EXHIBIT 10.1
NATIONSCREDIT COMMERCIAL FUNDING
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (as it may be amended, this "AGREEMENT")
is entered into on July __, 1998 between NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION ("LENDER"), having an
address at 1177 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
NATIONAL HOME CENTERS, INC. ("BORROWER"), whose chief executive office is
located at Xxxxxxx 000 Xxxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxxxxxxx 00000-0000
("BORROWER'S ADDRESS"). The Schedules to this Agreement are an integral part of
this Agreement and are incorporated herein by reference. Terms used, but not
defined elsewhere, in this Agreement are defined in Schedule B.
1. LOANS AND CREDIT ACCOMMODATIONS.
1.1 AMOUNT. Subject to the terms and conditions contained in this
Agreement, Lender will:
(a) REVOLVING LOANS AND CREDIT ACCOMMODATIONS. From time to time
during the Term at Borrower's request, make revolving loans to Borrower
("REVOLVING LOANS"), and make letters of credit, bankers acceptances and other
credit accommodations ("CREDIT ACCOMMODATIONS") available to Borrower, in each
case to the extent that there is sufficient Availability at the time of such
request to cover, dollar for dollar, the requested Revolving Loan or Credit
Accommodation; PROVIDED, that after giving effect to such Revolving Loan or
Credit Accommodation, (x) the outstanding balance of all monetary Obligations
(INCLUDING the principal balance of any Term Loan and, solely for the purpose of
determining compliance with this provision, the Credit Accommodation Balance)
will not exceed the Maximum Facility Amount set forth in Section 1(a) of
Schedule A and (y) none of the other Loan Limits set forth in Section 1 of
Schedule A will be exceeded. For this purpose, "AVAILABILITY" means:
(i) the aggregate amount of Eligible Accounts (less maximum
existing or asserted taxes, discounts, credits and allowances)
multiplied by the Accounts Advance Rate set forth in Section 1(b)(i)
of Schedule A but not to exceed the Accounts Sublimit set forth in
Section 1(c) of Schedule A;
PLUS
(ii) the lower of cost or market value of Eligible Inventory
multiplied by the Inventory Advance Rate(s) set forth in Section
1(b)(ii) of Schedule A, but not to exceed the Inventory Sublimit(s)
set forth in Section 1(d) of Schedule A;
MINUS
(iii) all Reserves which Lender has established pursuant to
Section 1.2 (including those to be established in connection with the
requested Revolving Loan or Credit Accommodation);
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MINUS
(iv) the outstanding balance of all of the monetary Obligations
(EXCLUDING the Credit Accommodation Balance and the principal balance
of the Term Loan); and
PLUS
(v) the Overadvance Amount, if any, set forth in Section 1(g)
of Schedule A.
(b) TERM LOAN. On the date of this Agreement, make (i) an advance to
Borrower computed with respect to the value of Borrower's Eligible Equipment
(the ("EQUIPMENT ADVANCE") in the principal amount, if any, set forth in Section
2(a)(i) of Schedule A, and (ii) an advance to Borrower computed with respect to
the value of Borrower's Eligible Real Property (the "REAL PROPERTY ADVANCE") in
the principal amount, if any, set forth in Section 2(a)(ii) of Schedule A. The
Equipment Advance and the Real Property Advance are collectively referred to as
the "TERM LOAN."
1.2 RESERVES. Lender may from time to time establish and revise such
reserves as Lender deems appropriate in its sole discretion exercised in good
faith ("RESERVES") to reflect (i) events, conditions, contingencies or risks
which affect or may affect (A) the Collateral or its value, or the security
interests and other rights of Lender in the Collateral or (B) the assets,
business or prospects of Borrower or any Obligor, (ii) Lender's good faith
concern that any Collateral report or financial information furnished by or on
behalf of Borrower or any Obligor to Lender is or may have been incomplete,
inaccurate or misleading in any material respect, (iii) any fact or circumstance
which Lender determines in good faith constitutes, or could constitute, a
Default or Event of Default or (iv) any other events or circumstances which
Lender determines in good faith make the establishment or revision of a Reserve
prudent. Without limiting the foregoing, Lender shall (x) in the case of each
Credit Accommodation issued for the purchase of Inventory (a) which meets the
criteria for Eligible Inventory set forth in clauses (i), (ii), (iii), (v) and
(vi) of the definition of Eligible Inventory, (b) which is or will be in transit
to one of the locations set forth in Section 9(d) of Schedule A, (c) which is
fully insured in a manner satisfactory to Lender and (d) with respect to which
Lender is in possession of all bills of lading and all other documentation which
Lender has requested, all in form and substance satisfactory to Lender in its
sole discretion, establish a Reserve equal to the cost of such Inventory (plus
all duties, freight, taxes, insurance, costs and other charges and expenses
relating to such Credit Accommodation or such Eligible Inventory) multiplied by
a percentage equal to 100% minus the Inventory Advance Rate applicable to
Eligible Inventory and (y) in the case of any other Credit Accommodation issued
for any purpose, establish a Reserve equal to the full amount of such Credit
Accommodation plus all costs and other charges and expenses relating to such
Credit Accommodation. In addition, (x) Lender shall establish a permanent
Reserve in the amount set forth in Section 1(f) of Schedule A, and (y) if the
outstanding principal balance of the Term Loan advance with respect to Eligible
Equipment exceeds the percentage set forth in Section 2(a)(i) of Schedule A of
the appraised
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value of such Eligible Equipment, Lender may establish an additional Reserve in
the amount of such excess (and, for this purpose, if payments of principal on
the Term Loan advances against Eligible Equipment and Real Property are not
calculated separately, payments of principal of the Term Loan made by Borrower
shall be deemed to apply to the Term Loan advance with respect to Eligible
Equipment and Real Property, respectively, in proportion to the original
principal amounts of such advances). Lender may, in its discretion, establish
and revise Reserves by deducting them in determining Availability or by
reclassifying Eligible Accounts or Eligible Inventory as ineligible. In no event
shall the establishment of a Reserve in respect of a particular actual or
contingent liability obligate Lender to make advances hereunder to pay such
liability or otherwise obligate Lender with respect thereto.
1.3 OTHER PROVISIONS APPLICABLE TO CREDIT ACCOMMODATIONS. Lender may, in
its sole discretion and on terms and conditions acceptable to Lender, make
Credit Accommodations available to Borrower either by issuing them, or by
causing other financial institutions to issue them supported by Lender's
guaranty or indemnification; provided, that after giving effect to each Credit
Accommodation, the Credit Accommodation Balance will not exceed the Credit
Accommodation Limit set forth in Section 1(e) of Schedule A. Any amounts paid by
Lender in respect of a Credit Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear interest, and
be payable, in the same manner as a Revolving Loan. Borrower agrees to execute
all documentation required by Lender or the issuer of any Credit Accommodation
in connection with any such Credit Accommodation.
1.4 REPAYMENT. Accrued interest on all monetary Obligations shall be
payable on the first day of each month. Principal of the Term Loan shall be
repaid as set forth in Section 2(b) of Schedule A. If at any time any of the
Loan Limits are exceeded, Borrower will immediately pay to Lender such amounts
(or provide cash collateral to Lender with respect to the Credit Accommodation
Balance in the manner set forth in Section 7.3), as shall cause Borrower to be
in full compliance with all of the Loan Limits. Notwithstanding the foregoing,
Lender may, in its sole discretion, make or permit Revolving Loans, the Term
Loan, any Credit Accommodations or any other monetary Obligations to be in
excess of any of the Loan Limits; PROVIDED, that Borrower shall, upon Lender's
demand, pay to Lender such amounts as shall cause Borrower to be in full
compliance with all of the Loan Limits. All unpaid monetary Obligations shall be
payable in full on the Maturity Date (as defined in Section 7.1) or, if earlier,
the date of any early termination pursuant to Section 7.2.
1.5 MINIMUM BORROWING. Not applicable.
2. INTEREST AND FEES.
2.1 INTEREST. All Loans and other monetary Obligations shall bear interest
at the Interest Rate(s) set forth in Section 3 of Schedule A, except where
expressly set forth to the contrary in this Agreement or another Loan Document;
PROVIDED, that after the occurrence of
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an Event of Default, all Loans and other monetary Obligations shall, at Lender's
option, bear interest at a rate per annum equal to two percent (2%) in excess of
the rate otherwise applicable thereto (the "DEFAULT RATE") until paid in full
(notwithstanding the entry of any judgment against Borrower or the exercise of
any other right or remedy by Lender), and all such interest shall be payable on
demand. Changes in the Interest Rate shall be effective as of the date of any
change in the Prime Rate. Notwithstanding anything to the contrary contained in
this Agreement, the aggregate of all amounts deemed to be interest hereunder and
charged or collected by Lender is not intended to exceed the highest rate
permissible under any applicable law, but if it should, such interest shall
automatically be reduced to the extent necessary to comply with applicable law
and Lender will refund to Borrower any such excess interest received by Lender.
2.2 FEES AND WARRANTS. Borrower shall pay Lender the following fees, and
issue Lender the following warrants, which are in addition to all interest and
other sums payable by Borrower to Lender under this Agreement, and are not
refundable:
(a) CLOSING FEE. A closing fee in the amount set forth in Section
6(a) of Schedule A.
(b) FACILITY FEES. Not applicable.
(c) SERVICING FEE. Not applicable.
(d) UNUSED LINE FEE. An unused line fee at a rate equal to the
percentage per annum set forth in Section 6(d) of Schedule A of the amount by
which the Maximum Facility Amount exceeds the average daily outstanding
principal balance of the Loans and the Credit Accommodation Balance during the
immediately preceding month (or part thereof), which fee shall be payable, in
arrears, on the first day of each month so long as any of the Obligations are
outstanding and on the Maturity Date.
(e) MINIMUM BORROWING FEE. Not applicable.
(f) SUCCESS FEE. Not applicable.
(g) WARRANTS. Not applicable.
(h) CREDIT ACCOMMODATION FEES. The fees relating to Credit
Accommodations set forth in Section 6(i) of Schedule A, payable, in arrears, on
the first day of each month so long as any of the Obligations are outstanding
and on the Maturity Date, plus all costs and fees charged by the issuer, payable
as and when such costs and fees are charged.
2.3 COMPUTATION OF INTEREST AND FEES. All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the actual
number of days elapsed in a year of 360 days. For purposes of calculating
interest and fees, if the outstanding daily
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principal balance of the Revolving Loans is a credit balance, such balance shall
be deemed to be zero.
2.4 LOAN ACCOUNT; MONTHLY ACCOUNTINGS. Lender shall maintain a loan account
for Borrower reflecting all advances, charges, expenses and payments made
pursuant to this Agreement (the "LOAN ACCOUNT"), and shall provide Borrower with
a monthly accounting reflecting the activity in the Loan Account. Each
accounting shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by Lender), unless Borrower notifies Lender in
writing to the contrary within sixty days after such account is rendered,
describing the nature of any alleged errors or omissions. However, Lender's
failure to maintain the Loan Account or to provide any such accounting shall not
affect the legality or binding nature of any of the Obligations. Interest, fees
and other monetary Obligations due and owing under this Agreement (including
fees and other amounts paid by Lender to issuers of Credit Accommodations) may,
in Lender's discretion, be charged to the Loan Account, and will thereafter be
deemed to be Revolving Loans and will bear interest at the same rate as other
Revolving Loans.
3. SECURITY INTEREST.
3.1 To secure the full payment and performance of all of the Obligations,
Borrower hereby grants to Lender a continuing security interest in all of
Borrower's property and interests in property, whether tangible or intangible,
now owned or in existence or hereafter acquired or arising, wherever located,
including Borrower's interest in all of the following, whether or not eligible
for lending purposes: (i) all Accounts, Chattel Paper, Instruments, Documents,
Goods (including Inventory, farm products and consumer goods), Investment
Property, General Intangibles, Deposit Accounts and money, (ii) all proceeds and
products of all of the foregoing (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties for loss or any
destruction of any of the foregoing) and (iii) all books and records relating to
any of the foregoing.
4. ADMINISTRATION.
4.1 LOCK BOXES AND BLOCKED ACCOUNTS. Borrower will, at its expense,
establish (and revise from time to time as Lender may require) collection
procedures acceptable to Lender, in Lender's sole discretion, for the collection
of checks, wire transfers and other proceeds of Accounts ("ACCOUNT PROCEEDS"),
which may include (i) directing all Account Debtors to send all such proceeds
directly to a post office box designated by Lender either in the name of
Borrower (but as to which Lender has exclusive access) or, at Lender's option,
in the name of Lender (a "LOCK BOX") or (ii) depositing all Account Proceeds
received by Borrower into one or more bank accounts maintained in Lender's name
(each, a "BLOCKED ACCOUNT"), under an arrangement acceptable to Lender with a
depository bank acceptable to Lender, pursuant to which all funds deposited into
each Blocked Account are to be transferred to Lender in such
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manner, and with such frequency, as Lender shall specify or (iii) a combination
of the foregoing; PROVIDED, that, although Lender reserves the right to require
the establishment of Lock Boxes at a future date, (i) no Lock Boxes shall be
required at this time and (ii) it is Lender's present intention not to require
Lock Boxes in the absence of (A) a material adverse change in Borrower's
business or operations or in the condition or value of the Collateral or (B) the
occurrence of a problem involving the operation of the Blocked Accounts.
Borrower agrees to execute, and to cause its depository banks to execute, such
Lock Box and Blocked Account agreements and other documentation as Lender shall
reasonably require from time to time in connection with the foregoing.
4.2 REMITTANCE OF PROCEEDS. Except as provided in Section 4.1, all proceeds
arising from the sale or other disposition of any Collateral shall be delivered,
in kind, by Borrower to Lender in the original form in which received by
Borrower not later than the following Business Day after receipt by Borrower.
Until so delivered to Lender, Borrower shall hold such proceeds separate and
apart from Borrower's other funds and property in an express trust for Lender.
Nothing in this Section 4.2 shall limit the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
4.3 APPLICATION OF PAYMENTS. Lender may, in its sole discretion, apply,
reverse and re-apply all cash and non-cash proceeds of Collateral or other
payments received with respect to the Obligations, in such order and manner as
Lender shall determine, whether or not the Obligations are due, and whether
before or after the occurrence of a Default or an Event of Default. For purposes
of determining Availability, such amounts will be credited to the Loan Account
and the Collateral balances to which they relate upon Lender's receipt of advice
from Lender's Bank (set forth in Section 11 of Schedule A) that such items have
been credited to Lender's account at Lender's Bank (or upon Lender's deposit
thereof at Lender's Bank in the case of payments received by Lender in kind), in
each case subject to final payment and collection. However, for purposes of
computing interest on the Obligations, such items shall be deemed applied by
Lender one Business Day after Lender's receipt of advice of deposit thereof at
Lender's Bank.
4.4 NOTIFICATION; VERIFICATION. Lender or its designee may, from time to
time, whether or not a Default or Event of Default has occurred (except as
expressly provided below): (i) verify directly with the Account Debtors the
validity, amount and other matters relating to the Accounts and Chattel Paper,
by means of mail, telephone or otherwise, either in the name of Borrower or
Lender or such other name as Lender may choose; (ii) notify Account Debtors that
Lender has a security interest in the Accounts and that payment thereof is to be
made directly to Lender; PROVIDED, that if Lender does so prior to the
occurrence of an Event of Default, Lender shall use its best efforts to give
Borrower at least one Business Day's prior written or verbal notice thereof
(although Lender shall not be liable to Borrower for Lender's failure to give
such notice) and (iii) after the occurrence and during the continuance
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of a Default or Event of Default, demand, collect or enforce payment of any
Accounts and Chattel Paper (but without any duty to do so).
4.5 POWER OF ATTORNEY. Borrower hereby grants to Lender an irrevocable
power of attorney, coupled with an interest, authorizing and permitting Lender
(acting through any of its officers, employees, attorneys or agents), at any
time (whether or not a Default or Event of Default has occurred and is
continuing, except as expressly provided below), at Lender's option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the following, in Borrower's name or otherwise: (i) execute on
behalf of Borrower any documents that Lender may, in its sole discretion,
exercised in good faith, deem advisable in order to perfect and maintain
Lender's security interests in the Collateral, to exercise a right of Borrower
or Lender, or to fully consummate all the transactions contemplated by this
Agreement and the other Loan Documents (including such financing statements and
continuation financing statements, and amendments thereto, as Lender shall deem
necessary or appropriate) and to file as a financing statement any copy of this
Agreement or any financing statement signed by Borrower; (ii) execute on behalf
of Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or lease (as lessor or lessee) any real
or personal property which is part of the Collateral or, after the occurrence
and during the continuance of an Event of Default, in which Lender has an
interest; (iii) execute on behalf of Borrower any invoices relating to any
Accounts, any draft against any Account Debtor, any proof of claim in
bankruptcy, any notice of Lien or claim, and any assignment or satisfaction of
mechanic's, materialman's or other Lien; (iv) execute on behalf of Borrower any
notice to any Account Debtor; (v) receive and otherwise take control in any
manner of any cash or non-cash items of payment or proceeds of Collateral except
as set forth in Section 4.1; (vi) endorse Borrower's name on all checks and
other forms of remittances received by Lender; (vii) pay, contest or settle any
Lien, charge, encumbrance, security interest and adverse claim in or to any of
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (viii) after the occurrence and during the
continuance of a Default or Event of Default, grant extensions of time to pay,
compromise claims relating to, and settle Accounts, Chattel Paper and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (ix) pay any sums required on account of
Borrower's taxes or to secure the release of any Liens therefor; (x) pay any
amounts necessary to obtain, or maintain in effect, any of the insurance
described in Section 5.12; (xi) settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (xii) instruct any third party having custody or control of any
Collateral or books or records belonging to, or relating to, Borrower to give
Lender the same rights of access and other rights with respect thereto as Lender
has under this Agreement; and (xiii) after the occurrence of a Default or Event
of Default, change the address for delivery of Borrower's mail and receive and
open all mail addressed to Borrower. Any and all sums paid, and any and all
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred, by Lender with respect to the foregoing shall be added to and become
part of the Obligations,
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shall be payable on demand, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations. Borrower agrees that
Lender's rights under the foregoing power of attorney or any of Lender's other
rights under this Agreement or the other Loan Documents shall not be construed
to indicate that Lender is in control of the business, management or properties
of Borrower.
4.6 DISPUTES. Borrower shall promptly, and in any event, no later than five
calendar days from the time Borrower receives notice of such disputes or claims,
notify Lender of (i) all verbal disputes or claims relating to Accounts and
Chattel Paper if they aggregate in excess of $50,000 per month and (ii) written
disputes or claims relating to Accounts and Chattel Paper if they aggregate in
excess of $25,000 per month; PROVIDED, that nothing contained in this sentence
shall diminish Borrower's obligation to reflect any disputes or claims on any
reports required to be submitted to Lender pursuant to this Agreement. Borrower
will not, without Lender's prior written consent, compromise or settle any
Account or Chattel Paper for less than the full amount thereof, grant any
extension of time of payment of any Account or Chattel Paper, release (in whole
or in part) any Account Debtor or other person liable for the payment of any
Account or Chattel Paper or grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any Account or
Chattel Paper; except that prior to the occurrence of an Event of Default,
Borrower may take any of such actions in the ordinary course of its business,
PROVIDED that Borrower promptly reports the same to Lender.
4.7 INVOICES. At Lender's request, Borrower will cause all invoices and
statements which it sends to Account Debtors or other third parties to be
marked, in a manner satisfactory to Lender, to reflect Lender's security
interest therein.
4.8 INVENTORY.
(a) RETURNS. Provided that no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower will promptly determine the reason for
such return and promptly issue a credit memorandum to the Account Debtor in the
appropriate amount (sending a copy to Lender upon Lender's request). After the
occurrence and during the continuance of an Event of Default, Borrower will not,
without Lender's prior written consent, accept any returns which are equal to or
greater than (i) $20,000 in the aggregate if such Inventory is unmerchantable
and (ii) $100,000 in the aggregate if such Inventory is merchantable. Regardless
of whether an Event of Default has occurred, Borrower will (i) hold the returned
Inventory in trust for Lender; (ii) segregate all returned Inventory from all of
Borrower's other property; (iii) conspicuously label the returned Inventory as
Lender's property; and (iv) immediately notify Lender of the return of such
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory and, at Lender's request, deliver such returned Inventory
to Lender at an address specified by Lender.
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(b) OTHER COVENANTS. Borrower will not, without Lender's prior
written consent, (i) store any Inventory with any warehouseman or other third
party other than as set forth in Section 9(d) of Schedule A or (ii) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent
basis. All of the Inventory has been produced only in accordance with the Fair
Labor Standards Act of 1938 and all rules, regulations and orders promulgated
thereunder.
4.9 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice, prior to the occurrence of a Default or an Event of
Default, and at any time and with or without notice after the occurrence of a
Default or an Event of Default, Lender or its agents shall have the right to
inspect the Collateral, and the right to examine and copy Borrower's books and
records. Lender shall take reasonable steps to keep confidential all information
obtained in any such inspection or examination, but Lender shall have the right
to disclose any such information to its auditors, regulatory agencies, attorneys
and participants, and pursuant to any subpoena or other legal process. Borrower
agrees to give Lender access to any or all of Borrower's premises to enable
Lender to conduct such inspections and examinations. Such inspections and
examinations shall be at Borrower's expense and the charge therefor shall be
$650 per person per day (or such higher amount as shall represent Lender's then
current standard charge), plus reasonable out-of-pocket expenses. Lender may, at
Borrower's expense, use Borrower's personnel, computer and other equipment,
programs, printed output and computer readable media, supplies and premises for
the collection, sale or other disposition of Collateral to the extent Lender, in
its sole discretion, deems appropriate. Borrower hereby irrevocably authorizes
all accountants and third parties to disclose and deliver to Lender, at
Borrower's expense, all financial information, books and records, work papers,
management reports and other information in their possession regarding Borrower.
Borrower will not enter into any agreement with any accounting firm, service
bureau or third party to store Borrower's books or records at any location other
than Borrower's Address without first obtaining Lender's written consent (which
consent may be conditioned upon such accounting firm, service bureau or other
third party agreeing to give Lender the same rights with respect to access to
books and records and related rights as Lender has under this Agreement).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce Lender to enter into this Agreement, Borrower represents,
warrants and covenants as follows (it being understood that (i) each such
representation and warranty will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation by, Lender, and (ii) the accuracy of
each such representation, warranty and covenant will be a condition to each Loan
and Credit Accommodation):
5.1 EXISTENCE AND AUTHORITY. Borrower is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation. Borrower
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is qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement and all of the
other Loan Documents have been duly and validly authorized, do not violate
Borrower's articles or certificate of incorporation, by-laws or other
organizational documents, or any law or any agreement or instrument or any court
order which is binding upon Borrower or its property, do not constitute grounds
for acceleration of any indebtedness or obligation under any agreement or
instrument which is binding upon Borrower or its property, and do not require
the consent of any Person. This Agreement and such other Loan Documents have
been duly executed and delivered by, and are enforceable against, Borrower, and
all other Obligors who have signed them, in accordance with their respective
terms. Sections 9(g) and 9(h) of Schedule A set forth the ownership of Borrower
and the names and ownership of Borrower's Subsidiaries as of the date of this
Agreement.
5.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct and complete legal name as of the date
hereof. Listed in Sections 9(a), 9(b) and 9(c) of Schedule A are all prior names
of Borrower and all of Borrower's present and prior trade names. Borrower shall
give Lender at least thirty days' prior written notice before changing its name
or doing business under any other name. Borrower has complied with all laws
relating to the conduct of business under a fictitious business name. Borrower
represents and warrants that (i) each trade name does not refer to another
corporation or other legal entity; (ii) all Accounts invoiced under any such
trade names are owned exclusively by Borrower and are subject to the security
interest of Lender and the other terms of this Agreement and (iii) all schedules
of Accounts, including any sales made or services rendered using any trade name
shall show Borrower's name as assignor.
5.3 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower has good and marketable
title to the Collateral. The Collateral now is and will remain free and clear of
any and all liens, charges, security interests, encumbrances and adverse claims,
except for Permitted Liens. Lender now has, and will continue to have, a
first-priority perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and Borrower will at all times
defend Lender and the Collateral against all claims of others. None of the
Collateral which is Equipment is or will be affixed to any real property in such
a manner, or with such intent, as to become a fixture. Except for leases or
subleases as to which Borrower has delivered to Lender a landlord's waiver in
form and substance satisfactory to Lender, Borrower is not a lessee or sublessee
under any real property lease or sublease pursuant to which the lessor or
sublessor may obtain any rights in any of the Collateral, and no such lease or
sublease now prohibits, restrains, impairs or conditions, or will prohibit,
restrain, impair or condition, Borrower's right to remove any Collateral from
the premises. Whenever any Collateral is located upon premises in which any
third party has an interest (whether as owner, mortgagee, beneficiary under a
deed of trust, lien or otherwise), Borrower shall, whenever requested by Lender,
cause each such third party to execute and deliver to Lender, in form and
substance acceptable to Lender, such waivers and subordinations as Lender shall
specify, so
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as to ensure that Lender's rights in the Collateral are, and will continue to
be, superior to the rights of any such third party. Borrower will keep in full
force and effect, and will comply with all the terms of, any lease of real
property where any of the Collateral now or in the future may be located.
5.4 ACCOUNTS AND CHATTEL PAPER. As of each date reported by Borrower, all
Accounts which Borrower has reported to Lender as being Eligible Accounts comply
in all respects with the criteria for eligibility established by Lender and in
effect at such time. All Accounts and Chattel Paper are genuine and in all
respects what they purport to be, arise out of a completed, bona fide and
unconditional and non-contingent sale and delivery of goods or rendition of
services by Borrower in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts or other
documents relating thereto, to the best of Borrower's knowledge, each Account
Debtor thereunder had the capacity to contract at the time any contract or other
document giving rise to such Accounts and Chattel Paper were executed, and the
transactions giving rise to such Accounts and Chattel Paper comply with all
applicable laws and governmental rules and regulations.
5.5 INVESTMENT PROPERTY. Borrower will take any and all actions required or
requested by Lender, from time to time, to (i) cause Lender to obtain exclusive
control of any Investment Property in a manner acceptable to Lender and (ii)
obtain from any issuers of Investment Property and such other Persons as Lender
shall specify, for the benefit of Lender, written confirmation of Lender's
exclusive control over such Investment Property and take such other actions as
Lender may request to perfect Lender's security interest in such Investment
Property. For purposes of this Section 5.5, Lender shall have exclusive control
of Investment Property if (A) such Investment Property consists of certificated
securities and Borrower delivers such certificated securities to Lender (with
appropriate endorsements if such certificated securities are in registered
form); (B) such Investment Property consists of uncertificated securities and
either (x) Borrower delivers such uncertificated securities to Lender or (y) the
issuer thereof agrees, pursuant to documentation in form and substance
satisfactory to Lender, that it will comply with instructions originated by
Lender without further consent by Borrower, and (C) such Investment Property
consists of security entitlements and either (x) Lender becomes the entitlement
holder thereof or (y) the appropriate securities intermediary agrees, pursuant
to documentation in form and substance satisfactory to Lender, that it will
comply with entitlement orders originated by Lender without further consent by
Borrower.
5.6 PLACE OF BUSINESS; LOCATION OF COLLATERAL. Borrower's Address is
Borrower's chief executive office and the location of its books and records. In
addition, except as provided in the immediately following sentence, Borrower has
places of business and Collateral located only at the locations set forth on
Sections 9(d) and 9(e) of Schedule A. Borrower will give Lender at least thirty
days' prior written notice before opening any additional place of business,
changing its chief executive office or the location of its books and records, or
moving any of the Collateral to a location other than Borrower's Address or
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one of the locations set forth in Sections 9(d) and 9(e) of Schedule A, and will
execute and deliver all financing statements and other agreements, instruments
and documents which Lender shall require as a result thereof.
5.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
delivered to Lender by or on behalf of Borrower have been prepared in conformity
with GAAP and completely and fairly reflect the financial condition of Borrower,
at the times and for the periods therein stated. Between the last date covered
by any such financial statement provided to Lender and the date hereof (or, with
respect to the remaking of this representation in connection with the making of
any Loan or the providing of any Credit Accommodation, the date such Loan is
made or such Credit Accommodation is provided), there has been no material
adverse change in the financial condition or business of Borrower. Borrower is
solvent and able to pay its debts as they come due, and has sufficient capital
to carry on its business as now conducted and as proposed to be conducted. All
schedules, reports and other information and documentation delivered by Borrower
to Lender with respect to the Collateral are, or will be, when delivered, true,
correct and complete as of the date delivered or the date specified therein.
5.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed all tax returns and reports required by applicable law, has timely paid or
accrued all applicable taxes, assessments, deposits and contributions owing by
Borrower and will timely pay all such items as they became due and payable.
Borrower may, however, defer payment of any contested taxes; PROVIDED, that
Borrower (i) in good faith contests Borrower's obligation to pay such taxes by
appropriate proceedings promptly and diligently instituted and conducted; (ii)
notifies Lender in writing of the commencement of, and any material development
in, the proceedings; (iii) posts bonds or takes any other steps required to keep
the contested taxes from becoming a Lien upon any of the Collateral and (iv)
maintains adequate reserves therefor in conformity with GAAP. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay, all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency.
5.9 COMPLIANCE WITH LAWS. Borrower has complied in all material respects
with all provisions of all applicable laws and regulations, including those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, the payment and withholding of taxes, ERISA
and other employee matters, safety and environmental matters.
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5.10 LITIGATION. Section 9(f) of Schedule A discloses all claims,
proceedings, litigation or investigations pending or (to the best of Borrower's
knowledge) threatened against Borrower. There is no claim, suit, litigation,
proceeding or investigation pending or (to the best of Borrower's knowledge)
threatened by or against or affecting Borrower in any court or before any
governmental agency (or any basis therefor known to Borrower) which may result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Lender in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower.
5.11 USE OF PROCEEDS. All proceeds of all Loans will be used solely for
lawful business purposes.
5.12 INSURANCE. Borrower will at all times carry property, liability and
other insurance, with insurers acceptable to Lender, in such form and amounts,
and with such deductibles and other provisions, as Lender shall require, and
Borrower will provide evidence of such insurance to Lender, so that Lender is
satisfied that such insurance is, at all times, in full force and effect. Each
property insurance policy shall name Lender as loss payee and shall contain a
lender's loss payable endorsement in form acceptable to Lender, each liability
insurance policy shall name Lender as an additional insured, and each business
interruption insurance policy shall be collaterally assigned to Lender, all in
form and substance satisfactory to Lender. All policies of insurance shall
provide that they may not be cancelled or changed without at least thirty days'
prior written notice to Lender, shall contain breach of warranty coverage, and
shall otherwise be in form and substance satisfactory to Lender. Upon receipt of
the proceeds of any such insurance, Lender shall apply such proceeds in
reduction of the Obligations as Lender shall determine in its sole discretion.
Borrower will promptly deliver to Lender copies of all reports made to insurance
companies.
5.13 FINANCIAL AND COLLATERAL REPORTS. Borrower has kept and will keep
adequate records and books of account with respect to its business activities
and the Collateral in which proper entries are made in accordance with GAAP
reflecting all its financial transactions, and will cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP,
unless Borrower's certified public accountants concur in any change therein and
such change is disclosed to Lender):
(a) COLLATERAL REPORTS. On or before the fifteenth day of each month,
an aging of Borrower's Accounts, Chattel Paper and notes receivable, weekly
summary Inventory reports and detailed monthly Inventory reports, all in such
form, and together with such additional certificates, schedules and other
information with respect to the Collateral or the business of Borrower or any
Obligor, as Lender shall request; PROVIDED, that Borrower's failure to execute
and deliver the same shall not affect or limit Lender's security interests and
other rights in any of the Accounts, nor shall Lender's failure to advance or
lend against a
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specific Account affect or limit Lender's security interest and other rights
therein. Together with each such schedule, Borrower shall furnish Lender with
copies (or, at Lender's request, originals) of all contracts, orders, invoices,
and other similar documents, and all original shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery, for any goods the
sale or disposition of which gave rise to such Accounts, and Borrower warrants
the genuineness of all of the foregoing. In addition, Borrower shall deliver to
Lender the originals of all Instruments, Chattel Paper, security agreements,
guaranties and other documents and property evidencing or securing any Accounts,
immediately upon receipt thereof and in the same form as received, with all
necessary endorsements. Lender may destroy or otherwise dispose of all
documents, schedules and other papers delivered to Lender pursuant to this
Agreement (other than originals of Instruments, Chattel Paper, security
agreements, guaranties and other documents and property evidencing or securing
any Accounts) six months after Lender receives them, unless Borrower requests
their return in writing in advance and arranges for their return to Borrower at
Borrower's expense.
(b) ANNUAL STATEMENTS. Not later than ninety days after the close of
each fiscal year of Borrower, unqualified (except for a qualification for a
change in accounting principles with which the accountant concurs and a
going-concern qualification), audited financial statements of Borrower and its
Subsidiaries as of the end of such year, on a consolidated and consolidating
basis, certified by a firm of independent certified public accountants of
recognized standing selected by Borrower but acceptable to Lender, together with
a copy of any management letter issued in connection therewith and a letter from
such accountants acknowledging that Lender is relying on such financial
statements;
(c) INTERIM STATEMENTS. Not later than twenty days after the end of
each month hereafter, including the last month of Borrower's fiscal year,
unaudited interim financial statements of Borrower and its Subsidiaries as of
the end of such month and of the portion of Borrower's fiscal year then elapsed,
on a consolidated and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly presenting
the consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain notes;
(d) PROJECTIONS, ETC. Such business projections, Availability
projections, business plans, budgets and cash flow statements for Borrower and
its Subsidiaries as Lender shall request from time to time;
(e) SHAREHOLDER REPORTS, ETC. Promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which Borrower files with the Securities and
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Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;
(f) ERISA REPORTS. Upon request by Lender, copies of any annual report
to be filed pursuant to the requirements of ERISA in connection with each plan
subject thereto; and
(g) OTHER INFORMATION. Such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's and each of its Subsidiary's financial
condition or results of operations.
5.14 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Lender with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Lender, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that Lender may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.15 MAINTENANCE OF COLLATERAL, ETC. Borrower will maintain all of its
Equipment in good working condition, ordinary wear and tear excepted, and
Borrower will not use the Collateral for any unlawful purpose. Borrower will
immediately advise Lender in writing of any material loss or damage to the
Collateral and of any investigation, action, suit, proceeding or claim relating
to the Collateral or which may result in an adverse impact upon Borrower's
business, assets or financial condition.
5.16 NOTIFICATION OF CHANGES. Borrower will promptly notify Lender in
writing of any change in its officers or directors, the opening of any new bank
account or other deposit account, or any material adverse change in the business
or financial affairs of Borrower or the existence of any circumstance which
would make any representation or warranty of Borrower untrue in any material
respect or constitute a material breach of any covenant of Borrower.
5.17 FURTHER ASSURANCES. Borrower agrees, at its expense, to take all
actions, and execute or cause to be executed and delivered to Lender all
promissory notes, security agreements, agreements with landlords, mortgagees and
processors and other bailees, subordination and intercreditor agreements and
other agreements, instruments and documents as Lender may request from time to
time, to perfect and maintain Lender's security interests in the Collateral and
to fully effectuate the transactions contemplated by this Agreement.
5.18 NEGATIVE COVENANTS. Except as set forth in Section 13 of Schedule A,
Borrower will not, without Lender's prior written consent, (i) merge or
consolidate with another Person, form any new Subsidiary or acquire any interest
in any Person; (ii) acquire any assets except in the ordinary course of business
and as otherwise permitted by this Agreement and the other Loan Documents; (iii)
enter into any transaction outside the ordinary course of business;
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(iv) sell or transfer any Collateral or other assets, except that Borrower may
sell finished goods Inventory in the ordinary course of its business; (v) make
any loans to, or investments in, any Affiliate or other Person in the form of
money or other assets; (vi) incur any debt outside the ordinary course of
business; (vii) guaranty or otherwise become liable with respect to the
obligations of another party or entity; (viii) pay or declare any dividends or
other distributions on Borrower's stock, if Borrower is a corporation (except
for dividends payable solely in capital stock of Borrower) or with respect to
any equity interests, if Borrower is not a corporation; (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's capital
stock or other equity interests; (x) make any change in Borrower's capital
structure; (xi) dissolve or elect to dissolve; (xii) pay any principal or
interest on any indebtedness owing to an Affiliate, (xiii) enter into any
transaction with an Affiliate other than on arms-length terms; or (xiv) agree to
do any of the foregoing.
5.19 FINANCIAL COVENANTS.
(a) CAPITAL EXPENDITURES. Borrower will not expend or commit to
expend, directly or indirectly, for capital expenditures (including capital
lease obligations) in excess of the amount set forth in Section 8(a) of Schedule
A as the Capital Expenditure Limitation in any fiscal year.
(b) NET WORTH. Borrower will at all times maintain a net worth of at
least the amount set forth in Section 8(b) of Schedule A.
(c) TANGIBLE NET WORTH. Borrower will at all times maintain a minimum
tangible net worth of at least the amount set forth in Section 8(c) of Schedule
A.
(d) WORKING CAPITAL. Borrower will at all times maintain working
capital of at least the amount set forth in Section 8(d) of Schedule A.
(e) NET LOSSES. Borrower will not permit its cumulative net loss to
exceed the amount set forth in Section 8(e) of Schedule A.
(f) NET INCOME. Borrower will not permit its cumulative net income to
be less than the amount set forth in Section 8(f) of Schedule A.
(g) LEVERAGE. Borrower will not permit the ratio of its total
liabilities to its net worth to exceed, at any time, the ratio set forth in
Section 8(g) of Schedule A.
(h) OTHER FINANCIAL COVENANTS. Borrower will comply with any
additional financial covenants set forth in Section 8(j) of Schedule A.
5.20 YEAR 2000 COMPLIANCE.
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(a) Borrower has (i) initiated a review and assessment of all areas
within its and each of its Affiliates' business and operations that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Borrower or any of its Affiliates may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Borrower
reasonably believes that all computer applications that are material to its or
any of its Subsidiaries' business and operations will on a timely basis be able
to perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a Material Adverse
Effect. For this purpose, "MATERIAL ADVERSE EFFECT" means a material adverse
effect on Borrower's business or operations or on the condition or value of the
Collateral.
(b) Borrower will promptly notify Lender in the event Borrower
discovers or determines that any computer application (including those of its
suppliers and vendors) that is material to its or any of its Affiliates'
business and operations will not be Year 2000 compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect.
6. RELEASE AND INDEMNITY.
6.1 RELEASE. Borrower hereby releases Lender and its Affiliates and their
respective directors, officers, employees, attorneys and agents and any other
Person affiliated with or representing Lender (the "RELEASED Parties") from any
and all liability arising from acts or omissions under or pursuant to this
Agreement, whether based on errors of judgment or mistake of law or fact, except
for those arising from gross negligence or willful misconduct. However, in no
circumstance will any of the Released Parties be liable for lost profits or
other special or consequential damages. Such release is made on the date hereof
and remade upon each request for a Loan or Credit Accommodation by Borrower.
Without limiting the foregoing:
(a) Lender shall not be liable for (i) any shortage or discrepancy in,
damage to, or loss or destruction of, any goods, the sale or other disposition
of which gave rise to an Account; (ii) any error, act, omission, or delay of any
kind occurring in the settlement, failure to settle, collection or failure to
collect any Account; (iii) settling any Account in good faith for less than the
full amount thereof; or (iv) any of Borrower's obligations under any contract or
agreement giving rise to an Account; and
(b) In connection with Credit Accommodations or any underlying
transaction, Lender shall not be responsible for the conformity of any goods to
the documents presented, the validity or genuineness of any documents, delay,
default or fraud by Borrower, shippers and/or any other Person. Borrower agrees
that any action taken by Lender, if taken in good
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faith, or any action taken by an issuer of any Credit Accommodation, under or in
connection with any Credit Accommodation, shall be binding on Borrower and shall
not create any resulting liability to Lender. In furtherance thereof, Lender
shall have the full right and authority to clear and resolve any questions of
non-compliance of documents, to give any instructions as to acceptance or
rejection of any documents or goods, to execute for Borrower's account any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, to grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances or documents, and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the Credit Accommodations or applications
and other documentation pertaining thereto.
6.2 INDEMNITY. Borrower hereby agrees to indemnify the Released Parties and
hold them harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and expenses
(including attorneys' fees), of every nature, character and description, which
the Released Parties may sustain or incur based upon or arising out of any of
the transactions contemplated by this Agreement or the other Loan Documents or
any of the Obligations, including any transactions or occurrences relating to
the issuance of any Credit Accommodation, the Collateral relating thereto, any
drafts thereunder and any errors or omissions relating thereto (including any
loss or claim due to any action or inaction taken by the issuer of any Credit
Accommodation) (and for this purpose any charges to Lender by any issuer of
Credit Accommodations shall be conclusive as to their appropriateness and may be
charged to the Loan Account), or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by Lender relating to Borrower or
the Obligations (except any such amounts sustained or incurred as the result of
the willful misconduct or gross negligence of the Released Parties).
Notwithstanding any provision in this Agreement to the contrary, the indemnity
agreement set forth in this Section shall survive any termination of this
Agreement.
7. TERM.
7.1 MATURITY DATE. Lender's obligation to make Loans and to provide Credit
Accommodations under this Agreement shall initially continue in effect until the
Initial Maturity Date set forth in Section 7 of Schedule A (the "INITIAL TERM");
PROVIDED, that such date shall automatically be extended (the Initial Maturity
Date, as it may be so extended, being referred to as the "MATURITY DATE") for
successive additional terms of three years each (each a "RENEWAL TERM"), unless
one party gives written notice to the other, not less than sixty days prior to
the Maturity Date, that such party elects not to extend the Maturity Date. This
Agreement and the other Loan Documents and Lender's security interests in and
Liens upon the Collateral, and all representations, warranties and covenants of
Borrower contained herein and therein, shall remain in full force and effect
after the Maturity Date until all of the monetary Obligations are indefeasibly
paid in full.
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7.2 EARLY TERMINATION. Lender's obligation to make Loans and to provide
Credit Accommodations under this Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective thirty days after written
notice of termination is given to Lender or (ii) by Lender at any time after the
occurrence of an Event of Default, without notice, effective immediately;
PROVIDED, that if any Affiliate of Borrower is also a party to a financing
arrangement with Lender, no such early termination shall be effective unless
such Affiliate simultaneously terminates its financing arrangement with Lender.
If so terminated under this Section 7.2, Borrower shall pay to Lender (i) an
early termination fee (the "EARLY TERMINATION FEE") in the amount set forth in
Section 6(h) of Schedule A plus (ii) any earned but unpaid Facility Fee;
PROVIDED, that if any Affiliate of NationsBank repays the Obligations prior to
the Maturity Date, no such Early Termination Fee shall be due hereunder. Such
fee shall be due and payable on the effective date of termination and thereafter
shall bear interest at a rate equal to the highest rate applicable to any of the
Obligations. In addition, if Borrower so terminates and repays the Obligations
without having provided Lender with at least thirty days' prior written notice
thereof, an additional amount equal to thirty days of interest at the applicable
Interest Rate(s), based on the average outstanding amount of the Obligations for
the six month period immediately preceding the date of termination.
7.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay in full all Obligations,
whether or not all or any part of such Obligations are otherwise then due and
payable. Without limiting the generality of the foregoing, if, on the Maturity
Date or on any earlier effective date of termination, there are any outstanding
Credit Accommodations, then on such date Borrower shall provide to Lender cash
collateral in an amount equal to 110% of the Credit Accommodation Balance to
secure all of the Obligations (including estimated attorneys' fees and other
expenses) relating to said Credit Accommodations or such greater percentage or
amount as Lender reasonably deems appropriate, pursuant to a cash pledge
agreement in form and substance satisfactory to Lender.
7.4 EFFECT OF TERMINATION. No termination shall affect or impair any right
or remedy of Lender or relieve Borrower of any of the Obligations until all of
the monetary Obligations have been indefeasibly paid in full. Upon indefeasible
payment and performance in full of all of the monetary Obligations (and the
provision of cash collateral with respect to any Credit Accommodation Balance as
required by Section 7.3) and termination of this Agreement, Lender shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be reasonably required to terminate Lender's
security interests in the Collateral.
8. EVENTS OF DEFAULT AND REMEDIES.
8.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "EVENT OF DEFAULT" under this Agreement, and Borrower shall give
Lender immediate written notice thereof: (i) if any warranty, representation,
statement, report or certificate made
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or delivered to Lender by Borrower or any of Borrower's officers, employees or
agents is untrue or misleading; (ii) if Borrower fails to pay any principal or
interest on any Loan or any other monetary Obligation when due (or within three
days thereafter in the case of interest and fees for which there is insufficient
Availability); (iii) if Borrower breaches any covenant or obligation contained
in this Agreement or any other Loan Document or fails to perform any other
non-monetary Obligation; (iv) if any levy, assessment, attachment, seizure, lien
or encumbrance (other than a Permitted Lien) is made or permitted to exist on
all or any part of the Collateral; (v) if one or more judgments aggregating in
excess of $100,000 not fully covered by insurance (other than the cases set
forth in Section 9(f) of Schedule A, so long as such cases are being appealed
and any judgment lien or payment of the judgment is stayed pending appeal, or
any injunction or attachment, is obtained against Borrower or any Obligor which
remains unstayed for more than ten days or is enforced; (vi) the occurrence of
any default under any financing agreement, security agreement or other
agreement, instrument or document executed and delivered by (A) Borrower with,
or in favor of, any Person other than Lender which, in Lender's sole judgment,
could have a Material Adverse Effect or (B) Borrower or any Affiliate of
Borrower with, or in favor of, Lender or any Affiliate of Lender, which default
or breach continues unwaived beyond any applicable grace period provided
therein; (vii) the dissolution, death, termination of existence in good
standing, insolvency or business failure or suspension or cessation of business
as usual of Borrower or any Obligor (or of any general partner of Borrower or
any Obligor if it is a partnership) or the appointment of a receiver, trustee or
custodian for all or any part of the property of, or an assignment for the
benefit of creditors by Borrower or any Obligor, or the commencement of any
proceeding by Borrower or any Obligor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, or if Borrower
makes or sends a notice of a bulk transfer or calls a meeting of its creditors;
(viii) the commencement of any proceeding against Borrower or any Obligor under
any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; (ix) the actual or attempted revocation or termination of, or
limitation or denial of liability upon, any guaranty of the Obligations, or any
security document securing the Obligations, by any Obligor; (x) if Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement or hereunder, or if any Person who has subordinated such
indebtedness or obligations attempts to limit or terminate its subordination
agreement; (xi) if there is any actual or threatened indictment of Borrower or
any Obligor under any criminal statute or commencement or threatened
commencement of criminal or civil proceedings against Borrower or any Obligor,
pursuant to which the potential penalties or remedies sought or available
include forfeiture of any property of Borrower or such Obligor; (xii) if Xxxxx
Xxxxxx ceases to own, directly or indirectly, at least 51% of the capital stock
of Borrower; (xiii) if there is any change in the chief executive officer, chief
operating officer, or chief financial officer of Borrower, and, within sixty
(60) days of any such change, no replacement acceptable to Lender in its sole
discretion has been appointed; or
20
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
(xiv) if an Event of Default occurs under any Loan and Security Agreement
between Lender and an Affiliate of Borrower.
8.2 REMEDIES. Upon the occurrence of any Default, and at any time
thereafter, Lender, at its option, may cease making Loans or otherwise extending
credit to Borrower under this Agreement or any other Loan Document. Upon the
occurrence of any Event of Default, and at any time thereafter, Lender, at its
option, and without notice or demand of any kind (all of which are hereby
expressly waived by Borrower), may do any one or more of the following: (i)
cease making Loans or otherwise extending credit to Borrower under this
Agreement or any other Loan Document; (ii) accelerate and declare all or any
part of the Obligations to be immediately due, payable and performable,
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any of the Obligations; (iii) take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes Lender, without judicial process, to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain (or cause a custodian
to remain) on the premises in exclusive control thereof, without charge for so
long as Lender deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement; PROVIDED,
that if Lender seeks to take possession of any of the Collateral by court
process, Borrower hereby irrevocably waives (A) any bond and any surety or
security relating thereto required by law as an incident to such possession, (B)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof and (C) any requirement that Lender retain possession
of, and not dispose of, any such Collateral until after trial or final judgment;
(iv) require Borrower to assemble any or all of the Collateral and make it
available to Lender at one or more places designated by Lender which are
reasonably convenient to Lender and Borrower, and to remove the Collateral to
such locations as Lender may deem advisable; (v) complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof and,
for such purpose and for the purpose of removal, Lender shall have the right to
use Borrower's premises, vehicles and other Equipment and all other property
without charge; (vi) sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Lender obtains possession of it or after further
manufacturing, processing or repair, at one or more public or private sales, in
lots or in bulk, for cash, exchange or other property, or on credit (a "SALE"),
and to adjourn any such Sale from time to time without notice other than oral
announcement at the time scheduled for Sale (and, in connection therewith, (A)
Lender shall have the right to conduct such Sale on Borrower's premises without
charge, for such times as Lender deems reasonable, on Lender's premises, or
elsewhere, and the Collateral need not be located at the place of Sale; (B)
Lender may directly or through any of its Affiliates purchase or lease any of
the Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition and (C) any Sale of Collateral shall
not relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title, physical condition or otherwise at the time of sale);
(vii) demand payment of and collect any Accounts, Chattel Paper, Instruments and
General
21
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
Intangibles included in the Collateral and, in connection therewith, Borrower
irrevocably authorizes Lender to endorse or sign Borrower's name on all
collections, receipts, Instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of Collateral or proceeds thereof and, in Lender's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Accounts, General Intangibles and the like for less than face value; and (viii)
demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
relating thereto. In addition to the foregoing remedies, upon the occurrence of
any Event of Default resulting from a breach of any of the financial covenants
set forth in Section 5.19, Lender may, at its option, upon not less than ten
days' prior notice to Borrower, reduce any or all of the Advance Rates set forth
in Section 1(b) of Schedule A to the extent Lender, in its sole discretion,
deems appropriate. In addition to the rights and remedies set forth above,
Lender shall have all the other rights and remedies accorded a secured party
after default under the UCC and under all other applicable laws, and under any
other Loan Document, and all of such rights and remedies are cumulative and
non-exclusive. Exercise or partial exercise by Lender of one or more of its
rights or remedies shall not be deemed an election or bar Lender from subsequent
exercise or partial exercise of any other rights or remedies. The failure or
delay of Lender to exercise any rights or remedies shall not operate as a waiver
thereof, but all rights and remedies shall continue in full force and effect
until all of the Obligations have been fully paid and performed. If notice of
any sale or other disposition of Collateral is required by law, notice at least
ten days prior to the sale designating the time and place of sale in the case of
a public sale or the time after which any private sale or other disposition is
to be made shall be deemed to be reasonable notice, and Borrower waives any
other notice. If any Collateral is sold or leased by Lender on credit terms or
for future delivery, the Obligations shall not be reduced as a result thereof
until payment is collected by Lender.
8.3 APPLICATION OF PROCEEDS. Subject to any application required by law,
all proceeds realized as the result of any Sale shall be applied by Lender to
the Obligations in such order as Lender shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
but Borrower shall remain liable to Lender for any deficiency. If Lender, in its
sole discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any Sale, Lender shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Lender of the cash
therefor.
9. GENERAL PROVISIONS.
9.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally, by reputable private delivery
service, by regular first-class mail or certified mail return receipt requested,
addressed to Lender or Borrower at the address shown in the heading to this
Agreement, or by facsimile to the facsimile number shown in
22
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
Section 9(i) of Schedule A, or at any other address (or to any other facsimile
number) designated in writing by one party to the other party in the manner
prescribed in this Section 9.1. All notices shall be deemed to have been given
when received or when delivery is refused by the recipient.
9.2 SEVERABILITY. If any provision of this Agreement, or the application
thereof to any party or circumstance, is held to be void or unenforceable by any
court of competent jurisdiction, such defect shall not affect the remainder of
this Agreement, which shall continue in full force and effect.
9.3 INTEGRATION. This Agreement and the other Loan Documents represent the
final, entire and complete agreement between Borrower and Lender and supersede
all prior and contemporaneous negotiations, oral representations and agreements,
all of which are merged and integrated into this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT
SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
9.4 WAIVERS. The failure of Lender at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
Loan Documents shall not waive or diminish any right of Lender later to demand
and receive strict compliance therewith. Any waiver of any default shall not
waive or affect any other default, whether prior or subsequent, and whether or
not similar. None of the provisions of this Agreement or any other Loan Document
shall be deemed to have been waived by any act or knowledge of Lender or its
agents or employees, but only by a specific written waiver signed by an
authorized officer of Lender and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper, Investment Property or guaranty at any time held by Lender on which
Borrower is or may in any way be liable, and notice of any action taken by
Lender, unless expressly required by this Agreement, and notice of acceptance
hereof.
9.5 AMENDMENT. The terms and provisions of this Agreement may not be
amended or modified except in a writing executed by Borrower and a duly
authorized officer of Lender.
9.6 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement and the other Loan Documents.
9.7 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Lender for all
reasonable attorneys' and paralegals' fees and all filing, recording, search,
title insurance, appraisal, audit, and other costs incurred by Lender, pursuant
to, in connection with, or relating to this Agreement, including all reasonable
attorneys' fees and costs Lender incurs to prepare and negotiate this Agreement
and the other Loan Documents, PROVIDED, that, so long as Borrower
23
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
has not engaged in protracted negotiations in connection with the preparation of
the Loan Documents, Borrower shall not be liable for such attorneys' fees of
Lender's counsel through the date hereof in excess of $25,000, exclusive of
out-of-pocket expenses; to obtain legal advice in connection with this Agreement
and the other Loan Documents or Borrower or any Obligor; to administer this
Agreement and the other Loan Documents (including the cost of periodic financing
statement, tax lien and other searches conducted by Lender); to enforce, or seek
to enforce, any of its rights; prosecute actions against, or defend actions by,
Account Debtors; to commence, intervene in, or defend any action or proceeding;
to enforce and protect, or to seek to enforce and protect, any of its rights and
interests in any bankruptcy case of Borrower, including, without limitation, by
initiating and prosecuting any motion for relief from the automatic stay and by
initiating, prosecuting or defending any other contested matter or adversary
proceeding in bankruptcy; to file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; to examine, audit (at the costs set
forth in Section 4.9), copy, and inspect any of the Collateral or any of
Borrower's books and records; to protect, obtain possession of, lease, dispose
of, or otherwise enforce Lender's security interests in, the Collateral; and to
otherwise represent Lender in any litigation relating to Borrower. If either
Lender or Borrower files any lawsuit against the other predicated on a breach of
this Agreement, the prevailing party in such action shall be entitled to recover
its reasonable costs and attorneys' fees, including reasonable attorneys' fees
and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to which Lender
may be entitled pursuant to this Section shall immediately become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
9.8 BENEFIT OF AGREEMENT; ASSIGNABILITY. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective successors,
assigns, heirs, beneficiaries and representatives of Borrower and Lender;
PROVIDED, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Lender, and any prohibited
assignment shall be void. No consent by Lender to any assignment shall release
Borrower from its liability for any of the Obligations. Lender shall have the
right to assign all or any of its rights and obligations under the Loan
Documents, and to sell participating interests therein, to one or more other
Persons, and Borrower agrees to execute all agreements, instruments and
documents requested by Lender in connection with each such assignment and
participation.
9.9 HEADINGS; CONSTRUCTION. Section and subsection headings are used in
this Agreement only for convenience. Borrower and Lender acknowledge that the
headings may not describe completely the subject matter of the applicable
Sections or subsections, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this
24
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
-------------------------------------------------------------------------------
Agreement shall be construed strictly against Lender or Borrower under any rule
of construction or otherwise.
9.10 GOVERNING LAW; CONSENT TO FORUM, ETC. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK, NEW YORK, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF SUCH STATE. BORROWER HEREBY CONSENTS AND AGREES THAT THE STATE AND
FEDERAL COURTS IN NEW YORK, NEW YORK OR THE STATE IN WHICH ANY OF THE COLLATERAL
IS LOCATED SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER ALSO AGREES THAT
ANY CLAIM OR DISPUTE BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING OUT OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL
COURTS OF NEW YORK. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE IN THE MANNER
AND SHALL BE DEEMED RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE
EXTENT PERMITTED BY LAW. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
9.11 WAIVER OF JURY TRIAL, ETC. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL OR ANY CONDUCT, ACTS OR OMISSIONS OF LENDER OR
BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OR ANY OTHER PERSONS AFFILIATED
25
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
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WITH LENDER OR BORROWER, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE; (ii)
NOTICE PRIOR TO LENDER'S TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER
TO EXERCISE ANY OF LENDER'S REMEDIES AND (iii) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT AND EXEMPTION LAWS. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND
THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[Remainder of page intentionally left blank; signature page follows.]
26
NATIONSCREDIT COMMERICAL FUNDING LOAN AND SECURITY AGREEMENT
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IN WITNESS WHEREOF, Borrower and Lender have signed this Agreement as of
the date set forth in the heading.
BORROWER: LENDER:
NATIONAL HOME CENTERS, INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING
DIVISION
By /s/ XXXXX XXXXXXX
----------------------------------
Its Authorized Signatory
By /s/ XXXXX X. XXXXX
-------------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
27
SCHEDULE A
DESCRIPTION OF CERTAIN TERMS
This Schedule is an integral part of the Loan and Security Agreement
between NATIONAL HOME CENTERS, INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
1. Loan Limits for Revolving
Loans:
(a) Maximum Facility
Amount: $20,000,000
(b) Advance Rates:
(i) Accounts 85%, PROVIDED, that if the
Advance Rate: Dilution Percentage exceeds 6%,
Lender may, in its sole
discretion, either (i) reduce
such advance rate by the number
of full or partial percentage
points of such excess, or (ii)
create a Reserve in the amount
of such excess
(ii) Inventory
Advance
Rate(s):
(A) Finished 65%, PROVIDED, that if Borrower
goods: generates a cumulative pretax
loss greater than $3,000,000
calculated from the date of the
Agreement, the Inventory Advance
Rate shall be decreased to 60%.
(B) Raw 65%, PROVIDED, that if Borrower
materials: generates a cumulative pretax
loss greater than $3,000,000
calculated from the date of the
Agreement, the Inventory Advance
Rate shall be decreased to 60%.
(C) Work in
process: Not applicable
(c) Accounts Sublimit: $10,000,000
A-1
(d) Inventory
Sublimit(s):
(i) Overall sublimit $10,000,000
on advances
against Eligible
Inventory
(ii) Sublimit on Not applicable
advances
against finished
goods
(iii) Sublimit on Not applicable
advances
against raw
materials
(iv) Sublimit on Not applicable
advances
against work in
process
(e) Credit
Accommodation $1,000,000
Limit:
(f) Permanent Reserve
Amount: Not applicable
(g) Overadvance Amount: Not applicable
2. Loan Limits for Term Loan:
(a) Principal Amount: Not applicable
(i) Equipment Not applicable
Advance
(i) Real Property Not applicable
Advance:
(b) Repayment Schedule:
A-2
(i) Equipment Not applicable
Advance:
(ii) Real Property Not applicable
Advance:
3. Interest Rates:
(a) Revolving Loans: .50% per annum in excess of the
Prime Rate
(b) Term Loan: Not applicable
4. Minimum Loan Amount: Not applicable
5. Maximum Days:
(a) Maximum days after
original INVOICE date
for Eligible
Accounts: 90 days
(b) Maximum days after
original INVOICE DUE
DATE for Eligible
Accounts: Not applicable
6. Fees:
(a) Closing Fee: $150,000, of which $40,000 has
been fully earned and paid upon
issuance of the commitment
letter and $110,000 of which
shall be fully earned and
payable on the date of the
Agreement
(b) Facility Fee:
(i) Initial Term: Not applicable
A-3
(ii) Renewal
Term(s): Not applicable
(c) Servicing Fee: Not applicable
(d) Unused Line Fee: .25% per annum
(e) Minimum Borrowing
Fee:
(i) Applicable Not applicable
period:
(ii) Date payable: Not applicable
(f) Success Fee: Not applicable
(g) Warrants: Not applicable
(h) Early Termination 2% of the Maximum Facility
Fee: Amount if terminated during the
first year of the Initial Term,
2% of the Maximum Facility
Amount if terminated during the
second year of the Initial Term,
1% of the Maximum Facility
Amount if terminated during the
third year of the Initial Term,
and 0% of the Maximum Facility
Amount if terminated thereafter
and prior to the Maturity Date;
PROVIDED, that if Borrower is
sold at any time following the
first year of the Initial Term,
the early termination fee shall
not exceed $50,000; PROVIDED,
FURTHER, that if Borrower is
sold at any time during the
first year of the Initial Term,
the early termination fee shall
be $150,000.
(i) Fees for letters of credit .50% per annum of the face
and other Credit amount of each open Credit
Accommodations (or Accommodation
guaranties thereof by
Lender):
7. Initial Maturity Date: July 14, 2002
A-4
8. Financial Covenants:
(a) Capital Expenditure
Limitation: Not applicable
(b) Minimum Net Worth
Requirement: Not applicable
(c) Minimum Tangible
Net Worth: Not applicable
(d) Minimum Working
Capital: Not applicable
(e) Maximum Not applicable
Cumulative Net Loss:
(f) Minimum Not applicable
Cumulative Net
Income:
(g) Maximum Leverage Not applicable
Ratio:
(h) Limitation on Not applicable
Purchase Money
Security Interests:
(i) Limitation on Not applicable
Equipment Leases:
(j) Additional Financial Not applicable
Covenants:
9. Borrower Information:
(a) Prior Names of
Borrower: National Lumber Company, Inc.
(b) Prior Trade Names of National Lumber Company, Inc.
Borrower: Cabinet Craft
A-5
(c) Existing Trade
Names of Borrower: Cabinet Craft
(d) Inventory Locations: Xxxxxxx 000 Xxxxx, X.X. Xxx 000
Xxxxxxxxxx, XX 00000
0000 X. Xxxxxx Xxxx., P.O. Box 000
Xxxxxxx 00 Xxxxx
Xxxxxxxxxxx, XX 00000
0000 Xxxx Xxxx, X.X. Xxx 0000
Xxxx Xxxxx, XX 00000
0000 Xxxxxxx Xxxx, X.X. Xxx 00000
Xxxxx Xxxxxx Xxxx, XX 00000
0000 Xxxxx Xxxxxx Xxxx
Xxxxx Xxxxxx Xxxx, XX 00000
720 Garland
X.X. Xxx 0000 Xxxxxx, XX 00000
Xxx 00 Xxxx, X.X. Xxx 000
Xxxxxxxxxxxx, XX 00000
000 Xxxxx Xx Xxxx
Xxxxxxxxxxxx, XX 00000
0000 Xxxx Xxxx Xxxxxx
Xxxxxxx 00 West, X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000
000 Xxxx Xxxx
Xxxxxx, XX 00000
Highway 00 Xxxxx xxx Xxxxxxxxxx 00
#0 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
000 X. 00xx
XX Corner of Highways 71B and 71
Xxxxxx, XX 00000
A-6
(e) Other Locations: none
(f) Litigation: 1. Xxxxx Xxxxxxx v. National Home
Centers, Inc., U.S. District
Court, Western District of
Arkansas, Fayetteville Division,
No. CIV 98-5009
2. Claim by the State of Arkansas
for unclaimed property tax in the
approximate amount of $400,000.
Claim has been made and accrued
for on Borrower's financial
statements but there has been no
litigation or pursuit of
collection of the claimed amount.
3. Xxxxx Xxxxxx and Xxxxxxxx
Xxxxxx, Husband and Wife v.
National Home Centers, Inc.,
Circuit Court of Washington
County, Arkansas, No. CIV 97-1553
(g) Ownership of Public company traded on Nasdaq
Borrower: National Market under symbol NHCI.
Xxxxx Xxxxxx currently
beneficially owns 62.9% of the
outstanding common stock.
(h) Subsidiaries (and
ownership thereof): Crystal Valley Properties, Inc.
(100%)
(i) Facsimile Numbers:
Borrower: (000) 000-0000
Lender: (000) 000-0000
10. Description of Real Not applicable
Property:
11. Lender's Bank: The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
A-7
12. Other Covenants: (a) Borrower shall take all
necessary steps, including without
limitation, the execution of any
documents that Lender may, in its
sole discretion, require, to
assign to Lender all of its
rights, remedies and interests
which shall arise in connection
with the filing by Borrower of any
materialman's liens
(b) At the request of Lender,
Borrower agrees, at its expense,
to open an operating account with
the New York branch of a financial
institution acceptable to Lender
in its sole discretion and to
otherwise take all necessary steps
to comply with any other requests
by Lender and its counsel
regarding the application of New
York law
13. Exceptions to Negative (a) Notwithstanding clause (ii) of
Covenants: Section 5.18 of the Agreement,
Borrower may make bulk purchases
of merchantable Inventory of a
type consistent with Borrower's
current product lines.
(b) Notwithstanding clause (iv) of
Section 5.18 of the Agreement,
Borrower may sell (A) its real
property located in Branson,
Missouri (upon which Lender has a
mortgage), in which event the
proceeds of sale shall be applied
(concurrently with such sale) to
reduce the Obligations, which
reduction shall be permanent
(i.e., such proceeds may not be
reborrowed by Borrower) if at the
time such proceeds are so applied
(x) an Event of Default has
occurred and is continuing or (y)
Borrower has a cumulative pretax
loss of $3,000,000 or more,
calculated from the date of the
Agreement, and
A-8
(B) equipment and other real
property in connection with the
closing of any of Borrower's
locations.
(c) Notwithstanding clause (v) of
Section 5.18 of the Agreement,
Borrower may obtain unsecured
loans from Xxxxx Xxxxxx or an
entity in which he has an
ownership interest, which are
fully subordinated to the
Obligations, such subordination to
be on terms and conditions, and
pursuant to documentation,
acceptable to Lender in its sole
discretion.
(d) Notwithstanding clause (xii)
of Section 5.18 of the Agreement,
Borrower may make payments of
principal and interest on the
indebtedness described in
paragraph (c) above in accordance
with the terms of the promissory
notes evidencing such indebtedness
as in effect on the date of
execution of the applicable
subordination agreement, so long
as (A) no Default or Event of
Default under the Agreement has
occurred and is then continuing or
would be caused by the making of
each such payment and (B) Borrower
will have excess Availability of
at least $1,000,000 after giving
effect to each such payment.
A-9
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule A as
of the date set forth in the heading to the Agreement.
BORROWER: LENDER:
NATIONAL HOME CENTERS, INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING
DIVISION
By /s/ XXXXX XXXXXXX
-------------------------------------
Its Authorized Signatory
By /s/ XXXXX X. XXXXX
--------------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
A-10
SCHEDULE B
DEFINITIONS
This Schedule is an integral part of the Loan and Security Agreement
between NATIONAL HOME CENTERS, INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
As used in the Agreement, the following terms have the following meanings:
"ACCOUNT" means any right to payment for Goods sold or leased or for
services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.
"ACCOUNT DEBTOR" means the obligor on an Account or Chattel Paper.
"ACCOUNT PROCEEDS" has the meaning set forth in Section 4.1.
"AFFILIATE" means, with respect to any Person, Xxxxx Xxxxxx, a
relative, partner, member, manager, director, officer, or employee of such
Person, any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person or any other Person
affiliated, directly or indirectly, by virtue of family membership, ownership,
management or otherwise.
"AGREEMENT" and "THIS AGREEMENT" mean the Loan and Security Agreement
of which this Schedule B is a part and the Schedules thereto.
"AVAILABILITY" has the meaning set forth in Section 1.1(a)
"BANKRUPTCY CODE" means the United States Bankruptcy Code
(11 U.S.C. ss. 101 et seq.).
"BLOCKED ACCOUNT" has the meaning set forth in Section 4.1.
"BORROWER" has the meaning set forth in the heading to the Agreement.
"BORROWER'S ADDRESS" has the meaning set forth in the heading to the
Agreement.
"BUSINESS DAY" means a day other than a Saturday or Sunday or
any other day on which Lender or banks in New York are authorized to close.
"CHATTEL PAPER" has the meaning set forth in the UCC.
"COLLATERAL" means all property and interests in property in or
upon which a security interest or other Lien is granted pursuant to this
Agreement or the other Loan Documents.
"CREDIT ACCOMMODATION" has the meaning set forth in Section 1.1(a).
B-1
"CREDIT ACCOMMODATION BALANCE" means the sum of (i) the
aggregate undrawn face amount of all outstanding Credit Accommodations and (ii)
all interest, fees and costs due or, in Lender's estimation, likely to become
due in connection therewith.
"DEFAULT" means any event which with notice or passage of time,
or both, would constitute an Event of Default.
"DEFAULT RATE" has the meaning set forth in Section 2.1.
"DEPOSIT ACCOUNT" has the meaning set forth in the UCC.
"DILUTION PERCENTAGE" means the gross amount of all returns,
allowances, discounts, credits, write-offs and similar items relating to
Borrower's Accounts computed as a percentage of Borrower's gross sales,
calculated on a ninety (90) day rolling average.
"DOCUMENT" has the meaning set forth in the UCC.
"EARLY TERMINATION FEE" has the meaning set forth in Section 7.2.
"ELIGIBLE ACCOUNT" means, at any time of determination, an Account
which satisfies the general criteria set forth below and which is otherwise
acceptable to Lender (PROVIDED, that Lender may, in its sole discretion, change
the general criteria for acceptability of Eligible Accounts upon at least
fifteen days' prior notice to Borrower). An Account shall be deemed to meet the
current general criteria if (i) neither the Account Debtor nor any of its
Affiliates is an Affiliate, creditor or supplier of Borrower; (ii) it does not
remain unpaid more than the earlier to occur of (A) the number of days after the
original INVOICE DATE set forth in Section 5(a) of Schedule A or (B) the number
of days after the original INVOICE DUE DATE set forth in Section 5(b) of
Schedule A; (iii) the Account Debtor or its Affiliates are not past due on other
Accounts owing to Borrower comprising more than 50% of all of the Accounts owing
to Borrower by such Account Debtor or its Affiliates; (iv) all Accounts owing by
the Account Debtor or its Affiliates do not represent more than 20% of all
otherwise Eligible Accounts (PROVIDED, that Accounts which are deemed to be
ineligible solely by reason of this clause (iv) shall be considered Eligible
Accounts to the extent of the amount thereof which does not exceed 20% of all
otherwise Eligible Accounts); (v) no covenant, representation or warranty
contained in this Agreement with respect to such Account (including any of the
representations set forth in Section 5.4) has been breached; (vi) the Account is
not subject to any contra relationship, counterclaim, dispute or set-off
(PROVIDED, that Accounts which are deemed to be ineligible solely by reason of
this clause (vi) shall be considered Eligible Accounts to the extent of the
amount thereof which is not affected by such contra relationships,
counterclaims, disputes or set-offs); (vii) the Account Debtor's chief executive
office or principal place of business is located in the United States or
Provinces of Canada which have adopted the Personal Property Security Act or a
similar act, unless (A) the sale is fully backed by a letter of credit, guaranty
or acceptance acceptable to Lender in its sole discretion, and if backed by a
letter of credit, such letter of credit has been issued or confirmed by a bank
satisfactory to Lender, is sufficient to cover such Account, and if required by
Lender, the original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the proceeds
of such letter of credit to Lender or (B) such Account is subject to credit
insurance
B-2
payable to Lender issued by an insurer and on terms and in an amount acceptable
to Lender; (viii) it is absolutely owing to Borrower and does not arise from a
sale on a xxxx-and-hold, guarantied sale, sale-or-return, sale-on-approval,
consignment, retainage or any other repurchase or return basis or consist of
progress xxxxxxxx; (ix) Lender shall have verified the Account in a manner
satisfactory to Lender; (x) the Account Debtor is not the United States of
America or any state or political subdivision (or any department, agency or
instrumentality thereof), unless Borrower has complied with the Assignment of
Claims Act of 1940 (31 U.S.C. ss.203 et seq.) or other applicable similar state
or local law in a manner satisfactory to Lender; (xi) it is at all times subject
to Lender's duly perfected, first priority security interest and to no other
Lien that is not a Permitted Lien, and the goods giving rise to such Account (A)
were not, at the time of sale, subject to any Lien except Permitted Liens and
(B) have been delivered to and accepted by the Account Debtor, or the services
giving rise to such Account have been performed by Borrower and accepted by the
Account Debtor; (xii) the Account is not evidenced by Chattel Paper or an
Instrument of any kind and has not been reduced to judgment; (xiii) the Account
Debtor's total indebtedness to Borrower does not exceed the amount of any credit
limit established by Borrower (as modified by Borrower's authorized personnel in
accordance with Borrower's customary procedures) or Lender and the Account
Debtor is otherwise deemed to be creditworthy by Lender (PROVIDED, that Accounts
which are deemed to be ineligible solely by reason of this clause (xiii) shall
be considered Eligible Accounts to the extent the amount of such Accounts does
not exceed the lower of such credit limits); (xiv) there are no facts or
circumstances existing, or which could reasonably be anticipated to occur, which
might result in any adverse change in the Account Debtor's financial condition
or impair or delay the collectibility of all or any portion of such Account;
(xv) Lender has been furnished with all documents and other information
pertaining to such Account which Lender has requested, or which Borrower is
obligated to deliver to Lender, pursuant to this Agreement; (xvi) Borrower has
not made an agreement with the Account Debtor without Lender's prior written
consent to extend the time of payment thereof beyond the time periods set forth
in clause (ii) above; and (xvii) Borrower has not posted a surety or other bond
in respect of the contract under which such Account arose.
"ELIGIBLE EQUIPMENT"" means, at any time of determination, Equipment
owned by Borrower which Lender, in its sole discretion, deems to be eligible for
borrowing purposes.
"ELIGIBLE INVENTORY" means, at any time of determination, Inventory
(other than packaging materials and supplies) which satisfies the general
criteria set forth below and which is otherwise acceptable to Lender (PROVIDED,
that Lender may, in its sole discretion, change the general criteria for
acceptability of Eligible Inventory upon at least fifteen days' prior written
notice to Borrower). Inventory shall be deemed to meet the current general
criteria if (i) it consists of raw materials or finished goods, or
work-in-process that is readily marketable in its current form; (ii) it is in
good, new and saleable condition; (iii) it is not slow-moving, obsolete or
unmerchantable, (iv) it is not in the possession of a processor, consignee or
bailee, or located on premises leased or subleased to Borrower, or on premises
subject to a mortgage in favor of a Person other than Lender, unless such
processor, consignee, bailee or mortgagee or the lessor or sublessor of such
premises, as the case may be, has executed and delivered all documentation which
Lender shall require to evidence the subordination or other limitation or
extinguishment of such Person's rights with respect to such Inventory and
Lender's right to gain access thereto; (v) it meets all standards
B-3
imposed by any governmental agency or authority; (vi) it conforms in all
respects to any covenants, warranties and representations set forth in the
Agreement; (vii) it is at all times subject to Lender's duly perfected, first
priority security interest and no other Lien except a Permitted Lien; (viii) it
is situated at an Inventory Location listed in Section 9(d) of Schedule A or
other location of which Lender has been notified as required by Section 5.6; and
(ix) it is not manufactured or distributed by General Electric Company and does
not bear a trademark of General Electric Company (including without limitation,
"General Electric," "Hotpoint" or "RCA").
"ELIGIBLE REAL PROPERTY" means, at any time of determination, Real
Property owned by Borrower which Lender, in its sole discretion, deems to be
eligible for borrowing purposes.
"EQUIPMENT" means all Goods which are used or bought for use primarily
in business (including farming or a profession) or by a Person who is a
non-profit organization or governmental subdivision or agency and which are not
Inventory, farm products or consumer goods, including all machinery, molds,
machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dies and jigs, and all attachments,
accessories, accessions, replacements, substitutions, additions or improvements
to, or spare parts for, any of the foregoing.
"EQUIPMENT ADVANCE" has the meaning set forth in Section 1.1(b).
"ERISA" means the Employee Retirement Income Security Act of
1974 and all rules, regulations and orders promulgated thereunder.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.1.
"GAAP" means generally accepted accounting principles as in
effect from time to time, consistently applied.
"GENERAL INTANGIBLES" has the meaning set forth in the UCC, and
includes all books and records pertaining to the Collateral and other business
and financial records in the possession of Borrower or any other Person,
inventions, designs, drawings, blueprints, patents, patent applications,
trademarks, trademark applications (other than "intent to use" applications
until a verified statement of use is filed with respect to such applications)
and the goodwill of the business symbolized thereby, names, trade names, trade
secrets, goodwill, copyrights, registrations, licenses, franchises, customer
lists, security and other deposits, causes of action and other rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, rights to purchase or sell real or personal property, rights as a
licensor or licensee of any kind, royalties, telephone numbers, internet
addresses, proprietary information, purchase orders, and all insurance policies
and claims (including life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and
claims, letters of credit, banker's acceptances and guaranties, computer
programs, discs, tapes and tape files in the possession of Borrower or any other
Person, claims under guaranties, security interests or other security held by or
granted to Borrower, all rights to indemnification and all other intangible
property of every kind and nature.
B-4
"GOODS" means all things which are movable at the time the security
interest attaches or which are fixtures (other than money, Documents,
Instruments, Investment Property, Accounts, Chattel Paper, General Intangibles,
or minerals or the like (including oil and gas) before extraction), including
standing timber which is to be cut and removed under a conveyance or contract
for sale, the unborn young of animals, and growing crops.
"INITIAL TERM" has the meaning set forth in Section 7.1.
"INSTRUMENT" has the meaning set forth in the UCC.
"INVENTORY" means all Goods held for sale or lease or furnished or to
be furnished under contracts of service, including all raw materials, work in
process, finished goods, goods in transit and materials and supplies which are
or might be used or consumed in a business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such Goods,
and all products of the foregoing, and shall include interests in goods
represented by Accounts, returned, reclaimed or repossessed goods and rights as
an unpaid vendor.
"INVESTMENT PROPERTY" shall mean all of Borrower's securities,
whether certificated or uncertificated, securities entitlements, securities
accounts, commodity contracts and commodity accounts.
"LENDER" has the meaning set forth in the heading to the Agreement.
"LIEN" means any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on common law, statute or contract, including rights of
sellers under conditional sales contracts or title retention agreements and
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting property. For the purpose of this Agreement, Borrower shall be deemed
to be the owner of any property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes. "LOAN ACCOUNT" has the meaning set forth in Section 2.4.
"LOAN DOCUMENTS" means the Agreement and all notes, guaranties,
security agreements, certificates, landlord's agreements, Lock Box and Blocked
Account agreements and all other agreements, documents and instruments now or
hereafter executed or delivered by Borrower or any Obligor in connection with,
or to evidence the transactions contemplated by, this Agreement.
"LOAN LIMITS" means, collectively, the Availability limits and all
other limits on the amount of Loans and Credit Accommodations set forth in this
Agreement.
"LOANS" means, collectively, the Revolving Loans and any Term Loan.
"LOCK BOX" has the meaning set forth in Section 4.1.
B-5
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 5.20.
"MATURITY DATE" has the meaning set forth in Section 7.1.
"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Lender, whether evidenced by this Agreement or any
other Loan Document, whether arising from an extension of credit, opening of a
Credit Accommodation, guaranty, indemnification or otherwise (including all
fees, costs and other amounts which may be owing to issuers of Credit
Accommodations and all taxes, duties, freight, insurance, costs and other
expenses, costs or amounts payable in connection with Credit Accommodations or
the underlying goods), whether direct or indirect (including those acquired by
assignment and any participation by Lender in Borrower's indebtedness owing to
others), whether absolute or contingent, whether due or to become due, and
whether arising before or after the commencement of a proceeding under the
Bankruptcy Code or any similar statute, including all interest, charges,
expenses, fees, attorney's fees, expert witness fees, audit fees, letter of
credit fees, Closing Fees, Facility Fees, Servicing Fees, Unused Line Fees,
Minimum Borrowing Fees, Success Fees, amounts owing under Warrants, Credit
Accommodation Fees and any other sums chargeable to Borrower under this
Agreement or under any other Loan Document.
"OBLIGOR" means any guarantor, endorser, acceptor, surety or other
person liable on, or with respect to, the Obligations or who is the owner of any
property which is security for the Obligations, other than Borrower.
"PERMITTED LIENS" means: (i) purchase money security interests in
specific items of Equipment in an aggregate amount not to exceed the limit set
forth in Section 8(h) of Schedule A; (ii) leases of specific items of Equipment
in an aggregate amount not to exceed the limit set forth in Section 8(i) of
Schedule A; (iii) Liens for taxes not yet due and payable; (iv) additional Liens
which are fully subordinate to the security interests of Lender and are
consented to in writing by Lender; (v) security interests being terminated
concurrently with the execution of this Agreement; (vi) Liens of materialmen,
mechanics, warehousemen or carriers arising in the ordinary course of business
and securing obligations which are not delinquent; (vii) Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clause (i) or (ii) above; PROVIDED,
that any extension, renewal or replacement Lien is limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase; (viii) Liens in favor
of customs and revenue authorities which secure payment of customs duties in
connection with the importation of goods; (ix) security deposits posted in
connection with real property leases or subleases; and (x) Liens shown on
Schedule C to the Agreement. Lender will have the right to require, as a
condition to its consent under clause (iv) above, that the holder of the
additional Lien sign an intercreditor agreement in form and substance
satisfactory to Lender, in its sole discretion, acknowledging that the Lien is
subordinate to the security interests of Lender, and agreeing not to take any
action to enforce its subordinate Lien so long as any Obligations remain
outstanding, and that Borrower agree that any uncured default in any obligation
secured by the subordinate Lien shall also constitute an Event of Default under
this Agreement.
B-6
"PERSON" means any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated organization,
association, corporation, government or any agency or political division
thereof, or any other entity.
"PRIME RATE" means, at any given time, the prime rate as quoted in The
Wall Street Journal as the base rate on corporate loans posted as of such time
by at least 75% of the nation's 30 largest banks (which rate is not necessarily
the lowest rate offered by such banks).
"REAL PROPERTY" means the real property described in Section 10 of
Schedule A.
"REAL PROPERTY ADVANCE" has the meaning set forth in Section 1.1(b).
"RELEASED PARTIES" has the meaning set forth in Section 6.1.
"RENEWAL TERM" has the meaning set forth in Section 7.1.
"RESERVES" has the meaning set forth in Section 1.2.
"REVOLVING LOANS" has the meaning set forth in Section 1.1(a).
"SALE" has the meaning set forth in Section 8.2.
"SUBSIDIARY" means any corporation or other entity of which a Person
owns, directly or indirectly, through one or more intermediaries, more than 50%
of the capital stock or other equity interest at the time of determination.
"TERM" means the period commencing on the date of this Agreement and
ending on the Maturity Date.
"TERM LOAN" has the meaning set forth in Section 1.1(b).
"UCC" means, at any given time, the Uniform Commercial Code as adopted
and in effect at such time in the State of New York.
All accounting terms used in this Agreement, unless otherwise indicated,
shall have the meanings given to such terms in accordance with GAAP. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the UCC, to the extent such terms are defined therein. The
term "including," whenever used in this Agreement, shall mean "including but not
limited to." The singular form of any term shall include the plural form, and
vice versa, when the context so requires. References to Sections, subsections
and Schedules are to Sections and subsections of, and Schedules to, this
Agreement. All references to agreements and statutes shall include all
amendments thereto and successor statutes in the case of statutes.
B-7
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule B as of
the date set forth in the heading to the Agreement.
BORROWER: LENDER:
NATIONAL HOME CENTERS, INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING
DIVISION
By /s/ XXXXX XXXXXXX
------------------------------------
Its Authorized Signatory
By /s/ XXXXX X. XXXXX
------------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
B-8
SCHEDULE C
PERMITTED LIENS
This Schedule is an integral part of the Loan and Security Agreement
between NATIONAL HOME CENTERS, INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the "AGREEMENT").
XXXXXXXX COUNTY
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SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 12/3/92 92-1673
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Xxxxx Credit Corporation 12/3/92 92-1674
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 12/3/92 92-1675
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Datamax Office Systems 1/8/93 93-31
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Datamax Office Systems 1/8/93 93-32
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Xxxxx Credit Corporation 1/15/93 93-80
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Xxxxx Credit Corporation 1/27/93 93-118
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XXXX COUNTY
-----------
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SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 5/7/93 93-732
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Associates Leasing, Inc. 7/26/93 93-1181
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WASHINGTON COUNTY
-----------------
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SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Xxxxx Credit corporation 10/19/93 9203850
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Xxxxx Credit Corporation 1/13/93 9300087
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Xxxxx Credit Corporation 1/13/93 9300088
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C-1
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SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Associates Commercial Corp. 2/16/93 9300439
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Xxxxx Credit Corporation 6/30/93 9302358
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Xxxxx Credit Corporation 10/8/93 9303727
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Xxxxx Credit Corporation 5/6/94 9401696
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 5/12/94 9401775
-------------------------------------------------------------------------------
Associates Commercial Corporation 12/28/95 9504587
-------------------------------------------------------------------------------
Associates Commercial Corporation 12/28/95 9504588
-------------------------------------------------------------------------------
IBM Credit Corporation 12/16/97 9704076
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UCC FIXTURE FILINGS:
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Xxxxx Credit Corporation 3/29/93 9300984
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NationsBanc Leasing Corporation 6/14/93 9302089
-------------------------------------------------------------------------------
Phoenixcor, Inc. 11/1/96 9603790
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Phoenixcor, Inc. 11/1/96 9603791
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ARKANSAS SECRETARY OF STATE
---------------------------
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SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Associates Commercial Corporation 5/10/91 753174
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Whirlpool Financial Corporation 7/9/91 760390
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Orix Credit Alliance, Inc. 2/9/93 834606
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Xxxxx Credit Corporation 7/1/93 856991
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Xxxxx Credit corporation 7/8/93 857865
-------------------------------------------------------------------------------
General Electric Capital Corporation 7/12/93 858367
-------------------------------------------------------------------------------
NationsBanc Leasing Corporation 7/13/93 858550
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C-2
-------------------------------------------------------------------------------
SECURED PARTY DATE FILE NUMBER
-------------------------------------------------------------------------------
Associates Leasing, Inc. 7/27/93 860830
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 8/30/93 865553
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 10/8/93 870861
-------------------------------------------------------------------------------
MetLife Capital Corporation 10/25/93 873046
-------------------------------------------------------------------------------
NationsBanc Leasing Corporation 1/10/94 882401
-------------------------------------------------------------------------------
Xxxxx Credit corporation 5/9/94 902210
-------------------------------------------------------------------------------
Xxxxx Credit Corporation 5/12/94 903123
-------------------------------------------------------------------------------
NationsBanc Leasing Corporation 6/24/94 910618
-------------------------------------------------------------------------------
MetLife Capital Corporation 12/9/94 935379
-------------------------------------------------------------------------------
Citicorp Dealer Finance 9/29/95 982907
-------------------------------------------------------------------------------
USL Capital Corporation 10/5/95 983973
-------------------------------------------------------------------------------
Whirlpool Corporation 10/25/95 986815
-------------------------------------------------------------------------------
USL Capital Corporation 10/26/95 987047
-------------------------------------------------------------------------------
Sensormatic Electronics Corp. 11/20/95 990426
-------------------------------------------------------------------------------
Citicorp Dealer Finance 11/27/95 990873
-------------------------------------------------------------------------------
Associates Commercial Corporation 12/29/95 995542
-------------------------------------------------------------------------------
Associates Commercial Corporation 12/29/95 995543
-------------------------------------------------------------------------------
Phoenixcor, Inc. 10/3/96 1039777
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NBD Bank, a Michigan banking corp. 10/8/96 1040564
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IBM Credit Corporation 12/12/97 1106271
-------------------------------------------------------------------------------
Pitney Xxxxx Credit Corporation 5/20/98 1132924
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C-3
IN WITNESS WHEREOF, Borrower and Lender have signed this Schedule C as
of the date set forth in the heading to the Agreement.
BORROWER: LENDER:
NATIONAL HOME CENTERS, INC. NATIONSCREDIT COMMERCIAL
CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING
DIVISION
By /s/ XXXXX XXXXXXX
-------------------------------------
Its Authorized Signatory
By /s/ XXXXX X. XXXXX
--------------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
C-4
