EXHIBIT 10.12
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Agreement made as of the 30th day of December, 2004, by and among
VERMONT PURE HOLDINGS, LTD., a Delaware corporation with an office at 0000
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("HOLDINGS"), CRYSTAL ROCK LLC,
a Delaware limited liability company with an office at 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 ("CRYSTAL ROCK LLC", and collectively with
Holdings, the "OBLIGORS"), each of the lenders which is a signatory hereto
(individually, together with its successors and assigns, a "LENDER" and
collectively, the "LENDERS") and XXXXXXX BANK, NATIONAL ASSOCIATION, a national
banking association with an office at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000 (formerly known as Xxxxxxx Bank), as agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, the
"AGENT").
WHEREAS, Lenders, Agent, Holdings, Crystal Rock Spring Water Company
("CRYSTAL ROCK SPRING") and Vermont Pure Springs, Inc. ("VPS", and collectively
with Holdings and Crystal Rock Spring, the "ORIGINAL OBLIGORS") entered into a
Loan and Security Agreement dated as of March 5, 2003 in connection with a term
loan in the original principal amount of $28,500,000, an acquisition/capital
asset line of credit in an amount up to $15,000,000 and a revolving line of
credit loan in the original principal amount of $6,500,000, as amended by
Amendment No. 1 to Loan and Security Agreement dated as of December 17, 2003 and
by Amendment No. 2 to Loan and Security Agreement and Loan Documents dated as of
March 19, 2004 (as so amended, the "EXISTING AGREEMENT").
WHEREAS, Crystal Rock Spring and VPS have each merged with and into
Holdings.
WHEREAS, Holdings has formed Crystal Rock LLC as a wholly owned
subsidiary of Holdings.
WHEREAS, Holdings has conveyed substantially all of its assets relating
to its business operations to Crystal Rock LLC.
WHEREAS, Lenders, Agent and Obligors desire to amend the Existing
Agreement to reflect the merger of Crystal Rock Spring and VPS with and into
Holdings and to include Crystal Rock LLC as an Obligor hereunder.
WHEREAS, the Lenders, Agent and Obligors are willing to make such
amendments on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
SECTION 1. Definitions, Accounting Terms and Financial Covenants.
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings specified below:
a. "Acquisition" means the acquisition of all the stock or other
ownership interests of, or all or substantially all of the
assets or a line of business of, any entity.
b. "Acquisition/Capital Asset Line of Credit" means the
$10,000,000 credit facility evidenced by the
Acquisition/Capital Asset Line of Credit Notes.
c. "Acquisition/Capital Asset Line of Credit Advance" shall mean
an Acquisition/Capital Asset Line of Credit Advance as defined
in Section 2.3(d).
d. "Acquisition/Capital Asset Line of Credit Notes" means the
amended and restated promissory notes of Obligors payable to
the order of the Lenders dated the date of this Agreement in
an aggregate original principal amount of up to $10,000,000,
as the same may be amended or amended and restated from time
to time.
e. "Additional Collateral" means (i) all General Intangibles,
including Payment Intangibles and Software and all Supporting
Obligations related thereto, (as such terms are defined in the
Uniform Commercial Code as in effect in Connecticut from time
to time) of every kind and description of the Obligors,
including without limitation federal, state and local tax
refund claims of all kinds, whether now existing or hereafter
arising; (ii) all of Obligors' Deposit Accounts, Letter of
Credit Rights and all Supporting Obligations related thereto
(as such terms are defined in the Uniform Commercial Code as
in effect in Connecticut from time to time), whether now owned
or hereafter created, wherever located, together with the
rights to withdraw from said Deposit Accounts and make
deposits to the same and the right to draw under Letters of
Credit; (iii) all monies, securities, instruments, cash and
other property of Obligors and the proceeds thereof, now or
hereafter held or received by, or in transit to, any Lender
from or for Obligors, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of
Obligors' deposits (general or special, balances, sums,
proceeds and credits of Obligors with any Lender at any time
existing); (iv) all interests in real property held or owned
by Obligors, including all leasehold interests; (v) all rights
under contracts and license agreements for water; (vi) all
books, records, customer lists, ledger cards, computer
programs, computer tapes, disks, printouts and records, and
other property and general intangibles at any time evidencing
or relating to any of the foregoing, whether now in
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existence or hereafter created; (vii) all other personal
property and fixtures of the Obligors, whether now existing or
hereafter arising or created; and all proceeds of the
foregoing and all proceeds of any insurance on the foregoing.
f. "Additional Costs" shall mean Additional Costs as defined in
Section 2.8(e).
g. "Adirondack" means Adirondack Coffee Service, Inc., a New York
corporation.
h. "Affiliate" means (i) any person or entity directly or
indirectly controlling or controlled by or under direct or
indirect common control with any Obligor or any other obligor
of the Obligations, as the case may be (including, without
limitation, any respective director or executive officer of
any Obligor or any other obligor of the Obligations, as the
case may be), (ii) any spouse, immediate family member or
other relative who has the same principal residence of any
person described in clause (i) above, (iii) any trust in which
any such person or entity described in clauses (i) or (ii)
above has a beneficial interest and (iv) any corporation or
other organization of which any such persons or entities
described in clauses (i) or (ii) above collectively own more
than ten percent (10%) of the voting securities of such
entity.
i. "Agency Agreement" means the Agency Agreement among the
Lenders and the Agent dated the Date of Closing, as amended on
the date of this Agreement and as the same may be amended from
time to time.
j. "Amortization Date" means the date two years from the Date of
Closing.
k. "Applicable Law" shall mean the law in effect as of the date
hereof provided, however, that in the event there is a change
in the law which results in a higher permissible rate of
interest, then this Agreement and the Notes shall be governed
by such new law as of its effective date.
l. "Applicable Margin" means:
(i) 2.50% if the ratio of Senior Funded Debt to EBITDA is
greater than 2.5 to 1.0;
(ii) 2.25% if the ratio of Senior Funded Debt to EBITDA is
greater than 2.0 to 1.0 and less than or equal to 2.5
to 1.0;
(iii) 2.00% if the ratio of Senior Funded Debt to EBITDA is
greater than 1.5 to 1.0 and less than or equal to 2.0
to 1.0; and
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(iv) 1.50% if the ratio of Senior Funded Debt to EBITDA is
less than or equal to 1.5 to 1.0.
The Applicable Margin on the date of this Agreement is 2.25%
and shall continue to be the Applicable Margin until a new
Applicable Margin is determined and goes into effect as
hereinafter set forth. A new Applicable Margin shall be
determined semiannually: (i) 120 days after the end of each
fiscal year of Holdings, commencing with the fiscal year
ending October 31, 2004, based upon the audited fiscal year
end financial statements for that fiscal year provided to
Agent within 90 days after the end of that fiscal year as
required in this Agreement, and (ii) 75 days after the end of
each second fiscal quarter of Holdings, based upon the
quarterly financial statements for that second fiscal quarter
provided to Agent within 45 days after the end of that fiscal
quarter as required in this Agreement. Such Applicable Margin
will automatically go into effect for each Interest Period
commencing after the date of determination and shall continue
in effect until a new Applicable Margin is determined and goes
into effect; provided, however, that if the audited fiscal
year end financial statements required in this Agreement are
not provided to Agent within 120 days after the end of any
fiscal year or the second quarter financial statements
required in this Agreement are not provided to Agent within 75
days after the end of any second fiscal quarter, as the case
may be, the Agent shall not be required to adjust the
Applicable Margin and the Applicable Margin that will go into
effect for each Interest Period commencing after that 120th
day or 75th day, as the case may be, shall be 2.50% until a
new Applicable Margin is determined and goes into effect
unless otherwise agreed to by the Lenders.
m. "Assignee" shall mean Assignee as defined in Section 9.3.
n. "Business Day" means any day other than a Saturday, Sunday or
day which shall be in the State of Connecticut a legal holiday
or day on which commercial banks in Hartford, Connecticut are
required or authorized by law to close.
o. "Capital Assets" means assets that, in accordance with GAAP,
are required or permitted to be depreciated or amortized on
Holdings' consolidated balance sheet.
p. "Capital Expenditures" mean expenditures for purchase,
acquisition or lease of Capital Assets.
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q. "Capital Leases" means capital leases, conditional sales
contracts and other title retention agreements relating to the
purchase or acquisition of Capital Assets.
r. "Code" means the Internal Revenue Code of 1986, as amended, or
any successor federal tax code, and any reference to any
provision shall be deemed to include a reference to any
successor provision or provisions.
s. "Collateral" means Receivables, Inventory, Equipment, Patents,
Trademarks, Investment Property, Additional Collateral, but
excluding personal property subject to a purchase money lien
permitted by Section 6.1 hereof to the extent the terms of
such purchase money lien prohibit further liens or
encumbrances.
t. "Crystal-Waterville" means Crystal-Waterville, Inc., a
Connecticut corporation.
u. "Current Assets" means current assets determined in accordance
with GAAP.
v. "Current Liabilities" means current liabilities determined in
accordance with GAAP.
w. "Current Maturities of Long Term Debt" means the current
maturity of long term Indebtedness paid or payable during the
applicable period provided, however, that the prepayment of
the Term Loan in the amount of $5,000,000 from net proceeds of
the sale pursuant to the Micropack Purchase Agreement and the
payment of the Subordinated Debt in the amount of $5,000,000
from net proceeds of the sale pursuant to the Micropack
Purchase Agreement shall be excluded therefrom.
x. "Current Ratio" means the ratio of Current Assets to Current
Liabilities.
y. "Date of Closing" means March 5, 2003.
z. "Debt Service Coverage Ratio" means, for the relevant period,
the ratio of (i) (A) EBITDA, minus (B) Dividends, minus (C)
Capital Expenditures (other than Excluded Capital
Expenditures) to the extent such Capital Expenditures are not
financed and are not incurred as part of an Acquisition, plus
(or minus) (D) the net increase (or decrease) in customer
deposits, plus (E) proforma EBITDA agreed to in writing by the
Agent relating to new Acquisitions as set forth in Section
6.17 hereof, minus (F) cash taxes to (ii) (A) Current
Maturities of Long Term Debt, plus (B) the current portion of
Capital Lease payments, plus (C) interest expense on all
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Indebtedness which is not Subordinated Debt plus (D) interest
expense paid on Subordinated Debt.
aa. "Dividends" means the payment of any dividend or other
distribution by Holdings in respect of its capital stock in
cash or other property (excepting distributions in the form of
such stock) or the redemption or acquisition of any such
stock.
bb. "Documentation Agent" means M&T Bank in such capacity,
together with its successors and assigns in such capacity.
cc. "EBITDA" means, for the relevant period, income from
continuing operations (excluding extraordinary items of income
and the write-down of closing costs associated with loans
refinanced by the Loans but including any extraordinary items
of loss) before deduction for interest and taxes, depreciation
and amortization.
dd. "Environmental Laws" means any and all applicable federal,
state and local environmental, health or safety statutes,
laws, regulations, rules, ordinances, guidances, policies and
rules or common law (whether now existing or hereafter enacted
or promulgated), of all governmental agencies, bureaus or
departments which may now or hereafter have jurisdiction over
any of the Obligors or any of the Obligors' property and all
applicable judicial and administrative and regulatory decrees,
judgments and orders, including common law rulings and
determinations, relating to injury to, or the protection of,
real or personal property or human health or the environment,
including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation
and removal of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances,
pollutants or contaminants whether solid, liquid or gaseous in
nature, into the environment or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of such Hazardous Materials, chemical
substances, pollutants or contaminants.
ee. "Equipment" means all Equipment, Farm Products and Fixtures
(as such terms are defined in the Uniform Commercial Code as
in effect in Connecticut on the date of this Agreement),
including all machinery, equipment, furniture, fixtures,
tools, parts, supplies and motor vehicles, now owned and
hereafter acquired, by Obligors of whatsoever name, nature,
kind or description, wherever located, and all additions and
accessions thereto and replacements or substitutions therefor,
and all proceeds thereof and all proceeds of any insurance
thereon.
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ff. "ERISA" means the Employee Retirement Income Security Act of
1974 and all rules and regulations promulgated pursuant
thereto, as the same may from time to time be supplemented or
amended.
gg. "Event of Default" shall have the meaning assigned in Section
7 hereof.
hh. "Excelsior" means Excelsior Spring Water Company, Inc., a New
York corporation.
ii. "GAAP" means generally accepted accounting principles in the
United States of America, as from time to time in effect.
jj. [Intentionally omitted]
kk. [Intentionally omitted]
ll. "Hazardous Material" means any substance: (i) the presence of
which requires or may hereafter require notification,
investigation, monitoring or remediation under any
Environmental Law; (ii) which is or becomes defined as a
"hazardous waste", "hazardous material" or "hazardous
substance" or "toxic substance" or "pollutant" or
"contaminant" under any present or future Environmental Law or
amendments thereto including, without limitation, the
Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any
applicable local statutes and the regulations promulgated
thereunder; (iii) which is toxic, explosive, corrosive,
reactive, ignitable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated
by any governmental authority, agency, department, commission,
board, agency or instrumentality of any foreign country, the
United States, any state of the United States, or any
political subdivision thereof to the extent any of the
foregoing has or had jurisdiction over any Obligor or any
Obligor's property; or (iv) without limitation, which contains
gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls.
mm. "Indebtedness" means (i) obligations for borrowed money, (ii)
obligations representing the deferred purchase price of
property other than accounts payable arising in the ordinary
course of Obligors' business on terms customary in the trade,
(iii) obligations, whether or not assumed, secured by a lien
on, or payable out of the proceeds or production from,
property now or hereafter owned or acquired by Obligors, (iv)
obligations which are evidenced by bonds, debentures, notes,
acceptances, or other instruments, (v) Capital Lease
obligations, (vi) guaranties of the obligations of other
parties, other than in connection with the endorsement of
negotiable
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instruments in the ordinary course of business, and (vii)
obligations under letters of credit and reimbursement
agreements.
nn. "Indemnifiable Liabilities" shall mean Indemnifiable
Liabilities as defined in Section 9.1.
oo. "Indemnitees" shall mean Indemnitees as defined in Section
9.1.
pp. "Interest Period" means with respect to any amount bearing
interest at the LIBOR Rate, an available period of one (1)
month, provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period
shall end on the immediately following Business Day
unless such Business Day would be in the next month
in which case such Interest Period shall end on the
preceding Business Day; and
(ii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end
on the last Business Day of a calendar month.
qq. "Inventory" means all Inventory and Goods and all Supporting
Obligations related thereto (as such terms are defined in the
Uniform Commercial Code as in effect in Connecticut from time
to time) of whatsoever name, nature, kind or description now
owned and hereafter acquired by Obligors, wherever located,
including without limitation all contract rights with respect
thereto and documents representing the same, all goods held
for sale or lease or to be furnished under contracts of
service, finished goods, raw materials, materials used or
consumed by Obligors, parts, supplies, and all wrapping,
packaging, advertising and shipping materials and any
documents relating thereto, and all labels and other devices,
names and marks affixed or to be affixed thereto for purposes
of selling or of identifying the same or the seller or
manufacturer thereof, and all right, title and interest of
Obligors therein and thereto, and all proceeds of the
foregoing and all proceeds of any insurance on the foregoing.
rr. "Investment Property" means all investment property (as such
term is defined in the Uniform Commercial Code as adopted in
Connecticut from time to time) of whatever type or nature now
owned or hereafter acquired by the Obligors, including without
limitation, all certificated securities, all uncertificated
securities, all security entitlements, all security accounts,
all commodity contracts, all commodity accounts and all
financial assets of every type and nature and all rights
thereto or therein, and all financial accounts of every type
and nature and all rights thereto or therein, and all
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Supporting Obligations (as such term is defined in the Uniform
Commercial Code as adopted in Connecticut from time to time)
related thereto and all proceeds and products thereof,
including without limitation, all insurance proceeds and
fidelity bond proceeds related thereto.
ss. "IRS" means the United States Internal Revenue Service.
tt. "Lender's Commitment Percentage" shall mean for each Lender,
the percentage listed next to such Lender's name on Schedule
1.1tt.
uu. "LIBOR Rate" means, with respect to any LIBOR Rate Loan for
each applicable Interest Period, the rate per annum determined
by the Agent to be equal to the quotient of (a) the London
Interbank Offered Rate for such LIBOR Rate Loan for such
Interest Period, divided by (b) one (1) minus the Reserve
Percentage for such Interest Period, expressed as follows:
LIBOR Rate = London Interbank Offered Rate
-----------------------------
1 - Reserve Percentage
vv. "LIBOR Rate Loan" means any Loan or portion thereof the
principal amount of which bears interest at a rate equal to
the LIBOR Rate plus the Applicable Margin.
ww. "Loan Account" shall mean Loan Account as defined in Section
2.2 (e)(1).
xx. "Loans" means the Term Loan, the Revolving Line of Credit and
the Acquisition/Capital Asset Line of Credit.
yy. "Loan Documents" means this Agreement, the Notes and all other
documents evidencing, securing, guarantying or relating to the
Loans.
zz. "London Interbank Offered Rate" means, with respect to any
applicable Interest Period, the rate per annum (rounded
upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in
U.S. dollars, for a principal amount and having a borrowing
date and a maturity date comparable to such Interest Period
for such amount which appears on the Telerate page 3750 as of
approximately 11:00 a.m. London time on the day that is two
London Banking Days preceding the first day of such Interest
Period; provided, however, if the rate described above does
not appear on the Telerate System on any applicable interest
determination date, the London Interbank Offered Rate shall be
the rate (rounded upwards as described above, if necessary)
for deposits in U.S. dollars for a period and a principal
amount substantially equal to the interest period on the
Reuters Page "LIBO" (or such other page as may replace the
LIBO Page on that service for the purpose of
9
displaying such rates) for such a principal amount, as of
approximately 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such
Interest Period. "Banking Day" shall mean, in respect of any
city, any date on which commercial banks are open for business
in that city. If both the Telerate and Reuters system are
unavailable, then the rate for that date will be determined on
the basis of the offered rates for deposits in U.S. dollars
for a period of time and a principal amount comparable to such
Interest Period for such principal amount which are offered by
four major banks in the London interbank market selected by
the Agent at approximately 11:00 a.m. London time, on the day
that is two (2) London Banking Days preceding the first day of
such Interest Period. The principal London office of each of
the four major London banks will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least
two such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for a period of time
and a principal amount comparable to such Interest Period and
such principal amount offered by major banks in New York City
at approximately 11:00 a.m. New York City time, on the day
that is two London Banking Days preceding the first day of
such Interest Period. In the event that Agent is unable to
obtain any such quotation as provided above, it will be deemed
that the LIBOR Rate pursuant to such Interest Period cannot be
determined.
aaa. "Managers" means Managers as defined in Section 6.7.
bbb. [Intentionally omitted]
ccc. "Net Income" means net income as determined in accordance with
GAAP.
ddd. "Net Loss" means net loss as determined in accordance with
GAAP.
eee. "Notice of Borrowing" shall mean Notice of Borrowing as
defined in Section 2.2 (e)(1).
fff. "Notes" means the Term Notes, the Revolving Line of Credit
Notes and the Acquisition/Capital Asset Line of Credit Notes.
ggg. "Obligations" means and includes all loans, advances,
interest, indebtedness, liabilities, obligations, guaranties,
covenants and duties at any time owing by Obligors to any
Lender or the Agent of every kind and description, whether or
not evidenced by any note or other instrument, whether or not
for the payment of money, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter
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arising, including, but not limited to, the Loans and all
other indebtedness, liabilities and obligations arising under
this Agreement and the other Loan Documents, all swap
agreements and all costs, expenses, fees, charges and
attorneys', paralegals' and professional fees incurred in
connection with any of the foregoing, or in any way connected
with, involving or relating to the preservation, enforcement,
protection or defense of, or realization under this Agreement,
the Notes, any of the other Loan Documents, the Collateral and
the rights and remedies hereunder or thereunder, including
without limitation, all costs and expenses incurred in
inspecting or surveying any real property, or conducting
environmental studies or tests, and in connection with any
"workout" or default resolution negotiations involving legal
counsel or other professionals and any re-negotiation or
restructuring of any of the Obligations.
hhh. "Patents" means all of Obligors' right, title and interest,
present and future, in and to (a) all letters patent of the
United States or any other country, all right, title and
interest therein and thereto, and all registrations and
recordings thereof, including without limitation applications,
registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the
United States or any state thereof or any other country or any
political subdivision thereof, all whether now owned or
hereafter acquired by Obligors; and (b) all reissues,
continuations, continuations-in-part or extensions thereof and
all licenses thereof; and all proceeds of the foregoing and
all proceeds of any insurance on the foregoing.
iii. "PBGC" means the Pension Benefit Guaranty Corporation.
jjj. "Permitted Encumbrances" means the liens and encumbrances
listed on Schedule 4.5 and those permitted pursuant to Section
6.1 hereof; provided, however, that none of the Permitted
Encumbrances shall be amended or modified in any way adverse
to any Lender or the Agent without the prior written consent
of Agent.
kkk. "Plan" means any employee benefit plan or other plan
maintained for employees of any of the Obligors or any related
entity covered by Title I of ERISA.
lll. "Pledge Agreement" means the Pledge Agreement dated the date
of this Agreement from Holdings to Agent, as the same may be
amended or amended and restated from time to time.
mmm. "Prime Rate" means the variable per annum rate of interest so
designated from time to time by Agent as its prime rate. The
Prime Rate is a reference
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rate and does not necessarily represent the lowest or best
rate being charged to any customer.
nnn. "Prime Rate Loan" means any Loan or portion thereof the
principal amount of which bears interest at a rate equal to
the Prime Rate. The interest rate on each Prime Rate Loan
shall change immediately, without notice or demand of any kind
to Obligors, each time that the Prime Rate changes so that the
rate of interest on a Prime Rate Loan is at all times equal to
the Prime Rate.
ooo. "Prior Encumbrances" means the mortgages, security interests,
pledges, liens, encumbrances or other charges listed in
Section A of Schedule 4.5.
ppp. "Property" means all property and assets of Obligors.
qqq. "Receivables" means (i) all of Obligors' now owned and
hereafter acquired, present and future, Accounts, Chattel
Paper, Documents, Instruments and Supporting Obligations
related thereto, (as such terms are defined in the Uniform
Commercial Code as in effect in Connecticut from time to time)
and contract rights, including without limitation all
obligations to Obligors for the payment of money, whether
arising out of Obligors' sale of goods or rendition of
services or otherwise (all hereinafter called "Accounts") and
all proceeds of the foregoing and all proceeds of any
insurance on the foregoing; (ii) all of Obligors' rights,
remedies, security and liens, in, to and in respect of the
Accounts, present and future, including without limitation,
rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, guaranties or other contracts of
suretyship with respect to the Accounts, deposits or other
security for the obligation of any debtor or obligor in any
way obligated on or in connection with any Accounts, and
credit and other insurance, and all proceeds of the foregoing
and all proceeds of any insurance on the foregoing; and (iii)
all of Obligors' right, title and interest, present and
future, in, to and in respect of all goods relating to, or
which by sale have resulted in, Accounts, including without
limitation all goods described in invoices or other documents
or instruments with respect to, or otherwise representing or
evidencing any Accounts, and all returned, reclaimed or
repossessed goods, and all proceeds of the foregoing and all
proceeds of any insurance on the foregoing.
rrr. "Reimbursement Agreement" shall mean Reimbursement Agreement
as defined in Section 2.4(b).
sss. "Request for Advance" shall mean Request for Advance as
defined in Section 2.3(e)(1).
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ttt. "Reserve Percentage" means the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of
the Federal Reserve System for determining the reserve
requirement (including all basic, supplemental, marginal and
other reserves) which is imposed on member banks of the
Federal Reserve System with respect to "Euro-currency
Liabilities" as defined in Regulation D. With respect to the
LIBOR Rate, any change in the interest rate because of a
change in the Reserve Percentage shall become effective,
without notice or demand of any kind, on the date on which
such change in the Reserve Percentage becomes effective.
uuu. "Revolving Line of Credit" means the $6,500,000 credit
facility evidenced by the Revolving Line of Credit Notes.
vvv. "Revolving Line of Credit Advance" shall mean the definition
assigned in Section 2.2(d).
www. "Revolving Line of Credit Notes" means the amended and
restated promissory notes of Obligors dated the date of this
Agreement payable to the order of the Lenders in an aggregate
original principal amount of up to $6,500,000, as the same may
be amended or amended and restated from time to time.
xxx. "Senior Funded Debt" means all Indebtedness of Obligors other
than Subordinated Debt and issued and outstanding Standby
Letters of Credit to the extent not yet drawn upon (and the
related obligations under reimbursement agreements in
connection therewith to the extent not yet due and payable),
including, without limitation, the average daily outstanding
principal amount of the Revolving Line of Credit (or the prior
line of credit) for the fiscal quarter then ended and the
immediately preceding three fiscal quarters.
yyy. "Standby Letter of Credit" means a standby letter of credit
issued by the Agent for the account of any Obligor in
accordance with the terms of this Agreement.
zzz. [Intentionally omitted]
aaaa. "Subordinated Debt" means debt of any of the Obligors which
has been subordinated in payment to the Obligations pursuant
to a subordination agreement which is satisfactory in form and
substance to the Agent.
13
bbbb. "Subordinated Encumbrances" means the mortgages, security
interests, pledges, liens, encumbrances or other charges
listed in Section B of Schedule 4.5.
cccc. "Subordinated Lenders" means (i) Xxxxx X. Xxxxx, (ii) Xxxx X.
Xxxxx, (iii) Xxxx X. Xxxxx, (iv) Xxxxx X. Xxxxx and (v) Xxxx
X. Xxxxxxxx, not individually but as Trustee of the Xxxxx X.
Xxxxx Life Insurance Trust, the Xxxx X. Xxxxx Insurance Trust
and U/T/A/ dated December 16, 1991 F/B/O Xxxx Xxxxx et al (the
"Trustee").
dddd. "Subsidiary" means any corporation, limited liability company,
partnership or other entity, a majority of whose outstanding
stock, membership interests, partnership interests or other
ownership interests having voting power to elect the board of
directors or other governing body or person of such entity
shall at any time be owned or controlled by the Obligors.
eeee. "Term Loan" means the loan evidenced by the Term Notes in the
original principal amount on the Date of Closing of
$28,500,000.
ffff. "Term Notes" means the amended and restated promissory notes
of the Obligors payable to the order of the Lenders dated the
date of this Agreement in an aggregate original principal
amount of $18,324,997.00.
gggg. "Termination Date" means:
(i) with respect to the Revolving Line of Credit or any
Revolving Line of Credit Note, April 1, 2005;
(ii) with respect to the Acquisition/Capital Asset Line of
Credit or any Acquisition/Capital Asset Line of
Credit Note, February 29, 2008; and
(iii) with respect to the Term Loan or any Term Note,
February 29, 2008.
hhhh. "Trademarks" means all of Obligors' right, title and interest,
present and future, in and to (i) all trademarks, trade names,
trade styles, service marks, prints and labels on which said
trademarks, trade names, trade styles and service marks have
appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all
right, title and interest therein and thereto, and all
registrations and recordings thereof, including without
limitation applications, registrations and recordings in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof, or
any other country or any political subdivision thereof, all
whether now owned
14
or hereafter acquired by Obligors; (ii) all reissues,
extensions or renewals thereof and all licenses thereof; and
(iii) the goodwill of the business symbolized by each of the
Trademarks, and all customer lists and other records of
Obligors relating to the distribution of products bearing the
Trademarks; and all proceeds of the foregoing and all proceeds
of any insurance on the foregoing.
iiii. "Excluded Capital Expenditures" means the $150,000 expenditure
by VPS for a SMI stretchfilm packaging machine in November,
2003 and $150,000 of a $350,000 Capital Expenditure by Crystal
Rock for new five gallon bottling equipment but only to the
extent that Crystal Rock has received $150,000 in proceeds
from the sale of its existing five gallon bottling equipment.
jjjj. "Micropack Purchase Agreement" means the Purchase and Sale
Agreement among Holdings, VPS and Micropack Corporation dated
as of March 1, 2004.
kkkk. "Senior Debt Service Coverage Ratio" means, for the relevant
period, the ratio of (i) (A) EBITDA, minus (B) Dividends,
minus (C) Capital Expenditures (other than Excluded Capital
Expenditures) to the extent such Capital Expenditures are not
financed, plus (or minus) (D) the net increase (or decrease)
in customer deposits, plus (E) proforma EBITDA agreed to in
writing by the Agent relating to new Acquisitions as set forth
in Section 6.17 hereof, minus (F) cash taxes to (ii) (A)
Current Maturities of Long Term Debt which is not Subordinated
Debt, plus (B) the current portion of Capital Lease payments,
plus (C) interest expense on all Indebtedness which is not
Subordinated Debt.
1.2 Accounting Terms. Unless otherwise defined, all accounting terms shall
be construed, and all computations or classifications of assets and
liabilities and of income and expenses shall be made or determined in
accordance with GAAP except as otherwise stated in Section 6.15.
1.3 Financial Covenants. All financial covenants in this Agreement shall
apply with respect to, and shall be measured in accordance with, the
consolidated financial statements of Holdings. All financial covenants
in this Agreement shall be tested commencing October 31, 2004.
15
SECTION 2. The Loan Transactions.
2.1 The Term Loan.
a. Amount. Lenders loaned to the Original Obligors the sum of
TWENTY EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS
($28,500,000).
b. Obligations to Repay. Obligors' obligations to repay the Term
Notes and the terms and conditions of the Term Loan are as
contained in this Agreement and the Term Notes, the form of
which is attached to this Agreement as EXHIBIT 2.1.
c. Use of Proceeds. The proceeds of the Term Loan were used to
refinance existing Xxxxxxx Bank term loans.
d. Interest Rate. The principal amount outstanding under the Term
Loan shall bear interest, subject to and in accordance with
the terms of this Agreement and the Term Notes, at a per annum
rate equal to a fixed rate equal to the LIBOR Rate (as
determined for each Interest Period applicable thereto) for
available Interest Periods of one (1) month plus the
Applicable Margin, provided, however, that notwithstanding
anything else herein to the contrary, the initial Interest
Period end on January 5, 2005. All computations of interest on
the Term Notes shall be made on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
e. Advances. The full amount of the Term Loan was advanced on the
Date of Closing by the Lenders in accordance with their
respective Lender's Commitment Percentages. Neither any Lender
nor Agent shall be responsible for advancing any amount of the
Term Loan made by any other Lender hereunder.
f. Continuation of Interest Periods. Any LIBOR Rate Loan under
the Term Notes shall be continued as such (less the amount of
principal that is due and payable at the end of such expiring
Interest Period) for an Interest Period of one (1) month at
the end of each Interest Period, provided that no LIBOR Rate
Loan may be continued as such: (i) at a time when any Event of
Default (or event or condition which would constitute an Event
of Default but for the giving of notice or passage of time or
both) has occurred and is continuing and (ii) after the date
that is one (1) month prior to the Termination Date, in which
event the principal amount under the Term Notes shall bear
interest as a Prime Rate Loan.
g. Payments of Interest. Monthly payments of interest on the Term
Notes shall be due and payable in arrears on the fifth day of
each month (or if
16
such day is not a Business Day, on the first Business Day
thereafter) until the entire principal amount of the Term Loan
is paid in full.
h. Payments of Principal. Obligors shall pay monthly installments
of principal on the Term Notes on the fifth day of each month
(or if such day is not a Business Day, on the first Business
Day thereafter), commencing January 5, 2005, in the amounts
of:
(1) $291,667 for each month from January 2005 through
March 2005;
(2) $325,000 for each month from April 2005 through March
2006;
(3) $333,333 for each month from April 2006 through March
2007;
(4) $354,167 for each month from April 2007 through
February 2008.
If not sooner paid, the aggregate outstanding principal amount of the
Term Notes, together with all accrued and unpaid interest thereon and
any other fees or charges then due, shall be due and payable on the
Termination Date.
i. Prepayments.
(1) Obligors may prepay the principal amount of the Term
Loan, or any portion thereof, only upon at least
three (3) Business Days prior written notice to Agent
(which notice shall be irrevocable and shall state
the amount to be prepaid). If Obligors refinance the
Term Loan, or any part thereof, with any other
entity, Obligors shall pay to Agent a prepayment
premium equal to one percent (1%) of the amount
prepaid if the prepayment is made less than two years
from the Date of Closing.
(2) If any prepayment of a LIBOR Rate Loan occurs on a
day other than the last day of the Interest Period,
Obligors shall pay to Agent, upon request of Agent,
such amount or amounts as shall be sufficient (in the
reasonable opinion of Agent) to compensate Lenders
for any loss, cost, or expense incurred as a result
of: (i) any payment on a date other than the last day
of the Interest Period; and (ii) any failure by any
Obligor to make a prepayment on the date for payment
specified in any Obligor's written notice.
(3) In the event of any prepayments, the Obligors shall
pay all accrued interest on the principal amount
being paid to the date of the prepayment and, in the
case of prepayments in full, all fees, charges,
costs, expenses and other amounts then due hereunder.
17
(4) Any partial prepayment shall be applied against
principal payments in the inverse order of maturity
and shall not reduce the monthly payments of
principal due under the Term Loan.
(5) If by reason of an Event of Default, Agent elects to
declare the Notes to be immediately due and payable,
then any prepayment premiums and other amounts which
would have been due if a prepayment been made at that
time shall become due and payable in the same manner
as though the Obligors had exercised such right of
prepayment.
2.2 The Revolving Line of Credit.
a. Amount. Lenders may loan to any of the Obligors, and any
Obligor may borrow from Lenders, from time to time in
accordance with the terms of this Agreement, up to SIX MILLION
FIVE HUNDRED THOUSAND DOLLARS ($6,500,000) less (a) the
maximum amount available to be drawn under all issued and
outstanding Standby Letters of Credit (assuming all conditions
for drawing have been satisfied) at the time of such borrowing
under the Revolving Line of Credit, and (b) all amounts drawn
under issued Standby Letters of Credit for which the Lenders
has not been reimbursed by the Obligors at the time of such
borrowing under the Revolving Letter of Credit. Obligors may
repay and reborrow advances that are made under the Revolving
Line of Credit, subject, however, to the prepayment terms
contained below.
b. Obligations to Repay. Obligors' obligations to repay the
Revolving Line of Credit Notes and the terms and conditions of
the Revolving Line of Credit are as contained in this
Agreement and the Revolving Line of Credit Notes, the form of
which is attached to this Agreement as EXHIBIT 2.2.
c. Use of Proceeds. The proceeds of the Revolving Line of Credit
shall only be used for general short term working capital
purposes.
d. Interest Rate. Each advance under the Revolving Line of Credit
(each a "Revolving Line of Credit Advance") shall bear
interest, at Obligors' option subject to and in accordance
with the terms of this Agreement and the Revolving Line of
Credit Notes, at a per annum rate equal to either (a) a fixed
rate equal to the LIBOR Rate (as determined for each Interest
Period applicable thereto) for available Interest Periods of
one (1) month plus the Applicable Margin, or (b) a variable
rate equal to the Prime Rate plus one quarter of one percent
(0.25%). All computations of interest on the Revolving Line of
Credit Notes shall be made on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
18
e. Requests for Advances.
(1) Except as set forth below in section 2.2 e.(2) of
this Agreement, whenever an Obligor desires an
advance, such Obligor shall notify Agent (which
notice shall be irrevocable) by telephone, facsimile
or in writing, of the desired borrowing. Such notice
(the "Notice of Borrowing") shall specify the date of
the proposed borrowing, whether such borrowing is to
bear interest initially as a LIBOR Rate Loan or a
Prime Rate Loan and the amount requested, which
amount shall be in a minimum amount of $100,000. Each
Notice of Borrowing must be received by Agent no
later than 10:00 a.m., Hartford, Connecticut time (a)
at least three (3) Business Days' prior to the day
such borrowing is requested if such borrowing is to
be a LIBOR Rate Loan or (b) on the day of such
borrowing if such borrowing is to be a Prime Rate
Loan. Any Notice of Borrowing that is not in writing
shall be followed by a written confirmation by such
Obligor, provided that if such written confirmation
differs in any respect from the action taken by
Agent, the records of Agent shall control, absent
manifest error. Obligors shall not have more than
four (4) LIBOR Rate Loans under the Revolving Line of
Credit outstanding at any one time. Each Revolving
Line of Credit Advance shall be made by the Lenders
in accordance with their respective Lender's
Commitment Percentages up to the maximum principal
amount of their respective Revolving Line of Credit
Notes. Neither any Lender nor Agent shall be
responsible for advancing any amount of any Revolving
Line of Credit Advance to be made by any other Lender
hereunder. Agent shall enter each Revolving Line of
Credit Advance as a debit on a loan account
maintained by Obligors with Agent (the "Loan
Account"). Agent may also record in the Loan Account,
in accordance with customary banking procedures, all
fees, accrued and unpaid interest, late fees, usual
and customary bank charges for the maintenance and
administration of accounts maintained by Obligors and
other fees and charges which are properly chargeable
to Obligors in connection with the Revolving Line of
Credit Advances and all payments, subject to
collection, made by Obligors on account of or to
Agent.
(2) In addition, Xxxxxxx Bank will automatically make
advances under the Revolving Line of Credit without
any additional notice in order to honor checks drawn
upon the Loan Account by any of the Obligors up to an
aggregate amount outstanding at any one time of
$1,000,000; provided, however, that (A) all advances
under this Section 2.2e.(2) and all other advances
under the Revolving Line
19
of Credit shall not exceed the maximum amount of the
Revolving Line of Credit and (B) the sum, at the time
of such borrowing under the Revolving Line of Credit
pursuant to this Section 2.2e.(2), of (i) all
advances under this Section 2.2e.(2), plus (ii)
Xxxxxxx Bank's Lender's Commitment Percentage of all
other advances under the Revolving Line of Credit
plus (iii) Xxxxxxx Bank's Lender's Commitment
Percentage of (a) the maximum amount available to be
drawn under all issued and outstanding Standby
Letters of Credit (assuming all conditions for
drawing have been satisfied) at the time of such
borrowing under the Revolving Line of Credit, and (b)
all amounts drawn under issued Standby Letters of
Credit for which the Lenders have not been reimbursed
by the Obligors directly or by an advance on the
Revolving Line of Credit shall not exceed the maximum
amount of the Revolving Line of Credit Note payable
to Xxxxxxx Bank. All such advances shall be Prime
Rate Loans and shall otherwise be subject to all the
terms and conditions of this Agreement and the
Revolving Line of Credit Note with Xxxxxxx Bank.
(3) Obligors' right to request advances under the
Revolving Line of Credit shall terminate on the
Termination Date unless sooner terminated by Agent in
accordance with the terms of this Agreement.
f. Conversion of Loans and Continuation of Interest Periods.
Unless an Obligor elects to convert any Revolving Line of
Credit Advance to a different type of loan by providing the
notice required below, any Prime Rate Loan shall be continued
as such and any LIBOR Rate Loan shall be continued as such for
an Interest Period of one (1) month upon the expiration of the
then current Interest Period, provided that no LIBOR Rate Loan
may be continued as such, no new LIBOR Rate Loan may be
selected by Obligors and no Prime Rate Loan shall be converted
to a LIBOR Rate Loan: (i) at a time when any Event of Default
(or event or condition which would constitute an Event of
Default but for the giving of notice or passage of time or
both) has occurred and is continuing and (ii) after the date
that is one (1) month prior to the Termination Date, in which
event the principal amount under the Revolving Line of Credit
shall bear interest as a Prime Rate Loan. Any Obligor may
elect from time to time to convert (a) a LIBOR Rate Loan under
the Revolving Line of Credit to a Prime Rate Loan and (b) a
Prime Rate Loan under the Revolving Line of Credit to a LIBOR
Rate Loan as provided in this section. An Obligor shall
exercise such election by giving the Agent not less than three
(3) Business Days prior irrevocable written notice of such
election; provided that any such conversion of a LIBOR Rate
Loan to a Prime Rate Loan shall only be made on the last
Business Day of the then current Interest Period with
20
respect thereto. Notwithstanding the foregoing, no Prime Rate
Loan made pursuant to an advance under Section 2.2e.(2) shall
be converted to a LIBOR Rate Loan.
g. Payments of Interest. Monthly payments of interest shall be
due and payable in arrears on the last day of each Interest
Period with respect to LIBOR Rate Loans and on the first day
of each month with respect to Prime Rate Loans until all Loans
are paid in full.
h. Payments of Principal. If not sooner paid, the aggregate
outstanding principal amount of the Revolving Line of Credit
Notes, together with all accrued and unpaid interest thereon
and any other fees or charges then due, shall be due and
payable on the Termination Date.
i. Prepayments.
(1) Except as set forth in the following sentence,
Obligors may prepay the principal amount under the
Revolving Line of Credit, or any portion thereof,
only upon at least three (3) Business Days prior
written notice to Agent (which notice shall be
irrevocable and shall state the amount to be
prepaid). Any checks payable to the order of any of
the Obligors which are properly deposited with
Xxxxxxx Bank in the Loan Account shall, upon becoming
immediately available funds, be automatically applied
as a prepayment of any outstanding Prime Rate Loan
made pursuant to Section 2.2.e.(2) of this Agreement
without the requirement of any notice. In the event
there is no Prime Rate Loan made pursuant to Section
2.2.e.(2) of this Agreement outstanding at such time,
such amount shall be deposited in the Loan Account
and invested in accordance with any applicable cash
management agreement among Obligors and Xxxxxxx Bank.
(2) If any prepayment of a LIBOR Rate Loan occurs on a
day other than the last day of the Interest Period,
Obligors shall pay to Agent, upon request of Agent,
such amount or amounts as shall be sufficient (in the
reasonable opinion of Agent) to compensate Lenders
for any loss, cost, or expense incurred as a result
of: (i) any payment on a date other than the last day
of the Interest Period; and (ii) any failure by any
Obligor to make a prepayment on the date for payment
specified in any Obligor's written notice.
(3) In the event of any prepayments, the Obligors shall
pay all accrued interest on the principal amount
being paid to the date of the prepayment and, in the
case of prepayments in full, all fees, charges,
costs, expenses and other amounts then due hereunder.
21
(4) If by reason of an Event of Default, Agent elects to
declare the Notes to be immediately due and payable,
then any prepayment premiums and other amounts which
would have been due if a prepayment been made at that
time shall become due and payable in the same manner
as though the Obligors had exercised such right of
prepayment.
2.3 The Acquisition/Capital Asset Line of Credit.
a. Amount. Lenders may loan to any of the Obligors, and any
Obligor may borrow from Lenders, from time to time in
accordance with the terms of this Agreement, up to TEN MILLION
DOLLARS ($10,000,000); provided, however, that any advances
under the Acquisition/Capital Asset Line of Credit shall
require the approval of all the Lenders, which may be given or
withheld in each Lender's sole and absolute discretion.
Obligors may not repay and reborrow advances that are made
under the Acquisition/Capital Asset Line of Credit.
b. Obligations to Repay. Obligors' obligations to repay the
Acquisition/Capital Asset Line of Credit Notes and the terms
and conditions of the Acquisition/Capital Asset Line of Credit
are as contained in this Agreement and the Acquisition/Capital
Asset Line of Credit Notes, the form of which is attached to
this Agreement as EXHIBIT 2.3.
c. Use of Proceeds. The proceeds of the Acquisition/Capital Asset
Line of Credit shall only be used to fund Acquisitions within
the home and office business segment of the food and beverage
industry and non-real estate Capital Expenditures in an
aggregate amount of up to ten million dollars ($10,000,000).
d. Interest Rate. Each advance under the Acquisition/Capital
Asset Line of Credit (each an "Acquisition/Capital Asset Line
of Credit Advance") shall bear interest, subject to and in
accordance with the terms of this Agreement and the
Acquisition/Capital Asset Line of Credit Notes, at a per annum
rate equal to a fixed rate equal to the LIBOR Rate (as
determined for each Interest Period applicable thereto) for
available Interest Periods of one (1) month plus the
Applicable Margin, provided, however, that notwithstanding
anything else herein to the contrary, all Interest Periods
which commence in March of 2005 shall end on March 31, 2005.
All computations of interest on the Acquisition/Capital Asset
Line of Credit Notes shall be made on the basis of a three
hundred sixty (360) day year and the actual number of days
elapsed.
e. Requests for Advances.
22
(1) Whenever an Obligor desires an Acquisition/Capital
Asset Line of Credit Advance, such Obligor shall
notify Agent (which notice shall be irrevocable) in
writing of the desired borrowing. Such notice (the
"Request for Advance") shall specify the date of the
proposed borrowing, the proposed use of such
borrowing and the amount requested, which amount
shall be in a minimum amount of $100,000. The Agent
shall promptly notify the Lenders of such Request for
Advance and the contents thereof.
(2) Each amount requested under the Acquisition/Capital
Asset Line of Credit to fund an Acquisition or a
Capital Expenditure shall not exceed 75% of the
purchase price of such Acquisition or such Capital
Expenditure and shall not exceed in the aggregate
with all other such requests $10,000,000. Each
Request for Advance in connection therewith must be
received by Agent no later than 10:00 a.m., Hartford,
Connecticut time at least five (5) Business Days'
prior to the day such borrowing is requested
(provided, however, that if such Acquisition or
Capital Expenditure requires the consent of the Agent
pursuant to Section 6.4 or 6.20 of this Agreement,
such consent has previously been obtained) and must
be accompanied by the following: (a) a copy of the
purchase agreement or purchase orders and invoices
relating to such Acquisition or Capital Expenditure,
(b) evidence satisfactory to the Agent that, at the
time of such Acquisition or Capital Expenditure, (i)
the Obligor will acquire good title to such entity or
assets, (ii) the Obligor will have physical
possession of any such assets, (iii) the Obligor will
obtain title to such entity or assets free and clear
of any pledge, lien, lease, encumbrance or charge of
any kind whatsoever, other than in favor of the
Agent, and (iv) the Agent will have a valid, duly
perfected, first priority lien in such entity or
assets, and (c) such other documents as the Agent may
reasonably require. At the time of funding such
Acquisition/Capital Asset Line of Credit Advance,
Obligor shall confirm, and provide such additional
documentation that the Agent may reasonably require,
that the statements in clauses (b)(i) through (b)(iv)
in the preceding sentence are true and accurate and
shall pay all reasonable costs and expenses incurred
by the Agent in connection with such
Acquisition/Capital Asset Line of Credit Advance.
(3) [Intentionally omitted]
(4) Obligors shall not have more than four (4) LIBOR Rate
Loans under the Acquisition/Capital Asset Line of
Credit outstanding at any one time. Each
Acquisition/Capital Asset Line of Credit
23
Advance shall be made by the Lenders in accordance
with their respective Lender's Commitment Percentages
up to the maximum principal amount of their
respective Acquisition/Capital Asset Line of Credit
Notes. Neither any Lender nor Agent shall be
responsible for advancing any amount of any
Acquisition/Capital Asset Line of Credit Advance to
be made by any other Lender hereunder. Agent shall
enter each Acquisition/Capital Asset Line of Credit
Advance as a debit on the Loan Account. Agent may
also record in the Loan Account, in accordance with
customary banking procedures, all fees, accrued and
unpaid interest, late fees, usual and customary bank
charges for the maintenance and administration of
accounts maintained by Obligors and other fees and
charges which are properly chargeable to Obligors in
connection with the Acquisition/Capital Asset Line of
Credit Advances and all payments, subject to
collection, made by Obligors on account of or to
Agent.
(5) Obligors' right to request advances under the
Acquisition/Capital Asset Line of Credit shall
terminate on the Amortization Date unless sooner
terminated by Agent in accordance with the terms of
this Agreement.
f. Continuation of Interest Periods. Any LIBOR Rate Loan under
the Acquisition/Capital Asset Line of Credit Notes shall be
continued as such (less the amount of principal that is due
and payable at the end of such expiring Interest Period) for
an Interest Period of one (1) month at the end of each
Interest Period, provided that no LIBOR Rate Loan may be
continued as such: (i) at a time when any Event of Default (or
event or condition which would constitute an Event of Default
but for the giving of notice or passage of time or both) has
occurred and is continuing and (ii) after the date that is one
(1) month prior to the Termination Date, in which event the
principal amount under the Acquisition/Capital Asset Line of
Credit Notes shall bear interest as a Prime Rate Loan.
g. Payments of Interest. Prior to April 1, 2005, monthly payments
of interest on the Acquisition/Capital Asset Line of Credit
Notes shall be due and payable in arrears on the last day of
each Interest Period with respect to LIBOR Rate Loans and, in
the event LIBOR Rate Loans are no longer available in
accordance with the terms of this Agreement, on the first day
of each month with respect to Prime Rate Loans. Commencing on
April 1, 2005, monthly payments of interest on the
Acquisition/Capital Asset Line of Credit Notes shall be due
and payable in arrears on the first day of each month (or if
such day is not a Business Day, on the first Business Day
thereafter) until the entire principal amount of the
Acquisition/Capital Asset Line of Credit Loan is paid in full.
24
h. Payments of Principal. Obligors shall pay monthly installments
of principal under the Acquisition/Capital Asset Line of
Credit Notes on the first day of each month (or if such day is
not a Business Day, on the first Business Day thereafter),
commencing May 1, 2005, in the amounts of:
(1) one twelfth of ten percent (10%) of the principal
amount outstanding under the Acquisition/Capital
Asset Line of Credit on the Amortization Date for
each month from May 2005 through April 2006;
(2) one twelfth of fifteen percent (15%) of the principal
amount outstanding under the Acquisition/Capital
Asset Line of Credit on the Amortization Date for
each month from May 2006 through April 2007;
(3) one twelfth of twenty percent (20%) of the principal
amount outstanding under the Acquisition/Capital
Asset Line of Credit on the Amortization Date for
each month from May 2007 through February 2008.
If not sooner paid, the aggregate outstanding principal amount of the
Acquisition/Capital Asset Line of Credit Notes, together with all
accrued and unpaid interest thereon and any other fees or charges then
due, shall be due and payable on the Termination Date.
i. Prepayments.
(1) Obligors may prepay the principal amount of the
Acquisition/Capital Asset Line of Credit, or any
portion thereof, only upon at least three (3)
Business Days prior written notice to Agent (which
notice shall be irrevocable and shall state the
amount to be prepaid). If Obligors refinance the
Acquisition/Capital Asset Line of Credit, or any part
thereof, with any other entity, Obligors shall pay to
Agent a prepayment premium equal to one percent (1%)
of the amount prepaid if the prepayment is made less
than two years from the Date of Closing.
(2) If any prepayment of a LIBOR Rate Loan occurs on a
day other than the last day of the Interest Period,
Obligors shall pay to Agent, upon request of Agent,
such amount or amounts as shall be sufficient (in the
reasonable opinion of Agent) to compensate Lenders
for any loss, cost, or expense incurred as a result
of: (i) any payment on a date other than the last day
of the Interest Period; and
25
(ii) any failure by any Obligor to make a prepayment
on the date for payment specified in any Obligor's
written notice.
(3) In the event of any prepayments, the Obligors shall
pay all accrued interest on the principal amount
being paid to the date of the prepayment and, in the
case of prepayments in full, all fees, charges,
costs, expenses and other amounts then due hereunder.
(4) Any partial prepayment shall be applied against
principal payments in the inverse order of maturity
and shall not reduce the monthly payments of
principal due under the Acquisition/Capital Asset
Line of Credit.
(5) If by reason of an Event of Default, Agent elects to
declare the Notes to be immediately due and payable,
then any prepayment premiums and other amounts which
would have been due if a prepayment been made at that
time shall become due and payable in the same manner
as though the Obligors had exercised such right of
prepayment.
2.4 Standby Letters of Credit.
a. Amount. Subject to the terms and conditions contained in this
Agreement, Agent on behalf of the Lenders and in reliance upon
the agreement of the Lenders set forth in Section 2.4 h.
hereof agrees, in its individual capacity, to issue Standby
Letters of Credit for drawing in U.S. Dollars for the account
of Obligors, from time to time during the term of the
Revolving Line of Credit in an amount not to exceed the lesser
of (i) $6,500,000, less (a) the aggregate principal amount
outstanding under the Revolving Line of Credit Notes at the
time of issuance of the Standby Letter of Credit, (b) the
maximum amount available to be drawn under all previously
issued and outstanding Standby Letters of Credit (assuming all
conditions for drawing have been satisfied) at the time of
issuance of the Standby Letter of Credit, and (c) all amounts
drawn under previously issued Standby Letters of Credit for
which the Lender has not been reimbursed by the Obligors at
the time of issuance of the Standby Letter of Credit, or (ii)
$2,000,000.
b. Notices of Issuance. Requests for the issuance of Standby
Letters of Credit (or to amend, renew or extend an outstanding
Standby Letter of Credit) may be made only once per Business
Day and shall be made on notice, given not later than 11:00
a.m. (Hartford, Connecticut time) two (2) Business Days prior
to the date of the proposed issuance or amendment, renewal or
extension, by any Obligor to Agent. Each such notice (which
notice shall be irrevocable and binding on the Obligors) of
26
issuance, amendment, renewal or extension shall be by
telephone, confirmed immediately in writing, or by telex or
telecopier, specifying therein the (i) requested date of such
issuance, amendment, renewal or extension (which shall be a
Business Day), (ii) requested principal amount of such Standby
Letter of Credit in U.S. Dollars, (iii) requested expiration
date of such Standby Letter of Credit (which shall comply with
subsection (c) below), (iv) whether such Standby Letter of
Credit is renewable, and (v) names and addresses of the
intended account party and the beneficiary of such Standby
Letter of Credit, and shall be accompanied by a fully executed
application and agreement for letter of credit as Agent may
require of Obligors for use in connection with such requested
Standby Letter of Credit (each a "Reimbursement Agreement")
and such Obligor's payment of the Agent's then current Standby
Letter of Credit fee. If the requested form of such Standby
Letter of Credit is acceptable to Agent, Agent will make such
Standby Letter of Credit available to such Obligor at its
office referred to in the first paragraph of this Agreement or
as otherwise agreed with such Obligor in connection with such
issuance. In the event and to the extent that the provisions
of any Reimbursement Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
c. Form of Letter of Credit. Each Standby Letter of Credit shall,
among other things, (i) be in a form acceptable to Agent, and
(ii) be governed by, and shall be construed in accordance
with, the laws or rules designated in such Standby Letter of
Credit, or if no such laws or rules are designated, the
Uniform Customs and, as to matters not governed by the Uniform
Customs, the laws of the State of Connecticut (without regard
to its conflict of laws rules).
d. Expiry Dates. Each Standby Letter of Credit shall provide that
it expires no later than the close of business seven days
prior to the expiration date for the Revolving Line of Credit,
unless such Standby Letter of Credit expires by its terms on
an earlier date.
e. Payment for Standby Letter of Credit Draws. Agent shall have
the right (but not the obligation), in its sole and absolute
discretion, to effect reimbursement by Obligors to Agent of
any payment made by Agent in connection with a drawing made
under a Standby Letter of Credit which is not reimbursed to
Agent within the time specified for reimbursement in the
applicable Reimbursement Agreement by making an advance on the
Revolving Line of Credit for the account of the Obligors. Each
such advance shall bear interest at the Prime Rate. Agent
shall endeavor to give Obligors forty-eight (48) hours prior
notice before making such an advance pursuant to this Section
2.4 e. but failure to provide such notice shall not affect
Agent's right to make such an advance.
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f. No Liability of Lender. Obligors assume all risks of the acts
or omissions of any beneficiary or transferee of any Standby
Letter of Credit with respect to the use of such Standby
Letter of Credit, and Obligors' obligations with respect to
payments made by Agent under any Standby Letter of Credit
shall be absolute, unconditional and irrevocable, irrespective
of: (i) any lack of validity or enforceability of any Standby
Letter of Credit, or any term or provision therein, alleged by
a party other than Agent; (ii) the existence of any dispute,
claim, setoff, defense or other right that Obligors or any
other person may have against the beneficiary under any
Standby Letter of Credit, Agent, any Lender or any other
person, whether in connection with this Agreement, any other
Loan Document or any other related or unrelated agreement or
transaction; (iii) any draft or other document presented under
a Standby Letter of Credit proving to be forged, fraudulent,
invalid or, subject to the provisions of the next paragraph,
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or (iv) any error,
omission, interruption or delay in any transmission, dispatch
or delivery of any message or advice, however transmitted, in
connection with any Standby Letter of Credit.
Without limiting the generality of the foregoing, it
is expressly understood and agreed that the absolute and
unconditional obligation of Obligors hereunder to reimburse
Standby Letter of Credit drawings will not be excused by the
negligence of Agent or any Lender. However, the foregoing
shall not be construed to excuse Agent from liability to
Obligors to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby
waived by Obligors to the fullest extent permitted by law)
suffered by Obligors that are caused by (x) Agent's willful
misconduct or gross negligence in determining whether
documents presented under any Standby Letter of Credit comply
with the terms of the Standby Letter of Credit, or (y) Agent's
willful failure to make lawful payment under a Standby Letter
of Credit after presentation to it of a draft or documents
strictly complying with the terms and conditions of such
Standby Letter of Credit. It is understood that Agent may,
subject to the standard of gross negligence or willful
misconduct, accept documents that appear on their face to be
in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and,
in making any payment under any Standby Letter of Credit (1)
Agent's exclusive reliance on the documents presented to it
under such Standby Letter of Credit as to any and all matters
set forth therein, including reliance on the amount of any
draft presented under such Standby Letter of Credit, whether
or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented
pursuant to such Standby Letter of Credit proves to be
insufficient in any respect, if such document on its face
appears to be in order, and whether or
28
not any other statement or any other document presented
pursuant to such Standby Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or
untrue in any respect whatsoever, and (2) any noncompliance in
any immaterial respect of the documents presented under such
Standby Letter of Credit with the terms thereof shall, in each
case, be deemed not to constitute willful misconduct or gross
negligence of Agent.
g. Interim Interest. If Agent shall make any payment in respect
of a Standby Letter of Credit, then, unless Obligors shall
reimburse such payment in full on the date specified for
reimbursement in the applicable Reimbursement Agreement, the
unpaid amount thereof shall bear interest for each day from
and including the date of such payment to but excluding the
date of payment, at the Prime Rate.
h. Reimbursement Obligations of Lenders. Each Lender severally
agrees that it shall be absolutely liable, without regard to
the occurrence of any Event of Default, any event which with
the giving of notice, the passage of time, or both, would
become an Event of Default or any other condition precedent
whatsoever, to the extent of such Lender's Commitment
Percentage, to reimburse the Agent on demand for the amount of
each draft paid by the Agent under each Standby Letter of
Credit to the extent that such amount is not reimbursed by the
Obligors within the time specified for reimbursement in the
applicable Reimbursement Agreement, except to the extent that
honoring such draft constitutes gross negligence or willful
misconduct of Agent. No later than 3:00 p.m. (Boston time) on
the Business Day next following the receipt of such demand,
each Lender shall make available to the Agent, at the Agent's
office, in immediately available funds, such Lender's
Commitment Percentage of such unpaid draft, together with an
amount equal to the product of (a) the average, computed for
the period referred to in clause (c) below, of the weighted
average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period,
times (b) the amount equal to such Lender's Commitment
Percentage of such unpaid ----- draft, times (c) a fraction,
the numerator of which is the number of days that elapse from
and including the date the Agent paid the draft presented for
honor or otherwise made payment to the date on which such
Lender's Commitment Percentage of such unpaid draft shall
become immediately available to the Agent, and the denominator
of which is 360. Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating
interest in the Agent's right to reimbursement under the
applicable Reimbursement Agreement in an amount equal to such
payment. Each Lender shall share in accordance with its
participating interest in any interest which accrues pursuant
to Section 2.4 g. hereof and in any payments made by Obligors
in connection therewith. The responsibility of
29
the Agent to the Lenders shall be only to determine that the
documents (including each draft) delivered under each Standby
Letter of Credit in connection with such presentment shall be
in conformity in all material respects with such Standby
Letter of Credit. Agent shall pay to each Lender its Lender's
Commitment Percentage of any annual commission (but not any
fee or commission in connection with the issuance of such
Standby Letter of Credit) received by Agent from the Obligors
in connection with such Standby Letter of Credit promptly
after such receipt by Agent.
2.5 Payments to Agent. Obligors shall make all payments due under this
Agreement and the Notes to Agent and Agent shall distribute such
payments to the Lenders in accordance with the Agency Agreement.
2.6 Illegality. Notwithstanding any other provisions hereof, if any
applicable law or governmental regulation, guideline, order or
directive, or any change therein or in the interpretation or
application thereof by any governmental authority charged with the
interpretation or the administration thereof (whether or not having the
force of law) shall make it unlawful for any Lender to make or maintain
LIBOR Rate Loans as contemplated by this Agreement and the Notes: (i)
the obligation of the Lenders to continue LIBOR Rate Loans shall
forthwith be canceled, and (ii) such amounts then outstanding shall be
automatically converted, without notice, to Prime Rate Loans on the
last day of the then current Interest Period or within such earlier
time as required by law. If any such conversion of LIBOR Rate Loans is
made on a day that is not the last Business Day of the then current
Interest Period applicable thereto, Obligors shall pay the Agent such
amount or amounts required pursuant to Section 2.9 below.
2.7 Basis for Determining LIBOR Inadequate or Unfair. In the event that the
Agent shall have determined (which determination, absent manifest
error, shall be conclusive and binding upon Obligors) that (i) by
reason of circumstances affecting the LIBOR market, adequate and
reasonable means do not exist for determining the LIBOR Rate, or (ii)
Dollar deposits in the relevant amount and for the relevant maturity
are no longer available to the Lenders in the LIBOR market, or (iii)
the continuation of LIBOR Rate Loans has been made impractical or
unlawful by the occurrence of a contingency that materially and
adversely affects the LIBOR market, or (iv) the LIBOR Rate will not
adequately and fairly reflect the cost to the Lenders of maintaining
LIBOR Rate Loans, or (v) the LIBOR Rate shall no longer represent the
effective cost to the Lenders of U.S. Dollar deposits in the relevant
market for deposits in which it regularly participates, the Agent shall
give the Obligors notice of such determination as soon as practicable.
If such notice is given all LIBOR Rate Loans shall be automatically
converted, without notice, to Prime Rate Loans effective on the last
Business Day of the then current Interest Period applicable thereto.
Until such notice has been withdrawn, the LIBOR Rate shall not be
continued.
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2.8 Increased Costs. In the event that applicable law, treaty or regulation
or directive from any government, governmental agency or regulatory
authority, or any change therein or in the interpretation or
application thereof, or compliance by any Lender or Agent with any
request or directive (whether or not having the force of law) from any
central bank or government, governmental agency or regulatory
authority, shall:
a. subject any Lender or Agent to any tax of any kind whatsoever
(except taxes on the overall net income of such entity) with
respect to this Agreement, any Note or any of the loans made
by it, or change the basis of taxation of payments to any
Lender or Agent in respect thereof (except for changes in the
rate of tax on the overall net income of such entity);
b. impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirements against
assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by,
or any other acquisition of funds by, any office of any Lender
or Agent, including (without limitation) pursuant to
Regulations of the Board of Governors of the Federal Reserve
System; or
c. in the opinion of any Lender or Agent, cause any Note or any
loan made under any Note or this Agreement to be included in
any calculations used in the computation of regulatory capital
standards; or
d. impose on any Lender or Agent any other condition;
e. and the result of any of the foregoing is to increase the cost
to any Lender or Agent, by an amount that such entity deems to
be material, of making, converting into, continuing and/or
maintaining the Loans and the Notes or to reduce the amount of
any payment (whether of principal, interest or otherwise) in
respect of any of such Loans, then, in any case, the Obligors
shall promptly pay such entity, upon its demand, such
additional amounts necessary to compensate such entity for
such additional costs or such reduction in payment, as the
case may be (collectively the "Additional Costs"). The Lender
or Agent affected thereby shall certify the amount of such
Additional Costs to the Obligors, and such certification,
absent manifest error, shall be deemed conclusive. In
determining such amount, the Lender or Agent affected thereby
shall use any reasonable averaging and attribution methods.
2.9 Indemnity. The Obligors agree to indemnify the Lenders and Agent and to
hold the Lenders and Agent harmless from any loss (including any of the
additional costs referred to above and any lost profits) or expense
that it may sustain or incur as a consequence of (i) a default by any
Obligor in the payment of the principal of
31
or interest due on any Note, (ii) the making of a prepayment of any
principal amount bearing interest based upon the LIBOR Rate on a day
which is not the last day of the then current Interest Period
applicable thereto or (iii) the failure by the Obligors to complete a
borrowing of or conversion into a LIBOR Rate Loan after notice thereof
has been given, including, but not limited to, in each case any such
loss or expense arising from the reemployment of funds obtained by it
or from fees, interest or other amounts payable to terminate the
deposits from which such funds were obtained. The Agent shall prepare a
certificate as to any additional amounts payable to it pursuant to this
Section, which certificate shall be submitted by the Agent to the
Obligors and shall, absent manifest error, be deemed conclusive.
2.10 Tax Indemnity. All payments made by the Obligors under this Agreement
and the Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (as hereafter defined),
excluding net income taxes and franchise taxes (imposed in lieu of net
income taxes) imposed on any Lender as a result of a present or former
connection between such Lender and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising
solely from such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or
any Note). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to any Lender
hereunder or under any Note, the amounts so payable to such Lender
shall be increased to the extent necessary to yield to such Lender
(after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Agreement. Whenever any Non-Excluded Taxes are payable by the
Obligors, as promptly as possible thereafter the Obligors shall send to
such Lender a certified copy of an original official receipt received
by the Obligors showing payment thereof. If the Obligors fail to pay
any Non-Excluded Taxes when due to the appropriate taxing authority or
fail to remit to such Lender the required receipts or other required
documentary evidence, the Obligors shall indemnify such Lender for any
incremental taxes, interest or penalties that may become payable by
such Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder. As used
in this Section, "Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
32
2.11 Lawful Interest. All agreements between Obligors and Lenders are hereby
expressly limited so that in no event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to any Lender or
Agent for the use or the forbearance of the indebtedness evidenced
hereby exceed the maximum permissible under applicable law. As used
herein, the term "applicable law" shall mean the law in effect as of
the date hereof provided, however, that in the event there is a change
in the law which results in a higher permissible rate of interest, then
this Agreement and the Notes shall be governed by such new law as of
its effective date. In this regard, it is expressly agreed that it is
the intent of Obligors and Lenders in the execution, delivery and
acceptance of each Note to contract in strict compliance with the laws
of the State of Connecticut from time to time in effect. If, under or
from any circumstances whatsoever, fulfillment of any provision hereof,
of any Note or of any of the Loan Documents at the time of performance
of such provision shall be due, shall involve transcending the limit of
such validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limits of such
validity, and if under or from any circumstances whatsoever any Lender
or the Agent should ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance
evidenced hereby and not to the payment of interest. This provision
shall control every other provision of all agreements between Obligors,
the Lenders and the Agent.
2.12 Due Date; Late Charge. If any Note or any payment hereunder or under
any Note becomes due on a day which is not a Business Day, the due date
of such Note or payment shall be extended to the next succeeding
Business Day and such extension of time shall be included in computing
interest and fees in connection with such payment. Without limiting the
Agent's and Lenders' rights and remedies with respect to the Event of
Default that will have occurred, if the entire amount of any required
principal and/or interest payment is not paid in full within fifteen
(15) days after the same is due, Obligors shall pay to the Agent a late
fee equal to the greater of five percent (5%) of the required payment
or fifteen dollars ($15.00).
2.13 Direct Debit of Principal and Interest. Obligors agree that Agent may
directly debit any Obligor's accounts held by Xxxxxxx Bank for any
principal or interest payment on any Obligation when such Obligation
becomes due and payable.
2.14 Agency Fees. The Obligors shall pay to the Agent on the Date of Closing
and on each anniversary thereof an annual agency fee in the amount of
Twenty Thousand Dollars ($20,000).
2.15 Unused Fee. The Obligors shall pay to the Agent for the benefit of the
Lenders by January 10, 2005 and April 10, 2005 a fee equal to one
quarter of one percent
33
(0.25%) of the difference obtained by subtracting from $10,000,000 the
average daily principal amount outstanding on the Acquisition/Capital
Asset Line of Credit (excluding any amount used to prepay Subordinated
Debt) for the three full calendar months prior to such payment date.
2.16 Interest Rate Hedge. The Obligors must hedge their interest rate
exposure on at least fifty percent (50%) of the principal balance at
any time outstanding under the Term Loan and the Acquisition/Capital
Asset Line of Credit by entering into an interest rate hedge agreement
with Xxxxxxx Bank or another counterparty acceptable to Agent. Any
documentation relating to such hedge shall contain standard provisions,
including make whole provisions, acceptable to Agent.
2.17 Several Obligations of Lenders. The obligations of the Lenders under
the Notes, this Agreement and the other Loan Documents are the several
obligations of each Lender in accordance with and to the extent of such
Lender's Lender's Commitment Percentage and are not the joint
obligations of the Lenders. The relation of the Lenders under this
Agreement, the Agency Agreement and the other Loan Documents shall not
create any joint venture or partnership among the Lenders.
2.18 Replacement of Lenders. If any Lender (an "Affected Lender") fails to
make available to Agent its share of any advance for any Loan, the
Obligors may, so long as no Event of Default or event which with the
giving of notice or the passage of time would constitute an Event of
Default has occurred and is then continuing, within ninety (90) days of
such failure, by notice (a "Replacement Notice") in writing to the
Agent and the Lenders (i) request the Affected Lender to cooperate with
the Obligors in obtaining a replacement Lender satisfactory to
non-Affected Lenders having an aggregate Lender's Commitment Percentage
equal to or greater than fifty percent (50%), the Agent and the
Obligors (the "Replacement Lender"); (ii) request the non-Affected
Lenders to acquire and assume all of the Affected Lender's Loans as
provided herein, but none of such Lenders shall be under an obligation
to do so; or (iii) designate a Replacement Lender approved by
non-Affected Lenders having an aggregate Lender's Commitment Percentage
equal to or greater than fifty percent (50%) and the Agent, which
consent shall not be unreasonably withheld or delayed. If any
satisfactory Replacement Lender shall be obtained, and/or if any one or
more of the non-Affected Lenders shall agree to acquire and assume all
of the Affected Lender's Loans, then such Affected Lender shall sell to
such Replacement Lender or non-Affected Lenders, as the case may be, at
par value, such Affected Lender's Notes and its interests in the Loans,
based upon the outstanding principal amounts thereof at the time of
purchase, plus, to the extent actually paid by Obligors and collected
by Agent, such Affected Lender's pro-rata share in accordance with its
Lender's Commitment Percentage of interest, fees (excluding agency
fees), late charges, costs and expenses and minus such Affected
Lender's pro-rata share in accordance with its Lender's Commitment
Percentage of costs and expenses owed to the
34
Agent and not reimbursed by the Obligors. The Replacement Lender or
non-Affected Lenders, as the case may be, shall also pay to the Agent
at the time of purchase such Affected Lender's pro-rata share in
accordance with its Lender's Commitment Percentage of costs and
expenses owed to the Agent and not reimbursed by the Obligors. The
Agent shall distribute to such Affected Lender the Affected Lender's
Lender's Commitment Percentage of such unpaid interest, fees, late
charges, costs and expenses and unreimbursed costs and expenses owed to
the Agent if and when such amounts are collected by Agent from the
Obligors. In the event of any purchase of an Affected Lender's Notes
and interests in the Loans pursuant to this Section, notwithstanding
any provisions of the Loan Documents, including the Notes, the Affected
Lender shall not be entitled to any prepayment premium or fee in
connection with such purchase. At the time of purchase, the Affected
Lender shall deliver its Notes to the Agent with appropriate
endorsements thereon and the Obligors, the Lenders and the Agent shall
execute amendments to this Agreement, the Agency Agreement and any of
the other Loan Documents which Agent deems appropriate to evidence the
purchase of such Affected Lender's Notes and interests in the Loans and
the Obligors shall issue replacement Notes to such Replacement Lender
and/or non-Affected Lenders, as the case may be. Upon any such purchase
and payment to the Affected Lender of the purchase price therefor, all
rights and obligations of the Affected Lender under this Agreement, the
Agency Agreement and the other Loan Documents, other than the right to
receive payments from the Agent as set forth in this section if and
when such amounts are collected by Agent from the Obligors and its
rights and obligations relating to indemnification, shall terminate.
SECTION 3. Collateral.
3.1 As security for the payment and performance of all Obligations,
Obligors hereby grant to Agent:
a. A first priority security interest in all of the Collateral,
subject only to the Prior Encumbrances.
b. A first priority security interest in all proceeds of any and
all insurance on the Collateral.
c. A first priority security interest in all proceeds and
products of any item or type of the Collateral, subject only
to Prior Encumbrances.
3.2 [Intentionally omitted].
3.3 Pledge of Membership Interests. Holdings shall pledge to Agent the
membership interests it owns in Crystal Rock LLC pursuant to the Pledge
Agreement.
35
3.4 Location of Collateral. All Collateral is and will be owned by
Obligors, free of all liens and encumbrances other than Permitted
Encumbrances and liens granted to the Agent and shall be kept by
Obligors at the locations listed on Schedule 3.4. Obligors will not,
without Agent's prior written approval, remove the Collateral
therefrom, except for the purposes of sale in the ordinary course of
business. All bottling facilities of the Obligors are identified as
such on Schedule 3.4, the tenant for each leased location is as
identified on Schedule 3.4 and the location of each public warehouse is
identified as such on Schedule 3.4.
3.5 Defend Collateral. Obligors shall defend the Collateral against all
claims and demands of all persons at any time claiming the same or any
interest therein and, in the event the Agent's security interest in the
Collateral, or any part thereof, would be impaired by an adverse
decision, allow the Agent to contest or defend any such claim or demand
in the Obligors' names and Obligors agree to pay, upon demand, the
Agent's reasonable costs, charges and expenses, including, without
limitation, attorney's fees, in connection therewith.
3.6 Financing Statements. From time to time, at the request of the Agent,
Obligors shall execute, if necessary, deliver and file one or more
financing statements on Form UCC-1 or other instruments, and do all
other reasonable acts as the Agent deems necessary or desirable to
perfect fully or to keep perfected its security interest in the
Collateral and pay, upon demand, all reasonable expenses, including,
without limitation, attorney's fees, incurred by the Agent in
connection therewith. The Obligors hereby irrevocably appoint the Agent
their attorney-in-fact to execute, if necessary, and file all such
UCC-1 forms or other instruments, documents or agreements deemed
necessary or desirable to fully perfect or keep perfected the Agent's
security interest in the Collateral.
3.7 Further Assurances Re Inventory. Obligors shall perform any and all
reasonable steps requested by Agent to perfect Agent's security
interest in the Inventory, such as leasing warehouses to Agent or
Agent's assignee, placing and maintaining signs, appointing custodians,
executing and filing financing, amendment or continuation statements in
form and substance satisfactory to Agent, maintaining stock records and
transferring Inventory to warehouses. Upon the occurrence and during a
continuance of an Event of Default, if any Inventory is in the
possession or control of any of Obligors' agents or processors,
Obligors shall notify such agents or processors of Agent's security
interest therein, and, upon request, instruct them to hold all such
Inventory for Agent's account and subject to Agent's instructions. A
physical listing of all Inventory, wherever located, shall be taken by
Obligors at least annually and whenever requested by Agent, and a copy
of each such physical listing shall be provided to Agent. Agent may
examine and inspect the Inventory upon reasonable notice during
business hours.
3.8 Further Assurance Re Receivables. Obligors shall place notations upon
Obligors' books of account to disclose the assignment of all
Receivables to Agent or Agent's
36
security interest therein and shall perform all other reasonable steps
requested by Agent to create and maintain in Agent's favor a valid
first priority security interest, assignment or lien in, of or on all
Receivables and all other security held by or for Agent.
3.9 [Intentionally omitted]
3.10 Revised Article 9. In connection with the revised Article 9 of the
Uniform Commercial Code substantially in the form approved in 1998 by
the American Law Institute and the National Conference of Commissioners
on Uniform State Law ("REVISED ARTICLE 9"), the Obligors hereby
acknowledge and agree with the Agent as follows:
a. In applying the law of any jurisdiction in which Revised
Article 9 is in effect, the Collateral is all assets of the
Obligors, whether or not within the scope of Revised Article
9. The Collateral shall also include, without limitation, the
following categories of assets as defined in Revised Article
9: goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents,
accounts (including health-care-insurance receivables),
chattel paper (whether tangible or electronic), deposit
accounts, letter-of-credit rights (whether or not the letter
of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, general
intangibles (including payment intangibles and software),
supporting obligations and any and all proceeds of any
thereof, wherever located, whether now owned and hereafter
acquired. If the Obligors (or any of them) shall at any time,
whether or not Revised Article 9 is in effect in any
particular jurisdiction, acquire a commercial tort claim, as
defined in Revised Article 9, the Obligors shall immediately
notify the Agent in a writing signed by the Obligors of the
brief details thereof and grant to the Agent in such writing a
security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in
form and substance satisfactory to the Agent. The Agent may at
any time and from time to time, pursuant to the provisions of
this Agreement, file financing statements, continuation
statements and amendments thereto that describe the Collateral
as "all assets of the Obligors" or words of similar effect and
which contain any other information required by Part 5 of
Revised Article 9 for the sufficiency or filing office
acceptance of any financing statement, continuation statement
or amendment, including whether each Obligor is an
organization, the type of organization and any organization
identification number issued to each of the Obligors. The
Obligors shall furnish any such information to the Agent
promptly upon request. Any such financing statements,
continuation statements or amendments may be signed by the
Agent on behalf of the Obligors (or any of them), as provided
in this Agreement, and may be filed at any time in any
37
jurisdiction whether or not Revised Article 9 is then in
effect in that jurisdiction.
b. The Obligors shall at any time and from time to time, whether
or not Revised Article 9 is in effect in any particular
jurisdiction, take such steps as the Agent may reasonably
request for the Agent (a) to obtain an acknowledgement, in
form and substance satisfactory to the Agent, of any bailee
having possession of any of the Collateral that the bailee
holds such Collateral for the Agent, (b) to obtain "control"
of any investment property, deposit accounts, letter-of-credit
rights or electronic chattel paper (as such terms are defined
in Revised Article 9 with corresponding provisions in Sections
9-104, 9-105, 9-106 and 9-107 relating to what constitutes
"control" for such items of Collateral), with any agreements
establishing control to be in form and substance satisfactory
to the Agent, and (c) otherwise to insure the continued
perfection and priority of the Agent's security interest in
any of the Collateral and of the preservation of its rights
therein, whether in anticipation and following the
effectiveness of Revised Article 9 in any jurisdiction.
c. Nothing contained herein shall be construed to narrow the
scope of the security interest granted hereby 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 the Agent hereunder except as (and then only to
the extent) specifically mandated by Revised Article 9 to the
extent then applicable.
3.11 Security Interest and License re Intangibles. The Obligors hereby grant
to the Agent a security interest in and following the occurrence and
during the continuance of an Event of Default, a non-exclusive license
and right to use any and all patents, copyrights, tradenames,
trademarks and all applications therefor, and licenses to any patent,
copyright, tradename or trademark that the Obligors now owns, has the
right to use (to the extent permitted by the governing document) or may
hereafter own or acquire the right to use (to the extent permitted by
the governing document). The Agent's security interest and
non-exclusive license, as set forth in this subparagraph, shall
specifically include all rights of the Obligors which may be necessary
in order for the Agent to exercise or get the full benefit and value
from the security interest set forth in this Agreement.
3.12 Mortgages on Real Estate. At least thirty (30) days prior to any
purchase of real estate by any of the Obligors, the Obligors shall
deliver to Agent notice of such intended purchase and all documentation
and information which the Agent shall request in connection with such
real estate, which documentation and information may include, without
limitation, environmental reports, engineering reports, title reports,
zoning reports and surveys. If the Agent so requests, which it may do
in
38
its sole and absolute discretion, the Obligors will deliver to Agent at
the time of purchase a mortgage on the real estate being purchased in
form and content satisfactory to Agent together with, if the Agent so
requests, a title insurance policy in form and content satisfactory to
Agent insuring the lien of the mortgage as a valid first priority
mortgage lien, an opinion letter relating to such real estate and
mortgage in form and substance satisfactory to Agent and such other
documentation as Agent may reasonably request.
3.13 Water Contracts and Licenses. At least ten (10) days prior to entering
into any material contract or license agreement by any of the Obligors
relating to the supply of water, the Obligors shall deliver to Agent
notice of such intended action and a complete copy of such contract or
license agreement. All such contracts and license agreements shall
specifically state that they are assignable to the Agent as security
for the Obligations and to any subsequent lenders and Obligors shall
take all steps necessary to complete such assignment to Agent,
including, without limitation, the execution and delivery to Agent of
an assignment of such contract or license agreement in form and content
satisfactory to Agent.
3.14 Acquisitions. At least ten (10) days prior to consummation of an
Acquisition which does not require the consent of the Agent pursuant to
Section 6.4 and for which the Obligors are not requesting an advance
under the Acquisition/Capital Asset Line of Credit, the Obligors shall
deliver to Agent notice of such intended Acquisition and such other
information as Agent shall request in connection with such Acquisition.
Without in any way waiving or limiting the other covenants and
requirements contained in this Agreement and the other Loan Documents,
the Obligors shall take all actions reasonably requested by Agent in
connection with any Acquisition to perfect Agent's security interest in
the stock or other ownership interests or assets acquired in such
Acquisition.
3.15 Costs and Expenses. Obligors will pay upon demand all costs and
expenses incurred by Agent, including, without limitation, reasonable
counsel fees, in connection with any of the actions set forth in this
Section 3.
SECTION 4. Representations, Warranties and General Covenants. On the date hereof
and in order to induce Lenders and Agent to enter into this Agreement, Obligors
represent, warrant and covenant the following:
4.1 Organization and Qualification. Holdings is and will continue to be a
corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation and is and will continue to
be duly qualified and licensed to do business in each other state in
which the nature of its business makes such qualification necessary.
Crystal Rock LLC is and will continue to be a limited liability company
duly organized, validly existing and in good standing under the laws of
the state of its organization and is and will continue to be duly
qualified and licensed to do business in each other state in which the
nature of its business
39
makes such qualification necessary. Each Obligor has all requisite
material permits, authorizations and licenses, without unusual
restrictions or limitations, to own, operate and lease its properties
and to conduct the business in which it is presently engaged, all of
which are in full force and effect.
4.2 Records. The Certificate of Incorporation and all amendments thereto of
Holdings and the Certificate of Formation and Limited Liability Company
Agreement of Crystal Rock LLC have been duly filed and are in proper
order. All capital stock issued by Holdings and outstanding has been
properly issued and is fully paid and non-assessable, all membership
interests issued by Crystal Rock LLC and outstanding have been properly
issued and all books and records of each Obligor, including but not
limited to its minute books, bylaws, and books of account, are accurate
and up to date in all material respects and will be so maintained.
4.3 Power and Authority. Each Obligor has the corporate or limited
liability company power, as the case may be, to execute, deliver and
carry out the terms of the Loan Documents and to incur the Obligations
and has taken all necessary corporate or limited liability company
action to authorize the execution, delivery and performance by it of
the Loan Documents.
4.4 No Legal Bar. The execution and delivery of the Loan Documents and
compliance by Obligors with the terms and provisions thereof do not, on
the date hereof, violate any provision of any existing law or
regulation or any writ or decree of any court or governmental
instrumentality, or any agreement or instrument to which any of the
Obligors is a party or which is binding upon any of them or their
assets, and will not result in the creation or imposition of any lien,
security interest, charge or encumbrance of any nature whatsoever upon
or in any of their assets, except as contemplated by the Loan
Documents; no consent of any other party, and, other than the filing of
UCC-1 financing statements, no consent, license, approval or
authorization of or registration or declaration with any governmental
bureau or agency, is required in connection with the execution,
delivery, performance, validity and enforceability of any of the Loan
Documents; and the Loan Documents, upon the execution and delivery
thereof and the execution or acceptance thereof by the Lenders and
Agent, will be legal, valid, binding and enforceable obligations of the
Obligors in accordance with their respective terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws of general application affecting
enforcement of creditors' rights generally and the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and the discretion of the court.
4.5 Title; No Liens. Except as set forth on Schedule 4.5, each of the
Obligors has good and marketable title to all of its Property that it
owns, subject to no mortgage, security interest, pledge, lien,
encumbrance or other charge.
40
4.6 No Litigation. Except as set forth on Schedule 4.6, there is no
litigation, administrative proceeding, hearing or to the knowledge of
the Obligors, investigation of or before any governmental body
presently pending or, to the knowledge of any of the Obligors,
threatened against it or any of its Property and if all of the matters
set forth on Schedule 4.6 were determined adversely to the Obligors,
such adverse determinations, either individually or in the aggregate,
would not have a material adverse effect on the Obligors, their
businesses or their Property taken as a whole or on the Loan Documents
or the rights and remedies granted therein.
4.7 No Default. None of the Obligors are, on the date hereof, in default
with respect to the payment or performance of any of their Obligations
or other Indebtedness or in the performance of any covenants or
conditions to be performed by any of them pursuant to the terms and
provisions of any Loan Documents or in any material respect, any other
indenture, agreement or instrument to which any of them are a party or
by which any of them are bound, and none of the Obligors has received a
notice of default under any of the foregoing.
4.8 Compliance with Laws. Each Obligor has complied in all material
respects with all applicable laws, ordinances, rules and regulations of
the United States of America, and all states, counties, municipalities
and agencies of any governmental authority thereof.
4.9 Taxes. Each Obligor has filed or caused to be filed or obtained
extensions for the filing of, and will continue to file and cause to be
filed, all federal, state and local tax returns required by law to be
filed, and has paid and will continue to pay all taxes shown to be due
and payable on such returns or on any assessment made against it,
except if being contested in good faith, if adequate provision has been
made therefor on its books of account and if requested by Agent, a
reserve satisfactory to Agent has been set aside to pay such taxes,
interest, penalties and costs associated therewith. No claims have been
asserted with respect to such taxes which are not reflected in the
financial statements which have been furnished by Obligors to Lenders.
4.10 Financial Condition. Holdings has submitted to Lenders various
financial statements and information as of October 31, 2003 and
subsequent Form 10-Qs through the date hereof, and represents that all
of such financial information is true and correct; that such financial
information fairly presents the consolidated financial condition and
results of operations of Holdings and its Subsidiaries as of the dates
thereof and for the periods indicated therein; that such financial
statements have been prepared in accordance with GAAP and practices
consistently maintained throughout the periods involved; and that, as
of the date of such financial information, there were no material
unrealized or anticipated losses from any unfavorable commitments of
any of the Obligors and that there
41
has been no material adverse change in the business or Property or in
the condition, financial or otherwise, of any of the Obligors from that
set forth in such financial statements other than as disclosed in
subsequent financial statements which will have been previously
delivered to each Lender.
4.11 Accuracy of Representations. To the best of the Obligors' knowledge,
after due inquiry, no representation or warranty by any of the Obligors
contained in any certificate or other document furnished or to be
furnished by it pursuant to this Agreement or in connection with the
transactions contemplated under this Agreement, contains, or at the
time of delivery will contain, any untrue statement of material fact or
omits or will omit to state a material fact necessary to make it not
misleading in light of the circumstances under which it was made.
4.12 Trade Names and Chief Executive Offices. Each of the Obligors operates
its business under the trade names set forth for it on Schedule 4.12
and has not used within the last five years and does not currently use
any other trade names. The chief executive office of Crystal Rock LLC
and its principal place of business are at 0000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000-0000. The chief executive office of Holdings and
its principal place of business are at 00 Xxxxx Xxxxx, Xxxxxxxxx, XX
00000.
4.13 Parents, Affiliates or Subsidiaries. Holdings has no parent corporation
and none of the Obligors have any Affiliates or Subsidiaries other than
each other and Computer Designed Systems, Inc. Adirondack and Excelsior
were merged with and into VPS and Crystal-Waterville was merged with
and into Crystal Rock Spring. VPS and Crystal Rock Spring were merged
with and into Holdings with Holdings being the surviving entity.
Crystal Rock LLC is a wholly owned Subsidiary of Holdings. Holdings
owns approximately twenty-three and 36/100 percent (23.36%) of the
outstanding stock of Computer Designed Systems, Inc.
4.14 Agreements Regarding Stock. None of the Obligors has any agreements
pertaining to the issuance, purchase or sale of its capital stock,
except as set forth on Schedule 4.14.
4.15 Collective Bargaining Agreements. None of the Obligors is a party to
any collective bargaining agreements.
4.16 Subsequent Advances Under the Loans. Each request by any Obligor for an
advance under the Revolving Line of Credit or the Acquisition/Capital
Asset Line of Credit or for the issuance of a Standby Letter of Credit
shall constitute a representation by such Obligor to Lenders and Agent
that (a) either (i) all of the representations and warranties contained
in this Agreement shall have continued to be true and accurate in all
material respects to and including the date of such borrowing as though
made on and as of such date or (ii) any changes in any material respect
to such representations and warranties have been disclosed in
42
writing to the Agent and individually or in the aggregate could not
reasonably be foreseen to result in a material adverse change to the
Collateral or in the business, properties, condition or operations,
financial or otherwise, of any Obligor; (b) no event has occurred and
is continuing (that has not been waived pursuant to this Agreement), or
would exist as a result of the proposed borrowing, which constitutes an
Event of Default hereunder or would constitute such an Event of Default
but for the giving of notice or passage of time; (c) each Obligor has
performed all of the agreements (that have not been waived pursuant to
this Agreement) on its part contained in the Loan Documents and
required to be performed by it on or prior to the date of such
borrowing; and (d) the corporate resolutions authorizing the Loan
Documents and the underlying transactions remain in full force and
effect and have not been modified or amended in any respect.
4.17 Saleable Value of Assets. The fair saleable value of the assets of each
Obligor, after giving effect to the transactions contemplated by the
Loan Documents, will be in excess of its debts (including contingent,
subordinated, unmatured and unliquidated liabilities).
4.18 Sufficient Cash Flow. Each Obligor has, and after giving effect to the
transactions contemplated by the Loan Documents each Obligor will have,
sufficient cash flow to continue to operate its business in the
ordinary course as heretofore conducted, make the payments called for
by the Loan Documents and pay all other debts, including but not
limited to payments under the Notes, supplier payments, pension and
other employee benefit plan liabilities, business expenses and taxes,
as the same shall become due.
4.19 No Hindrance. None of the Obligors has any intent to hinder, delay or
defraud any entity to which it is or will become indebted.
4.20 Capitalization. None of the Obligors, after giving effect to the
transactions contemplated by the Loan Documents, will be engaged in any
business or transaction or is about to engage in any business or
transaction for which it has unreasonably small capital.
4.21 Ability to Pay Debts. None of the Obligors, after giving effect to the
transactions contemplated by the Loan Documents, intends to incur nor
does it believe that it will incur debts beyond its ability to pay as
they become due.
4.22 Ownership of Property. None of the Obligors has in its possession any
personal property of which it is not the actual owner, except as
described on Schedule 4.22.
4.23 Benefit of Loans. Each Obligor shall receive material direct and
indirect benefits from the making of any portion of the Loans to any of
the Obligors and a
43
satisfactory financial condition and successful business operations of
each Obligor benefits, directly and indirectly, each of the other
Obligors.
4.24 Crystal Rock LLC. Holdings has conveyed all of its assets which were
used in, necessary for, or desirable for use in its business operations
to Crystal Rock LLC. Holdings has assigned to Crystal Rock LLC and
Crystal Rock LLC has assumed all contracts relating to, necessary for,
or desirable for use in Holdings' business operations.
4.25 Compliance with Land Use Permits. The Obligors are in material
compliance with all land use permits relating to any real property
which it occupies.
4.26 Revised Article 9 Information. The type of organization of each
Obligor, the state of organization of each Obligor, the organizational
identification number of each Obligor for Revised Article 9 purposes in
each such state of organization and the Federal Employer Identification
number of each Obligor is set forth on Schedule 4.26.
4.27 Water Contracts and Licenses. All of Obligors' material contracts and
license agreements relating to the supply of water to any of the
Obligors are listed on Schedule 4.27, all such material contracts and
license agreements are in full force and effect and have not been
amended or modified in any respect, no Obligor and, to the knowledge of
the Obligors, no other party thereto is in default with respect
thereto, and true and complete copies of all such material contracts
and license agreements have been provided to Agent.
4.28 Reorganization compliance. The consummation of the mergers described in
Section 4.13 and the conveyance of assets and assignment of contracts
described in Section 4.24 did not violate any provision of any existing
law or regulation or any writ or decree of any court or governmental
instrumentality applicable to any Obligor or Original Obligor, or any
agreement or instrument to which any of the Obligors or Original
Obligors was a party or which was binding upon any of them or their
assets, and did not result in the creation or imposition of any lien,
security interest, charge or encumbrance of any nature whatsoever upon
or in any of their assets, except as contemplated by the Loan
Documents. Except as described on Schedule 4.28, no consent of any
other party, and no consent, license, approval or authorization of or
registration or declaration with any governmental bureau or agency,
other than the filing of the appropriate certificates of merger with
the Secretaries of State of Delaware, New York and Connecticut which
were duly filed, was required in connection with the consummation of
the mergers described in Section 4.13 and the conveyance of assets and
assignment of contracts described in Section 4.24.
44
SECTION 5. Affirmative Covenants. Obligors covenant and agree that, so long as
any of the Obligations shall remain outstanding, they will perform and observe
each and all of the covenants and agreements herein set forth, unless waived in
writing by Agent.
5.1 Payments Under this Agreement and the other Loan Documents. Each
Obligor will make punctual payment of all monies and will faithfully
and fully keep and perform all of the terms, conditions, covenants and
agreements on its part to be paid, kept or performed hereunder, and
will be bound in all respects as obligor under this Agreement and the
other Loan Documents. All Obligations shall be direct and primary
obligations of each Obligor and each Obligor shall be jointly and
severally liable for all Obligations. Notwithstanding any term or
provision of this Agreement, the Notes or the other Loan Documents to
the contrary, the Obligations of each Obligor shall not exceed the
maximum amount for which such Obligor can be liable without rendering
the Obligations of such Obligor voidable under applicable law relating
to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
5.2 Information, Access to Books, and Inspection. Each Obligor will furnish
to each Lender such information regarding the business affairs and
financial condition of the Obligors as such Lender may reasonably
request and give any representative of any Lender access during normal
business hours to, and permit him/her to examine and copy, make
extracts from, and audit any and all books, records and documents in
the possession of Obligors relating to their affairs and to inspect any
of the Property so long as each Lender and its representative agrees to
maintain the confidentiality of such information.
5.3 Payment of Liabilities. Each Obligor will pay and discharge at or
before their maturity all taxes, assessments, rents, claims, debts and
charges, except where the same may be contested in good faith, will
maintain, in accordance with GAAP, appropriate reserves for the accrual
of any of the same and if requested by Agent, will set aside a reserve
satisfactory to Agent to pay such contested amounts and all taxes,
interest, penalties and costs associated therewith.
5.4 Corporate Existence, Properties. Each Obligor will continue to conduct
its business as presently conducted; will do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises, and will comply with all
laws applicable thereto; will maintain all licenses, patents and other
rights necessary for the operation of its business; will at all times
maintain, preserve and protect all franchises, patents, trademarks,
trade names and water rights and will preserve, to the extent deemed
necessary or appropriate by Obligors in their reasonable business
judgment, all of the remainder of its Property used or useful in the
conduct of its business and will keep the same in good condition and
repair (normal wear and tear and obsolescence excepted), and from time
to time will reasonably make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and
45
improvements thereto, and will pay or cause to be paid, except when the
same may be contested in good faith, all rent due on premises where any
Property is held or may be held, so that the business carried on in
connection therewith may be continuously conducted.
5.5 Insurance. Each Obligor will have and maintain casualty insurance at
all times with respect to all Property and all Collateral against risks
of fire (including so-called extended coverage), theft and such risks
as Agent may reasonably require, business interruption insurance as
Agent may reasonably require, public liability insurance as Agent may
reasonably require and flood insurance as Agent may reasonably require,
containing such terms, in such form, in such amounts (including 100% of
the full insurable value of buildings, improvements and personal
property with respect to casualty insurance) and for such periods, and
written by such companies as may reasonably be satisfactory to Agent,
such insurance to be payable to Agent and Obligors as their interests
may appear. Each policy of insurance shall have a mortgagee and loss
payee endorsement providing:
a. That loss or damage, if any under the policy, shall be payable
to Agent, as secured party, as its interests may appear;
b. That the insurance as to the interest of Agent shall not be
invalidated by any act or neglect of the insured or owner of
the property described in said policy, nor by any foreclosure,
or other proceeding, nor by any change in the title of
ownership of said property, nor by the occupation of the
premises where the property is located for purposes more
hazardous than are permitted by said policy;
c. That, if the policy is canceled at any time by the insurance
carrier, in such case the policy shall continue in force for
the benefit of Agent for not less than thirty (30) days after
written notice of cancellation to Agent from the insurance
carrier; and
d. That the policy will not be reduced or canceled at the request
of the insured nor will said loss payee endorsement be amended
or deleted without thirty (30) days' prior written notice to
Agent from the insurance carrier.
Upon the occurrence and during the continuance of any Event of Default,
Agent may act as attorney for the Obligors in obtaining, adjusting,
settling, and canceling such insurance and receiving and endorsing any
drafts. Each Obligor hereby assigns to Agent any and all monies which
may become due and payable under any policy insuring the Collateral
covered by this Agreement, including return of unearned premiums, and
hereby directs any insurance company issuing any such policy to make
payment directly to Agent and authorizes Agent, at its option except to
the extent that either of the next two sentences apply,: (i) to apply
such
46
monies in payment on account of any Obligation hereunder, whether or
not due, and remit any surplus to Obligors; or (ii) to return said
funds to Obligors for the purpose of replacement of the Collateral.
Upon the damage, destruction or loss of any personal property which
constitutes Collateral in an aggregate amount of $250,000 or less,
Agent agrees that it will return said funds to Obligors for the purpose
of replacement of the Collateral with new Collateral of the same value
and utility if no event which constitutes or which with notice or lapse
of time, or both, would constitute an Event of Default has occurred and
the damage, destruction or loss has not materially impaired the
business operations of any of the Obligors. If the damage, destruction
or loss of any personal property which constitutes Collateral exceeds
an aggregate amount of $250,000, Agent agrees that it will return said
funds to Obligors for the purpose of replacement of the Collateral with
new Collateral of the same value and utility but only on the following
conditions: (i) no event which constitutes or which with notice or
lapse of time, or both, would constitute an Event of Default has
occurred, (ii) the damage, destruction or loss has not materially
impaired the business operations of any of the Obligors, (iii) Agent
has approved the plans and specifications for the replacement
Collateral, (iv) funds are released to the Obligors as the replacement
progresses in accordance with Agent's customary procedures for
financings of property such as the replacement Collateral. Each Obligor
will also at all times maintain necessary workers' compensation
insurance and such other insurance as may be required by law or as may
be reasonably required in writing by Agent.
Obligors will furnish Agent with certificates or other evidence
satisfactory to Agent of compliance with the foregoing insurance
provisions on the Date of Closing and thirty (30) days prior to each
anniversary of the Date of Closing.
5.6 Compliance with Laws. Each Obligor shall comply in all material
respects with all laws, ordinances, rules or regulations, applicable to
it, of all federal, state or municipal governmental authorities,
instrumentalities or agencies including, without limitation, ERISA, the
United States Occupational Safety and Health Act of 1970, as amended,
and all federal, state, county and municipal laws, ordinances, rules
and regulations relating to the environment or the employment of labor,
as such may be amended.
5.7 Notices. Obligors will promptly give notice in writing to each Lender
of: (a) the occurrence of any event which constitutes or which with
notice or lapse of time, or both, would constitute an Event of Default
under this Agreement or any of the other Loan Documents; (b) the
occurrence of any material adverse change in the business, properties
or the condition or operations, financial or otherwise, of any of the
Obligors, or the occurrence of any event which is reasonably likely to
result in such a material adverse change, in each case specifying such
change or event; (c) any court or governmental orders, notices, claims,
investigations, litigation and proceedings received by or involving any
of the Obligors in which the aggregate amount involved is $100,000 or
more and not covered by insurance; (d) any
47
material dispute which may exist between any of the Obligors and any
governmental regulatory body or any other party; and (e) any proposed
or actual change in the names, identities or corporate structure of any
of the Obligors.
5.8 Financial Statements. Obligors shall deliver or cause to be delivered
to each Lender:
a. As soon as available and in any event within ninety (90) days
after the close of each fiscal year of Holdings, audited
consolidated and consolidating financial statements including
a balance sheet as of the close of such fiscal year and
statements of operations and changes in stockholders' equity
and changes in cash flows for the year then ended, all on a
comparative basis with corresponding statements for the
preceding fiscal year and prepared in conformity with GAAP,
applied on a basis consistent with that of the preceding year,
and accompanied by a report thereon, containing an opinion,
unqualified as to scope, of a firm of independent certified
public accountants selected by Holdings and reasonably
acceptable to Agent, stating that the financial statements
fairly present in all material respects the consolidated
financial condition and results of operation of Holdings and
its Subsidiaries as of the end of the fiscal year and for the
period then ended.
b. As soon as available and in any event within forty-five (45)
days after the end of each fiscal quarter in each fiscal year,
Holdings' Form 10Q as filed with the Securities Exchange
Commission and a consolidated balance sheet of Holdings and
its Subsidiaries as of the close of such fiscal quarter and
consolidating statements of operations and changes in cash
flows for that portion of the fiscal year-to-date then ended,
all on a comparative basis with the budget and prepared in
conformity with GAAP, applied on a basis consistent with that
of the preceding period, and which shall be certified by the
President, Chief Executive Officer or Chief Financial Officer
of Holdings as being accurate and fairly presenting the
financial condition of Holdings and its Subsidiaries.
c. Together with the statements and reports referred to in
sub-paragraphs a. and b. above, a written statement from the
President, Chief Executive Officer or Chief Financial Officer
of Holdings certifying compliance with all financial covenants
and reflecting all computations in connection therewith and
certifying that there exists no Event of Default, or any event
but for the giving of notice or the passage of time would
constitute an Event of Default.
d. As soon as available and in any event within ninety (90) days
after the close of each fiscal year of Holdings, detailed
budgets and projections for
48
the current fiscal year of Holdings and Crystal Rock LLC
approved by the Board of Directors of Holdings.
e. [Intentionally omitted]
f. From time to time, promptly upon any Lender's written request,
such other information about the financial condition and
operations of Obligors as such Lender may reasonably request,
in form and detail reasonably satisfactory to such Lender.
5.9 Operating Accounts. Obligors shall maintain their primary operating and
disbursement accounts with Xxxxxxx Bank and shall utilize the cash
management services provided by Xxxxxxx Bank or any other Lender,
including, at Obligors' option, automated "sweep" and investment
features. Each of the Obligors may retain a local depository
relationship for collection and payroll purposes.
5.10 Pension Plans.
a. No event, including but not limited to any "reportable event",
as that term is defined in Section 4043 of ERISA, exists in
connection with any of its Plans and any entities related to
it under Section 414(b), (c), (m), (n) or (o) of the Code has
occurred which might constitute grounds for termination of any
such Plan by the PBGC, or for the appointment by the
appropriate United States District Court of a trustee to
administer any such Plan. A list of all of the Obligors' Plans
are attached hereto on Schedule 5.10;
b. No "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code exists or will exist upon
the execution and delivery of this Agreement and the other
Loan Documents, or the performance by the parties hereto or
thereto of their respective duties and obligations hereunder
and thereunder;
c. Each Obligor shall do all acts, including, but not limited to,
making all contributions necessary to maintain compliance with
ERISA and the Code, and agrees not to terminate any Plan in a
manner or do or fail to do any act which could result in the
imposition of a lien on any of its properties pursuant to
Section 4068 of ERISA;
d. None of the Obligors sponsors or maintains, and has never
contributed to, and has not incurred any withdrawal liability
under a "multi employer plan" as defined in Section 3 of ERISA
and none has any written or verbal commitment of any kind to
establish, maintain or contribute to any "multi employer plan"
under the Multi Employer Pension Plan Amendments Act of 1980;
49
e. None of the Obligors has any unfunded liability in
contravention of ERISA and the Code;
f. Each of the Plans complies currently, and has complied in the
past, in all material respects, both as to form and operation,
with its terms and with the provisions of the Code and ERISA,
and all applicable regulations thereunder and all applicable
rules issued by the Internal Revenue Service, U.S. Department
of Labor and the PBGC and as such, is and remains a
"qualified" plan under the Code;
g. No actions, suits or claims are pending (other than routine
claims for benefits) against any Plan or the assets of any
Plan;
h. Each Obligor has performed in all material respects all
obligations required to be performed by it under any Plan set
forth in Schedule 5.10 and it is not in default or in
violation of any Plan, and has no knowledge of any such
default or violation by any other party to any such Plans;
i. No liability has been incurred by any Obligor to the PBGC or
to participants or beneficiaries on account of any termination
of a Plan subject to Title IV of ERISA, no notice of intent to
terminate a Plan has been filed by (or on behalf of) it
pursuant to Section 4041 of ERISA and no proceeding has been
commenced by the PBGC pursuant to Section 4042 of ERISA;
j. The reporting and disclosure provisions of the Securities Act
of 1933 and Securities Exchange Act of 1934 have been complied
with for all Plans, to the extent applicable.
5.11 Environmental Matters.
a. Each Obligor has obtained all permits, licenses and other
authorizations which are required under all Environmental
Laws. Each Obligor is in compliance with the terms and
conditions of all such permits, licenses and authorizations,
and is, to the best of its knowledge, also in compliance with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in
any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.
b. No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and, to the knowledge
of the Obligors, no investigation
50
or review is pending or threatened by any governmental or
other entity with respect to any alleged failure by any
Obligor to have any permit, license or authorization required
in connection with the conduct of its business or with respect
to any Environmental Laws, including without limitation,
Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Materials.
c. No oral or written notification of a release of a Hazardous
Material has been filed by or against any Obligor and to the
best of each Obligor's knowledge, no property now or
previously owned, leased or used by it is listed or proposed
for listing on the Comprehensive Environmental Response,
Compensation and Liability Inventory of Sites or National
Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
or on any similar state or federal list of sites requiring
investigation or clean-up.
d. There are no liens or encumbrances arising under or pursuant
to any Environmental Laws on any of the property or properties
owned by any Obligor, and no governmental actions have been
taken or are in process which could subject any of such
properties to such liens or encumbrances or, as a result of
which any Obligor would be required to place any notice or
restriction relating to the presence of Hazardous Materials at
any property owned by it in any deed to such property.
e. Neither Obligors nor, to the best of their knowledge, any
previous owner, tenant, occupant or user of any property owned
by any Obligor, has (i) engaged in or permitted any operations
or activities upon or any use or occupancy of such property,
or any portion thereof, for the purpose of or in any way
involving the release, discharge, refining, dumping or
disposal (whether legal or illegal, accidental or intentional)
of any Hazardous Materials in an amount required to be
reported to any governmental agency or authority on, under, in
or about such property, or (ii) transported or had transported
any Hazardous Materials to such property except to the extent
such Hazardous Materials are commonly used in day-to-day
operations of such property and, in such case, in compliance
with, all applicable Environmental Laws; (iii) engaged in or
permitted any operations or activities which would allow the
facility to be considered a treatment, storage or disposal
facility as that term is defined in 40 CFR 264 and 265, (iv)
engaged in or permitted any operations or activities which
would cause any property now owned, leased or used by it to
become subject to any state transfer act, or (v) constructed,
stored or otherwise located Hazardous Materials on, under, in
or about any property now owned, leased or used by it except
to the extent commonly used in day-to-day operations of such
properties and, in such case, in compliance
51
with all applicable Environmental Laws. Further, to the best
of Obligors' knowledge, no Hazardous Materials have migrated
from other properties upon, about or beneath any property now
owned, leased or used by any of them.
SECTION 6. Negative Covenants. So long as any Obligations remain outstanding and
unpaid, Obligors covenant and agree that they will not without the express
written consent of Agent:
6.1 Limitation on Liens. Incur or permit to exist any lien, mortgage,
security interest, pledge, charge or other encumbrance against the
Property, whether now owned or hereafter acquired (including, without
limitation, any lien or encumbrance relating to any response, removal
or clean-up of any toxic substances or hazardous wastes), except: (a)
liens, mortgages, security interests, charges or other encumbrances in
favor of Agent or specifically permitted in writing by Agent; (b) liens
or pledges incidental to the conduct of business or the ownership of
properties and assets (including liens or pledges in connection with
worker's compensation, unemployment insurance and other like laws,
warehousemen's and attorneys' liens and statutory landlords' liens) and
liens to secure the performance of bids, tenders or trade contracts, or
to secure statutory obligations, surety or appeal bonds or other liens
of like general nature incurred in the ordinary course of business and
not in connection with the borrowing of money provided in each case,
the obligation secured is not overdue; (c) tax liens which are being
contested in good faith with the prior written consent of Agent and
against which, if requested by Agent, Obligors shall maintain reserves
in amounts and in form (book, cash, bond or otherwise) satisfactory to
Agent; (d) the liens existing on the date of this Agreement which are
listed on Schedule 4.5; and (e) purchase money security interests
pursuant to which the amount financed and secured thereby does not
exceed $250,000 in any one fiscal year.
6.2 Limitation on Other Borrowing. Incur, create, assume or permit to exist
any Indebtedness other than (a) Indebtedness to the Lenders pursuant to
this Agreement, (b) Indebtedness existing on the date of this Agreement
which is listed on Schedule 6.2, (c) purchase money indebtedness
pursuant to which the amount financed does not exceed $250,000 in any
one fiscal year, and (d) advances made from any Obligor to any other
Obligor.
6.3 Limitation on Contingent Liabilities. Become liable as guarantor,
surety, endorser or otherwise for, or agree to purchase, repurchase or
assume, any obligation of any person, firm or corporation, except for
endorsement of commercial paper and negotiable instruments for deposit,
collection, or discount in the ordinary course of business.
6.4 Limitation on Advances and Investments. Make or suffer to exist any
advances or loans to, or any investments in (by transfers of property,
contributions to capital, purchase of stock or securities or evidence
of indebtedness, acquisition of assets
52
or business or otherwise) any person, firm or corporation, including
officers or employees of Obligors, other than (a) Capital Expenditures
permitted by Section 6.20, (b) advances for employee business expenses
in the ordinary course of business, (c) advances or loans to another
Obligor, (d) investments in U. S. Treasury obligations, Certificates of
Deposits issued by banks domiciled in the United States and securities
pursuant to Agent's automatic sweep investment account, in each case in
the ordinary course of business, (e) the existing investments in Mac
Casualty Ltd. and Computer Designed Systems, Inc. as of the date of
this Agreement and (f) Acquisitions of businesses within the home and
office business segment of the food and beverage industry which derive
seventy-five percent (75%) or more of their revenues from the home and
office delivery of bottled water and refreshment products and for
which, in any one transaction, the total purchase price does not exceed
$4,000,000, the amount borrowed under the Acquisition/Capital Asset
Line of Credit does not exceed $3,000,000 and the total amount of the
purchase price funded by internally generated cash does not exceed
$1,000,000 and after giving effect to which, as certified in a written
statement from the President, Chief Executive Officer or Chief
Financial Officer of Holdings delivered to Agent prior to such
Acquisition demonstrating compliance with all financial covenants on a
proforma basis after taking into account such Acquisition and
reflecting all computations in connection therewith, no Event of
Default, or event which with the giving of notice or the passage of
time would constitute an Event of Default, shall have occurred and (g)
the acceptance of a promissory note in the original principal amount of
$500,000 from Micropack Corporation, a copy of which is attached hereto
as Exhibit 6.4. None of the Obligors shall enter into any joint
venture.
6.5 Limitation on Fundamental Changes. Merge or consolidate with or into
any other firm or corporation; dissolve or liquidate; change
substantially their lines of business; change their names; convey,
sell, lease or otherwise dispose of all or substantially all of their
property, assets or business.
6.6 Limitation on Affiliates and Subsidiaries. Acquire, form or dispose of
any Subsidiary or Affiliate or acquire all, or substantially all or any
material portion of the stock or assets of any other person, firm,
corporation, corporate division or business entity other than (i)
Acquisitions permitted by Section 6.4, provided, however, that Obligors
have given prior written notice thereof to Agent and have taken, at
Obligors' sole cost and expense, all steps reasonably required by Agent
to perfect the Agent's security interest in the stock or assets
acquired, and (ii) the disposition of Mac Casualty Ltd. or Computer
Designed Systems, Inc. or any interest therein with written notice
thereof to Agent.
6.7 Limitation on Changes in Management. Make or consent to a material
change in the manner in which the business of the Obligors is conducted
or make or consent to a change in management so that any of Xxxxxxx X.
Xxxxxx, Xxxxx X. XxxXxxxxx, Xxxx Xxxxx or Xxxxx Xxxxx (the "MANAGERS")
are no longer actively
53
involved in the management of the Obligors; provided, however, the
Agent will not unreasonably withhold its consent to a suitable
replacement to any of the Managers approved by the Board of Directors
of Holdings. Each Manager shall be a party to an employment contract
that is satisfactory to Agent at the time of entering into or amending
such contract.
6.8 Limitation on Disposition of Assets. Sell, exchange or otherwise
dispose of any Property, other than finished goods and inventory in the
ordinary course of business and obsolete equipment no longer used or
useful in the conduct of business which is replaced by equipment of at
least equivalent value which is subject to a valid perfected first
priority security interest in the Agent; provided, however, that
Obligors need not replace any such equipment if it is unnecessary to do
so in the business judgment of the Obligors and the proceeds thereof
are applied to the outstanding principal balance on the Term Loan.
6.9 Limitation on Dividends and Distributions. Declare or pay any Dividend
(unless payable in capital stock of Holdings) or authorize or make any
other distribution on or with respect to any shares of capital stock of
Holdings, whether now or hereafter outstanding.
6.10 Limitation on Acquisition of Stock of Holdings. Purchase, acquire or
redeem, or make any commitment to purchase, acquire or redeem, any of
the capital stock of Holdings, whether now or hereafter outstanding.
6.11 Limitation on Officer Compensation. Pay direct or indirect compensation
to any officer or director, whether bonus, commission, stock
distribution, or otherwise (but specifically excluding salary), which
would, after giving effect thereto, constitute an Event of Default
hereunder.
6.12 Limitation on Transactions with Affiliates. Other than the Subordinated
Debt with the Subordinated Lenders and the Subordinated Encumbrances
related thereto, employment contracts, the grant of stock options, the
existing arrangements with Mac Casualty Ltd. and Computer Designed
Systems, Inc. and the lease of property in Watertown and Stamford,
Connecticut, enter into, or be a party to, any transaction with any
Affiliate (including, without limitation, transactions involving the
purchase, sale or exchange of property, the rendering of services or
the sale of stock) except in the ordinary course of business pursuant
to the reasonable requirements of the Obligors and upon fair and
reasonable terms no less favorable to the Obligors than Obligors would
obtain in a comparable arm's-length transaction with a person other
than an Affiliate.
6.13 Limitation on Change of Name or Location. Change their corporate names
or conduct any of their business under any trade name or style other
than as set forth on Schedule 4.12 or change their chief executive
offices, principal places of business or other places of business or
the locations of the Collateral or records
54
relating to the Collateral from those locations set forth in Section
3.4 and Section 4.12; provided, however, that Obligors may do any of
the foregoing, other than change their chief executive offices or
principal places of business, if Obligors give at least thirty (30)
days prior written notice thereof to Agent and take, prior to any such
change, at Obligors' sole cost and expense, all steps reasonably
required by Agent to maintain Agent's perfection of its first priority
security interest in the Collateral.
6.14 Mandatory Prepayment. Permit the aggregate outstanding principal amount
of the Revolving Line of Credit Notes to exceed, at any time, six
million five hundred thousand dollars ($6,500,000) less (a) the maximum
amount available to be drawn under all issued and outstanding Standby
Letters of Credit (assuming all conditions for drawing have been
satisfied), and (b) all amounts drawn under issued Standby Letters of
Credit for which the Agent has not been reimbursed by the Obligors and,
in the event any advances are outstanding in excess of such amount,
prepay on any day so much of the outstanding principal amount which is
in excess thereof.
6.15 Limitation on Changes in Accounting Methods. Make or consent to a
material change in their method of accounting unless such change is
required by GAAP; provided, however, that if any such change would
affect the calculation of any of the financial covenants contained in
this Agreement, the Obligors shall continue to provide financial
statements without such change for the purpose of calculating
compliance with the financial covenants until such time as the
financial covenants are adjusted by agreement of the Obligors and the
Lenders to take into account such change required by GAAP.
6.16 Senior Funded Debt to EBITDA. Permit the ratio of Senior Funded Debt to
EBITDA to be greater than 2.75 to 1.00 as of the end of any fiscal
quarter. This ratio shall be tested as of the end of each fiscal
quarter, commencing with the fiscal quarter ending October 31, 2004,
for the fiscal quarter then ended and the immediately preceding three
fiscal quarters. Projected EBITDA for each new Acquisition for the
first year after such Acquisition as agreed upon by the Agent and the
Obligors will also be included in this calculation. Such projected
EBITDA will consist of 75% of the year one adjusted EBITDA (after cost
eliminations). For every quarter of actual operations in the first year
after such Acquisition, the projected EBITDA for those quarters will be
replaced by the actual EBITDA.
6.17 Debt Service Coverage Ratio.
a. Permit its Debt Service Coverage Ratio to be less than 1.1 to
1.0. This ratio shall be tested as of the end of each fiscal
quarter, commencing with the fiscal quarter ending October 31,
2004, for the fiscal quarter then ended and the immediately
preceding three fiscal quarters. Projected
55
EBITDA for each new Acquisition for the first year after such
Acquisition as agreed upon by the Agent and the Obligors will
also be included in this calculation. Such projected EBITDA
will consist of 75% of the year one adjusted EBITDA (after
cost eliminations). For every quarter of actual operations in
the first year after such Acquisition, the projected EBITDA
for those quarters will be replaced by the actual EBITDA.
b. Permit its Senior Debt Service Coverage Ratio to be less than
1.5 to 1.0. This ratio shall be tested as of the end of each
fiscal quarter, commencing with the fiscal quarter ending
October 31, 2004, for the fiscal quarter then ended and the
immediately preceding three fiscal quarters. Projected EBITDA
for each new Acquisition for the first year after such
Acquisition as agreed upon by the Agent and the Obligors will
also be included in this calculation. Such projected EBITDA
will consist of 75% of the year one adjusted EBITDA (after
cost eliminations). For every quarter of actual operations in
the first year after such Acquisition, the projected EBITDA
for those quarters will be replaced by the actual EBITDA.
6.18 Current Ratio. Permit at any time its Current Ratio to be less than 1.0
to 1.0.
6.19 Net Losses. Permit any Net Loss. This covenant shall be tested as of
the end of the second, third and fourth fiscal quarters, for the fiscal
quarter then ended (not on a year to date basis), of each fiscal year.
6.20 Capital Expenditures. Permit Capital Expenditures in any fiscal year,
on a non cumulative basis, to exceed the lesser of (i) $3,000,000 plus
Net Income or (ii) $5,000,000; provided, however, that (A) expenditures
incurred as part of an Acquisition and (B) the portions of expenditures
for Capital Assets funded with advances under the Acquisition/Capital
Asset Line of Credit and (C) the Excluded Capital Expenditures shall be
excluded from such calculation. This covenant shall be tested as of the
end of each fiscal year, commencing with the fiscal year ending October
31, 2004.
6.21 Holdings. Permit Holdings to conduct any business operations other than
business operations incidental to its owning the membership interests
in Crystal Rock LLC.
SECTION 7. Default.
7.1 The occurrence of any of the following events will constitute an Event
of Default under this Agreement:
a. The failure by Obligors to pay any installment of principal
and/or interest due under any of the Loans or any of the other
Obligations when due and payable.
56
b. The failure by Obligors to pay taxes, if any, due on any
indebtedness under the Loans or any tax or assessment upon any
collateral securing the Obligations, on or before the same
shall become due and payable.
c. The failure of Obligors (i) to observe or perform any
affirmative covenant contained in Section 5 of this Agreement
other than sections 5.5 and 5.7 and such failure continues for
a period of thirty (30) days, provided that Obligors at all
times diligently pursue the cure of such failure or (ii) to
observe or perform any other covenant contained in this
Agreement, including, without limitation, sections 5.5 and
5.7, or in any of the other Loan Documents.
d. The occurrence of an Event of Default as defined in or under
any of the other Loan Documents.
e. The filing by or against any Obligor of any petition,
arrangement, reorganization, or the like under any insolvency
or bankruptcy law, or the adjudication of any Obligor as a
bankrupt (and if such filing is involuntary, the failure to
have same dismissed within sixty (60) days from the date of
filing), or the making of an assignment for the benefit of
creditors, or the appointment of a receiver for any part of
Obligors' properties or the admission in writing by any
Obligor of its inability to pay debts as they become due.
f. The breach of any material warranty or the untruth or
inaccuracy of any material representation of any Obligor
contained in the Loan Documents.
g. The occurrence of a default beyond any applicable grace or
cure period under, or demand for the payment of, any other
note or obligation of any Obligor to any Lender.
h. The failure by any Obligor to make payment on any Indebtedness
with an outstanding principal balance in excess of $25,000 due
to any party other than any Lender, beyond any grace period
provided with respect thereto, or upon demand, or the failure
to perform any other term, condition, or covenant contained in
any agreement under which any such Indebtedness is created,
the effect of which failure is to cause or permit the holder
of such Indebtedness to cause such Indebtedness to become due
and payable prior to its date of maturity.
i. The dissolution, liquidation or termination of existence of
any Obligor.
j. The passage or enforcement of any federal, state, or local law
or the rendition of a final decision of any court (other than
a law or decision with
57
respect to a tax upon the general revenues or income of any
Lender) in any way directly changing or affecting any of the
Loans or lessening the net income thereon in a fashion which
is not corrected or reimbursed by Obligors.
k. The passage or enforcement of any federal, state, or local law
or the rendition of a final decision of any court in any way
impairing any Lender's ability to charge and collect the
interest stated in the Notes, including without limitation,
the ability to vary the interest payable under the Notes in
accordance with their terms.
l. A judgment or judgments for the payment of money shall be
rendered against any Obligor, any such judgment or judgments
shall remain unsatisfied and in effect for a period of thirty
(30) consecutive days without a stay of execution and either
the amount of such judgment or judgments is in excess of
$25,000 or any attachment or execution occurs on any property
of any of the Obligors with respect to such judgment or
judgments.
m. The occurrence of a material adverse change to the Collateral
or in any business, properties, condition or operations,
financial or otherwise, of any Obligor.
n. The invalidity or asserted invalidity by any of the Obligors
of any of the Loan Documents.
7.2 No Further Advances. Upon the happening and during the continuance of
any Event of Default specified above, notwithstanding any other
provision herein to the contrary, Obligors shall not be entitled to any
further advances under the Revolving Line of Credit or the
Acquisition/Capital Asset Line of Credit or the issuance of any Standby
Letters of Credit and, at the option of the Agent, the entire unpaid
balance owed under the Loans, the Notes and the Loan Documents and
under any other note or other documents evidencing the same, plus any
other sums owed hereunder, shall become and shall thereafter be
immediately due and payable without presentment, demand, protest,
notice of protest, or other notice of dishonor of any kind, all of
which are hereby expressly waived by Obligors. Notwithstanding the
foregoing, upon an Event of Default pursuant to Section 7.1e., the
entire unpaid balance owed under the Loans, the Notes and the Loan
Documents and under any other note or other documents evidencing the
same, plus any other sums owed hereunder, shall automatically become
and shall thereafter be immediately due and payable and the commitments
of the Lenders to make advances hereunder shall be terminated. Failure
to exercise such option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default. Upon the
occurrence of any Event of Default, without in any way affecting any
Lender's or Agent's other rights and remedies, or after maturity
58
or judgment, the interest rate applicable to each of the Loans shall
automatically change without notice to a rate per annum equal to four
percentage points (4%) above the otherwise then applicable rate. The
Agent shall endeavor to give the Obligors prompt notice of the
acceleration of the unpaid balance owed under the Loans, the Notes and
the Loan Documents but failure to give such notice shall not affect any
action taken by Agent and Agent shall not incur any liability for any
failure to deliver such notice.
7.3 Rights of Agent. In the event of the occurrence and during the
continuance of an Event of Default (a) Agent will have the right to
take possession of the Collateral and to maintain such possession on
Obligors' premises or to remove the Collateral or any part thereof to
such places as Agent may desire. If Agent exercises its right to take
possession of the Collateral, Obligors will, upon Agent's demand,
assemble the Collateral and make it available to Agent at a place
reasonably convenient to both parties; (b) Agent shall have, in
addition to all other rights provided herein, the rights and remedies
of a secured party under the Uniform Commercial Code; (c) Agent may
sell and deliver any or all Receivables and any or all other security
and Collateral held by Agent or for Agent at public or private sale,
for cash, upon credit or otherwise, at such prices and upon such terms
as Agent deems advisable, at Agent's sole discretion; and (d) in
addition to all other sums due Agent, Obligors will pay to Agent all
costs and expenses incurred by Agent, including attorneys' fees, to
obtain or enforce payment of Receivables or the Obligations, or in the
prosecution or defense of any action or proceeding either against Agent
or any Lender or against any Obligor concerning any matter arising out
of or connected with this Agreement or the Collateral or the Loan
Documents or otherwise due pursuant to the terms of this Agreement. Any
requirement of reasonable notice shall be met if such notice is mailed
postage prepaid to each Obligor at each Obligor's address as set forth
herein at least ten (10) days before the time of sale or other
disposition. Agent or any Lender may be the purchaser at any such sale,
if it is public, and, in the event Agent or any Lender is the
purchaser, Agent or such Lender shall have all the rights of a good
faith, bona fide purchaser for value from a secured party after
default. The proceeds of sale shall be applied first to all costs and
expenses of sale, including attorneys' fees, and second to the payment
(in whatever order Agent elects) of all Obligations, and any remaining
proceeds shall be applied in accordance with the provisions of Article
9 of the Uniform Commercial Code. Obligors shall remain liable to Agent
and the Lenders for any deficiency. Failure by Agent or any Lender to
exercise any right, remedy or option under this Agreement or any of the
other Loan Documents or in any other agreement between any Obligor and
Agent or any Lender, or delay by Agent or any Lender in exercising the
same will not operate as a waiver by Agent or any Lender unless it is
in writing and signed by such party and then only to the extent
specifically stated. Neither Agent nor any Lender nor any party acting
as Agent's or any Lender's attorney pursuant to this Agreement shall be
liable for any error of judgment or mistake of fact or law. Agent's and
Lenders' rights and remedies under this Agreement will be cumulative
and not exclusive of any other
59
right or remedy which Agent and Lenders may have. Nothing in this
Agreement shall be construed to modify or limit the unconditional right
of Agent or any Lender in its sole discretion to demand full or partial
payment of the principal of, and interest on, any demand Obligation.
The right to make demand on any such demand Obligation shall exist
whether or not Obligors are in compliance with the covenants or
conditions contained in this Agreement or in any other agreements
between Obligors and Agent or any Lender.
7.4 Collection of Receivables. Upon the occurrence and during the
continuance of an Event of Default, Agent or its designee may notify
customers or account debtors of Obligors at any time, that Receivables
have been assigned to Agent or of Agent's security interest therein and
collect them directly and charge the collection costs and expenses to
Obligors' account.
7.5 Power of Attorney. Obligors appoint Agent, or any other person whom
Agent may designate as its attorney, with power following the
occurrence and during the continuance of an Event of Default: to
endorse Obligors' names on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into
Agent's possession; to sign Obligors' names on any invoice or xxxx of
lading relating to any Receivables, on notices of assignment, financing
statements, and other public records, on verifications of accounts and
on notices to customers; to notify the post office authorities to
change the address for delivery of Obligors' mail to an address
designated by Agent; to send requests for verification of Receivables
to customers or account debtors; and to do all things necessary to
carry out this Agreement. Obligors ratify and approve all lawful acts
of the attorney. Neither Agent nor the attorney will be liable for any
lawful acts or omissions nor for any error of judgment or mistake of
fact or law. This power, being coupled with an interest, is irrevocable
so long as any Receivables assigned to Agent or in which Agent has a
security interest remain unpaid or until the Obligations have been
fully satisfied. Agent may file one or more financing statements
disclosing Agent's security interest without Obligors' signatures
appearing thereon.
SECTION 8. Conditions Precedent. Notwithstanding any other provision of this
Agreement or any of the other Loan Documents, and without affecting in any
manner the rights of the Agent and Lenders under the other sections of this
Agreement, the Lenders shall not (i) be required to make any advances under the
Revolving Line of Credit or the Acquisition/Capital Asset Line of Credit or
issue any Standby Letters of Credit under this Agreement or (ii) waive any Event
of Default described in Section 9.26 unless and until each of the following
conditions has been and continues to be satisfied:
8.1 Documentation. Agent shall have received, in form and substance
satisfactory to Agent and its counsel, a duly executed copy of this
Agreement, the Notes and the Pledge Agreement, together with such
additional documents, instruments, consents, waivers, resolutions and
certificates as Agent and its counsel shall
60
reasonably require in connection therewith, all in form and substance
satisfactory to Agent and its counsel.
8.2 No Default. No Event of Default or event which with the giving of
notice of the passage of time would constitute an Event of Default
shall exist.
8.3 Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.
8.4 No Litigation. 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.
8.5 Opinion of Counsel. The Agent and Lenders shall have received an
opinion of counsel to the Obligors in form and content satisfactory to
the Agent and its counsel.
8.6 Compliance with Covenants. The Obligors shall have satisfied in all
respects all covenants to be performed by the Obligors prior to the
date of this Agreement.
8.7 Representations and Warranties True and Correct. The representations
and warranties of the Obligors set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement.
8.8 No Material Adverse Change. There shall have been no material adverse
change in the condition or operations, financial or otherwise, of the
Obligors or the Collateral, between October 31, 2003 and the date of
this Agreement.
8.9 Subordination Agreement. The Subordinated Lenders shall have executed
and delivered to the Agent reaffirmations of their subordination
agreements in form and content satisfactory to Agent in its sole
discretion.
8.10 [Intentionally omitted]
8.11 Landlord Consents. The Obligors shall have delivered to the Agent
landlord consents executed by the landlords of various business
locations leased by the Obligors in form and content satisfactory to
Agent in its sole discretion.
8.12 Reimbursement of Costs and Expenses. The Obligors shall have reimbursed
the Agent for all costs and expenses incurred by the Agent in
connection with this Agreement and the transactions contemplated
hereby.
61
8.13 Certificate of Obligors. The Obligors shall have furnished a
certificate to the Agent, dated as of the date of this Agreement,
certifying that, assuming the items submitted which are required to be
satisfactory to Agent are satisfactory to Agent, all conditions
precedent set forth in this Section have been satisfied in all
respects.
SECTION 9. Miscellaneous.
9.1 Indemnification. In consideration of each Lender's and Agent's
execution and delivery of this Agreement and each Lender's making of
the Loans hereunder and in addition to all other obligations of
Obligors under this Agreement, each Obligor hereby agrees to defend,
protect, indemnify and hold harmless each Lender and Agent, their
successors, assigns, officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages
and expenses in connection therewith (irrespective of whether any such
Indemnitees are a party to any action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnifiable Liabilities") incurred by the
Indemnitees or any of them as a result of, or arising out of, or
relating to (a) the execution, delivery, performance or enforcement of
this Agreement and the other Loan Documents and any instrument,
document or agreement executed pursuant hereto; (b) any Lender's status
as lender to, or creditor of, any of the Obligors or the Agent's status
as agent in connection herewith; or (c) the operation of Obligors'
business from and after the date hereof, provided that Obligors shall
not be required to indemnify any Indemnitee for any Indemnifiable
Liabilities resulting from such Indemnitee's own gross negligence or
willful misconduct. To the extent that the foregoing undertaking by
Obligors may be unenforceable for any reason, each Obligor shall make
the maximum contribution to the payment and satisfaction of each of the
Indemnifiable Liabilities which is permissible under applicable law.
9.2 Setoff. All sums at any time standing to Obligors' credit on the books
of any Lender or upon or in which any Lender has a lien or security
interest shall be security for all of the Obligations. In addition to
and not in limitation of the above, with respect to any deposits or
Property of any Obligor in the possession or control of any Lender, now
or in the future, such party shall have the right, if an event which
constitutes or which with notice or lapse of time, or both, would
constitute an Event of Default under this Agreement or any of the other
Loan Documents has occurred and is continuing, to setoff all or any
portion thereof, at any time, against any Obligations hereunder, even
though unmatured, without prior notice or demand to any Obligor.
9.3 Sale or Participation of Interests. Subject to the terms of the Agency
Agreement, each Lender shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to
Obligors, to sell or to grant participating
62
interests in all or a part of such Lender's Notes and its interests in
the Loans to one or more banks or other financial institutions (each,
an "ASSIGNEE"). In the event of any such grant by such Lender of a
participating interest, whether or not upon notice to Obligors, such
Lender shall remain responsible for the performance of its obligations
hereunder and Obligors shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations
under this Agreement and the other Loan Documents. In the event of any
such sale by such Lender of all or a part of such Lender's Notes and
its interests in the Loans, such Assignee shall become responsible for
the performance of such Lender's obligations hereunder to the extent of
such sale and such Lender shall be released from its obligations
hereunder to such extent. The parties hereto shall execute any
amendments to this Agreement or any of the other Loan Documents and
provide such other documentation, such as replacement Notes, requested
by the Agent to reflect the transfer of interests pursuant to this
Section. Any Lender may furnish any information concerning Obligors in
its possession from time to time to prospective Assignees, providing
that such Lender shall require any such prospective Assignee to agree
in writing to maintain the confidentiality of such information.
9.4 No Waiver. No course of dealing between Obligors and Agent or any
Lender and no failure to exercise or delay in exercising on the part of
Agent or any Lender any right, power or privilege under the terms of
this Agreement or the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or thereunder preclude any other or further
exercise. Neither the Agent nor any Lender shall be deemed to have
waived any of its rights upon or under Obligations or the Collateral
unless such waiver be in writing and signed by such party. The rights
and remedies provided herein or in any other agreement are cumulative
and not exclusive or in derogation of any rights or remedies provided
therein and thereof, by law or otherwise.
9.5 Cross-Collateralization. All collateral which Agent or any Lender may
at any time acquire from Obligors or from any other source in
connection with the Obligations arising under this Agreement and the
other Loan Documents shall constitute collateral for each and every
Obligation, without apportionment or designation as to particular
Obligations and all Obligations, however and whenever incurred, shall
be secured by all collateral however and whenever acquired, and Agent
shall have the right, in its sole discretion, to determine the order in
which Agent and Lenders' rights in or remedies against any collateral
are to be exercised and which type of collateral or which portions of
collateral are to be proceeded against and the order of application of
proceeds of collateral as against particular Obligations.
63
9.6 Cross-Default. Obligors acknowledge and agree that a default under any
one of the Loan Documents shall constitute a default under each of the
other Loan Documents.
9.7 Survival of Agreements. All agreements, representations and warranties
made herein, in any agreement and in any statements, notices, invoices,
certificates, schedules, documents or other instruments delivered to
Agent or any Lender in connection with this Agreement or any other Loan
Document shall survive the making of the Loans and advances hereunder.
9.8 Further Documents. Obligors agree that, at any time or from time to
time upon written request of Agent, Obligors will execute and deliver
such further documents and do such other acts and things as Agent may
reasonably request in order to fully effect the purposes of this
Agreement and the other Loan Documents and in order to reflect, to the
extent deemed necessary by the Agent or the Lenders, the addition of
any new lender hereunder, the removal of any Lender hereunder, any
change in the Lender's Commitment Percentages or the replacement of the
Agent with a new agent appointed by the Lenders in accordance with the
Agency Agreement.
9.9 Entire Agreement; Governing Law. This Agreement and the documents
referred to herein constitute the entire agreement of the parties and
may not be amended orally and they shall be construed and interpreted
in accordance with the laws of the State of Connecticut, including its
conflict of laws principles.
9.10 Consent to Jurisdiction. Each Obligor hereby acknowledges that the
underlying transactions to which this Agreement and the other Loan
Documents relate concern the making, now or in the future, of loans and
advances to the Obligors and that said obligations of the Obligors are
primarily to be performed in the State of Connecticut. The Obligors
agree that the execution of this Agreement and the other Loan Documents
and the rights and obligations of the parties hereunder and thereunder
shall be deemed to have a Connecticut situs and each Obligor shall be
subject to the personal jurisdiction of the courts of the State of
Connecticut with respect to any action the Agent, any Lender, or any of
their successors or assigns, may commence hereunder. Accordingly, each
Obligor hereby specifically and irrevocably consents to the
jurisdiction of the courts of the State of Connecticut with respect to
all matters concerning this Agreement, the other Loan Documents, the
Notes or the enforcement of any of the foregoing.
9.11 Joint and Several Liability. All obligations, covenants and agreements
of the Obligors pursuant to this Agreement or any of the other Loan
Documents shall be the joint and several obligations, covenants and
agreements of each of the Obligors.
64
9.12 Successors. All rights of Agent and the Lenders hereunder shall inure
to the benefit of their successors and assigns, and all Obligations of
Obligors shall bind their successors and assigns.
9.13 Expenses. Obligors will pay all expenses arising out of the
preparation, amendment, protection, collection and/or other enforcement
of this Agreement, the other Loan Documents, the Collateral or security
interest granted hereunder or thereunder and the Notes (including,
without limitation, reasonable counsels' fees).
9.14 Payments. The acceptance of any check, draft or money order tendered in
full or partial payment of any Obligation hereunder is conditioned upon
and subject to the receipt of final payment in cash.
9.15 Exhibits and Schedules. All exhibits and schedules referred to herein
and annexed hereto are hereby incorporated into this Agreement and made
a part hereof.
9.16 Acknowledgment of Copy, Use of Proceeds. Obligors acknowledge receipt
of copies of the Notes and attest, represent and warrant to Lenders and
Agent that advances made under the Loans are to be used for general
commercial purposes and that no part of such proceeds will be used, in
whole or in part, directly or indirectly, for the purpose of purchasing
or carrying any "margin security" or "margin stock" as such terms are
defined in Regulation U of the Board of Governors of the Federal
Reserve System.
9.17 Descriptive Headings. The descriptive headings of the several sections
of this Agreement are inserted for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.
9.18 Notices. Any written notice required or permitted by this Agreement may
be delivered by depositing it in the U.S. mail, postage prepaid or with
a nationally recognized overnight courier service or by facsimile
addressed to the Obligors at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 and to the Agent or the Lenders at the addresses set forth
beneath their signatures at the end of this Agreement. If any notice is
sent to any Lender (as opposed to the Agent) pursuant to this
paragraph, a copy thereof should also be sent to the Agent and each
other Lender. Any party may change the address for its notices
hereunder by sending in accordance with this section a notice of such
change of address to all the other parties hereto, which notice shall
be effective upon receipt by the other parties.
9.19 Severability. If any provision of this Agreement or application thereof
to any person or circumstance shall to any extent be invalid, the
remainder of this Agreement or the application of such provision to
persons, entities or circumstances other than those as to which it is
held invalid, shall not be affected
65
thereby and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
9.20 Agency Agreement. The rights and obligations of the Lenders and the
Agent vis-a-vis each other with respect to Loans and the Obligations
are set forth in the Agency Agreement.
9.21 Termination. This Agreement shall terminate when all obligations to
make advances or issue letters of credit hereunder have terminated and
all Obligations relating in any way to the Loans or the Loan Documents
have been indefeasibly paid in full.
9.22 WAIVER OF RIGHT TO PREJUDGMENT REMEDY NOTICE AND HEARING. OBLIGORS
ACKNOWLEDGE THAT EACH LENDER AND AGENT MAY HAVE RIGHTS AGAINST THEM,
NOW OR IN THE FUTURE, IN ITS CAPACITY AS CREDITOR OR IN ANY OTHER
CAPACITY. SUCH RIGHTS MAY INCLUDE THE RIGHT TO DEPRIVE OBLIGORS OF OR
AFFECT THE USE OF OR POSSESSION OR ENJOYMENT OF THEIR PROPERTY; AND IN
THE EVENT ANY LENDER OR AGENT DEEMS IT NECESSARY TO EXERCISE ANY OF
SUCH RIGHTS PRIOR TO THE RENDITION OF A FINAL JUDGMENT AGAINST ANY
OBLIGOR, OR OTHERWISE, SUCH OBLIGOR MAY BE ENTITLED TO NOTICE AND/OR
HEARING UNDER THE CONSTITUTION OF THE UNITED STATES AND/OR STATE OF
CONNECTICUT, CONNECTICUT STATUTES (TO DETERMINE WHETHER OR NOT SUCH
LENDER OR AGENT HAS PROBABLE CAUSE TO SUSTAIN THE VALIDITY OF SUCH
PARTY'S CLAIM), OR THE RIGHT TO NOTICE AND/OR HEARING UNDER OTHER
APPLICABLE STATE OR FEDERAL LAWS PERTAINING TO PREJUDGMENT REMEDIES,
PRIOR TO THE EXERCISE BY SUCH LENDER OR AGENT OF ANY SUCH RIGHTS.
OBLIGORS EXPRESSLY WAIVE ANY SUCH RIGHT TO PREJUDGMENT REMEDY NOTICE OR
HEARING TO WHICH OBLIGORS MAY BE ENTITLED. THIS SHALL BE A CONTINUING
WAIVER AND REMAIN IN FULL FORCE AND EFFECT SO LONG AS OBLIGORS ARE
OBLIGATED TO ANY LENDER OR AGENT.
9.23 Waivers. Each Obligor hereby waives presentment, demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, collateral received or delivered or other action taken
in reliance hereon and all other demands and notices of any
description. With respect to this Agreement, the other Loan Documents,
the Obligations and the Collateral, each Obligor assents to any
extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of the Collateral,
to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payments thereon and
the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as the Agent and the Lenders may
66
deem advisable. Neither the Agent nor any Lender shall have any duty as
to the collection or protection of the Collateral or any income
thereon, nor as to the preservation of rights against prior parties,
nor as to the preservation of any rights pertaining thereto beyond the
safe custody thereof. The Agent and the Lenders may exercise its rights
with respect to the Collateral without resorting or regard to other
collateral or sources of reimbursement for liability. Each Obligor
waives all suretyship defenses with respect to the Notes, the Loans,
the Obligations and all other matters arising from or relating to the
Loans and the Loan Documents.
9.24 WAIVER OF RIGHT TO JURY TRIAL. EACH OBLIGOR, AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY AND THE RIGHT TO TRIAL BY JURY IN ALL
ACTIONS OR PROCEEDINGS BETWEEN THEM IN ANY COURT ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ITS VALIDITY OR INTERPRETATION. THIS SHALL
BE A CONTINUING WAIVER AND REMAIN IN FULL FORCE AND EFFECT SO LONG AS
OBLIGORS ARE OBLIGATED TO ANY LENDER OR AGENT.
9.25 Counterparts. This Agreement may be executed and delivered in any
number of counterparts each of which shall constitute an original, but
all of which taken together shall constitute but one and the same
agreement. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be effective as delivery of a manually
signed counterpart of this Agreement.
9.26 Waiver of Default. The Lenders and Agent waive any Event of Default
that may have arisen solely as a result of the mergers described in
Section 4.13 and the conveyance of assets and assignment of contracts
described in Section 4.24. Each of the Obligors hereby acknowledge and
agree that this waiver is a one-time waiver and this waiver shall be
effective only in this specific instance and does not allow any other
or further departure from the terms of this Agreement or any other Loan
Document, which terms shall continue in full force and effect. This
waiver shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or the Lenders under
any of the Loan Documents, nor constitute or be construed or
interpreted, directly or by implication, as a waiver of or an amendment
or modification to any other obligation of any Obligor to the Agent or
any Lender under any of the Loan Documents.
9.27 Valid Debt; No Claims. Each Obligor represents and warrants to Lenders
and Agent that the debt evidenced by the Notes is a valid debt of the
Obligor owed to the Lenders and no Obligor has any defense, setoff,
counterclaim or independent action against any Lender or Agent of any
kind whether relating to the Loan Documents or otherwise. Nothing in
this Agreement shall operate to release Obligors from their liability
to pay any and all sums they owe to the Lenders and Agent or to perform
all of the terms, conditions, obligations, agreements and warranties
contained in this Agreement and the other Loan Documents.
67
9.28 Amended and Restated Agreement. The Existing Agreement is hereby
amended and restated, superseded and replaced in its entirety by this
Agreement and shall have no further force and effect except to the
extent necessary to preserve and maintain Agent's previously perfected
first lien security interest in the Collateral, but the amendment,
restatement, and replacement of the Existing Agreement and the Notes
pursuant to this Agreement shall in no way be construed as a novation
of the indebtedness of the Obligors to the Lenders and the Agent
existing prior to the execution and delivery of this Agreement and the
Notes dated the date of this Agreement. All references to the Existing
Agreement in the Loan Documents shall be deemed to refer to this
Agreement, as the same may be amended from time to time.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, the parties have caused this Agreement to be duly
executed and delivered by the proper and duly authorized officers as of the date
and year first above written.
WITNESS:
__________________________ VERMONT PURE HOLDINGS, LTD.
__________________________ By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
__________________________ CRYSTAL ROCK LLC
__________________________ By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Manager
__________________________ BANKNORTH, N.A.
__________________________ By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President
Address for notice:
0000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
__________________________ MANUFACTURERS AND TRADERS TRUST COMPANY
__________________________ By: /s/ Xxxxxxx Golderick
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
Address for notice:
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH, as
Lender
__________________________
__________________________ By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Executive Director
__________________________
__________________________ By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Director
Address for notice:
000 Xxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
0000 Xxxx Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx Xxxxx, Executive
Director
__________________________ XXXXXXX BANK, NATIONAL ASSOCIATION,
as Lender
__________________________ By: /s/ Xxxxxxx X. X'Xxxxx
-----------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
Address for notice:
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
__________________________ XXXXXXX BANK, NATIONAL ASSOCIATION,
as Agent
__________________________ By: /s/ Xxxxxxx X. X'Xxxxx
-----------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: Senior Vice President
Address for notice:
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
SCHEDULE 1.1tt
Lender Commitment Percentage
------ ---------------------
Banknorth, N.A. 20%
Manufacturers and Traders Trust Company 25%
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.,
"Rabobank International",
New York Branch 20%
Xxxxxxx Bank, National Association 35%
EXHIBIT 2.1
Form of Term Note
EXHIBIT 2.2
Form of Revolving Line of Credit Note
EXHIBIT 2.3
Form of Acquisition/Capital Asset Line of Credit Note
EXHIBIT 6.4
Copy of Micropack Note
