Exhibit 10.13
$8,700,000.00
CREDIT AGREEMENT
DATED AS OF
NOVEMBER 14, 1996
BETWEEN
THE SOURCE COMPANY
AND
WACHOVIA BANK OF NORTH CAROLINA, N.A.
TABLE OF CONTENTS
[Not a part of the Agreement]
ARTICLE I. DEFINITIONS......................................................1
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Accounting Terms and Determinations..........................14
SECTION 1.03. Use of Defined Terms.........................................14
SECTION 1.04. Terminology..................................................14
SECTION 1.05. References...................................................14
ARTICLE II. THE CREDITS.....................................................14
SECTION 2.01. Commitment to Lend...........................................14
SECTION 2.02. Method of Borrowing..........................................15
SECTION 2.03. Note.........................................................15
SECTION 2.04. Payment of Advances..........................................15
SECTION 2.05. Interest Rates...............................................15
SECTION 2.06. Fees.........................................................16
SECTION 2.07. Optional Termination or Reduction of Commitment..............16
SECTION 2.08. Termination of Commitment....................................17
SECTION 2.09. Optional Prepayments.........................................17
SECTION 2.10. Mandatory Prepayments........................................17
SECTION 2.11. General Provisions Concerning Payments.......................17
SECTION 2.12. Computation of Interest......................................18
ARTICLE III. CHANGE IN CIRCUMSTANCES; COMPENSATION.........................18
SECTION 3.01. Basis for Determining Interest Rate Inadequate or Unfair.....18
SECTION 3.02. Illegality...................................................19
SECTION 3.03. Increased Cost and Reduced Return............................19
SECTION 3.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans...21
SECTION 3.05. Compensation.................................................21
ARTICLE IV. CONDITIONS TO BORROWINGS.......................................21
SECTION 4.01. Conditions to First Borrowing................................21
SECTION 4.02. Conditions to All Borrowings.................................23
ARTICLE V. REPRESENTATIONS AND WARRANTIES..................................24
SECTION 5.01. Corporate Existence and Power................................24
SECTION 5.02. Corporate and Governmental Authorization; Contravention......24
SECTION 5.03. Binding Effect...............................................24
SECTION 5.04. Financial Information........................................24
SECTION 5.05. Litigation...................................................25
SECTION 5.06. Compliance with ERISA........................................25
SECTION 5.07. Taxes........................................................25
SECTION 5.08. Subsidiaries.................................................25
SECTION 5.09. Not an Investment Company....................................25
SECTION 5.10. Ownership of Property; Liens.................................25
SECTION 5.11. No Default...................................................25
SECTION 5.12. Full Disclosure..............................................26
SECTION 5.13. Environmental Matters.......................................26
SECTION 5.14. Compliance with Laws.........................................26
SECTION 5.15. Capital Stock................................................26
SECTION 5.16. Margin Stock.................................................26
SECTION 5.17. Insolvency...................................................27
SECTION 5.18. Insurance....................................................27
ARTICLE VI. COVENANTS......................................................27
SECTION 6.01. Information..................................................27
SECTION 6.02. Inspection of Property, Books and Records....................29
SECTION 6.03. Ratio of EBILT to Interest Expense and Lease Obligations.....29
SECTION 6.04. Ratio of Funded Debt to EBITDA...............................29
SECTION 6.05. Ratio of Funded Debt to Total Capitalization.................29
SECTION 6.06. Minimum Tangible Net Worth...................................29
SECTION 6.07. Accounts Receivable..........................................29
SECTION 6.08. Restricted Payments..........................................30
SECTION 6.09. Loans or Advances............................................30
SECTION 6.10. Investments..................................................30
SECTION 6.11. Negative Pledge..............................................30
SECTION 6.12. Maintenance of Existence.....................................30
SECTION 6.13. Dissolution..................................................30
SECTION 6.14. Consolidations, Mergers and Sales of Assets..................30
SECTION 6.15. Use of Proceeds..............................................31
SECTION 6.16. Compliance with Laws; Payment of Taxes.......................31
SECTION 6.17. Insurance....................................................31
SECTION 6.18. Change in Fiscal Year........................................32
SECTION 6.19. Maintenance of Property......................................32
SECTION 6.20. Environmental Notices........................................32
SECTION 6.21. Environmental Matters........................................32
SECTION 6.22. Environmental Release........................................32
SECTION 6.23. Transactions with Affiliates.................................33
SECTION 6.24. Collateral...................................................33
SECTION 6.25. Interest Rate Protection.....................................33
ARTICLE VII. DEFAULTS......................................................34
SECTION 7.01. Events of Default............................................34
SECTION 7.02. Remedies on Default..........................................36
SECTION 7.03. Security Interest; Offset....................................37
ARTICLE VIII. MISCELLANEOUS................................................37
SECTION 8.01. Notices......................................................37
SECTION 8.02. No Waivers...................................................38
SECTION 8.03. Expenses; Documentary Taxes; Indemnification.................38
SECTION 8.04. Amendments and Waivers.......................................39
SECTION 8.05. Successors and Assigns.......................................39
SECTION 8.06. Confidentiality..............................................40
SECTION 8.07. Interest Limitation..........................................41
SECTION 8.08. Survival of Certain Obligations..............................41
SECTION 8.09. Governing Law................................................41
SECTION 8.10. Counterparts.................................................41
SECTION 8.11. Consent to Jurisdiction......................................41
SECTION 8.12. Severability.................................................41
SECTION 8.13. Captions.....................................................42
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Assignment and Acceptance
EXHIBIT D Form of Closing Certificate
EXHIBIT E Form of Officer's Certificate
EXHIBIT F Form of Receivables Certification
EXHIBIT G Location of Collateral
EXHIBIT H Form of Compliance Certificate
Schedule 1.01 Canadian Companies
Schedule 5.05 Litigation Disclosure
Schedule 5.10 List of Patents, Tradenames, Trademarks and Applications
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, made as of the 14th day of November 1996, by and
between THE SOURCE COMPANY, a Missouri corporation (together with its
successors, the "Borrower"), and WACHOVIA BANK OF NORTH CAROLINA, N.A., a
national banking association (together with endorsees, successors and assigns,
the "Bank").
BACKGROUND
The Borrower desires to establish with the Bank a credit facility
providing for revolving loans of up to $8,700,000.00 in the aggregate maximum
principal amount at any time outstanding, and the Bank is willing to establish
such a credit facility on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the promises
herein contained, and each intending to be legally bound hereby, the parties
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section 1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment,"
"General Intangibles," "Goods," "Instruments," "Fixtures," and "Inventory" shall
have the same respective meanings as are given to those terms in the Uniform
Commercial Code of North Carolina.
"Adjusted Monthly Libor Index Rate" means a rate per annum (rounded
upward, if necessary, to the next higher 1/10,000th of 1%) determined by the
Bank pursuant to the following formula:
Adjusted Monthly Libor = Monthly Libor Index Rate + Applicable Margin
-----------------------------
Index Rate 1.0 - Euro-Dollar Reserve Percentage for Euro-Dollar Loan
"Advance" means any advance by the Bank under the Commitment.
"Affiliate" of any Person means (i) any other Person which directly, or
indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.
"Applicable Margin" means, for any Base Rate Loan for any day and for
any Euro-Dollar Loan, a positive number equal to the percentages set forth below
during the Borrower's fiscal periods that the ratio of Funded Debt to EBITDA,
based upon the financial information submitted to the Bank pursuant to Section
6.01, is as follows:
Ratio of Funded Applicable Margin Applicable Margin
Debt to EBITDA for Base Rate Loan for Euro-Dollar Loan
-------------- ------------------ --------------------
greater than 3.00 to 1.00 1.00% 3.50%
greater than 2.25 to 1.00 0.50% 3.00%
greater than 1.50 to 1.00 0.25% 2.75%
less than or equal to
1.50 to 1.00 0.00% 2.50%
"Assignee" has the meaning set forth in Section 8.05(c).
"Assignment and Acceptance" means an Assignment and Acceptance executed
in accordance with Section 8.05(c) in the form attached hereto as Exhibit C.
"Authority" has the meaning set forth in Section 3.02.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate for such day, plus the
Applicable Margin for Base Rate Loan. For purposes of determining the Base Rate
for any day, changes in the Prime Rate shall be effective on the date of each
such change.
"Base Rate Loan" means an Advance made or to be made as a Base Rate
Loan pursuant to Article III.
"Borrowing" shall mean a borrowing under the Commitment consisting of
an Advance by the Bank. A Borrowing is a "Euro-Dollar Borrowing" if the Advance
is made as a Euro-Dollar Loan, and a "Base Rate Borrowing" if the Advance is
made as a Base Rate Loan.
"Borrowing Base" means, based on the most recent Quarterly Receivables
Certification, which as of the date of a determination of the Borrowing Base has
been received by the Bank, the aggregate of: (a) 85% of the aggregate net amount
of Tier I Eligible Receivables; and (b) 70% of the aggregate net amount of Tier
II Eligible Receivables.
"Capital Leases" means all leases reflected on a balance sheet of the
Borrower or a lease that should be so reflected in accordance with generally
accepted accounting principles consistently applied.
"Capital Stock" means any nonredeemable capital stock of the Borrower
(to the extent issued to a Person other than the Borrower), whether common or
preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section 3.02.
"Closing Certificate" has the meaning set forth in Section 4.01(d).
"Closing Date" means ____________________________.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Collateral" has the meaning set forth in the Security Agreement.
"Collateral Documents" shall mean, collectively, (i) the Security
Agreement; (ii) the FMA Agreement; and (iii) the Guaranty Agreement; as any of
the foregoing may be amended, modified, or supplemented.
"Commitment" shall have the meaning assigned to it in Section 2.01.
"Compliance Certificate" has the meaning set forth in Section 6.01(c).
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Convertible Preferred Stock" of any Person means any nonredeemable
preferred stock issued by such Person which is at any time prior to the
Termination Date convertible to Capital Stock at the option of the holder
thereof.
"Debt" of the Borrower or of any other Person means at any date,
without duplication, (i) all obligations of the Borrower or such Person for
borrowed money, (ii) all obligations of the Borrower or such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
the Borrower or such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of the Borrower or such Person as lessee under
Capital Leases, (v) all obligations of the Borrower or such Person to reimburse
any bank or other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of the Borrower or such Person
(in the event such Person is a corporation), (vii) all obligations of the
Borrower or such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of the Borrower or such Person, whether or
not such Debt is assumed by the Borrower or such Person, and (ix) all Debt of
others Guaranteed by the Borrower or such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Advance, on any day, the sum
of 2% plus the higher of (x) the Adjusted Monthly Libor Index Rate or (y) the
Base Rate.
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower for such period, as determined in accordance with
generally accepted accounting principles consistently applied.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Domestic Business Day" means any day on which the Bank is open to the
public for the conduct of banking business at its principal office in
Winston-Salem, North Carolina.
"EBILT" means, without duplication, for any fiscal period, as applied
to the Borrower, the sum of the amounts for such fiscal period of: (i) Net
Income (Loss) of the Borrower, (ii) Interest Expense, (iii) Lease Obligations
actually paid or incurred by the Borrower during such period, and (iv) taxes
based on income of the Borrower and actually paid by the Borrower during such
period, all as determined and computed in accordance with generally accepted
accounting principles consistently applied.
"EBITDA" means, without duplication, for any fiscal period, as applied
to the Borrower, the sum of the amounts for such fiscal period of: (i) Net
Income (Loss) of the Borrower, (ii) Interest Expense, (iii) taxes based on
income of the Borrower and actually paid by the Borrower during such period,
(iv) Depreciation, and (v) amortization expense, all as determined and computed
in accordance with generally accepted accounting principles consistently
applied.
"Eligible Receivables" means those Receivables of the Borrower, each of
which meets the following requirements: (i) such Receivable arose in the
ordinary course of the Borrower's business; (ii) the right to payment has been
fully earned by completed performance and, if Goods are involved, the Goods have
been shipped by the Borrower (or if not shipped by the Borrower, are held by the
Borrower under a "xxxx and hold" arrangement satisfactory to the Bank in its
sole discretion); (iii) the Receivable includes only that portion thereof not
subject to any offset, defense, counterclaim, credit, allowance or adjustment;
(iv) the Borrower's title to such Receivable is absolute and is subject to no
prior assignment, claim, lien or security interest; (v) the full amount
reflected on the Borrower's books and on any invoice or statement delivered to
the Bank related to such Receivable is owing to the Borrower and no partial
payment has been made thereon; (vi) such Receivable is currently due and payable
and is not past due beyond the requirements set forth in the definitions for
Tier I and Tier II Eligible Receivables; (vii) such Receivable did not arise out
of a contract or purchase order containing provisions prohibiting assignment
thereof or the creation of a security interest therein, and the Borrower has
received no note, trade acceptance, draft or other instrument with respect to
such Receivable or in payment thereof; (viii) the Borrower has received no
notice of the death of the account debtor or of the dissolution, termination of
existence, insolvency, bankruptcy, appointment of receiver for any part of the
property of, or assignment for the benefit of creditors made by, the account
debtor; (ix) such Receivable is not payable by any Affiliate of the Borrower;
(x) such Receivable is not payable by any foreign Person except those foreign
persons located in Canada and identified on Schedule 1.01 attached hereto, which
Schedule 1.01 may be supplemented from time to time at their discretion
(provided that Persons present in possessions of the United States of America
shall not be considered foreign Persons), unless such Receivable is payable in
the full amount of the face value of such Receivable in United States dollars
and is supported by an irrevocable letter of credit in form and substance
acceptable to the Bank, in its sole discretion, and issued by a bank
satisfactory to the Bank, in its sole discretion (and, if requested by the Bank,
such letter of credit or the proceeds thereof, as the Bank, in its sole
discretion, shall require, have been assigned to the Bank); (xi) such Receivable
is not payable by the United States of America or any political subdivision or
agency thereof, unless the Bank and the Borrower have complied with the
Assignment of Claims Act with respect to such Receivable; (xii) the account
debtor for such Receivable is not located in the State of New Jersey unless the
Borrower has filed a Notice of Business Activities Report with the New Jersey
Division of Taxation for the then current year; and (xiii) such Receivable is
not payable by any Person who is the account debtor for other Receivable and who
is past due (as provided in (vi) above) with regard to fifty percent (50%) or
more of the aggregate amount of such other Receivables.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower required by any Environmental Requirement.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with any
Environmental Requirement, including without limitation any complaints,
citations, demands or requests from any Environmental Authority or from any
other person or entity for correction of any violation of any Environmental
Requirement or any investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower or the
Properties, including but not limited to any such requirement under CERCLA or
similar state legislation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law, including any rules or
regulations promulgated thereunder. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means an Advance made or to be made (pursuant to
this Agreement and the FMA Agreement) as a Euro-Dollar Loan based on the
Adjusted Monthly Libor Index Rate.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
the Bank to United States residents). The Adjusted Monthly Libor Index Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
"Event of Default" shall have the meaning assigned to such term in
Section 7.01.
"Facility Fee" shall have the meaning assigned to it in Section 2.06.
"Facility Fee Payment Date" means the first day of each February, May,
August, and November, commencing February 1, 1997; provided that if any such day
is not a Domestic Business Day, the Facility Fee Payment Date shall be on the
next succeeding Domestic Business Day.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to Wachovia on such day on such
transactions.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"FMA Agreement" means that certain Financial Management Account Master
Agreement dated November 14, 1996, between the Borrower and the Bank, together
with and as amended by that certain Financial Management Account
Investment/Commercial Loan Access Agreement dated November 14, 1996, between the
Borrower and the Bank, together with all supplements, amendments, additions, and
schedules thereto from time to time.
"Funded Debt" means, at any date, any Debt of the Borrower.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantors" shall have the meaning set forth in Section 4.01(h).
"Guaranty Agreement" shall have the meaning set forth in Section 4.01
(h).
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, or in any applicable state or local law or regulation, (b) hazardous
substances, as defined in CERCLA, or in any applicable state or local law or
regulation, (c) gasoline, or any other petroleum product or by-product, (d)
toxic substances, as defined in the Toxic Substances Control Act of 1976, or in
any applicable state or local law or regulation or (e) insecticides, fungicides,
or rodenticides, as defined in the Federal Insecticide, Fungicide, and
Rodenticide Act of 1975, or in any applicable state or local law or regulation,
as each such Act, statute or regulation may be amended from time to time.
"Interest Expense" for any period means interest, whether expensed or
capitalized, in respect of Debt of the Borrower outstanding during such period.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lease Obligations" means, for any period, as applied to the Borrower,
all Debt and payment obligations of the Borrower for such period under operating
leases and rental agreements.
"Lending Office" means the Bank's office located at its address set
forth on the signature pages hereof (or identified on the signature pages hereof
as its Lending Office) or such other office as the Bank may hereafter designate
as its Lending Office by notice to the Borrower.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loan Documents" means this Agreement, the Note, the Collateral
Documents, and any other document evidencing, relating to or securing the
Advances, and any other document or instrument delivered from time to time in
connection with this Agreement, the Note, the Collateral Documents, or the
Advances, as such documents and instruments may be amended or supplemented from
time to time.
"Long-Term Debt" means, at any date, any Debt which matures (or the
maturity of which may at the option of the Borrower be extended such that it
matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, business, investments, assets, or properties of the
Borrower, (b) the rights and remedies of the Bank under the Loan Documents, or
the ability of the Borrower to perform its obligations under the Loan Documents,
or (c) the legality, validity or enforceability of any Loan Document.
The "Monthly Libor Index Rate" applicable to any Euro-Dollar Loan means
the rate per annum designated by the Bank in its sole discretion on each Rate
Determination Date as the Bank's Monthly Libor Index Rate, taking into account
the offered rate for deposits in Dollars for a term of one month, which appears
on the display designated as Page "3750" of the Telerate Service (or such other
page as may replace page 3750 of that service or such other service or services
as may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits), determined
as of 11:00 a.m. (London time), on each such Rate Determination Date, and such
other factors as the Bank shall deem relevant.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) or ERISA.
"Net Income (Loss)" means, as applied to the Borrower or any other
Person, for any period, gross revenues and other proper income of the Borrower
or such other Person during such period less the aggregate during such period of
(i) cost of merchandise sold, (ii) selling, administrative and general expenses,
(iii) taxes, (iv) Depreciation, depletion and amortization of assets, and (v)
any other items that are treated as expenses under generally accepted accounting
principles consistently applied, all as computed in accordance with generally
accepted accounting principles consistently applied.
"Net Income of the Borrower" means, for any period, the Net Income
(Loss) of the Borrower, but excluding any equity interests of the Borrower in
the unremitted earnings of any Person.
"Note" shall mean a promissory note of the Borrower payable to the
order of the Bank, in substantially the form of Exhibit A hereto, evidencing the
maximum principal indebtedness of the Borrower to the Bank under the Commitment,
either as originally executed or as it may be from time to time supplemented,
modified, amended, renewed or extended.
"Obligations" means all indebtedness, obligations and liabilities to
the Bank existing on the date of this Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, of the Borrower under this Agreement or any other Loan
Document.
"Officer's Certificate" has the meaning set forth in Section 4.01(e).
"Operating Profits" means, as applied to any Person (including the
Borrower) for any period, the operating income of such Person for such period,
as determined in accordance with generally accepted accounting principles
consistently applied.
"Participant" has the meaning set forth in Section 8.05(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means:
(a) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(b) Pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age pensions
or other social security programs;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(d) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of twenty percent (20%) of
the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;
(e) Liens in favor of the Bank pursuant to the Loan Documents; and
(f) Any Lien on any equipment of the Borrower securing Debt of the
Borrower incurred for the purpose of financing all of the cost of acquiring such
equipment, provided that (i) such Lien attaches to such equipment concurrently
with the acquisition thereof, and (ii) such Liens shall not exceed, in the
aggregate, $100,000.00 in any Fiscal Year.
"Person" means any individual, joint venture, corporation, company,
voluntary association, partnership, trust, joint stock company, unincorporated
organization, association, government, or any agency, instrumentality, or
political subdivision thereof, or any other form of entity or organization.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Wachovia. Wachovia lends
at interest rates above and below the Prime Rate. A change in the Prime Rate
shall be effective on the date of such change.
"Properties" means all real property owned, leased or otherwise used or
occupied by the Borrower, wherever located.
"Quarterly Receivables Certification" means a certification in the form
attached hereto as Exhibit F and otherwise satisfactory to the Bank, certified
by the chief financial officer or other authorized officer of Borrower regarding
the Receivables of the Borrower.
"Rate Determination Date" means each day that is two Euro-Dollar
Business Days prior to the first day of each calendar month, and if such day is
not a Domestic Business Day, then on the immediately preceding Domestic Business
Day which is also a Euro-Dollar Business Day.
"Receivables" means all obligations of every kind at any time owing to
Borrower (whether now existing or hereafter arising, and whether classified
under the Uniform Commercial Code as Accounts, Instruments, Contract Rights,
Chattel Paper, Contracts, General Intangibles, or otherwise), all proceeds
thereof, all security therefor and all of the Borrower's rights to Goods or
other property sold or leased which may be represented thereby.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Termination Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reportable Event" has the meaning given such term in Section 4043(b)
of Title V of ERISA.
"Reported Net Income" means, for any period, the Net Income (Loss) of
the Borrower.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Borrower's capital stock (except dividends payable solely in
shares of its capital stock) or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Borrower's
capital stock (except shares acquired upon the conversion thereof into other
shares of its capital stock) or (b) any option, warrant or other right to
acquire shares of the Borrower's capital stock.
"Security Agreement" shall have the meaning set forth in Section 4.01
(g).
"Stockholders' Equity" means, at any time, the shareholders' equity of
the Borrower, as set forth or reflected on the most recent balance sheet of the
Borrower prepared in accordance with generally accepted accounting principles
consistently applied, excluding any Redeemable Preferred Stock of the Borrower,
and including any Convertible Preferred Stock. Shareholders' Equity would
generally include, but not be limited to (i) the par or stated value of all
outstanding Capital Stock, (ii) capital surplus, (iii) retained earnings, and
(iv) various deductions such as (A) purchases of treasury stock, (B) valuation
allowances, (C) receivables due from an employee stock ownership plan, (D)
employee stock ownership plan debt guarantees, and (E) translation adjustments
for foreign currency transactions.
"Subsidiary" any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Tangible Net Worth" means, at any time, Stockholders' Equity, less the
sum of the value, as set forth or reflected on the most recent balance sheet of
the Borrower, prepared in accordance with generally accepted accounting
principles consistently applied, of
(A) Any surplus resulting from any write-up of assets subsequent to
July 31, 1996;
(B) All assets which would be treated as intangibles under generally
accepted accounting principles, including without limitation goodwill (whether
representing the excess of cost over book value of assets acquired, or
otherwise), trademarks, tradenames, copyrights, patents and technologies, and
unamortized debt discount and expense;
(C) To the extent not included in (B) of this definition, any amount at
which shares of capital stock of the Borrower appear as an asset on the balance
sheet of the Borrower;
(D) Loans or advances to stockholders, directors, officers or
employees; and
(E) To the extent not included in (B) of this definition, deferred
expenses.
"Taxes" has the meaning set forth in Section 2.11.
"Termination Date" has the meaning set forth in Section 2.07.
"Third Parties" means all lessees, sublessees, licenses and other users
of the Properties, excluding those users of the Properties in the ordinary
course of the Borrower's business and on a temporary basis.
"Tier I Eligible Receivables" means those Receivables of the Borrower,
each of which meets the following requirements: (i) such Receivable meets all of
the requirements set forth in the definition of the term "Eligible Receivables",
and (ii) such Receivable is currently due and payable and no more than 90 days
have elapsed from the date the claim evidencing such Receivable was filed with
the publisher for payment, or alternatively, as may be applicable, from invoice
date, and (iii) such Receivable is not a Tier II Eligible Receivable.
"Tier II Eligible Receivables" means those Receivables of the Borrower,
each of which meets the following requirements: (i) such Receivable meets all of
the requirements set forth in the definition of the term "Eligible Receivables",
(ii) such Receivable is not a Tier I Eligible Receivable, and (iii) such
Receivable is currently due and payable and more than 90 days have elapsed from
the date the claim evidencing such Receivable was filed with the publisher for
payment, or alternatively, as may be applicable, from invoice date, but no more
than 365 days have elapsed from the date the claim evidencing such Receivable
was filed with the publisher for payment, or alternatively, as may be
applicable, from invoice date.
"Total Assets" means, at any time, the total assets of the Borrower as
set forth or reflected on the most recent balance sheet of the Borrower,
prepared in accordance with generally accepted accounting principles
consistently applied.
"Total Capitalization" means, at any time, the sum of (i) Stockholders'
Equity, and (ii) Funded Debt.
"Transferee" has the meaning set forth in Section 8.05(d).
"Unused Commitment" means at any date an amount equal to the Commitment
less the aggregate outstanding principal amount of the Advances.
"Wachovia" means Wachovia Bank of North Carolina, N.A., a national
banking association, together with its successors.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
financial statements of the Borrower delivered to the Bank.
SECTION 1.03. Use of Defined Terms. All terms defined in this Agreement
shall have the same meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
SECTION 1.05. References. Except as otherwise expressly provided in
this Agreement: the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole, including any Schedule hereto
which is a part hereof, and not to any particular Section, Article, paragraph or
other subdivision; the singular includes the plural and the plural includes the
singular; "or" is not exclusive; the words "include," "includes" and "including"
are not limiting; a reference to any agreement or other contract includes past
and future permitted supplements, amendments, modifications and restatements
thereto or thereof; a reference to an Article, Section, paragraph or other
subdivision is a reference to an Article, Section, paragraph or other
subdivision of this Agreement; a reference to any law includes any amendment or
modification to such law and any rules and regulations promulgated thereunder; a
reference to a Person includes its permitted successors and assigns; any right
may be exercised at any time and from time to time; and, except as otherwise
expressly provided therein, all obligations under any agreement or other
contract are continuing obligations throughout the term of such agreement or
contract.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitment to Lend. The Bank agrees, on the terms and
conditions set forth herein and in the FMA Agreement, to make Advances to the
Borrower from time to time before the Termination Date; provided that,
immediately after each such Advance is made, the aggregate principal amount of
outstanding Advances shall not exceed the lesser of (i) the Borrowing Base, or
(ii) $8,700,000.00 (as such figure may be reduced from time to time as provided
in this Agreement, the "Commitment"). Within the foregoing limits, the Borrower
may borrow under this Section, repay or, to the extent permitted by Section
2.09, prepay Advances and reborrow under this Section at any time before the
Termination Date. The Bank shall have no obligation to advance funds in excess
of the lesser of (i) the Borrowing Base, or (ii) the amount of the Commitment.
SECTION 2.02. Method of Borrowing. (a) Advances to the Borrower shall
be made in accordance with the Bank's Financial Management Account service as
set forth in the FMA Agreement, the terms and provisions of which are
incorporated herein by reference; provided that all Advances shall be subject to
the terms, covenants, conditions, restrictions and provisions of this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the FMA Agreement, the Bank shall have no obligation to make an
Advance if there shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cured or waived.
SECTION 2.03. Note. The Advances shall be evidenced by a single Note
payable to the order of the Bank in an amount equal to the original principal
amount of the Bank's Commitment. The Bank may, at its option, record on any
schedule forming a part of the Note appropriate notations to evidence, the date,
amount and maturity of, and effective interest rate for, each Advance made by
it, the date and amount of each payment of principal made by the Borrower with
respect thereto, and such recordations and endorsements shall constitute
rebuttable presumptive evidence of the principal amount owing and unpaid on the
Note; provided that the failure of the Bank to make any such recordation shall
not affect the obligation of the Borrower hereunder, under the Loan Documents or
under the Note. The Note shall bear interest and be repaid in accordance with
the terms and provisions of the FMA Agreement and Sections 2.04 and 2.05 of this
Agreement.
SECTION 2.04. Payment of Advances. The principal amount of all
outstanding Advances together with all accrued and unpaid interest thereon,
shall be due and payable in full, on the Termination Date; provided, however,
that the aggregate outstanding principal amount of all Advances at any one time
outstanding shall not exceed the lesser of: (i) the Commitment; or (ii) the
Borrowing Base. In addition, the Borrower has authorized and directed the Bank
to effect periodic payments of principal and interest on Advances under the FMA
Agreement.
SECTION 2.05. Interest Rates. (a) Subject to the provisions of Article
III, each Advance shall bear interest on the outstanding principal amount
thereof at a rate per annum equal to the current Adjusted Monthly Libor Index
Rate. The Adjusted Monthly Libor Index Rate will change as of the first (1st)
day of each calendar month following a change in the Monthly Libor Index Rate as
of the immediately preceding Rate Determination Date. Such interest shall be
payable on the first (1st) Domestic Business Day of each calendar month in
accordance with the FMA Agreement. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
higher of (i) the sum of 2% plus the Adjusted Monthly Libor Index Rate
applicable to such Euro-Dollar Loan or (ii) the Default Rate.
(b) The Bank shall determine the interest rate applicable to each
Advance hereunder and under the FMA Agreement, and shall, if requested by the
Borrower, give prompt notice to the Borrower by telephone or telecopy of the
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
(c) After the occurrence and during the continuance of a Default, the
principal amount of Advances (and, to the extent permitted by applicable law,
all accrued interest thereon) may, at the election of the Bank, bear interest at
the Default Rate. The Advances shall bear interest at a rate per annum equal to
the Default Rate following any judgment in favor of the Bank on the Note.
SECTION 2.06. Fees. (a) From and after the date hereof up to and
including the Termination Date, the Borrower shall pay to the Bank a facility
fee at the rate of three-eighths of one percent (0.375%) per annum (calculated
from the date hereof on the basis of a year of 360 days and paid for the actual
number of days elapsed) on the average daily balance of the Unused Commitment
(the "Facility Fee"). The Facility Fee shall be payable by the Borrower
quarterly in arrears on each Facility Fee Payment Date and on the Termination
Date, provided that should the Commitment be terminated at any time prior to the
Termination Date (whether by termination of the Commitment as provided in
Section 2.07 or Section 2.08, refinancing of the Advances or otherwise), the
entire accrued and unpaid Facility Fee shall be paid on the date of such
termination.
(b) The Borrower shall pay to the Bank on or prior to the Closing Date
a Commitment Fee in the amount of $8,700.00 (the "Commitment Fee").
SECTION 2.07. Optional Termination or Reduction of Commitment. (a) The
Borrower may, upon at least three Domestic Business Days' notice to the Bank,
terminate the Commitment at any time, or reduce the Commitment from time to time
by an aggregate minimum amount of at least $1,000,000 or an integral multiple of
$100,000 in excess thereof. If the Commitment is so reduced, such reduction
shall be accounted for in determining the Facility Fees due under Section 2.06.
If the Commitment is so terminated in its entirety, (i) all accrued fees (as
provided under Section 2.06) shall be payable on the effective date of such
termination, and (ii) the Borrower shall pay to the Bank on the effective date
of such termination a termination fee equal to one tenth of one percent (0.10%)
of the Commitment. A notice of reduction or termination of the Commitment
hereunder, once given, shall not thereafter be revocable by the Borrower.
(b) NOTWITHSTANDING ANYTHING HEREIN OR IN THE FMA AGREEMENT TO THE
CONTRARY, the Bank shall have the right, in its sole and absolute discretion, to
terminate the Commitment and the Bank's obligation to extend the Commitment to
the Borrower hereunder, upon not less than thirteen (13) months prior written
notice. Such termination shall become effective on the date specified in the
written notice which the Bank delivers to the Borrower exercising the Bank's
option under this Section 2.07 to terminate the Commitment (the termination date
specified in said written notice being referred to herein as the "Termination
Date").
SECTION 2.08. Termination of Commitment. The Commitment shall terminate
and the unpaid principal balance and all accrued and unpaid interest on the Note
will be due and payable upon the first of the following dates or events to
occur: (i) acceleration of the maturity of the Note in accordance with the
remedies contained in Section 7.02; (ii) the Borrower's termination of the
Commitment pursuant to Section 2.07(a); or (iii) upon expiration of the
Commitment on the Termination Date as provided for in Section 2.07(b). From and
after the date of such termination, no Advances shall be made.
SECTION 2.09. Optional Prepayments. Optional prepayments of Advances
shall be permitted only as provided for in the FMA Agreement.
SECTION 2.10. Mandatory Prepayments. (a) On each date on which the
Commitment is reduced pursuant to Section 2.07, the Borrower shall repay or
prepay such principal amount of the outstanding Advances, if any (together with
interest accrued thereon), as may be necessary so that after such payment the
aggregate unpaid principal amount of the outstanding Advances does not exceed
the aggregate amount of the Commitment as then reduced. Each such payment or
prepayment shall be applied to Advances outstanding on the date of such payment
(in direct order of maturity).
(b) In the event that the aggregate principal amount of all Advances at
any one time outstanding shall at any time exceed the lesser of: (i) the
Borrowing Base; or (ii) the aggregate amount of the Commitment, the Borrower
shall immediately repay (in the inverse order of maturity) so much of the
Advances as is necessary in order that the aggregate principal amount of the
Advances thereafter outstanding shall not exceed the lesser of: (i) the
Borrowing Base; or (ii) the Commitment.
SECTION 2.11. General Provisions Concerning Payments. (a) All payments
of principal of, or interest on, the Note, and of the Facility Fee or any other
fees due hereunder, shall be made in Federal or other funds immediately
available to the Bank at its office in Greensboro, North Carolina not later than
1:00 p.m., Greensboro, North Carolina time. Funds received after 1:00 p.m. shall
be deemed to have been paid on the next following Domestic Business Day.
(b) Whenever any payment of principal, or interest or fees, shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. If the date for
any payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(c) All payments of principal, interest and fees and all other amounts
to be made by the Borrower pursuant to this Agreement shall be paid without
deduction for, and free from, any tax, imposts, levies, duties, deductions, or
withholdings of any nature now or at anytime hereafter imposed by any
governmental authority or by any taxing authority thereof or therein excluding
in the case of the Bank, taxes imposed on or measured by its net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which the
Bank is organized or any political subdivision thereof (all such non-excluded
taxes, imposts, levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by applicable law to make
any such withholding or deduction of Taxes with respect to Advances or fee or
other amount, the Borrower shall pay such deduction or withholding to the
applicable taxing authority, shall promptly furnish to the Bank all receipts and
other documents evidencing such payment and shall pay to the Bank additional
amounts as may be necessary in order that the amount received by the Bank after
the required withholding or other payment shall equal the amount the Bank would
have received had no such withholding or other payment been made. If no
withholding or deduction of Taxes are payable in respect of any Advance or fee
relating thereto, the Borrower shall furnish, at the Bank's request, a
certificate from each applicable taxing authority or an opinion of counsel
acceptable to the Bank, in either case stating that such payments are exempt
from or not subject to withholding or deduction of Taxes. If the Borrower fails
to provide such original or certified copy of a receipt evidencing payment of
Taxes or certificate(s) or opinion of counsel of exemption, the Borrower hereby
agrees to compensate the Bank for, and indemnify the Bank with respect to, the
tax consequences of the Borrower's failure to provide evidence of tax payments
or tax exemption.
In the event the Bank receives a refund of any Taxes paid by the
Borrower pursuant to this Section 2.11, it will pay to the Borrower the amount
of such refund promptly upon receipt thereof; provided, however, if at any time
thereafter the Bank is required to return such refund, the Borrower shall
promptly repay to the Bank the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.11 shall be applicable with respect to any Participant, Assignee
or other Transferee, and any calculations required by such provisions (i) shall
be made based upon the circumstances of such Participant, Assignee or other
Transferee, and (ii) constitute a continuing agreement and shall survive the
termination of this Agreement and the payment in full or cancellation of the
Note.
SECTION 2.12. Computation of Interest. Interest shall be calculated on
the basis of a year of 360 days for the actual number of days
for the actual number of days in each interest period.
ARTICLE III. CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 3.01. Basis for Determining Interest Rate Inadequate or Unfair.
If at any time:
(i) the Bank determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such one month period
or otherwise determines in its reasonable judgment that it is not possible to
determine the Monthly Libor Index Rate, or
(ii) the Bank determines that the Monthly Libor Index Rate will not
adequately and fairly reflect the cost to the Bank of funding Euro-Dollar Loans,
the Bank shall give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Bank to make or maintain Euro-Dollar Loans
shall be suspended.
SECTION 3.02. Illegality. If, after the date hereof, the adoption of
any applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof (any such authority, bank or agency being referred to as
an "Authority" and any such event being referred to as a "Change of Law"), or
compliance by the Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority shall make it unlawful
or impossible for the Bank (or its Lending Office) to make, maintain or fund its
Euro-Dollar Loans and the Bank shall so notify the Borrower, whereupon until the
Bank notifies the Borrower that the circumstances giving rise to such suspension
no longer exist, the obligation of the Bank to make Euro-Dollar Loans shall be
suspended. If the Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and shall
so specify in such notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each Euro-Dollar Loan, together with
accrued interest thereon. Concurrently with prepaying each such Advance, the
Borrower shall borrow an Advance as a Base Rate Loan in an equal principal
amount from the Bank and the Bank shall make such an Advance.
SECTION 3.03. Increased Cost and Reduced Return. (a) If after the date
hereof, a Change of Law or compliance by the Bank (or its Lending Office) with
any request or directive (whether or not having the force of law) of any
Authority:
(i) shall subject the Bank (or its Lending Office) to any tax, duty or
other charge with respect to its Euro-Dollar Loans, the Note or its obligation
to make or maintain Euro-Dollar Loans, or shall change the basis of taxation of
payments to the Bank (or its Lending Office) of the principal of or interest on
its Euro-Dollar Loans or any other amounts due under this Agreement in respect
of its Euro-Dollar Loans or its obligation to make or maintain Euro-Dollar Loans
(except for changes in the rate of tax on the overall net income of the Bank or
its Lending Office imposed by the jurisdiction in which the Bank's principal
executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding any such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the account of, or credit
extended by, the Bank (or its Lending Office); or
(iii) shall impose on the Bank (or its Lending Office) or the London
interbank market any other condition affecting its Euro-Dollar Loans, its Note
or its obligation to make or maintain Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by the Bank (or its Lending Office)
under this Agreement or under the Note with respect thereto, by an amount deemed
by the Bank to be material, then, within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction.
(b) If the Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof, or compliance by the Bank (or its Lending Office) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any Authority, has or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations under this Agreement with
respect to any Advance to a level below that which the Bank could have achieved
but for such adoption, change or compliance (taking into consideration the
Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 15 days after demand by the
Bank, the Borrower shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section shall be applicable with respect to
any Participant in, or Assignee or other Transferee of, the obligations of the
Borrower hereunder to the Bank, and any calculations required by such provisions
shall be made based upon the circumstances of such Participant, Assignee or
other Transferee.
SECTION 3.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of the Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 3.01 or Section 3.02, or (ii) the Bank
has demanded compensation under Section 3.03 and the Borrower, by at least one
Domestic Business Day's prior notice to the Bank, shall have elected that the
provisions of this Section shall apply, then, unless and until the Bank notifies
the Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Advances which would otherwise be made by the Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans, and
(b) after each of its Euro-Dollar Loans has been repaid, all payments
of principal which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
SECTION 3.05. Compensation. Upon the request of the Bank, delivered to
the Borrower, the Borrower shall pay to the Bank such amount or amounts as shall
compensate the Bank for any loss, cost or expense incurred by the Bank as a
result of:
(a) any optional or mandatory payment or prepayment (pursuant to
Section 3.02, the FMA Agreement or otherwise) of a Euro-Dollar Loan on a date
other than (i) the first day of a calendar month, or (ii) an approved date for
payment or prepayment as provided for in or pursuant to the FMA Agreement; or
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment of or
notice of reduction of the Commitment hereunder, as the case may be.
ARTICLE IV. CONDITIONS TO BORROWINGS
SECTION 4.01. Conditions to First Borrowing. The obligation of the Bank
to make an Advance on the occasion of the first Borrowing is subject to the
satisfaction of the conditions set forth in Section 4.02 and the following
additional conditions:
(a) receipt by the Bank from the Borrower of a duly executed
counterpart of this Agreement signed by the Borrower;
(b) receipt by the Bank of the duly executed Note complying with the
provisions of Section 2.03;
(c) receipt by the Bank of an opinion of counsel of Gallop, Xxxxxxx &
Xxxxxx, X.X., counsel for the Borrower and Guarantors, substantially in the form
of Exhibit B hereto, and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) receipt by the Bank of a certificate, dated the Closing Date and
substantially in the form attached hereto at Exhibit D (the "Closing
Certificate"), signed by a principal financial officer of the Borrower to the
effect that (i) no Default hereunder has occurred and is continuing on the
Closing Date and (ii) the representations and warranties of the Borrower
contained in Article V are true on and as of the Closing Date; and if the first
Advance is made by the Bank after the Closing Date, receipt by the Bank of a
certificate, dated the date of the first Advance, signed by a principal
financial officer of the Borrower to the effect that (i) no Default hereunder
has occurred and is continuing on the date of the first Advance and (ii) the
representations and warranties of the Borrower contained in Article V are true
on and as of the date of the first Advance hereunder;
(e) receipt by the Bank of all documents which the Bank may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of this Agreement, the Note and the other Loan Documents to
which the Borrower is a party, and any other matters relevant hereto, all in
form and substance satisfactory to the Bank, including without limitation a
certificate of incumbency of the Borrower, signed by the Secretary or an
Assistant Secretary of the Borrower and substantially in the form of Exhibit E
hereto (the "Officer's Certificate"), certifying as to the names, true
signatures and incumbency of the officer or officers of the Borrower authorized
to execute and deliver the Loan Documents, and certified copies of the following
items: (i) the Borrower's Certificate of Incorporation, (ii) the Borrower's
Bylaws, (iii) a certificate of the Secretary of State (or other appropriate
office) of the jurisdiction of the Borrower's incorporation as to the good
standing of the Borrower as a corporation of such jurisdiction, (iv) a
certificate of the Secretary of State of North Carolina as to the good standing
of the Borrower as a foreign corporation under the laws of the State of North
Carolina, and (v) the action taken by the Board of Directors of the Borrower
authorizing the Borrower's execution, delivery and performance of this
Agreement, the Note and the other Loan Documents to which the Borrower is a
party;
(f) receipt by the Bank of the duly executed FMA Agreement, together
with all Schedules and supplements thereto;
(g) duly executed UCC financing statements and a duly executed Security
Agreement (the "Security Agreement") from the Borrower granting to or for the
benefit of the Bank a first priority lien on and security interest in the
Collateral;
(h) receipt by the Bank of a Guaranty Agreement satisfactory in form
and substance to the Bank (the "Guaranty Agreement"), and duly executed by S.
Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxxx X. Xxx, Xx., and Xxxxxxx X. Xxx (herein
collectively referred to as the "Guarantors") to and in favor of the Bank;
(i) policies of insurance or certificates evidencing such policies
(with loss payable clauses satisfactory to the Bank) as required pursuant to the
Security Agreement;
(j) a Quarterly Receivables Certification dated as of July 31, 1996 and
the financial information required in Sections 6.01(b) and (c) with respect to
the Fiscal Quarter ending July 31,1996;
(k) Uniform Commercial Codes searches confirming the Bank's first lien
position with respect to the Collateral;
(l) receipt by the Bank of payment of the Commitment Fee; and
(m) such other documents or items as the Bank or its counsel may
reasonably request.
SECTION 4.02. Conditions to All Borrowings. The obligation of the Bank
to make an Advance on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) the fact that, immediately after such Borrowing, no Default shall
have occurred and be continuing;
(b) the fact that the representations and warranties of the Borrower
contained in Article V shall be true on and as of the date of such Borrowing;
and
(c) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of the Advances will not exceed the lesser of (i)
the amount of the Commitment, or (ii) the Borrowing Base.
Each Advance hereunder and under the FMA Agreement shall be deemed to be a
representation and warranty by the Borrower on the date of such Advance as to
the facts specified in clauses (a), (b) and (c) of this Section; provided that
such Advance shall not be deemed to be such a representation and warranty to the
effect set forth in Section 5.04(b) as to any event, act or condition having a
Material Adverse Effect which has theretofore been disclosed in writing by the
Borrower to the Bank if the aggregate outstanding principal amount of the
Advances immediately after such Borrowing will not exceed the aggregate
outstanding principal amount of Advances immediately before such Borrowing.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION 5.02. Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Borrower of this Agreement, the
Note and the other Loan Documents (i) are within the Borrower's corporate
powers, (ii) have been duly authorized by all necessary corporate action, (iii)
require no action by or in respect of, or filing with, any governmental body,
agency or official, (iv) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of the Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower, and (v) do not result in
the creation or imposition of any Lien on any asset of the Borrower.
SECTION 5.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Borrower enforceable in accordance with its terms, and
the Note and the other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding obligations of the
Borrower enforceable in accordance with their respective terms, provided that
the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 5.04. Financial Information. (a) The balance sheet of the
Borrower as of January 31, 1996 and the related consolidated statements of
income, shareholders' equity and cash flows for the Fiscal Year then ended,
reported on by BDO Xxxxxxx LLP, copies of which have been delivered to the Bank,
and the unaudited financial statements of the Borrower for the interim period
ended July 31, 1996, copies of which have been delivered to the Bank, fairly
present, in conformity with generally accepted accounting principles, the
financial position of the Borrower as of such dates and its results of
operations and cash flows for such periods stated.
(b) Since July 31, 1996 there has been no event, act, condition or
occurrence having a Material Adverse Effect.
(c) The Borrower's federal taxpayer identification number is
00-0000000.
SECTION 5.05. Litigation. Except as disclosed in Schedule 5.05, there
is no action, suit or proceeding pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower before any court or arbitrator or
any governmental body, agency or official which could have or cause a Material
Adverse Effect, or which in any manner draws into question the validity of, or
could impair the ability of the Borrower to perform its obligations under, this
Agreement, the Note or any of the other Loan Documents.
SECTION 5.06. Compliance with ERISA. (a) The Borrower does not have any
employee pension benefit plan which is covered by Title IV of ERISA or that is
subject to the minimum funding standards under Section 412 of the Code.
(b) The Borrower and each member of the Controlled Group have fulfilled
their obligations under the minimum funding standards of ERISA and the Code with
respect to any Plan and are in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and have not incurred any
liability to the PBGC or any Plan under Title IV of ERISA.
(c) Neither the Borrower nor any member of the Controlled Group is or
ever has been obligated to contribute to any Multiemployer Plan.
SECTION 5.07. Taxes. There have been filed on behalf of the Borrower
all Federal, state and local income, excise, property and other tax returns
which are required to be filed by it and all taxes due pursuant to such returns
or pursuant to any assessment received by or on behalf of the Borrower have been
paid. The charges, accruals and reserves on the books of the Borrower in respect
of taxes or other governmental charges are, in the opinion of the Borrower,
adequate. United States income tax returns of the Borrower have been examined
and closed through the Fiscal Year ended January 31, 1996.
SECTION 5.08. Subsidiaries. The Borrower has no Subsidiaries.
SECTION 5.09. Not an Investment Company. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 5.10. Ownership of Property; Liens. The Borrower has title to
its Properties and assets sufficient for the conduct of its business, and none
of such Properties or assets is subject to any Lien except for Permitted
Encumbrances. All patents, trademarks, tradenames, copyrights, technologies and
applications for such owned by or requested in the name of the Borrower are
shown on Schedule 5.10 hereto.
SECTION 5.11. No Default. The Borrower is not in default under or with
respect to any agreement, instrument or undertaking to which it is a party or by
which it or any of its property is bound which could have or cause of Material
Adverse Effect. No Default has occurred and is continuing.
SECTION 5.12. Full Disclosure. All information heretofore furnished by
the Borrower to the Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all such information hereafter
furnished by the Borrower to the Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified. The Borrower has disclosed to the Bank
in writing any and all facts which could have or cause a Material Adverse
Effect.
SECTION 5.13. Environmental Matters. (a) The Borrower is not subject to
any Environmental Liability which could have or cause a Material Adverse Effect
and the Borrower has not been designated as a potentially responsible party
under CERCLA or under any state statute similar to CERCLA. None of the
Properties have been identified on any current or proposed (i) National
Priorities List under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list
arising from a state statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, managed at, or shipped
or transported to or from the Properties or are otherwise present at, on, in or
under the Properties, or, to the best of the knowledge of the Borrower, at or
from any adjacent site or facility, except for Hazardous Materials, such as
cleaning solvents, pesticides and other materials used, produced, manufactured,
processed, generated, stored, disposed of, and managed in the ordinary course of
business in compliance with all applicable Environmental Requirements.
(c) The Borrower, and each of its Affiliates, has procured all
Environmental Authorizations necessary for the conduct of its business, and is
in compliance with all Environmental Requirements in connection with the
operation of the Properties and the Borrower's, and each of its Affiliate's,
respective businesses.
SECTION 5.14. Compliance with Laws. The Borrower is in compliance with
all applicable laws, including, without limitation, all Environmental Laws,
except where any failure to comply with any such laws would not, alone or in the
aggregate, have a Material Adverse Effect.
SECTION 5.15. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrower presently issued and outstanding
are validly and properly issued in accordance with all applicable laws,
including, but not limited to, the "Blue Sky" laws of all applicable states and
the federal securities laws.
SECTION 5.16. Margin Stock. The Borrower is not engaged principally, or
as one of its important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of any Advance will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation X.
SECTION 5.17. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Advances under this
Agreement and under the FMA Agreement, the Borrower will not be "insolvent,"
within the meaning of that term as defined in ss. 101 of Title 11 of the United
States Code or Section 2 of the Uniform Fraudulent Transfer Act, or as
contemplated in N.C.G.S. ss. 39-15, et. seq. or any other applicable state law
pertaining to fraudulent transfers, as each may be amended from time to time, or
be unable to pay its debts generally as such debts become due, or have an
unreasonably small capital to engage in any business or transaction, whether
current or contemplated.
SECTION 5.18. Insurance. The Borrower maintains (in its own name), with
financially sound and reputable insurance companies, insurance on all of its
Properties, Equipment, Fixtures, and Inventory, in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar business.
ARTICLE VI. COVENANTS
The Borrower agrees that, so long as the Commitment is in effect
hereunder or any amount payable under the Note, this Agreement or the FMA
Agreement remains unpaid:
SECTION 6.01. Information. The Borrower will deliver to the Bank:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year, a balance sheet of the Borrower as of the end of such
Fiscal Year and the related statements of income, shareholders' equity and cash
flows for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous fiscal year, all certified by BDO Xxxxxxx LLP or other
independent public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not acceptable to
Bank;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each Fiscal Year, a balance sheet of the
Borrower as of the end of such quarter and the related statement of income and
statement of cash flows for such quarter and for the portion of the Fiscal Year
ended at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of the
previous Fiscal Year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate substantially
in the form of Exhibit H attached hereto (the "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Sections 6.03
through 6.07, inclusive on the date of such financial statements and (ii)
stating whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(e) within five Domestic Business Days after the Borrower becomes aware
of the occurrence of any Default, a certificate of the chief financial officer
or the chief accounting officer of the Borrower setting forth the details
thereof and the action which the Borrower is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or monthly reports which the
Borrower shall have filed with the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any Reportable Event with respect to any
Plan which might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has given or is
required to give notice of any such Reportable Event, a copy of the notice of
such Reportable Event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice;
(i) as soon as available and in any event within forty-five (45) days
after the end of each Fiscal Quarter of each Fiscal Year, a Quarterly
Receivables Certification, dated as of the last day of the applicable Fiscal
Quarter; and
(j) from time to time such additional information regarding the
financial position or business of the Borrower as the Bank may reasonably
request.
SECTION 6.02. Inspection of Property, Books and Records. The Borrower
will keep proper books of record and account which fairly state the financial
position of the Borrower in all material respects in conformity with generally
accepted accounting principles with respect to all dealings and transactions in
relation to its business and activities; and will permit representatives of the
Bank at the Bank's expense prior to the occurrence of an Event of Default and at
the Borrower's expense after the occurrence of an Event of Default to visit and
inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants. The Borrower agrees to cooperate and assist in
such visits and inspections, in each case at such reasonable times and as often
as may reasonably be desired.
SECTION 6.03. Ratio of EBILT to Interest Expense and Lease Obligations.
As of January 31, 1997, the ratio of EBILT for the Fiscal Quarter then ending
and the immediately preceding three Fiscal Quarters to the sum of (i) Interest
Expense and (ii) Lease Obligations, actually paid during such Fiscal Quarters,
will not be less than 2.00 to 1.00; and as of the end of each Fiscal Quarter
thereafter, the ratio of EBILT for the Fiscal Quarter then ending and the
immediately preceding three Fiscal Quarters to the sum of (i) Interest Expense
and (ii) Lease Obligations, actually paid during such Fiscal Quarters, will not
be less than 2.50 to 1.00.
SECTION 6.04. Ratio of Funded Debt to EBITDA. As of July 31, 1997 and
as of the end of each Fiscal Quarter thereafter, the ratio of Funded Debt for
the Fiscal Quarter then ending to EBITDA for such Fiscal Quarter and for the
immediately preceding three Fiscal Quarters, will not be less than 4.00 to 1.00.
SECTION 6.05. Ratio of Funded Debt to Total Capitalization. From the
Closing Date through the Fiscal Quarter ending July 31, 1997, the ratio of
Funded Debt to Total Capitalization shall not exceed 65.0%; from August 1, 1997
through January 31, 1998, the ratio of Funded Debt to Total Capitalization shall
not exceed 60.0%; from February 1, 1998 through July 31, 1998, the ratio of
Funded Debt to Total Capitalization shall not exceed 55.0%; and from and after
August 1, 1998, the ratio of Funded Debt to Total Capitalization shall not
exceed 50.0%.
SECTION 6.06. Minimum Tangible Net Worth. Tangible Net Worth will at no
time be less than $3,600,000.00 plus the sum of 50.0% of the cumulative Reported
Net Income of the Borrower during any period after July 31, 1996 (taken as one
accounting period), calculated quarterly but excluding from such calculations
any quarter in which the Net Income of the Borrower is negative.
SECTION 6.07. Accounts Receivable. Tier I Eligible Receivables shall at
all times comprise more than fifty percent (50%) of the Borrower's Receivables.
At no time shall total Receivables to the Canadian companies identified on
Schedule 1.01 attached hereto exceed in the aggregate ten percent (10%) of
Eligible Receivables.
SECTION 6.08. Restricted Payments. The Borrower will not declare or
make any Restricted Payment during any Fiscal Year except from Net Income and
then only after providing for payment of all current principal payments on
Long-Term Debt; provided that after giving effect to the payment of any such
Restricted Payments, the Borrower will be in full compliance with all of the
provisions of this Agreement.
SECTION 6.09. Loans or Advances. The Borrower shall not make loans or
advances to any Person except: (i) the existing loans to officers of the
Borrower as reflected on the financial information submitted by the Borrower to
the Bank under Section 6.01(b) and (c) of this Agreement for the Fiscal Quarter
ending July 31, 1996; and (ii) deposits required by government agencies or
public utilities; provided that after giving effect to the making of any loans,
advances or deposits permitted by clause (i) or (ii) of this Section, the
Borrower will be in full compliance with all the provisions of this Agreement.
SECTION 6.10. Investments. The Borrower shall not make Investments in
any Person except investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Bank, (iii) commercial paper
rated A-1 or the equivalent thereof by Standard & Poor's Corporation or P-1 or
the equivalent thereof by Xxxxx'x Investors Service, Inc. and in either case
maturing within 6 months after the date of acquisition, and/or (iv) tender bonds
the payment of the principal of and interest on which is fully supported by a
letter of credit issued by a United States bank whose long-term certificates of
deposit are rated at least AA or the equivalent thereof by Standard & Poor's
Corporation and Aa or the equivalent thereof by Xxxxx'x Investors Service, Inc.
SECTION 6.11. Negative Pledge. The Borrower shall not create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except for Permitted Encumbrances.
SECTION 6.12. Maintenance of Existence. The Borrower shall maintain its
corporate existence and carry on its business in substantially the same manner
and in substantially the same fields as such business is now carried on and
maintained.
SECTION 6.13. Dissolution. The Borrower shall not suffer or permit
dissolution or liquidation either in whole or in part or redeem or retire any
shares of its own stock.
SECTION 6.14. Consolidations, Mergers and Sales of Assets. The Borrower
will not consolidate or merge with or into, or sell, lease or otherwise transfer
all or any substantial part of its assets to, any other Person, or create or
acquire any Subsidiary, or discontinue or eliminate any business line or
segment, provided that
(a) the Borrower may merge with another Person if (i) such Person was
organized under the laws of the United States of America or one of its states,
(ii) the Borrower is the corporation surviving such merger and (iii) immediately
after giving effect to such merger, no Default shall have occurred and be
continuing,
(b) the foregoing limitation on the sale, lease or other transfer of
assets and on the discontinuation or elimination of a business line or segment
shall not prohibit, during any Fiscal Quarter, a transfer of assets or the
discontinuance or elimination of a business line or segment (in a single
transaction or in a series of related transactions) unless the aggregate assets
to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, during
such Fiscal Quarter and the immediately preceding seven Fiscal Quarters, either
(x) constituted more than 10% of Total Assets at the end of the eighth Fiscal
Quarter immediately preceding such Fiscal Quarter, or (y) contributed more than
10% of Operating Profits during the eight Fiscal Quarters immediately preceding
such Fiscal Quarter.
SECTION 6.15. Use of Proceeds. No portion of the proceeds of the
Advances will be used by the Borrower (i) in connection with any tender offer
for, or other acquisition of, stock of any corporation with a view towards
obtaining control of such other corporation, (ii) directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any Margin Stock, or (iii) for any purpose in violation of any
applicable law or regulation.
SECTION 6.16. Compliance with Laws; Payment of Taxes. The Borrower
will, and will cause each member of the Controlled Group to, comply with
applicable laws (including but not limited to ERISA), regulations and similar
requirements of governmental authorities (including but not limited to PBGC),
except where the necessity of such compliance is being contested in good faith
through appropriate proceedings diligently pursued. The Borrower will pay
promptly when due all taxes, assessments, governmental charges, claims for
labor, supplies, rent and other obligations which, if unpaid, might become a
lien against the property of the Borrower, except liabilities being contested in
good faith by appropriate proceedings diligently pursued and against which, if
requested by the Bank, the Borrower will set up reserves satisfactory to the
Bank.
SECTION 6.17. Insurance. The Borrower will maintain, or cause to be
maintained, public liability insurance and fire and extended coverage insurance
on all assets owned by it, all in such form and amounts as are consistent with
industry practices and satisfactory to the Bank and with such insurers as may be
satisfactory to the Bank. The Borrower will maintain, or cause to be maintained,
business interruption insurance in such form and amounts as are satisfactory to
the Bank and with insurers as may be satisfactory to the Bank. Such policies of
insurance or certificates evidencing such policies shall be deposited with the
Bank, or the Borrower will furnish to the Bank such evidence of insurance as the
Bank may require. All such policies insuring Collateral shall contain a loss
payable clause, in a form satisfactory to the Bank, in its sole discretion,
naming the Bank as loss payee as its interests may appear. Each such policy of
insurance or endorsement shall contain a clause requiring the insurer to give
the Bank not less than thirty (30) days written notice before any such policy
shall be altered or cancelled or the coverage thereunder reduced or restricted.
Unless written consent to the contrary is first obtained from the Bank, all
proceeds payable under any such policy shall be payable in any event to the Bank
(regardless of whether an Event of Default has occurred hereunder), and the
insurer named therein is hereby authorized and directed by the Borrower to make
payment for any loss under any such policy of insurance to the Bank as its
interests may appear, rather than to the Borrower and the Bank jointly. The Bank
may act as the Borrower's agent in adjusting or compromising any loss under any
such insurance policy and in collecting and receiving the proceeds from any such
policy, and the Bank is hereby appointed the Borrower's attorney-in-fact
(without requiring the Bank to act as such) to endorse any check which may be
payable to the Borrower and to collect such returned or unearned premiums or the
proceeds of such insurance, and any amount so collected may be applied toward
satisfaction of any of the liabilities, indebtedness or obligations of the
Borrower evidenced by the Note or arising from or in connection with this
Agreement. The Borrower hereby agrees that, if the Borrower shall default in its
obligation hereunder to insure the Collateral in a manner satisfactory to the
Bank, or in the event the Borrower fails to pay or cause to be paid the premium
on any insurance required hereunder, then the Bank shall have the right (but not
the obligation), in its sole discretion, to procure such insurance and/or pay
any premium on such insurance, and to charge the costs of same to the Borrower,
and the Bank may, at its option, demand reimbursement by the Borrower for such
amounts so paid with interest thereon at the Default Rate, or the Bank may, at
its option, add all such costs and expenses incurred by the Bank to the unpaid
principal amount of the liabilities, indebtedness and obligations of the
Borrower evidenced by the Note and arising from or in connection with this
Agreement (which costs and expenses shall become a part thereof and shall bear
interest at the Default Rate or the highest contract rate permitted by
applicable law whichever is less); and all of the foregoing shall be secured by
the Collateral.
SECTION 6.18. Change in Fiscal Year. The Borrower will not change its
Fiscal Year without the consent of the Bank.
SECTION 6.19. Maintenance of Property. The Borrower shall maintain all
of its Properties and assets in good condition, repair and working order,
ordinary wear and tear excepted, and will pay and discharge or cause to be paid
and discharged when due, the cost of repairs to or maintenance of the same, and
will pay or cause to be paid all rental or mortgage payments due on such real
estate. The Borrower hereby agrees that, in the event it fails to pay or to
cause to be paid any such payment which failure continues for five (5) days
(unless the validity or amount of such payment is being contested in good faith,
by appropriate proceedings diligently pursued and the amount thereof is
adequately reserved), the Bank may (but shall have no obligation to) do so and
shall be reimbursed by the Borrower therefor on demand with interest thereon at
the Default Rate. The Borrower will comply with all obligations under the leases
to which the Borrower is a party with regard to the Properties.
SECTION 6.20. Environmental Notices. The Borrower shall furnish to the
Bank prompt written notice of all Environmental Liabilities, pending, threatened
or anticipated Environmental Proceedings, Environmental Notices, Environmental
Judgments and Orders, and Environmental Releases at, on, in, under or in any way
affecting the Properties or any adjacent property, and all facts, events, or
conditions that could lead to any of the foregoing.
SECTION 6.21. Environmental Matters. The Borrower will not, and will
not permit any Third Party to, use, produce, manufacture, process, generate,
store, dispose of, manage at, or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials such as cleaning solvents,
pesticides and other similar materials used, produced, manufactured, processed,
generated, stored, disposed or managed in the ordinary course of business in
compliance with all applicable Environmental Requirements.
SECTION 6.22. Environmental Release. The Borrower agrees that upon the
occurrence of an Environmental Release it will act immediately to investigate
the extent of, and to take appropriate remedial action to eliminate, such
Environmental Release, whether or not ordered or otherwise directed to do so by
any Environmental Authority.
SECTION 6.23. Transactions with Affiliates. The only transactions with
Affiliates of Borrower to which the Borrower is a party are those transactions
with Affiliates disclosed in the Borrower's Form 10-K annual report for the
Fiscal Year ending January 31, 1996 and the Borrower's Form 10-Q quarterly
report for July 31, 1996, copies of which have been provided to the Bank; and
otherwise, the Borrower shall not enter into, or be a party to, any transaction
with any Affiliate of the Borrower (which Affiliate is not the Borrower), except
as permitted by law and in the ordinary course of business and pursuant to
reasonable terms which are disclosed to the Bank, consented to in writing by the
Bank, and are no less favorable to Borrower than would be obtained in a
comparable arm's length transaction with a Person which is not an Affiliate.
SECTION 6.24. Collateral. (a) The Borrower will collect its Accounts
and sell its Inventory only in the ordinary course of its business.
(b) The Borrower will keep accurate and complete records of its
Accounts, Inventory and Equipment, consistent with sound business practices.
(c) The Borrower will notify the Bank ten (10) days in advance of any
change in the location of any of its places of business or of the establishment
of any new, or the discontinuance of any existing, place of business or of the
locations at which any of the Collateral is kept; and all locations of the
Borrower's places of business and all locations at which any of the Collateral
is kept are listed on Exhibit G attached hereto.
(d) If requested by the Bank in writing, the Borrower will furnish to
the Bank written reports, in addition to the other reports and certificates
required of Borrower under this Agreement, detailing the aging of the
Receivables and collections thereof, and containing such information with
respect thereto as the Bank may specify. Such reports shall be furnished by the
Borrower daily, if required by the Bank.
(e) If requested by the Bank in writing from time to time and at
intervals designated by the Bank, Borrower shall provide the Bank with
schedules, in addition to the other reports and certificates required of
Borrower under this Agreement, of all of Borrower's Inventory, itemizing and
describing the kind, type, quality and quantity of such Inventory, Borrower's
cost therefor and selling price thereof, together with such support documents as
the Bank may request, including, without limitation, invoices relating to
Borrower's purchase of goods listed in said schedule; and the Borrower shall not
sell Inventory on consignment.
SECTION 6.25. Interest Rate Protection. The Borrower will obtain and
maintain interest rate protection (for example, without limitation, an interest
rate swap, cap, floor or collar), satisfactory to the Bank on at least fifty
percent (50%) of the Commitment. The Borrower agrees that it will, from time to
time, execute and deliver to the Bank, or cause to be executed and delivered,
such further instruments, documents, contracts and agreement as may reasonably
be required by the Bank for carrying out the requirements for interest rate
protection or facilitating the performance by the Borrower of its obligations
under this Section 6.25.
ARTICLE VII. DEFAULTS
SECTION 7.01. Events of Default. The occurrence of any one or more of
the following events shall constitute an Event of Default by the Borrower under
this Agreement:
(a) the Borrower shall fail to pay when due any principal of any
Advance, or shall fail to pay any interest on any Advance within five (5)
Domestic Business Days after such interest shall become due, or shall fail to
pay any fee or other amounts payable hereunder within five (5) Domestic Business
Days after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 6.03 through 6.15, inclusive, and Sections 6.17 and 6.24;
or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for thirty (30) days after the earlier of (i) the first day on which
a responsible officer of the Borrower has knowledge of such failure, or (ii)
written notice thereof has been given to the Borrower by the Bank; or
(d) any representation, warranty, certification or statement made by
the Borrower in Article V, or deemed made by the Borrower or any Guarantor, in
any certificate, financial statement or other document delivered pursuant to
this Agreement or the Guaranty Agreement shall prove to have been incorrect in
any material respect when made (or deemed made); or
(e) the Borrower shall fail to make any payment when due or within any
applicable grace period in respect of Debt outstanding (other than the Note),
which Debt in the aggregate exceeds $100,000.00; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Guarantor which in the aggregate exceeds $100,000.00 or the purchase of such
Debt by the Borrower (or its designee) or by such Guarantor (or his designee)
prior to the scheduled maturity thereof or enables (or, with the giving of
notice or lapse of time or both, would enable) the holders of such Debt or any
Person acting on such holders' behalf to accelerate the maturity thereof or
require the purchase thereof by the Borrower (or its designee) or by such
Guarantor (or his designee) prior to the scheduled maturity thereof, without
regard to whether such holders or other Person shall have exercised or waived
their right to do so;
(g) the Borrower or any Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or any Guarantor seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Guarantor under the federal
bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay to the
PBGC or to any Plan under Title IV of ERISA; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or the Borrower or any other member of the Controlled Group shall
enter into, contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $100,000.00 shall be rendered against the Borrower
or any Guarantor and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or any
Guarantor under Section 6323 of the Code or a lien of the PBGC shall be filed
against the Borrower under Section 4068 of ERISA and in any case such lien shall
remain undischarged for a period of 25 days after the date of filing; or
(l) (i) any Person or two or more Persons (other than S. Xxxxxx Xxxxxx
and Xxxxxxx X. Xxx, Xx.) acting in concert shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of the voting stock of the Borrower; or (ii) as of any date a
majority of the Board of Directors of the Borrower consists of individuals who
were not either (A) directors of the Borrower as of the corresponding date of
the previous year, (B) selected or nominated to become directors by the Board of
Directors of the Borrower of which a majority consisted of individuals described
in clause (A), or (C) selected or nominated to become directors by the Board of
Directors of the Borrower of which a majority consisted of individuals described
in clause (A) and individuals described in clause (B); or
(m) a judgment creditor of the Borrower shall lawfully obtain and
retain for at least five (5) days possession of any material portion of the
Collateral by any lawful means, including, but without limitation, levy,
distraint, replevin or self-help; or
(n) the Guarantors (or any one of them) shall fail to observe or
perform any obligation under the Guaranty Agreement or any other document to
which any Guarantor is a party relating to the Advances or the Guaranty
Agreement; or
(o) a default or an event of default under any of the Loan Documents or
Collateral Documents shall occur and be continuing; or
(p) the occurrence of any event, act or condition which the Bank
determines either does or has a reasonable probability of causing a Material
Adverse Effect; or
(q) a breach, violation, failure of performance, default or event of
default shall occur and be continuing under the FMA Agreement or the FMA
Agreement is terminated.
SECTION 7.02. Remedies on Default. Upon the occurrence of an Event of
Default, the Bank may, by notice to the Borrower, terminate the Commitment which
shall thereupon terminate, and by notice to the Borrower declare the Note
(together with accrued interest thereon) to be, and the Note and all outstanding
Advances shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that if any Event of Default specified
in clause (g) or (h) above occurs with respect to the Borrower, without any
notice to the Borrower or any other act by the Bank, the Commitment shall
thereupon terminate and the Note and all outstanding Advances (together with
accrued interest thereon) and fees shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower. In addition and upon the occurrence of an
Event of Default, the Bank may exercise any rights, powers or remedies under any
of the Loan Documents. Notwithstanding the foregoing, the Bank shall have
available to it all rights and remedies provided under the Loan Documents
(including, without limitation, the Collateral Documents) and in addition
thereto, all other remedies at law or in equity, and may exercise any one or all
of them.
SECTION 7.03. Security Interest; Offset. In addition to, and not in
limitation of, all rights of offset that the Bank or other holder of the Note
may have under applicable law, the Borrower hereby grants to the Bank, and to
each Participant, Assignee or other Transferee, as security for the full and
punctual payment and performance of the obligations to pay to the Bank the
principal of and interest on the Advances and other amounts due hereunder, a
continuing lien on and security interest in all deposits and other sums credited
by or due from the Bank (or such Participant, Assignee or other Transferee) to
the Borrower or subject to withdrawal by the Borrower; and regardless of the
adequacy of any collateral or other means of obtaining repayment of the
Obligations, the Bank (and each such Assignee and, to the extent permitted by
applicable law, each such Participant and other Transferee) may, at any time
after the occurrence of an Event of Default and without notice to the Borrower,
set off the whole or any portion or portions of any or all such deposits and
other sums against the amounts owing under this Agreement and the Note, whether
or not any other Person or Persons could also withdraw money therefrom.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party at its address or facsimile
number set forth below or such other address or facsimile number as such party
may hereafter specify for the purpose by notice to the other party:
(a) If to the Borrower:
The Source Company
00000 Xxxxxxx Xxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Mr. S. Xxxxxx Xxxxxx
Fax number: (000) 000-0000
(b) If to the Bank:
Wachovia Bank of North Carolina, X.X.
Xxxx Xxxxxx Xxx 00000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
[230 Xxxxx Xxx Xxxxxx - 00000-0000]
Xxxxxxxxx: Xxxx X. Xxxxxxxx
Fax number: 000-000-0000
Each such notice, request or other communication shall be effective (i) if given
by facsimile transmission, when such facsimile is transmitted to the fax number
specified in this Section and the facsimile machine used by the sender provides
a written confirmation that such facsimile has been so transmitted or receipt of
such facsimile transmission is otherwise confirmed, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Bank under Article II or Article III shall not be effective until
received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in exercising
any right, power or privilege hereunder or under the Note or any other Loan
Documents shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Bank, including without
limitation, reasonable attorneys' fees and all disbursements of attorneys for
the Bank, in connection with the preparation of this Agreement and the other
Loan Documents, any waiver or consent hereunder or any amendment hereof or any
actual or alleged Default hereunder and (ii) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Bank, including fees and disbursements of
counsel, in connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom, including out-of-pocket expenses
incurred in enforcing this Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Bank against any transfer taxes,
documentary taxes, assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan Documents.
(c) The Borrower shall indemnify the Bank and each Affiliate thereof
and their respective directors, officers, employees and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by the
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Bank to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse the Bank, and each Affiliate thereof and their respective directors,
officers, employees and agents, upon demand for any expenses (including, without
limitation, reasonable attorneys' fees and all disbursements of attorneys for
the Bank, any Affiliate thereof, or any such other Person) incurred in
connection with any such investigation or proceeding; but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 8.04. Amendments and Waivers. Any provision of this Agreement,
the Note or any other Loan Documents may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Bank.
SECTION 8.05. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Advance, the Note, the Commitment
hereunder or any other interest of the Bank hereunder. In the event of any such
sale by the Bank of a participating interest to a Participant, the Bank's
obligations under this Agreement shall remain unchanged, the Bank shall remain
solely responsible for the performance thereof, the Bank shall remain the holder
of any the Note for all purposes under this Agreement, and the Borrower shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement. In no event shall the Bank be
obligated to the Participant to take or refrain from taking any action hereunder
except that the Bank may agree that it will not (except as provided below),
without the consent of the Participant, agree to (i) the change of any date
fixed for the payment of principal of or interest on the related Advance or
Advances, (ii) the change of the amount of any principal, interest or fees due
on any date fixed for the payment thereof with respect to the related Advance or
Advances, (iii) the change of the principal of the related Advance or Advances,
(iv) any change in the rate at which either interest is payable thereon or (if
the Participant is entitled to any part thereof) commitment fee is payable
hereunder from the rate at which the Participant is entitled to receive interest
or commitment fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the Collateral held as
security for the Advances, or (vi) the release of the Guaranty Agreement given
to support payment of the Advances. The Bank shall, within ten Domestic Business
Days after selling a participating interest in any Advance, the Note, the
Commitment or other interest under this Agreement, provide the Borrower with
written notification stating that such sale has occurred and identifying the
Participant and the interest purchased by such Participant. The Borrower agrees
that each Participant shall be entitled to the benefits of Article III and
Section 7.03 with respect to its participation in Advances outstanding from time
to time.
(c) The Bank may at any time assign to one or more banks or financial
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Note, and such Assignee
shall assume all such rights and obligations, pursuant to an Assignment and
Acceptance in the form attached hereto as Exhibit C executed by such Assignee,
the Bank and the Borrower; provided that (i) no interest may be sold by the Bank
pursuant to this paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the Commitment, and (ii) no interest may be sold by the
Bank pursuant to this paragraph (c) to any Assignee which is not an Affiliate of
the Bank without the consent of the Borrower, which consent shall not be
unreasonably withheld or delayed. Upon (A) execution of the Assignment and
Acceptance by the Bank, such Assignee, and the Borrower, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrower, and (C) payment
by such Assignee to the Bank of an amount equal to the purchase price agreed
between the Bank and such Assignee, such Assignee shall for all purposes be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank under this Agreement to the same extent as if it were an original party
hereto with a Commitment as set forth in such instrument of assumption, and the
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by the Borrower or the Bank shall be required.
Upon the consummation of any transfer to an Assignee pursuant to this paragraph
(c), the Bank and the Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to such Assignee.
(d) Subject to the provisions of Section 8.06, the Borrower authorizes
the Bank to disclose to any Participant, Assignee or other transferee (each a
"Transferee") and any prospective Transferee any and all financial information
in the Bank's possession concerning the Borrower which has been delivered to the
Bank by the Borrower pursuant to this Agreement or which has been delivered to
the Bank by the Borrower in connection with the Bank's credit evaluation prior
to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater payment
under Section 3.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 3.03
requiring the Bank to designate a different Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) Anything in this Section 8.05 to the contrary notwithstanding, the
Bank may assign and pledge all or any Advances and/or obligations owing to it to
any Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and Operating Circular issued by such Federal Reserve Bank, provided that any
payment in respect of such assigned Advances and/or obligations made by the
Borrower to the Bank in accordance with the terms of this Agreement shall
satisfy the Borrower's obligations hereunder in respect of such assigned
Advances and/or obligations to the extent of such payment. No such assignment
shall release the Bank from its obligations hereunder.
SECTION 8.06. Confidentiality. The Bank agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower to
it which is clearly indicated to be confidential information, confidential from
any one other than persons employed or retained by the Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Advances; provided, however, that nothing herein shall prevent
the Bank from disclosing such information (i) upon the order of any court or
administrative agency, (ii) upon the request or demand of any regulatory agency
or authority having jurisdiction over the Bank, (iii) which has been publicly
disclosed, (iv) to the extent reasonably required in connection with any
litigation to which the Bank or their respective Affiliates may be a party, (v)
to the extent reasonably required in connection with the exercise of any remedy
hereunder, (vi) to the Bank's legal counsel and independent auditors and (vii)
to any actual or proposed Participant, Assignee or other Transferee of all or
part of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section.
SECTION 8.07. Interest Limitation. Notwithstanding any other term of
this Agreement, the Note or any other Loan Document, the maximum amount of
interest which may be charged to or collected from any person liable hereunder
or under the Note by the Bank shall be absolutely limited to, and shall in no
event exceed, the maximum amount or interest which could lawfully be charged or
collected under applicable law (including, to the extent applicable, the
provisions of section 5197 of the Revised Statutes of the United States of
America, as amended, 12 U.S.C. ss.85, as amended), so that the maximum of all
amounts constituting interest under applicable law, howsoever computed, shall
never exceed as to any Person liable therefor such lawful maximum, and any term
of this Agreement, the Note or any other Loan Document which could be construed
as providing for interest in excess of such lawful maximum shall be and hereby
is made expressly subject to and modified by the provisions of this paragraph.
SECTION 8.08. Survival of Certain Obligations. Article III and the
obligations of the Borrower thereunder, and Section 8.03 and the obligations of
the Borrower thereunder, shall survive, and shall continue to be enforceable
notwithstanding, the termination of this Agreement and the Commitment and the
payment in full of the principal of and interest on the Advances.
SECTION 8.09. Governing Law. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State of North
Carolina. This Agreement and the Note are intended to be effective as
instruments executed under seal.
SECTION 8.10. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 8.11. Consent to Jurisdiction. The Borrower (a) submits to
personal jurisdiction in the State of North Carolina, the courts thereof and the
United States District Courts sitting therein, for the enforcement of this
Agreement, the Note and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or venue
within the State of North Carolina for the purpose of litigation to enforce this
Agreement, the Note or the other Loan Documents, and (c) agrees that service of
process may be made upon it in the manner prescribed in Section 8.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Bank from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
SECTION 8.12. Severability. If any provisions of this Agreement shall
be held invalid under any applicable laws, such invalidity shall not affect any
other provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
SECTION 8.13. Captions. Captions in this Agreement are for the
convenience of reference only and shall not affect the meaning or interpretation
of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the year and day first above written.
BORROWER:
THE SOURCE COMPANY
ATTEST:
____________________________ By:________________________________________
Assistant Secretary Title: Chairman and Chief Executive Officer
[CORPORATE SEAL]
BANK:
Lending Office WACHOVIA BANK OF NORTH CAROLINA, N.A.
Wachovia Bank of North
Carolina, N.A. By:_________________________________________
000 X. Xxx Xxxxxx Xxxxx:______________________________________
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
