject to the terms
and conditions of this Agreement, to make Advances and to purchase participations in Letters of Credit.
"Commitment Percentage" means, as to any Lender, the percentage of the Revolving Credit
Facility Amount obtained by dividing such Lender's Commitment by the Revolving Credit Facility Amount.
"Common Stock" means, with respect to any corporation, the shares of common stock of such
corporation.
"Consolidating Balance Sheet" means a Consolidated Balance Sheet plus individual balance sheets
for each Borrower and its consolidated Subsidiaries, showing all eliminations of inter-company transactions and
prepared in such form as is satisfactory to the Agent.
"Consolidated Balance Sheet" means a consolidated balance sheet for the Borrowers and their
consolidated Subsidiaries, eliminating all inter-company transactions and Liabilities and prepared in accordance
with GAAP.
"Consolidated Net Income" means, for any period, the net income or loss of the Borrowers and
their consolidated Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.
"Contaminant" means any waste, pollutant, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste, or any constituent of any such substance
or waste.
"Contracts" means, as to any Person, all "contracts" as such term is defined in the Uniform
Commercial Code, including, without limitation, all of such Person's then owned or existing and future acquired
or arising contracts, undertakings, or agreements (other than rights evidenced by chattel paper, documents or
instruments as such terms are defined in the Uniform Commercial Code) in or under which such Person may now or
hereafter have any right, title or interest, including, without limitation, any agreement relating to Inventory,
the terms of payment or the terms of performance of any Account or any other Collateral.
"Contract Rights" means, as to any Person, all of such Person's then owned or existing and
future acquired or arising rights under Contracts not yet fully performed and not evidenced by an instrument or
chattel paper, to the extent that the same may lawfully be assigned.
"Control Agreement" means an acknowledgement from, or an agreement among the Borrowers, the
Agent, for the benefit of the Lenders, and (i) the issuer of uncertificated securities with respect to
uncertificated securities in the name of any Borrower, (ii) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other financial assets held in a securities
account in the name of any Borrower, or (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Borrower, whereby, among other things, the
issuer, securities intermediary, or futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of the Agent, for the benefits of the Lenders, on such financial assets,
and agrees to follow the instructions or entitlement orders of the Agent without further consent by the affected
Borrower.
"Cost" means with respect to Eligible Inventory of a Borrower the lower of cost, determined on
a first-in first-out basis, or fair market value of such Eligible Inventory as determined in accordance with GAAP.
"Default" means any of the events specified in Section 12.1 which with the passage of time or
giving of notice or both would constitute an Event of Default.
"Default Margin" means two percent (2%) per annum.
"Deposit Accounts" means, as to any Person, all "deposit accounts" as defined in the Uniform
Commercial Code, now owned or hereafter acquired, including, without limitation, all of such Person's demand,
time, savings, passbook, money market or like depository accounts and all certificates of deposit, maintained
with a bank, savings and loan association, credit union or like organization (other than an account evidenced by
a certificate of deposit that is an instrument under the Uniform Commercial Code).
"Disbursement Account" means an account maintained by and in the name of a Borrower with a
Disbursing Bank for the purposes of depositing proceeds of Advances.
"Disbursing Bank" means any commercial bank within which a Borrower maintains a Disbursement
Account after the Effective Date.
"Documentary Letter of Credit" means any documentary letter of credit issued or authorized to
be issued by an Issuing Bank for the account of a Borrower pursuant to Article 3 hereof.
"Documents" means, as to any Person, all "documents" as defined in the Uniform Commercial Code,
now owned or hereafter acquired, including, without limitation, all of such Person's certificates or documents of
origin and of title, warehouse receipts and manufacturers statements of origin.
"Domestic Subsidiary" means a Subsidiary of a Borrower (other than a Subsidiary that is a
Borrower) that is incorporated under the laws of a state of the United States or the District of Columbia.
"Dollar" and "$" means freely transferable United States dollars.
"Early Termination Date" means any date, prior to the Expiration Date, on which the Borrowers
terminate this Agreement or the Revolving Credit Facility pursuant to Section 4.5.
"Early Termination Fee" means an amount equal to (a) one and one half percent (1.5%) of the
Revolving Credit Facility Amount, if Borrowers terminate the Revolving Credit Facility or this Agreement on or
before the first anniversary of the Effective Date; or (b) three quarters percent (0.75%) of the Revolving Credit
Facility Amount, if Borrowers terminate the Revolving Credit Facility or this Agreement following the first
anniversary of the Effective Date but prior to the Expiration Date.
"EBITDA" means, for any period Consolidated Net Income for such period plus without duplication
and to the extent deducted in the determination of Consolidated Net Income for such period, (a) interest, income
taxes, depreciation and amortization expenses, (b) non cash write downs of Accounts owing to any Borrower from
Swiss Army Brands, Inc. and any other intangible assets of any Borrower, (c) non-cash charges up to $3,500,000
associated with the consolidation of Borrowers' distribution facilities, (d) non-cash charges associated with the
winding up and closure of Borrowers' Australian and New Zealand Subsidiaries, (e) non-cash charges associated
with the winding up and closure of Borrowers' Mexican and Canadian operations of up to $750,000, (f) non-cash
charges of up to $4,000,000 associated with the winding up and closure of Borrowers' dormant Subsidiaries, (g)
non cash write downs of up to $2,500,000 of capitalized FCC costs and (h) severance costs of up to $500,000
incurred in connection with Borrowers' restructuring minus to the extent added in the determination of
Consolidated Net Income for such period, extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP.
"Effective Date" means the later of (a) the Agreement Date, or (b) the first date on which all
of the conditions set forth in Article 5 shall have been fulfilled.
"Effective Interest Rate" means the rate of interest per annum on the Revolving Credit Loans in
effect from time to time pursuant to the provisions of Section 4.1(a).
"Eligible Accounts" of a Borrower, means the unpaid portion of any Account, including credit
card receivables, payable in Dollars to such Borrower net of any returns, discounts, claims, credits, charges or
other allowances, offsets, deductions, counterclaims, disputes or other defenses and reduced by the aggregate
amount of all reserves, limits and deductions provided for in this definition, which are deemed by Agent in its
reasonable credit judgment to be eligible for inclusion in the calculation of the Accounts Borrowing Base;
provided, that, unless otherwise approved in writing by the Agent, (I) no Account shall be deemed to be an
Eligible Account of such Borrower unless it meets all of the following requirements: (a) such Account arises from
the sale of goods, is owned by such Borrower and represents a complete bona fide transaction which requires no
further act under any circumstances on the part of such Borrower to make such Account payable by the Account
Debtor; (b) such Account has not been not outstanding for longer than the earlier of (i) one hundred and twenty
(120) days after the invoice date thereof or (ii) sixty (60) days after the due date thereof; (c) such Account
and the underlying contract does not contravene any laws, rules or regulations applicable thereto including,
without limitation, rules and regulations relating to truth-in-lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy and no party to the underlying
contract is in violation of any such laws, rules or regulation; (d) such Account is a valid, legally enforceable
obligation of the Account Debtor with respect thereto and is not subject to any present, or contingent (and no
facts (y) exist to the knowledge of any Borrower, or (z) have been disclosed in the course of any audit, which
are the basis for any future) offset, deduction or counterclaim, dispute or other defense on the part of such
Account Debtor; (e) such Account is subject to the Security Interest, which is perfected as to such Account, and
is subject to no other Lien whatsoever and the goods, the sale of which gave rise to the Accounts, were not at
the time of the sale subject to any Lien whatsoever; (f) such Borrower is not in breach of any express or implied
representations or warranty with respect to the goods, the sale of which gave rise to such Account nor in breach
of any representation or warranty, covenant or other agreement contained in the Loan Documents with respect to
such Account; (g) such Account does not arise out of any transaction with any Subsidiary, Affiliate, creditor,
lessor or supplier of such Borrower; (h) the Account Debtor with respect thereto is located within the United
States of America; (i) such Account is not subject to the Assignment of Claims Act of 1940, as amended from time
to time, or any Applicable Law now or hereafter existing similar in effect thereto, as determined in the sole
discretion of Lender, or to any provision prohibiting its assignment or requiring notice of or consent to such
assignment; (j) the Account Debtor with respect to such Account is not insolvent or the subject of any bankruptcy
or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might,
in Agent's reasonable credit judgment, have a materially adverse effect on such Account Debtor; (k) such Account
is not owing by an Account Debtor (other than Wal Mart or Sam's Club) that has then-existing Accounts owing to
such Borrower, fifty percent (50%) of which are not deemed Eligible Accounts hereunder; (l) such Account is not
owing by Wal Mart or Sam's Club if either such Account Debtor has then-existing Accounts owing to such Borrower,
twenty-five percent (25%) of which are not deemed Eligible Accounts hereunder; (m) such Account is evidenced by
an invoice or other documentation in a form acceptable to Agent containing only terms normally offered by such
Borrower; (n) such Account is not evidenced by Chattel Paper or an Instrument of any kind; (o) such Account does
not arise out of a rebill or advertising xxxx; (r) the Goods, the sale of which gave rise to such Account, were
delivered to the Account Debtor on an absolute sale basis and not on (i) a xxxx and hold sale basis, (ii) a
consignment sale basis, (iii) a guaranteed sale basis, (iv) a sale or return basis, or (v) on the basis of any
similar understanding, and no material part of such Goods has been returned or rejected; (p) such Account does
not arise from the performance of services under or related to any warranty claim or obligation, or out of fees
or charges imposed by such Borrower for the time value of money; and (q) any other requirements deemed necessary
by the Agent in its reasonable credit judgment and which are customary either in the commercial finance industry
or in the lending practices of the Agent, and (II) Eligible Accounts of a Borrower shall not include any Account
(a) owed by an Account Debtor (other than Wal Mart or Sam's Club) if the aggregate unpaid balance of such
Accounts exceeds thirty percent (30%) of the aggregate unpaid balance of all Eligible Accounts owed to such
Borrower at such time, but only to the extent of such excess or (b) owed by Wal Mart or Sam's Club if the
aggregate unpaid balance of such Accounts exceeds sixty percent (60%) of the aggregate unpaid balance of all
Eligible Accounts owed to such Borrower at such time, but only to the extent of such excess.
"Eligible Assignee" means (i) a commercial bank organized under the laws of the United States,
or any State thereof, having total assets in excess of $500,000,000 or any commercial finance or asset based
lending affiliate of any such commercial bank; (ii) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, or any finance company, insurance company, fund or
institutional investor regularly engaged in the business of making secured loans, which, in each of the foregoing
cases, has total assets of at least $500,000,000 calculated in accordance with GAAP and, unless a Default or
Event of Default exists, is reasonably acceptable to the Borrowers (such approval by the Borrowers, when
required, not to be unreasonably withheld or delayed and to be deemed given by Borrowers if no objection is
received by the assigning Lender and the Agent from the Borrowers within two (2) Business Days after notice of
such proposed assignment has been provided by the assigning Lender as set forth in Section 13.2; and (iii) any
Lender listed on the signature page of this Agreement or any finance Affiliate thereof; provided in the case of
the institutions or Lenders described in clauses (i), (ii) and (iii) of this definition, such institution or
Lender is reasonably acceptable to the Agent and the representations contained in Section 13.2 hereof shall be
applicable with respect to such institution or Lender.
"Eligible Credit Approved Accounts" means Eligible Accounts that have been approved as to
credit by CIT under the CARPA.
"Eligible Non-Credit Approved Accounts" means Eligible Accounts that are not Eligible Credit
Approved Accounts.
"Eligible Inventory" of a Borrower means items of Inventory of such Borrower consisting of raw
materials or finished goods held for sale in the ordinary course of the business of such Borrower which are
deemed by Agent in its reasonable credit judgment to be eligible for inclusion in the calculation of the
Inventory Borrowing Base. Unless otherwise approved in writing by the Agent, no Inventory shall be deemed to be
Eligible Inventory of a Borrower unless it meets all of the following requirements: (a) such Inventory is owned
by such Borrower, is subject to the Security Interest, which is perfected as to such Inventory, and is not
subject to any claim of reclamation, adverse claim, security interest or right of equal or superior priority to
the Security Interest, or any other Lien whatsoever; (b) such Inventory consists of raw materials or finished
goods, but excludes work-in-process; (c) such Inventory is in good condition and meets all standards applicable
to such goods for their use or sale imposed by any Person having regulatory authority over such matters; (d) such
Inventory is currently usable or merchantable and readily saleable, at prices approximating at least the Cost
thereof, in the normal course of such Borrower's business; (e) such Inventory is not slow moving, stale,
obsolete, or seconds; (f) such Inventory (i) is located at one of the locations listed in Schedule 6.1(s) or is
in-transit to such locations, provided that such Inventory that is in transit is (x) fully insured with the Agent
as the loss payee with respect thereto and (y) is to be paid for by a drawing on a Documentary Letter of Credit
issued by the Agent or an Issuing Bank and (ii) is not Inventory that has been sold on terms, FOB customer
location or destination; (g) such Inventory is in the possession and control of the Borrower and not any third
party; provided that, if such Inventory is located in a facility owned by a third party or is subject to a
mortgage in favor of a lender other than Agent, then the mortgagee, lessor, warehouseman, bailee or other third
party, as the case may be, shall have executed and delivered to the Agent a Waiver and Consent in form and
substance satisfactory to the Agent; (h) such Inventory is not food, perishables, live plants, freight, damaged,
defective or unmerchantable goods, sample inventory, display items, packaging or shipping materials, supplies
used or consumed in a Borrower's business, shrinkage or Inventory scheduled for return to vendors; (i) such
Borrower is not in breach of any express or implied representation or warranty with respect to either the
Inventory in general or to the Eligible Inventory; (j) it is not subject to any License Agreement or other
agreement that limits, conditions or restricts such Borrower's or the Agent's right to sell or otherwise dispose
of such Inventory unless (i) the aggregate value (measured as the lower of cost or market value) of such
Inventory is not greater than $1,000,000 or (ii) the Licensor has entered into a Licensor/Lender Agreement with
the Agent; and (k) such Inventory was not produced in violation of the Fair Labor Standards Act and subject to
the so-called "hot goods" provision contained in Title 29, Chapter 8, U.S.C.ss.215(a).
"Eligible Letters of Credit" means Documentary Letters of Credit issued to support the purchase
of Inventory by any Borrower for shipment to the United States of America.
"Environmental Laws" means all federal, state, local and foreign laws now or hereafter in
effect relating to pollution or protection of the environment, including laws relating to emissions, discharges,
Releases or threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation, ambient air, surface water, ground
water, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport, or handling of pollutants, Contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes, and any and all regulations, notices or demand letters issued, entered,
promulgated or approved thereunder; such laws and regulations include but are not limited to the Resource
Conservation and Recovery Act, 42 X.X.X.xx. 6901 et seq., as amended; the Comprehensive Environmental Response,
Compensation and Liability Act, 42 X.X.X.xx. 6901 et seq., as amended; the Toxic Substances Control Act, 15 U.S.C.
ss. 2601 et seq., as amended; the Clean Air Act, 46 X.X.X.xx. 7401 et seq., as amended; and state and federal lien
and environmental cleanup programs.
"Environmental Lien" means a Lien in favor of any governmental entity for (a) any liability
under Environmental Laws or (b) damages arising from, or costs incurred by such governmental entity in response
to, a Release or threatened Release of Contaminant into the environment.
"Environmental Liabilities" means, with respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to
any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or common law, including, without
limitation, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any
Release or threatened Release or presence of a Contaminant whether on, at, in, under, from or about or in the
vicinity of any real or personal property.
"Environmental Permits" means all permits, licenses, authorizations, certificates, approvals,
registrations or other written documents required by any Governmental Authority under any Environmental Laws.
"Equipment" means, as to any Person, all "equipment" as such term is defined in the Uniform
Commercial Code, now owned or hereafter acquired, including, without limitation, all of such Person's then owned
or existing and future acquired or arising machinery, apparatus, equipment, furnishings, Fixtures, motor
vehicles, computers, trade fixtures, tractors, trailers, rolling stock, fittings, and other tangible personal
property (other than Inventory) of every kind and description used in such Person's business operations or owned
by such Person or in which such Person has an interest and all spare parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as in effect from time to
time, and any successor statute.
"Event of Default" means any of the events specified in Section 12.1, provided that any
requirement for notice or lapse of time or any other express condition has occurred or been satisfied.
"Excess Availability" means, at any time, the amount by which (a) the Borrowing Base at such
time, exceeds (b) the aggregate amount of all Revolving Credit Loans outstanding at such time.
"Exchange Notes" means a note or other similar security that is registered under the Securities
Act of 1933 and that is exchanged for a Senior Subordinated Note.
"Existing Agent" shall have the meaning given to such term in the Recitals to this Agreement.
"Existing Lenders" shall have the meaning given to such term in the Recitals to this Agreement.
"Existing Letters of Credit" means those letters of credit issued by Fleet National Bank and
listed on Exhibit G attached hereto.
"Expiration Date" means October 31, 2006.
"Facility Fee" shall have the meaning assigned to such term in Section 4.2(a).
"FCC" shall have the meaning given to such term in the Recitals to this Agreement and shall
include any successor to FCC that is an Affiliate of Bank of America, N.A.
"Fees" mean any and all fees payable to the Agent or any Lender pursuant to this Agreement or
any of the other Loan Documents.
"Financial Covenant Applicability Date" means any date on which (a) the sum of Excess
Availability plus the Minimum Excess Availability Reserve (hereinafter "Adjusted Excess Availability") is less
than twenty percent (20%) of the Revolving Credit Facility Amount on such date and (b) the Agent has provided the
Borrower written notice thereof; provided, however, (i) after the first Financial Covenant Applicability Date to
occur after the Effective Date, if Adjusted Excess Availability becomes equal to or greater than twenty percent
(20%) of the Revolving Credit Facility Amount within ten (10) Business Days after such Financial Covenant
Applicability Date (the date on which Adjusted Excess Availability becomes equal to or greater than twenty
percent (20%) of the Revolving Credit Facility Amount being hereinafter known as the "Cure Date"), then such
Financial Covenant Applicability Date shall be deemed not to have occurred and (ii) the same opportunity shall
exist for a Cure Date to occur in respect of any Financial Covenant Applicability Date after the first Financial
Covenant Applicability Date but only after a period of ninety (90) days has elapsed after the most recent Cure
Date.
"Financial Covenant Inapplicability Date" means any date after the occurrence of any Financial
Covenant Applicability Date on which (a) Excess Availability is equal to or greater than twenty percent (20%) of
the Revolving Credit Facility Amount on such date and (b) the Agent has provided the Borrower written notice
thereof.
"Financial Officer" means the chief financial officer, chief accounting officer, Treasurer or
Controller of a Borrower, or an officer in a comparable position at any Borrower.
"Financing Statements" means and includes (a) all UCC financing statements required by Agent
and authorized by a Borrower, in form and substance satisfactory to the Agent for the purpose of perfecting a
security interest in the personal property Collateral and (b) the Fixture Filings.
"Fiscal Month" means each of the twelve (12) monthly accounting periods of the Borrowers
comprising their Fiscal Year.
"Fiscal Quarter" means each of the quarterly accounting periods of the Borrowers comprising
their Fiscal Year.
"Fiscal Week" means each of the weekly accounting periods of the Borrowers comprising their
Fiscal Year.
"Fiscal Year" means each of the fiscal years of the Borrowers ending on the Saturday nearest to
September 30th of each calendar year.
"Fixed Asset Borrowing Base" means at any time, for the Borrowers in the aggregate, an amount
equal to the lesser of (i) $5,700,000 or (ii) the sum of (A) fifty percent (50%) of the Appraised FM Value of the
Mortgaged Property and (B) eighty percent (80%) of the Appraised OL Value of each Borrower's Equipment.
Notwithstanding the foregoing to the contrary, the Fixed Assets Borrowing Base will be reduced by $400,000 on the
first day of the third month after the Effective Date and on the first day of each third month thereafter.
The Agent shall have, and reserves, the right at any time, in its reasonable credit judgment,
to adjust the foregoing advance rate percentages.
"Fixed Charges" means, with respect to any Person for any relevant fiscal period, (a) interest
paid or accrued during such period plus (b) payments and scheduled payments of principal with respect to
Indebtedness during such period (excluding the periodic permanent reductions of the Fixed Asset Borrowing Base as
described in the definition thereof and in Section 4.3(d)) plus (c) Capital Lease payments paid or accrued during
such period plus (d) cash payments of dividends, and any other cash distributions or accruals thereof to any
Borrower's shareholders, members or partners during such period, all as determined on a consolidated basis in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means, for any relevant fiscal period with respect to the
Borrowers and their consolidated Subsidiaries, the ratio of (a) EBITDA during such period minus cash payments of
income taxes during such period and Capital Expenditures during such period that are not financed through the
incurrence of Indebtedness (excluding the Revolving Credit Loans), all as determined on a consolidated basis in
accordance with GAAP, to (b) Fixed Charges for such period.
"Fixtures" means, as to any Person, all "fixtures" as such term is defined in the Uniform
Commercial Code, now owned or hereafter acquired by such Person.
"Fixture Filings" means and includes all of those certain UCC Financing Statements authorized
by Borrowers and delivered to Agent, for the benefit of Lenders, for the purpose of perfecting a security
interest in and to Borrowers' Fixtures.
"Foreign Subsidiary" means a Subsidiary that is not a Domestic Subsidiary.
"Form 10-K" means the Parent's annual report on Form 10-K and the accompanying consolidated
financial statements filed with the Securities and Exchange Commission.
"Form 10-Q" means, for any given Fiscal Quarter, the Parent's quarterly report on Form 10-Q and
the accompanying consolidated financial statements filed with the Securities and Exchange Commission.
"GAAP" means accounting principles generally accepted in the United States consistently applied
and maintained throughout the period indicated and consistent with the prior financial practice of the Person
referred to.
"General Intangibles" means, as to any Person, all "general intangibles" as defined in the
Uniform Commercial Code, now owned or hereafter acquired, including, without limitation, all of such Person's
then owned or existing and future acquired or arising general intangibles, choses in action and causes of action
and all other intangible personal property of such Person of every kind and nature, including, without
limitation, Intellectual Property, corporate or other business records, inventions, designs, blueprints, plans,
specifications, trade secrets, goodwill, computer software, customer lists, licenses, franchises, tax refund
claims, reversions or any rights thereto and any other amounts payable to such Person from any Benefit Plan,
Multiemployer Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to
indemnification, and business interruption, property, casualty or any similar type of insurance and any proceeds
thereof.
"Goods" means, as to any Person, all "goods" as defined in the Uniform Commercial Code, now
owned or hereafter acquired, including, without limitation, all of such Person's then owned or existing and
future acquired or arising movables, Fixtures, Equipment, Inventory and other tangible personal property.
"Government Lists" means any of the following lists: (a) the "Specially Designated Nationals
and Blocked Persons List" maintained by OFAC, (b) any other list of terrorists, terrorist organizations or
narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Agent notifies
Borrower in writing is to be included in "Governmental Lists", or (c) any similar list maintained by the United
States Department of State, the United States Department of Commerce or any other Governmental Authority or
pursuant to any Executive Order of the President of the United States of America that Agent notifies Borrower in
writing is to be included in "Governmental Lists".
"Governmental Approvals" means all authorizations, consents, approvals, licenses and exemptions
of, registrations and filings with, and reports to, all governmental bodies, whether federal, state, local or
foreign national or provincial and all agencies thereof.
"Governmental Authority" means any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Guaranty," "Guaranteed" or to "Guarantee" as applied to any obligation of another Person means
(a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of
business), directly or indirectly, in any manner, of any part or all of such obligation of such other
Person, and
(b) an agreement direct or indirect, contingent or otherwise, and whether or not constituting a guaranty,
the practical effect of which is to assure the payment or performance (or payment of damages in the
event of nonperformance) of any part or all of such obligation of such other Person whether by (i) the
purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose of enabling the obligor with
respect to such obligation to make any payment or performance (or payment of damages in the event of
nonperformance) of or on account of any part or all of such obligation or to assure the owner of such
obligation against loss, (iii) the supplying of funds to, or in any other manner investing in, the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any
part of such Person's obligation under a guaranty of any obligation or indemnifying or holding harmless,
in any way, such Person against any part or all of such obligations.
"Indebtedness" of any Person means, without duplication, (a) Liabilities, (b) all obligations
for money borrowed or for the deferred purchase price of property or services, other than trade indebtedness
incurred in the ordinary course of business that is unsecured and not overdue by more than six (6) months unless
being contested in good faith, (c) all reimbursement and other obligations with respect to letters of credit,
bankers' acceptances and surety bonds, whether or not matured, (d) all obligations represented by bonds,
debentures, notes and similar instruments and accepted drafts that represent extensions of credit, (e) all
Capitalized Lease Obligations and the present value of future rental payments under all synthetic leases, (f) all
obligations (including obligations created or arising under any conditional sale or title retention agreement)
secured by any Lien to which any property or asset owned or held by such Person is subject, whether or not the
obligation secured thereby shall have been assumed by such Person, (g) all obligations of other Persons which
such Person has Guaranteed, including, but not limited to, all obligations of such Person consisting of recourse
liability with respect to accounts receivable sold or otherwise disposed of by such Person, (h) all obligations
of such Person under commodity purchase or options agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (i) all obligations of such Person under any foreign exchange contract
currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement
designed to alter the risks of such Person arising from fluctuations in currency values or interest rates, in
each case whether contingent or matured, (j) all obligations in respect of mandatorily redeemable capital stock
and (j) in the case of a Borrower (without duplication), the Revolving Credit Loans.
"Instruments" means, as to any Person, all "instruments," as such term is defined in the
Uniform Commercial Code, now owned or hereafter acquired by such Person, including, without limitation, all
certificated securities, all certificates of deposit, and all notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property" means, as to any Person, all of such Person's then owned existing and
future acquired or arising patents, patent rights, copyrights, works which are the subject of copyrights,
trademarks, service marks, trade names, patent, trademark and service xxxx applications, and all licenses and
rights related to any of the foregoing and all other rights under any of the foregoing, all extensions, renewals
reissues, divisions, continuations and continuations-in-part of any of the foregoing and all rights to xxx for
past, present and future infringements of any of the foregoing.
"Interest Expense" means the interest on Indebtedness during the period for which computation
is being made, excluding (a) the amortization of fees and costs incurred with respect to the closing of loans
which have been capitalized as transaction costs, and (b) interest paid in kind.
"Interest Payment Date" means for all Loans, the first (1st) day of each calendar month
commencing on the first day of the month immediately following the Effective Date continuing thereafter until the
Secured Obligations have been irrevocably paid in full.
"Inventory" means, as to any Person, all "inventory" as defined in the Uniform Commercial Code
including, without limitation, all of such Person's then owned or existing and future acquired or arising (a)
inventory, merchandise, Goods and other personal property intended for sale or lease or for display or
demonstration, (b) work in process, (c) raw materials and other materials and supplies of every nature and
description used or which might be used in connection with the manufacture, packing, shipping, advertising,
selling, leasing or furnishing of the foregoing or otherwise used or consumed in the conduct of business, and (d)
Documents evidencing, and General Intangibles relating to, any of the foregoing.
"Inventory Borrowing Base" means at any time, for the Borrowers in the aggregate, an amount
equal to the lesser of (A) $30,000,000, (B) sixty percent (60%) of the sum of (i) Eligible Inventory at Cost plus
(ii) the face amount of Eligible Letters of Credit prior to the time title to the Inventory on order and
documented under such Eligible Letters of Credit passes to a Borrower, (C) eighty-five percent (85%) of the sum
of (i) Eligible Inventory at its Appraised OL Value plus (ii) the Appraised OL Value of the Inventory on order
and documented under Eligible Letters of Credit prior to the time title to such Inventory passes to a Borrower,
or (D) the Accounts Borrowing Base.
The Agent shall have, and reserves, the right at any time, in its reasonable credit judgment,
to adjust the foregoing advance rate percentages.
"Inventory Borrowing Base Certificate" means a certificate in the form attached hereto as
Exhibit F (or another form acceptable to the Agent) setting forth the calculation of the Inventory Borrowing
Base, including a calculation of each component thereof, in sufficient detail by Borrowers or otherwise in such
detail as shall be reasonably satisfactory to the Agent. All calculations of the Inventory Borrowing Base in
connection with the preparation of any Inventory Borrowing Base Certificate shall originally be made by the
Borrowers and certified to the Agent; provided, that the Agent shall have the right to review and adjust, in the
exercise of its reasonable credit judgment, any such calculation (a) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, it being understood and agreed that if the Agent
adjusts the Inventory Borrowing Base Certificate in accordance with this clause (a), the Agent will as soon as
commercially practicable thereafter cause an updated appraisal of the Inventory to be performed, and (b) to the
extent that such calculation is not in accordance with this Agreement.
"Inventory Reserves" means such reserve or reserves as the Agent may establish or deem
necessary from time to time in the exercise of its reasonable credit judgment with respect to changes in the
determination of the saleability of the Eligible Inventory or which, without duplication as to valuation for
purposes of the Borrowing Base, reflect such other factors as negatively affect the value of the Eligible
Inventory. Without limiting the generality of the foregoing, Inventory Reserves may include, but are not limited
to, reserves based on (i) obsolescence, (ii) seasonality, (iii) shrinkage, (iv) imbalance, (v) change in
Inventory character, composition or mix, (vi) vendor chargebacks, and (vii) estimated reclamation claims of
unpaid sellers of Inventory to any Borrowers including, in each of the foregoing cases, where any of the
foregoing are inconsistent with prior period practice or performance, industry standards, or current business
plans of any Borrower.
"Investment Accounts" means any and all of Borrowers' securities accounts, brokerage accounts
and commodities accounts held with a brokerage, commodities, investment banking or other financial institution.
"Investment Property" means, as to any Person, all "investment property", as defined in the
Uniform Commercial Code, including, without limitation, (i) all securities, whether certificated or
uncertificated, including, but not limited to, stocks, bonds, interests in limited liability companies,
partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities
entitlements of such Person, including, but not limited to, the rights of such Person to any Investment Accounts
and the financial assets held by a financial intermediary in such accounts and any free credit balance or other
money owing by any financial intermediary with respect to such accounts; (iii) all commodity contracts of such
Person; and (iv) all Investment Accounts of such Person.
"IRS" means the Internal Revenue Service or any successor agency thereto.
"Issuing Bank" means any banking institution which is an issuer of a Letter of Credit and its
successors and assigns hereunder.
"Ledger Debt" means Indebtedness for goods and services purchased by any Borrower from any
Person whose Accounts are factored or financed by CIT.
"Lender" means, at any time, any financial institution party to this Agreement as a Lender at
such time, including any such Person becoming a party hereto pursuant to the provisions of Section 13.2, and its
successors and assigns, and "Lenders" means, at any time, all of the financial institutions party to this
Agreement as Lenders at such time, including any such Persons becoming parties hereto pursuant to the provisions
of Section 13.2, and their successors and assigns.
"Letter of Credit" means any Documentary Letter of Credit or Standby Letter of Credit,
including any Existing Letter of Credit.
"Letter of Credit Amount" means, with respect to any Letter of Credit, the aggregate maximum
amount at any time available for drawing under such Letter of Credit.
"Letter of Credit Default Margin" means 2.00% per annum.
"Letter of Credit Facility" means that part of this Agreement pursuant to which Letters of
Credit or guarantees thereof are provided to Borrowers.
"Letter of Credit Facility Amount" means the amount of $30,000,000 with respect to Documentary
Letters of Credit and $10,000,000 with respect to Standby Letters of Credit
"Letter of Credit Obligations" means, at any time, the sum of (a) the aggregate Reimbursement
Obligations of all of the Borrowers at such time, plus (b) the aggregate Letter of Credit Amount of Letters of
Credit outstanding at such time, plus (c) the aggregate Letter of Credit Amount of Letters of Credit the issuance
of which has been authorized by the Agent and the Issuing Bank pursuant to Section 3.1 but that have not yet been
issued, in each case as determined by the Agent.
"Letter of Credit Reserve" means, at any time, the aggregate Letter of Credit Obligations at
such time, excluding Letter of Credit Obligations that are fully secured by Cash Collateral.
"Letter of Credit Rights" means, as to any Person, all "letter of credit rights" as defined in
the Uniform Commercial Code, now owned or hereafter acquired by such Person.
"Liabilities" means, as at the end of any fiscal period, all liabilities determined in
accordance with GAAP and included on a balance sheet.
"LIBOR" means at any time of determination, and subject to availability, for each calendar
month, the higher of the applicable reserve adjusted London Interbank Offered Rate paid in London on dollar
deposits from other banks (a) as quoted by Chase Bank, or (b) as published under "Money Rates" in the New York
City edition of the Wall Street Journal or, if there is no such publication or statement therein as to the London
Interbank Offered Rate, then in any publication used in the New York City financial community.
"LIBOR Advances" means the Advances during any period in which they bear interest at a rate
determined with reference to LIBOR.
"License Agreement" means any agreement between a Borrower and a Licensor pursuant to which
such Borrower is authorized to use any Intellectual Property in connection with the manufacturing, marketing,
sale or other distribution of any Inventory of such Borrower.
"Licensor" means any Person from whom a Borrower obtains the right to use (whether on an
exclusive or non-exclusive basis) any Intellectual Property in connection with such Borrower's manufacturing,
marketing, sale or other distribution of any Inventory of such Borrower.
"Licensor/Lender Agreement" means an agreement between the Agent and a Licensor by which the
Agent is given the unqualified right, vis-a-vis such Licensor, to enforce the Agent's Liens with respect to and
to dispose of a Borrower's Inventory with the benefit of any Intellectual Property applicable thereto,
irrespective of such Borrower's default under any License Agreement with such Licensor and which is otherwise in
form and substance satisfactory to the Agent.
"Lien" as applied to the property of any Person means: (a) any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, lease constituting a Capitalized Lease Obligation, conditional sale or other
title retention agreement, or other security interest, security title or encumbrance of any kind in respect of
any property of such Person or upon the income and profits therefrom, whether such interest is based on the
common law, statute or contract, (b) any arrangement, express or implied, under which any property of such Person
is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured
creditors of such Person, and (c) the filing of, or any agreement to give, any financing statement under the UCC
of any state or its equivalent in any jurisdiction.
"Loan Account" and "Loan Accounts" shall have the meanings ascribed thereto in Section 4.4(a).
"Loan Documents" means collectively this Agreement, the Notes, the Security Documents and each
other instrument, agreement or document executed by any Borrower or any Affiliate or Subsidiary of any Borrower
in connection with this Agreement whether prior to, on or after the Effective Date and each other instrument,
agreement or document referred to herein or contemplated hereby, all in form and substance acceptable to the
Agent.
"Lockbox Agreement" means an agreement among a Borrower, the Agent and a Clearing Bank, in a
form acceptable to the Agent, concerning the collection, treatment and remission of payments or other deposits
which represent the proceeds of Collateral.
"Margin Stock" means margin stock as defined in Section 221.1(h) of Regulation U, as the same
may be amended or supplemented from time to time.
"Material Contract" means any contract or other arrangement (other than Loan Documents),
whether written or oral, to which any Borrower is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a Materially Adverse Effect.
"Materially Adverse Effect" means a materially adverse effect upon (a) the business, assets,
properties, liabilities, condition (financial or otherwise), results of operations or business prospects of any
Borrower, (b) the value of the whole or any material part of the Collateral, or the enforceability or priority of
the Security Interest, (c) the ability of any Borrower to perform any material obligations hereunder or under any
other Loan Document to which it is a party or (d) the legality, validity, binding effect, enforceability or
admissibility into evidence of any Loan Document or the rights or remedies of the Agent or the Lenders under or
in connection with any Loan Document.
"Materially Adverse Change" means an act, omission, situation, circumstance, event or
undertaking which could reasonably be expected to have singly or in combination with one or more other acts,
omissions, situations, circumstances, events or undertakings a Material Adverse Effect.
"Minimum Commitment" shall have the meaning ascribed to such term in Section 13.2(a) hereof.
"Minimum Excess Availability Reserve" means, at any time, the Revolving Credit Facility Amount
at such time multiplied by 10%.
"Money Borrowed" means, as applied to Indebtedness, (a) Indebtedness for money borrowed, (b)
Indebtedness, whether or not in any such case the same was for money borrowed, (i) represented by notes payable
and drafts accepted, that represent extensions of credit, (ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or (iii) upon which interest charges are customarily paid (other than
trade Indebtedness) or that was issued or assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, (d) Indebtedness that is such by virtue of clause (f) of the
definition thereof, but only to the extent that the obligations Guaranteed are obligations that would constitute
Indebtedness for Money Borrowed and (e) obligations in respect of mandatory redeemable capital stock, if any, of
any Borrower.
"Mortgaged Properties" means the Real Estate described on Schedule 1.2 hereto.
"Mortgage" means an indenture of mortgage, deed of trust, deed to secure debt or other similar
instrument in form and substance reasonably satisfactory to the Agent and the Lenders granting to the Agent for
the benefit of the Lenders a Lien on and security interest in the subject Real Estate to secure the Secured
Obligations and other obligations referred to therein.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section 4001(a)(3) of ERISA
to which a Borrower or a Related Company is required to contribute or has contributed within the immediately
preceding six years.
"Net Income" or "Net Loss" means, as applied to any Person, the net income (or net loss) of
such Person for the period in question after giving effect to deduction of or provision for all operating
expenses, all taxes and reserves (including reserves for deferred taxes and all other proper deductions), all
determined in accordance with GAAP.
"Net Outstandings" of any Lender means, at any time, the sum of (a) all amounts paid by such
Lender to the Agent in respect of Revolving Credit Loans or the Letter of Credit Obligations under this
Agreement, minus (b) all amounts paid by the Agent to such Lender which are received by the Agent and which,
pursuant to this Agreement, are paid over to such Lender for application in reduction of the outstanding
principal balance of the Revolving Credit Loans or the Letter of Credit Obligations.
"Net Proceeds" means with respect to any Asset Disposition, the aggregate cash payments
received (directly or indirectly), including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, therefrom, but only as and when received, net of (i)
the transaction costs of such Asset Disposition, including, without limitation, all reasonable legal and
investment banking fees and expenses, title and recording tax expenses, commissions, fees and expenses incurred
in obtaining regulatory approvals and other reasonable and customary fees and expenses incurred or agreed to be
incurred, (ii) any tax liability arising from such Asset Disposition including, without limitation, all foreign,
federal, state and local income or other Taxes estimated to be payable currently, attributable thereto, and (iii)
the amount of any contractually required repayments of Indebtedness (other than the Secured Obligations) to the
extent secured by a Permitted Lien thereon.
"Non-Ratable Loan" means a Revolving Credit Loan made by the Settlement Lender in accordance
with the provisions of Section 4.7(b)(ii).
"Note" means the Revolving Credit Note and "Notes" means more than one of such Revolving Credit
Notes.
"OFAC" mean the Office of Foreign Assets Control, United States Department of the Treasury, or
any other office, agency or department that succeeds to the duties of OFAC.
"Operating Lease" shall have the meaning assigned to such term in Section 11.10 hereof.
"Operating Lease Obligations" means, with respect to an Operating Lease for a Borrower, as of
any date, an amount equal to (a) the monthly lease payment for such Operating Lease including, without
limitation, any projected percentage rent, additional rent, escalation payments, and any other payments by such
Borrower to any lessor under an Operating Lease relating to common area maintenance, operating expenses, real
estate taxes, insurance or any other expenses allocated to such Borrower as tenant under such Operating Lease
multiplied times (b) the number of months then remaining in the current term of such Operating Lease.
"Overadvance" means any advance made pursuant to Section 4.12 hereof.
"Overextension" shall have the meaning assigned to such term in Section 2.3(a) hereof.
"Parent" shall have the meaning assigned to such term in the preamble to this Agreement.
"Patent Security Agreement" means a Patent Security Agreement, in form and substance
satisfactory to the Agent, executed and delivered by a Borrower to the Agent, for the benefit of the Lenders,
contemporaneously herewith as the same may be amended, modified or supplemented from time to time.
"Payoff Letter" means a letter, in form and substance reasonably satisfactory to Agent, from
the Existing Agent, notifying the Agent and the Borrowers of the amount necessary to repay in full all of the
obligations of the Borrowers, Duck Head and Delta to the Existing Lenders and committing to terminate and release
all Liens existing in favor of the Existing Agent in the properties and assets of the Borrowers.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor agency.
"Permitted Guaranties" means (a) those described on Schedule 6.1(i), or (b) any Guaranty of
Permitted Obligations.
"Permitted Indebtedness for Money Borrowed" means (a) the Indebtedness to Lenders arising under
this Agreement, (b) Indebtedness owed to another Borrower, (c) Permitted Guaranties, (d) the Senior Subordinated
Indebtedness and (e) the Indebtedness set forth on Schedule 6.1(i) hereof.
"Permitted Liens" means: (a) Liens securing taxes, assessments and other governmental charges
or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA) or the claims of materialmen,
suppliers, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but in all cases, only if payment shall not at the time be required to be made
in accordance with Section 9.6, and (b) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of utility payments, bids, tenders, contracts (other than
contracts for payment of money), obligations under workers' compensation, unemployment insurance or similar
legislation or under surety or performance bonds, in each case arising in the ordinary course of business; (c)
Liens constituting encumbrances in the nature of zoning restrictions, special assessments, easements and rights
or restrictions of record on the use of the Real Estate, which in the reasonable credit judgment of the Agent do
not materially detract from the value of Real Estate or impair the use thereof in the business of the applicable
Borrower; (d) Liens securing Permitted Obligations; (e) Liens arising out of or resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which
the applicable Borrower is fully protected by insurance or in respect of which such Borrower shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have been secured, and as to which appropriate reserves have
been established on the books of such Borrower; and (f) Liens listed on Schedule 6.1(h).
"Permitted Obligations" means the aggregate amount of outstanding Purchase Money Indebtedness,
Operating Lease Obligations, and Permitted Indebtedness for Money Borrowed which, and only to the extent, is
incurred subject to the provisions of this Agreement, including without limitation, Section 11.2.
"Person" means an individual, corporation, partnership, association, trust or unincorporated
organization, or a government or any agency, division, department, or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement, in form and substance satisfactory to the Agent,
executed and delivered by each Borrower to the Agent, for the benefit of the Lenders, contemporaneously herewith
as the same may be amended, modified or supplemented from time to time, pursuant to which such Borrower has
pledged to the Agent, for the benefit of the Lenders, as security for the Obligations, 66% of the capital stock
of each Foreign Subsidiary of such Borrower and all of the capital stock of each Domestic Subsidiary of such
Borrower.
"Power of Attorney" means the Power of Attorney substantially in the form of Exhibit C hereto,
executed and delivered by each Borrower to Agent contemporaneously herewith, as the same may be amended, modified
or supplemented from time to time.
"Prime Advances" means the Advances during any period in which they bear interest at a rate
determined with reference to the Chase Bank Rate.
"Proceeds" means "proceeds," as such term is defined in the Uniform Commercial Code, including
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Borrower from time to
time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and
payable to any Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Borrower against third parties (i) for past, present or
future infringement of any patent or patent license, or (ii) for past, present or future infringement or
dilution of any copyright, copyright license, trademark or trademark license, or for injury to the goodwill
associated with any trademark or trademark license, (d) any recoveries by any Borrower against third parties with
respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to,
Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends,
interest, distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and
all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Proportionate Share" means a fraction, the numerator of which is the most recent appraised
value of the Mortgaged Property sold in any one transaction, and the denominator of which is the most recent
appraised value of all of the Mortgaged Property at the time of such sale.
"Purchase Money Indebtedness" means Indebtedness created to finance or refinance the payment of
all or any part of the purchase price (not in excess of the fair market value thereof) of any tangible asset,
other than Inventory, incurred at the time of or within ten (10) days prior to or after the acquisition of such
tangible asset and secured only by Purchase Money Liens.
"Purchase Money Lien" means any Lien securing Purchase Money Indebtedness, but only if such
Lien shall at all times be confined solely to the tangible asset (other than Inventory) which was financed or
refinanced through the incurrence of the Purchase Money Indebtedness secured by such Lien.
"Real Estate" means all of each Borrower's now or hereafter owned or leased estates in real
property, including, without limitation, all fees, leaseholds and future interests, together with all of such
Borrower's now or hereafter owned or leased interests in the improvements and emblements thereon, the fixtures
attached thereto and the easements appurtenant thereto, including, without limitation, the real property
described on Schedule 6.1(v).
"Register" shall have the meaning assigned to such term in Section 13.2(c) hereof.
"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System (or
any successor), as the same may be amended or supplemented from time to time.
"Reimbursement Agreement" means, with respect to a Letter of Credit, such form of application
therefor and form of reimbursement agreement therefor (whether in a single document or several documents) as the
Issuing Bank may employ in the ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by an Issuing Bank and a Borrower, provided that such application and agreement and any
modifications thereto are not inconsistent with the terms of this Agreement.
"Reimbursement Obligations" means the reimbursement or repayment obligations of a Borrower to
an Issuing Bank pursuant to Article 3 or pursuant to a Reimbursement Agreement with respect to amounts that have
been drawn under Letters of Credit.
"Related Company" means, as to any Person, any (a) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Person, (b)
partnership or other trade or business (whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with such Person, or (c) member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as such Person or any corporation described in clause (a) above or any
partnership, trade or business described in clause (b) above.
"Release" means release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any
property, including the movement of Contaminants through or in the air, soil, surface water or groundwater.
"Remedial Action" means actions required to (i) clean up, remove, treat or in any other way
address Contaminants in the indoor or outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii) perform pre-remedial studies and investigations
and post-remedial monitoring and care.
"Replacement Letters of Credit" shall have the meaning assigned to such term in Section 3.3(a)
hereof.
"Required Lenders" means (a) at any time the Lenders are comprised only of CIT and FCC, one
hundred percent of the Commitment Percentages of such Lenders and (b) at any other time, any combination of
Lenders whose Commitment Percentages at such time aggregate at least fifty-nine percent (59%) thereof.
"Restricted Distribution" means, with respect to any Person, (a) any retirement, redemption,
purchase, or other acquisition for value of any capital stock or other equity securities or membership or
partnership interests issued by such Person, (b) any declaration or payment of any dividend or distribution on or
with respect to any such securities or membership or partnership interests, (c) any loan or advance by such
Person to, or other investment by such Person in, the holder of any of such securities or membership or
partnership interests, and (d) any other payment by such Person in respect of such securities or membership or
partnership interests.
"Restricted Investments" means any acquisition of property by a Borrower or any of its
Subsidiaries in exchange for cash or other property, whether in the form of an acquisition of equity interests or
Indebtedness, or the purchase or acquisition by such Borrower or any of its Subsidiaries of any other property,
or a loan, advance, capital contribution or subscription, except acquisitions of the following: (a) investments
in one or more Subsidiaries of such Borrower to the extent existing on the Effective Date, (b) current assets
arising from the sale or lease of goods or the rendition of services by such Borrower or any of its Subsidiaries
in the ordinary course of business; (c) fixed assets to be used in the business of such Borrower and any of its
Subsidiaries so long as the acquisition costs thereunder constitute Capital Expenditures permitted hereunder, (d)
goods held for sale or lease or to be used in the manufacture of goods or the rendition of services by such
Borrower or any of its Subsidiaries in the ordinary course of business; and (e) Cash Equivalents.
"Restricted Payment" means, with respect to any Person, (a) any retirement, redemption,
repurchase, prepayment or other acquisition, or the setting aside of any money for a sinking, defeasance or other
analogous fund for any such retirement, redemption, repurchase, prepayment or other acquisition, prior to the
stated maturity thereof or prior to the due date of any regularly scheduled installment or amortization payment
with respect thereto, of any Indebtedness of such Person (other than the Secured Obligations and trade debt), (b)
the payment by such Person of the principal amount of or interest on any Indebtedness (other than trade debt)
owing to an Affiliate of such Person, and (c) the payment of any management, advisory, guaranty, consulting or
other similar fee by such Person to an Affiliate of such Person.
"Revolving Credit Facility" means that part of this Agreement pursuant to which Revolving
Credit Loans are provided to Borrowers.
"Revolving Credit Facility Amount" means the principal amount equal to $60,000,000.
"Revolving Credit Loans" means, as measured at any time, the aggregate outstanding amount of
the Advances made to all of the Borrowers pursuant to Section 2.1.
"Revolving Credit Note" means a promissory note made payable by the Borrowers to the order of a
Lender evidencing the obligation of each Borrower to pay the aggregate unpaid principal amount of the Revolving
Credit Loans made to it by such Lender (and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor whether payable to such Lender or to a
different Lender in connection with a Person becoming a Lender after the Effective Date or otherwise)
substantially in the form of Exhibit A hereto, with all blanks properly completed, either as originally executed
or as the same may from time to time be supplemented, modified, amended, renewed, extended or refinanced.
"Schedule of Accounts" means a schedule delivered by the Borrowers to the Agent, from time to
time, pursuant to the provisions of Section 8.8(a).
"Schedule of Inventory" means a schedule delivered by the Borrowers to the Agent, from time to
time, pursuant to the provisions of Section 8.8(c).
"Secured Obligations" means, in each case whether now in existence or hereafter arising, (a)
the principal of, and interest and premium, if any, on, the Revolving Credit Loans, (b) the Reimbursement
Obligations and all other obligations of any Borrower to the Agent or any Lender (or Fleet National Bank or FCC
in connection with the Existing Letters of Credit) arising in connection with the issuance of Letters of Credit
(including the Existing Letters of Credit), (c) Ledger Debt not to exceed $750,000 in the aggregate at any one
time, (d) Bank Products Liabilities and (e) all indebtedness, liabilities, obligations, covenants and duties of
any Borrower to the Agent or to the Lenders of every kind, nature and description arising under or in respect of
this Agreement, the Notes, any of the other Loan Documents, whether direct or indirect, absolute or contingent,
due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note,
and whether or not for the payment of money, including without limitation, fees required to be paid pursuant to
Article 4 and expenses required to be paid or reimbursed pursuant to Section 15.2.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) the Lockbox Agreements;
(c) the Control Agreements;
(d) the Waivers and Consents;
(e) the Patent Security Agreement;
(f) the Trademark Security Agreement;
(g) the Pledge Agreement; and
(h) each other agreement, document, instrument or writing executed and delivered by any Borrower or any
other Person securing the Secured Obligations.
"Security Interest" means the valid and perfected first priority Liens of the Agent, for the
benefit of the Agent and the Lenders, on and in the Collateral effected hereby or by any of the Security
Documents or pursuant to the terms hereof or thereof.
"Senior Subordinated Documents" means the Senior Subordinated Indenture, the Senior
Subordinated Notes and all documents, agreements and instruments entered into in connection therewith or related
thereto.
"Senior Subordinated Indebtedness" means the Indebtedness for Money Borrowed owing by the
Parent evidenced by and owing pursuant to the Senior Subordinated Documents.
"Senior Subordinated Indenture" means the Indenture, dated June 10, 1998, among the Parent,
certain of its Subsidiaries and the Trustee.
"Senior Subordinated Notes" means the Senior Subordinated Unsecured Notes issued by the Parent
pursuant to the Senior Subordinated Indenture in the aggregate amount of $100,000,000, and payable in 2008,
together with any Exchange Notes at any time issued with respect thereto.
"Settlement Date" means each Business Day after the Effective Date selected by the Agent in its
sole discretion subject to and in accordance with the provisions of Section 4.7(b)(i) as of which a Settlement
Report is delivered by the Agent and on which settlement is to be made among the Lenders in accordance with the
provisions of Section 4.7.
"Settlement Lender" means, for the purposes of Section 4.7, the Agent in its capacity as a
Lender.
"Settlement Report" means each report, substantially in the form agreed to by Agent and
Lenders, prepared by the Agent and delivered to each Lender and setting forth, among other things, as of the
Settlement Date indicated thereon and as of the next preceding Settlement Date, the aggregate principal balance
of all Revolving Credit Loans outstanding, each Lender's Commitment Percentage thereof, each Lender's Net
Outstandings and all Non-Ratable Loans made, and all payments of principal, interest and fees received by the
Agent from a Borrower during the period beginning on such next preceding Settlement Date and ending on such
Settlement Date.
"Software" means all "software" as such term is defined in the Uniform Commercial Code, now
owned or hereafter acquired by any Borrower, other than software embedded in any category of Goods, including all
computer programs and all supporting information provided in connection with a transaction related to any program.
"Standby Letter of Credit" means any letter of credit (other than a Documentary Letter of
Credit) issued by an Issuing Bank for the account of a Borrower pursuant to Article 3 hereof.
"Subordinated Indebtedness" means the Senior Subordinated Indebtedness and any other Permitted
Indebtedness for Money Borrowed (other than the Revolving Credit Facility), that is subordinated to the Secured
Obligations on terms and conditions acceptable to the Agent.
"Subsidiary"
(a) when used to determine the relationship of a Person to another Person, means a Person of which an
aggregate of 50% or more of the stock of any class or classes or 50% or more of other ownership
interests is owned of record or beneficially by such other Person, or by one or more Subsidiaries of
such other Person, or by such other Person and one or more Subsidiaries of such Person,
(i) if the holders of such stock, or other ownership interests, (A) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even though the right so to vote has
been suspended by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing similar
functions) of such Person, whether or not the right so to vote exists by reason of the
happening of a contingency, or
(ii) in the case of such other ownership interests, if such ownership interests constitute a majority
voting interest, and
(b) when used with respect to a Plan, ERISA or a provision of the Code pertaining to employee benefit plans,
also means any corporation, trade or business (whether or not incorporated) which is under common
control with a Borrower and is treated as a single employer with such Borrower under Section 414(b) or
(c) of the Code and the regulations thereunder.
"Supporting Obligations" means, as to any Person, all "supporting obligations" as such term is
defined in the Uniform Commercial Code, now owned or hereafter acquired, including, without limitation, all of
such Person's mortgages, deeds to secure debt and deeds of trust on real or personal property, guaranties,
leases, security agreements, and other agreements and property which secure or relate to any Collateral, or are
acquired for the purpose of securing and enforcing any item thereof,
"Termination Date" means the first to occur of (a) the Expiration Date, (b) an Early
Termination Date, upon thirty (30) days prior written notice by the Borrowers or (c) the date of termination of
the Lenders' obligations to make Advances and to incur Letter of Credit Obligations or permit existing Advances
to remain outstanding pursuant to Section 12.2
"Termination Event" means (a) a "Reportable Event" as defined in Section 4043(b) of ERISA, but
excluding any such event as to which the provision for 30 days' notice to the PBGC is waived under applicable
regulations, (b) the filing of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit Plan
amendment as a termination under Section 4041 of ERISA, or (c) the institution of proceedings to terminate a
Benefit Plan by the PBGC under Section 4042 of ERISA or the appointment of a trustee to administer any Benefit
Plan.
"Title IV Plan" means a Benefit Plan which is subject to Title IV of ERISA.
"Total Liabilities" means, as at the end of any fiscal period, total Liabilities determined in
accordance with GAAP and included on the latest Consolidated Balance Sheet.
"Trademark Security Agreement" means the Trademark Security Agreement, in form and substance
satisfactory to the Agent, executed and delivered by a Borrower to the Agent, for the benefit of the Lenders,
contemporaneously herewith as the same may be amended, modified or supplemented from time to time.
"Trade Names" shall have the meaning assigned to such term in Section 6.1(bb) hereof.
"Trustee" means SunTrust Bank, a Georgia banking corporation.
"UCC" and "Uniform Commercial Code" means the Uniform Commercial Code as in effect from time to
time in North Carolina; provided, that to the extent that the UCC is used to define any term herein or in any
Loan Document and such term is defined differently in different Articles or Divisions of the UCC, the definition
of such term contained in Revised Article 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect
to, Agent's or any Lender's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of North Carolina, the term "UCC" or "Uniform Commercial Code"
means the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
"Unfunded Vested Accrued Benefits" means with respect to any Plan at any time, the amount (if
any) by which (a) the present value of all vested non-forfeitable benefits under such Plan exceeds (b) the fair
market value of all Plan assets allocable to such benefits, all determined as of then most recent valuation date
for such Plan.
"Unused Line Fee" shall have the meaning assigned to such term in Section 4.2(b).
"Waiver and Consent" shall have the meaning assigned to such term in Section 8.10 hereof.
SECTION 1.2 Other Referential Provisions.
(a) All defined terms in this Agreement, the Exhibits and Schedules hereto shall have the same meanings when
used in any other Loan Document, unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms under GAAP including,
without limitation, applicable statements and interpretations issued by the Financial Accounting
Standards Board and bulletins, opinions, interpretations and statements issued by the American Institute
of Certified Public Accountants or its committees. All financial and accounting calculations,
measurements and computations made for any purpose relating to this Agreement, including, without
limitation, all computations utilized by any Borrower to determine whether it is in compliance with any
covenant contained herein, shall, unless this Agreement otherwise provides or unless Required Lenders
shall otherwise consent in writing, be performed in accordance with GAAP That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing.
(c) All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the plural, and the plural shall include the
singular. In any circumstance where use of the term "the Borrower" as opposed to the term "the
Borrowers," or vice versa, would limit, diminish or otherwise impair or negatively affect any of
Lenders' rights hereunder, the plural shall be substituted for the singular, or vice versa, in such
manner as will result in the maintenance or enlargement of Lenders' rights hereunder or pursuant
hereto. By way of example, but not in limitation, if a reference to "the Borrowers' property" would
otherwise be construed as referring only to property which is jointly owned by all the Borrowers, such
reference shall instead be construed as referring to the aggregate total of each Borrower's property.
(d) The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for convenience only, do not constitute part of
this Agreement and neither limit nor amplify the provisions of this Agreement, and all references in
this Agreement to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules or
Exhibits shall refer to the corresponding Article, Section, Subsection, paragraph, clause or subclause
of, or Schedule or Exhibit attached to, this Agreement, unless specific reference is made to the
articles, sections or other subdivisions or divisions of, or to schedules or exhibits to, another
document or instrument.
(f) Each definition of a document in this Agreement shall include such document as amended, modified,
supplemented or restated from time to time in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a Loan Document includes that party and
its permitted successors and assigns permitted hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is referred to in this Agreement or in any other
Loan Document, such time shall be the local time in the city in which the office of Agent is located as
set forth in Section 15.1 hereof.
(i) Whenever the phrase "to the knowledge of a Borrower" or words of similar import relating to the
knowledge of a Borrower are used herein, such phrase shall mean and refer to (i) the actual knowledge of
the President, chief executive officer, chief operating officer, chief financial officer or other
Section 16 reporting officers, or (ii) the knowledge that such officers would have obtained if they had
engaged in good faith in the diligent performance of their duties, including the making of such
reasonable specific inquiries as may be necessary in the reasonable business judgment of such officers
to ascertain the accuracy of the matter to which such phrase relates.
(j) The term "including" shall not be limiting or exclusive, unless specifically indicated to the contrary.
The terms "reasonable," "reasonably" and the like, when used in reference to a decision, conduct or the
discretion of the Agent or a Lender, shall mean and refer to the reasonableness of the conduct, decision
or discretion at issue of an agent or a lender in a position equivalent to that of the Agent or Lender,
including without limitation the normal and customary concerns of an agent or a lender including,
without limitation, impairment of collateral, and the timeliness of a borrower's compliance with payment
obligations.
(k) The terms accounts, chattel paper, deposit accounts, documents, equipment, fixtures, general
intangibles, goods, instruments, inventory, investment property, letter of credit rights, software, and
supporting obligations, as and when used (without being capitalized) in this Agreement or the Security
Documents, shall have the meanings given those terms in the Uniform Commercial Code.
SECTION 1.3 Exhibits and Schedules. All Exhibits and Schedules attached hereto are by reference made a
part hereof.
ARTICLE II.
REVOLVING CREDIT LOANS
SECTION 2.1 Revolving Credit Loans. Upon the terms and subject to the conditions of, and in reliance upon
the representations and warranties made under, this Agreement, each Lender agrees, severally, but not jointly, to
make Advances to the Borrowers from time to time from the Effective Date to but not including the Termination
Date, as requested or deemed requested by the Borrowers in accordance with the terms of Section 2.2, in amounts
equal to such Lender's Commitment Percentage of each such Advance requested or deemed requested hereunder up to
an aggregate amount at any one time outstanding equal to such Lender's Commitment Percentage of the Borrowing
Base; provided, however, that, the aggregate principal amount of all outstanding Revolving Credit Loans (after
giving effect to such Advances requested and any Non-Ratable Loans) shall not exceed the Borrowing Base. It is
expressly understood and agreed that, the Lenders may and at present intend to use the Borrowing Base as a
maximum ceiling on Revolving Credit Loans to the Borrowers; provided, further, however, that, the parties agree
that, should the Revolving Credit Loans exceed the ceiling so determined or any other limitation set forth in
this Agreement, such Revolving Credit Loans shall nevertheless constitute Secured Obligations and, as such, shall
be entitled to all benefits thereof and security therefor. The principal amount of any Advances which are repaid
pursuant to Section 2.3(a) may be reborrowed by the Borrowers, subject to the terms and conditions of this
Agreement, in accordance with the terms of this Section 2.1. The Agent's and each Lender's books and records
reflecting the date and the amount of each Advance and each repayment of principal thereof shall constitute prima
facie evidence of the accuracy of the information contained therein, subject to the provisions of Section 4.7.
Manner of Borrowing Revolving Credit Loans.Advances under the Revolving Credit Facility shall
be made as follows:
(a) Requests for Advances. A request for an Advance shall be made, or shall be deemed to be made, in the
following manner:
(i) a Financial Officer of the Borrowers (or another authorized representative designated by a
Financial Officer of the Borrowers and listed on Schedule 2.2 hereto) shall deliver to the Agent
a Notice of Proposed Advance/ Conversion/ Continuation in the form of Exhibit B hereto (the
"Borrowing Notice") not later than 11:00 a.m. (New York time) on the Business Day of the
proposed Advance. The Borrowing Notice shall contain the information requested therein
including, without limitation, a statement that an Advance is requested, the amount of the
proposed Advance and the date of the proposed Advance. Unless the Agent has received notice in
accordance with the provisions of Section 4.6(c) that a Lender will not make available to the
Agent such Lender's ratable portion of an Advance because of a Default or Event of Default, the
Agent shall use commercially reasonable efforts to disburse the proceeds of each Advance not
later than 3:30 p.m. (New York time) on the Business Day a Borrowing Notice is received. The
Borrowing Notice shall be given in accordance with the provisions of this Section 2.2 hereof;
provided, however, that upon written notice from Agent, the Parent shall thereafter include in
each Borrowing Notice the amount of Excess Availability after giving effect to such requested
Advance,
(ii) unless payment is otherwise made by the Borrowers, the becoming due of any amount required to
be paid under this Agreement or any of the Notes as interest shall be deemed to be a request
for an Advance on the due date in the amount required to pay such interest,
(iii) unless payment is otherwise made by the Borrowers, the becoming due of any other Secured
Obligation (other than Ledger Debt) shall be deemed to be a request for an Advance on the due
date in the amount then so due, and such request shall be irrevocable,
(iv) the receipt by the Agent of notification from an Issuing Bank to the effect that a drawing has
been made under a Letter of Credit and that a Borrower has failed to reimburse the Issuing Bank
therefor in accordance with the terms of the Letter of Credit, the Reimbursement Agreement and
Article 3, shall be deemed to be a request for an Advance on the date such notification is
received in the amount of such drawing which is so unreimbursed, and
(v) unless payment is otherwise made by the Borrowers, the receipt by Agent of a demand for
reimbursement by a Clearing Bank pursuant to the provisions of any Lockbox Agreement, shall be
deemed to be a request for an Advance on the date any such demand is received by Agent in the
amount set forth therein.
(b) Notification to Lenders. Unless the Agent has elected periodic settlements pursuant to Section 4.7, the
Agent shall promptly notify the Lenders of any Borrowing Notice delivered or deemed given pursuant to
Section 2.2(a) by 12:00 noon (New York time) on the proposed Advance date with respect to any Advance.
The notice from the Agent to the Lenders shall set forth the information contained in the applicable
Borrowing Notice. Not later than 1:30 p.m. (New York time) on the proposed Advance date, each Lender
shall make available to the Agent, for the account of the Borrowers, at the Agent's Office in funds
immediately available to the Agent, an amount equal to such Lender's Commitment Percentage of the
Advance to be made on such Advance date.
(c) Disbursement of Advances. Each Borrower hereby irrevocably authorizes the Agent to disburse the
proceeds of each Advance requested, or deemed to be requested, pursuant to this Section 2.2 as follows:
(i) the proceeds of each Advance requested under Section 2.2(a)(i) shall be disbursed by the Agent
in Dollars in immediately available funds, (A) in the case of the initial Advance, in accordance
with notice from the Borrowers to the Agent referred to in Section 5.1(b)(xiii), and (B) in the
case of each subsequent Advance, by wire transfer to the Disbursement Account, or by wire
transfer to such other account as designated in writing by the Borrowers at least two (2)
Business Days prior to the borrowing date of such proposed Advance,
(ii) the proceeds of each Advance deemed requested under Section 2.2 (a)(ii) or (iii) or (iv) shall be
disbursed by the Agent by way of direct payment of the relevant interest or Secured Obligation,
as the case may be, and
(iii) the proceeds of each Advance deemed requested under Section 2.2(a)(v) shall be disbursed by the
Agent directly to the Clearing Bank on behalf of the applicable Borrower.
SECTION 2.2 Repayment of Revolving Credit Loans; Reduction of Commitments.
(a) The Revolving Credit Loans will be repaid as follows:
(i) Whether or not any Default or Event of Default has occurred, the outstanding principal amount of
all the Revolving Credit Loans is due and payable, and shall be repaid by the Borrowers in full,
not later than the Termination Date;
(ii) If at any time the aggregate outstanding unpaid principal amount of the Revolving Credit Loans
exceeds the Borrowing Base in effect at such time (such excess referred to herein as an
"Overextension"), the Borrowers shall repay the Revolving Credit Loans in an amount sufficient
to reduce the aggregate unpaid principal amount of such Revolving Credit Loans by an amount
equal to the Overextension, together with accrued and unpaid interest on the amount of the
Overextension to the date of repayment; and
(iii) The Borrowers hereby instruct the Agent to repay the Revolving Credit Loans outstanding on any
day in an amount equal to the amount received by the Agent on such day pursuant to Section 8.1(b).
(b) The Borrowers shall have the right, one time, to terminate ratably the Lenders' unused Commitments under
the Revolving Credit Facility upon not less than thirty (30) days' notice to the Agent specifying the
effective date of termination (which shall be a Business Day), the aggregate amount of the unused
Commitments to be terminated (which shall be in increments of $5,000,000 up to a maximum of $15,000,000)
and the payment of any accrued and unpaid fees (pursuant to Section 4.2) with respect to the amount of
the Commitments being terminated. No unused Commitments that have been terminated may be reinstated.
Each notice of termination of unused Commitments shall be irrevocable when given. Upon receipt of such
notice, the Agent shall promptly notify each Lender thereof.
SECTION 2.3 Revolving Credit Note. Each Lender's Revolving Credit Loans and the joint and several
obligation of the Borrowers to repay such Revolving Credit Loans shall also be evidenced by a Revolving Credit
Note payable to the order of such Lender. Each Lender's Revolving Credit Note shall be dated the Effective Date,
be duly and validly executed and delivered by the Borrowers and be in the amount of such Lender's Commitment.
ARTICLE III.
LETTER OF CREDIT FACILITY
SECTION 3.1 Issuance. The Borrowers, the Agent and the Lenders agree that the Existing Letters of Credit
shall remain outstanding after the date hereof and shall constitute Secured Obligations hereunder. Each Lender
shall be deemed to have purchased risk participations in such Existing Letters of Credit as more fully described
in Section 3.2(b)(ii). In addition, after the Effective Date and subject to the terms and conditions of the
Agreement, Agent and the Lenders agree to incur, from time to time prior to the Termination Date, upon the
request of the Borrowers and for the Borrowers' account, Letter of Credit Obligations by causing Letters of
Credit to be issued (by Agent or an Affiliate thereof, or a bank or other legally authorized Person selected by
and acceptable to Agent in its sole discretion, including Fleet National Bank as issuer of the Existing Letters
of Credit (each, an "Issuing Bank")) for the Borrowers' account and guaranteed by Agent; provided, however, that
if the Issuing Bank is a Lender, then such Letters of Credit shall not be guaranteed by Agent but rather each
Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the written consent of Agent, as more
fully described in Section 3.2(b)(ii) below. The Agent and the Lenders shall have no obligation to incur Letter
of Credit Obligations if, after giving effect to the issuance or guaranty by the Lenders of any requested Letter
of Credit, (i) the aggregate amount of all such Letter of Credit Obligations outstanding would exceed the Letter
of Credit Facility Amount or (ii) the aggregate amount of all Revolving Credit Loans outstanding would exceed the
Borrowing Base or (iii) if no Revolving Credit Loans are outstanding, the aggregate amount of the Letter of
Credit Obligations outstanding would exceed the Borrowing Base. No such Letter of Credit shall have an expiry
date which is more than one year following the date of issuance thereof, and neither Agent nor the Lenders shall
be under any obligation to incur Letter of Credit Obligations in respect of, or purchase risk participations in,
any Letter of Credit having an expiry date which is later than five (5) Business Days prior to the Termination
Date.
SECTION 3.2 Advances Automatic; Participations.
(a) In the event that Agent or any Lender shall make any payment on or pursuant to any Letter of Credit
Obligation, such payment shall then be deemed automatically to constitute an Advance under Section 2.2
of the Agreement regardless of whether a Default or Event of Default shall have occurred and be
continuing and notwithstanding the Borrowers' failure to satisfy the conditions precedent set forth in
Article 5, and each Lender shall be obligated to pay an amount calculated by applying such Lender's
Commitment Percentage to the aggregate amount of such payment. The failure of any Lender to make
available to Agent for Agent's own account an amount equivalent to a Lender's Commitment Percentage as
to any such payment by Agent under or in respect of a Letter of Credit shall not relieve any other
Lender of its obligation hereunder to make available to Agent an amount equivalent to such other
Lender's Commitment Percentage with respect thereto, but no breach by a Lender shall cause an increase in
any other Lender's Commitment Percentage.
(b) If it shall be illegal or unlawful for the Borrowers to incur Revolving Credit Loans in the
circumstances contemplated by paragraph (a) above because of an Event of Default described in Section
12.1(g) or (h) or otherwise or if it shall be illegal or unlawful for any Lender to be deemed to have
assumed a ratable share of the Reimbursement Obligations owed to an Issuing Bank, or if the Issuing Bank
is a Lender, then (i) immediately and without further action whatsoever, each Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such Issuing Bank, as the case may be) an
undivided interest and participation in an amount equivalent to such Lender's Commitment Percentage
(based on the Commitments) of the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (ii) thereafter, immediately upon issuance of any Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally purchased from Agent (or such Issuing Bank, as the case
may be) an undivided interest and participation in an amount equivalent to such Lender's Commitment
Percentage (based on the Commitments) of the Letter of Credit Obligations with respect to such Letter of
Credit on the date of such issuance. Each Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided in the Agreement with
respect to Advances as set out in Section 2.2(b) hereof.
SECTION 3.3 Cash Collateral.
(a) If any Letter of Credit Obligations, whether or not then due and payable, shall for any reason be
outstanding on the Termination Date or an Event of Default shall have occurred, the Borrowers shall, at
the request of the Agent, either (i) provide cash collateral therefor in the manner described below, or
(ii) cause all such Letters of Credit and guaranties thereof to be canceled and returned, or (iii)
deliver a stand-by letter (or letters) of credit in guarantee of such Letter of Credit Obligations,
which stand-by letter (or letters) of credit shall be of like tenor and duration as, and be in an amount
equal to one hundred five percent (105%) of the aggregate then available to be drawn under, the Letters
of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to Agent in its sole
discretion (the "Replacement Letters of Credit"). If the Borrowers are required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement prior to the Termination Date,
the Borrowers will deliver to Agent, for the benefit of the Lenders, cash or Cash Equivalents in an
amount equal to one hundred five percent (105%) of the maximum amount then available to be drawn under
each Letter of Credit outstanding. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or financial institution
acceptable to Agent. The Cash Collateral Account shall be in the name of the Borrowers and shall be
pledged to, and subject to the control of, Agent, for the benefit of Agent and the Lenders, in a manner
satisfactory to Agent. Each Borrower hereby pledges and grants to Agent, on behalf of itself and the
Lenders, a security interest in all such funds and Cash Equivalents held in any Cash Collateral Account
from time to time and all proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Secured Obligations, whether or not then due. This Agreement
shall constitute a security agreement under applicable law.
(b) From time to time after funds are deposited in the Cash Collateral Account by the Borrowers, whether
before or after the Termination Date, Agent may apply such funds or Cash Equivalents then held in the
Cash Collateral Account to the payment of any amounts, in such order as Agent may elect, as shall be or
shall become due and payable by the Borrowers to Lenders with respect to such Letter of Credit
Obligations of the Borrowers and, upon the satisfaction in full of all Letter of Credit Obligations, to
any other Secured Obligations then due and payable.
(c) No Borrower nor any Person claiming on behalf of or through any Borrower shall have any right to
withdraw any of the funds or Cash Equivalents held in the Cash Collateral Account, except that upon the
termination or satisfaction in full of all Letter of Credit Obligations and the payment of all amounts
payable by the Borrowers to Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be held and applied to other Secured Obligations then due and owing and upon payment in
full of all Secured Obligations, any remaining amount shall be paid to the Borrowers or as otherwise
required by law.
SECTION 3.4 Fees and Expenses. The Borrowers, jointly and severally, agree to pay to the Agent, for the
benefit of the Lenders (except as otherwise described in Section 4.2(c)), as compensation for Letter of Credit
Obligations incurred hereunder, the fees set forth in Section 4.2(c) hereof.
SECTION 3.5 Request for Incurrence of Letter of Credit Obligations. The Borrowers shall give Agent at
least two (2) Business Days prior written notice requesting approval of the issuance, or a guarantee of, any
Letter of Credit, specifying the date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary to which such Letter of Credit Obligation relates and describing the nature of the transactions
proposed to be supported thereby. The notice shall be accompanied by the form of the Letter of Credit (which
shall be acceptable to the Issuing Bank) to be issued or guaranteed and a completed application for the Standby
Letter of Credit or the Documentary Letter of Credit in form and substance satisfactory to Borrowers, Agent and
the Issuing Bank. Notwithstanding anything contained herein to the contrary, Letter of Credit applications by
the Borrowers and approvals by Agent may be made and transmitted pursuant to electronic codes and security
measures mutually agreed upon and established by and among such Borrower, Agent and the Issuing Bank.
SECTION 3.6 Obligation Absolute. The obligation of the Borrowers to reimburse Agent and the Lenders for
payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the obligations of each Lender to
make payments to Agent with respect to Letters of Credit shall be unconditional and irrevocable. Such
obligations of the Borrowers and the Lenders to Agent shall be paid strictly in accordance with the terms hereof
under all circumstances including the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit, this Agreement, the other Loan Documents
or any other agreement;
(b) the existence of any claim, set-off, defense or other right which any Borrower or any of its Affiliates
or any Lender may at any time have against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such transferee may be acting), Agent, any Lender, or any other
Person, whether in connection with the Agreement, the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction (including any underlying transaction between such
Borrower or any of its Affiliates and the beneficiary for which the Letter of Credit was procured);
(c) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) except as expressly provided in Section 3.7(b)(iii) hereof, payment by Agent or any Issuing Bank under
any Letter of Credit or guaranty thereof against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit or such guaranty;
(e) any other circumstance or happening whatsoever, which is similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have occurred and be continuing.
SECTION 3.7 Indemnification; Nature of Lenders' Duties.
(a) In addition to amounts payable by the Borrowers to Agent and Lenders as elsewhere provided in this
Agreement, the Borrowers hereby, jointly and severally, agree to pay and to protect, indemnify, and save
harmless Agent, and each Lender and each Issuing Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including attorneys' fees and, after and
during the continuance of an Event of Default, allocated costs of internal counsel) which Agent, any
Lender or any Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit or guaranty thereof, or (ii) the failure of Agent or any Lender seeking
indemnification or of any Issuing Bank to honor a demand for payment under any Letter of Credit or
guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case other than to the extent
solely as a result of the gross negligence or willful misconduct of Agent or such Lender (as finally
determined by a court of competent jurisdiction).
(b) As between Agent, any Lender and any Issuing Bank and the Borrowers, the Borrowers, jointly and
severally, hereby assume all risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of the foregoing, to the
fullest extent permitted by law neither Agent nor any Lender shall be responsible: (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to demand payment under such Letter
of Credit; provided that, in the case of any payment by Agent under any Letter of Credit or guaranty
thereof, Agent shall be liable to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit or guaranty thereof complies on its
face with any applicable requirements for a demand for payment under such Letter of Credit or guaranty
thereof; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise
of any document required in order to make a payment under any Letter of Credit or guaranty thereof or of
the proceeds thereof; (vii) for the application of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (viii) for any consequences arising from causes beyond the control of
Agent or any Lender. None of the above shall affect, impair, or prevent the vesting of any of Agent's
or any Lender's rights or powers hereunder or under the other Loan Documents.
(c) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or indemnities
made by any Borrower in favor of any Issuing Bank in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between such Borrower and such Issuing Bank.
ARTICLE IV.
GENERAL LOAN PROVISIONS
SECTION 4.1 Interest.
(a) General Interest Provisions. The Borrowers, jointly and severally, agree to pay interest to Agent, for
the ratable benefit of the Lenders, on the Revolving Credit Loans from time to time outstanding from the
date of such loan(s) until such principal amount shall be paid in full, at the following rates per annum.
(i) Prime Advances. During the month or months that such loans are Prime Advances, at a rate equal to
(A) the Chase Bank Rate then in effect plus (B) the Applicable Margin in effect from time to time
for the respective type of Loan, payable in arrears as it accrues on each Interest Payment Date.
(ii) LIBOR Advances. During the month or months that such loans are LIBOR Advances, at a rate equal to
(A) LIBOR at the beginning of each such month plus (B) the Applicable Margin in effect from time
to time for the respective type of Loan, payable in arrears as it accrues on each Interest
Payment Date.
(iii) Selection of Interest Rate. The Borrowers may select the interest rate (i.e., either the Chase
Bank Rate or LIBOR) that will apply to all Advances for a particular calendar month by giving
notice to the Agent not later than 11:00 a.m.(New York time)on the third (3rd) Business Day prior
to the first day of such month. The Chase Bank Rate or LIBOR applicable to any month will be the
Chase Bank Rate or LIBOR on the first day of such month, and such Chase Bank Rate or LIBOR will
remain constant throughout such month and will not fluctuate. If the Borrowers fail to notify
the Agent of their selection of the applicable interest rate (i.e., either the Chase Bank Rate
or LIBOR) for any month by 11:00 a.m. (New York time) on the third (3rd) Business Day prior to
the first day of such month, Borrowers will be deemed to have selected for the next month the
rate of interest then in effect, which rate will be reset to the Chase Bank Rate or LIBOR in
effect on the first day of such month. For the calendar month in which the Effective Date
occurs, all Advances shall be deemed to be outstanding as LIBOR Advances. In the event of a
Default or Event of Default, all Advances shall, at the Agent's option, be deemed to be
converted to Prime Advances and the Borrowers shall not be permitted to select LIBOR as the
applicable rate of interest.
(b) Non-Business Day Payments. If any payment on the Revolving Credit Loans becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day
and, with respect to payments of principal, interest thereon shall be payable at then applicable rate
during any such extension.
(c) Default Interest. From and after the occurrence of an Event of Default and at the option of the Agent
or at the direction of the Required Lenders, without notice to the Borrowers, the unpaid principal
amount of each Secured Obligation shall bear interest while such Event of Default is continuing at a
rate per annum equal to the Default Margin plus the then Effective Interest Rate for the applicable type
of Prime Advance, payable on demand. The interest rate provided for in this Section 4.1(c) shall to the
extent permitted by applicable law also apply to and accrue on the amount of any judgment entered with
respect to any Secured Obligation and shall continue to accrue at such rate during any proceeding
described in Section 12.1(g) or (h).
(d) Computation. The interest rates provided for in this Section 4.1 and the fees provided for in Sections
4.2(b) and 4.2(c)(iii) shall be computed on the basis of a year of three hundred sixty (360) days and
the actual number of days elapsed.
(e) Maximum Rate. It is not intended by the Lenders, and nothing contained in this Agreement or any Note
shall be deemed, to establish or require the payment of a rate of interest in excess of the maximum rate
permitted by applicable law (the "Maximum Rate"). If, in any month, the Effective Interest Rate, absent
such limitation, would have exceeded the Maximum Rate, then the Effective Interest Rate for that month
shall be the Maximum Rate, and if, in future months, the Effective Interest Rate would otherwise be less
than the Maximum Rate, then the Effective Interest Rate shall remain at the Maximum Rate until such time
as the amount of interest paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In this connection, in the event that, upon payment in
full of the Secured Obligations, the total amount of interest paid or accrued under the terms of this
Agreement is less than the total amount of interest which would have been paid or accrued if the
Effective Interest Rate had at all times been in effect, then the Borrowers shall, to the extent
permitted by applicable law, pay to the Lenders an amount equal to the difference between (i) the lesser
of (A) the amount of interest which would have been charged if the Maximum Rate had, at all times, been
in effect and (B) the amount of interest which would have accrued had the Effective Interest Rate, at
all times, been in effect, and (ii) the amount of interest actually paid or accrued under this
Agreement. In the event the Lenders receive, collect or apply as interest any sum in excess of the
Maximum Rate, such excess amount shall be applied to the reduction of the principal balance of the
applicable Secured Obligation, and, if no such principal is then outstanding, such excess or part
thereof remaining shall be paid to the Borrowers.
SECTION 4.2 Fees.
(a) Facility Fee. In consideration for documenting, extending and closing the Revolving Credit Facility and
committing the funds with respect thereto, on the Effective Date, the Borrowers shall pay to the Agent,
for the ratable benefit of itself and the Lenders, a facility fee in the amount of three quarters
percent (0.75%) of the Revolving Credit Facility Amount (the "Facility Fee") incurred in connection with
the preparation, execution and closing of this transaction, which fee shall be fully earned and
non-refundable as of the Effective Date.
(b) Unused Line Fee. As additional compensation for the costs and risks in making the Revolving Credit
Facility available to the Borrowers, the Borrowers agree to pay to the Agent, for the ratable benefit of
the Lenders, in arrears, on the first (1st) Business Day of each month with respect to the immediately
prior month, during the term hereof or any extension thereof, a fee equal to the Applicable Percentage
per annum (the "Unused Line Fee") of the difference between (i) the Revolving Credit Facility Amount,
and (ii) the average daily outstanding balance of the Revolving Credit Loans and the Letter of Credit
Obligations during the period for which the Unused Line Fee is due.
(c) Letter of Credit Charges and Fees. The Borrowers agree to pay (i) to Agent, (A) the fees set forth on
Exhibit G with respect to Letters of Credit other than the Existing Letters of Credit, (B) an opening
fee of 0.125% of the face amount of each Letter of Credit and (C) for each month during which any Letter
of Credit Obligation is outstanding, a fee in an amount equal to the per annum Applicable Margin for
LIBOR Advances times the average amount available to be drawn under each Letter of Credit in such month
(the "Letter of Credit Monthly Fee") and (ii) to FCC the fees set forth on Exhibit G with respect to
the Existing Letters of Credit. Each Letter of Credit Monthly Fee shall be paid to Agent, for the
benefit of the Lenders, in arrears on the first (1st) Business Day of each month with respect to the
immediately preceding month and on the Termination Date or until all such Letter of Credit Obligations
have been paid or otherwise satisfied. Upon the occurrence and during the continuation of an Event of
Default, the Letter of Credit Monthly Fee shall be increased by an amount equal to the Letter of Credit
Default Margin.
(d) Early Termination Fees. If for any reason this Agreement is terminated by any Borrower, the Revolving
Credit Loans hereunder are repaid (including, without limitation, any default, voluntary prepayment
and/or termination of such loans by any Borrower or any termination at the option of the Agent following
an Event of Default but excluding Revolving Credit Loan payments made in the ordinary course of
business) on an Early Termination Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of
Lenders' lost profits as a result thereof, the Borrowers agree to pay to Agent, for the ratable benefit
of the Lenders, upon the effective date of such termination or prepayment of the Revolving Credit Loans,
the Early Termination Fee; provided, however, no Early Termination Fee shall be due and payable by the
Borrowers in the event Sections 12.1(g) or 12.1(h) have occurred.
(e) Agent Fee. As additional consideration for the Agent's ongoing costs and expenses of administering the
Revolving Credit Facility, the Borrowers agree to pay to the Agent the amount of $30,000 per annum
during the term of the Revolving Credit Facility (each an "Agent Fee"). Each Agent Fee shall be fully
earned and payable in advance on the Effective Date and each annual anniversary thereafter during the
term of the Revolving Credit Facility.
SECTION 4.3 Manner of Payment; Application of Proceeds.
(a) Each payment (including prepayments) by the Borrowers on account of the principal of or interest on the
Revolving Credit Loans or of any other amounts payable to the Lenders under this Agreement or any Note
shall be made not later than 1:00 p.m. (New York time) on the date specified for payment under this
Agreement to the Agent, for the account of the Lenders, at the Agent's Office, in Dollars, in
immediately available funds and shall be made without any setoff, counterclaim or deduction whatsoever
and, for purposes of calculating interest on Secured Obligations, shall be applied to the Secured
Obligations as set forth in Section 8.1(b) hereof. Any payment received after 1:00 p.m. (New York time)
on such day shall be deemed to have been made on the next succeeding Business Day.
(b) The Borrowers hereby irrevocably authorize each Lender and each Affiliate of such Lender and each
participant herein to charge any account of the Borrowers maintained with such Lender or with such
Affiliate or participant with such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which are not paid when due,
and the proceeds thereof shall be applied as set forth below in Section 4.3(c).
(c) Except as otherwise provided in Section 12.3, the Agent and the Lenders shall apply all receipts with
respect to payments on Revolving Credit Loans and all proceeds of Collateral (other than the Mortgaged
Property as provided in Section 4.3(d)) and other amounts representing payments in respect of any of the
Secured Obligations (i) first, to the Agent to pay any unpaid principal and accrued interest on the
Agent Advances; (ii) second, to the Settlement Lender to pay the principal and accrued interest on any
portion of the Non-Ratable Loans outstanding, to be shared with the Lenders that have acquired and paid
for a participating interest in such Non-Ratable Loans, (iii) third, to the Agent to pay all costs and
expenses including, without limitation, indemnified amounts, that have not been reimbursed to Agent by
the Borrowers or the Lenders, including interest thereon, if any; (iv) fourth, to the Agent to pay any
fees due the Agent hereunder, including interest thereon, if any; (v) fifth, to the Lenders for any
indemnified amounts and costs and expenses paid to or reimbursed to the Agent; (vi) sixth, to the
Lenders to pay any unpaid principal and accrued interest on the Revolving Credit Loans and the other
Secured Obligations then outstanding; (vii) seventh, to pay an amount to the Agent equal to all
outstanding Letter of Credit Obligations to be held as cash collateral for such Letter of Credit
Obligations; (viii) eighth, to any Lender or any Affiliate thereof in payment of any Bank Products
Liabilities and to CIT in payment of Ledger Debt up to a maximum of $750,000, to be shared pro rata
based on the amount of Bank Products Liabilities and Ledger Debt (up to a maximum of $750,000) then
outstanding; provided, however, in the event that (x) the aggregate amount of outstanding Revolving
Credit Loans exceeds the Borrowing Base, or (y) upon the occurrence of an Event of Default, the Agent
and the Lenders may apply all such amounts received in respect of the Secured Obligations or the
Collateral to the payment of Secured Obligations in such manner and in such order as the Agent may elect
in its reasonable credit judgment.
(d) Except as otherwise provided in Section 12.3, the Agent and the Lenders shall apply the Proportionate
Share of all proceeds of the Mortgaged Property to the Revolving Credit Loans made by the Lenders in
respect of the Fixed Asset Borrowing Base, and the Fixed Asset Borrowing Base shall be permanently
reduced by such amount, and the amount of such proceeds in excess of the Proportionate Share of such
proceeds shall be applied to the Revolving Credit Loans made by the Lenders other than in respect of the
Fixed Asset Borrowing Base and may be reborrowed subject to the other provisions of this Agreement.
Notwithstanding the immediately preceding sentence to the contrary, after the Fixed Asset Borrowing Base
is zero, the Agent and the Lenders shall apply all proceeds of the Mortgaged Property as provided in
Section 4.3(c).
SECTION 4.4 Loan Accounts; Statements of Account.
(a) Each Lender shall open and maintain on its books a loan account in the Borrowers' name (each, a "Loan
Account"). Each Loan Account shall show as debits thereto each Advance made under this Agreement by
such Lender to the Borrowers and as credits thereto all payments received by such Lender and applied to
the principal of such Revolving Credit Loans outstanding to the Borrowers so that the balance of the
Loan Account at all times reflects the aggregate principal amount of the Revolving Credit Loans due such
Lender from the Borrowers.
(b) The Agent shall maintain on its books a control account for the Borrowers in which shall be recorded (i)
the amount of each Advance made hereunder to the Borrowers, (ii) the amount of any principal or interest
due or to become due from the Borrowers hereunder, and (iii) the amount of any sum received by the Agent
hereunder from the Borrowers and each Lender's ratable share therein.
(c) The entries made in the accounts pursuant to subsections (a) and (b) shall be prima facie evidence, in
the absence of manifest error, of the existence and amounts of the obligations of the Borrowers therein
recorded and in case of discrepancy between such accounts, in the absence of manifest error, the
accounts maintained pursuant to subsection (b) shall be controlling.
(d) The Agent will account to the Borrowers monthly with a statement of the Revolving Credit Loans, charges
and payments made to and by the Borrowers pursuant to this Agreement, and such accounts rendered by the
Agent shall be deemed final, binding and conclusive, save for manifest error, unless the Agent is
notified by the Borrowers in writing to the contrary within thirty (30) days of the date the account was
so rendered. Such notice by the Borrowers shall be deemed an objection to only those items specifically
objected to therein. Failure of the Agent to render such account shall in no way affect the rights of
the Agent or of the Lenders hereunder.
SECTION 4.5 Termination of Agreement. On the Termination Date, the Borrowers shall pay to the Agent, for
the account of the Lenders, in same day funds, an amount equal to all Secured Obligations then outstanding,
including, without limitation, all (i) accrued interest thereon, (ii) all accrued fees provided for hereunder,
and (iii) any amounts payable to the Agent and the Lenders pursuant to Sections 4.1, 4.2, 4.8, 4.11, 4.12, 4.13,
15.2, 15.3 and 15.13, and, in addition thereto, shall deliver to the Agent, in respect of each outstanding Letter
of Credit, either the Replacement Letter of Credit or the Cash Collateral as provided in Section 3.3. Upon
payment in full of the amounts specified in this Section 4.5, this Agreement shall be terminated and the Agent,
the Lenders and the Borrowers shall have no further obligations to any other party hereto except for the
obligations to the Agent and the Lenders pursuant to Section 15.11 hereof and those which survive according to
their express terms.
SECTION 4.6 Making of Advances.
(a) Nature of Obligations of Lenders to Make Advances. The obligations of the Lenders under this Agreement
to make the Revolving Credit Loan are several and are not joint or joint and several.
(b) Assumption by Agent. Subject to the provisions of Section 4.7 and notwithstanding the occurrence or
continuance of a Default or Event of Default or other failure of any condition to the making of Advances
hereunder subsequent to the Advances to be made on the Effective Date, unless the Agent shall have
received notice from a Lender in accordance with the provisions of Section 4.6(c) prior to a proposed
borrowing date that such Lender will not make available to the Agent such Lender's ratable portion of
the amount to be borrowed on such date, the Agent may assume that such Lender will make such portion
available to the Agent in accordance with Section 2.2(b), and the Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount. If and to the extent
such Lender shall not make such ratable portion available to the Agent, such Lender and the Borrowers
severally agree to repay to the Agent forthwith on demand such corresponding amount (the "Make-Whole
Amount"), together with interest thereon for each day from the date such amount is made available to the
Borrowers until the date such amount is repaid to the Agent at the Effective Interest Rate or, if lower,
subject to Section 4.1(e), the Maximum Rate. If such Lender shall repay to the Agent such corresponding
amount, the amount so repaid shall constitute such Lender's Commitment Percentage of the Advance made on
such borrowing date for purposes of this Agreement. The failure of any Lender to make available its
Commitment Percentage of any Advance shall not (without regard to whether the Borrowers shall have
returned the amount thereof to the Agent in accordance with this Section 4.6) relieve it or any other
Lender of its obligation, if any, hereunder to make its Commitment Percentage of such Advance available
on such borrowing date, but no Lender shall be responsible for the failure of any other Lender to make
available its Commitment Percentage of such Advance on the borrowing date.
(c) Delegation of Authority to Agent.
(i) Without limiting the generality of Section 14.1, each Lender expressly authorizes the Agent to
determine on behalf of such Lender (A) any reduction or increase of advance rates applicable
to the Borrowing Base, so long as such advance rates do not at any time exceed the rates set
forth in the Borrowing Base definition, (B) the creation or elimination of any reserves (other
than the Letter of Credit Reserve and the Minimum Excess Availability Reserve) under the
Revolving Credit Facility and the Borrowing Base, and (C) whether or not Inventory shall be
deemed to constitute Eligible Inventory. Such authorization may be withdrawn by the Required
Lenders by giving the Agent written notice of such withdrawal signed by the Required Lenders;
provided, however, that unless otherwise agreed by the Agent such withdrawal of authorization
shall not become effective until the thirtieth (30th) Business Day after receipt of such notice
by the Agent. Thereafter, the Required Lenders shall jointly instruct the Agent in writing
regarding such matters with such frequency as the Required Lenders shall jointly determine.
(ii) Unless and until the Agent shall have received written notice from the Required Lenders that
because of a Default or Event of Default the Required Lenders do not intend to make available to
the Agent such Lenders' ratable share of Advances made after the effective date of such notice,
the Agent shall be entitled to continue to make the assumptions described in Section 4.6(b).
After receipt of the notice described in the preceding sentence, which shall become effective on
the third (3rd) Business Day after receipt of such notice by the Agent unless otherwise agreed by
the Agent, the Agent shall be entitled to make the assumptions described in Section 4.6(b) as
to any Advances as to which it has not received a written notice to the contrary prior to 11:00
a.m. (New York time) on the Business Day next preceding the day on which the Advance is to be
made. The Agent shall not be required to make any Advance as to which it shall have received
notice from a Lender of such Lender's intention not to make its ratable portion of such Advance
available to the Agent. Any withdrawal of authorization under this Section 4.6(c) shall not
affect the validity of any Advances made prior to the effectiveness thereof.
SECTION 4.7 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's Net Outstandings are intended by the Lenders to
be equal at all times to such Lender's Commitment Percentage of the aggregate principal amount of all
Revolving Credit Loans outstanding. Notwithstanding such agreement, the several and not joint
obligation of each Lender to fund Advances made in accordance with the terms of this Agreement ratably
in accordance with such Lender's Commitment Percentage and each Lender's right to receive its ratable
share of principal payments on Revolving Credit Loans in accordance with its Commitment Percentage, the
Lenders agree that in order to facilitate the administration of this Agreement and the Loan Documents
that settlement among them as to Revolving Credit Loans may take place on a periodic basis in accordance
with the provisions of this Section 4.7.
(b) Settlement Procedures as to Revolving Credit Loans. To the extent and in the manner hereinafter
provided in this Section 4.7, settlement among the Lenders as to Revolving Credit Loans may occur
periodically on Settlement Dates determined from time to time by the Agent, which may occur before or
after the occurrence or during the continuance of a Default or Event of Default and whether or not all
of the conditions set forth in Section 5.2 have been met. On each Settlement Date payments shall be
made by or to the Settlement Lender and the other Lenders in the manner provided in this Section 4.7 in
accordance with the Settlement Report delivered by the Agent pursuant to the provisions of this Section
4.7 in respect of such Settlement Date so that as of each Settlement Date, and after giving effect to
the transactions to take place on such Settlement Date, each Lender's Net Outstandings shall equal such
Lender's Commitment Percentage of the Revolving Credit Loans outstanding.
(i) Selection of Settlement Dates. If the Agent elects, in its discretion, but subject to the consent
of the Settlement Lender, to settle accounts among the Lenders with respect to principal amounts
of Revolving Credit Loans less frequently than each Business Day, then the Agent shall
designate periodic Settlement Dates which may occur on any Business Day after the Effective
Date; provided, however, that the Agent shall designate as a Settlement Date any Business Day
which is an Interest Payment Date; and provided further, that a Settlement Date shall occur at
least once during each seven-day period. The Agent shall designate a Settlement Date by
delivering to each Lender a Settlement Report not later than 12:00 noon (New York time) on the
proposed Settlement Date, which Settlement Report shall be with respect to the period beginning
on the next preceding Settlement Date and ending on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement Dates, the Agent shall request and the
Settlement Lender may (but shall not be obligated to) advance to the Borrowers out of the
Settlement Lender's own funds, the entire principal amount of any Advance requested or deemed
requested pursuant to Section 2.2(a)(any such Advance being referred to as a "Non-Ratable Loan").
The making of each Non-Ratable Loan by the Settlement Lender shall be deemed to be a purchase
by the Settlement Lender of a one hundred percent (100%) participation in each other Lender's
Commitment Percentage of the amount of such Non-Ratable Loan. All payments of principal,
interest and any other amount with respect to such Non-Ratable Loan shall be payable to and
received by the Agent for the account of the Settlement Lender. Upon demand by the Settlement
Lender, with notice thereof to the Agent, each other Lender shall pay to the Settlement Lender,
as the repurchase of such participation, an amount equal to one hundred percent (100%) of such
Lender's Commitment Percentage of the principal amount of such Non-Ratable Loan. Any payments
received by the Agent between Settlement Dates which in accordance with the terms of this
Agreement are to be applied to the reduction of the outstanding principal balance of Revolving
Credit Loans, shall be paid over to and retained by the Settlement Lender for such application,
and such payment to and retention by the Settlement Lender shall be deemed, to the extent of
each other Lender's Commitment Percentage of such payment, to be a purchase by each such other
Lender of a participation in the Revolving Credit Loans (including the repurchase of
participations in Non-Ratable Loans) held by the Settlement Lender. Upon demand by another
Lender, with notice thereof to the Agent, the Settlement Lender shall pay to the Agent, for the
account of such other Lender, as a repurchase of such participation, an amount equal to such
other Lender's Commitment Percentage of any such amounts (after application thereof to the
repurchase of any participations of the Settlement Lender in such other Lender's Commitment
Percentage of any Non-Ratable Loans) paid only to the Settlement Lender by the Agent.
(iii) Net Decrease in Outstandings. If on any Settlement Date the increase, if any, in the dollar
amount of any Lender's Net Outstandings which is required to comply with the first sentence of
Section 4.7(a) is less than such Lender's Commitment Percentage of amounts received by the Agent
but paid only to the Settlement Lender since the next preceding Settlement Date, such Lender and
the Agent, in their respective records, shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings, and the Settlement Lender shall pay
to the Agent, for the account of such Lender, the excess allocable to such Lender.
(iv) Net Increase in Outstandings. If on any Settlement Date the increase, if any, in the dollar
amount of any Lender's Net Outstandings which is required to comply with the first sentence of
Section 4.7(a) exceeds such Lender's Commitment Percentage of amounts received by the Agent but
paid only to the Settlement Lender since the next preceding Settlement Date, such Lender and the
Agent, in their respective records, shall apply such Lender's Commitment Percentage of such
amounts to the increase in such Lender's Net Outstandings, and such Lender shall pay to the
Agent, for the account of the Settlement Lender, any excess.
(v) No Change in Outstandings. If a Settlement Report indicates that no Revolving Credit Loans have
been made during the period since the next preceding Settlement Date, then such Lender's
Commitment Percentage of any amounts received by the Agent in respect of Revolving Credit Loans
but paid only to the Settlement Lender shall be paid by the Settlement Lender to the Agent, for
the account of such Lender. If a Settlement Report indicates that the increase in the dollar
amount of a Lender's Net Outstandings which is required to comply with the first sentence of
Section 4.7(a) is exactly equal to such Lender's Commitment Percentage of amounts received by
the Agent in respect of Revolving Credit Loans but paid only to the Settlement Lender since the
next preceding Settlement Date, such Lender and the Agent, in their respective records, shall
apply such Lender's Commitment Percentage of such amounts to the increase in such Lender's Net
Outstandings.
(vi) Return of Payments. If any amounts received by the Settlement Lender in respect of the
Secured Obligations are later required to be returned or repaid by the Settlement Lender to the
Borrowers or any other obligor or their respective representatives or successors in interest,
whether by court order, settlement or otherwise, in excess of the Settlement Lender's
Commitment Percentage of all such amounts required to be returned by all Lenders, each other
Lender shall, upon demand by the Settlement Lender with notice to the Agent, pay to the Agent
for the account of the Settlement Lender, an amount equal to the excess of such Lender's
Commitment Percentage of all such amounts required to be returned by all Lenders over the
amount, if any, returned directly by such Lender.
(vii) Payments to Agent, Lenders.
(A) Payment by any Lender to the Agent shall be made not later than 1:00 p.m. (New York time) on the
Business Day such payment is due, provided that if such payment is due on demand by another
Lender, such demand is made on the paying Lender not later than 11:00 a.m. (New York time) on
such Business Day. Payment by the Agent to any Lender shall be made by wire transfer, promptly
following the Agent's receipt of funds for the account of such Lender and in the type of funds
received by the Agent, provided that if the Agent receives such funds at or prior to 1:00 p.m.
(New York time), the Agent shall pay such funds to such Lender by 2:00 p.m. (New York time) on
such Business Day. If a demand for payment is made after the applicable time set forth above,
the payment due shall be made by 2:00 p.m. (New York time) on the first Business Day following
the date of such demand.
(B) If a Lender shall, at any time, fail to make any payment to the Agent required hereunder, the Agent may,
but shall not be required to, retain payments that would otherwise be made to such Lender hereunder
and apply such payments to such Lender's defaulted obligations hereunder, at such time, and in such
order, as the Agent may elect in its sole discretion.
(C) With respect to the payment of any funds under this Section 4.7(b), whether from the Agent to a Lender or
from a Lender to the Agent, the party failing to make full payment when due pursuant to the terms hereof
shall, upon demand by the other party, pay such amount together with interest on such amount at the then
Effective Interest Rate for Prime Advances.
(c) Settlement of Other Secured Obligations. All other amounts received by the Agent on account of, or
applied by the Agent to the payment of, any Secured Obligation owed to the Lenders (including, without
limitation, fees payable to the Lenders pursuant to Sections 4.2(b) and (c) and proceeds from the sale
of, or other realization upon, all or any part of the Collateral following an Event of Default) that are
received by the Agent on or prior to 1:00 p.m. (New York time) on a Business Day will be paid by the
Agent to each Lender on the same Business Day, and any such amounts that are received by the Agent after
1:00 p.m. (New York time) will be paid by the Agent to each Lender on the following Business Day.
Unless otherwise stated herein, the Agent shall distribute fees payable to the Lenders pursuant to
Section 4.2(b) and (c) ratably to the Lenders based on each Lender's Commitment Percentage and shall
distribute proceeds from the sale of, or other realization upon, all or any part of the Collateral
following an Event of Default ratably to the Lenders as set forth in Section 12.3.
SECTION 4.8 Changed Circumstances.
(a) Each Borrower agrees that if (i) any law hereafter in effect or (ii) any request, guideline or directive
of any Governmental Authority (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) not in effect as of the Effective Date with respect to any law now
or hereafter in effect (and whether or not any such law is presently applicable to any Lender) or the
interpretation or administration thereof by any Governmental Authority, shall either (A) (1) impose,
affect, modify or deem applicable any reserve, special deposit, capital maintenance or similar
requirement against any Revolving Credit Loans, (2) impose on such Lender any other condition regarding
any Advance, this Agreement, any Note or the facilities provided hereunder, or (3) result in any
requirement regarding capital adequacy (including any risk-based capital guidelines) affecting such
Lender being imposed or modified or deemed applicable to such Lender or (B) subject such Lender to any
taxes on the recording, registration, notarization or other formalization of the Revolving Credit Loans
or Note, and the result of any event referred to in clause (i) or (ii) above shall be to increase the
cost to such Lender of making, funding or maintaining any Revolving Credit Loans or to reduce the amount
of any sum receivable by such Lender or such Lender's rate of return on capital with respect to any
Revolving Credit Loans to a level below that which such Lender could have achieved but for such
imposition, modification or deemed applicability (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material, then, upon demand by
such Lender, each Borrower shall immediately pay to such Lender additional amounts which shall be
sufficient to compensate such Lender for such increased cost, tax or reduced rate of return. A
certificate of such Lender to the Borrowers claiming compensation under this Section 4.8 shall be final,
conclusive and binding on all parties for all purposes in the absence of manifest error. Such
certificate shall set forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to it hereunder and the method by which such amounts were
determined. In determining such amount, such Lender may use any reasonable averaging and attribution
methods.
(b) If the Agent shall, at least one (1) Business Day before the effective date of any conversion of the
Prime Advances into LIBOR Advances or the continuation of existing LIBOR Advances (each such requested
loan made and/or to be converted or to continued, a "Pending Advance"), notify the Borrowers that the
LIBOR based interest rate will not adequately reflect the cost to the Lenders of making or funding such
Pending Advance as a LIBOR Advance or that LIBOR is not determinable from any interest rate reporting
service of recognized standing, then the right of the Borrowers to select a LIBOR Advance for such
Pending Advance, to convert the Prime Advances into LIBOR Advances or to continue the LIBOR Advances,
shall be suspended until the Agent shall notify the Borrowers that the circumstances causing such
suspension no longer exist, and Pending Advances and each such subsequent LIBOR Advance requested to be
made, continued or converted shall be made, continued as, or converted into a Prime Advance.
SECTION 4.9 Obligations Absolute. Each Borrower agrees that the Secured Obligations will be paid strictly
in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any Lender with respect
thereto. All Secured Obligations shall be conclusively presumed to have been created in reliance hereon. The
liabilities of each Borrower under this Agreement shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or in any other term of, all or any part of the
Secured Obligations, or any other amendment or waiver thereof or any consent to departure therefrom,
including, but not limited to, any increase in the Secured Obligations resulting from the extension of
additional credit to any Borrower or otherwise;
(b) any taking, exchange, release or non-perfection of any Collateral or any other collateral securing the
Secured Obligations, or any release, amendment or waiver of, or consent to or departure from, any
guaranty for all or any of the Secured Obligations;
(c) any change, restructuring or termination of the corporate structure or existence of any Borrower; or
(d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any
Borrower other than payment or satisfaction of the Secured Obligations or to the extent of any loss
resulting from the gross negligence or willful misconduct of the Agent, any Lender or the Issuing Bank,
as determined by the final non-appealable judgment of a court of competent jurisdiction.
SECTION 4.10 Borrowers' Representative. Each of the Borrowers hereby appoints the Parent as, and the Parent
shall act under this Agreement as, the agent, attorney-in-fact and legal representative of the Borrowers for all
purposes hereunder, including, without limitation, requesting Advances and receiving account statements and other
notices and communications to the Borrowers (or any of them) from the Agent or any Lender. Accordingly, the
parties agree that any and all actions to be taken hereunder by the Borrowers may be taken by the Parent for and
on behalf of the Borrowers, and any and all notices and communications permitted or required to be made by the
Agent or any Lender hereunder to the Borrowers, shall be deemed made to all of the Borrowers if delivered to the
Parent. The Agent and the Lenders may rely, and shall be fully protected in relying, on any Borrowing Notice,
request for a Letter of Credit, disbursement instruction, report, information or any other notice or
communication made or given by the Parent, whether in its own name, on behalf of any other Borrower or on behalf
of "the Borrowers", and neither the Agent nor any Lender shall have any obligation to make any inquiry or request
any confirmation from or on behalf of any other Borrower as to the binding effect on it of any such notice,
request, instruction, report, information, other notice or communications, provided that the provisions of this
Section 4.10 shall not be construed so as to preclude any Borrower from taking other actions permitted to be
taken by "a Borrower" hereunder. The Parent may from time to time tender to Agent or Lenders, representations or
performance of covenants hereunder and take actions in respect of other matters on behalf of the Borrowers, and
any such representations, performance or actions by the Parent, if accepted by Agent or Lenders, as the case may
be, shall (irrespective of whether the particular matter is otherwise authorized elsewhere herein) be
conclusively deemed done with the authorization of and on behalf of one or more of the Borrowers, as the
circumstances and the specific action taken may indicate. Agent and any Lender may in all cases rely on
communications from, and representations and actions taken by, the Parent as though given, delivered, made or
taken by or from one or more of the Borrowers, and all such communications, representations and actions shall be
binding upon any and every Borrower in whose behalf such communications, representations or actions were
purportedly taken by the Parent. Notwithstanding anything to the contrary herein, nothing in this Section 4.10
shall be deemed to grant the Parent the authority to execute any amendment of any Loan Document on behalf of any
Borrower.
SECTION 4.11 Agent Advances.
(a) The Agent hereby is authorized by the Borrowers and the Lenders, from time to time in the Agents' sole
discretion, (i) after the occurrence of a Default or an Event of Default (but without constituting a
waiver of such Default or Event of Default), or (ii) at any time that any of the other applicable
conditions precedent set forth in Section 5.2 have not been satisfied, to make Advances to the Borrowers
on behalf of the Lenders which the Agent, in good faith, determines is necessary (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the likelihood of repayment of the
Secured Obligations, or (C) to pay any other amount chargeable to the Borrowers pursuant to the terms of
this Agreement, including costs, fees, and expenses (any of the Advances described in this Section 4.11
being hereinafter referred to as "Agent Advances").
(b) The Agent Advances shall (i) not exceed the principal amount of $1,000,000 in the aggregate at any one
time, (ii) not be made for the purpose of paying Ledger Debt, (iii) be repayable on demand or, if
earlier, not later than fifteen (15) days after the making of such Agent Advances unless otherwise
agreed by the Required Lenders, (iv) be secured by the Collateral, (v) constitute Advances and Secured
Obligations hereunder, and (vi) bear interest at the then Effective Interest Rate for Prime Advances.
SECTION 4.12 Overadvances.
(a) The Agent may make voluntary Overadvances without the written consent of the Required Lenders for
interest, fees or expenses due to Lenders in accordance with the provisions hereof. If the conditions
for borrowing under Section 5.2 cannot be fulfilled, the Agent may, but is not obligated to, knowingly
and intentionally continue to make Advances (including Agent Advances) to the Borrowers, at the request
of a Borrower, notwithstanding such failure of condition(s), so long as, at any time, either (i) the
aggregate amount of then outstanding Revolving Credit Loans would not exceed the Borrowing Base by more
than an amount equal to five percent (5%) of the Revolving Credit Facility Amount, or (ii) (A) the
aggregate amount of outstanding Revolving Credit Loans would not exceed the Borrowing Base by more than
the amount proposed by the Agent and agreed to by the Required Lenders, and (B) such Overadvances are
made pursuant to a plan (proposed by the Agent and agreed to by the Required Lenders) for the
elimination of such Overadvances. The Overadvances made under clause (i) of this Section 4.12(a) shall
be repayable not later than fifteen (15) days after the making of such Overadvances unless otherwise
agreed by the Required Lenders. The foregoing provisions are for the sole and exclusive benefit of the
Agent and the Lenders and are not intended to, and shall not be construed to, create any obligations of
the Agent or any Lender to the Borrowers with respect to Overadvances or otherwise benefit the Borrowers
in any way. The Overadvances and Agent Advances, as applicable, that are made pursuant to this
Agreement shall be subject to the same terms and conditions as any other Advance except that such
advances shall bear interest at the then Effective Interest Rate for Prime Advances; provided, however,
that the making of any Overadvance shall not constitute a waiver of any Default or Event of Default then
in existence or arising therefrom.
(b) In the event the Agent obtains actual knowledge that the aggregate amount of outstanding Revolving
Credit Loans exceeds the amount permitted by the preceding paragraph, regardless of the amount of or
reason for such excess, the Agent shall notify the Lenders as soon as practicable (and prior to making
any (or any further) intentional Overadvances (except for and excluding amounts charged to the
applicable Loan Account for interest, fees, or expenses) unless the Agent determines that prior notice
would result in imminent harm to the Collateral or its value), and the Lenders thereupon shall, together
with the Agent, jointly determine the terms of arrangements that shall be implemented with the Borrowers
intended to reduce, within a reasonable time, the outstanding principal amount of the Revolving Credit
Loans of the Borrowers to an amount permitted by the preceding paragraph. In the event any Lender
disagrees over the terms of reduction and/or repayment of any Overadvance, the terms of reduction and/or
repayment thereof shall be implemented according to the determination of the Required Lenders.
(c) Each Lender shall be obligated to settle with the Agent as provided in Section 4.7 for the amount of
such Lender's ratable share of any Overextension reported to such Lender, any Overadvances made as
permitted under this Section 4.12, and any Overextension resulting from the charging to the applicable
Loan Account interest, fees, or expenses.
(d) Any and all Overadvances made by the Agent (i) shall be repaid upon the demand of the Agent (except as
set forth in Section 4.12(a)(ii) which amounts shall be repaid pursuant to a plan for repayment as
described in Section 4.12(a)(ii) above), (ii) be secured by the Collateral, and (iii) constitute
Advances and Secured Obligations hereunder.
SECTION 4.13 Reserved.
SECTION 4.14 Joint and Several Liability.
(a) Joint and Several Liability. Each of the Borrowers acknowledges and agrees that (i) it is a co-borrower
hereunder and shall be jointly and severally, with the other Borrowers, directly and primarily liable to
the Agent and the Lenders for the Secured Obligations regardless of which Borrower actually receives
Advances or other extensions of credit hereunder or the amount of such Advances received or the manner
in which the Agent and/or such Lender accounts for such Advances or other extensions of credit on its
books and records, (ii) each of the Secured Obligations shall be secured by all of the Collateral, (iii)
each of the Borrowers shall have the obligations of co-maker and shall be primary obligors with respect
to the Revolving Credit Loans, the Notes, and the other Secured Obligations, it being agreed that the
Advances to each Borrower inure to the benefit of all Borrowers, and (iv) the Agent and the Lenders are
relying on such joint and several liability of the Borrowers as co-makers in extending the Revolving
Credit Loans hereunder. Each Borrower's Secured Obligations with respect to Advances made to it, and
each Borrower's Secured Obligations arising as a result of the joint and several liability of the
Borrowers hereunder, with respect to Advances made to the other Borrowers hereunder, shall be separate
and distinct obligations, but all such Secured Obligations shall be primary obligations of each
Borrower. Each Borrower hereby unconditionally and irrevocably agrees that upon default in the payment
when due (whether at stated maturity, by acceleration or otherwise) of any principal of, or interest on,
any Revolving Credit Loans or other Secured Obligation payable by it to the Agent or any Lender, it will
forthwith pay the same, without notice of demand. Notwithstanding anything to the contrary contained in
this Agreement, the Agent shall be entitled to rely upon any telephonic request for Advances received by
it from any Borrower on behalf of all Borrowers, shall be entitled to rely upon any other request,
notice or other communication received by it from any Borrower on behalf of all Borrowers, and shall be
entitled to treat its giving of any notice hereunder pursuant to Section 15.1 hereof as notice to each
and all Borrowers.
(b) Unconditional Liability. Each Borrower's Secured Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Advances or other extensions of credit made
to the other Borrowers hereunder shall, to the fullest extent permitted by law, be unconditional
irrespective of (i) the validity or enforceability, avoidance or subordination of the Secured
Obligations of the other Borrowers or of any Note or other document evidencing all or any part of the
Secured Obligations of the other Borrowers, (ii) the absence of any attempt to collect the Secured
Obligations from the other Borrowers, or any other security therefor, or the absence of any other action
to enforce the same, (iii) the waiver, consent, extension, forbearance or granting of any indulgence by
the Agent and/or any Lender with respect to any provision of any instrument evidencing the Secured
Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter
executed by the other Borrowers and delivered to the Agent and/or any Lender, (iv) the failure by the
Agent and/or any Lender to take any steps to perfect and maintain its security interest in, or to
preserve its rights to, any security or Collateral for the Secured Obligations of the other Borrowers,
(v) the Agent's and/or any Lender's election, in any proceeding instituted under the Bankruptcy Code, of
the application of Section-1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by the other Borrowers, as debtors-in-possession under Section 364 of the Bankruptcy Code,
(vii) the disallowance of all or any portion of the Agent's and/or any Lender's claim(s) for the
repayment of the Secured Obligations of the other Borrowers under Section 502 of the Bankruptcy Code, or
(viii) any other circumstances which might constitute a legal or equitable discharge or defense of any
other Borrowers.
(c) Waiver of Subrogation and Other Rights. With respect to each Borrower's Secured Obligations arising as
a result of the joint and several liability of the Borrowers hereunder with respect to Advances or other
extensions of credit made to any of the other Borrowers hereunder, each Borrower waives, until the
Secured Obligations shall have been paid in full and the Agreement and the other Loan Documents shall
have been terminated, any right to enforce any right of subrogation or any remedy which the Agent and/or
any Lender now has or may hereafter have against such Borrower, any endorser or any guarantor of all or
any part of the Secured Obligations, and any benefit of, and any right to participate in, any security
or collateral given to the Agent and/or any Lender to secure payment of the Secured Obligations or any
other liability of the Borrowers to the Agent and/or any Lender.
(d) No Modification or Release of Obligations. No payment or payments made by any of the Borrowers or any
other Person or received or collected by the Agent or any Lender from any of the Borrowers or any other
Person by virtue of any action or proceeding or any set-off-or appropriation or application at any time
or from time to time in reduction of or in payment of the Secured Obligations shall be deemed (except to
the extent Secured Obligations are satisfied) to modify, release or otherwise affect the liability of
each Borrower under this Agreement, which shall remain liable for the Secured Obligations until the
Secured Obligations are paid in full and the Revolving Credit Facility is terminated.
SECTION 4.15 Waiver of Suretyship Defenses. Each Borrower agrees that the joint and several liability of
the Borrowers provided for in Section 4.14 shall not be impaired or affected by any modification, supplement,
extension or amendment or any contract or Agreement to which the other Borrowers may hereafter agree (other than
an Agreement signed by the Agent and all of the Lenders specifically releasing such liability), nor by any delay,
extension of time, renewal, compromise or the indulgence granted by the Agent with respect to any of the Secured
Obligations, nor by any other agreements or arrangements whatever with any other Borrower or with anyone else,
and each Borrower hereby waives all notice of such delay, extension, release, substitution, renewal, compromise
or other indulgence, hereby consenting to be bound thereby as fully and effectively as if it had expressly agreed
thereto in advance. The liability of each Borrower is direct and unconditional as to all of the Secured
Obligations, and may be enforced without requiring the Agent first to resort to any other right, remedy or
security. Each Borrower consents and agrees that the Agent shall be under no obligation to marshal any assets in
favor of such Borrower or against or in payment of any or all of the Obligations. Each Borrower hereby expressly
waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Secured
Obligations, the Revolving Credit Notes, this Agreement, or any other Loan Document, and any requirement that
the Agent protect, secure, marshal, perfect or insure any lien or any property subject thereto (except to the
extent required by Applicable Law or this Agreement) or exhaust any right or take any action against any or all
Borrowers or any other Person or any collateral, including any rights which may be conferred under applicable law
permitting any Person after the Secured Obligations become due, to demand that the Agent first commence
proceedings against any other obligor to collect such amounts, the failure of which by the Agent to commence such
proceedings would discharge such Person from its obligations.
SECTION 4.16 Contribution and Indemnification Among the Borrowers.
(a) Each Borrower is obligated to repay the Secured Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several obligor,
repay any of the Secured Obligations constituting Advances made to another Borrower hereunder or other
Secured Obligations incurred directly and primarily by any other Borrower (an "Accommodation Payment"),
then the Borrower making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an amount, for each of such
other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is
such other Borrower's "Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Borrowers. As of any date of determination, the "Allocable Amount"
of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which
could be asserted against such Borrower hereunder without (a) rendering such Borrower "insolvent" within
the meaning of Section 101(31) of the Bankruptcy Code Section of the Uniform Fraudulent Transfer Act
(the "UFTA"), or Section 2 of the Uniform Fraudulent Conveyance Act (the "UFCA"), (b) leaving such
Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its
debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the
UFTA, or Section 5 of the UFCA. All rights and claims of contribution, indemnification and
reimbursement under this Section shall be subordinate in right of payment to the prior payment in full
of the Secured Obligations. Each agreement, consent, warranty, representation or obligation of the
Borrowers hereunder shall be deemed to be made or to have been made by the Borrowers on a joint and
several basis. The provisions of this Section shall, to the extent expressly inconsistent with any
provision in any Loan Documents, supersede such inconsistent provision.
(b) Each Borrower hereby agrees that to the extent that any individual Borrower or entity obligated
hereunder shall have paid an amount hereunder or pursuant to this Agreement which would, but for this
provision, render such Borrower or entity insolvent for purposes of state or federal fraudulent
conveyance laws, such Borrower shall be entitled to seek and receive contribution from and against any
other Borrower hereunder to the extent such contribution would not render such other Borrower
insolvent. The provisions of this Section 4.16 shall in no respect limit the obligations and
liabilities of any Borrower to Agent and Lenders and each Borrower shall remain liable to Agent and
Lenders for the full amount of such Borrower's Secured Obligations hereunder.
SECTION 4.17 Subordination. Each Borrower hereby subordinates any claims (including, without limitation,
any right of payment, subrogation, contribution and indemnity) that it may have from or against any other
Borrower, and any successor or assign of any other Borrower, including, without limitation, any trustee, receiver
or debtor-in-possession, howsoever arising, due or owing and whether heretofore, now or hereafter existing, to
the payment in full of the Secured Obligations. Notwithstanding the provisions of this Section 4.17 to the
contrary, for so long as no Default or an Event of Default shall exist, each Borrower may pay to the other
Borrower Indebtedness validly owed to such other Borrower which arises in the ordinary course of such Borrower's
business.
ARTICLE V.
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Revolving Credit Loans and Letters of Credit. Notwithstanding any
other provision of this Agreement, the initial Advance will not be made, nor will any initial Letter of Credit be
issued or Letter of Credit Obligations be incurred, until the fulfillment of each of the following conditions
prior to or contemporaneously with the making of such Advance or issuance (unless waived in writing by the Agent):
(a) Fees and Expenses. The Borrowers shall have paid all of the fees and all expenses payable on the
Effective Date referred to herein, including, without limitation, the Facility Fee and all out-of-pocket
costs and expenses incurred in connection with the preparation, negotiation, execution and closing of
this Agreement and the transactions contemplated herein.
(b) Closing Documents. The Agent shall have received each of the following documents, all of which shall be
satisfactory in form and substance to the Agent and its counsel and to the Lenders:
(i) Loan Agreement. This Agreement, duly executed and delivered by each Borrower and each Lender;
(ii) Secretary's Certificate. A certificate of the Secretary or Assistant Secretary of each
corporate Borrower (or other similar officer for other entities), in form and substance
satisfactory to the Agent, which shall include each such Borrowers (A) articles or certificate of
incorporation or other documents of formation or organization, together with any and all
amendments thereto, (B) bylaws, partnership or operating agreement, together with any and all
amendments thereto, (C) Board of Director (and if required, stockholder), Board of Manager or
partnership resolutions, approving and authorizing the transactions to be consummated in
connection herewith and (D) the signature and incumbency certificates of its officers executing
any of the Loan Documents, all certified as of the Effective Date as being true, accurate,
correct and complete;
(iii) Good Standing Certificates. A certificate evidencing the good standing (including verification of
tax status) of each Borrower in the jurisdiction of its incorporation and each other foreign
jurisdiction where it is authorized to do business, dated as of a date not more than thirty
(30) days prior to the Effective Date and certified by the applicable Secretary of State or
other authorized Governmental Authority;
(iv) Financial Statements; Projections. Copies of all financial statements and Projections referred
to in Section 6.1(m) and meeting the requirements thereof;
(v) Legal Opinions. Signed opinions of counsel to the Borrowers, together with any local counsel
opinions reasonably requested by the Agent, in form and substance reasonably satisfactory to the
Agent;
(vi) Payoff Letters. A Payoff Letter executed by FCC, in connection with the term loan from FCC to
the Parent, in form and substance reasonably satisfactory to the Agent, together with (A) UCC and
other appropriate termination statements, in form and substance reasonably satisfactory to the
Agent, releasing all liens of FCC upon any of the assets and properties of each Borrower as
security for such term loan and (B) termination of all blocked account agreements, control
agreements and other similar agreements and arrangements relating to the Collateral and other
assets and properties of the Borrowers in favor of the Existing Agent or relating to the
existing credit facility;
(vii) Security Interests and UCC Filings. (A) Evidence satisfactory to the Agent that the Agent(for the
benefit of itself and Lenders) has a valid and perfected first priority security interest in
the Collateral, including, without limitation, (1) such documents duly executed or authorized
by each Borrower (including UCC financing statements and other applicable documents under the
laws of any jurisdiction with respect to the perfection of Liens) as the Agent may request in
order to perfect its security interests in the Collateral and (2) copies of UCC search reports
listing all effective financing statements that name any Borrower as debtor, together with
copies of such financing statements, none of which shall cover the Collateral, except for those
relating to the Existing Agent's credit facility with the Borrowers (all of which shall be
terminated on the Effective Date); (B) Evidence satisfactory to the Agent, including copies,
of all UCC-1 and other financing statements filed in favor of any Borrower with respect to each
location, if any, at which Inventory may be consigned; and (C) fully executed Control
Agreements from (i) all issuers of uncertificated securities and financial assets held by each
Borrower, (ii) all securities intermediaries with respect to all Investment Accounts of each
Borrower and any securities entitlements of each Borrower, and (iii) all futures commission
agents and clearing houses with respect to all commodities contracts and commodities accounts
held by any Borrower;
(viii) Insurance. Certificates or binders of insurance relating to each of the policies of insurance
covering any of the Collateral together with a loss payable endorsement, in form and substance
reasonably satisfactory to the Agent, and/or additional insured clauses or endorsements, which
comply with the terms of Section 8.6;
(ix) Officers' Certificate. A certificate of the President or a Financial Officer of each Borrower
stating that, to the best of his knowledge and based on an examination sufficient to enable him
to make an informed statement, (A) all of the representations and warranties made or deemed to be
made under this Agreement and the other Loan Documents are true and correct as of the Agreement
Date and the Effective Date, after giving effect to the Initial Loans to be made at such time
and the application of the proceeds thereof, and (B) no Default or Event of Default exists;
(x) Borrowing Base Certificates. An Accounts Borrowing Base Certificate and an Inventory Borrowing
Base Certificate each prepared as of the Effective Date or such earlier date acceptable to
the Agent, duly executed and delivered by a Financial Officer;
(xi) Power of Attorney. An original of the Power of Attorney substantially in the form attached
hereto as Exhibit C, as executed by each Borrower in favor of the Agent;
(xii) Cash Management Agreements. Evidence satisfactory to the Agent of the existence, as of the
Effective Date, of a cash management system that complies with Section 8.1(a) hereof and
that is otherwise satisfactory to the Agent, in it's sole discretion, including, without
limitation, Lockbox Agreements with respect to the Blocked Accounts, duly executed by the
Borrowers and the applicable Clearing Bank;
(xiii) Initial Borrowing Notice. A letter, conforming to the requirements of Section 9.8, from the
Borrower to the Agent requesting the initial Revolving Credit Loan and specifying the method of
disbursement of the proceeds thereof.
(xiv) Schedules of Accounts and Inventory. A Schedule of Accounts and a Schedule of Inventory
prepared as of the Effective Date or a recent prior date in accordance with Sections 8.8(a) and
(c);
(xv) Environmental Reports. Copies of all of the most recent existing reports from a qualified
environmental engineering firm or other qualified consultant acceptable to the Agent with
respect to investigations and audits of all Real Estate;
(xvi) Ancillary Documents. Copies of each of the other Loan Documents duly executed by the parties
thereto, together with evidence satisfactory to the Agent of the due authorization and binding
effect of each such Loan Document on such party;
(xvii) Waivers and Consents. Waivers and Consents duly executed on behalf of (y) each landlord or
mortgagee, as the case may be, of Real Estate and any other real property on which any
Collateral is located, and (z) each bailee (with respect to any warehouse, processor, converter
or other storage facility) where any Collateral is located;
(xviii) Inventory Appraisal. An appraisal of all Inventory, including the Eligible Inventory, prepared at
the Borrowers' cost and expense by appraisers satisfactory to the Agent, establishing an
appraisal value for such Inventory that indicates an Appraised OL Value of such Inventory at
levels satisfactory to the Agent;
(xix) Executive Credit Committee Approval. The Agent's executive credit committee shall have approved
the extension of the Revolving Credit Facility;
(xx) Subordination and Intercreditor Agreements. Any and all subordination and/or intercreditor
Agreements, each in form and substance satisfactory to the Agent in its sole discretion, as the
Agent shall have deemed necessary or appropriate with respect to any Indebtedness of the
Borrowers, each duly executed by the lender, the Borrowers party thereto and the Agent;
(xxi) Mortgages. Mortgages covering all of the Mortgaged Properties together with: (a) title
insurance policies, current as-built surveys, zoning letters and certificates of occupancy, in
each case reasonably satisfactory in form and substance to the Agent, in its sole discretion;
(b) evidence that counterparts of the Mortgages have been recorded in all places to the extent
necessary or desirable, in the judgment of the Agent, to create a valid and enforceable first
priority lien (subject to Permitted Liens) on each Mortgaged Property in favor of the Agent for
the benefit of itself and Lenders (or in favor of such other trustee as may be required or
desired under local law); and (c) an opinion of counsel in each state in which any Mortgaged
Property is located in form and substance and from counsel reasonably satisfactory to the
Agent;
(xxii) Assignment of CARPA Proceeds. An assignment of the proceeds of the CARPA in form and substance
satisfactory to the Agent, duly executed by CIT, the Agent and the Parent;
(xxiii) Documentation Regarding Existing Loan Agreement. Assignment and Acceptance Agreements in form
and substance satisfactory to the Agent, duly executed by the Existing Agent, the Existing
Lenders, the Agent and the Borrowers, and documentation acceptable to the Agent between the Agent
and the Existing Agent evidencing the resignation of the Existing Agent as agent under the
Existing Loan Agreement and the substitution of the Agent as agent under the Existing Loan
Agreement.
(xxiv) General. Such other documents and instruments as the Agent or any Lender may reasonably request.
(c) Notes. Each Lender shall have received a Note duly executed and delivered by each Borrower, in the form
attached hereto as Exhibit A, and complying with the terms of Sections 2.4.
(d) Other Security Documents. The Agent shall have received each other Security Document, all in form and
substance satisfactory to the Agent, together with all share certificates, securities, instruments,
agreements and other documents required to be delivered and/or relating thereto, duly executed by the
Borrowers and such other parties thereto.
(e) Excess Availability. The Agent shall be provided with evidence satisfactory to it, confirmed by a
certificate of a Financial Officer of the Borrowers, that as of the Effective Date, after giving effect
to the initial Advance and the issuance of any Letters of Credit on the Effective Date, Excess
Availability is not less than $12,000,000 and that each Borrower's Indebtedness is being timely paid in
a manner consistent with its usual business practices.
(f) No Injunctions, Etc. No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin,
restrain, or prohibit, or to obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby or which, in the Agent's
reasonable discretion, would make it inadvisable to consummate the transactions contemplated by this
Agreement.
(g) Material Adverse Change. As of the Effective Date, and except as disclosed in the unaudited financial
statements described in Section 6.1(m), there shall not have occurred any change which is materially
adverse, in the Agent's reasonable credit judgment, to the assets, liabilities, businesses, operations,
condition (financial or otherwise) or prospects of the Borrowers from those presented by the unaudited
financial statements described in Section 6.1(m), it being understood that any adverse change in the
terms, conditions, assumptions or projections supplied by the Borrowers and on which Agent and the
Lenders based their decision to issue their commitment to lend to the Borrowers may, in their
commercially reasonable discretion, be construed by the Agent and the Lenders as a material adverse
change.
(h) Release of Security Interests. The Agent shall have received evidence satisfactory to it of the release
and termination of, or with respect to the Existing Agent a commitment to release and terminate upon
payment in full of all amounts due under the existing credit facility, all Liens other than Permitted
Liens.
(i) Due Diligence. The Agent shall have completed, with results satisfactory to it in its sole discretion,
its legal, credit and business due diligence in respect of each Borrower.
SECTION 5.2 All Advances; Letters of Credit. At the time of making of each Advance, including the initial
Advance and all subsequent Advances and the issuance of each Letter of Credit:
(a) all of the representations and warranties made or deemed to be made under this Agreement shall be true
and correct at such time both with and without giving effect to such Advance and the Letters of Credit
to be made at such time and the application of the proceeds thereof,
(b) no event shall have occurred and be continuing, or would result from the making of any Advance or the
incurrence of any Letter of Credit Obligation, as the case may be, which constitutes a Default or an
Event of Default;
(c) each of the conditions set forth in Section 5.1(a) through (i) shall continue to be satisfied by the
Borrowers as of such date.
(d) the corporate actions of each Borrower, including shareholder approval if necessary, to authorize the
execution, delivery and performance of this Agreement, the other Loan Documents and the borrowings
hereunder shall remain in full force and effect and the incumbency of officers shall be as stated in the
certificates of incumbency delivered pursuant to Section 5.1(b)(ii) or as subsequently modified and
reflected in a certificate of incumbency delivered to the Agent, and
(e) each request and deemed request for any Advance or for the incurrence of any Letter of Credit Obligation
hereunder shall be deemed to be a certification by each Borrower to the Agent and the Lenders as to the
matters set forth in Section 5.2(a) and (d) and the Agent may, without waiving either condition,
consider the conditions specified in Sections 5.2(a) and (d) fulfilled and a representation by such
Borrower to such effect made, if no written notice to the contrary is received by the Agent prior to the
making of the Advance then to be made.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BORROWERS
SECTION 6.1 Representations and Warranties. Each Borrower represents and warrants to the Agent and to the
Lenders as follows:
(a) Organization; Power; Qualification; FEIN. Schedule 6.1(a) lists for each Borrower and its Subsidiaries
as of the Agreement Date (i) the exact name of the entity as it appears in the official filings relating
thereto, the type of entity, and the jurisdiction in which each Borrower and its Subsidiaries is
incorporated, registered or formed, (ii) the jurisdictions in which they are qualified to do business as
foreign entities, (ii) the organization or registration number of each Borrower and its Subsidiaries as
fixed by their respective jurisdictions of incorporation, registration or formation and (iii) the
federal employer identification number of such Borrower and its Subsidiaries. Each Borrower and each of
its Subsidiaries is duly organized or formed, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or formation, has the legal power and authority to own its
properties and to carry on its business as now being and hereafter proposed to be conducted and is duly
qualified and authorized to do business in each jurisdiction in which failure to be so qualified and
authorized would have a Materially Adverse Effect.
(b) Subsidiaries and Ownership of each Borrower. Each Borrower's Subsidiaries, and its ownership interests
therein, are set forth on Schedule 6.1(b). Except as set forth on Schedule 6.1(b), each Borrower owns
100% of all such Subsidiaries. The outstanding stock of each corporate Borrower and each of its
corporate Subsidiaries has been duly and validly issued and is fully paid and non-assessable by each
corporate Borrower and such corporate Subsidiary and the number and owners of such shares of capital
stock of each corporate Borrower are set forth on Schedule 6.1(b). Except as set forth on Schedule
6.1(b), there are no outstanding rights to purchase, options, warrants or similar rights or agreements
pursuant to which any Borrower may be required to issue, sell, repurchase or redeem any of its stock or
other equity securities or any stock or other equity securities of its Subsidiaries. Except for
Subsidiaries which are Borrowers, no Subsidiary of any Borrower, except as set forth in Schedule 6.1(b),
(i) owns any assets or property (A) having a value in excess of $10,000, or (B) otherwise material to
the operation of the business of any Borrower, or (ii) engages in any operations which are material to
the business of any Borrower.
(c) Authorization of Agreement, Notes, Loan Documents and Borrowing. Each Borrower has the right and power
and has taken all necessary action to authorize the execution, delivery and performance of each of the
Loan Documents to which it is a party in accordance with their respective terms. Each of the Loan
Documents to which it is a party have been duly executed and delivered by the duly authorized officers
of each Borrower, and each is, or when executed and delivered in accordance with this Agreement will be,
a legal, valid and binding obligation of such Borrower, enforceable in accordance with its terms.
(d) Compliance of Agreement, Notes, Loan Documents and Borrowing with Laws, Etc. The execution, delivery
and performance of each of the Loan Documents to which each Borrower is a party in accordance with its
respective terms and the borrowings hereunder do not and will not, by the passage of time, the giving of
notice or otherwise,
(i) require any Governmental Approval or violate any applicable law, regulation, judgment, injunction,
order or decree relating to such Borrower or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute a default under (A) the articles or
certificate of incorporation or formation, the by-laws, the limited liability company operating
agreement, partnership agreement or other similar organizational documents of such Borrower,
(B) any indenture, material agreement or other instrument to which such Borrower is a party or by
which any of its property may be bound or (C) any Governmental Approval relating to such Borrower,
or,
(iii) result in or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by such Borrower other than the Security Interest.
(e) Business. Each Borrower is engaged principally in the business described on Schedule 6.1(e).
(f) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 6.1(f), each Borrower
(A) has all material Governmental Approvals, including permits relating to federal, state and local
Environmental Laws, ordinances and regulations, required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and not subject to review on appeal and is
not the subject of any pending or, to the knowledge of such Borrower, threatened attack by direct or
collateral proceeding, and
(B) is in compliance with each material Governmental Approval applicable to it and in compliance with all
other material Applicable Laws relating to it, including, without being limited to, all material
Environmental Laws and all material occupational health and safety laws applicable to such Borrower or its
properties,
except for instances of noncompliance which would not, singly or in the aggregate, cause a Default or Event of
Default or have a Materially Adverse Effect on such Borrower and its Subsidiaries as a whole and in respect of
which reserves in respect of such Borrower's or its Subsidiary's reasonably anticipated liability therefore have
been established on the books of such Borrower or such Subsidiary, as applicable.
(ii) Without limiting the generality of the above, except as disclosed on a report delivered
pursuant to Section 5.1(b)(xv) or with respect to matters which could not reasonably be expected
to have, singly or in the aggregate, a Materially Adverse Effect on such Borrower:
(A) the operations of such Borrower and each of its Subsidiaries complies in all material respects with all
applicable environmental, health and safety requirements of Applicable Law;
(B) such Borrower and each of its Subsidiaries has obtained all environmental, health and safety permits
necessary for its operation and all permits are in good standing and such Borrower and each of its
Subsidiaries is in compliance in all material respects with all terms and conditions of such permits;
(C) neither such Borrower nor any of its Subsidiaries nor any of their respective present or past property
or operations are subject to any order from or agreement with any public authority or private party
respecting (x) any environmental, health or safety requirements of Applicable Law, (y) any Remedial
Action, or (z) any liabilities and costs arising from the Release or threatened Release of a Contaminant
into the environment or otherwise arising from the environmental, health or safety requirements of any
Applicable Law;
(D) none of the operations of such Borrower or of any of its Subsidiaries is subject to any judicial or
administrative proceeding alleging a violation of any environmental, health or safety requirement of
Applicable Law;
(E) none of the present nor past operations of such Borrower or any of its Subsidiaries is the subject of
any investigation by any public authority evaluating whether any Remedial Action is needed to respond to
a Release or threatened Release of a Contaminant into the environment;
(F) neither such Borrower nor any of its Subsidiaries has filed any notice under any requirement of
Applicable Law indicating past or present treatment, storage or disposal of a hazardous waste, as that
term is defined under 40 CFR Part 261 or any state equivalent;
(G) neither such Borrower nor any of its Subsidiaries has filed any notice under any requirement of
Applicable Law reporting a Release of a Contaminant into the environment;
(H) except in compliance with applicable Environmental Laws, during the course of such Borrower's or any of
its Subsidiaries' ownership of or operations on the Real Estate there have been no (1) generation,
treatment, recycling, storage or disposal of hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent, (2) use of underground storage tanks or surface impoundments, (3) use
of asbestos-containing materials, or (4) use of polychlorinated biphenyls (PCB) used in hydraulic oils,
electrical transformers or other equipment on the Real Estate;
(I) neither such Borrower nor any of its Subsidiaries has entered into any negotiations or agreements with
any Person (including, without limitation, any prior owner of any of the Real Estate or other property
of such Borrower or any of its Subsidiaries) relating to any Remedial Action or environmentally-
related claim;
(J) neither such Borrower nor any of its Subsidiaries has received any notice or claim to the effect that it
is or may be liable to any Person as a result of the Release or threatened Release of a Contaminant
into the environment;
(K) neither such Borrower nor any of its Subsidiaries has any contingent liability in connection with any
Release or threatened Release of any Contaminant into the environment;
(L) no Environmental Lien has attached to any of the owned Real Estate or other property of such Borrower or
of any of its Subsidiaries, or, to the knowledge of any Borrower or any Subsidiary thereof, any of the
leased Real Estate;
(M) the presence and condition of all asbestos-containing material which is on or part of the owned Real
Estate or, to the knowledge of any Borrower or any Subsidiary thereof, on or part of any of the leased
Real Estate (excluding any raw materials used in the manufacture of products or products themselves) do
not violate any currently applicable requirement of Applicable Law;
(N) neither such Borrower nor any of its Subsidiaries manufactures, distributes or sells, and has not, in
the past twenty (20) years, manufactured, distributed or sold, products which contain asbestos-
containing material; and
(O) such Borrower hereby acknowledges and agrees that Agent
(i) is not now, and has not ever been, in control of any of the Real Estate or any of such Borrower's
affairs, and
(ii) does not have the capacity through the provisions of the Loan Documents or otherwise to influence
such Borrower's conduct with respect to the ownership, operation or management of any of
its Real Estate or compliance with Environmental Laws or Environmental Permits.
(iii) Schedule 6.1(f) sets forth each notice received by any Borrower or Subsidiary of a material
violation of any Environmental Laws and occupational health and safety laws applicable to such
Borrower, any of its respective Subsidiaries or any of their respective properties.
(g) Real Estate; Leases. Schedule 6.1(g) sets forth, as of the Agreement Date, a correct and complete list
of all Real Estate owned by the Borrowers, all leases and subleases of real or personal property held by
the Borrowers as lessee or sublessee, and all leases and subleases of real or personal property held by
the Borrowers as lessor, or sublessor, in each case, as to which the interests of the relevant Borrower
has a book value or estimated fair market value in excess of $100,000. Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no
material default by any Borrower to any such lease or sublease exists. The Borrowers have good and
marketable title in fee simple to the Real Estate identified on Schedule 6.1(g) as owned by the
Borrowers, or valid leasehold interests in all Real Estate designated therein as "leased" by the
Borrowers and the Borrowers have good, indefeasible, and merchantable title to all of their other
property reflected on the Financial Statements delivered to the Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof, free of all Liens except
Permitted Liens.
(h) Liens. Except as set forth in Schedule 6.1(h), none of the properties and assets owned by any Borrower
or any Subsidiary, including, without limitation, the Collateral, is subject to any Lien, except
Permitted Liens. Other than the Financing Statements, no financing statement under the UCC of any state
which names any Borrower or any Subsidiary as debtor and which has not been terminated has been filed in
any state or other jurisdiction, and no Borrower or any of their respective Subsidiaries has signed any
such financing statement or any security agreement authorizing any secured party thereunder to file any
such financing statement, except to perfect those Liens listed in Schedule 6.1(h).
(i) Indebtedness and Guaranties. Set forth on Schedule 6.1(i) is a complete and correct listing of all of
each Borrower's and each of its Subsidiaries' (i) Indebtedness for Money Borrowed and (ii) Guaranties.
Each Borrower and each of its Subsidiaries has performed and is in compliance with all of the terms and
provisions of such Indebtedness and Guaranties and all instruments and agreements relating thereto and
no default or event of default or event or condition which, with notice or lapse of time or both, would
constitute such a default or event of default, exists with respect to such Indebtedness or Guaranties or
related instruments or agreements.
(j) Litigation. Except as set forth on Schedule 6.1(j), there are no actions, suits or proceedings pending
(nor, to the knowledge of any Borrower, are there any actions, suits or proceedings threatened, nor is
there any basis therefor) against or in any other way relating adversely to or affecting any Borrower or
any Subsidiary or any of their respective properties, or which challenge any Borrower's right or power
to enter into or perform any of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder, in any court or before
any arbitrator of any kind or before or by any governmental body, which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on any Borrower and its
Subsidiaries, as a whole.
(k) Tax Returns and Payments. Except as set forth on Schedule 6.1(k), all United States federal, state and
local as well as foreign national, provincial and local and other tax returns of each Borrower and each
of its Subsidiaries required by Applicable Law to be filed have been duly filed, and all United States
federal, state and local and foreign national, provincial and local and other taxes, assessments and
other governmental charges or levies upon such Borrower and each of its Subsidiaries and such Borrower's
and any of its Subsidiaries' property, income, profits and assets which are due and payable have been
paid, except any such nonpayment which is at the time permitted under Section 9.6. The charges,
accruals and reserves on the books of each Borrower and each of its Subsidiaries in respect of United
States federal, state and local and foreign national, provincial and local taxes for all fiscal years
and portions thereof since the organization of such Borrower are in the judgment of such Borrower
adequate, and such Borrower knows of no reason to anticipate any additional assessments for any of such
years which, singly or in the aggregate, could reasonably be expected to have a Materially Adverse
Effect on such Borrower. Proper and accurate amounts have been withheld by each Borrower from its
respective employees for all periods in full compliance with all applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective Governmental Authorities.
Schedule 6.1(k) sets forth as of the Effective Date those taxable years for which any Borrower's tax
returns are currently being audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described on Schedule 6.1(k), as of the Effective Date, no Borrower has executed
or filed with the IRS or any other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any Charges. Except as
disclosed in Schedule 6.1(k) hereto, no Borrower or any of its respective predecessors are liable for
any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to any Borrower's
knowledge, as a transferee. As of the Effective Date, no Borrower has agreed or been requested to make
any adjustment under Code Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Materially Adverse Effect.
(l) Burdensome Provisions. No Borrower or any of its respective Subsidiaries is a party to any indenture,
agreement, lease or other instrument, or subject to any charter or corporate restriction, Governmental
Approval or Applicable Law compliance with the terms of which could reasonably be expected to have a
Materially Adverse Effect on any Borrower and its Subsidiaries, taken as a whole.
(m) Financial Statements.
(i) The Borrowers have furnished to the Agent and the Lenders a copy of (A) Borrowers' Consolidated
Balance Sheet and Consolidating Balance Sheet as at September 27, 2003 (and for any Borrower
which is a public company, such Borrower's Form 10-K containing such balance sheets), and the
related statements of income, cash flow and retained earnings for the Fiscal Year then ended, and
(B) its unaudited balance sheet as at May 1, 2004, and the related unaudited statement of income
for the seven (7) Fiscal Months then ended. Such financial statements are complete and correct
and present fairly and in all material respects in accordance with GAAP, the financial position
of the Borrowers, as at the dates thereof and the results of operations thereof, for the
periods then ended on a consolidated and consolidating basis (except with respect to interim
financial statements, for the omission of footnotes and normal year-end adjustments). Except
as disclosed or reflected in such financial statements, no Borrower has any material
liabilities, contingent or otherwise, and there were no material unrealized or anticipated
losses of such Borrower required to be accrued, reserved for, or disclosed in the foregoing
financial statements.
(ii) The Borrowers have furnished to the Agent and the Lenders copies of the projections, dated April
20, 2004, for the period through and including September, 2005 (the "Projections"). The
Projections have been prepared by the Borrowers in light of the past operations of the business
of the Borrowers and their Subsidiaries and were, at the time furnished, (i) believed to be
reasonable, and (ii) prepared on a reasonable and good faith basis based on assumptions
believed to be reasonable, using the best information then available, concerning the most
probable course of the business of the Borrowers and their Subsidiaries.
(n) Adverse Change. Since the date of the financial statements described in clause (i) of Section 6.1(m)
and other than as disclosed in the unaudited financial statements described in clause (ii) of Section
6.1(m), (i) no change in the business, assets, liabilities, condition (financial or otherwise), results
of operations or business prospects of any Borrower has occurred that has had, or may have, a Materially
Adverse Effect, and (ii) no event has occurred or failed to occur which has had, or may have, a
Materially Adverse Effect.
(o) Benefit Plans; ERISA. No Borrower or any Related Company maintains or contributes to any Benefit Plan
other than those listed on Schedule 6.1(o). Each Benefit Plan is in substantial compliance with ERISA
to the extent that ERISA is applicable, and no Borrower or any Related Company has received any notice
asserting that a Benefit Plan is not in compliance with ERISA. No material liability to the PBGC or to
a Multiemployer Plan has been, or is expected by any Borrower to be, incurred by such Borrower or any
Related Company. Copies of all such listed Benefit Plans, together with a copy of the latest form 5500
(if any) for each such Benefit Plan, have been delivered to Agent. No Borrower or any Related Company
has failed to make any contribution or pay any amount due as required by either Section 412 of the Code
or Section 302 of ERISA or the terms of any such Benefit Plan. No Borrower or any Related Company has
engaged in a prohibited transaction, as defined in Section 4975 of the Code, in connection with any
Benefit Plan, which would subject such Borrower to a material tax on prohibited transactions imposed by
Section 4975 of the Code. Except as set forth in Schedule 6.1(o): (i) no Title IV Plan has any Unfunded
Vested Accrued Benefits; (ii) no ERISA Event or event described in Section 4062(e) of ERISA with respect
to any Title IV Plan has occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Borrower, threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Benefit Plan or any Person as
fiduciary or sponsor of any Benefit Plan; (iv) no Borrower or any Related Company has incurred or
reasonably expects to incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan with Unfunded Vested Accrued
Benefits has been transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of such Borrower or any Related Company; and (vi) no liability under any Title IV
Plan has been satisfied with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or the equivalent by another nationally recognized rating agency.
(p) Absence of Defaults. No Borrower or any of its Subsidiaries is in default under its articles or
certificate of incorporation or under its by-laws or other equivalent organic documents and no event has
occurred, which has not been remedied, cured or waived, which constitutes a Default or an Event of
Default, or which constitutes, or which with the passage of time or giving of notice or both would
constitute, a default or event of default by any Borrower or any of its Subsidiaries under any material
agreement (other than this Agreement) or judgment, decree or order to which any Borrower or any of its
Subsidiaries is a party or by which any Borrower, any of its Subsidiaries or any Borrower's or any of
its Subsidiaries' properties may be bound or which would require any Borrower or any of its Subsidiaries
to make any payment under any of the foregoing prior to the scheduled maturity date therefor.
(q) Accuracy and Completeness of Information. All Schedules hereto and all material written information,
reports and other papers and data produced by or on behalf of each Borrower and furnished to the Agent
or any Lender were, at the time the same were so furnished, complete and correct in all material
respects, to the extent necessary to give the recipient a true and accurate knowledge of the subject
matter. None of the representations and warranties made by any Borrower in any of the Loan Documents as
of the date such representations and warranties are made or deemed made and no document furnished or
written statement made to the Agent or any Lender by any Borrower in connection with the negotiation,
preparation or execution of this Agreement or any of the Loan Documents contains or will contain any
untrue statement of a fact material to the creditworthiness of any Borrower or omits or will omit to
state a material fact necessary in order to make the statements contained therein not misleading.
(r) Reserved.
(s) Inventory. All Inventory included in any Inventory Borrowing Base Certificate delivered to the Agent
pursuant to Section 8.8(d) meets the criteria enumerated in the definitions of Eligible Inventory,
except as disclosed in such Inventory Borrowing Base Certificate or in a subsequent Inventory Borrowing
Base Certificate or as otherwise specifically disclosed in writing to the Agent. All Eligible Inventory
is in good condition, meets all standards imposed by any governmental agency or department or division
thereof having regulatory authority over such goods, their use or sale, and is currently either usable
or saleable in the normal course of a Borrower's business, except to the extent reserved against in the
financial statements delivered pursuant to Section 6.1(m) and Article 10 or as disclosed on a Schedule
of Inventory delivered to the Agent pursuant to Section 8.8(c). The Agent may rely on all statements,
warranties or representations made in any Schedule of Inventory in determining which items of Inventory
listed in such Schedule are to be deemed Eligible Inventory. Set forth on Schedule 6.1(s) is the (i)
address (including street, city, county and state) of each facility at which Inventory is located, (ii)
the approximate Cost value of the Inventory located at each such facility, (iii) if the facility is
leased or is a third party warehouse or processor location, the name of the landlord or such third party
warehouseman or processor, and (iv) if the Inventory is consigned, all outstanding consignment and memo
contract agreements to which such Borrower is a party. All Inventory is located on the premises set
forth on Schedule 6.1(s) or is in transit to one of such locations, except as otherwise disclosed in
writing to the Agent; no Borrower has located Inventory at premises other than those set forth on
Schedule 6.1(s) at any time during the four months immediately preceding the Agreement Date. No
Inventory is subject to any Liens other than Permitted Liens.
(t) Accounts.
(i) Each Account reflected in the computations included in any Accounts Borrowing Base Certificate
meets the criteria enumerated in the definition of "Eligible Accounts," except as disclosed
in such Accounts Borrowing Base Certificate or as disclosed in a timely manner in a subsequent
Accounts Borrowing Base Certificate or otherwise in writing to the Administrative Agent.
(ii) No Borrower has any knowledge of any fact or circumstance not disclosed to the Agent in an
Accounts Borrowing Base Certificate or otherwise in writing which would impair the validity
or collectibility of any otherwise Eligible Account of $50,000 or more.
(u) Chief Executive Office. The chief executive office and principal place of business of each Borrower and
the books and records relating to the Collateral are located at the address or addresses set forth on
Schedule 6.1(u). Except as set forth on Schedule 6.1(u) no Borrower has maintained its chief executive
office or books and records relating to the Collateral at any other address at any time during the five
years immediately preceding the Agreement Date.
(v) Transfer Pricing Between Affiliates. Each Borrower is in compliance with and utilizes the arms-length
standard for course of dealing transactions applicable to Affiliates as contemplated in Section 482 of
the Code, as amended and the regulations promulgated thereunder, such that no material amount of taxes
are due and owing and unpaid as a result of any such transaction or series of transactions.
(w) Corporate and Fictitious Names. Except as otherwise disclosed on Schedule 6.1(w), during the five-year
period preceding the Agreement Date, no Borrower or any predecessor thereof has been known as or used
any corporate or fictitious name other than the corporate name of each Borrower on the Effective Date.
(x) Use of Proceeds; Federal Reserve Regulations. The proceeds of the Revolving Credit Loans are to be used
solely to repay in full all of the obligations of the Borrowers to the Existing Lenders, for working
capital, capital expenditures, and other lawful corporate purposes. No Borrower or any of its
Subsidiaries is engaged and none will 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" (as each
of the quoted terms is defined or used in Regulation U of the Board of Governors of the Federal Reserve
System). No Borrower owns any Margin Stock and no part of the proceeds of any of the Advances will be
used for so purchasing or carrying margin stock or, in any event, for any purpose which violates, or
which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. If
requested by the Agent or any Lender, each Borrower will furnish to the Agent and the Lenders a
statement or statements in conformity with the requirements of said Regulation T, U or X to the
foregoing effect.
(y) Government Regulation. No Borrower is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended). No Borrower is subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, or any other federal or state statute that restricts or limits its ability
to incur Indebtedness or to perform its obligations hereunder. Assuming the accuracy of the
representations set forth in Section 13.3 hereunder, the making of Advances and the incurrence of Letter
of Credit Obligations, the application of the proceeds thereof and repayment thereof and the
consummation of the related transactions will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.
(z) Employee Relations. Each Borrower and each of its Subsidiaries has adequate relations with its
employees and is not, except as set forth on Schedule 6.1(z), party to any collective bargaining
agreement nor has any labor union been recognized as the representative of any Borrower's or any of its
Subsidiaries' employees, and no Borrower is aware of any pending, threatened or contemplated strikes,
work stoppage or other material labor disputes involving such Borrower's or any of its Subsidiaries'
employees.
(aa) Intellectual Property. Schedule 6.1(aa) sets forth a correct and complete list of all Intellectual
Property owned by each Borrower or which any Borrower has the right to use. Each Borrower owns or
possesses all Intellectual Property required to conduct its business as now and presently planned to be
conducted. None of the Intellectual Property is subject to any licensing agreement or similar
arrangement except as set forth on Schedule 6.1(aa) or as entered into in the sale or distribution of
the applicable Borrower's Inventory in the ordinary course of business. To the best of each Borrower's
knowledge, none of the Intellectual Property infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Intellectual Property.
(bb) Trade Names. All trade names under which any Borrower sells Inventory, creates Accounts, to which
instruments in payment of Accounts are made payable, or under which it owns or leases the other
Collateral (collectively, "Trade Names") are listed on Schedule 6.1(bb). The Trade Names are merely
trade names or divisions of a Borrower. All Inventory and other Collateral held under the Trade Names
is owned solely and exclusively by a Borrower, and no other Person has any Lien or other interest in any
of the Inventory or other Collateral, including, without limitation, any sales or proceeds thereof,
whether such sales of Inventory are made in the name of a Borrower or in the name of any of the Trade
Names.
(cc) Brokers. Except as disclosed on Schedule 6.1 (cc), no broker or finder acting on behalf of any Borrower
brought about the obtaining, making or closing of the Revolving Credit Facility or any Advances
hereunder or the related transactions, and no Borrower has any obligation to any Person in respect of
any finder's or brokerage fees in connection herewith.
(dd) Insurance. Schedule 6.1(dd) lists all insurance policies of any nature maintained, as of the Effective
Date, for current occurrences by each Borrower, as well as a summary of the material terms of each such
policy.
(ee) Deposit and Disbursement Accounts. Schedule 6.1(ee) lists all banks and other financial institutions at
which any Borrower maintains deposits and/or other accounts as of the Effective Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone number of
each depository, the name in which the account is held, a description of the purpose of the account, and
the complete account number.
(ff) Government Contracts. Except as set forth in Schedule 6.1(ff), as of the Effective Date, no Borrower is
a party to any contract or agreement with the federal government or any state or municipal government
and the Accounts are not subject to the Federal Assignment of Claims Act, as amended (31 U.S.C. Section
3727) or any similar state or local law.
(gg) Trade Relations. Except as set forth in Schedule 6.1(gg), there exists no actual or, to the knowledge
of any Borrower, threatened termination or cancellation of, or any material adverse modification or
change in the business relationship of any Borrower with any supplier material to its operations.
(hh) Agreements and Other Documents.
(i) As of the Effective Date, each Borrower has made available to the Agent or its counsel, on behalf
of Lenders, for their review, accurate and complete copies (or summaries) of all Material
Contracts, each of which are listed on Schedule 6.1(hh);
(ii) Each Borrower that is a party to any Material Contract has performed and is in compliance with
all of the terms of such Material Contract, and no default or event of default, or event or
condition which with the giving of notice, the lapse of time, or both, would constitute such a
default or event of default, exists with respect to any such Material Contract.
(iii) as of the Effective Date, each Borrower has made available to the Agent or its counsel, on
behalf of Lenders, accurate and complete copies of (A) licenses and permits held by such
Borrower, the absence of which could be reasonably likely to have a Materially Adverse
Effect; (B) instruments or documents evidencing Indebtedness of such Borrower and any security
interest granted by such Borrower with respect thereto; and (C) instruments and agreements
evidencing the issuance of any equity securities, warrants, rights or options to purchase
equity securities of such Borrower (except with respect to GFC).
(ii) Full Disclosure. None of the representations or warranties made by any Borrower in the any Loan
Documents as of the date such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished by or on behalf of any
Borrower in connection with the Loan Documents (including the materials delivered by or on behalf of the
Borrowers to the Lenders prior to the Closing Date), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of the time when made or
delivered.
(jj) Survival of Representation and Warranties, Etc. All representations and warranties set forth in this
Article 6 and all statements contained in any certificate, financial statement, or other agreements or
documents, delivered by or on behalf of any Borrower pursuant to or in connection with this Agreement or
any of the Loan Documents (and any such representation, warranty or statement made in or in connection
with any amendment thereto) shall constitute representations and warranties made under this Agreement.
All representations and warranties made under this Agreement shall be made or deemed to be made at and
as of the Agreement Date, at and as of the Effective Date and at and as of the date of each Advance,
except that representations and warranties which, by their terms are applicable only to one such date
shall be deemed to be made only at and as of such date. All representations and warranties made or
deemed to be made under this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder.
ARTICLE VII.
SECURITY INTEREST
SECTION 7.1 Security Interest.
(a) To secure the payment, observance and performance of the Secured Obligations, each Borrower hereby
mortgages, pledges and assigns all of the Collateral of such Borrower to the Agent, for the benefit of
itself as Agent, the Lenders and Fleet National Bank as issuer of the Existing Letters of Credit, and
grants to the Agent, for the benefit of itself as Agent and the Lenders, a continuing first priority
security interest in, and a continuing Lien upon, the Collateral.
(b) As additional security for all of the Secured Obligations, each Borrower grants to the Agent, for the
benefit of itself and the Lenders, a security interest in, and assigns to the Agent, for the benefit of
itself as Agent and the Lenders, all of each and every Borrower's right, title and interest in and to,
any deposits or other sums at any time credited by or due from each Lender and each Affiliate of a
Lender to a Borrower, or credited by or due from any participant of any Lender to a Borrower, with the
same rights therein as if the deposits or other sums were credited by or due from such Lender. Each
Borrower hereby authorizes each Lender and each Affiliate of such Lender and each participant to pay or
deliver to the Agent, for the account of the Lenders, without any necessity on the Agent's or any
Lender's part to resort to other security or sources of reimbursement for the Secured Obligations, at any
time during the continuation of any Event of Default or in the event that the Agent, on behalf of the
Lenders, should make demand for payment hereunder and without further notice to such Borrower (such
notice being expressly waived), any of the aforesaid deposits (general or special, time or demand,
provisional or final) or other sums for application to any Secured Obligation, irrespective of whether
any demand has been made or whether such Secured Obligation is mature, and the rights given the Agent,
the Lenders, their Affiliates and participants hereunder are cumulative with such Person's other rights
and remedies, including other rights of set-off. The Agent will promptly notify the Borrowers of its
receipt of any such funds for application to the Secured Obligations, but failure to do so will not
affect the validity or enforceability thereof. The Agent may give notice of the above grant of a
security interest in and assignment of the aforesaid deposits and other sums, and authorization, to, and
make any suitable arrangements with, any Lender, any such Affiliate of any Lender or participant for
effectuation thereof, and each Borrower hereby irrevocably appoint Agent as its attorney to collect any
and all such deposits or other sums to the extent any such payment is not made to the Agent or any
Lender by such Lender, Affiliate or participant.
SECTION 7.2 Continued Priority of Security Interest.
(a) The Security Interest granted by each Borrower shall at all times be valid, perfected and enforceable
against such Borrower and all third parties in accordance with the terms of this Agreement, as security
for the Secured Obligations, and the Collateral shall not at any time be subject to any Liens that are
prior to, on a parity with or junior to the Security Interest, other than Permitted Liens.
(b) Each Borrower shall, at its cost and expense, take all action that may be necessary or desirable, or
that the Agent may reasonably request, so as at all times to maintain the validity, perfection,
enforceability and rank of the Security Interest in the Collateral in conformity with the requirements
of Section 7.2(a), to enable the Agent and the Lenders to exercise or enforce their rights hereunder,
and to obtain the full benefits of this Agreement including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully levied or assessed on any of the
Collateral, except to the extent that such taxes, assessments and other claims constitute
Permitted Liens, or are being contested in good faith in appropriate proceedings and have
been adequately reserved for in such Borrower's financial statements,
(ii) using all reasonable efforts to obtain the Waivers and Consents and any other Lien releases,
subordinations or waivers, including, without limitation, any mechanic's lien releases, if
required pursuant to the terms hereof,
(iii) delivering to the Agent, for the benefit of the Lenders, endorsed or accompanied by such
instruments of assignment as the Agent may specify, and stamping or marking, in such manner as
the Agent may specify, any and all Chattel Paper, Instruments, Supporting Obligations and
Documents evidencing or forming a part of the Collateral,
(iv) executing and delivering financing statements, pledges, Control Agreements, designations,
hypothecations, notices and assignments in each case in form and substance satisfactory to the
Agent relating to the creation, validity, perfection, maintenance or continuation of the
Security Interest under the UCC or other Applicable Law; and
(v) using its best efforts to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Agent of any License or Contract held by such Borrower
(c) Each Borrower shall xxxx its books and records as directed by the Agent and as may be necessary or
appropriate to evidence, protect and perfect the Security Interest and shall cause its financial
statements to reflect the Security Interest.
(d) The Borrowers hereby collectively authorize the Agent to, at any time and from time to time, pursuant to
the provisions of this Agreement and the other Loan Documents, file in any filing office financing
statements, continuation statements and amendments thereto that (i) identify the Collateral (A) as all
assets of the Borrowers or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of the UCC, or (B) as being of an equal or lesser scope or with
greater detail, and (ii) contain any other information required by part 5 of Article 9 of the Code of
the State of North Carolina or other applicable jurisdiction for the sufficiency or filing office
acceptance of any financing statement or amendment, including (A) whether such Borrower is an
organization, the type of organization and any organization identification number issued to such
Borrower, and (B) in the case of a financing statement filed as a fixture filing or indicating
Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. Each Borrower agrees to furnish any such information to the Agent
promptly upon request. Each Borrower also agrees that any such financing statements, continuation
statements or amendments may be signed by Agent on behalf of the Borrower, as provided in this Agreement
and the other Loan Documents, and ratifies its authorization for the Agent to have filed in any
jurisdiction, any like initial financing statements or amendments thereto if filed prior to the date
hereof.
(e) Borrowers shall at any time and from time to time, take such steps as Agent requests for Agent (i) to
obtain a Waiver and Consent, in form and substance satisfactory to Agent, from any bailee or
warehouseman having possession of any of the Collateral that the bailee or warehouseman holds such
Collateral for Agent, (ii) to obtain "control" of any Investment Property, Deposit Accounts,
Letter-of-Credit Rights, electronic Chattel Paper, or transferable records (as such terms are defined
under the UCC and as "transferable records" is defined in the Uniform Electronic Transactions Act),
pursuant to a Control Agreement or such other agreements establishing control, in form and substance
satisfactory to Agent, (iii) to enter into a tri-party agreement with the issuer and/or confirmation
bank with respect to any Letter-of Credit Rights that such Borrower has acquired, and thereby directing
all payments under such Letter-of Credit Rights to the Collection Account, (iv) to promptly notify
Agent, in a writing signed by Borrower, of any commercial tort claim (as defined under the UCC) acquired
by it and unless otherwise consented by Agent, to enter into a supplement to this Agreement, granting to
Agent a Lien in such commercial tort claim and in the proceeds thereof, and (v) otherwise to ensure the
continued perfection and priority of Agent's security interest in any of the Collateral and of the
preservation of its rights therein.
(f) Nothing contained in this Section 7.3 shall be construed to narrow the scope of Agent's security
interest in any of the Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of Agent or any other Lender hereunder except as (and
then only to the extent) mandated by the UCC.
ARTICLE VIII.
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured Obligations have
been paid in full, unless the Required Lenders shall otherwise consent in the manner provided in Section 15.9:
SECTION 8.1 Collections; Payments.
(a) Blocked Accounts/Lockboxes.
(i) Borrowers shall establish and maintain, at their sole cost and expense, lockboxes and related
blocked accounts (each, a "Blocked Account") with respect to those Deposit Accounts of the
Borrowers as Agent shall request and with such banks as are reasonably acceptable to Agent.
Borrowers shall direct their Account Debtors to directly remit for deposit therein all payments
on Accounts and all payments constituting proceeds of Inventory and other Collateral in the form
in which such payments are made, whether by cash, check, credit card sales drafts, credit card
sales, charge slips or any other manner whatsoever (collectively, "Receipts"). All Receipts
shall be held in trust for the Agent as the property of the Agent, for the ratable benefit of the
Lenders.
(ii) Each Lockbox Agreement shall be in a form reasonably acceptable to the Agent and shall provide
for, among other things, (A) that the Receipts and any and all other funds on deposit in the
Blocked Account subject to such Lockbox Agreement are the collateral of Agent and are held by
such Clearing Bank as agent or bailee-in-possession for Agent, on behalf of itself and Lenders,
(B) that such bank has no lien upon, or right to setoff against, the Blocked Account subject to
such Lockbox Agreement, the Receipts, or any other funds from time to time on deposit therein,
other than for its service fees and other charges relating to such account and for returned
checks or other items of payment, and (C) that such bank will wire, or otherwise transfer, in
available funds on a daily basis, all Receipts and other funds on deposit in such accounts,
into the Collection Account for application on account of the Secured Obligations. Subject to
the rights of the Borrowers hereunder, Borrowers agree that all deposits made in, and payments
made to, a Blocked Account and other funds received and collected by Agent, whether on the
Accounts or as proceeds of Inventory or other Collateral or otherwise shall be the collateral
of Agent, subject to the sole dominion and control of the Agent.
(b) For purposes of (i) calculating the amount of Excess Availability to Borrowers and (ii) calculating
interest on Secured Obligations, Receipts and other payments and funds received in the Collection
Account will be applied (conditioned upon final collection) to the Secured Obligations three (3)
Business Day(s) after receipt in the Collection Account.
(c) Borrowers and all of their affiliates, subsidiaries, shareholders, directors, employees or agents shall,
acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts,
credit card sales drafts, credit card sales or charge slips or receipts, or any other payment relating
to and/or proceeds of Accounts or other Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the
Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Agent. In no event
shall the same be commingled with Borrowers' own funds. Borrowers agree to reimburse Agent on demand
for any amounts owed or paid to any Clearing Bank or any other bank or person involved in the transfer
of funds to or from the Blocked Accounts arising out of Agent's payments to or indemnification of such
bank or person. The obligation of Borrowers to reimburse Agent, for such amounts pursuant to this
Section 8.1 shall survive the termination of this Agreement.
(d) It is expressly agreed by each Borrower that, anything herein to the contrary notwithstanding, such
Borrower shall remain liable under each of its Contracts, licenses and other agreements, documents and
instruments evidencing Inventory, Accounts and the other Collateral to observe and perform all the
conditions and obligations to be observed and performed by it thereunder. Neither Agent nor any Lender
shall have any obligation or liability under any such Contract, license or agreement by reason of or
arising out of this Agreement or the granting herein of a security interest therein or the receipt by
Agent or any Lender of any payment relating to any such Contract, license or agreement pursuant hereto.
Neither Agent nor any Lender shall be required or obligated in any manner to perform or fulfill any of
the obligations of any Borrower under or pursuant to any such Contract, license or agreement, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or
the sufficiency of any performance by any party under any such Contract, license or agreement, or to
present or file any claims, or to take any action to collect or enforce any performance or the payment
of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
(e) All Chattel Paper shall be marked with the following legend: "This writing and the obligations evidenced
or secured hereby are subject to the security interest of The CIT Group/Commercial Services, Inc., as
Agent for the benefit of itself as a Lender and certain other Lenders." For Agent's further security,
each Borrower agrees that Agent shall have a security interest in all of such Borrower's books and
records pertaining to the Collateral and, upon the occurrence and during the continuance of any Event of
Default, such Borrower shall deliver and turn over any such books and records to Agent or to its
representatives at any time on demand of Agent. Prior to the occurrence of a Default or Event of
Default and upon notice from Agent, each Borrower shall permit any representative of Agent to inspect
such books and records and shall provide photocopies thereof to Agent, for the benefit of Agent and
Lenders, as more specifically set forth in this Agreement.
SECTION 8.2 Inspection, Verification and Notification. The Agent and each Lender (by any of their
officers, employees or agents) shall have the right at any time or times upon reasonable notice (the requirement
for reasonable notice to apply only so long as no Default or Event of Default has occurred and is continuing) to
(a) visit the properties of each Borrower and its Subsidiaries, inspect the Collateral and the other assets of
such Borrower and its Subsidiaries and inspect and make extracts from the books and records of such Borrower and
its Subsidiaries, including but not limited to management letters, prepared by independent accountants, all
during customary business hours at such premises; (b) discuss such Borrower's and its Subsidiaries' business,
assets, liabilities, financial condition, results of operations and business prospects, insofar as the same are
reasonably related to the rights of the Agent or the Lenders hereunder or under any of the Loan Documents, with
such Borrower's and its Subsidiaries' (i) principal officers, (ii) independent accountants, and (iii) any other
Person (except that any such discussion with any third parties shall be conducted in accordance with the Agent's
or such Lender's standard operating procedures relating to the maintenance of the confidentiality of confidential
information of borrowers); (c) verify the validity, amount, quantity, value and condition of, or any other matter
relating to, the Accounts, Inventory or any of the other Collateral in person or by mail, telephone, telegraph or
otherwise and in this connection to review, audit and make extracts from all records and files related to any of
the Collateral; and (d) on and after an Event of Default, to notify the Account Debtors or obligors under any
Accounts, of the assignment of such Collateral to the Agent, for the benefit of the Lenders, and to direct such
Account Debtor or obligors to make payment of all amounts due or to become due thereunder directly to the Agent,
for the account of the Lenders, and, upon such notification and at the expense of such Borrower, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Borrower might have done. Each Borrower will deliver to the Agent, for the
benefit of the Lenders, any instrument necessary for it or any Lender to obtain records from any service bureau
maintaining records on behalf of such Borrower
SECTION 8.3 Inventory Covenants.
(a) All sales of Inventory will be made in compliance with all requirements of Applicable Law.
(b) Each Borrower shall notify the Agent in writing promptly upon, but in no event later than three (3)
Business Days after, learning of any Eligible Inventory with a value in excess of $250,000 that becomes,
or such Borrower believes will become, ineligible, and of the cause of such ineligibility, except for
any such circumstance occurring in the ordinary course of business which has been appropriately reserved
against, as reflected in financial statements previously delivered to the Agent and the Lenders pursuant
to Section 6.1(m) or Article 10.
(c) No Borrower shall consign Inventory to any Person except as disclosed in the Schedule of Inventory
delivered immediately after such consignment.
(d) Each Borrower shall permit the Agent or an agent or representative thereof, to conduct appraisals of the
Inventory at the cost and expense of the Borrowers at such times as Agent determines to be necessary in
its discretion.
(e) Each Borrower shall maintain a perpetual method of Inventory control and will at all times keep complete
and accurate records of Inventory on a basis consistent with past practices of such Borrower, itemizing
and describing the kind, type and quantity of Inventory and such Borrower's Cost therefor and a current
price list for such Inventory.
(f) Each Borrower will take a physical count of Inventory, wherever located, at least annually and shall
reconcile the results of such physical Inventory counts to each Borrower's Inventory records; provided,
that, if the Borrowers take regular cycle counts supervised by the Borrowers' internal audit function
and such counts are relied upon by the Borrowers' external auditors, then the Borrowers will not be
required to perform physical counts.. Upon the request of the Agent, each Borrower shall deliver to the
Agent, copies of the results of any physical Inventory count showing in reasonable detail the locations
of and values for specific items of Inventory and such other information and supporting documents
regarding Inventory that the Agent deems necessary
SECTION 8.4 Returned Inventory. The Security Interest in the Inventory shall, without further act, attach
to the cash and non-cash proceeds resulting from the sale or other disposition thereof and to all Inventory which
is returned to any Borrower by customers or is otherwise recovered.
SECTION 8.5 Ownership and Defense of Title.
(a) Except for Permitted Liens, each Borrower shall at all times be the sole owner or lessee of each and
every item of Collateral and shall not create any lien on, or sell, lease, exchange, assign, transfer,
pledge, hypothecate, grant a security interest or security title in or otherwise dispose of, any of the
Collateral or any interest therein, except for sales of Inventory in the ordinary course of business,
for cash or on open account or on terms of payment ordinarily extended to its customers, and except as
otherwise expressly permitted under this Agreement. The inclusion of "proceeds" of the Collateral under
the Security Interest shall not be deemed a consent by the Agent or the Lenders to any other sale or
other disposition of any part or all of the Collateral.
(b) Each Borrower shall defend its title, and use commercially reasonable efforts to defend its leasehold
interest in and to, and the Security Interest in, the Collateral against the claims and demands of all
Persons.
SECTION 8.6 Insurance.
(a) The Borrowers shall maintain insurance against loss or damage by fire with extended coverage; theft,
burglary, pilferage and loss in transit; public liability and third party property damage; larceny,
embezzlement or other criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary for Persons engaged in
the same or similar business, as the Agent, in its discretion, shall specify, in amounts, and under
policies reasonably acceptable to Agent.
(b) All insurance policies required under Section 8.6(a) shall be maintained with financially sound and
reputable insurers having at least an A+ or better rating from Best Rating Guide, and shall name the
Agent, for the benefit of the Lenders, as an additional insured and shall contain loss payable clauses
in form and substance reasonably satisfactory to the Agent, naming the Agent, for the benefit of the
Lenders, as loss payee, as its interests may appear, and providing that:
(i) all proceeds thereunder relating to Collateral shall be payable to the Agent, for the benefit
of the Lenders;
(ii) no such insurance shall be affected by any act or neglect of the insurer or owner of the
property described in such policy, and
(iii) such policy and loss payable clauses may not be canceled, amended or terminated unless at least
thirty (30) days prior written notice is given to the Agent (or such lesser notice period with
respect to non-payment of premiums, but in no event less than ten (10) days).
(c) Any proceeds of insurance referred to in this Section 8.6 which are paid to the Agent in connection with
the Collateral, for the account of the Lenders shall be applied at the election of the Required Lenders,
in their sole discretion, (i) to the payment or prepayment of the Secured Obligations or (ii) to
rebuild, restore or replace the damaged or destroyed property.
(d) Each Borrower irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Event of Default shall have occurred and be continuing as such
Borrower's true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such "All Risk" policies of insurance, endorsing the name of such Borrower on any check or
other item of payment for the proceeds of such "All Risk" policies of insurance and for making all
determinations and decisions with respect to such "All Risk" policies of insurance; provided, however,
that in the event that any claim which is or could be made under any of such insurance policies exceeds
$500,000 no such claim shall be settled, compromised or finally determined, except with the prior
written consent of Agent. Agent shall have no duty to exercise any rights or powers granted to it
pursuant to the foregoing power-of-attorney. Each Borrower shall promptly notify Agent of any loss,
damage, or destruction to the Collateral in the amount of $500,000 or more, whether or not covered by
insurance. After deducting from such insurance proceeds the expenses, if any, incurred by Agent in the
collection or handling thereof, Agent shall apply such proceeds as set forth in Section 8.6(c). If
Agent permits such insurance proceeds to be applied to the replacement, repair, restoration or
rebuilding of the damaged Collateral, and no Event of Default has occurred and is continuing, then Agent
shall first apply the proceeds to reduce the outstanding principal balance of the Revolving Credit Loans
(which application shall not result in a permanent reduction of the Revolving Credit Facility Amount)
and upon such application, Agent shall establish a reserve against the Borrowing Base in an amount equal
to the amount of such proceeds so applied (the "Insurance Reserve"). Thereafter, such funds shall be
made available to such Borrower to provide funds to replace, repair, restore or rebuild the Collateral
as follows: (i) such Borrower shall request an Advance in the amount requested to be released; (ii) so
long as the conditions set forth in Article 2 and Section 5.2 have been met, the Lenders shall make such
Advance; and (iii) the Insurance Reserve established with respect to such insurance proceeds shall be
reduced by the amount of such Advance. To the extent not used to replace, repair, restore or rebuild
the Collateral, such proceeds shall be applied to the reduction of the Secured Obligations in accordance
with Section 4.3(c).
SECTION 8.7 Records Relating to Collateral; Location of Offices and Collateral.
(a) Each Borrower will at all times keep complete and accurate records of all Collateral.
(b) No Borrower will use, represent or hold out the Trade Names in a corporate manner or use any designation
that would identify the Trade Names as a corporation or other separate entity or organization (i.e.
"Inc.", "Corp." or "Limited" shall not be used) but shall only use such names so that it will be clearly
understood that they are merely Trade Names of such Borrower.
(c) No Borrower will change its jurisdiction of incorporation, registration or formation, the location of
its chief executive office or the place where it keeps its books and records relating to the Collateral
or change its name, its identity or corporate structure in any manner which might make any Financing
Statement or other UCC amendment, assignment or continuation statement filed in connection herewith
seriously misleading within the meaning of Sections 9-506 and 9-507 of the Uniform Commercial Code or
any other then applicable provision of the Uniform Commercial Code of any other relevant jurisdiction,
without giving the Agent sixty (60) days prior written notice thereof and complying with the
requirements and conditions of Section 8.7(f).
(d) All Inventory, other than Inventory in transit to any such location, will at all times be kept by each
Borrower at one of the locations set forth in Schedule 6.1(s) and shall not, without giving the Agent at
least thirty (30) days prior written notice and complying with the requirements and conditions of
Section 8.7(f) hereof, be removed therefrom except (i) to another location on Schedule 6.1(s), or (ii)
for sales of Inventory permitted under Section 8.5(a).
(e) If any Inventory is in the possession or control of any of any Borrower's agents or processors, each
Borrower shall notify such agents or processors of the Security Interest and, upon the occurrence of an
Event of Default, shall instruct them (and cause them to acknowledge such instruction) to hold all such
Inventory for the account of the Agent, for the benefit of the Lenders, subject to the instructions of
the Agent.
(f) After Agent's written acknowledgment that any reasonable action requested by Agent in connection with
any changes covered by Sections 8.7(c) or (d), including continuation of the perfection of any Liens in
favor of Agent, on behalf of the Agent and the Lenders, in any Collateral, has been completed or taken,
each Borrower may change its jurisdiction of incorporation, registration or formation, the location of
its Collateral or the location where it keeps its books and records relating to the Collateral, provided
that any such new location shall be in the continental United States, or change its name, its identity
or its corporate structure. No Borrower shall change its fiscal year to a year ending in any day other
than the Fiscal Year end of the Borrowers.
SECTION 8.8 Information and Reports.
(a) Schedule of Accounts; Sales Journal: Each Borrower shall deliver to the Agent on or before the
Effective Date and no later than five (5) Business Days after the end of each Fiscal Month thereafter a
Schedule of Accounts which (i) shall be as of the last Business Day of the immediately preceding month,
(ii) shall be reconciled to the Accounts Borrowing Base Certificate as of such last Business Day; and
(iii) shall set forth a detailed aged trial balance of all then existing Accounts for such Borrower.
Each Borrower shall deliver to the Agent no later than five (5) Business Days after the end of each
Fiscal Month such Borrower's sales journal for the immediately preceding Fiscal Month in form and
substance satisfactory to the Agent.
(b) Collection Reports. Each Borrower shall deliver to the Agent no later than five (5) Business Days after
the end of each Fiscal Month of such Borrower, a Collection Report containing information, as of the
last Business Day of such Borrower's immediately preceding Fiscal Month, regarding Receipts, deposits
and expenditures on and with respect to each Business Day of such Fiscal Month and such other
information as the Agent may request including, without limitation, credit memos issued by any Borrower,
deductions taken by any Account Debtor and information pertaining to any other reduction in Eligible
Accounts. Upon request of the Agent, each Borrower shall deliver to the Agent copies of bank statements
and checks, drafts or other items of payment deposited by or on behalf of such Borrower in any Deposit
Account, including, without limitation, the Blocked Accounts and the Disbursement Accounts, together
with copies of deposit slips for each deposit, and such other information regarding Receipts,
expenditures and Deposit Account balances as the Agent may request. Each Borrower shall immediately (i)
notify the Agent of any changes, additions or deletions to Schedule 6.1(ee), and (ii) prepare and
deliver a new Schedule 6.1(ee) reflecting such changes, additions and deletions.
(c) Schedule of Inventory. Each Borrower shall deliver to the Agent, no later than ten (10) Business Days
after the end of each Fiscal Month of such Borrower, a Schedule of Inventory as of the last Business Day
of the immediately preceding Fiscal Month of such Borrower. Each Schedule of Inventory shall itemize
and describe the kind, type, quantity and location of Inventory and the cost thereof, and shall be
reconciled to the balance of Inventory as set forth in the Consolidated Balance Sheet as of such date.
(d) Borrowing Base Certificates. The Borrowers shall deliver to the Agent, (i) a daily Accounts Borrowing
Base Certificate prepared as of the close of business of the previous Business Day and (ii) not later
than ten (10) Business Days after the end of each Fiscal Month of Borrowers, an Inventory Borrowing Base
Certificate prepared as of the close of business of the last Business Day of the previous Fiscal Month.
(e) Notice of Diminution of Value. Each Borrower shall give prompt notice to the Agent of any matter or
event which has resulted in, or may result in, the diminution in excess of $500,000 with respect to
Inventory and any other Collateral, except for any such diminution in the value of any Accounts or
Inventory in the ordinary course of business which has been appropriately reserved against, as reflected
in financial statements previously delivered to the Agent and the Lenders pursuant to Section 6.1(m) or
Article 10.
(f) Accounts Payable Report. Each Borrower shall deliver to the Agent no later than five (5) Business Days
after the end of each Fiscal Month a detailed aged balance as of the last Business Day of the
immediately preceding month of all then existing accounts payable for such Borrower in form and
substance satisfactory to the Agent.
(g) Additional Information. The Agent may in its reasonable discretion from time to time request that the
Borrowers deliver the schedules, certificates or reports described in Sections 8.8(a) through (f) more
or less often and on different schedules than specified in such sections. The Borrowers shall also
furnish to the Agent and each Lender such other information with respect to the Collateral as the Agent
or such Lender may from time to time reasonably request.
(h) Certification. Each of the schedules delivered to the Agent pursuant to this Section 8.8 shall be
certified by a Financial Officer of the Borrowers to be true, correct and complete as of the date
indicated thereon.
(i) Covenants Regarding Intellectual Property Collateral. Each Borrower shall notify Agent immediately if it
knows that any application or registration relating to any Intellectual Property (now or hereafter
existing) may become abandoned or dedicated, or of any adverse determination or development (including
the institution of, or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court) regarding such Borrower's
ownership of any Intellectual Property, its right to register the same, or to keep, use and maintain the
same.
(j) Promptly after the date on which any Borrower acquires any Intellectual Property, such Borrower shall
execute and deliver any and all security agreements with respect to such Intellectual Property as Agent
may request to evidence Agent's security interest, for the benefit of itself and the Lenders, in such
Intellectual Property, and the General Intangibles of such Borrower relating thereto or represented
thereby.
(k) Each Borrower shall take all actions necessary or requested by Agent to maintain and pursue each
application, to obtain the relevant registration and to maintain the registration with respect to all of
its Intellectual Property (now or hereafter existing), including the filing of applications for renewal,
affidavits of use, affidavits of non-contestability and opposition and interference and cancellation
proceedings.
(l) In the event that any of the Intellectual Property is infringed upon, or misappropriated or diluted by a
third party, each Borrower shall notify Agent promptly after such Borrower learns thereof. Each
Borrower shall promptly xxx for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and shall take such other actions as Agent
shall deem appropriate under the circumstances to protect such Intellectual Property.
SECTION 8.9 Landlord and Other Waivers. Each Borrower shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each third party location where any Collateral
is or may be located. On or prior to the Effective Date, and after the Effective Date prior to locating
Collateral at any third party location, each Borrower shall use its best efforts to obtain from each landlord and
mortgagee of, and bailee (with respect to any warehouse, processor, converter or other storage facility) at, a
location where Collateral is, or is to be, stored or held, an agreement or letter which shall contain a waiver or
subordination of all Liens or claims that such landlord, mortgagee or bailee may assert against the Collateral at
such location, a consent to enter or use such location for sale or removal of the Collateral, and which shall
otherwise be satisfactory in form and substance to the Agent (each, a "Waiver and Consent"). If the Borrowers
are unable to obtain a Waiver and Consent with respect to a location where Collateral is stored or held, Agent
may, at its option, remove such Collateral from the Borrowing Base, if applicable, or establish a reserve against
the Borrowing Base sufficient, based upon the determination of the Agent in its sole discretion, to insure that
there will be no impairment of the Collateral. Nothing contained in this Section 8.10 shall impair or otherwise
modify any of Agent's rights under this Agreement, including, without limitation, Agent's rights pursuant to the
respective definitions of "Eligible Inventory" and "Borrowing Base."
SECTION 8.10 Control Agreements. On or before the Effective Date and, after the Effective Date, prior to
establishing a securities, commodities, credit card processing or other financial account (individually, a
"Financial Account", and collectively, "Financial Accounts"), each Borrower shall obtain from each financial
institution where a Financial Account is held by such Borrower, a Control Agreement reasonably satisfactory in
form and substance to Agent. If any Borrower is unable to obtain a Control Agreement with respect to such
account or program, Agent may, at its option, establish a reserve against the Borrowing Base sufficient, based
upon the determination of the Agent in its sole discretion, to insure that there will be no impairment of the
Collateral. Nothing contained in this Section 8.11 shall impair or otherwise modify any of Agent's rights under
this Agreement, including, without limitation, Agent's rights pursuant to the definition of "Borrowing Base."
SECTION 8.11 Real Estate and Fixtures. The Borrowers shall deliver to the Agent, for the benefit of itself
as Agent and the Lenders, with respect to any Borrower's acquisition of any interest in any Real Estate, an
executed Mortgage in form and substance satisfactory to the Agent, conveying to the Agent, for the benefit of
itself and the Lenders, a first priority Lien on such Real Estate and the Fixtures thereon, subject only to
Permitted Liens and such prior Liens as the Agent shall consent to in writing. The Borrowers shall also deliver
to the Agent at the Borrowers' expense (i) a mortgagee title insurance policy in favor of the Agent and the
Lenders insuring such Mortgage to create and convey such Lien, subject only to such exceptions consented to by
the Agent and (ii) such other agreements, instruments, certificates and documents with respect to such Real
Estate and Fixtures as the Agent may request, all in form and substance satisfactory to the Agent.
ARTICLE IX.
AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured Obligations have
been paid in full, unless the Required Lenders shall otherwise consent in the manner provided for in Section
15.9, each Borrower will, and will cause each of its Subsidiaries to:
SECTION 9.1 Preservation of Corporate Existence and Similar Matters. Preserve and maintain its legal
existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation and
qualify and remain qualified as a foreign entity and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such qualification or authorization, except
where the failure to do so would not have a Materially Adverse Effect on such Borrower and its Subsidiaries taken
as a whole.
SECTION 9.2 Compliance with Applicable Law. Comply in all material respects with all Applicable Laws
relating to such Borrower or any Subsidiary.
SECTION 9.3 Maintenance of Property. In addition to, and not in derogation of, the requirements of the
Security Documents,
(a) protect and preserve all properties material to its business, including, without limitation, Equipment
and Intellectual Property, maintain all tangible properties in good repair, working order and condition
in all material respects, with reasonable allowance for wear and tear, and exercise proper custody over
all such property;
(b) from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements
and additions to such properties necessary for the conduct of its business, so that the business carried
on in connection therewith may be properly and advantageously conducted at all times; and
(c) obtain and maintain all patents, trademarks, licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as conducted on the Agreement
Date or as otherwise permitted under Section 9.4.
SECTION 9.4 Conduct of Business. At all times engage only in the same types and lines of business of such
Borrower as the businesses conducted on the Effective Date.
SECTION 9.5 Insurance. Maintain, in addition to the coverage required by Section 8.6 and the Security
Documents, insurance with responsible insurance companies against such risks and in such amounts as is
customarily maintained by similar businesses or as may be required by Applicable Law, including, without
limitation, public liability, product liability, third party property damage and business interruption insurance,
and from time to time deliver to the Agent or any Lender upon its request a detailed list of the insurance then
in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.
SECTION 9.6 Payment of Taxes and Claims. Pay or discharge when due (a) all Charges and other taxes,
assessments and governmental levies imposed upon it or upon its income or profits or upon any properties
belonging to it, except that real property ad valorem taxes shall be deemed to have been so paid or discharged if
the same are paid before they become delinquent, and (b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of such Borrower; except that this Section 9.6 shall not require the payment or discharge of any
Charge which is being contested in good faith by appropriate proceedings and for which reserves in respect of the
reasonably anticipated liability therefor have been appropriately established.
SECTION 9.7 Accounting Methods and Financial Records. Maintain a system of accounting, and keep such
books, records and accounts (which shall be true and complete), as may be required or as may be necessary to
permit the preparation of financial statements in accordance with GAAP consistently applied.
SECTION 9.8 Use of Proceeds.
(a) Use the proceeds of the initial Advance under the Revolving Credit Facility to (i) refinance and pay off
the Indebtedness to the Existing Lenders and other outstanding amounts due as indicated on Schedule 9.8
and to fund certain of the fees and expenses associated with the extension of the Revolving Credit
Facility, and (ii) all subsequent Advances only for working capital purposes or as is otherwise
expressly authorized herein; and
(b) Not use any part of such proceeds to purchase or, to carry or reduce or retire or refinance any credit
incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) or, in any event, for any purpose which would involve a
violation of such Regulation U or of Regulation T or X of such Board of Governors, or for any purpose
prohibited by law or by the terms and conditions of this Agreement.
SECTION 9.9 Hazardous Waste and Substances; Environmental Requirements.
(a) In addition to, and not in derogation of, the requirements of Section 9.2 and of the Security Documents,
substantially comply with all Environmental Laws and all Applicable Laws relating to occupational health
and safety (except for instances of noncompliance that are being contested in good faith by appropriate
proceedings if reserves in respect of such Borrower's or such Subsidiary's reasonably anticipated
liability therefor have been appropriately established), promptly notify the Agent of its receipt of any
written notice of a violation of any such Environmental Laws or other such Applicable Laws and indemnify
and hold the Agent and the Lenders harmless from all Environmental Liabilities incurred by or imposed
upon the Agent or any Lender on account of such Borrower's failure to perform its obligations under this
Section 9.9.
(b) Such Borrower shall not cause or permit a Release of any Contaminant on, at, in, under, above, to, from
or about any of the Real Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or (b)
otherwise adversely impact the value or marketability of any of the Real Estate or any of the
Collateral, other than such violations or impacts which could not reasonably be expected to have a
Materially Adverse Effect on such Borrower.
SECTION 9.10 Further Assurances. Upon the request of the Agent, to duly execute and deliver, or cause to be
duly executed and delivered, to the Agent such further instruments and do and cause to be done such further acts
as may be necessary in the reasonable opinion of the Agent to carry out the express provisions of this Agreement
or any other Loan Document.
ARTICLE X.
INFORMATION
Until the Revolving Credit Facility has been terminated and all the Secured Obligations have
been paid in full, unless the Required Lenders shall otherwise consent in the manner set forth in Section 15.9,
the Borrowers will furnish to the Agent and to each Lender at the offices then designated for such notices
pursuant to Section 15.1:
SECTION 10.1 Financial Statements.
(a) Audited Year-End-Statements. As soon as available, but in any event within ninety (90) days after the
end of each Fiscal Year, copies of the Borrowers' audited Consolidated Balance Sheet and Consolidating
Balance Sheet as at the end of such Fiscal Year and the related statements of income, shareholders'
equity and cash flow for such Fiscal Year (and with respect to Borrowers which are public companies, if
any, copies of such Borrower's Form 10-K containing such financial statements), together with
consolidating statements for the Borrowers and their subsidiaries, in each case setting forth in
comparative form the figures for the previous Fiscal Year and, in the case of the Consolidated Balance
Sheet, shall include an unqualified opinion of the independent certified public accountants that such
financial statements present fairly the financial position of the Borrowers as at the end of and for
such Fiscal Year (the "Audited Financial Statements").
(b) Monthly Financial Statements. As soon as available, but in any event within thirty (30) days after the
end of each Fiscal Month, copies of the unaudited Consolidated Balance Sheet and Consolidating Balance
Sheet as at the end of such Fiscal Month and the related unaudited income statement for such Fiscal
Month and for the portion of the Fiscal Year through such Fiscal Month, together with consolidating
statements for the Borrowers and their subsidiaries, in each case setting forth in comparative form the
figures for the previous Fiscal Year (including, without limitation, a comparison to the then current
projected budget figures for the current Fiscal Year), certified by the Financial Officer as presenting
fairly the financial condition and results of operations of the Borrowers and their Subsidiaries as at
the date thereof and for the periods ended on such date, subject to normal quarterly and year end
adjustments. Such financial statements shall be complete and correct in all material respects and
prepared in accordance with GAAP (except for the omission of footnotes and normal year-end adjustments)
applied consistently throughout the periods reflected therein.
(c) Quarterly Financial Statements. As soon as available, but in any event within forty-five (45) days
after the end of each Fiscal Quarter other than the fourth Fiscal Quarter, copies of the Borrowers'
unaudited Consolidated Balance Sheet and Consolidating Balance Sheet as at the end of such Fiscal
Quarter and the related unaudited income statement for such Fiscal Quarter and for the portion of the
Fiscal Year through such Fiscal Quarter (and with respect to Borrowers which are public companies, if
any, copies of such Borrower's Form 10-Q containing such financial statements), together with
Consolidating Statements in each case setting forth in comparative form the figures for the previous
Fiscal Year, certified by the Financial Officer as presenting fairly the financial condition and results
of operations of the Borrowers and their Subsidiaries as at the date thereof and for the periods ended
on such date, subject to normal year end adjustments. Such financial statements shall be complete and
correct in all material respects and prepared in accordance with GAAP (except for the omission of
footnotes and normal year-end adjustments) applied consistently throughout the periods reflected therein.
(d) Projected Financial Statements. As soon as available, but in any event within thirty (30) days prior to
the end of each Fiscal Year during the term hereof, forecasted financial statements prepared by the
Borrowers on a consolidated basis, consisting of monthly consolidated balance sheets, cash flow
statements and income statements of the Borrowers, reflecting projected borrowings hereunder and setting
forth the assumptions on which such forecasted financial statements were prepared, covering the one year
period commencing on the first day of the next succeeding Fiscal Year.
SECTION 10.2 Reserved.
SECTION 10.3 Officer's Certificate. Together with each delivery of financial statements required by Section
10.1(a), (b) and (c), a certificate of the Chief Executive Officer, President or a Financial Officer of the
Borrowers (a) stating that, based on an examination sufficient to enable him to make an informed statement, no
Default or Event of Default exists or, if such is not the case, specifying such Default or Event of Default and
its nature, when it occurred, whether it is continuing and the steps being taken by the Borrowers with respect to
such Default or Event of Default, (b) setting forth the calculations necessary to establish whether or not the
Borrowers were in compliance with the covenants contained in Section 11.5, as of the date of such statements, and
(c) stating whether the financial covenants contained in Section 11.1 are applicable and, if they are, setting
forth the calculations necessary to establish whether or not the Borrowers were in compliance with such covenants.
SECTION 10.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of any management letters and any other reports disclosing any
internal control or deficiencies or weaknesses with respect to the Borrowers submitted to any Borrower
or its Board of Directors by its independent public accountants.
(b) As soon as practicable, copies of all financial statements and reports that any Borrower shall send to
its shareholders generally and of all registration statements and all regular or periodic reports which
any Borrower shall file with the Securities and Exchange Commission or any successor commission.
(c) From time to time and as soon as reasonably practicable following each request, such forecasts, data,
certificates, reports, statements, opinions of counsel, documents or further information regarding the
business, assets, liabilities, financial condition, results of operations or business prospects of the
Borrowers and their Subsidiaries as the Agent or any Lender may reasonably request. The rights of the
Agent and the Lenders under this Section 10.4 are in addition to and not in derogation of their rights
under any other provision of this Agreement or of any other Loan Document.
(d) If requested by the Agent or any Lender, such Borrower will furnish to the Agent and the Lenders
statements in conformity with the requirements of Federal Reserve Form G-3 or U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve System.
SECTION 10.5 Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent the Borrowers are aware of the same, of all proceedings and
investigations by or before any governmental or non-governmental body and all actions and proceedings in
any court or before any arbitrator against or in any other way relating to or affecting any Borrower,
any of its Subsidiaries or any of any Borrower's or any of its Subsidiaries' properties, assets or
businesses, which might, singly or in the aggregate, result in the occurrence of a Default or an Event
of Default, or have a Material Adverse Effect on such Borrower and its Subsidiaries, taken as a whole,
(b) without in any way limiting subsection (a) hereof, the commencement against any Borrower or any of their
respective Subsidiaries of any involuntary bankruptcy proceeding, immediately upon receipt by any of
them of notice of commencement thereof or pleadings with respect thereto,
(c) any amendment of the articles of incorporation, by-laws or other similar organizational documents of
such Borrower or any of its Subsidiaries,
(d) any change in the business, assets, liabilities, financial condition, results of operations or business
prospects of any Borrower or any of its Subsidiaries which has had or is reasonably likely to have,
singly or in the aggregate, a Materially Adverse Effect on such Borrower or its Subsidiaries, taken as a
whole, and any change in the Chief Executive Officer, President or Chief Financial Officer of such
Borrower, and
(e) any Default or Event of Default or any event which constitutes or which with the passage of time or
giving of notice or both would constitute a default or event of default by such Borrower or any of its
Subsidiaries under any material agreement to which such Borrower or any of its Subsidiaries is a party
or by which such Borrower, any of its Subsidiaries or any of such Borrower's or any of its Subsidiaries'
properties may be bound.
SECTION 10.6 ERISA. As soon as possible and in any event within five (5) days after such Borrower knows, or
has reason to know, that:
(a) any Termination Event with respect to a Plan has occurred or will occur, or
(b) the aggregate present value of the Unfunded Vested Accrued Benefits under all Plans is equal to an
amount in excess of $0, or
(c) such Borrower or any of its Subsidiaries is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan required by reason of such Borrower's or such
Subsidiary's complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan, a certificate of the President or a Financial Officer of such Borrower setting forth
the details of such event and the action which is proposed to be taken with respect thereto, together
with any notice or filing which may be required by the PBGC or other agency of the United States
government with respect to such event.
SECTION 10.7 Accuracy of Information. All written information, reports, statements and other papers and
data furnished to the Agent or any Lender, whether pursuant to this Article 10 or any other provision of this
Agreement or of any other Loan Document, shall be, at the time the same is so furnished, complete and correct in
all material respects to the extent necessary to give the Agent and the Lenders true and accurate knowledge of
the subject matter.
SECTION 10.8 Revisions or Updates to Schedules. Should any of the information or disclosures provided on
any of the Schedules originally attached hereto become outdated or incorrect in any material respect, such
Borrower shall deliver to the Agent and the Lenders as part of the officer's certificate required pursuant to
Section 10.3 such revisions or updates to such Schedule(s) as may be necessary or appropriate to update or
correct such Schedule(s), provided that no such revisions or updates to any Schedule(s) shall be deemed to have
amended, modified or superseded such Schedule(s) as originally attached hereto, or to have cured any breach of
warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule(s), unless and
until the Agent in the exercise of its reasonable credit judgment, shall have accepted in writing such revisions
or updates to such Schedule(s).
ARTICLE XI.
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured Obligations have
been paid in full, unless the Required Lenders shall otherwise consent in the manner set forth in Section 15.9,
no Borrower will directly or indirectly:
SECTION 11.1 Financial Covenants. Breach the following financial covenants:
(a) Minimum EBITDA. The Borrower shall not permit EBITDA for each of the following respective periods to be
less than the EBITDA set forth opposite each such period:
----------------------------------------------------------------- ----------------------------------------------------
Period Minimum EBITDA
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Fiscal Quarter ended July 3, 2004 -$1,000,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Two consecutive Fiscal Quarters ended October 2, 2004 -$1,000,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Three consecutive Fiscal Quarters ended January 1, 2005 $125,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended April 2, 2005 $5,924,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended July 2, 2005 $7,199,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended October 1, 2005 $8,730,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended December 31, 2005 $10,022,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended April 1, 2006 $10,566,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended July 1, 2006 $11,039,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended September 30, 2006 $11,527,000
----------------------------------------------------------------- ----------------------------------------------------
(b) Minimum Fixed Charge Coverage Ratio. The Borrowers shall not permit the Fixed Charge Coverage
Ratio for each of the following respective periods to be less than the ratio set forth opposite each
such period:
----------------------------------------------------------------- ----------------------------------------------------
Period Minimum Fixed Charge Coverage Ratio
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended April 2, 2005 0.05:1.0
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended July 2, 2005 0.14:1.0
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended October 1, 2005 0.54:1.0
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended December 31, 2005 0.62:1.0
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Four consecutive Fiscal Quarters ended April 1, 2006 and each 0.65:1.0
period of four consecutive Fiscal Quarters ended on the last
day of each Fiscal Quarter thereafter
----------------------------------------------------------------- ----------------------------------------------------
(c) Adjustments to Financial Covenants Based on Excess Availability. Notwithstanding anything contained in
this Agreement to the contrary, until the occurrence of a Financial Covenant Applicability Date, the
financial covenants in Sections 11.1(a) and (b) shall not apply or be tested for any periods described
in Sections 11.1(a) and (b). After the occurrence of a Financial Covenant Applicability Date, and until
the occurrence of a Financial Covenant Inapplicability Date, the financial covenants in Sections 11.1(a)
and (b) shall apply and be tested (i) retroactively for the most recently ended period described in
Sections 11.1(a) and (b) and (ii) thereafter for any periods described in Sections 11.1(a) and (b). To
avoid misunderstanding, it is understood and agreed that the occurrence of a Financial Covenant
Inapplicability Date shall not result in the waiver or cure of an Event of Default that exists as a
result of the testing of a financial covenant prior to such Financial Covenant Inapplicability Date.
SECTION 11.2 Indebtedness for Money Borrowed. Create, assume, or otherwise become or remain obligated in
respect of, or permit or suffer to exist or to be created, assumed or incurred or to be outstanding any
Indebtedness for Money Borrowed, except for Permitted Indebtedness for Money Borrowed.
SECTION 11.3 Guaranties. Become or remain liable with respect to any Guaranty of any obligation of any
other Person, except for Permitted Guaranties.
SECTION 11.4 Restricted Investments. Make or have any Restricted Investment.
SECTION 11.5 Capital Expenditures. Make any Capital Expenditures during the following periods that exceed
in the aggregate the following respective amounts:
----------------------------------------------------------------- ----------------------------------------------------
Period Maximum Capital Expenditure
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Fiscal Year ending September 25, 2004 $5,500,000
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Fiscal Year ending September 24, 2005 $2,000,000 plus up to $2,000,000 in Capital
Expenditures permitted in the Fiscal Year ending
September 25, 2004 but not made by Borrowers
----------------------------------------------------------------- ----------------------------------------------------
----------------------------------------------------------------- ----------------------------------------------------
Fiscal Year ending September 25, 2006 $2,500,000
----------------------------------------------------------------- ----------------------------------------------------
SECTION 11.6 Restricted Distributions and Payments. Declare or make any Restricted Distribution or
Restricted Payment, other than Restricted Distributions or Restricted Payments described on Schedule 11.6.
SECTION 11.7 Merger, Consolidation and Sale of Assets. Merge or consolidate with any other Person or sell,
lease or transfer or otherwise dispose of its assets to any Person, including its stock or the capital stock of
any of its Subsidiaries, other than (i) the transactions described in Schedule 11.7 for so long as no Default or
Event of Default has occurred and is continuing, (ii) sales of Inventory in the ordinary course of business;
(iii) transfer of assets between Borrowers in the ordinary course of business, (iv) combinations or mergers of two
or more Borrowers, or (v) a liquidation or dissolution of any Borrower resulting in a liquidating distribution to
another Borrower, provided that, with respect to clauses (iv) and (v) of this Section 11.7, the Agent has
received at least thirty (30) days prior written notice thereof.
SECTION 11.8 Transactions with Affiliates. Effect any transaction with any Affiliate or Subsidiary (other
than transactions between or among the Borrowers) on a basis less favorable to any Borrower than would be the
case if such transaction had been effected with a Person not an Affiliate or Subsidiary, without the express
prior written consent of the Agent.
SECTION 11.9 Liens. Create, assume or permit or suffer to exist or to be created or assumed any Lien on any
of the Collateral, other than Permitted Liens.
SECTION 11.10 Operating Leases. Enter into any lease other than a Capitalized Lease (an "Operating Lease"),
which would cause the aggregate amount of the Borrowers' payment obligations under its Operating Lease
Obligations to exceed $500,000 in the aggregate during any Fiscal Year during the term hereof.
SECTION 11.11 Benefit Plans. Permit any condition to exist in connection with any Benefit Plan which might
constitute grounds for the PBGC to institute proceedings to have such Benefit Plan terminated or a trustee
appointed to administer such Benefit Plan, and any other condition, event or transaction with respect to any
Benefit Plan which could result in the incurrence by such Borrower of any material liability, fine or penalty,
including, without limitation, failure to pay when due any required minimum funding or other payment with respect
to any Benefit Plan.
SECTION 11.12 Sales and Leasebacks. Enter into any synthetic lease or any arrangement with any Person
providing for such Borrower's leasing from such Person any real or personal property which has been or is to be
sold, conveyed or transferred, directly or indirectly, by such Borrower to such Person.
SECTION 11.13 Capital Structure and Business. (a) Make any material changes in any of its business
objectives, purposes or operations which could reasonably be expected to materially and adversely affect the
repayment of the Revolving Credit Loans or any of the other Secured Obligations or could reasonably be expected
to result in a Materially Adverse Effect on such Borrower and its Subsidiaries as a whole, (b) change its Fiscal
Year, (c) amend its charter, bylaws, limited liability company operating agreement, partnership agreement or
other similar organizational documents in a manner which would adversely affect Agent or Lenders or such
Borrower's duty or ability to repay the Secured Obligations or (d) directly or indirectly, create, organize,
acquire or permit to exist any Subsidiary other than those existing on the Agreement Date.
SECTION 11.14 No Impairment of Intercompany Transfers. Directly or indirectly enter into or become bound by
any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents)
which could directly or indirectly restrict, prohibit or require the consent of any Person with respect to (a)
the payment of dividends or distributions to any Borrower, (b) the payment of any Indebtedness or other
obligation owed to any Borrower or (c) the making or repayment of intercompany loans by a Subsidiary of any
Borrower to such Borrower.
SECTION 11.15 No Speculative Transactions. Engage in any transaction involving commodity options, futures
contracts or similar transactions, except solely to hedge against fluctuations in the prices of commodities owned
or purchased by it and the values of foreign currencies receivable or payable by it and interest swaps, caps or
collars.
SECTION 11.16 Subordinated Indebtedness.
(a) Make any payment of all or any part of any Subordinated Indebtedness or take any other action or omit to
take any other action in respect of any Subordinated Indebtedness, except in accordance with the
subordination agreement relative thereto or, in the case of the Senior Subordinated Notes, in accordance
with the Senior Subordinated Documents.
(b) Change, amend, modify or supplement (collectively, "Change") the terms of any Subordinated Indebtedness
(or any indenture or agreement in connection therewith) if the effect of such Change is to: (i)
increase the interest rate on such Subordinated Indebtedness; (ii) change the dates upon which payments
of principal or interest are due on such Subordinated Indebtedness other than to extend such dates;
(iii) change any default or event of default other than to delete or make less restrictive any default
provision therein, or add any covenant with respect to such Subordinated Indebtedness; (iv) change the
redemption or prepayment provisions of such Subordinated Indebtedness other than to extend the dates
thereof or to reduce the premiums payable in connection therewith; (v) grant any security or collateral
to secure payment of such Subordinated Indebtedness; or (vi) change any other term if such change would
materially increase the obligations of the obligor or confer additional material rights to holder of
such Subordinated Indebtedness in a manner adverse to such Borrower, Agent or any Lender.
(c) Renew, refinance or extend any Subordinated Indebtedness without the prior written consent of the
Agent. Such Borrower shall notify Agent, at least three (3) months prior to the maturity, expiration or
termination date of any Subordinated Indebtedness, of such Borrower's intent to renew, refinance or
extend such indebtedness (collectively, a "Refinancing"), which notice shall include the proposed terms
and conditions of the Refinancing and the proposed documentation thereof.
SECTION 11.17 Terminations; Amendments Not Authorized. File any financing statement or amendment or
termination statement with respect to any financing statement without the prior written consent of Agent, subject
to such Borrower's rights under Section 9-509(d)(2) of the Uniform Commercial Code.
SECTION 11.18 No Restriction on Payments to Agent. Enter into any Contract that restricts or prohibits the
grant of a security interest in Accounts, Chattel Paper, Instruments, payment intangibles or other Collateral or
the proceeds of any of the foregoing to Agent.
ARTICLE XII.
DEFAULT
SECTION 12.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the
reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation of any governmental or
non-governmental body:
(a) Default in Payment. Any Borrower shall default in any payment of principal of or interest on any
Revolving Credit Loans or any Note when and as due (whether at maturity, by reason of acceleration or
otherwise).
(b) Other Payment Default. Any Borrower shall default in the payment, as and when due, of principal of or
interest on, any other Secured Obligation, and such default shall continue for a period of ten (10) days
after written notice thereof has been given to such Borrower by the Agent.
(c) Misrepresentation. Any representation or warranty made or deemed to be made by any Borrower under this
Agreement or any other Loan Document, or any amendment hereto or thereto, shall at any time prove to
have been incorrect or misleading in any material respect when made.
(d) Default in Performance. Any Borrower shall default in the performance or observance of any term,
covenant, condition or agreement to be performed by such Borrower, contained in,
(i) Articles 7 or 11 and Sections 8.8(a)-(d), 10.1 and 10.3;
(ii) Articles 8 (except Section 8.8(a)-(d)), 9, or 10 (except Sections 10.1 and 10.3) and such
default, if such default is capable of being cured, shall continue for a period of fifteen (15)
days after the sooner to occur of written notice of such default having been given to such
Borrower by Agent or such default first becoming known to any Section 16 reporting officer; or
(iii) any other provision of this Agreement (other than as specifically provided for otherwise in this
Section 12.1) and such default, if capable of being cured, shall continue for a period of thirty
(30) days after the sooner to occur of written notice of such default having been given to
such Borrower by Agent or such default first becoming known to any Section 16 reporting officer.
(e) Indebtedness Cross-Default. With respect to Permitted Indebtedness for Money Borrowed,
(i) Any Borrower or any Subsidiary thereof shall fail to pay when due and payable the principal
of or interest on any Indebtedness (other than the Revolving Credit Facility) in an amount
outstanding in excess of $500,000, or
(ii) the maturity of any such Indebtedness, individually or in the aggregate with other such
Indebtedness, in a principal amount exceeding $500,000 shall have (A) been accelerated in
accordance with the provisions of any indenture, contract or instrument providing for the
creation of or concerning such Indebtedness, or (B) been required to be prepaid prior to the
stated maturity thereof.
(f) Other Cross-Defaults. Any Borrower or any of its Subsidiaries shall default in the payment when due, or
in the performance or observance, of any obligation or condition of any agreement, contract or lease
(other than this Agreement, the Security Documents or any such agreement, contract or lease relating to
Permitted Indebtedness for Money Borrowed) if the existence of any such defaults, singly or in the
aggregate, could in the reasonable judgment of the Agent have a Materially Adverse Effect.
(g) Voluntary Bankruptcy Proceeding. Any Borrower or any of its Subsidiaries shall (i) commence a voluntary
case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an involuntary case under such
bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in
writing its inability to pay its debts as they become due, (vi) make a general assignment for the
benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(h) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Borrower
or any of its Subsidiaries in any court of competent jurisdiction seeking (i) relief under the federal
bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating
to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of any Borrower, any of its Subsidiaries or of all
or any substantial part of the assets, domestic or foreign, of such Borrower or any of its Subsidiaries,
and such case or proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive calendar days, or an order granting the relief requested in such case or proceeding against
such Borrower or any of its Subsidiaries (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(i) Loan Documents. Any event of default or Event of Default under any other Loan Document shall occur or
any Borrower shall default in the performance or observance of any material term, covenant, condition or
agreement contained in, or the payment of any other sum covenanted to be paid by such Borrower under,
any such Loan Document or any provision of this Agreement, or of any other Loan Document after delivery
thereof hereunder, shall for any reason cease to be valid and binding, other than a nonmaterial
provision rendered unenforceable by operation of law, or such Borrower or other party thereto (other
than the Agent or a Lender) shall so state in writing, or this Agreement or any other Loan Document,
after delivery thereof hereunder, shall for any reason (other than any action taken independently by the
Agent or a Lender and except to the extent permitted by the terms thereof) cease to create a valid,
perfected and, except as otherwise expressly permitted herein, first priority Lien on, or security
interest in, any of the Collateral purported to be covered thereby.
(j) Judgment. Any judgment or order for the payment of money warrant, writ of attachment, execution or
similar process shall have been entered against any Borrower which exceeds in amount or value $500,000
either individually or in the aggregate with any other judgments that have been entered against any
Borrowers by any court and such judgment, order, warrant, writ of attachment, execution or similar
process shall continue undischarged or unstayed for thirty (30) days.
(k) Governmental Action. The indictment by any Governmental Authority, or as the Agent may reasonably and
in good faith determine, the threatened indictment by any Governmental Authority, of any Borrower of
which such Borrower or the Agent receives notice, in either case, as to which there is, in the good
faith determination of the Agent, a reasonable possibility of an adverse outcome under any criminal
statute, or commencement or threatened commencement of criminal or civil proceedings against such
Borrower, pursuant to which statute or proceedings the penalties or remedies sought or available include
forfeiture of (i) any of the Collateral having a value in excess of $500,000 or (ii) any other property
of any Borrower which is necessary or material to the conduct of its business; or
(l) Material Loss or Damage. There shall occur (i) any material damage to, or loss, theft or destruction
of, any material assets of any of the Borrowers, (ii) any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty, which in any such case causes, for more
than ten (10) consecutive days, the cessation or substantial curtailment of revenue producing activities
at any facility of any of the Borrowers or (iii) any loss, suspension or revocation of, or failure to
renew, any license or permit, qualification or contract right now held or hereafter acquired by any of
the Borrowers, if such event or circumstance is not covered by business interruption insurance and would
have a Material Adverse Effect.
(m) ERISA. (i) Any Termination Event with respect to a Benefit Plan shall occur that, after taking into
account the excess, if any, of (A) the present value on such day of all vested nonforfeitable benefits
under such other Plan, over (B) the fair market value of the assets of any other Benefit Plan with
respect to which a Termination Event occurs on the same day (but only to the extent that such excess is
the property of a Borrower), results in an Unfunded Vested Accrued Benefit in excess of $0.00, or (ii)
any Plan shall incur an "accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA) for which a waiver has not been obtained in accordance with the applicable
provisions of the Code and ERISA, or (iii) any Borrower is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from such Borrower's
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such Multiemployer
Plan.
(n) Qualified Audits. The independent certified public accountants retained by the Borrowers or any
Borrower shall refuse to deliver an opinion in accordance with Section 10.1(a) with respect to the
annual financial statements of the Borrowers or such Borrower.
(o) Change of Control. If any Change of Control shall occur.
SECTION 12.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the occurrence of an Event of Default
specified in Sections 12.1(g) or (h), (i) the principal of and the interest on the Revolving Credit
Loans and any Note at the time outstanding, and all other amounts owed to the Agent or the Lenders under
this Agreement or any of the Loan Documents and all other Secured Obligations, shall thereupon become
immediately due and payable without presentment, demand, protest, or other notice of any kind, all of
which are expressly waived, anything in this Agreement or any of the Loan Documents to the contrary
notwithstanding, and (ii) any obligation of the Lenders or the Agent to make Advances or incur Letter of
Credit Obligations, and the right of any Borrower to request Advances or Letters of Credit under this
Agreement shall immediately terminate without notice.
(b) Other Remedies. If any Event of Default (other than an Event of Default specified in Sections 12.1(g)
or (h) shall have occurred, and during the continuance of any such Event of Default, the Agent may
without notice, and at the direction of the Required Lenders in their sole and absolute discretion
shall, do any of the following:
(i) declare the principal of and interest on the Revolving Credit Loans and any Note at the time
outstanding, and all other amounts owed to the Agent or the Lenders under this Agreement or any
of the Loan Documents and all other Secured Obligations, to be forthwith due and payable,
whereupon the same shall immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything in this
Agreement or the Loan Documents to the contrary notwithstanding;
(ii) terminate any obligation of the Lenders or the Agent to make Advances or incur Letter of Credit
Obligations, and any other right of the Borrowers to request the same hereunder;
(iii) without prior notice to any Borrower, notify, or at Agent's election request, the Borrowers to
notify Account Debtors and other Persons obligated on the Collateral that Agent has a security
interest therein, and that payments shall be made directly to Agent. Once any such notice has
been given to any Account Debtor or other Person obligated on the Collateral, the affected
Borrower shall not give any contrary instructions to such Account Debtor or other Person
without Agent's prior written consent. If, notwithstanding the giving of any notice, any
Account Debtor or other such obligor shall make payments to any Borrower, such Borrower shall
hold all such payments it receives in trust for the Agent, for the account of the Lenders,
without commingling the same with other funds or property of, or held by, such Borrower, and
shall deliver the same to the Agent or any such agent or designee of the Agent immediately upon
receipt by such Borrower in the identical form received, together with any necessary
endorsements.
(iv) settle or adjust disputes and claims directly with Account Debtors and other obligors on Accounts
for amounts and on terms which the Agent reasonably considers advisable and in all such cases
only the net amounts received by the Agent, for the account of the Lenders, in payment of
such amounts, after deductions of costs and reasonable attorneys' fees, shall constitute
Collateral and no Borrower shall have any further right to make any such settlements or
adjustments or to accept any returns of merchandise;
(v) through self-help, without notice, demand or judicial or other process, enter upon any premises
in which Collateral including without limitation, any Inventory, may be located and, without
resistance or interference by any Borrower, take physical possession of any or all thereof
and maintain such possession on such premises or move the same or any part thereof to such
other place or places as the Agent shall choose, without being liable to such Borrower on account
of any loss, damage or depreciation that may occur as a result thereof, so long as the Agent
shall act reasonably and in good faith;
(vi) require each Borrower to and each Borrower shall, at its own cost and expense and without charge
to the Agent or any Lender, assemble the Collateral including without limitation, the Inventory,
and maintain or deliver it into the possession of the Agent or any agent or representative of
the Agent at such place or places as the Agent may designate and as are reasonably convenient
to both the Agent and such Borrower;
(vii) at the expense of each Borrower, cause any of the Collateral to be placed in a public or
field warehouse, and the Agent shall not be liable to such Borrower on account of any loss,
damage or depreciation that may occur as a result thereof, so long as the Agent shall act
reasonably and in its reasonable credit judgment;
(viii) through self-help and without notice, demand or judicial or other process, and without payment of
any rent or any other charge, enter any or all of each Borrower's premises and, without breach
of the peace, until the Agent, on behalf of the Lenders, completes the enforcement of its rights
in the Collateral, take possession of such premises or place custodians in exclusive control
thereof, remain on such premises and use the same and any of such Borrower's Collateral, for
the purpose of (A) preparing any Inventory for disposition and disposing thereof and (B)
collecting any Account, and the Agent, for the benefit of the Lenders, is hereby granted a
license or sublicense and all other rights as may be necessary, appropriate or desirable to use
the proprietary rights in connection with the foregoing, and the rights of such Borrower under
all licenses, sublicenses and franchise agreements shall inure to the Agent for the benefit of
the Lenders (provided, however, that any use of any federally registered trademarks as to any
goods shall be subject to the control as to the quality of such goods of the owner of such
trademarks and the goodwill of the business symbolized thereby);
(ix) exercise any and all of its rights under any and all of the Security Documents;
(x) apply any Collateral consisting of cash to the payment of the Secured Obligations in accordance
with Section 12.3 hereof or in any order in which the Agent, on behalf of the Lenders, may elect
or use such cash in connection with the exercise of any of its other rights hereunder or under
any of the Security Documents;
(xi) establish or cause to be established one or more Lockboxes or other arrangement for the deposit
of proceeds of Accounts, and, in such case, each Borrower shall cause to be forwarded to the
Agent at the Agent's Office, on a daily basis, copies of all checks and other items of payment
and deposit slips related thereto deposited in such Lockboxes, together with Collection Reports
in accordance with Section 8.8(b), in form and substance satisfactory to the Agent; and
(xii) exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and
under any other Applicable Law, including, without limitation, the right, without notice except
as specified below and with or without taking the possession thereof, to sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any location chosen by
the Agent, for cash, on credit or for future delivery, and at such price or prices and upon
such other terms as are commercially reasonable. Each Borrower agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days notice to such Borrower of the
time and place of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification, but notice given in any other reasonable manner or at any
other reasonable time shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned.
SECTION 12.3 Application of Proceeds. All proceeds from each sale of, or other realization upon, all or any
part of the Collateral following an Event of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection with such sale or other
realization, including attorneys' fees and expenses actually incurred (including, without limitation,
the expenses and other allocated costs of internal counsel),
(b) Second: to the payment of the Secured Obligations in accordance with the priorities set forth in
Section 4.3(c) hereof (with each Borrower remaining liable for any deficiency), or any order that Agent
may elect,
(c) Third: the balance (if any) of such proceeds shall be paid to the Borrowers, subject to any duty
imposed by law, or otherwise to whomsoever shall be entitled thereto.
Each Borrower shall remain liable, jointly and severally, and will pay, on demand, any deficiency remaining in
respect of the Secured Obligations, together with interest thereon at a rate per annum equal to the highest rate
then payable hereunder on such Secured Obligations, which interest shall constitute part of the Secured
Obligations.
SECTION 12.4 Miscellaneous Provision Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Agent and the Lenders under this Agreement, the Notes
and each of the Loan Documents shall be cumulative and not exclusive of any rights or remedies which it
or they would otherwise have. In exercising such rights and remedies the Agent and the Lenders may be
selective and no failure or delay by the Agent or any Lender in exercising any right shall operate as a
waiver of it, nor shall any single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right.
(b) Marshaling. Neither the Agent nor the Lenders shall be required to marshal the Collateral or any
guarantee of any obligation arising under this Agreement or any other Loan Document or to resort to the
Collateral or any such guarantee in any particular order and each Borrower hereby waives any right to
require any marshaling of assets or any other similar right.
(c) Limitation of Liability. Nothing contained in this Article 12 or elsewhere in this Agreement or in any
of the other Loan Documents shall be construed as requiring or obligating the Agent, any Lender or any
agent or designee of the Agent or any Lender to (i) make any demand upon, or pursue or exhaust any of
their rights or remedies against, any Borrower, any other obligor, guarantor, pledgor or any other
Person with respect to the payment of any Letter of Credit Obligation, Secured Obligation, or any other
obligation arising under this Agreement or any of the other Loan Documents, or the monies due or to
become due thereunder, including by making an inquiry as to the nature or sufficiency of any payment
received by it, (ii) to pursue or exhaust any of their rights or remedies, such as by filing a claim or
notice, with respect to any Collateral, the monies due or to become due thereunder, or any direct or
indirect guarantee thereof, and (iii) to take any steps necessary to preserve any rights against prior
parties. To the extent it may lawfully do so, each Borrower absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against the Agent or any Lender,
any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this provision, might be
applicable to the sale of any Collateral made under the judgment, order or decree of any court, or
privately under the power of sale conferred by this Agreement, or otherwise. Without limiting the
generality of the foregoing, each Borrower (A) agrees that it will not invoke or utilize any law which
might prevent, cause a delay in or otherwise impede the enforcement of the rights of the Agent or any
Lender in the Collateral, (B) waives its rights under all such laws, and (C) agrees that it will not
invoke or raise as a defense to any enforcement by the Agent or any Lender of any rights and remedies
relating to the Collateral, the Letter of Credit Obligations, the Secured Obligations, or any other
obligations hereunder, any legal or contractual requirement with which the Agent or any Lender may have
in good faith failed to comply. The Agent, the Lenders and their agents or designees shall have no
liability to any Borrower for actions taken pursuant to this Article 12, any other provision of this
Agreement or any of the other Loan Documents so long as the Agent or such Lender shall act reasonably
and in its reasonable credit judgment.
(d) Appointment of Receiver. In any action under this Article 12, the Agent shall be entitled during the
continuance of an Event of Default to the appointment of a receiver, without notice of any kind
whatsoever, to take possession of all or any portion of the Collateral and to exercise such power as the
court shall confer upon such receiver.
(e) Power of Attorney. On the Effective Date each Borrower shall execute and deliver to Agent the Power of
Attorney. The power of attorney granted pursuant to the Power of Attorney is a power coupled with an
interest and shall be irrevocable until the Termination Date. The powers conferred on Agent, for the
benefit of Agent and Lenders, under the Power of Attorney are solely to protect Agent's interests (for
the benefit of Agent and Lenders) in the Collateral and shall not impose any duty upon Agent or any
Lender to exercise any such powers. Agent agrees that (i) except for the powers granted in clause (i)
of the Power of Attorney, it shall not exercise any power or authority granted under the Power of
Attorney unless an Event of Default has occurred and is continuing, and (ii) Agent shall account for any
moneys received by Agent in respect of any foreclosure on or disposition of Collateral pursuant to the
Power of Attorney provided that none of Agent or any Lender shall have any duty as to any Collateral,
and Agent and Lenders shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY BORROWER FOR ANY ACT OR
FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE
SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
(f) Commercially Reasonable Remedies. To the extent that Applicable Law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is
not commercially unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant
by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to fail to obtain third
party consents for access to Collateral to be disposed of, or to obtain or, if not required by other
law, to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against
Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general circulation, whether or
not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same
business as such Borrower, for expressions of interest in acquiring all or any portion of such
Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such
as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the
Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and
other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each
Borrower acknowledges that the purpose of this Section 12.4(f) is to provide non-exhaustive indications
of what actions or omissions by the Agent would not be commercially unreasonable in the Agent's exercise
of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 12.4(f). Without
limitation upon the foregoing, nothing contained in this Section 12.4(f) shall be construed to grant any
rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by
this Agreement or by Applicable Law in the absence of this Section 12.4(f).
SECTION 12.5 Trademark License. Each Borrower hereby grants to the Agent, for the benefit of the Lenders,
to the extent of such Borrower's rights therein and to the extent permitted by the various license agreements
relating thereto, the nonexclusive right and license to use the trademarks and tradenames or other Intellectual
Property set forth on Schedules 6.1(aa) and 6.1(bb) and any other such trademark, tradename or property then used
by such Borrower, for the purposes set forth in Section 12.2(b)(viii) and for the purpose of enabling the Agent
to realize on the Collateral and to permit any purchaser of any portion of the Collateral through a foreclosure
sale or any other exercise of the Agent's rights and remedies under the Loan Documents to use, sell or otherwise
dispose of the Collateral bearing any such trademark. Such right and license is granted free of charge, without
the requirement that any monetary payment whatsoever be made to such Borrower or any other Person by the Agent.
Each Borrower hereby represents, warrants, covenants and agrees that, except as set forth in the license
agreements, it presently has, and shall continue to have, the right, without the approval or consent of others,
to grant the license set forth in this Section 12.5.
ARTICLE XIII.
ASSIGNMENTS
SECTION 13.1 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each
Borrower, the Lenders, the Agent, all future holders of the Notes, and their respective successors and assigns,
except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender, and any such attempted assignment or transfer by any Borrower except in
strict compliance with the provisions hereof shall be null and void, and of no force or effect.
SECTION 13.2 Assignments; Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a portion of the Revolving
Credit Loans at the time owing to it and the Notes held by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all the assigning Lender's rights
and obligations under this Agreement, (ii) the amount of the Commitment of the assigning Lender that is
subject to each such assignment (determined as of the date the Assignment and Transfer with respect to
such assignment is delivered to the Agent) shall in no event be less than $5,000,000 (the "Minimum
Commitment"), (iii) in the case of a partial assignment, the amount of the Commitment that is retained
by the assigning Lender (determined as of the date the Assignment and Transfer with respect to such
assignment is delivered to the Agent) shall in no event be less than the Minimum Commitment, (iv) the
parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording
in the Register (as hereinafter defined) an Assignment and Transfer, together with any Note or Notes
subject to such assignment and such assignee's commitment percentage of the Agent's syndication
expenses, (v) such assignment shall not, without the consent of each Borrower, require any Borrower to
file a registration statement with the Securities and Exchange Commission or apply to or qualify the
Revolving Credit Loans or the Notes under the blue sky laws of any state, (vi) the representation
contained in Section 13.3 hereof shall be true with respect to any such proposed assignee and (vii) such
Lender provides notice to each Borrower of the identity of the Eligible Assignee. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified in each Assignment and
Transfer, which effective date shall be at least five (5) Business Days after the execution thereof, (x)
the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and
Transfer, have the rights and obligations of a Lender hereunder, and (y) the Lender assignor thereunder
shall, to the extent provided in such assignment, be released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and Transfer, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim, such Lender assignor 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;
(ii) such Lender assignor makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Borrower or the performance or observance by any Borrower of any of
its obligations under this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 6.1(m) 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
Transfer; (iv) such assignee will, independently and without reliance upon the Agent, such Lender
assignor 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; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vii) 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.
(c) The Agent shall maintain a copy of each Assignment and Transfer delivered to it and a register for the
recordation of the names and addresses of the Lenders and the Commitment Percentage of, and principal
amount of the Revolving Credit Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, the
Agent and the Lenders may treat each person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Transfer executed by an assigning Lender and an Eligible Assignee
together with any Note or Notes subject to such assignment and the written consent to such assignment,
the Agent shall, if such Assignment and Transfer has been completed and is in the form of Exhibit D, (i)
accept such Assignment and Transfer, (ii) record the information contained therein in the Register,
(iii) give prompt notice thereof to the Lenders and each Borrower, and (iv) promptly deliver a copy of
such Assignment and Transfer to each Borrower. Within five (5) Business Days after receipt of notice,
each Borrower shall execute and deliver to the Agent in exchange for the surrendered Note or Notes, a
new Note or Notes to the order of such Eligible Assignee in amounts equal to the Commitment Percentage
assumed by such Eligible Assignee pursuant to such Assignment and Transfer and a new Note or Notes to
the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such Assignment and Transfer and
shall otherwise be in substantially the form of the assigned Notes delivered to the assignor Lender.
Assignor Lenders shall cancel and return the old Note or Notes to the Borrowers' promptly after delivery
of the new Note or Notes to the applicable Lenders.
(e) Each Lender may, without the consent of any Borrower, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its commitments hereunder and the Revolving Credit Loans owing to it and
the Notes held by it); provided, however, that (i) each such participation shall be in an amount not
less than the Minimum Commitment, (ii) such Lender's obligations under this Agreement (including,
without limitation, its commitments hereunder) shall remain unchanged, (iii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations, (iv) such Lender
shall remain the holder of the Notes held by it for all purposes of this Agreement, (v) each Borrower,
the Agent and the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement; provided, that such Lender
may agree with any participant that such Lender will not, without such participant's consent, agree to
or approve any waivers or amendments which would reduce the principal of or the interest rate on any
Revolving Credit Loans, extend the term or increase the amount of the commitments of such participant,
reduce the amount of any fees to which such participant is entitled, extend any scheduled payment date
for principal or release Collateral securing the Revolving Credit Loans (other than Collateral disposed
of pursuant to the terms of this Agreement or the Security Documents), and (vi) any such disposition
shall not, without the consent of such Borrower, require such Borrower to file a registration statement
with the Securities and Exchange Commission to apply to qualify the Revolving Credit Loans or the Notes
under the blue sky law of any state.
(f) Any Lender may, in connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.2, disclose to the assignee, participant, proposed assignee or
proposed participant, any information relating to each Borrower furnished to such Lender by or on behalf
of such Borrower; provided that, prior to any such disclosure, each such-assignee, proposed assignee,
participant or proposed participant shall agree with such Borrower or such Lender (which in the case of
an agreement with only such Lender, such Borrower shall be recognized as a third party beneficiary
thereof) to preserve the confidentiality of any confidential information relating to such Borrower
received from such Lender.
(g) Each Borrower shall assist any Lender permitted to sell assignments or participations under this Section
13.2 as reasonably required to enable the assigning or selling Lender to effect any such assignment or
participation, including, without limitation, (i) prompt assistance in the preparation of an information
memorandum and the verification of the completeness and accuracy of the information contained therein;
(ii) preparation of offering materials and projections by such Borrower and its advisors; (iii)
providing the Agent with all information reasonably deemed necessary by Agent to successfully complete
the syndication, assignment or participation, including, without limitation, financial information,
evaluations and projections; (iv) confirmation as to the accuracy and completeness of such offering
materials, information and projections; (v) participation of such Borrower's senior management in
meetings and conference calls with potential lenders at such times and places as Agent may reasonable
request; and (vi) the execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested.
SECTION 13.3 Representation of Lenders. Each Lender hereby represents that it will make each Advance
hereunder as a commercial loan for its own account in the ordinary course of its business; provided, however,
that subject to Section 13.2 hereof, the disposition of the Notes or other evidence of the Secured Obligations
held by any Lender shall at all times be within its exclusive control.
ARTICLE XIV.
THE AGENT
SECTION 14.1 Appointment of Agent. Each of the Lenders hereby irrevocably designates and appoints the CIT
Group/Commercial Services, Inc. as the Agent of such Lender under this Agreement and the other Loan Documents.
Each such Lender irrevocably authorizes Agent, as the Agent for such Lender to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement and such other Loan Documents,
including, without limitation, to make determinations as to the eligibility of Accounts and Inventory and to
adjust the advance ratios contained in the definition of "Borrowing Base" (so long as such advance ratios, as
adjusted, do not exceed those set forth in the definition of "Borrowing Base"), together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement
or such other Loan Documents, the Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or the other Loan
Documents or otherwise exist against the Agent.
SECTION 14.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
SECTION 14.3 Exculpatory Provisions. Neither the Agent nor any of its trustees, officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (i) liable to any Lender (or any Lender's
participants) for any action lawfully taken or omitted to be taken by it or such Person under or in connection
with this Agreement or the other Loan Documents (except for its or such Person's own gross negligence or willful
misconduct), or (ii) responsible in any manner to any Lender (or any Lender's participants) for any recitals,
statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement
or the other Loan Documents or in any certificate, report, statement or other document referred to or provided
for in, or received by the Agent under or in connection with, this Agreement or the other Loan Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other
Loan Documents or for any failure of any Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or
records of any Borrower.
SECTION 14.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the Borrowers), independent
accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 13.2. The
Agent shall be fully justified in failing or refusing to take any action under this Agreement and the other Loan
Documents unless it shall first receive such advice or concurrence of the Required Lenders (or the unanimous
consent of the Lenders with respect to the matters set forth in Section 15.9(b)) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a
request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Notes.
SECTION 14.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the Agent has received notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) continue making Advances to any Borrower
on behalf of the Lenders in reliance on the provisions of Section 4.6 and take such other action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 14.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the
affairs of each Borrower, shall be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property, financial and other condition and
creditworthiness of each Borrower and made its own decision to make its Advances hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and creditworthiness of each Borrower. Except for
notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder or
by the other Loan Documents, the Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property, financial and other condition or
creditworthiness of each Borrower which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 14.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such (to the
extent not reimbursed by a Borrower and without limiting the obligation of each Borrower to do so), ratably
according to their respective Commitment Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever
which may at any time (including, without limitation, at any time following the payment of the Notes) be imposed
on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or the
other Loan Documents, or any documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the Agent's gross negligence or willful misconduct or resulting solely from transactions or
occurrences that occur at a time after such Lender has assigned all of its interests, rights and obligations
under this Agreement pursuant to Section 13.2 or, in the case of a Lender to which an assignment is made
hereunder pursuant to Section 13.2, at a time before such assignment. The agreements in this subsection shall
survive the payment of the Notes, the Secured Obligations and all other amounts payable hereunder and the
termination of this Agreement.
SECTION 14.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with each Borrower and its Subsidiaries as though it
was not the Agent hereunder. With respect to its Commitment, and the Advances made or renewed by it and any Note
issued to it and any Letter of Credit issued by it, the Agent shall have and may exercise the same rights and
powers under this Agreement and the other Loan Documents and is subject to the same obligations and liabilities
as and to the extent set forth herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or "Required Lenders" or any other term shall, unless the context clearly otherwise indicates, include the Agent
in its individual capacity as a Lender or one of the Required Lenders.
SECTION 14.9 Successor Agent. The Agent may resign as Agent by providing thirty (30) days written notice to
the Lenders. If the Agent shall resign or be removed as Agent under this Agreement, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall, so long as
no Default or Event of Default shall have occurred, be subject to the approval of the Borrowers (which approval
shall not be unreasonably withheld), whereupon such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed
on the part of such former Agent or any of the parties to this Agreement or any holders of the Notes. After any
Agent's resignation or removal hereunder as Agent, the provisions of Section 14.7 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
SECTION 14.10 Notices from Agent to Lenders. The Agent shall promptly, upon receipt thereof, forward to each
Lender copies of any written notices, reports or other information supplied to it by any Borrower (but which such
Borrower is not required to supply directly to the Lenders).
SECTION 14.11 Agency for Perfection. Agent and each Lender hereby appoints each other Lender as agent for
the purpose of perfecting Agent's Liens in assets which, in accordance with Article IX of the UCC can be
perfected only by possession. Should any Lender (other than the Agent) obtain possession of any such Collateral,
such Lender shall notify the Agent thereof, and, promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's instructions.
ARTICLE XV.
MISCELLANEOUS
SECTION 15.1 Notices.
(a) Method of Communication. Except as specifically provided in this Agreement or in any of the Loan
Documents, all notices and the communications hereunder and thereunder shall be in writing or by
telephone, subsequently confirmed in writing. Notices in writing shall be delivered personally or sent
by e-mail, certified or registered mail, postage pre-paid, or by overnight courier, telex or facsimile
transmission and shall be deemed received in the case of personal delivery, when delivered, in the case
of mailing, when receipted for, in the case of overnight delivery, on the next Business Day after
delivery to the courier, and in the case of e-mail, telex and facsimile transmission, upon transmittal,
provided that in the case of notices to the Agent, notice shall be deemed to have been given only when
such notice is actually received by the Agent. A telephonic notice to the Agent, as understood by the
Agent, will be deemed to be the controlling and proper notice in the event of a discrepancy with or
failure to receive a confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the following addresses, or any
other address of which all the other parties are notified in writing
If to any Borrower: Tropical Sportswear Int'l Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Facsimile No. 000-000-0000
With a copy to: Akerman Senterfitt
Citrus Center - 17th Floor
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn:Xxxxx X. Xxxxxxx, Esq.
Facsimile No. 000-000-0000
If to the Agent: The CIT Group/Commercial Services, Inc.
Two Wachovia Center
Suite 2500
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Account Executive - Tropical Sportswear
Int'l Corporation
Facsimile No. 000-000-0000
With a copy to: Hunton & Xxxxxxxx, LLP
Bank of America Plaza
Suite 3500
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn.: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: 704-378-4890
If to a Lender: At the address of such Lender set forth on the
signature page hereof.
(c) Agent's Office. The Agent hereby designates its office located at Two Wachovia Center, Suite 2500, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrowers, as the office to which payments due are
to be made and at which Advances will be disbursed.
SECTION 15.2 Expenses. Each Borrower, jointly and severally, agrees to pay or reimburse on demand all
reasonable costs and expenses incurred by the Agent or, following an Event of Default, any Lender, including,
without limitation, the reasonable fees and disbursements of counsel, including, without limitation, the
reasonably allocated costs and expenses of internal legal services of the Agent, in connection with (a) the
negotiation, preparation, execution, delivery, administration, enforcement and termination of any proposal and
commitment letter, this Agreement and each of the other Loan Documents (collectively, the "Transaction
Documents"), whenever the same shall be executed and delivered, including, without limitation (i) the
out-of-pocket costs and expenses incurred in connection with the administration and interpretation of the
Transaction Documents; (ii) the costs and expenses of appraisals of the Collateral; (iii) the costs and expenses
of lien and title searches and title insurance; (iv) the costs and expenses of environmental reports with respect
to the Real Estate; (v) taxes, fees and other charges for recording the Mortgages, filing the Financing
Statements and continuations and the costs and expenses of taking other actions to perfect, protect, and continue
the Security Interests including, without limitation, the filing of any such financing or continuation statements
as Agent deems necessary in its sole discretion in order to comply with the Uniform Commercial Code in other
jurisdictions where Collateral is located; (b) the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Agent and the Lenders relating to the Transaction Documents; (c) sums paid or
incurred to pay any amount or take any action required of the Borrowers under the Transaction Documents that any
Borrower fails to pay or take; (d) the reasonable out-of-pocket costs of field audits, inspections and
verifications of the Collateral by the Agent and the Lenders relating to travel, meals, lodging and other
incidental expenses and the Agent's and Lenders' standard per diem fee of $850 for each auditor in connection the
foregoing, including, without limitation, for those audits, inspections and verifications on or prior to the date
on which a Person becomes a Lender; (e) costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining any and all Disbursement Accounts, Blocked Accounts,
lockboxes and any other arrangements with third parties relating to the Collateral; (f) costs and expenses of
preserving and protecting the Collateral; (g) consulting with one or more Persons, including appraisers,
accountants and lawyers, concerning the value of any Collateral for the Secured Obligations or related to the
nature, scope or value of any right or remedy of the Agent or any Lender hereunder or under any of the
Transaction Documents, including any review of factual matters in connection therewith, which expenses shall
include the fees and disbursements of such Persons; and (h) reasonable costs and expenses paid or incurred to
obtain payment of the Secured Obligations, enforce the Security Interests, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Transaction Documents, or to prosecute or defend any
claim in any way arising out of, related to or connected with, this Agreement or any of the Transaction
Documents, which expenses shall include the reasonable fees and disbursements of counsel and of experts and other
consultants retained by the Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of the Transaction Documents
regarding costs and expenses to be paid by a Borrower. Each Borrower hereby authorizes the Agent and the Lenders
to debit the Borrower's Loan Accounts (by increasing the principal amount of the Revolving Credit Loans) in the
amount of any such costs and expenses owed by such Borrower when due.
SECTION 15.3 Stamp and Other Taxes. Each Borrower will pay any and all stamp, registration, recordation and
similar taxes, fees or charges and shall indemnify the Agent and the Lenders against any and all liabilities with
respect to or resulting from any delay in the payment or omission to pay any such taxes, fees or charges, which
may be payable or determined to be payable in connection with the execution, delivery, performance or enforcement
of this Agreement and any of the Loan Documents or the perfection of any rights or security interest thereunder,
including, without limitation, the Security Interest.
SECTION 15.4 Setoff; Pro Rata Participation.
(a) In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of
any such rights, during the continuance of any Event of Default, each Lender, any participant with such
Lender in the Revolving Credit Loans and each Affiliate of each Lender are hereby authorized by each
Borrower at any time or from time to time, without notice to such Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender or any participant to or for the credit or the account of such
Borrower against and on account of the Secured Obligations irrespective or whether or not the Agent or
such Lender shall have made any demand under this Agreement or any of the Loan Documents, or the Agent
or such Lender shall have declared any or all of the Secured Obligations to be due and payable as
permitted by Section 12.2 and although such Secured Obligations shall be contingent or unmatured.
(b) If any Lender shall obtain payment of any principal of or interest on any Revolving Credit Loans made by
it or on any other Secured Obligation owing to such Lender through the exercise of any right of set-off,
banker's lien or counterclaim or similar right or otherwise, it shall promptly so notify the Agent
(which shall promptly notify the other Lenders). If, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on any Revolving Credit Loans than
such Lender's Commitment Percentage thereof, then it shall, at the request of such other Lender or
Lenders, promptly purchase from such other Lender or Lenders participations in (or, if and to the extent
specified by such first Lender, direct interests in) the principal of or interest on any Revolving
Credit Loans, as the case may be, owing to such other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that such first Lender and such other
Lender or Lenders (such first Lender and such other Lender or Lenders being collectively referred to as
the "Sharing Lenders") shall share the benefit of such excess payment (net of any expenses which may be
incurred by such first Lender in obtaining or preserving such excess payment) ratably in accordance with
the unpaid amounts of such obligations owing to each of the Sharing Lenders and their respective
Commitment Percentages of the Revolving Credit Facility. To such end all the Sharing 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.
(c) Each Borrower agrees that any Lender so purchasing a participation in obligations hereunder of such
Borrower to another Lender or other Lenders may exercise any and all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if such first Lender were
a direct holder of obligations of such Borrower in the amount of 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
or obligation of such Borrower.
(d) If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a set-off to which Section 15.4(b) hereof applies, such Lender shall to the extent
practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section 15.4 to share in the benefits of any recovery on such secured
claim.
SECTION 15.5 Litigation. EACH BORROWER, THE AGENT AND EACH LENDER HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST ANY BORROWER, THE AGENT AND SUCH LENDER ARISING OUT OF THIS AGREEMENT, THE
COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN ANY BORROWER
AND THE AGENT OR ANY LENDER OF ANY KIND OR NATURE. EACH BORROWER, THE AGENT AND THE LENDERS HEREBY AGREE THAT
THE FEDERAL COURT OF THE WESTERN DISTRICT OF NORTH CAROLINA SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER AND THE AGENT OR SUCH LENDER, PERTAINING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. EACH BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS, HEREBY
WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREEING
THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO SUCH BORROWER AT THE ADDRESS OF SUCH BORROWER SET FORTH IN SECTION 15.1. SHOULD SUCH BORROWER FAIL
TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE RECEIPT
THEREOF (AS THE TERM RECEIPT IS DEFINED IN SECTION 15.1 HEREOF), IT SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE RENDERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR
PAPERS. THE NONEXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE
SAME IN ANY APPROPRIATE JURISDICTION.
SECTION 15.6 Reserved.
SECTION 15.7 Reversal of Payments. The Agent and each Lender shall have the continuing and exclusive right
to apply, reverse and re-apply any and all payments to any portion of the Secured Obligations in a manner
consistent with the terms of this Agreement. To the extent a Borrower makes a payment or payments to the Agent,
for the account of the Lenders, or any Lender receives any payment or proceeds of the Collateral for such
Borrower's benefit, which payment(s) or proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended to be satisfied shall be revived
and continued in full force and effect, as if such payment or proceeds had not been received by the Agent or such
Lender, and shall constitute a Prime Advance.
SECTION 15.8 Injunctive Relief. Each Borrower recognizes that, in the event such Borrower fails to perform,
observe or discharge any of its obligations or liabilities under this Agreement, any remedy at law may prove to
be inadequate relief to the Agent and the Lenders; therefore, such Borrower agrees that if any Event of Default
shall have occurred and be continuing, the Agent and the Lenders, if the Agent or any Lender so requests, shall
be entitled to temporary and permanent injunctive relief without the necessity of proving actual damages.
SECTION 15.9 Amendments.
(a) Except as set forth in subsection (b) below, any term, covenant, agreement or condition of this
Agreement or any of the Loan Documents may be amended or waived, and any departure therefrom may be
consented to by the Required Lenders, if, but only if, such amendment, waiver or consent is in writing
signed by the Required Lenders and, in the case of an amendment (other than an amendment described in
Section 15.9(d)), by the Borrowers, and in any such event, the failure to observe, perform or discharge
any such term, covenant, agreement or condition (whether such amendment is executed or such waiver or
consent is given before or after such failure) shall not be construed as a breach of such term,
covenant, agreement or condition or as a Default or an Event of Default. Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given. In the event that any such waiver or amendment
is requested by the Borrowers, the Agent and the Lenders may require and charge a fee in connection
therewith and consideration thereof in such amount as shall be determined by the Agent and the Required
Lenders in their reasonable discretion.
(b) Except as otherwise set forth in this Agreement, without the prior unanimous written consent of the
Lenders,
(i) no amendment, consent or waiver shall affect the amount or extend the time of the obligation
of the Lenders to make Advances or extend the originally scheduled time or times of payment of
the principal of any Revolving Credit Loans or alter the time or times of payment of interest on
any Revolving Credit Loans, the Revolving Credit Facility Amount, the Commitment or Commitment
Percentage of any Lender or the rate of interest thereon or the amount of any fee payable
hereunder or permit any subordination of the principal or interest on such loans, permit the
subordination of the Security Interests in any material Collateral or amend the provisions of
Article 12 or of this Section 15.9(b),
(ii) no Collateral shall be released by the Agent other than as specifically permitted in this
Agreement,
(iii) except to the extent expressly provided herein, the definition "Borrowing Base" shall not be
amended, and
(iv) neither the Agent nor any Lender shall consent to any amendment to or waiver of the
amortization, deferral or subordination provisions of any instrument or agreement evidencing or
relating to obligations of any Borrower that are expressly subordinate to any of the Secured
Obligations if such amendment or waiver would be adverse to the Lenders in their capacities
as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding, Required Lenders shall have the right to
waive any Default or Event of Default and the consequences hereunder of such Default or Event of Default,
provided that such Default or Event of Default does not arise under Section 12.1(g) or Section 12.1(h) or out of
a breach of, or failure to perform or observe any term, covenant or condition of this Agreement or any other Loan
Document (other than the provisions of Article 12 of this Agreement), the amendment of which requires the
unanimous consent of the Lenders. The Required Lenders shall have the right, with respect to any Default or Event
of Default that may be waived by them, to enter into an agreement with the Borrowers providing for the
forbearance from the exercise of any remedies provided hereunder or under the other Loan Documents without
waiving any Default or Event of Default.
(c) The making of Advances hereunder by the Lenders during the existence of a Default or Event of Default
shall not be deemed to constitute a waiver of such Default or Event of Default.
(d) Notwithstanding any provision of this Agreement or the other Loan Documents to the contrary, no consent,
written or otherwise, of the Borrowers shall be necessary or required in connection with any amendment
to Article 14 (except to the extent provided in Section 14.9) or Section 4.7; provided, however, Agent
shall provide copies of such amendment to the Borrowers.
SECTION 15.10 Performance of each Borrower's Duties. Each Borrower's obligations under this Agreement and
each of the Loan Documents shall be performed by such Borrower at its own cost and expense. Upon the occurrence
of a Default or Event of Default hereunder or under any of the Loan Documents, if a Borrower shall fail to do any
act or thing which they have covenanted to do under this Agreement or any of the Loan Documents, the Agent, on
behalf of the Lenders, may (but shall not be obligated to) do the same or cause it to be done, at such Borrower's
cost and expense, either in the name of the Agent or the Lenders or in the name and on behalf of such Borrower,
and such Borrower hereby irrevocably authorizes the Agent so to act.
SECTION 15.11 Indemnification. Each Borrower agrees to reimburse the Agent and the Lenders for all costs and
expenses, including, without limitation, reasonable counsel fees and disbursements, incurred, and to indemnify
and hold the Agent and the Lenders harmless from and against all losses suffered by, the Agent or any Lender in
connection with (i) the exercise by the Agent or any Lender of any right or remedy granted to it under any of the
Transaction Documents, (ii) any claim, and the prosecution or defense thereof, arising out of or in any way
connected with any of the Transaction Documents, and (iii) the collection or enforcement of the Secured
Obligations or any of them, in each case, other than such costs, expenses and liabilities solely and directly
from the Agent's or any Lender's gross negligence or willful misconduct.
SECTION 15.12 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to
the Agent and the Lenders and any Persons designated by the Agent or the Lenders pursuant to any provisions of
this Agreement or any of the Transaction Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Secured Obligations remain unpaid or unsatisfied.
SECTION 15.13 Survival. Notwithstanding any termination of this Agreement, (a) until all Secured Obligations
have been irrevocably paid in full or otherwise satisfied, the Agent, for the benefit of the Lenders, shall
retain its Security Interest and shall retain all rights under this Agreement and each of the Security Documents
with respect to such Collateral as fully as though this Agreement had not been terminated, (b) the indemnities to
which the Agent and the Lenders are entitled under the provisions of this Article 15 and any other provision of
this Agreement and the Loan Documents shall continue in full force and effect and shall protect the Agent and the
Lenders against events arising after such termination as well as before, and (c) in connection with the
termination of this Agreement and the release and termination of the Security Interests, the Agent, on behalf of
itself as agent and the Lenders, may require such assurances and indemnities as it shall reasonably deem
necessary or appropriate to protect the Agent and the Lenders against loss on account of such release and
termination, including, without limitation, with respect to credits previously applied to the Secured Obligations
that may subsequently be reversed or revoked.
SECTION 15.14 Severability of Provisions. Any provision of this Agreement or any Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining
provisions hereof or thereof or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 15.15 Governing Law. This Agreement and the Notes shall be construed in accordance with and governed
by the law of the State of North Carolina.
SECTION 15.16 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
shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute
one and the same agreement.
SECTION 15.17 Reproduction of Documents. This Agreement, each of the Loan Documents and all documents
relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Agent or any Lender, and (c) financial statements, certificates and other
information previously or hereafter furnished to the Agent or any Lender, may be reproduced by the Agent or such
Lender by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process
and such Person may destroy any original document so produced. Each party hereto stipulates that, to the extent
permitted by Applicable Law, any such reproduction shall be as admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original shall be in existence and whether or not
such reproduction was made by the Agent or such Lender in the regular course of business), and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 15.18 Term of Agreement. This Agreement shall remain in effect from the Agreement Date through the
Termination Date and thereafter until all Secured Obligations shall have been irrevocably paid and satisfied in
full. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising
prior to such termination.
SECTION 15.19 Confidentiality.
(a) Provided the Borrowers have given their permission, the Agent and each Lender may issue and disseminate
to the public general information describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of the Borrowers and a general description of the Borrower's
business and may use the Borrower's name in advertising and other promotional material.
(b) Subject to the provisions of the following sentence, each Lender severally agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of all information
identified as "confidential" or "secret" by each Borrower and provided to the Agent or such Lender by or
on behalf of such Borrower, under this Agreement or any other Loan Document, except to the extent that
such information (i) was or becomes generally available to the public other than as a result of
disclosure by the Agent or such Lender, or (ii) was or becomes available on a nonconfidential basis from
a source other than the Borrowers, provided that such source is not bound by a confidentiality agreement
with the Borrowers known to the Agent or such Lender; provided, however, that the Agent and any Lender
may disclose such information (A) at the request or pursuant to any requirement of any Governmental
Authority to which the Agent or such Lender is subject or in connection with an examination of the Agent
or such Lender by any such Governmental Authority; (B) pursuant to subpoena or other court process; (C)
when required to do so in accordance with the provisions of any Applicable Law; (D) to the extent
reasonably required in connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Agent, any Lender or their respective Affiliates may be party; (E)
to the extent reasonably required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to the Agent's or such Lender's independent auditors, accountants, attorneys
and other professional advisors; (G) to any prospective Participant or Assignee under any Assignment and
Acceptance, actual or potential, provided that such prospective Participant or Assignee agrees to keep
such information confidential to the same extent required of the Agent and the Lenders hereunder; and
(H) to its Affiliates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers in several counterparts all as of the day and year first written above.
BORROWERS:
TROPICAL SPORTSWEAR INT'L
CORPORATION
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President, Chief Executive Officer
and Treasurer
TROPICAL SPORTSWEAR COMPANY, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President, Chief Executive Officer
SAVANE INTERNATIONAL CORP.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President, Chief Executive Officer
APPAREL NETWORK CORP.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President, Chief Executive Officer
and Treasurer
TSI BRANDS, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
TSIL, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
AGENT:
THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
LENDERS:
Commitment Amount: $40,000,000 THE CIT GROUP/COMMERCIAL
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Commitment Amount: $20,000,000 FLEET CAPITAL CORPORATION
By: Xxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxx X. Xxxxxx
Title: Senior Vice President
