REVOLVING CREDIT AND TERM LOAN AGREEMENT
BETWEEN
GARDENBURGER, INC.,
AS BORROWER
AND
CAPITALSOURCE FINANCE LLC,
AS AGENT AND LENDER
DATED AS OF
JANUARY 10, 2002
REVOLVING CREDIT AND TERM LOAN AGREEMENT
TABLE OF CONTENTS
Page
I. DEFINITIONS..........................................................1
1.1 General Terms...................................................1
II. ADVANCES, PAYMENT AND INTEREST.......................................1
2.1 The Revolving Facility..........................................1
2.2 The Revolving Notes; Maturity...................................2
2.3 Interest........................................................3
2.4 Facility Disbursements; Requirement to Deliver Borrowing
Certificate3
2.5 Collections; Repayment; Borrowing Availability and Lockbox......4
2.6 Term Loan.......................................................5
2.7 Interest on the Term Notes......................................5
2.8 Repayment of Term Loan; Maturity................................5
2.9 Manner of Payment...............................................6
2.10 Repayment of Excess Advances....................................6
2.11 Other Mandatory Prepayments.....................................6
2.12 Payments by Agent...............................................7
2.13 Collateral; Security Interest...................................7
2.14 Collateral Administration.......................................7
2.15 Power of Attorney...............................................9
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE.................9
3.1 Commitment Fee..................................................9
3.2 Unused Line Fee.................................................9
3.3 Collateral Management Fee.......................................9
3.4 No Termination; Exit Fee.......................................10
3.5 Computation of Fees; Lawful Limits.............................10
3.6 Late Fee; Default Rate of Interest.............................10
IV. CONDITIONS PRECEDENT................................................10
4.1 Conditions to Initial Advance, Funding of Term Loan and Closing10
4.2 Conditions to Each Advance and Funding of Term Loan............13
V. REPRESENTATIONS AND WARRANTIES......................................14
5.1 Organization and Authority.....................................14
5.2 Loan Documents.................................................14
5.3 Subsidiaries, Capitalization and Ownership Interests...........15
5.4 Properties.....................................................15
5.5 Other Agreements...............................................15
5.6 Litigation.....................................................15
5.7 Hazardous Materials............................................16
5.8 Tax Returns; Governmental Reports..............................16
5.9 Financial Statements and Reports...............................16
5.10 Compliance with Law............................................16
5.11 Intellectual Property..........................................17
5.12 Licenses and Permits; Labor....................................17
5.13 No Default.....................................................18
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5.14 Disclosure.....................................................18
5.15 Existing Indebtedness; Investments, Guarantees and Certain
Contracts18
5.16 Other Agreements...............................................18
5.17 Insurance......................................................19
5.18 Names; Location of Offices, Records and Collateral.............19
5.19 Non-Subordination..............................................19
5.20 Accounts.......................................................19
5.21 Survival.......................................................20
VI. AFFIRMATIVE COVENANTS...............................................20
6.1 Financial Statements, Reports and Other Information............20
6.2 Payment of Obligations.........................................22
6.3 Conduct of Business and Maintenance of Existence and Assets....23
6.4 Compliance with Legal and Other Obligations....................23
6.5 Insurance......................................................23
6.6 True Books.....................................................24
6.7 Inspection; Periodic Audits....................................24
6.8 Further Assurances; Post Closing...............................24
6.9 Payment of Indebtedness........................................25
6.10 Lien Searches..................................................25
6.11 Use of Proceeds................................................25
6.12 Collateral Documents...........................................25
6.13 Taxes and Other Charges........................................25
VII. NEGATIVE COVENANTS..................................................26
7.1 Financial Covenants............................................26
7.2 Indebtedness...................................................26
7.3 Liens..........................................................27
7.4 Investments; New Facilities or Collateral; Subsidiaries........27
7.5 Dividends; Redemptions.........................................28
7.6 Transactions with affiliates...................................28
7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds...29
7.8 Transfer of Assets.............................................29
7.9 Contingent Obligations.........................................29
7.10 Truth of Statements............................................29
7.11 Payment on Subordinated Debt...................................30
VIII. EVENTS OF DEFAULT.............................................30
IX. RIGHTS AND REMEDIES AFTER DEFAULT...................................33
9.1 Rights and Remedies............................................33
9.2 Application of Proceeds........................................34
9.3 Rights of Agent to Appoint Receiver............................34
9.4 Rights and Remedies not Exclusive..............................34
X. WAIVERS AND JUDICIAL PROCEEDINGS....................................35
10.1 Waivers........................................................35
10.2 Delay; No Waiver of Defaults...................................35
10.3 Jury Waiver....................................................35
10.4 Cooperation in Discovery and Litigation........................36
10.5 Amendment and Waivers..........................................36
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XI. EFFECTIVE DATE AND TERMINATION......................................37
11.1 Effectiveness and Termination..................................37
11.2 Survival.......................................................37
XI-A. AGENCY PROVISIONS.............................................38
11-A.1 Agent.......................................................38
11-A.2 Consents....................................................42
11-A.3 Set Off and Sharing of Payments.............................43
11-A.4 Disbursement of Funds.......................................44
11-A.5 Settlements; Payments and Information.......................44
11-A.6 Dissemination of Information................................45
XII. MISCELLANEOUS.......................................................46
12.1 Governing Law; Jurisdiction; Service of Process; Venue.........46
12.2 Successors and Assigns; Assignments and Participations.........46
12.3 Application of Payments........................................48
12.4 Indemnity......................................................48
12.5 Notice.........................................................49
12.6 Severability; Captions; Counterparts; Facsimile Signatures.....49
12.7 Expenses.......................................................50
12.8 Entire Agreement...............................................50
12.9 Agent Approvals................................................51
12.10 Confidentiality and Publicity.................................51
1) Leverage Ratio..................................................1
2) Minimum Adjusted EBITDA.........................................1
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REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "AGREEMENT")
dated as of January 10, 2002, is entered into between GARDENBURGER, INC., an
Oregon corporation (the "BORROWER"), CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("CAPITALSOURCE"), as administrative agent and
collateral agent for Lenders (in such capacities, the "AGENT"), and the Lenders.
WHEREAS, Borrower has requested that Lenders make available to
Borrower (i) a revolving credit facility (the "REVOLVING FACILITY") in a maximum
principal amount at any time outstanding of up to Seven Million Dollars
($7,000,000.00) (the "FACILITY CAP"), and (ii) a term loan (the "TERM LOAN") in
a maximum principal amount of $8,000,000 (the "MAXIMUM LOAN Amount"), the
proceeds of which shall be used by Borrower for refinancing Borrower's existing
obligations and indebtedness to Xxxxx Fargo Bank and Banc of America Commercial
Finance Corporation and working capital needs in connection with its veggie
burger and meat alternative products business; and
WHEREAS, Lenders are willing to make the Revolving Facility and Term
Loan available to Borrower upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1 GENERAL TERMS
For purposes of this Agreement, in addition to the definitions above
and elsewhere in this Agreement, the terms listed in APPENDIX A hereto shall
have the meanings given such terms in APPENDIX A, which is incorporated herein
and made a part hereof. All capitalized terms used which are not specifically
defined shall have meanings provided in Article 9 of the UCC in effect on the
date hereof to the extent the same are used or defined therein. Unless otherwise
specified herein or in APPENDIX A, any agreement or contract referred to herein
or in APPENDIX A shall mean such agreement as modified, amended or supplemented
from time to time. Unless otherwise specified, as used in the Loan Documents or
in any certificate, report, instrument or other document made or delivered
pursuant to any of the Loan Documents, all accounting terms not defined in
APPENDIX A elsewhere in this Agreement shall have the meanings given to such
terms in and shall be interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1 THE REVOLVING FACILITY
(a) Subject to the provisions of this Agreement, each Lender agrees
to make available its Pro Rata Share of Advances to Borrower under the Revolving
Facility from time to
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time during the Revolving Facility Term; PROVIDED, that (i) the Pro Rata Share
of the Advances of any Lender shall not at any time exceed its separate
Commitment, and (ii) the aggregate amount of all Advances at any time
outstanding under the Revolving Facility shall not exceed the lesser of (A) the
Facility Cap and (B) the Availability. The aggregate amount of Advances at any
time outstanding under the Revolving Facility shall not be less than $1,000,000.
The obligations of Lenders hereunder shall be several and not joint up to the
amount of the Commitments. The Revolving Facility is a revolving credit
facility, which may be drawn, repaid and redrawn, from time to time as permitted
under this Agreement. Any determination as to whether there is availability
within the Borrowing Base for Advances shall be made by Agent in its Permitted
Discretion and is final and binding upon Borrower. Unless otherwise permitted by
Agent, each Advance shall be in an amount of at least $100,000. Subject to the
provisions of this Agreement, Borrower may request Advances under the Revolving
Facility up to and including the value, in Dollars, of (i) eighty-five percent
(85%) of the Borrowing Base for Eligible Receivables, and (ii) sixty percent
(60%) of the Borrowing Base for Eligible Inventory Costs, minus, if applicable,
amounts reserved pursuant to this Agreement (such calculated amount being
referred to herein as the "AVAILABILITY"). Advances under the Revolving Facility
automatically shall be made for the payment of interest on the Revolving Notes
and other Obligations on the date when due to the extent available and as
provided for herein.
(b) Agent has established the above-referenced advance rate for
Availability and, in its Permitted Discretion, may further adjust the
Availability and such advance rate, upon written notice to Borrower, by applying
percentages (known as "LIQUIDITY FACTORS") to Eligible Receivables based upon
Borrower's actual recent collection history in a manner consistent with Agent's
underwriting practices and procedures, including, without limitation, Agent's
review and analysis of, among other things, Borrower's historical returns,
rebates, discounts, credits and allowances (collectively, the "DILUTION ITEMS").
Such liquidity factors and the advance rate for Availability may be adjusted by
Agent throughout the Revolving Facility Term, upon written notice to Borrower,
as warranted by Agent's underwriting practices and procedures in its Permitted
Discretion. Also, Agent shall have the right to establish and readjust from time
to time, in its Permitted Discretion, reserves against the Borrowing Base, which
reserves shall have the effect of reducing the amounts otherwise eligible to be
disbursed to Borrower under the Revolving Facility pursuant to this Agreement.
2.2 THE REVOLVING NOTES; MATURITY
(a) All Advances under the Revolving Facility shall be evidenced by
the Revolving Notes, payable to the order of each Lender in the principal amount
of the Commitment of such Lender, duly executed and delivered by Borrower. The
Revolving Notes shall evidence the aggregate Indebtedness of Borrower to Lenders
resulting from Advances under the Revolving Facility from time to time. Each
Lender hereby is authorized, but is not obligated, to enter the amount of such
Lender's Pro Rata Share of each Advance under the Revolving Facility, and the
amount of each payment or prepayment of principal or interest thereon in the
appropriate spaces on the reverse of or on an attachment to such Lender's
Revolving Note(s). Agent will account to Borrower monthly with a statement of
Advances under the Revolving Facility, and charges and payments made pursuant to
this Agreement, and in the absence of manifest error, such accounting rendered
by Agent shall be deemed final, binding and conclusive unless Agent is notified
by Borrower in writing to the contrary within 15
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Business Days of Receipt of each accounting, which notice shall be deemed an
objection only to items specifically objected to therein.
(b) All amounts outstanding under the Revolving Notes and other
Obligations under the Revolving Facility shall be due and payable in full, if
not earlier in accordance with this Agreement, on the earlier of (i) the
occurrence of an Event of Default if required pursuant hereto or Agent's demand
upon an Event of Default, and (ii) the last day of the Revolving Facility Term
(such earlier date being the "REVOLVING FACILITY MATURITY Date").
2.3 INTEREST
Interest on outstanding Advances under the Revolving Notes shall be
payable monthly in arrears on the first day of each calendar month at an annual
rate of Prime Rate plus 2.50%, PROVIDED, HOWEVER, that, notwithstanding any
provision of any Loan Document, the interest on outstanding Advances under the
Revolving Notes shall be not less than 8.00%, in each case calculated on the
basis of a 360-day year and for the actual number of calendar days elapsed in
each interest calculation period. Interest accrued on each Advance under the
Revolving Notes shall be due and payable on the first day of each calendar
month, in accordance with the procedures provided for in SECTION 2.5 and SECTION
2.9, commencing February 1, 2002 and continuing until the later of the
expiration of the Revolving Facility Term and the full performance and
irrevocable payment in full in cash of the Obligations and termination of this
Agreement.
2.4 FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER BORROWING CERTIFICATE
So long as no Default or Event of Default shall have occurred and be
continuing, Borrower may give Agent irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Agent not later than 1:00
p.m. (New York City time) at least two (2) but not more than four (4) Business
Days before the proposed borrowing date of such requested Advance (the
"BORROWING DATE"), a completed Borrowing Certificate and relevant supporting
documentation satisfactory to Agent, which shall (a) specify the proposed
Borrowing Date of such Advance which shall be a Business Day, (b) specify the
principal amount of such requested Advance, (c) certify the matters contained in
SECTION 4.2, and (d) specify the amount of any recoupments of any third-party
payor being sought, requested or claimed, or, to Borrower's knowledge,
threatened against Borrower or Borrower's affiliates. Each time a request for an
Advance is made, and, in any event and regardless of whether an Advance is being
requested, on Tuesday of each week during the Revolving Facility Term (and more
frequently if Agent shall so request) until the Obligations are indefeasibly
paid in cash in full and this Agreement is terminated, Borrower shall deliver to
Agent a Borrowing Certificate accompanied by a separate detailed aging and
categorizing of Borrower's accounts receivable and accounts payable and
inventory and such other supporting documentation with respect to the figures
and information in the Borrowing Certificate as Agent shall reasonably request
from a credit or security perspective or otherwise; provided, however, that
Borrower shall be required to deliver a calculation of ineligible receivables
only once per calendar month, or more often as requested by Agent. On each
Borrowing Date, Borrower irrevocably authorizes Agent to disburse the proceeds
of the requested Advance to the Borrower's account(s) as set forth on SCHEDULE
2.4, in all cases for
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credit to the Borrower (or to such other account as to which the Borrower shall
instruct Agent) via Federal funds wire transfer no later than 4:00 p.m. New York
City time.
2.5 COLLECTIONS; REPAYMENT; BORROWING AVAILABILITY AND LOCKBOX
Borrower shall maintain a lockbox together with a blocked account
(individually and collectively, the "BLOCKED ACCOUNT") with one or more banks
acceptable to Agent (each, a "LOCKBOX BANK"), and shall execute with each
Lockbox Bank one or more agreements acceptable to Agent from time to time
(individually and collectively, the "LOCKBOX AGREEMENT"), and such other
agreements related thereto as Agent may require. Irrespective of any Lockbox
Agreement executed on or about the Closing Date, Agent reserves the right to
require a replacement Lockbox Agreement with a Lockbox Bank if Agent determines
in its Permitted Discretion the existing lockbox arrangement is not
satisfactory. Borrower shall ensure that all collections of their respective
Accounts and all other cash payments received by Borrower are paid and delivered
directly from Account Debtors and other Persons into the Blocked Account. The
Lockbox Agreements shall provide that the Lockbox Banks immediately will
transfer all funds paid into the Blocked Accounts into a depository account or
accounts maintained by Agent or an affiliate of Agent at such bank as Agent may
communicate to Borrower from time to time (the "CONCENTRATION ACCOUNT").
Notwithstanding and without limiting any other provision of any Loan Document,
Agent shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreement and this SECTION 2.5 in
such order and manner as determined by Agent. To the extent that any Accounts
collections of Borrower or any other cash payments received by Borrower are not
sent directly to the Blocked Account but are received by Borrower or any of
their affiliates, such collections and proceeds shall be held in trust for the
benefit of Agent and Lenders and immediately remitted (and in any event within
two (2) Business Days), in the form received, to the Blocked Account for
immediate transfer to the Concentration Account. Borrower acknowledges and
agrees that compliance with the terms of this SECTION 2.5 is an essential term
of this Agreement, and that, in addition to and notwithstanding any other rights
Agent may have hereunder, under any other Loan Document, under applicable law or
at equity, upon each and every failure by Borrower or any of their affiliates to
comply with any such terms Agent shall be entitled to assess a non-compliance
fee which shall operate to increase the Applicable Rate by five percent (5.0%)
per annum during any period of non-compliance, whether or not a Default or an
Event of Default occurs or is declared; PROVIDED, that nothing shall prevent
Agent from considering any failure to comply with the terms of this SECTION 2.5
to be a Default or an Event of Default. All funds transferred to the
Concentration Account for application to the Obligations under the Revolving
Facility shall be applied to reduce the Obligations under the Revolving
Facility, but, for purposes of calculating interest hereunder, shall be subject
to a five (5) Business Day clearance period. If as the result of collections of
Accounts and/or any other cash payments received by Borrower pursuant to this
SECTION 2.5 a credit balance exists with respect to the Concentration Account,
such credit balance shall not accrue interest in favor of a Borrower, but shall
be remitted to Borrower within two (2) Business Days after Borrower's written
request. If applicable, at any time prior to the execution of all or any of the
Lockbox Agreements and operation of the Blocked Account, Borrower and its
affiliates shall direct all collections or proceeds it receives on Accounts or
from other Collateral to the accounts(s) and in the manner specified by Agent in
its Permitted Discretion.
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2.6 TERM LOAN
Subject to the terms and conditions set forth in this Agreement,
each Lender agrees to loan to Borrower its Pro Rata Share of the Term Loan,
which in the aggregate equals an original principal amount of $8,000,000. The
Term Loan shall be evidenced by Term Notes, payable to the order of each Lender
in the principal amount of the Commitment of the applicable Lender, duly
executed and delivered by Borrower. Each Lender agrees to loan to Borrower on
the Closing Date its Pro Rata Share of the Maximum Loan Amount to be disbursed
to Borrower's account(s) as set forth on SCHEDULE 2.4. The Term Loan is not a
revolving credit facility, and any repayments of principal shall be applied to
permanently reduce the Term Loan. The Term Loan shall be evidenced by the Term
Notes.
2.7 INTEREST ON THE TERM NOTES
Interest on the outstanding balance of the Term Loan under the Term
Notes shall be payable monthly in arrears on the first day of each calendar
month at an annual rate of Prime Rate plus 4.50%; PROVIDED, HOWEVER, that,
notwithstanding any other provision of any Loan Document, the interest on the
outstanding principal balance of the Term Loan under the Term Notes shall be not
less than 10.00%, in each case calculated on the basis of a 360-day year and for
the actual number of calendar days elapsed in each interest calculation period.
Interest accrued on the Term Loan shall be due and payable on the first day of
each calendar month commencing February 1, 2002, and continuing until the later
of the expiration of the Term Loan Term and the full performance and irrevocable
payment in full in cash of the Obligations and termination of this Agreement.
Advances under the Revolving Facility shall be made automatically for the
payment of interest on the Term Loan and other Obligations on the date when due
to the extent available and as provided for herein.
2.8 REPAYMENT OF TERM LOAN; MATURITY
Payment of principal (in addition to the interest payments in
SECTION 2.7) and all other amounts outstanding under the Term Loan shall be made
monthly as follows:
(a) the amount per month indicated below (based on the applicable
calendar month) shall be due and payable, beginning February 1, 2002 and
continuing on the 1st day of each calendar month thereafter through the last
month of the Term Loan Term;
Year Monthly Principal Payment
February 1, 2002 through January 1, 2003 $ 41,667
February 1, 2003 through January 1, 2004 $125,000
February 1, 2004 through the last day of the $166,667
Term Loan Term
(b) the unpaid principal of the Term Loan and all other Obligations
under the Term Loan shall be due and payable in full, and the Term Notes shall
mature, if not earlier in accordance with this Agreement, on the earlier of (i)
the occurrence of an Event of Default if
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required pursuant hereto or Agent's demand upon an Event of Default, and (ii)
the last day of the Term Loan Term (such earlier date being the "TERM LOAN
MATURITY DATE").
2.9 MANNER OF PAYMENT
Any payments made by Borrower (other than payments automatically
paid through Advances under the Revolving Facility as provided herein), shall
be made only by wire transfer on the date when due, without offset or
counterclaim, in Dollars, in immediately available funds to such account as
may be indicated in writing by Agent to Borrower from time to time. Any such
payment received after 2:00 p.m. New York City time on any date shall be
deemed received on the following Business Day. Whenever any payment
hereunder shall be stated to be due or shall become due and payable on a day
other than a Business Day, the due date thereof shall be extended to, and
such payment shall be made on, the next succeeding Business Day, and such
extension of time in such case shall be included in the computation of
payment of any interest (at the interest rate then in effect during such
extension) and/or fees, as the case may be.
2.10 REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility outstanding at
any time in excess of the lesser of the Facility Cap or the Availability shall
be immediately due and payable by Borrower without the necessity of any demand,
at the Payment Office, whether or not a Default or Event of Default has occurred
or is continuing and shall be paid in the manner specified in SECTION 2.9.
2.11 OTHER MANDATORY PREPAYMENTS
In addition to and without limiting any provision of any Loan
Document:
(a) if a Change of Control occurs, on or prior to the first Business
Day following the date of such Change of Control, Borrower shall prepay the
Loans and all other Obligations in full in cash together with accrued interest
thereon to the date of prepayment and all other amounts owing to Agent and
Lenders under the Loan Documents;
(b) if Borrower sells any of its assets or properties (other than
sales of inventory in the ordinary course of business or sales of other assets
the proceeds of which are reinvested within 20 Business Days in similar assets
constituting Collateral), sells or issues any securities (debt or equity),
capital stock, or ownership interests, receives any property damage or insurance
award which is not used to repair or replace the property covered thereby,
incurs any Indebtedness, except for Permitted Indebtedness, or receives any life
insurance proceeds, then it shall apply 100% of the proceeds thereof to the
prepayment of the Loans together with accrued interest thereon and all other
Obligations owing to Agent and Lenders under the Loan Documents, such payment to
be applied pro rata to the payments required by SECTION 2.8; PROVIDED, HOWEVER,
during the existence of an Event of Default, such payments shall be applied to
the Obligations at such time and in such manner and order as Agent shall decide
in its sole discretion; and
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(c) until such time as the Obligations relating to the Term Loan are
indefeasibly paid in full in cash and fully performed, the Applicable ECF
Percentage of Borrower's Excess Cash Flow for each fiscal year shall be paid by
Borrower to Agent, for the benefit of Lenders, and shall be applied by Agent to
reduce the Obligations relating to the Term Loan. Such payments shall be made no
later than thirty (30) calendar days after preparation of Borrower's audited
financial statements, but in any event not later than one hundred and twenty
(120) calendar days after the end of the fiscal year to which such Excess Cash
Flow relates. Such payments are to be applied pro rata to the payments required
by SECTION 2.8; PROVIDED, HOWEVER, during the existence of any Event of Default,
such payments shall be applied to the Obligations relating to the Term Loan at
such time and in such manner and order as Agent shall decide in its Permitted
Discretion.
2.12 PAYMENTS BY AGENT
Should any amount required to be paid under any Loan Document be
unpaid, such amount may be paid by Agent, for the account of Lenders, which
payment shall be deemed a request for an Advance under the Revolving Facility as
of the date such payment is due, and Borrower irrevocably authorizes
disbursement of any such funds to Agent, for the benefit of Lenders, by way of
direct payment of the relevant amount, interest or Obligations. No payment or
prepayment of any amount by Agent, Lenders or any other Person shall entitle any
Person to be subrogated to the rights of Agent and/or Lenders under any Loan
Document unless and until the Obligations have been fully performed and paid
irrevocably in cash and this Agreement has been terminated. Any sums expended by
Agent and/or Lenders as a result of Borrower's or any Guarantor's failure to
pay, perform or comply with any Loan Document or any of the Obligations may be
charged to Borrower's account as an Advance under the Revolving Facility and
added to the Obligations.
2.13 COLLATERAL; SECURITY INTEREST
To secure the payment and performance of the Obligations, Borrower
has granted to Agent, for the benefit of itself and Lenders, a valid, continuing
perfected first priority security interest in and lien upon its Collateral
pursuant to the Security Documents.
2.14 COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts) will at all times be
kept by Borrower at the locations set forth on SCHEDULE 5.18B hereto and shall
not, without thirty (30) calendar days prior written notice to Agent, be moved
therefrom, and in any case shall not be moved outside the continental United
States.
(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit such records
to Agent on such periodic bases as Agent may request. In addition, if Borrower
has actual knowledge that Accounts of Borrower in an aggregate face amount in
excess of $50,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Receivables, Borrower shall notify Agent of such occurrence on the first
Business Day following such occurrence and the Borrowing Base shall thereupon be
adjusted to reflect such occurrence. If
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requested by Agent after an Event of Default, Borrower shall execute and deliver
to Agent formal written assignments of all of its Accounts weekly or daily as
Agent may request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other information
related thereto. To the extent that collections from such assigned accounts
exceed the amount of the Obligations, such excess amount shall not accrue
interest in favor of Borrower but shall be available to Borrower upon Borrower's
written request.
(c) Whether or not an Event of Default has occurred, any of the
Agent's officers, employees, representatives or agents shall have the right, at
any time during normal business hours, in the name of Agent, any designee of
Agent or Borrower, to verify the validity, amount or any other matter relating
to any Accounts of Borrower. Borrower shall cooperate fully with Agent in an
effort to facilitate and promptly conclude such verification process.
(d) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Agent, for the account of
Lenders. Agent shall have the right at all times after the occurrence of an
Event of Default and after written notice to Borrower to notify Account Debtors
owing Accounts to Borrower that their Accounts have been assigned to Agent, for
the benefit of itself and Lenders, and to collect such Accounts directly in its
own name and to charge collection costs and expenses, including reasonable
attorney's fees, to Borrower.
(e) As and when determined by Agent in its Permitted Discretion,
Agent will perform the searches described in clauses (i) and (ii) below against
Borrower and Guarantors (the results of which are to be consistent with
Borrower's representations and warranties under this Agreement), all at
Borrower's expense: (i) UCC searches with the Secretary of State and local
filing offices of each jurisdiction where Borrower and/or any Guarantors (A) are
organized and (B) maintain their respective executive offices, a place of
business or assets; and (ii) judgment, federal tax lien and corporate and
partnership tax lien searches, in each jurisdiction searched under clause (i)
above.
(f) Borrower (i) shall provide prompt written notice to its current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) shall provide prompt written notice to each Account Debtor that
Agent has been granted a lien and security interest in, upon and to all Accounts
applicable to such Account Debtor and shall direct each Account Debtor to make
payments to the appropriate Lockbox Account (unless such notices have already
been sent), and Borrower hereby authorizes Agent and/or Lenders, upon any
failure to send such notices and directions within ten (10) calendar days after
the date of this Agreement (or ten (10) calendar days after the Person becomes
an Account Debtor), to send any and all similar notices and directions to such
Account Debtors, and (iii) shall do anything further that may be lawfully
required by Agent and/or any Lender to secure Agent, for the benefit of itself
and Lenders, and effectuate the intentions of the Loan Documents. At Agent's
request, Borrower shall immediately deliver to Agent all items for which Agent
must receive possession to obtain a perfected security interest and all notes,
certificates, and documents of title, chattel paper, warehouse receipts,
instruments, and any other similar instruments constituting Collateral.
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2.15 POWER OF ATTORNEY
Agent is hereby irrevocably made, constituted and appointed the true
and lawful attorney for Borrower (without requiring it to act as such) with full
power of substitution to do the following during an Event of Default: (a)
endorse the name of any such Person upon any and all checks, drafts, money
orders, and other instruments for the payment of money that are payable to such
Person and constitute collections on its or their Accounts; (b) execute and file
in the name of such Person any financing statements, schedules, assignments,
instruments, documents, and statements that it is or they or are obligated to
give Agent under any of the Loan Documents; and (c) do such other and further
acts and deeds in the name of such Person that Agent may deem necessary or
desirable to enforce any Account or other Collateral or to perfect Agent's, for
the benefit of itself and Lenders, security interest or lien in any Collateral.
In addition, if any such Person breaches its obligation hereunder to direct
payments of Accounts or the proceeds of any other Collateral to the appropriate
Lockbox or Blocked Account, Agent, as the irrevocably made, constituted and
appointed true and lawful attorney for such Person pursuant to this paragraph,
may, by the signature or other act of any of Agent's officers or authorized
signatories (without requiring any of them to do so), direct any federal, state
or private payor or fiscal intermediary to pay proceeds of Accounts or any other
Collateral to the appropriate Lockbox or Blocked Account.
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
3.1 COMMITMENT FEE
On or before the Closing Date, Borrower shall pay to Agent, for the
ratable benefit of Lenders, $300,000 as a nonrefundable commitment fee.
3.2 UNUSED LINE FEE
Borrower shall pay to Agent, for the ratable benefit of Lenders, an
unused line fee (the "UNUSED LINE FEE") in an amount equal to 0.083% (per month)
of the difference derived by subtracting (a) the daily average amount of the
balances under the Revolving Facility outstanding during the preceding month,
from (b) the Facility Cap. The Unused Line Fee shall be payable monthly in
arrears on the first day of each successive calendar month (starting with the
month in which the Closing Date occurs).
3.3 COLLATERAL MANAGEMENT FEE
Borrower shall pay Agent a monthly collateral management fee (the
"COLLATERAL MANAGEMENT FEE") of $4,166.67. The Collateral Management Fee shall
be payable monthly in arrears on the first day of each successive calendar month
(starting with the month in which the Closing Date occurs).
9
3.4 NO TERMINATION; EXIT FEE
Upon the earlier of (i) the payment in full of the Term Loan and
(ii) the last day of the Term Loan Term, Borrower shall pay Agent for the
ratable benefit of Lenders, an exit fee of $750,000 (the "EXIT FEE"). Borrower
shall have no right to terminate the Loans before July 10, 2003, except upon a
Company Sale. Thereafter, Borrower may permanently repay the Loans and may
terminate Lender's future lending commitments hereunder without termination fee
or penalty, other than the Exit Fee.
3.5 COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of 360
days and for the actual number of days elapsed in each calculation period, as
applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Agent, for the benefit of Lenders, for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Lenders shall have
received interest or any other charges of any kind which might be deemed to be
interest under applicable law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by Borrower hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate. The terms and
provisions of this SECTION 3.5 shall control to the extent any other provision
of any Loan Document is inconsistent herewith.
3.6 LATE FEE; DEFAULT RATE OF INTEREST
Notwithstanding any other provision of any Loan Document, if any
payment, interest, Obligation, fee, charge or other amount due under any Loan
Document is not received by Agent within three (3) Business Days of its due
date, then Borrower shall pay to Agent for the ratable benefit of Lenders a late
charge equal to 5% of the amount not timely made or paid. Upon the occurrence
and during the continuation of an Event of Default, the Applicable Rate of
interest in effect at such time with respect to the Obligations shall be
increased by 5% per annum (the "DEFAULT RATE").
IV. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL ADVANCE, FUNDING OF TERM LOAN AND CLOSING
The obligations of Lenders to consummate the transactions
contemplated herein and to make the initial Advance under the Revolving Facility
(the "INITIAL ADVANCE") and to fund the Term Loan are subject to the
satisfaction, in the sole judgment of Agent, of the following:
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(a) (i) Borrower shall have delivered to Agent (A) the Loan
Documents to which it is a party, each duly executed by an authorized officer of
Borrower and the other parties thereto and (B) a Borrowing Certificate for the
Initial Advance under the Revolving Facility executed by an authorized officer
of Borrower, and (ii) each Guarantor shall have delivered to Agent the Loan
Documents to which such Guarantor is a party, each duly executed and delivered
by such Guarantor or an authorized officer of such Guarantor, as applicable, and
the other parties thereto;
(b) all in form and substance satisfactory to Agent in its Permitted
Discretion, Agent shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
Borrower and Guarantor in each jurisdiction determined by Agent in its Permitted
Discretion, and such report shall show no Liens on the Collateral (other than
Permitted Liens), (ii) each document (including, without limitation, any Uniform
Commercial Code financing statement) required by any Loan Document or under law
or requested by Agent to be filed, registered or recorded to create, in favor of
Agent, for the benefit of Lenders, a perfected first priority security interest
upon the Collateral, and (iii) evidence of each such filing, registration or
recordation and of the payment by Borrower of any necessary fee, tax or expense
relating thereto;
(c) Agent shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Agent, (ii) a certificate of
the corporate secretary or assistant secretary of Borrower dated the Closing
Date, as to the incumbency and signature of the Persons executing the Loan
Documents, in form and substance acceptable to Agent, (iii) the written legal
opinion(s) of counsel for Borrower and Guarantors, in form and substance
satisfactory to Agent and its counsel; and (iv) a certificate executed by an
authorized officer of Borrower, which shall constitute a representation and
warranty by Borrower as of the Closing Date and the applicable Borrowing Date
and the date of funding of the Term Loan that the conditions contained in this
Agreement have been satisfied;
(d) Agent shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of Borrower, in form and substance satisfactory to Agent (each, a
"SOLVENCY CERTIFICATE"), certifying that as of the Closing Date and the
Borrowing Date for the Initial Advance and the date of funding of the Term Loan
and after giving effect to such transactions and Indebtedness: (A) the
consolidated tangible and intangible assets of Borrower, at a Fair Valuation,
exceed the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of Borrower, and (B) no unreasonably small capital
base with which to engage in its anticipated business exists with respect to
Borrower;
(e) Agent shall have completed examinations, the results of which
shall be satisfactory in form and substance to Agent, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of Borrower and Guarantor, and Borrower shall
have demonstrated to Agent's satisfaction that (i) its operations comply, in all
respects deemed material by Agent, in its sole judgment, with all applicable
federal, state, foreign and local laws, statutes and regulations, (ii) its
operations are not the subject of any governmental investigation, evaluation or
any remedial action which could result in any expenditure or liability deemed
material by Agent, in its sole judgment, and (iii) it has no
11
liability (whether contingent or otherwise) that is deemed material by Agent, in
its sole judgment;
(f) Agent shall have received all fees, charges and expenses payable
to Agent and Lenders on or prior to the Closing Date pursuant to the Loan
Documents;
(g) all in form and substance satisfactory to Agent in its Permitted
Discretion, Agent shall have received such consents, approvals and agreements,
including, without limitation, any applicable Landlord Waivers and Consents with
respect to any and all leases set forth on SCHEDULE 5.4, from such third parties
as Agent and its counsel shall determine are necessary or desirable with respect
to (i) the Loan Documents and/or the transactions contemplated thereby, and/or
(ii) claims against Borrower or Guarantor or the Collateral;
(h) Borrower shall be in compliance with SECTION 6.5 and SECTION
7.7, and Agent shall have received certificates of such insurance policies
confirming that they are in effect and that the premiums due and owing with
respect thereto have been paid in full and naming Agent, for the benefit of
itself and Lenders, as sole beneficiary or loss payee and additional insured, as
appropriate;
(i) all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrower) shall be satisfactory to Agent;
(j) no default shall exist pursuant to any of Borrower's obligations
under any material contract or compliance with applicable laws and there exists
no fact or circumstance which, with the passage of time, the giving of notice,
or both, could constitute a default under any material contract to which
Borrower or any Guarantor is a party or any law to which Borrower or any
Guarantor is subject;
(k) Borrower shall have established a Lockbox and Blocked Account
pursuant to SECTION 2.5;
(l) Agent shall have received copies of all licenses and permits
required for Borrower to conduct the business in which it is currently engaged
or is contemplated pursuant to the Loan Documents;
(m) Agent shall have completed its due diligence examinations of
Borrower, the results of which shall be satisfactory in form and substance to
Agent;
(n) Agent shall have received an executed copy of an amendment to
the Note Purchase Agreement, in form and substance acceptable to Agent;
(o) Agent shall have received a filed and certified copy of the
Preferred Stock Designations, in form and substance acceptable to Agent;
(p) Agent shall have received evidence that the following will occur
upon Closing: (i) repayment in full and termination of all liabilities and
obligations of Borrower to
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Xxxxx Fargo Bank, N.A. and BA Leasing and Capital Corporation and all related
documents, agreements and instruments and of all Liens and Uniform Commercial
Code financing statements relating thereto, excluding, that certain Irrevocable
Standby Letter of Credit No. NZ5390898 issued on March 30, 2001, and (ii)
release and termination of any and all Liens and/or Uniform Commercial Code
financing statements in, on, against or with respect to any of the Collateral
(other than Permitted Liens);
(q) a copy of the recipe and procedures for making each product of
Borrower shall have been delivered to Agent to be held in accordance with
SECTION 6.1(G);
(r) Borrower's Adjusted EBITDA for the twelve (12) months ending
November 30, 2001 shall be not less than $5,500,000; and
(s) after giving effect to the Loans made on the Closing Date,
Borrower must have Excess Availability of at least $1,500,000.
4.2 CONDITIONS TO EACH ADVANCE AND FUNDING OF TERM LOAN
The obligations of Lenders to make any Advance (including, without
limitation, the Initial Advance) and to fund the Term Loan are subject to the
satisfaction, in the sole judgment of Agent, of the following additional
conditions precedent:
(a) Borrower shall have delivered to Agent a Borrowing Certificate
for the Advance executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by Borrower as of the Borrowing Date of
such Advance that the conditions contained in this SECTION 4.2 have been
satisfied; PROVIDED, HOWEVER, that any determination as to whether to fund
Advances or extensions of credit shall be made by Agent in its Permitted
Discretion;
(b) each of the representation and warranties made by Borrower in or
pursuant to this Agreement shall be accurate, before and after giving effect to
such Advance and/or funding the Term Loan, and no Default or Event of Default
shall have occurred or be continuing or would exist after giving effect to the
requested Advance or the funding of the Term Loan on such date;
(c) immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed the lesser of the Availability and the Facility Cap and the
aggregate outstanding principal amount of the Term Loan shall not exceed the
Maximum Loan Amount;
(d) except as disclosed in the historical financial statements,
there shall be no liabilities or obligations with respect to Borrower of any
nature whatsoever which, either individually or in the aggregate, would
reasonably be likely to have a Material Adverse Effect;
(e) Agent shall have received all fees, charges and expenses payable
to Agent on or prior to such date pursuant to the Loan Documents; and
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(f) there shall not have occurred any Material Adverse Change or
Material Adverse Effect.
V. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as of the date hereof, the Closing
Date, each Borrowing Date and the date of funding of the Term Loan as follows:
5.1 ORGANIZATION AND AUTHORITY
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of formation. Borrower (a) has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the Loan
Documents, (b) is duly qualified to do business in every jurisdiction in which
failure so to qualify could reasonably be expected to have a Material Adverse
Effect, and (c) has all requisite power and authority (i) to execute, deliver
and perform the Loan Documents to which it is a party, (ii) to borrow hereunder,
(iii) to consummate the transactions contemplated under the Loan Documents, and
(iv) to grant the Liens with regard to the Collateral pursuant to the Security
Documents to which it is a party. Borrower is not an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or is controlled by such an "investment company."
5.2 LOAN DOCUMENTS
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (a) have been duly authorized by all requisite action of
Borrower and have been duly executed and delivered by or on behalf of Borrower;
(b) do not violate any provisions of (i) applicable law, statute, rule,
regulation, ordinance or tariff, (ii) any order of any Governmental Authority
binding on Borrower or any of its properties, or (iii) the certificate of
incorporation or bylaws (or any other equivalent governing agreement or
document) of Borrower, or any agreement between Borrower and its shareholders,
members, partners or equity owners or among any such shareholders, members,
partners or equity owners; (c) are not in conflict with, and do not result in a
breach or default of or constitute an event of default, or an event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of default under,
any indenture, agreement or other instrument to which Borrower is a party, or by
which the properties or assets of Borrower are bound, the effect of which could
reasonably be expected to have a Material Adverse Effect; (d) except as set
forth therein, will not result in the creation or imposition of any Lien of any
nature upon any of the properties or assets of Borrower, and (e) except as set
forth on SCHEDULE 5.2, do not require the consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, each of the Loan Documents to which
Borrower is a party will constitute the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
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5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
Borrower has no Subsidiaries other than those persons listed as
Subsidiaries on SCHEDULE 5.3, each of which are Guarantors of the Obligations of
Borrower herein. SCHEDULE 5.3 states the authorized and outstanding
capitalization of Borrower, and the number and class of equity securities of
Borrower owned by each director, each beneficial owner of 5% or more of
Borrower's common stock, and each owner of Borrower's preferred stock (including
options, warrants and other rights to acquire any of the foregoing). The
outstanding equity securities of Borrower have been duly authorized and validly
issued and are fully paid and nonassessable. SCHEDULE 5.3 also lists the
directors of Borrower. Except as listed on SCHEDULE 5.3, Borrower does not own
an interest or participate or engage in any joint venture, partnership or
similar arrangements with any Person.
5.4 PROPERTIES
Borrower (a) is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in, all of its properties and assets,
including the Collateral, whether personal or real, subject to no transfer
restrictions or Liens of any kind except for Permitted Liens, and (b) is in
compliance in all material respects with each lease to which it is a party or
otherwise bound. SCHEDULE 5.4 lists all real properties (and their locations)
owned or leased by or to, and all other assets or property that are leased or
licensed by, Borrower and all leases (including leases of leased real property)
covering or with respect to such properties and assets. Borrower enjoys peaceful
and undisturbed possession under all such leases and such leases are all the
leases necessary for the operation of such properties and assets, are valid and
subsisting and are in full force and effect.
5.5 OTHER AGREEMENTS
Borrower is not (a) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, any Loan Document or to pay the Obligations, (b) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a party or to
which any of its properties or assets are subject, which default, if not
remedied within any applicable grace or cure period, could reasonably be
expected to have a Material Adverse Effect, nor is there any event, fact,
condition or circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default under,
any of the foregoing which, if not remedied within any applicable grace or cure
period could reasonably be expected to have a Material Adverse Effect; or (c) a
party or subject to any agreement, document or instrument with respect to, or
obligation to pay any, service or management fee with respect to, the ownership,
operation, leasing or performance of any of its business.
5.6 LITIGATION
There is no action, suit, proceeding or investigation pending or, to
its knowledge, threatened against Borrower that (a) questions or could prevent
the validity of any of the Loan Documents or the right of Borrower to enter into
any Loan Document or to consummate the
15
transactions contemplated thereby, (b) could reasonably be expected to be or
have, either individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect, or (c) could reasonably be expected to result in any
Change of Control or other change in the current ownership, control or
management of Borrower. Borrower is not aware that there is any basis for the
foregoing. Borrower is not a party or subject to any order, writ, injunction,
judgment or decree of any Governmental Authority. There is no action, suit,
proceeding or investigation initiated by Borrower currently pending. Borrower
has no existing accrued and/or unpaid Indebtedness to any Governmental Authority
or any other governmental payor.
5.7 HAZARDOUS MATERIALS
Borrower is in compliance in all material respects with all
applicable Environmental Laws. Borrower has not been notified of any action,
suit, proceeding or investigation (a) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (b) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (c) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance.
5.8 TAX RETURNS; GOVERNMENTAL REPORTS
Borrower (a) has filed all federal, state, foreign (if applicable)
and local tax returns and other reports which are required by law to be filed by
Borrower, and (b) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except only for items that
Borrower is currently contesting in good faith and that are described on
SCHEDULE 5.8.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
Borrower that have been or may hereafter be delivered to Agent by Borrower are
accurate and complete and have been prepared in accordance with GAAP
consistently applied with prior periods. Borrower has no material obligations or
liabilities of any kind not disclosed in such financial information or
statements, and since the date of the most recent financial statements submitted
to Agent, there has not occurred any Material Adverse Change or Material Adverse
Effect or, to Borrower's knowledge, any other event or condition that could
reasonably be expected to have a Material Adverse Effect.
5.10 COMPLIANCE WITH LAW
Borrower (a) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
Borrower and/or Borrower's business, assets or operations, including, without
limitation, ERISA, FDA and any laws or regulations pertaining to the food
industry except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect, and (b) is not in violation of any
order of any Governmental Authority or other board or tribunal, except where
noncompliance or
16
violation could not reasonably be expected to have a Material Adverse Effect.
There is no event, fact, condition or circumstance which, with notice or passage
of time, or both, would constitute or result in any noncompliance with, or any
violation of, any of the foregoing , in each case except where noncompliance or
violation could not reasonably be expected to have a Material Adverse Effect.
Borrower has not received any notice that Borrower is not in compliance in any
respect with any of the requirements of any of the foregoing. Borrower has (i)
not engaged in any Prohibited Transactions as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder, (ii) not failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of its plans
and no funding requirements have been postponed or delayed, (iii) no any
knowledge of any event or occurrence which would cause the Pension Benefit
Guaranty Corporation to institute proceedings under Title IV of ERISA to
terminate any of the employee benefit plans, (iv) no fiduciary responsibility
under ERISA for investments with respect to any plan existing for the benefit of
Persons other than its employees or former employees, or (v) not withdrawn,
completely or partially, from any multi-employer pension plans so as to incur
liability under the MultiEmployer Pension Plan Amendments of 1980. With respect
to Borrower, there exists no event described in Section 4043 of ERISA, excluding
Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day
notice period contained in 12 C.F.R. ss. 2615.3 has not been waived.
5.11 INTELLECTUAL PROPERTY
Except as set forth on SCHEDULE 5.11, Borrower does not own, license
or utilize, and is not a party to, any patents, patent applications, trademarks,
trademark applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets, software or licenses
(collectively, the "INTELLECTUAL PROPERTY").
5.12 LICENSES AND PERMITS; LABOR
Borrower is in compliance with and has all Permits and Intellectual
Property necessary or required by applicable law or Governmental Authority for
the operation of its businesses. All of the foregoing are in full force and
effect and not in known conflict with the rights of others. Borrower is not (a)
in breach of or default under the provisions of any of the foregoing, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect, (b) a party to or subject to any agreement, instrument or
restriction that is so unusual or burdensome that it might have a Material
Adverse Effect, and/or (c) and has not been, involved in any labor dispute,
strike, walkout or union organization which could reasonably be expected to have
a Material Adverse Effect
17
5.13 NO DEFAULT
There does not exist any Default or Event of Default or any event,
fact, condition or circumstance which, with the giving of notice or passage of
time or both, would constitute or result in a Default or Event of Default.
5.14 DISCLOSURE
No Loan Document nor any other agreement, document, certificate, or
statement furnished to Agent by or on behalf of Borrower in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made by Borrower in any Loan Document, contains any untrue statement of
material fact or omits to state any fact necessary to make the statements
therein not materially misleading. There is no fact known to Borrower which has
not been disclosed to Agent in writing which could reasonably be expected to
have a Material Adverse Effect.
5.15 EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN CONTRACTS
Except as contemplated by the Loan Documents or as otherwise set
forth on SCHEDULE 5.15, Borrower (a) has no outstanding Indebtedness, (b) is not
subject or party to any mortgage, note, indenture, indemnity or guarantee of,
with respect to or evidencing any Indebtedness of any other Person, or (c) does
not own or hold any equity or long-term debt investments in, and does not have
any outstanding advances to or any outstanding guarantees for, the obligations
of, or any outstanding borrowings from, any Person. Borrower has performed all
material obligations required to be performed by Borrower pursuant to or
connection with any items listed on SCHEDULE 5.15 and there has occurred no
breach, default or event of default under any document evidencing any such items
or any fact, circumstance, condition or event which, with the giving of notice
or passage of time or both, would constitute or result in a breach, default or
event of default thereunder.
5.16 OTHER AGREEMENTS
Except as set forth on SCHEDULE 5.16, (a) there are no existing or
proposed agreements, arrangements, understandings or transactions between
Borrower and any of Borrower's officers, directors, employees, affiliates or
beneficial owners of five percent or more of its outstanding equity securities,
and (b) none of the foregoing Persons are directly or indirectly, indebted to or
have any direct or indirect ownership, partnership or voting interest in, to
Borrower's knowledge, any affiliate of Borrower or any Person with which
Borrower has a business relationship or which competes with Borrower (except
that any such Persons may own stock in (but not exceeding 2% of the outstanding
capital stock of) any publicly traded company that may compete with Borrower.
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5.17 INSURANCE
Borrower has in full force and effect such insurance policies as are
customary in its industry and as may be required pursuant to SECTION 6.5 hereof.
All such insurance policies are listed and described on SCHEDULE 5.17.
5.18 NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years, Borrower has not conducted business
under or used any name (whether corporate, partnership or assumed) other than as
shown on SCHEDULE 5.18A. Borrower is the sole owner of all of its names listed
on SCHEDULE 5.18A, and any and all business done and invoices issued in such
names are Borrower's sales, business and invoices. Each trade name of Borrower
represents a division or trading style of Borrower. Borrower maintains its
places of business and chief executive offices only at the locations set forth
on SCHEDULE 5.18B, or as disclosed in writing to Agent in accordance with
SECTION 7.4, and all Accounts of Borrower arise, originate and are located, and
all of the Collateral and all books and records in connection therewith or in
any way relating thereto or evidence the Collateral are located and shall be
only, in and at such locations. All of the Collateral is located only in the
continental United States.
5.19 NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of Borrower or to the rights of any other Person.
5.20 ACCOUNTS
In determining which Accounts are Eligible Receivables, Agent may
rely on all statements and representations made by Borrower with respect to any
Account. Unless otherwise indicated in writing to Agent, each Account of
Borrower (a) is genuine and in all respects what is purports to be and is not
evidenced by a judgment, (b) arises out of a completed, bona fide sale and
delivery of goods or rendering of services by Borrower in the ordinary course of
business and in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations, certificates of need and other
documents relating thereto or forming a part of the contract between Borrower
and the Account Debtor, (c) is for a liquidated amount maturing as stated in a
claim or invoice covering such sale of goods or rendering of services, a copy of
which has been furnished or is available to Agent, (d) together with Agent's
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any offset, lien, deduction, defense,
dispute, counterclaim or other adverse condition, is absolutely owing to
Borrower and is not contingent in any respect or for any reason, (e) there are
no facts, events or occurrences which in any way impair the validity or
enforceability thereof or tend to reduce the amount payable thereunder from the
face amount of the claim or invoice and statements delivered to Agent with
respect thereto, (f) to the best of Borrower's knowledge, (i) the Account Debtor
thereunder had the capacity to contract at the time any contract or other
document giving rise thereto was executed and (ii) such Account Debtor is
solvent, (g) to the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor thereunder
which might result in any material adverse
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change in such Account Debtor's financial condition or the collectability
thereof, (h) has been billed and forwarded to the Account Debtor for payment in
accordance with applicable laws and is in compliance and conformance with any
requisite procedures, requirements and regulations governing payment by such
Account Debtor with respect to such Account, and (i) Borrower has obtained and
currently has all Permits necessary in the generation thereof.
5.21 SURVIVAL
Borrower makes the representations and warranties contained herein
with the knowledge and intention that Agent and Lenders are relying and will
rely thereon. All such representations and warranties will survive the execution
and delivery of this Agreement, the making of the Advances and the funding of
the Term Loan.
VI. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
6.1 FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) FINANCIAL REPORTS. Borrower shall furnish to Agent and each
Lender (i) as soon as available and in any event within ninety (90) calendar
days after the end of each fiscal year of Borrower, audited annual consolidated
and consolidating financial statements of Borrower, including the notes thereto,
consisting of a consolidated and consolidating balance sheet at the end of such
completed fiscal year and the related consolidated and consolidating statements
of income, retained earnings, cash flows and owners' equity for such completed
fiscal year, which financial statements shall be prepared and certified without
qualification by an independent certified public accounting firm satisfactory to
Agent and accompanied by related management letters, if available, (ii) as soon
as available and in any event within forty-five (45) days after the end of each
fiscal quarter of Borrower, unaudited consolidated and consolidating financial
statements of Borrower consisting of a balance sheet and statements of income,
retained earnings, cash flows and owners' equity as of the end of the
immediately preceding fiscal quarter, and (iii) as soon as available and in any
event within thirty (30) calendar days after the end of each calendar month,
unaudited consolidated and consolidating financial statements of Borrower
consisting of a balance sheet and statements of income, retained earnings, cash
flows and owners' equity as of the end of the immediately preceding calendar
month. All such financial statements shall be prepared in accordance with GAAP
consistently applied with prior periods. With each quarterly and annual
financial statement, Borrower shall also deliver a certificate of its chief
financial officer in the form of EXHIBIT B hereto (the "COMPLIANCE
CERTIFICATE"), stating that (A) such person has reviewed the relevant terms of
the Loan Documents and the condition of Borrower, (B) no Default or Event of
Default has occurred or is continuing, or, if any of the foregoing has occurred
or is continuing, specifying the nature and status and period of existence
thereof and the steps taken or proposed to be taken with respect thereto, (C)
Borrower is in compliance with all financial covenants attached as ANNEX I
hereto. Such certificate shall be accompanied by the calculations necessary to
show compliance with the financial covenants in a form satisfactory to the
Agent.
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(b) OTHER MATERIALS. Borrower shall furnish to Agent and each Lender
as soon as available, and in any event within fifteen (15) calendar days after
the preparation or issuance thereof or at such other time as set forth below:
(i) copies of such financial statements (other than those required to be
delivered pursuant to SECTION 6.1(A)) prepared by, for or on behalf of Borrower
and any other notes, reports and other materials related thereto, including,
without limitation, any pro forma financial statements, (ii) any reports,
returns, information, notices and other materials that Borrower shall send to
its stockholders at any time, (iii) within fifteen (15) calendar days after the
end of each calendar month for such month, (A) a sales report, collections
report, credit memo report, accounts receivable detailed aging, accounts payable
detailed aging, summary report of monthly sales by SKU (in cases and dollars),
and a reconciliation of the accounts receivable and accounts payable to the
general ledger and financial statements, (B) an inventory report by warehouse
and in-transit inventory, inventory report by product item, a list of finished
goods expiring in the next six months, a turnover usage report for each
inventory item and a reconciliation of the inventory report to the general
ledger and financial statements, (C) an open deductions report and (D) a
projected sales forecast for the next three (3) months pertaining to Xxxxxxxx
product with Costco, (iv) promptly upon receipt thereof, copies of any reports
submitted to Borrower by its independent accountants in connection with any
interim audit of the books of such Person or any of its affiliates and copies of
each management control letter provided by such independent accountants, and (v)
such additional information, documents, statements, reports and other materials
as Agent may reasonably request from a credit or security perspective or
otherwise from time to time.
(c) NOTICES. Borrower shall promptly, and in any event within two
(2) calendar days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Agent in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets
to the extent (A) the amount in controversy exceeds $50,000, or (B) to the
extent any of the foregoing seeks injunctive relief, (ii) any Default or Event
of Default, which notice shall specify the nature and status thereof, the period
of existence thereof and what action is proposed to be taken with respect
thereto, (iii) any other development, event, fact, circumstance or condition
that could reasonably be expected to have a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice received by Borrower from any payor
of a claim, suit or other action such payor has, claims or has filed against
Borrower, (v) any matter(s) affecting the value, enforceability or
collectability of any of the Collateral, including, without limitation, claims
or disputes in the amount of $50,000 or more, singly or in the aggregate, in
existence at any one time, (vi) any notice given by Borrower to any other lender
of Borrower and shall furnish to Agent a copy of such notice, (vii) receipt of
any notice or request from any Governmental Authority regarding any liability or
claim of liability, (viii) receipt of any notice by Borrower regarding
termination of any lease, and/or (ix) if any Account becomes evidenced or
secured by an instrument or chattel paper.
(d) CONSENTS AND LANDLORD WAIVERS. Borrower shall obtain and deliver
from time to time all required consents, approvals and agreements from such
third parties as Agent shall determine are necessary or desirable in its
Permitted Discretion and that are satisfactory to Agent with respect to (i) the
Loan Documents and the transactions contemplated thereby, (ii)
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claims against Borrower, or the Collateral, and/or (iii) any agreements,
consents, documents or instruments to which Borrower is a party or by which any
properties or assets of Borrower or any of the Collateral is or are bound or
subject, including, without limitation, Landlord Waivers and Consents with
respect to leases; PROVIDED, HOWEVER, Borrower shall only be required to obtain
Landlord Waivers and Consents for any leased facility containing Collateral with
a value in excess of $15,000; FURTHER PROVIDED, HOWEVER, that the aggregate
total amount of all Collateral at locations not covered by Landlord Waivers and
Consents shall not exceed $100,000 at any time.
(e) OPERATING BUDGET. Borrower shall furnish to Agent and each
Lender on or prior to the Closing Date and for each fiscal year of Borrower
thereafter not less than thirty (30) calendar days prior to the commencement of
such fiscal year, consolidated and consolidating month by month projected
operating budgets, projections, profit and loss statements, balance sheets and
cash flow reports of and for Borrower for such upcoming fiscal year (including
an income statement for each month and a balance sheet as at the end of the last
month in each fiscal quarter), and annual projections for the next three (3)
years, in each case prepared in accordance with GAAP consistently applied with
prior periods.
(f) SEC AND GOVERNMENTAL AUTHORITY FILINGS. Borrower shall furnish
to Agent and each Lender, concurrently with the sending or filing thereof, a
copy of any proxy statement, financial statements or reports which Borrower has
made available to its shareholders and a copy of any regular, periodic and
special reports or registration statements which Borrower files with the
Securities and Exchange Commission, any stock exchange or any Governmental
Authority.
(g) RECIPES AND PROCEDURES. Promptly upon Borrower's use thereof,
Borrower shall furnish to Agent a copy of each recipe and procedures for making
each product of Borrower, which shall be held by Agent in a safe deposit box
until such time as an Event of Default exists. Prior to an Event of Default,
Agent will not disclose or distribute the recipes or procedures to any Person,
UNLESS in connection with pursuing and enforcing Agent's and Lender's remedies
under the Loan Documents. Notwithstanding anything contained in this Agreement
to the contrary, CapitalSource and its affiliates, as Agent and/or Lender, may
disclose to their lenders such recipes and procedures, provided such lenders
agree with CapitalSource (orally or in writing) to be subject to the
restrictions set forth in this SECTION 6.1(G).
(h) DEPOSIT ACCOUNTS, OTHER ACCOUNTS AND INVESTMENT PROPERTY.
Borrower shall (i) promptly, and in any event within five (5) calendar days
after Borrower (A) establishes any Deposit Account, securities account, money
market account or any similar account, or (B) becomes the owner of any
investment property, notify Agent of such, and thereafter (ii) deliver to Agent,
within fifteen (15) Business Days, documentation to perfect Agent's Lien
thereon, in form and substance reasonably acceptable to Agent
6.2 PAYMENT OF OBLIGATIONS
Borrower shall make full and timely indefeasible payment in cash of
the principal of and interest on the Loans, Advances and all other Obligations.
Simultaneously upon any prepayment of the Revolving Loan and termination of the
Revolving Facility, Borrower shall
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make full indefeasible payment in cash of the principal of and interest on the
Term Loan and all other Obligations relating to the Term Loan.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Borrower shall (a) conduct its business in accordance with good
business practices customary to the industry, (b) engage principally in the same
or similar lines of business substantially as heretofore conducted, (c) collect
its Accounts in the ordinary course of business, (d) maintain all of its
material properties, assets and equipment used or useful in its business in good
repair, working order and condition (normal wear and tear excepted and except as
may be disposed of in the ordinary course of business and in accordance with the
terms of the Loan Documents), (e) from time to time to make all necessary or
desirable repairs, renewals and replacements thereof, (f) maintain and keep in
full force and effect its existence and all material Permits and qualifications
to do business and good standing in each jurisdiction in which the ownership or
lease of property or the nature of its business makes such Permits or
qualification necessary and in which failure to maintain such Permits or
qualification could reasonably be likely to have a Material Adverse Effect; and
(g) remain in good standing.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Borrower shall (a) comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (b) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith and against which adequate reserves have been established, (c)
perform in accordance with its terms each contract, agreement or other
arrangement to which it is a party or by which it or any of the Collateral is
bound, except where the failure to comply, pay or perform could not reasonably
be expected to have a Material Adverse Effect, (d) maintain and comply with all
Permits necessary to conduct its business and comply with any new or additional
requirements that may be imposed on it or its business, and (e) maintain all
Intellectual Property (as defined in the Security Agreement) in accordance with
the Intellectual Property Security Agreement.
6.5 INSURANCE
Borrower shall (a) keep the Life Insurance Policy fully paid and in
full force and effect, (b) keep all of its insurable properties and assets
adequately insured in all material respects against losses, damages and hazards
as are customarily insured against by businesses engaging in similar activities
or owning similar assets or properties and at least the minimum amount required
by applicable law and any agreement to which Borrower is a party, including,
without limitation, liability and errors and omissions insurance, as applicable;
and maintain general public liability insurance at all times against liability
on account of damage to persons and property having such limits, deductibles,
exclusions and co-insurance and other provisions as are customary for a business
engaged in activities similar to those of Borrower; and (c) maintain insurance
under all applicable workers' compensation laws; all of the foregoing insurance
policies to (i) be satisfactory in form and substance to Agent, (ii) name Agent,
for the benefit of itself and Lenders, as loss payee and additional insured
thereunder (except that Agent shall be
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named as sole beneficiary of the Life Insurance Policy), and (iii) expressly
provide that they cannot be altered, amended, modified or canceled without
thirty (30) Business Days prior written notice to Agent and that they inure to
the benefit of Agent, for the benefit of itself and Lenders, notwithstanding any
action or omission or negligence of or by Borrower, or any insured thereunder.
6.6 TRUE BOOKS
Borrower shall (a) keep true, complete and accurate books of record
and account in accordance with commercially reasonable business practices in
which true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (b) set up and maintain on its books
such reserves as may be required by GAAP with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.7 INSPECTION; PERIODIC AUDITS
Borrower shall permit the representatives of Agent and Lenders, at
the expense (which in the case of third-party expenses, shall be reasonable) of
Borrower, from time to time during normal business hours upon reasonable notice,
to (a) visit and inspect any of its offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine or audit
all of its books of account, records, reports and other papers, (b) make copies
and extracts therefrom, and (c) discuss its business, operations, prospects,
properties, assets, liabilities, condition and/or Accounts with its officers and
independent public accountants (and by this provision such officers and
accountants are authorized to discuss the foregoing).
6.8 FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, Borrower shall (a) within five (5)
Business Days after Agent's demand, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as Agent may request with respect to the
purposes, terms and conditions of the Loan Documents and the consummation of the
transactions contemplated thereby, whether before, at or after the performance
and/or consummation of the transactions contemplated hereby or the occurrence of
a Default or Event of Default, (b) without limiting and notwithstanding any
other provision of any Loan Document, execute and deliver, or cause to be
executed and delivered, such agreements and documents, and take or cause to be
taken such actions, and otherwise perform, observe and comply with such
obligations, as are set forth on SCHEDULE 6.8, and (c) upon the exercise by
Agent, any Lender or any of their affiliates of any power, right, privilege or
remedy pursuant to any Loan Document or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Governmental Authority, execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments and other documents
that may be so required for such consent, approval, registration, qualification
or authorization. Without limiting the foregoing, upon the exercise by Agent,
any Lender or any of their affiliates of any right or remedy under any Loan
Document which requires any consent, approval or registration with, consent,
qualification or authorization by, any Person, Borrower
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shall execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments and other documents that Agent, any
Lender or such affiliate may be required to obtain for such consent, approval,
registration, qualification or authorization.
6.9 PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents, Borrower shall
pay, discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of its material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Agent may deem proper and necessary in its
Permitted Discretion shall have been made.
6.10 LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrower immediately
shall take, execute and deliver all actions, documents and instruments necessary
to release and terminate such Liens.
6.11 USE OF PROCEEDS
Borrower shall use the proceeds from the Revolving Facility and the
Term Loan only for the purposes set forth in the recitals to this Agreement.
6.12 COLLATERAL DOCUMENTS
On demand of Agent or any Lender, Borrower shall make available to
Agent or such Lender copies of any and all documents, instruments, materials and
other items that relate to, secure, evidence, give rise to or generate or
otherwise involve Accounts of Borrower.
6.13 TAXES AND OTHER CHARGES
All payments and reimbursements to Agent, for the benefit of
Lenders, made under any Loan Document shall be free and clear of and without
deduction for all taxes, levies, imposts, deductions, assessments, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever,
excluding taxes to the extent imposed on each Lender's net income. If Borrower
shall be required by law to deduct any such amounts from or in respect of any
sum payable under any Loan Document to Agent, for the benefit of Lenders, then
the sum payable to Agent, for the benefit of Lenders, shall be increased as may
be necessary so that, after making all required deductions, each Lender receives
an amount equal to the sum it would have received had no such deductions been
made. Notwithstanding any other provision of any Loan Document, if at any time
after the Closing (a) any change in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (b) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (c) compliance by any Lender with any request or directive (whether
or not having the force of law) from any Governmental Authority: (i) subjects
such Lender to any tax, levy, impost, deduction, assessment, charge or
25
withholding of any kind whatsoever with respect to any Loan Document, or changes
the basis of taxation of payments to Agent, for the benefit of Lenders, of any
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of each Lender), or (ii) imposes on Lenders any other condition or increased
cost in connection with the transactions contemplated thereby or participations
therein; and the result of any of the foregoing is to increase the cost to
Lenders of making or continuing any Loan hereunder or to reduce any amount
receivable hereunder, then, in any such case, Borrower shall promptly pay to
Agent, for the benefit of Lenders, any additional amounts necessary to
compensate each Lender, on an after-tax basis, for such additional cost or
reduced amount as determined by such Lender. If any Lender becomes entitled to
claim any additional amounts pursuant to this SECTION 6.13 it shall promptly
notify Borrower of the event by reason of which such Lender has become so
entitled, and each such notice of additional amounts payable pursuant to this
SECTION 6.13 submitted by such Lender to Borrower shall, absent manifest error,
be final, conclusive and binding for all purposes. Without limiting or being
limited by any other provision of any Loan Document, Borrower at all times shall
retain and use a Person acceptable to Agent in its Permitted Discretion to
process, manage and pay its payroll taxes and shall cause to be delivered to
Agent and each Lender within ten (10) calendar days after the end of each
calendar month a report of its payroll taxes for the immediately preceding
calendar month and evidence of payment thereof.
VII. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
7.1 FINANCIAL COVENANTS
Borrower shall not violate the financial covenants set forth on
ANNEX I to this Agreement, which annex is incorporated herein and made a part
hereof.
7.2 INDEBTEDNESS
Borrower shall not create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"): (a)
Indebtedness under the Loan Documents, (b) any Indebtedness set forth on
SCHEDULE 7.2; (c) Capitalized Lease Obligations incurred after the Closing Date
and Indebtedness incurred pursuant to purchase money Liens permitted by SECTION
7.3(E); PROVIDED, that the aggregate amount thereof outstanding at any time
shall not exceed $100,000, (d) accounts payable to trade creditors and current
accrued operating expenses (other than for borrowed money) which are not aged
more than 120 calendar days from the billing date or more than 30 days from the
due date, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are being contested in good faith and
by appropriate and lawful proceedings and such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by Borrower's independent
accountants shall have been reserved; and (e) borrowings incurred in the
ordinary course of business and not exceeding $50,000 individually or in the
aggregate outstanding at any one time; provided, HOWEVER, that the Indebtedness
described in (e) above shall be on an unsecured basis, subordinated in right of
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repayment and remedies to all of the Obligations and to all of Agent's and
Lenders' rights, Liens and remedies and in form and substance satisfactory to
Agent. Borrower shall not make prepayments on any existing or future
Indebtedness to any Person other than to Agent, for the benefit of Lenders, or
to the extent specifically permitted by this Agreement or any subsequent
agreement between Borrower, Agent and Lenders.
7.3 LIENS
Borrower shall not create, incur, assume or suffer to exist any Lien
upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"): (a) Liens under the Loan
Documents or otherwise arising in favor of Agent, for the benefit of itself and
Lenders, (b) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained by such Person in
accordance with GAAP to the satisfaction of Agent in its Permitted Discretion,
(c) (i) statutory Liens of landlords (provided that any such landlord has
executed a Landlord Waiver and Consent in form and substance satisfactory to
Agent) and of carriers, warehousemen, mechanics, materialmen, and (ii) other
Liens imposed by law or that arise by operation of law in the ordinary course of
business from the date of creation thereof, in each case only for amounts not
yet due or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP to the satisfaction of
Agent in its Permitted Discretion, (d) Liens incurred or deposits made in the
ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of Indebtedness),
statutory obligations and other similar obligations, (e) purchase money Liens
securing Indebtedness permitted under SECTION 7.2(C), (f) Liens necessary and
desirable for the operation of such Person's business; PROVIDED, that Agent has
consented to such Liens in writing before their creation and existence and the
priority of such Liens and the debt secured thereby are both subject and
subordinate in all respects to the Liens securing the Collateral and to the
Obligations and all of the rights and remedies of Agent and each Lender, all in
form and substance satisfactory to Agent in its sole discretion; (g) Liens shown
on the title policy or survey covering the Leasehold Property and approved by
Agent in its sole discretion; and (h) Liens disclosed on SCHEDULE 7.3.
7.4 INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES
Borrower, directly or indirectly, shall not (a) merge with,
purchase, own, hold, invest in or otherwise acquire obligations or stock or
securities of, or any other interest in, or all or substantially all of the
assets of, any Person or any joint venture, or (b) make or permit to exist any
loans, advances or guarantees to or for the benefit of any Person or assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for or upon or incur any obligation of any Person (other than those created by
the Loan Documents and Permitted Indebtedness set forth on SCHEDULE 7.2 and
other than (i) trade credit extended in the ordinary course of business, (ii)
advances for business travel and similar temporary advances made in the
27
ordinary course of business to officers, directors and employees, and (iii) the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business). Borrower, directly or
indirectly, shall not purchase, own, operate, hold, invest in or otherwise
acquire any property or assets or any Collateral that is not located at the
locations set forth on SCHEDULE 5.18B, unless Borrower shall provide to Agent at
least thirty (30) calendar days' prior written notice. Borrower shall have no
Subsidiaries.
7.5 DIVIDENDS; REDEMPTIONS; PREFERRED STOCK
Borrower shall not (a) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or interests
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock), (b) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (PROVIDED, HOWEVER, that Borrower may redeem its capital stock from
terminated employees pursuant to, but only to the extent required under, the
terms of the related employment agreements as long as no Default or Event of
Default has occurred and is continuing or would be caused by or result
therefrom), (c) otherwise make any payments or Distributions to any stockholder,
member, partner or other equity owner in such Person's capacity as such, (d)
make any payment of any management, service or related or similar fee to any
affiliate of Borrower, or (e) issue any Series A and B Preferred Stock.
7.6 TRANSACTIONS WITH AFFILIATES
Borrower shall not enter into or consummate any transaction of any
kind with any of its affiliates or any Guarantor or any of their respective
affiliates other than: (a) salary, bonus, employee stock option and other
compensation and employment arrangements with directors or officers in the
ordinary course of business; PROVIDED, that no payments of any bonus or
otherwise (except normal salaries consistent with past practices) shall be
permitted if a Default or Event of Default has occurred and remains in effect or
would be caused by or result from such payment, (b) distributions and dividends
permitted pursuant to SECTION 7.5, (c) transactions on overall terms at least as
favorable to Borrower as would be the case in an arm's length transaction
between unrelated parties of equal bargaining power, (d) transactions with Agent
or any affiliate of Agent, (e) payments under the Note Purchase Agreement as
permitted by SECTION 7.11, or (f) payments permitted under and pursuant to
written agreements entered into by and between Borrower and one or more of its
affiliates that both (i) reflect and constitute transactions on overall terms at
least as favorable to Borrower as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, and (ii) are
subject to such terms and conditions as determined by Agent in its Permitted
Discretion; PROVIDED, that notwithstanding the foregoing Borrower shall not (A)
enter into or consummate any transaction or agreement pursuant to which it
becomes a party to any mortgage, note, indenture or guarantee evidencing any
Indebtedness of any of its affiliates or otherwise to become responsible or
liable, as a guarantor, surety or otherwise, pursuant to agreement for any
Indebtedness of any such affiliate, (B) make any payment to any of its
affiliates in excess of $100,000 without the prior written consent of Agent, or
(C) make any payment to an affiliate if a Default or Event of Default has
occurred and remains in effect or would be caused by or result from such
payment,
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provided that payments under the Note Purchase Agreement may be made subject to
the terms of the Note Purchase Agreement and SECTION 7.11.
7.7 CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; USE OF PROCEEDS; LIFE
INSURANCE
Borrower shall not (a) change its state of organization, or amend,
modify, restate or change its certificate of incorporation or bylaws or similar
charter documents in a manner that would be adverse to Agent or any Lender, (b)
change its fiscal year, (c) amend, alter or suspend or terminate or make
provisional in any material way, any Permit without the prior written consent of
Agent, which consent shall not be unreasonably withheld, (d) wind up, liquidate
or dissolve (voluntarily or involuntarily) or commence or suffer any proceedings
seeking or that would result in any of the foregoing, (e) use any proceeds of
any Loans for "purchasing" or "carrying" "margin stock" as defined in
Regulations U, T or X of the Board of Governors of the Federal Reserve System,
or (f) amend, modify, restate or change the Life Insurance Policy in any
material respect (including, without limitation, with respect to amounts of
coverage, beneficiaries and/or loss payees and additional insureds).
7.8 TRANSFER OF ASSETS
Borrower shall not sell, lease, transfer, assign or otherwise
dispose of any interest in any properties or assets, or agree to do any of the
foregoing, without Agent's prior written approval exercised in its Permitted
Discretion, except that:
(a) Borrower may lease (other than by a sale-leaseback transaction)
as lessee real or personal property or surrender all or a portion of a lease of
the same, in each case in the ordinary course of business (so long as such lease
does not create or result in and is not otherwise a Capitalized Lease Obligation
prohibited under this Agreement), PROVIDED that a Landlord Waiver and Consent
and such other consents as are required by Agent are signed and delivered to
Agent and Lenders with respect to any lease of real property;
(b) Borrower may sell obsolete or replaced equipment or excess
equipment no longer needed in the ordinary course of business;
(c) Borrower may sell Inventory in the ordinary course of business;
and
(d) Borrower may sell any other assets, the fair market value of
which shall not exceed $100,000 in the aggregate.
7.9 CONTINGENT OBLIGATIONS
Borrower shall not enter into any Contingent Obligations or assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for or upon or incur any obligation of any Person.
7.10 TRUTH OF STATEMENTS
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Borrower shall not furnish to Agent or any Lender any certificate or
other document that contains any untrue statement of a material fact or that
omits to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.
7.11 PAYMENT ON SUBORDINATED DEBT.
Borrower shall not (a) make any prepayment of any part or all of the
Subordinated Debt, (b) repurchase, redeem or retire any instrument evidencing
the Subordinated Debt prior to maturity, or (c) enter into any agreement (oral
or written) which could in any way be construed to amend, modify, alter or
terminate any one or more instruments or agreements evidencing or relating to
the Subordinated Debt; PROVIDED, HOWEVER, that Borrower may make scheduled and
accrued interest payments on the Subordinated Debt and Excess Cash Flow
payments, each in accordance with and subject to the provisions of the Note
Purchase Agreement.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute
an "Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due in respect of principal, Excess Cash
Flow or other payments required by SECTION 2.11, or within three (3) Business
Days of when due in respect of any Obligation other than the foregoing (whether
on any payment date, at maturity, by reason of acceleration, by notice of
intention to prepay, by required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed made by
Borrower or any Guarantor in any Loan Document or in any other certificate,
document, report or opinion delivered in conjunction with any Loan Document to
which it is a party, shall not be true and correct in all material respects or
shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by
materiality, in which case it shall be true and correct in all respects and
shall not be false or misleading in any respect);
(c) Borrower or any Guarantor or other party thereto, other than
Agent or any Lender, shall be in violation, breach or default of, or shall fail
to perform, observe or comply with any covenant, obligation or agreement set
forth in, any Loan Document and such violation, breach, default or failure shall
not be cured within the applicable period set forth in the applicable Loan
Document; PROVIDED that, with respect to the affirmative covenants set forth in
ARTICLE VI (other than SECTIONS 6.1(A), 6.1(B), 6.8(b), 6.9 and 6.11 for which
there shall be no cure period, SECTION 6.2 for which there shall be a cure
period to the extent indicated in subsection (a) above, and SECTION 6.3 for
which there shall be a five-day cure period), there shall be a thirty (30)
calendar day cure period commencing from the earlier of (i) Receipt by such
Person of written notice of such breach, default, violation or failure, and (ii)
the time at which such Person or any authorized officer thereof knew or became
aware of such failure, violation, breach or default;
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(d) (i) any of the Loan Documents ceases to be in full force and
effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terms
thereof, or Agent, for the benefit of itself and Lenders, ceases to have a valid
perfected first priority security interest in any of the Collateral or any
securities pledged to Agent, for the benefit of itself and Lenders, pursuant to
the Security Documents;
(e) one or more judgments or decrees is rendered against Borrower or
Guarantor in an amount in excess of $50,000, which is/are not satisfied, stayed,
vacated or discharged of record within thirty (30) calendar days of being
rendered;
(f) (i) any default occurs, which is not cured or waived, (x) in the
payment of any amount with respect to any Indebtedness (other than the
Obligations) of Borrower or Guarantor in excess of $50,000, (y) in the
performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which Borrower or Guarantor is a
party or to which any of their properties or assets are subject or bound under
or pursuant to which any Indebtedness was issued, created, assumed, guaranteed
or secured and such default continues for more than any applicable grace period
or permits the holder of any Indebtedness to accelerate the maturity thereof,
including but not limited to the Note Purchase Agreement and related documents,
or (z) in the performance, observance or fulfillment of any provision contained
in any agreement, contract, document or instrument between Borrower or Guarantor
and Agent or any Lender or affiliate of Agent or any Lender (other than the Loan
Documents), or (ii) any Indebtedness of Borrower or Guarantor is declared to be
due and payable or is required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof, or any obligation of
such Person for the payment of Indebtedness (other than the Obligations) is not
paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof, or there occurs an event which, with the giving of notice or lapse of
time, or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable;
(g) Borrower or Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) file a petition under any insolvency statute,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property,
or (v) file a petition seeking reorganization or liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of Borrower or Guarantor or the whole or any substantial part of any
such Person's properties, which shall continue unstayed and in effect for a
period of sixty (60) calendar days, (B) shall approve a petition filed against
Borrower or Guarantor seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within sixty (60) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of Borrower or Guarantor or of the whole or any substantial part of any
such Person's properties, which is not irrevocably relinquished within sixty
(60) calendar days, or (ii) there is commenced against Borrower or Guarantor any
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proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, which (A) is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) is with respect to which Borrower or Guarantor takes any
action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs, (ii) any Material Adverse
Effect or Material Adverse Change occurs, or is reasonably expected to occur, or
(iii) Borrower or Guarantor ceases any material portion of its business
operations as currently conducted;
(j) Agent or any Lender receives any indication or evidence that
Borrower or Guarantor may have directly or indirectly been engaged in any type
of activity which, in Agent's judgment, might result in forfeiture of any
property to any Governmental Authority which shall have continued unremedied for
a period of ten (10) calendar days after written notice from Agent;
(k) an event of default occurs under any other Loan Document and
remains unremedied for any applicable cure period;
(l) uninsured damage to, or loss, theft or destruction of, any
portion of the Collateral occurs that exceeds $50,000 in the aggregate;
(m) Borrower or Guarantor or any of their respective directors or
senior officers is criminally indicted or convicted under any law that could
lead to a forfeiture of any Collateral;
(n) the issuance of any process for levy, attachment or garnishment
or execution upon or prior to any judgment against Borrower or Guarantor or any
of their property or assets; or
(o) Borrower or Guarantor does, or enters into or becomes a party to
any agreement or commitment to do, or cause to be done, any of the things
described in this ARTICLE VIII or otherwise prohibited by any Loan Document
(subject to any cure periods set forth therein) (PROVIDED, HOWEVER, no Event of
Default shall exist by virtue of this subsection (o) if Borrower enters into or
becomes a party to any agreement or commitment to enter into a Company Sale,
PROVIDED, that in the case of such an event, an Event of Default shall exist
upon the consummation of such Company Sale);
then, and in any such event, notwithstanding any other provision of any Loan
Document, (I) Agent may (and at the request of Requisite Lenders, shall), by
notice to Borrower (i) terminate Lenders' obligations to make Loans hereunder,
whereupon the same shall immediately terminate, and (ii) declare all or any of
the Notes, all interest thereon and all other Obligations to be due and payable
immediately (except in the case of an Event of Default under SECTION 8(D), (G),
(H) or (I)(III), in which event all of the foregoing shall automatically and
without further act by Agent or any Lender be due and payable; PROVIDED, that,
with respect to non-material breaches or violations that constitute Events of
Default under clause (ii) of SECTION 8(D), there shall be a five (5) Business
Day cure period commencing from the earlier of (A) Receipt by the applicable
Person of written notice of such breach or violation or of any event, fact or
circumstance constituting or resulting in any of the foregoing, and (B) the time
at
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which such Person or any authorized officer thereof knew or became aware, or
should have known or been aware, of such breach or violation and resulting Event
of Default or of any event, fact or circumstance constituting or resulting in
any of the foregoing)), in each case without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower, and (II) effective immediately, without any action of Agent or
Lenders, no action permitted to be taken under ARTICLE VII hereof may be taken.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in ARTICLE
VIII above, upon the occurrence and continuation of an Event of Default, Agent
shall have the right to (and at the request of Requisite Lenders, shall)
exercise any and all rights, options and remedies provided for in any Loan
Document, under the UCC or at law or in equity, including, without limitation,
the right to (i) apply any property of Borrower held by Agent, for the benefit
of Lenders, or Lenders to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
Borrower might exercise, (v) collect and send notices regarding the Collateral,
with or without judicial process, (vi) by its own means or with judicial
assistance, enter any premises at which Collateral and/or pledged securities are
located, or render any of the foregoing unusable or dispose of the Collateral
and/or pledged securities on such premises without any liability for rent,
storage, utilities, or other sums, and no Borrower shall resist or interfere
with such action, (vii) at Borrower's expense, require that all or any part of
the Collateral be assembled and made available to Agent at any place designated
by Agent, (viii) reduce or otherwise change the Facility Cap and/or the Maximum
Loan Amount, and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document,
Agent, in its Permitted Discretion, shall have the right, at any time that
Borrower fails to do so, and from time to time, without prior notice, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
document unless Borrower is in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Agent and shall be secured by the Collateral,
and such payments by Agent shall not be construed as a waiver by Agent or
Lenders of any Event of Default or any other rights or remedies of Agent and
Lenders.
(b) Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Agent without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrower which right is hereby waived and released.
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Borrower covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Agent's exercise of
its rights and remedies with respect to the Collateral. Agent, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
9.2 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Agent and
Lenders have under the Loan Documents, the UCC, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder shall be applied in the
following order of priority: (i) FIRST, to the payment of all costs and expenses
of such collection, storage, lease, holding, operation, management, sale,
disposition or delivery and of conducting Borrower's business and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Agent or Lenders may
be required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Agent or Lenders may be required or authorized to make under any provision
of this Agreement (including, without limitation, in each such case, in-house
documentation and diligence fees and legal expenses, search, audit, recording,
professional and filing fees and expenses and reasonable attorneys' fees and all
expenses, liabilities and advances made or incurred in connection therewith);
(ii) SECOND, to the payment of all Obligations as provided herein; (iii) THIRD,
to the satisfaction of Indebtedness secured by any subordinate security interest
of record in the Collateral if written notification of demand therefor is
received before distribution of the proceeds is completed, PROVIDED, that, if
requested by Agent, the holder of a subordinate security interest shall furnish
reasonable proof of its interest, and unless it does so, Agent and Lenders need
not address their claims; and (iv) FOURTH, to the payment of any surplus then
remaining to Borrower, unless otherwise provided by law or directed by a court
of competent jurisdiction, PROVIDED that Borrower shall be liable for any
deficiency if such proceeds are insufficient to satisfy the Obligations or any
of the other items referred to in this section.
9.3 RIGHTS OF AGENT TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options and
remedies Agent has under the Loan Documents, the UCC, at law or in equity, upon
the occurrence and continuation of an Event of Default, Agent shall have the
right to apply for and have a receiver appointed by a court of competent
jurisdiction in any action taken by Agent to enforce its and Lenders' rights and
remedies in order to manage, protect and preserve the Collateral and continue
the operation of the business of Borrower and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.
9.4 RIGHTS AND REMEDIES NOT EXCLUSIVE
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Agent shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish or subordinate, and such determination will not in any way modify or
affect any of Agent's or Lenders' rights, Liens or remedies under any Loan
Document, applicable law or equity. The enumeration of any rights and remedies
in any Loan Document is not intended to be exhaustive, and all rights and
remedies of Agent and Lenders described in any Loan Document are cumulative and
are not alternative to or exclusive of any other rights or remedies which Agent
or Lenders otherwise may have. The partial or complete exercise of any right or
remedy shall not preclude any other further exercise of such or any other right
or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 WAIVERS
Except as expressly provided for herein, Borrower hereby waives
demand, presentment, protest, all defenses with respect to any and all
instruments and all notices and demands of any description. Borrower hereby
waives any and all defenses and counterclaims it may have or could interpose in
any action or procedure brought by Agent or any Lender to obtain an order of
court recognizing the assignment of, or Lien of Agent, for the benefit of itself
and Lenders, in and to, any Collateral.
10.2 DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of Borrower or Guarantor
or operate as a waiver of such provision or affect the liability of Borrower or
Guarantor or preclude any other or further exercise of such provision. No waiver
by any party to any Loan Document of any one or more defaults by any other party
in the performance of any of the provisions of any Loan Document shall operate
or be construed as a waiver of any future default, whether of a like or
different nature, and each such waiver shall be limited solely to the express
terms and provisions of such waiver. Notwithstanding any other provision of any
Loan Document, by completing the Closing under this Agreement and/or by making
Advances or funding the Term Loan, neither Agent nor any Lender waives any
breach of any representation or warranty of under any Loan Document, and all of
Agent's and Lenders' claims and rights resulting from any such breach or
misrepresentation are specifically reserved.
10.3 JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH
RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND
35
CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY.
10.4 COOPERATION IN DISCOVERY AND LITIGATION
In any litigation, arbitration or other dispute resolution
proceeding relating to any Loan Document, Borrower waives any and all defenses,
objections and counterclaims it may have or could interpose with respect to (a)
any of its directors, officers, employees or agents being deemed to be employees
or managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (b) Agent's or any Lender's counsel
examining any such individuals as if under cross-examination and using any
discovery deposition of any of them as if it were an evidence deposition, and/or
(c) using all commercially reasonable efforts to produce in any such dispute
resolution proceeding, at the time and in the manner requested by Agent, all
Persons, documents (whether in tangible, electronic or other form) and/or other
things under its control and relating to the dispute.
10.5 AMENDMENT AND WAIVERS
(a) Except as otherwise provided herein, no amendment, modification,
termination, or waiver of any provision of this Agreement or any Loan Document,
or consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by Borrower, Requisite
Lenders and Agent; PROVIDED, that no amendment, modification, termination, or
waiver shall, unless in writing and signed by each Lender directly affected
thereby, do any of the following: (i) increase the Commitment of any Lender
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or fees payable with respect to any Loan;
(iii) extend the scheduled due date, reduce the amount due on any scheduled due
date, of any installment of principal, interest, or fees payable with respect to
any Loan, or waive, forgive, extend, defer or postpone the payment thereof; (iv)
change the percentage of the Commitments, of the aggregate unpaid principal
amount of the Loans, or of Lenders which shall be required for Lenders or any of
them to take any action hereunder (which action shall be deemed to directly
affect all Lenders); (v) except as otherwise permitted herein or in the other
Loan Documents, release any Guaranty or release any of the Collateral (which
action shall be deemed to directly affect all Lenders) (provided, that consent
to such release shall not be required if such release is made after and during
the continuance of an Event of Default in connection with the sale or
disposition of the Collateral by Agent); (vi) amend, modify or waive this
SECTION 10.5 or the definitions of the terms used in this SECTION 10.5 insofar
as the definitions affect the substance of this SECTION 10.5 (which action shall
be deemed to directly affect all Lenders); (vii) consent to the assignment or
other transfer by Borrower or any other party (other than any Lender) to any
Loan Documents of any of their rights and obligations under any Loan Document;
and, PROVIDED, FURTHER, that no amendment, modification, termination or waiver
affecting the rights or duties of Agent under any Loan Document shall in any
event be effective, unless in writing and signed by Agent, in addition to
Lenders required herein above to take such action.
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(b) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(c) Any amendment, modification, termination, waiver or consent
effected in accordance with this SECTION 10.5 shall be binding upon each Lender
and Borrower.
XI. EFFECTIVE DATE AND TERMINATION
11.1 EFFECTIVENESS AND TERMINATION
Subject to each Lender's right to terminate and cease making Loans
upon or after any Event of Default, this Agreement shall continue in full force
and effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this SECTION 11.1. Borrower
may terminate this Agreement at any time upon not less than thirty (30) calendar
days' prior written notice to Agent and upon full performance and indefeasible
payment in full in cash of all Obligations on or prior to such 30th calendar day
after Receipt by Agent of such written notice; PROVIDED, HOWEVER, that,
notwithstanding any other provision of any Loan Document, Borrower shall have no
right to terminate this Agreement until after July 10, 2003, except upon a
Company Sale. All of the Obligations shall be immediately due and payable upon
any such termination on the termination date stated in any notice of termination
(the "TERMINATION Date"); PROVIDED, that, notwithstanding any other provision of
any Loan Document, the Termination Date shall be effective no earlier than the
first Business Day of the month following the expiration of the thirty (30)
calendar days' prior written notice period. Notwithstanding any other provision
of any Loan Document, no termination of this Agreement shall affect any Lender's
or Agent's rights or any of the Obligations existing as of the effective date of
such termination, and the provisions of the Loan Documents shall continue to be
fully operative until the Obligations have been fully performed and indefeasibly
paid in cash in full. The Liens granted to Agent, for the benefit of itself and
Lenders, under the Security Documents and the financing statements filed
pursuant thereto and the rights and powers of Agent and Lenders shall continue
in full force and effect notwithstanding the fact that Borrower's borrowings
hereunder may from time to time be in a zero or credit position until all of the
Obligations have been fully performed and indefeasibly paid in full in cash.
11.2 SURVIVAL
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by Borrower in any Loan Document shall survive the
execution and delivery of the Loan Documents, the Closing, the making of the
Loans and any termination of this Agreement until all Obligations are fully
performed and indefeasibly paid in full in cash. The obligations and provisions
of SECTIONS 3.5, 3.6, 6.13, 10.1, 10.3, 11.1, 11.2, 12.4 and 12.7 and ARTICLE
XI-A shall survive termination of the Loan Documents and any payment, in full or
in part, of the Obligations; provided, however, the provisions of SECTION 12.4
shall only survive for a period of one year following such termination and
indefeasible payment in full in cash of the Obligations.
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XI-A. AGENCY PROVISIONS
11-A.1 AGENT
(a) APPOINTMENT. Each Lender hereby designates and appoints
CapitalSource as the administrative agent and the collateral agent, under this
Agreement and the other Loan Documents, and each Lender hereby irrevocably
authorizes CapitalSource, as the administrative agent and the collateral agent
for such Lender, to take such action or to refrain from taking such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Agent agrees to act as
such on the conditions contained in this ARTICLE 11-A. The provisions of this
ARTICLE 11-A are solely for the benefit of Agent and Lenders, and Borrower shall
have no rights as a third-party beneficiary of any of the provisions hereof,
except as expressly set forth in this ARTICLE 11-A. Agent may perform any of its
duties hereunder, or under the Loan Documents, by or through its agents or
employees.
(b) NATURE OF DUTIES. In performing its functions and duties under
this Agreement, Agent is acting solely on behalf of Lenders and its duties are
administrative in nature and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for
Lenders, other than as expressly set forth herein and in the other Loan
Documents, or Borrower. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Except for information,
notices, reports, and other documents expressly required to be furnished to
Lenders by the Agent hereunder or given to the Agent for the account of or with
copies for Lenders, each Lender shall make its own independent investigation of
the financial condition and affairs of Borrower in connection with the extension
of credit hereunder and shall make its own appraisal of the creditworthiness of
Borrower, and Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the Closing Date
or at any time or times thereafter. If Agent seeks the consent or approval of
any Lenders to the taking or refraining from taking any action hereunder, then
Agent shall send prior written notice thereof to each Lender. Agent shall
promptly notify (in writing) each Lender any time that the applicable percentage
of Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(c) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its officers,
directors, managers, members, equity owners, employees or agents shall be liable
to any Lender for any action lawfully taken or omitted by them hereunder or
under any of the other Loan Documents, or in connection herewith or therewith.
Notwithstanding the foregoing, Agent shall be obligated on the terms set forth
herein for performance of its express duties and obligations hereunder, and
Agent shall be liable with respect to its own gross negligence or willful
misconduct. Agent shall not be liable for any apportionment or distribution of
payments made by it in good faith, and if any such apportionment or distribution
is subsequently determined to have been made in error, the sole recourse of any
Lender to whom payment was due but not made shall be to recover from
38
other Lenders any payment in excess of the amount to which they are determined
to be entitled (and such other Lenders hereby agree to return to such Lender any
such erroneous payments received by them). In performing its functions and
duties hereunder, Agent shall exercise the same care which it would in dealing
with loans for its own account. Agent shall not be responsible to any Lender for
any recitals, statements, representations or warranties made by Borrower herein
or for the execution, effectiveness, genuineness, validity, enforceability,
collectability, or sufficiency of this Agreement or any of the other Loan
Documents or the transactions contemplated thereby, or for the financial
condition of Borrower. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions,
or conditions of this Agreement or any of the Loan Documents or the financial
condition of Borrower, or the existence or possible existence of any Default or
Event of Default. Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the other Loan Documents Agent is permitted or required to take or to
grant, and Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from taking any action or withholding any approval
under any of the Loan Documents until it shall have received such instructions
from the applicable percentage of Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the applicable percentage
of Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action
exposes Agent or any of its officers, directors, managers, members, equity
owners, employees or agents to any personal liability unless Agent receives an
indemnification reasonably satisfactory to it from Lenders with respect to such
action.
(d) RELIANCE. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) INDEMNIFICATION. Each Lender, severally and not jointly, agrees
to reimburse and indemnify Agent and its officers, directors, managers, members,
equity owners, employees and agents (to the extent not reimbursed by Borrower or
the Guarantors), ratably according to their respective Pro Rata Share in effect
on the date on which indemnification is sought under this subsection of the
total outstanding obligations (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been
paid in full, ratably in accordance with their Pro Rata Share immediately prior
to such date of the total outstanding obligations), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances, or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agent or any of its
officers, directors, managers, members, equity owners, employees or agents in
any way relating to or arising out of this Agreement or any of the other Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the other Loan Documents; PROVIDED,
39
HOWEVER, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct. The obligations of Lenders under this ARTICLE
II-A shall survive the payment in full of the Obligations and the termination of
this Agreement.
(f) CAPITALSOURCE INDIVIDUALLY. With respect to the Loans made by
it, and the Notes issued to it, CapitalSource shall have and may exercise the
same rights and powers hereunder and under the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and the other Loan Documents as any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include CapitalSource in its individual capacity as a
Lender or one of the Requisite Lenders. CapitalSource may lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
or any subsidiary of Borrower as if it were not acting as Agent pursuant hereto.
(g) SUCCESSOR AGENT.
(i) RESIGNATION. Agent may resign from the performance of all
its functions and duties hereunder at any time by giving at least thirty (30)
days' prior written notice to Borrower and Lenders. Such resignation shall take
effect upon the acceptance by a successor Agent of appointment pursuant to
clause (ii) below or as otherwise provided below.
(ii) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation pursuant to CLAUSE (G)(I) above, Requisite Lenders shall appoint a
successor Agent. If a successor Agent shall not have been so appointed within
said thirty (30) day period, the retiring Agent, upon notice to Borrower, may,
on behalf of Lenders, then appoint a successor Agent who shall serve as Agent
until such time, as Requisite Lenders, appoint a successor Agent as provided
above. If no successor Agent has been appointed pursuant to the foregoing within
said thirty (30) day period, the resignation shall become effective and
Requisite Lenders shall thereafter perform all the duties of Agent hereunder,
until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(iii) SUCCESSOR AGENT. Upon the acceptance of any appointment
as Agent under the Loan Documents by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and, upon the earlier of such
acceptance or the effective date of the retiring Agent's resignation, the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents, except that any indemnity rights or other rights in favor of
such retiring Agent shall continue. After any retiring Agent's resignation as
Agent under the Loan Documents, the provisions of this ARTICLE 11-A shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under the Loan Documents.
(h) COLLATERAL MATTERS.
(i) COLLATERAL. Each Lender agrees that any action taken by
the Agent or the Requisite Lenders (or, where required by the express terms of
this Agreement, a greater
40
proportion of Lenders) in accordance with the provisions of this Agreement or of
the other Loan Documents relating to the Collateral, and the exercise by the
Agent or the Requisite Lenders (or, where so required, such greater proportion)
of the powers set forth herein or therein, together with such other powers as
are reasonably incidental thereto, shall be authorized and binding upon all of
Lenders and the Agent. Without limiting the generality of the foregoing, the
Agent shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection herewith and with the Loan Documents in
connection with the Collateral; (ii) execute and deliver each Loan Document
relating to the Collateral and accept delivery of each such agreement delivered
by Borrower or any of its Subsidiaries; (iii) act as collateral agent for
Lenders for purposes of the perfection of all security interests and Liens
created by such agreements and all other purposes stated therein; (iv) manage,
supervise and otherwise deal with the Collateral; (v) take such action as is
necessary or desirable to maintain the perfection and priority of the security
interests and Liens created or purported to be created by the Loan Documents
relating to the Collateral, and (vi) except as may be otherwise specifically
restricted by the terms hereof or of any other Loan Document, exercise all
remedies given to such Agent and Lenders with respect to the Collateral under
the Loan Documents relating thereto, applicable law or otherwise.
(ii) RELEASE OF COLLATERAL. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent for the benefit of Lenders upon any property covered
by this Agreement or the Loan Documents (A) upon termination of this Agreement
and payment and satisfaction in full of all Obligations; (B) constituting
property being sold or disposed of if Borrower certifies to Agent that the sale
or disposition is made in compliance with the provisions of this Agreement (and
Agent may rely in good faith conclusively on any such certificate, without
further inquiry); or (C) constituting property leased to Borrower under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
Borrower to be, renewed or extended.
(iii) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in SECTION
11-A.1(h)(i) AND (ii)), each Lender agrees to confirm in writing, upon request
by Borrower, the authority to release any property covered by this Agreement or
the Loan Documents conferred upon Agent under SECTION 11-A.1(h)(ii). So long as
no Event of Default is then continuing, upon receipt by Agent of confirmation
from the requisite percentage of Lenders, of its authority to release any
particular item or types of property covered by this Agreement or the Loan
Documents, and upon at least five (5) Business Days prior written request by
Borrower, Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to evidence the release of the Liens
granted to Agent for the benefit of Lenders herein or pursuant hereto upon such
Collateral; PROVIDED, HOWEVER, that (A) Agent shall not be required to execute
any such document on terms which, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (B) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of Borrower or any subsidiary of Borrower, in respect of), all
interests retained by Borrower or any subsidiary of Borrower, including, without
limitation, the proceeds of any sale,
41
all of which shall continue to constitute part of the property covered by this
Agreement or the Loan Documents.
(iv) ABSENCE OF DUTY. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents exists or is owned by Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent on behalf of Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this SECTION 11-A.1(H) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by this Agreement
or the Loan Documents or any act, omission, or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by this Agreement or the Loan Documents as one of
Lenders and that Agent shall have no duty or liability whatsoever to any of the
other Lenders; PROVIDED, that Agent shall exercise the same care which it would
in dealing with loans for its own account. Notwithstanding the foregoing, Agent
shall be liable with respect to its own gross negligence or willful misconduct.
(i) AGENCY FOR PERFECTION. Each Lender hereby appoints Agent as
agent for the purpose of perfecting Lenders' security interest in Collateral
which, in accordance with ARTICLE 9 of the UCC in any applicable jurisdiction,
can be perfected only by possession. Should any Lender (other than Agent) obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor, shall deliver such Collateral to Agent
or in accordance with Agent's instructions.
(j) EXERCISE OF REMEDIES. Except as set forth in SECTION 11-A.3,
each Lender agrees that it will not have any right individually to enforce or
seek to enforce this Agreement or any Loan Document or to realize upon any
collateral security for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by Agent.
11-A.2 CONSENTS
(a) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent so long as such request contained a notice stating that such
failure to respond within five (5) business days would be deemed to be a consent
by such Lender.
(b) In the event Agent requests the consent of a Lender in a
situation where such Lender's consent would be required and such consent is
denied, then Agent may, at its option, require such Lender to assign its
interest in the Loans to Agent for a price equal to the then outstanding
principal amount thereof PLUS accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrower. In
the event that Agent elects to require any Lender to assign its interest to
Agent pursuant to this SECTION 11-A.2, Agent will so notify such Lender in
writing within forty-five (45) days following such Lender's
42
denial, and such Lender will assign its interest to Agent no later than five (5)
days following receipt of such notice.
11-A.3 SET OFF AND SHARING OF PAYMENTS
In addition to any rights and remedies now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by Borrower at any time or from time to time, to the fullest
extent permitted by law, with reasonably prompt subsequent notice to Borrower or
to any other Person (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (a) balances
(general or special, time or demand, provisional or final) held by such Lender
or such holder at any of its offices for the account of Borrower or any of its
Subsidiaries (regardless of whether such balances are then due to Borrower or
its Subsidiaries), and (b) other property at any time held or owing by such
Lender or such holder to or for the credit or for the account of Borrower or any
of its Subsidiaries, against and on account of any of the Obligations which are
not paid when due; except that no Lender or any such holder shall exercise any
such right without the prior written notice to Agent; PROVIDED, HOWEVER, that
the failure to give notice to Borrower or to any other Person shall not affect
the validity of such set-off and application. Any Lender which has exercised its
right to set off or otherwise has received any payment on account of the
Obligations shall, to the extent the amount of any such set off or payment
exceeds its Pro Rata Share of payments obtained by all of the Lenders on account
of such Obligations, purchase for cash (and the other Lenders or holders of Term
Loans shall sell) participations in each such other Lender's or holder's Pro
Rata Share of Obligations as would be necessary to cause such Lender to share
such excess with each other Lenders or holders in accordance with their
respective Pro Rata Shares; PROVIDED, HOWEVER, that if all or any portion of
such excess payment or benefits is thereafter recovered from such purchasing
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery. Any Lender which has exercised its
right to set off or otherwise has received any payment on account of the
Obligations shall, to the extent the amount of any such set off or payment
exceeds its Pro Rata Share of payments obtained by all the Lenders on account of
such Obligations shall, to the extent the amount of any such set off or payment
exceeds it Pro Rata Share of payments obtained by all the Lenders on account of
such Obligations, purchase for cash (and the other Lenders or holders of
Revolving Loans shall sell) participations in each such other Lender's or
holder's Pro Rata Share of the Obligations as would be necessary to cause such
Lender to share such excess with each other Lenders or holders in accordance
with their respective Pro Rata Share; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
purchasing Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery. Borrower agrees, to the
fullest extent permitted by law, that (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such excess to other Lenders and
holders, and (b) any Lender or holder so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
Loans and other Obligations in the amount of such participation.
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11-A.4 DISBURSEMENT OF FUNDS
Agent may, on behalf of Lenders, disburse funds to Borrower for
Advances requested. Each Lender shall reimburse Agent on demand for its Pro Rata
Share of all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Advance before Agent
disburses same to Borrower. If Agent elects to require that funds be made
available prior to disbursement to Borrower, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata Share of
such requested Advance no later than one (1) Business Day prior to the funding
date applicable thereto, and each such Lender shall pay Agent such Lender's Pro
Rata Share of such requested Loan, in same day funds, by wire transfer to
Agent's account not later than 3:00 p.m. (Eastern Time). If any Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower, and Borrower shall immediately repay such amount to
Agent. Any repayment required pursuant to this SECTION 11-A.4 shall be without
premium or penalty. Nothing in this SECTION 11-A.4 or elsewhere in this
Agreement or the other Loan Documents, including without limitation the
provisions of SECTION 11-A.5, shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its commitments hereunder or to prejudice any rights that Agent or Borrower may
have against any Lender as a result of any default by such Lender hereunder.
11-A.5 SETTLEMENTS; PAYMENTS AND INFORMATION
(a) ADVANCES AND PAYMENTS; TERM LOAN PAYMENTS; INTEREST AND FEE
PAYMENTS.
(i) The amount outstanding pursuant to Advances may fluctuate
from day to day through Agent's disbursement of funds to, and receipt of funds
from, Borrower. In order to minimize the frequency of transfers of funds between
Agent and each Lender notwithstanding terms to the contrary set forth in SECTION
11-A.4, Advances and repayments may be settled according to the procedures
described in SECTIONS 11-A.5(A)(II) and 11-A.5(A)(III) of this Agreement.
Payments of principal, interest and fees in respect of the Loans will be
settled, in accordance with each Lender's Pro Rata Share on the first Business
Day after such payments are received. Notwithstanding these procedures, each
Lender's obligation to fund its Pro Rata Share of any advances made by Agent to
Borrower will commence on the date such advances are made by Agent. Such
payments will be made by such Lender without set-off, counterclaim or reduction
of any kind.
(ii) Once each week, or more frequently (including daily), if
Agent so elects (each such day being a "SETTLEMENT DATE"), Agent will advise
each Lender by 1 p.m. (Eastern Time) by telephone, telex, or telecopy of the
amount of each such Lender's Pro Rata Share of the outstanding Advances. In the
event payments are necessary to adjust the amount of such Lender's share of the
Advances to such Lender's Pro Rata Share of the Advances, the party from which
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 3:00 p.m. (Eastern Time) on the Business Day
following the Settlement Date.
44
(iii) On the first Business Day of each month ("INTEREST
SETTLEMENT DATE"), Agent will advise each Lender by telephone, telefax or
telecopy of the amount of interest and fees charged to and collected from
Borrower for the proceeding month in respect of the Advances. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on SCHEDULE 1 of this Agreement as amended by such
Lender from time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Lender Addition Agreement) not later than
3 p.m. (Eastern Time) on the next Business Day following the Interest Settlement
Date such Lender's share of such interest and fees.
(b) AVAILABILITY OF LENDERS' PRO RATA SHARE.
(i) Unless Agent has been notified by a Lender prior to any
proposed funding date of such Lender's intention not to fund its Pro Rata Share
of the Advance amount requested by Borrower, Agent may assume that such Lender
will make such amount available to Agent on the proposed funding date or the
Business Day following the next Settlement Date, as applicable. If such amount
is not, in fact, made available to Agent by such Lender when due, Agent will be
entitled to recover such amount on demand from such Lender without set-off,
counterclaim, or deduction of any kind.
(ii) Nothing contained in this SECTION 11-A.5(B) will be
deemed to relieve a Lender of its obligation to fulfill its commitments or to
prejudice any rights Agent or Borrower may have against such Lender as a result
of any default by such Lender under this Agreement.
(c) RETURN OF PAYMENTS.
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to any other
person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
11-A.6 DISSEMINATION OF INFORMATION
The Agent will distribute promptly to each Lender copies of all
notices, schedules, reports, projections, financial statements, agreements and
other material and other information, including, but not limited to, financial
and reporting information received from
45
Borrower or its Subsidiaries or generated by a third party (and excluding only
internal information generated by CapitalSource for its own use as a Lender or
as Agent), as provided for in this Agreement and the other Loan Documents as
received by the Agent. The Agent shall promptly give notice to Lenders of the
receipt or sending of any notice, schedule, report, projection, financial
statement or other document or information pursuant to this Agreement or any of
the other Loan Documents and shall promptly forward a copy thereof to each
Lender. Agent shall request information from Borrower or its Subsidiaries as
Lenders may request from time to time. Agent shall not be liable to Lenders for
any failure to comply with its obligations under this SECTION 11-A.6, except to
the extent that such failure is attributable to Agent's gross negligence or
willful misconduct.
XII. MISCELLANEOUS
12.1 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of Maryland without giving effect to its
choice of law provisions. Any judicial proceeding against Borrower with respect
to the Obligations, any Loan Document or any related agreement may be brought in
any federal or state court of competent jurisdiction located in the State of
Maryland. By execution and delivery of each Loan Document to which it is a
party, Borrower (i) accepts the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waives personal service of process, (iii) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to SECTION 12.5 hereof, and (iv) waives any objection to jurisdiction and venue
of any action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience. Nothing shall affect the right of
Agent or any Lender to serve process in any manner permitted by law or shall
limit the right of Agent or any Lender to bring proceedings against Borrower in
the courts of any other jurisdiction having jurisdiction. Any judicial
proceedings against Agent or any Lender involving, directly or indirectly, the
Obligations, any Loan Document or any related agreement shall be brought only in
a federal or state court located in the State of Maryland. All parties
acknowledge that they participated in the negotiation and drafting of this
Agreement and that, accordingly, no party shall move or petition a court
construing this Agreement to construe it more stringently against one party than
against any other.
12.2 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS
(a) Each Lender may at any time assign all or a portion of its
rights and delegate all or a portion of its obligations under this Agreement and
the other Loan Documents (including all its rights and obligations with respect
to the Loans) to one or more Persons (a "TRANSFEREE"); PROVIDED, that such
Transferee and such assigning Lender shall execute and deliver to Agent for
acceptance and recording in the Register, a Lender Addition Agreement,
substantially in the form of EXHIBIT C; PROVIDED FURTHER, that any such
assignment shall be in a Commitment amount of at least $1,000,000 (or such
lesser amount if such amount is a complete assignment of all of such Lender's
Commitment). Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Lender Addition
46
Agreement, (i) the Transferee thereunder shall be a party hereto and, to the
extent provided in such Lender Addition Agreement, have the same rights,
benefits and obligations as it would if it were a Lender hereunder, (ii) the
assigning Lender shall be relieved of its obligations hereunder with respect to
its Commitment or assigned portion thereof, as the case may be, to the extent
that such obligations shall have been expressly assumed by the Transferee
pursuant to such Lender Addition Agreement (and, in the case of a Lender
Addition Agreement covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto but shall nevertheless continue to be entitled
to the benefits of SECTION 12.7). Borrower hereby acknowledges and agrees that
any assignment will give rise to a direct obligation of Borrower to the
Transferee and that the Transferee shall be considered to be a "Lender"
hereunder. Borrower may not sell, assign or transfer any interest in this
Agreement, any of the other Loan Documents, or any of the Obligations, or any
portion thereof, including Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder.
(b) Each Lender may at any time sell participations in all or any
part of its rights and obligations under this Agreement and the other Loan
Documents (including all its rights and obligations with respect to the Loans)
to one or more Persons (a "PARTICIPANT"). In the event of any such sale by a
Lender of a participation to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan (and any Note evidencing such Loan) for
all purposes under this Agreement and the other Loan Documents and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. Any agreement pursuant to which any Lender shall sell
any such participation shall provide that such Lender shall retain the sole
right and responsibility to exercise such Lender's rights and enforce each of
the Borrower's obligations hereunder, including the right to consent to any
amendment, supplement, modification or waiver of any provision of this Agreement
or any of the other Loan Documents.
(c) The Agent, on behalf of the Borrower, shall maintain at its
address referred to in SECTION 12.5 a copy of each Lender Addition Agreement
delivered to it and a register (the "REGISTER") for the recordation of the names
and addresses of the Lenders and the Commitment of, and the principal amount of
the Loans owing to, and the Notes evidencing such Loans owned by, each Lender
from time to time. Notwithstanding anything in this Agreement to the contrary,
each of the Borrower, the Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan, the Notes and the
Commitment recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Notwithstanding anything in this Agreement to the contrary, no
assignment under SUBSECTION 12.2(A) of any rights or obligations under or in
respect of the Loans or the Notes evidencing such Loans shall be effective
unless and until the Agent shall have recorded the assignment pursuant to
SUBSECTION 12.2(C). Upon its receipt of a Lender Addition Agreement executed by
an assigning Lender and an Transferee, the Agent shall (i) promptly accept such
Lender Addition Agreement and (ii) on the effective date determined pursuant
47
thereto record the information contained therein in the Register and give prompt
notice of such acceptance and recordation to the Lenders and the Borrower. On or
prior to such effective date, the assigning Lender shall surrender any
outstanding Notes held by it all or a portion of which are being assigned, and
the Borrower, at its own expense, shall, upon the request of the Agent by the
assigning Lender or the Transferee, as applicable, execute and deliver to the
Agent new Notes to reflect the interest held by the assigning Lender and its
Transferee.
(e) Except as otherwise provided in this SECTION 12.2 no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants).
(f) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement, including, without limitation, the Loans owing
to it and the Notes held by it.
(g) Borrower agrees to use commercially reasonable efforts to assist
any Lender in assigning or selling participations in all or any part of any
Loans made by such Lender to another Person identified by such Lender.
(h) Notwithstanding anything in this Agreement to the contrary, (i)
CapitalSource and its affiliates shall not be required to execute and deliver a
Lender Addition Agreement in connection with any transaction involving its
affiliates or lenders, (ii) no lender to or funding source of CapitalSource or
its affiliates shall be considered a Transferee and (iii) there shall be no
limitation or restriction on CapitalSource's ability to assign or otherwise
transfer any Loan Document to any such affiliate or lender; PROVIDED, HOWEVER,
CapitalSource shall continue to be liable as a "Lender" under the Loan Documents
unless such affiliate or lender executes a Lender Addition Agreement and thereby
becomes a "Lender."
12.3 APPLICATION OF PAYMENTS
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Agent or any Lender. Any payments with respect
to the Obligations received shall be credited and applied in such manner and
order as Agent shall decide in its Permitted Discretion.
12.4 INDEMNITY
Borrower jointly and severally shall indemnify Agent and each
Lender, their affiliates and their respective managers, members, officers,
employees, affiliates, agents, representatives, successors, assigns, accountants
and attorneys (collectively, the "INDEMNIFIED
48
PERSONS") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, reasonable fees
and disbursements of counsel and in-house documentation and diligence fees and
legal expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, any Loan Document or any agreement, document or transaction
contemplated thereby, whether or not such Indemnified Person is a party thereto,
except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of such Indemnified Person. If any Indemnified
Person uses in-house counsel for any purpose for which Borrower is responsible
to pay or indemnify, Borrower expressly agrees that its indemnification
obligations include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by such
Indemnified Person in its sole discretion for the work performed. Agent agrees
to give Borrower reasonable notice of any event of which Agent becomes aware for
which indemnification may be required under this SECTION 12.4, and Agent may
elect (but is not obligated) to direct the defense thereof; PROVIDED, that the
selection of counsel shall be subject to Borrower's consent, which consent shall
not be unreasonably withheld or delayed. Any Indemnified Person may, in its
reasonable discretion, take such actions as it deems necessary and appropriate
to investigate, defend or settle any event or take other remedial or corrective
actions with respect thereto as may be necessary for the protection of such
Indemnified Person or the Collateral. Notwithstanding the foregoing, if any
insurer agrees to undertake the defense of an event (an "INSURED EVENT"), Agent
agrees not to exercise its right to select counsel to defend the event if that
would cause Borrower's insurer to deny coverage; PROVIDED, HOWEVER, that Agent
reserves the right to retain counsel to represent any Indemnified Person with
respect to an Insured Event at its sole cost and expense. To the extent that
Agent or any Lender obtains recovery from a third party other than an
Indemnified Person of any of the amounts that Borrower has paid to Agent or any
Lender pursuant to the indemnity set forth in this SECTION 12.4, then Agent
and/or Lender shall promptly pay to Borrower the amount of such recovery.
12.5 NOTICE
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
SECTION 12.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a "RECEIPT"): (i) registered or
certified mail, return receipt requested, on the date on which such received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile or electronic transmission, in each case upon telephone or
further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
12.6 SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
49
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.7 EXPENSES
Borrower shall pay, whether or not the Closing occurs, all costs
and expenses incurred by Agent, Lenders and/or their affiliates, including,
without limitation, documentation and diligence fees and expenses, all
search, audit, appraisal, recording, professional and filing fees and
expenses and all other out-of-pocket charges and expenses (including, without
limitation, UCC and judgment and tax lien searches and UCC filings and fees
for post-Closing UCC and judgment and tax lien searches and wire transfer
fees and audit expenses), and reasonable attorneys' fees and expenses, (i) in
any effort to enforce, protect or collect payment of any Obligation or to
enforce any Loan Document or any related agreement, document or instrument,
(ii) in connection with entering into, negotiating, preparing, reviewing and
executing the Loan Documents and/or any related agreements, documents or
instruments, (iii) arising in any way out of administration of the
Obligations or the taking or refraining from taking by Agent or Lender of any
action requested by Borrower, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Agent's, for the
benefit of itself and Lenders, Liens in any of the Collateral or securities
pledged under the Loan Documents, whether through judicial proceedings or
otherwise, (v) in defending or prosecuting any actions, claims or proceedings
arising out of or relating to Agent's and Lenders' transactions with
Borrower, (vi) in seeking, obtaining or receiving any advice with respect to
its rights and obligations under any Loan Document and any related agreement,
document or instrument, (vii) arising out of or relating to any Default or
Event of Default, (viii) in connection with all actions, visits, audits and
inspections undertaken by Agent or Lenders or their affiliates pursuant to
the Loan Documents, and/or (ix) in connection with any modification,
restatement, supplement, amendment, waiver or extension of any Loan Document
and/or any related agreement, document or instrument. All of the foregoing
shall be charged to Borrower's account and shall be part of the Obligations.
If Agent, any Lender or any of their affiliates uses in-house counsel for any
purpose under any Loan Document for which Borrower is responsible to pay or
indemnify, Borrower expressly agrees that its Obligations include reasonable
charges for such work commensurate with the fees that would otherwise be
charged by outside legal counsel selected by Agent, such Lender or such
affiliate in its sole discretion for the work performed. Without limiting
the foregoing, Borrower shall pay all taxes (other than taxes based upon or
measured by each Lender's income or revenues or any personal property tax),
if any, in connection with the issuance of any Note and the filing and/or
recording of any documents and/or financing statements.
12.8 ENTIRE AGREEMENT
50
This Agreement and the other Loan Documents to which Borrower is a
party constitute the entire agreement between Borrower, Agent and Lenders with
respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof or
thereof. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing
signed by Borrower, Agent and such Lenders. No provision of this Agreement may
be changed, modified, amended, restated, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing or in any other manner
other than by an agreement in writing signed by Borrower, Agent and Lenders (or
Requisite Lenders, as appropriate). Each party hereto acknowledges that it has
been advised by counsel in connection with the negotiation and execution of this
Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
12.9 AGENT APPROVALS
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Agent or Lenders with respect to any matter
that is subject of any Loan Document may be granted or withheld by Agent or
Lenders, as applicable, in their sole and absolute discretion.
12.10 CONFIDENTIALITY AND PUBLICITY
Borrower agrees, and agrees to cause each of its affiliates, not to
transmit or disclose any provision of any Loan Document to any Person other than
to Borrower's advisors and officers on a need-to-know basis or as required by
applicable law, without Agent's prior written consent. With respect to the
information and other material furnished under or in connection with this
Agreement (whether furnished before, on or after the date hereof), which
constitutes or contains non-public business, financial or other information
("NON-PUBLIC INFORMATION") of Agent and/or Lenders, Borrower covenants for
itself and its directors and officers that it will use due care to prevent its
officers, directors, employees, members, managers, stockholders, controlling
persons, affiliates, agents, advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors) from (a) disclosing
any Non-Public Information to Persons other than to its and their officers,
directors, employees, members, managers, stockholders, controlling persons,
affiliates, agents, advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors), or (b) using
Non-Public Information in any manner that would constitute a violation of
federal or state securities laws; PROVIDED, HOWEVER, that Borrower may disclose
or deliver any Non-Public Information should Borrower be advised by its counsel
that such disclosure or delivery is required by law, regulation or judicial or
administrative order. Agent and each Lender reserve the right to review and
approve all materials that Borrower or any of its affiliates prepares that
contain Agent's or such Lender's name or describe or refer to any Loan Document,
any of the terms thereof or any of the transactions contemplated thereby.
Borrower shall not, and shall not permit any of its affiliates to, use either
Agent's or any Lender's name (or the name of any of Agent's or any Lender's
affiliates) in connection with any of its business operations. Nothing contained
in any Loan Document is intended to permit or authorize Borrower or any of its
affiliates to contract on behalf of Agent or any Lender. With respect to
Non-Public Information of Borrower, Agent and Lenders covenant for themselves
and their directors and officers that they will use due care to
51
prevent their officers, directors, employees, members, managers, stockholders,
controlling persons, affiliates, agents, lenders, advisors (including, without
limitation, attorneys, accountants, consultants, bankers and financial
advisors), and any potential Lender or participant of the Loans from (x)
disclosing any Non-Public Information to Persons other than to its and their
officers, directors, employees, members, managers, stockholders, controlling
persons, affiliates, agents, advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors), or (y) using
Non-Public Information in any manner that would constitute a violation of
federal or state securities laws; PROVIDED, however, that Agent and Lenders may
disclose or deliver any Non-Public Information should the Agent and Lenders be
advised by its counsel that such disclosure or delivery is required by law,
regulation or judicial or administrative order. For purposes of this
subparagraph, "due care" means at least the same level of care that Agent and
Lenders would use to protect the confidentiality of their own sensitive or
proprietary information, and this obligation shall survive termination of this
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
52
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Credit and Term Loan Agreement as of the date first written above.
BORROWER:
GARDENBURGER, INC.
By: /s/ Xxxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxxxx
----------------------------------
Title: Vice President of Finance
---------------------------------
0000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxxxx@xxxxxxxxxxxx.xxx
53
AGENT AND LENDER:
CAPITALSOURCE FINANCE LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------
Title: Senior Vice President
------------------------------
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, XX 00000
Attention: Corporate Finance Group,
Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxxx@xxxxxxxxxxxxx.xxx
54
EXHIBITS
A Borrowing Certificate
B Compliance Certificate
C Lender Addition Agreement
SCHEDULES
1 Lenders/Commitments
2.4 Borrower's Accounts
5.2 Consents, Approvals and Authorizations Required
5.3 Subsidiaries; Authorized and Issued Capital Stock;
Capitalization; Directors, Members, Managers and/or Partners;
Joint Venture and Partnership Arrangements
5.4 Real Properties
5.8 Taxes Contested in Good Faith
5.11 Intellectual Property
5.15 Indebtedness; Material Obligations
5.16 Other Agreements
5.17 Insurance Policies
5.18A Corporate Names
5.18B Place of Business/Chief Executive Officer
6.8 Post Closing Obligations
7.2 Permitted Indebtedness
7.3 Permitted Liens
A-1 Approved Adjustments for Adjusted EBITDA Calculation
All Exhibits and Schedules to the Revolving Credit and Term Loan Agreement have
been omitted from this filing. Gardenburger, Inc. hereby agrees to furnish
supplementally a copy of any omitted Exhibit or Schedule to the Securities and
Exchange Commission upon request.
ANNEX I
FINANCIAL COVENANTS
1) LEVERAGE RATIO
The Leverage Ratio shall not exceed (i) 2.75:1.00, upon the making
of the Initial Advance and the Term Loan and for each Quarterly Test Period
through the fiscal quarter ending June 30, 2002, and (ii) 2.50:1.00, for each
Quarterly Test Period after June 30, 2002.
2) MINIMUM ADJUSTED EBITDA
Adjusted EBITDA for each Quarterly Test Period, shall not be less
than (i) $5,000,000 for each Quarterly Test Period ending on or before June 30,
2002, and (ii) $6,000,000 for each Quarterly Test Period after June 30, 2002.
3) FIXED CHARGE COVERAGE RATIO
The Fixed Charge Coverage Ratio for each Quarterly Test Period shall
not be less than 1.25:1.00.
4) CAPITAL EXPENDITURES
For any Quarterly Test Period, Borrower shall not permit its Capital
Expenditures in the aggregate to exceed (i) $1,750,000 for each Quarterly Test
Period ending on or before September 30, 2002, and $1,100,000 for each Quarterly
Test Period after September 30, 2002.
For purposes of the covenants set forth in this Annex I, the terms listed
below shall have the following meanings:
"ADJUSTED EBITDA" shall mean EBITDA plus the amounts listed on the
attached Schedule A-1 for the applicable Quarterly Test Period.
"CAPITAL EXPENDITURES" shall mean, for any Quarterly Test Period,
the sum (without duplication) of all expenditures (whether paid in cash or
accrued as liabilities) during the Quarterly Test Period that are or should be
treated as capital expenditures under GAAP.
"EBITDA" shall mean, for any Quarterly Test Period, the sum, without
duplication, of the following for Borrower, on a consolidated and consolidating
basis: Net Income determined in accordance with GAAP, PLUS, (a) Interest
Expense, (b) taxes on income, whether paid, payable or accrued, (c) depreciation
expense, (d) amortization expense, (e) non-cash dividends on preferred stock,
and (f) all other non-cash, non-recurring charges and expenses, excluding
accruals for cash expenses made in the ordinary course of business, all of the
foregoing determined in accordance with GAAP, LESS (f) all non-cash income.
1
"FIXED CHARGE COVERAGE RATIO" shall mean, at any date of
determination, for Borrower individually and collectively on a consolidated and
consolidating basis, the ratio of (a) Adjusted EBITDA for the Quarterly Test
Period most recently ended before such date, to (b) Fixed Charges for the
Quarterly Test Period most recently ended before such date, in each case taken
as one accounting period.
"FIXED CHARGES" shall mean, on any calculation date, for any
Quarterly Test Period, the sum of the following for Borrower, individually and
collectively, on a consolidated and consolidating basis: (a) Total Debt Service
for such period, (b) Capital Expenditures during such period, (c) income taxes
paid in cash or accrued during such period, and (d) dividends paid or declared
during such period.
"INTEREST EXPENSE" shall mean, for any Quarterly Test Period, total
interest expense (including attributable to Capital Leases in accordance with
GAAP) of Borrower individually and collectively, on a consolidated and
consolidating basis with respect to all outstanding Indebtedness including
capitalized interest but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements.
"INTEREST RATE AGREEMENT" shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.
"LEVERAGE RATIO" shall mean, at any date of determination, for
Borrower, the ratio of (i) the aggregate unpaid principal amount of all Loans on
such date, PLUS the aggregate liability of Borrower pursuant to any letter of
credit or surety bond to (ii) Adjusted EBITDA.
"NET INCOME" shall mean, for any Quarterly Test Period, the net
income (or loss) of Borrower individually and collectively on a consolidated and
consolidating basis for such period taken as a single accounting period
determined in conformity with GAAP; PROVIDED, that there shall be excluded (i)
the income (or loss) of any Person in which any other Person (other than
Borrower) has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to a Borrower by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Borrower or is merged into or consolidated with a Borrower or that
Person's assets are acquired by a Borrower, (iii) the income of any Subsidiary
of Borrower to the extent that the declaration or payment of dividends or
similar distributions of that income by that Subsidiary is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to former or
current employees, including officers, of a Borrower, or the exercise of such
options or rights, in each case to the extent the obligation (if any) associated
therewith is not expected to be settled by the payment of cash by a Borrower or
any affiliate thereof, and (v) compensation expense resulting from the
repurchase of capital stock, options and rights described in clause (iv) of this
definition of Net Income.
"QUARTERLY TEST PERIOD" shall mean the twelve month period ending on
the last day of each March, June, September and December of each year.
2
"TOTAL DEBT SERVICE" shall mean for any period, for Borrower
individually and collectively on a consolidated and consolidating basis, the sum
of (i) scheduled or other required payments of principal on Indebtedness, (ii)
any other fees due or payable in connection with any Indebtedness, and (iii)
Interest Expense, in each case for such period.
3
APPENDIX A
DEFINITIONS
"ACCOUNT DEBTOR" shall mean any Person who is obligated under an
Account.
"ACCOUNTS" shall mean all "accounts" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
contract rights, instruments, general intangibles or chattel paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"ADVANCES" shall mean a borrowing under the Revolving Facility. Any
amounts paid by Agent or any Lender on behalf of Borrower or any Guarantor under
any Loan Document shall be an Advance for purposes of the Agreement.
"APPLICABLE ECF PERCENTAGE" shall mean the applicable percentage
indicated below based on the applicable fiscal year end and the amount of Excess
Cash Flow for such period:
FISCAL YEAR END EXCESS CASH FLOW APPLICABLE ECF PERCENTAGE
September 30, 2002 $0 < $2,000,000 12.5%
-
> $2,000,000 25.0% of Excess Cash Flow
over $2,000,000 and 12.5%
of Excess Cash Flow up to
$2,000,000
September 30, 2003 $0 < $6,000,000 12.5%
-
> $6,000,000 25.0% of Excess Cash Flow
over $6,000,000 and 12.5%
of Excess Cash Flow up to
$6,000,000
September 30, 2004 $0 < $8,000,000 12.5%
and each year -
thereafter > $8,000,000 25.0% of Excess Cash Flow
over $8,000,000 and 12.5%
of Excess Cash Flow up to
$8,000,000
"APPLICABLE RATE" shall mean the interest rates applicable from time
to time to Loans under the Agreement.
"BORROWING BASE" shall mean, as of any date of determination, the
net collectible value of (a) Eligible Receivables and (b) Eligible Inventory
Costs, as determined with reference to the most recent Borrowing Certificate and
otherwise in accordance with the Agreement; PROVIDED, HOWEVER, that if as of
such date the most recent Borrowing Certificate is of a date more
1
than four (4) Business Days before or after such date, the Borrowing Base shall
be determined by Agent in its Permitted Discretion.
"BORROWING CERTIFICATE" shall mean a Borrowing Certificate
substantially in the form of EXHIBIT A.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which the Federal Reserve or Agent is closed.
"CAPITAL LEASE" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"CAPITALIZED LEASE OBLIGATIONS" shall mean all obligations of any
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
"CHANGE OF CONTROL" shall mean, with respect to Borrower or
Guarantor, the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions in which any Person or group
of affiliated Persons or Persons acting together, own more than 45% of the
combined voting power of Borrower's then outstanding securities, calculated on a
fully diluted basis, (ii) a direct or indirect sale, transfer or other
conveyance or disposition, in any single transaction or series of transactions,
of all or substantially all of its assets, (iii) any "change in/of control" or
"sale" or "disposition" or similar event as defined in any document governing
indebtedness of more than $50,000 of such Person which gives the holder of such
indebtedness the right to accelerate or otherwise require payment of such
indebtedness prior to the maturity date thereof, (iv) Rosewood Capital III, L.P.
and Farallon Capital Partners, L.P. or their affiliates, acting together, cease
to have the voting power to elect 2 directors to the Board of Directors of
Borrower, (v) Xxxxx X. Xxxxxxx ceases to be employed as Chief Executive Officer
of Borrower or otherwise becomes disabled and is not replaced within thirty (30)
days by an interim Chief Executive Officer, and within one hundred twenty (120)
days by a permanent Chief Executive Officer, each to Agent's satisfaction, or
any such replacement Chief Executive Officer ceases such employment or otherwise
becomes disabled unless replaced in the same time periods and to Agent's
satisfaction, or (vi) a Company Sale.
"CHARTER AND GOOD STANDING DOCUMENTS" shall mean, for Borrower (i) a
copy of the certificate of incorporation or formation (or other charter
document) certified as of a date not more than three (3) Business Days before
the Closing Date by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of Borrower, (ii) a copy of the bylaws or similar
organizational documents of certified as of a date not more than three (3)
Business Days before the Closing Date by the corporate secretary or assistant
secretary of Borrower, (iii) an original certificate of good standing as of a
date acceptable to Agent issued by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of Borrower and of every other
jurisdiction in which Borrower has an office or conducts business or is
otherwise required to be in good standing, and (iv) copies of the resolutions of
the Board of Directors or managers (or other applicable governing body) and, if
required, stockholders, members or other equity owners authorizing the
execution, delivery and performance of the Loan
2
Documents to which Borrower is a party, certified by an authorized officer of
such Person as of the Closing Date.
"CLOSING" shall mean the satisfaction, or written waiver by Agent
and Lenders, of all of the conditions precedent set forth in the Agreement
required to be satisfied prior to the consummation of the transactions
contemplated hereby.
"CLOSING DATE" shall mean the date the Closing occurs.
"COLLATERAL" shall mean, collectively and each individually, all
collateral and/or security granted to Agent, for the benefit of itself and
Lenders, by Borrower and/or Guarantors pursuant to the Loan Documents.
"COMMITMENT" or "COMMITMENTS" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Advances and the Term Loan, as set
forth on SCHEDULE 1 or in the most recent Lender Addition Agreement executed by
such Lender, and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Advances and the Term Loan.
"COMPANY SALE" shall mean a sale of substantially all of the assets
or common stock of Borrower through a merger or otherwise to a Person which is
not an equity holder, director or member of the management of Borrower as of the
Closing Date.
"CONTINGENT OBLIGATIONS" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guaranty any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, PROVIDED, HOWEVER, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.
"DEBTOR RELIEF LAW" shall mean, collectively, the Bankruptcy Code of
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"DEFAULT" shall mean any event, fact, circumstance or condition
that, with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"DEPOSIT ACCOUNT" shall mean, collectively, any Lockbox Account,
Blocked Account and all bank or other depository accounts of Borrower.
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"DISTRIBUTION" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"ELIGIBLE INVENTORY COSTS" shall mean the value of Borrower's
saleable Inventory, after taking into account all discounts, which Inventory is
maintained in the ordinary course of the Borrower's business which Agent, in its
Permitted Discretion, deems Eligible Inventory Costs unless:
(a) such Inventory is not subject to a valid perfected first
priority security interest in favor of Agent, for the benefit of itself and
Lenders;
(b) any consent, license, approval or authorization required to be
obtained by Borrower in connection with the granting of the security interest
under the Security Documents or in connection with manufacture or sale of such
Inventory has not been or was not duly obtained and is not in full force and
effect;
(c) any covenant, representation or warranty contained in this
Agreement or in any other Loan Document with respect to such Inventory has been
breached and remains uncured;
(d) such Inventory is not owned by Borrower;
(e) such Inventory does not comply, or was not manufactured in
compliance, in all material respects with all applicable requirements of all
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like, now or hereafter in effect, of any Governmental Authority,
including any judicial or administrative interpretations thereof, and any
judicial or administrative orders, consents, decrees or judgments;
(f) such Inventory does not, or at the time of its purchase from the
vendor did not, constitute "inventory" under Article 9 of the UCC as then in
effect in the jurisdiction whose law governs perfection of the security
interest;
(g) the Person for whose account such Inventory is being or was
produced has commenced a voluntary case under any federal bankruptcy or state or
federal insolvency laws or has made an assignment for the benefit of creditors,
or if a decree or order for relief has been entered by a court having
jurisdiction in respect of such Person in an involuntary case under any federal
bankruptcy or state or federal insolvency laws, or if any other petition or
application for relief under any federal bankruptcy or state or federal
insolvency laws has been filed against such Person, or if such Person has
failed, suspended business, ceased to be solvent, called a meeting of its
creditors, or has consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs;
(h) the transfer of such Inventory to Borrower by vendor, supplier
or other Person did not constitute a valid sale and transfer to Borrower of all
right, title and interest of such Person in the Inventory enforceable against
all creditors of and purchasers from the vendor;
(i) (A) Borrower is not the sole owner of all right, title and
interest in and to such Inventory, (B) Borrower does not have a valid ownership
interest therein free and clear of
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all Liens other than Liens granted under the Loan Documents, or (C) any offsets,
defenses or counterclaims have been asserted or threatened in writing against
such Inventory;
(j) such Inventory is not in good working order or is damaged;
(k) such Inventory is not located at a location which is covered by
a Landlord Waiver and Consent;
(l) such Inventory consists only of packing materials, supplies,
parts or other components or returned or discontinued product;
(m) such Inventory is subject to a bona fide dispute or is or has
been classified as counterfeit or fraudulent;
(n) such Inventory has been sold, assigned, or otherwise encumbered
by Borrower or Guarantor except pursuant to the Loan Documents;
(o) such finished goods Inventory is within six (6) months of the
expiration date therefor;
(p) such Inventory is held as samples or for sale to employees;
(q) such Inventory is in-transit, PROVIDED, HOWEVER to the extent it
otherwise satisfies the eligibility criteria, up to $400,000 of in-transit
Inventory between warehouses subject to a Landlord Waiver and Consent may be
considered Eligible Inventory Costs;
(r) such Inventory constitutes custom Inventory, work-in-process,
slow-moving Inventory, private label Inventory, or Inventory subject to a
quality assurance hold; PROVIDED, HOWEVER to the extent it otherwise satisfies
the eligibility criteria, private label Inventory (i) for Sysco equal to an
amount of up to the last 3 months of sales to Sysco, (ii) for new products for
Sysco, and (iii) for Costco equal to an amount of up to Costco's average three
month purchases of the private label product for the immediately preceding
twelve-month period or Costco's anticipated orders for the coming three months
if there have not been three months of purchases; may be considered Eligible
Inventory Costs;
(s) such Inventory constitutes raw materials to the extent also
listed as finished goods;
(t) such Inventory is perishable; or
(u) such Inventory fails to meet such other specifications and
requirements which may from time to time be established by Agent, or such
Inventory otherwise is not satisfactory to Agent, as determined in the Permitted
Discretion of Agent.
"ELIGIBLE RECEIVABLES" shall mean each Account arising in the
ordinary course of Borrower's business from the sale of goods or rendering of
services which Agent, in its Permitted Discretion, deems an Eligible Receivable
unless:
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(a) it is not subject to a valid perfected first priority security
interest in favor of Agent, for the benefit of itself and Lenders, subject to no
other Lien of equal or higher priority;
(b) it is not evidenced by an invoice, statement or other
documentary evidence satisfactory to Agent; PROVIDED, that Agent in its sole
discretion may from time to time include as Accounts that are not evidenced by
an invoice, statement or other documentary evidence satisfactory to Agent as
Eligible Receivables and determine the advance rate, liquidity factors and
reserves applicable to Advances made on any such Accounts;
(c) it arises out of services rendered or a sale made to, or out of
any other transaction between with, one or more affiliates of Borrower;
(d) it remains unpaid for longer than 90 calendar days after the
original invoice date;
(e) with respect to all Accounts owed by any particular Account
Debtor and/or its affiliates, if more than 25% of the aggregate balance of all
such Accounts owing from such Account Debtor and/or its affiliates remain unpaid
for longer than 90 calendar days after the original invoice date;
(f) with respect to all Accounts owed by any particular Account
Debtor and/or its affiliates, 25% or more of all such Accounts are not deemed
Eligible Receivables for any reason hereunder (which percentage may, in Agent's
Permitted Discretion, be increased or decreased);
(g) with respect to all Accounts owed by any particular Account
Debtor and/or its affiliates, if such Accounts exceed 10% (such percentage or
any other percentage set forth below or hereafter established for any particular
Account Debtor, a "CONCENTRATION LIMIT") (all of which Concentration Limits may,
in Agent's Permitted Discretion, be increased or decreased) of all Accounts at
any one time; PROVIDED, that only the portion of Accounts which exceed the
Concentration Limit shall be deemed ineligible for purposes of this SUBSECTION
(G); and, FURTHER PROVIDED, that the Concentration Limit for each of the
following Account Debtors shall be as follows: Sysco - 25%, Costco - 15%, US
Foodservice - 15%, DOT Foods - 15%;
(h) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(i) the Account Debtor for such Account has commenced a voluntary
case under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or Borrower, in the ordinary course of business, should have
known of any of the foregoing;
6
(j) it arises from the sale of property or services rendered to one
or more Account Debtors outside the continental United States or Canada or that
have their principal place of business or chief executive offices outside the
continental United States or Canada;
(k) it represents the sale of goods or rendering of services to an
Account Debtor on a xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper or an instrument of any kind or has been reduced to judgment;
(l) the applicable Account Debtor for such Account is any
Governmental Authority, unless rights to payment of such Account have been
assigned to Agent, for the benefit of itself and Lenders, pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727, et seq.
and 41 U.S.C. Section 15, et seq.), or otherwise all with applicable statutes or
regulations respecting the assignment of government Accounts have been complied
with;
(m) it is subject to any offset, credit (including any resource or
other income credit or offset), deduction, defense, discount, chargeback,
freight claim, allowance, adjustment, dispute or counterclaim, or is contingent
in any respect or for any reason;
(n) there is any agreement with an Account Debtor for any deduction
from such Account, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each invoice related thereto,
such that only the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible Receivable;
(o) any return, rejection or repossession of goods or services
related to it has occurred;
(p) it is not payable to Borrower;
(q) Borrower has agreed to accept or has accepted any non-cash
payment for such Account;
(r) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee;
(s) it constitutes a re-billing of an amount previously billed; or
(t) it fails to meet such other specifications and requirements
which may from time to time be established by Agent or is not otherwise
satisfactory to Agent, as determined in Agent's Permitted Discretion.
"ENVIRONMENTAL LAWS" shall mean, collectively and each individually
,the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes,
7
ordinances and codes relating to the protection of the environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances, in each case, as
amended, and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of Governmental Authorities with respect
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"EVENT OF DEFAULT" shall mean the occurrence of any event set
forth in ARTICLE VIII.
"EXCESS AVAILABILITY" shall mean Availability less the outstanding
balance of all Advances.
"EXCESS CASH FLOW" shall mean, for any fiscal year, without
duplication, an amount equal to the sum of (i) consolidated net income or loss
of Borrower for such period, PLUS (ii) an amount equal to the amount of
depreciation expenses, amortization expense (including the amortization of
goodwill), accrued non-cash interest expense and all other non-cash charges
deducted in arriving at such consolidated net income or loss, PLUS (iii) an
amount equal to the aggregate net cash proceeds of the sale, lease, transfer or
other disposition of assets by Borrower during such period to the extent not (a)
reinvested in other assets constituting Collateral upon which Agent has a first
and prior Lien, or (b) required to be applied to mandatory prepayments or
payments on the Loans, PLUS (iv) an amount equal to the net loss on the sale,
lease, transfer or other disposition of assets by Borrower during such period to
the extent deducted in arriving at such consolidated net income or loss, PLUS
(v) the amount of any tax refunds or credits received by Borrower during such
period, LESS (vi) an amount equal to the non-financed Capital Expenditures of
Borrower for such period, LESS (vii) an amount equal to the sum of payments
required by and actually paid pursuant to SECTION 2.8(A) and all voluntary
prepayments on the Term Loan in excess of required payments actually made during
such period to the extent permitted hereunder, LESS (viii) an amount equal to
the net gain on the sale, lease, transfer or other disposition of assets, other
than sales in the ordinary course of business, by Borrower during such period to
the extent included in arriving at such consolidated net income or loss, LESS
(ix) an amount equal to the increase in Borrower's working capital during such
period.
"FAIR VALUATION" shall mean the determination of the value of the
consolidated tangible and intangible assets of a Person on the basis of the
amount which may be realized by a willing seller within a reasonable time
through collection or sale of such assets as a whole at market value on a going
concern basis to an interested buyer who is willing to purchase under ordinary
selling conditions in an arm's length transaction.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government
8
or any court, in each case, whether of the United States or a state, territory
or possession thereof, a foreign sovereign entity or country or jurisdiction or
the District of Columbia.
"GUARANTOR" shall mean, collectively and each individually, all
guarantors of the Obligations or any part thereof.
"GUARANTY" shall mean, collectively and each individually, all
guarantees executed by any Guarantors.
"HAZARDOUS SUBSTANCES" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a)
all items which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute Indebtedness, (b) all
indebtedness secured by any mortgage, pledge, security, Lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean that certain
Intellectual Property Security Agreement executed by Borrower in favor of Agent,
for the benefit of itself and Lenders, as such may be modified, amended or
supplemented from time to time.
"INVENTORY" shall mean all "inventory" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), now owned
or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"LANDLORD WAIVER AND CONSENT" shall mean a waiver/consent in form
and substance satisfactory to Agent from the owner/lessor of any premises not
owned by Borrower at which any of the Collateral is now or hereafter located for
the purpose of providing Agent access to such Collateral, in each case as such
may be modified, amended or supplemented from time to time.
"LEASEHOLD PROPERTY" shall mean Borrower's leasehold interest in
that certain property located at Freeport Center, Xxxx. X-00, Xxxxxxx X, X and
X-0 xxx Xxxx. X-0, Xxxxxxxxxx, Xxxx as more particularly described in the
Mortgage covering such leasehold interest.
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"LENDER ADDITION AGREEMENT" shall mean an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans and other interests under
this Agreement and the other Loan Documents substantially in the form of EXHIBIT
C hereto.
"LENDERS" shall mean the financial institutions, from time to time
named on SCHEDULE 1 under the heading "Lenders", their respective successors and
permitted assigns (but not, except as expressly set forth herein, any
participant that is not otherwise a party to this Agreement).
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"LIFE INSURANCE POLICY" shall mean the life insurance policy
required by SCHEDULE 6.8.
"LOAN" or "LOANS" shall mean, individually and collectively, the
Term Loan and all Advances.
"LOAN DOCUMENTS" shall mean, collectively and each individually, the
Agreement, the Notes, the Security Documents, the Guarantees, the Uniform
Commercial Code Financing Statements, the Landlord Waiver and Consents, the
Borrowing Certificates, and all other agreements, documents, instruments and
certificates heretofore or hereafter executed or delivered to Agent or Lenders
in connection with any of the foregoing or the Loans, as the same may be
amended, modified or supplemented from time to time.
"LOCKBOX ACCOUNTS" shall mean the accounts maintained by Borrower at
the Lockbox Banks into which all collections or payments on their Accounts and
other Collateral are paid.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" shall mean
any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has or could reasonably be expected to
have any material adverse effect upon or change in the validity or
enforceability of any Loan Document, (ii) has been or could reasonably be
expected to be material and adverse to the value of any of the Collateral or to
the business, operations, prospects, properties, assets, liabilities or
condition of Borrower and/or Guarantors, either individually or taken as a
whole, or (iii) has materially impaired or could reasonably be expected to
materially impair the ability of Borrower or Guarantor to perform the
Obligations or to consummate the transactions under the Loan Documents executed
by such Person.
"MORTGAGE" shall mean, the Leasehold Trust Deed executed by Borrower
in favor of Agent, for the benefit of itself and Lenders, by which Borrower
granted and conveyed to Agent, for the benefit of itself and Lenders, as
security for the Obligations, a Lien upon the Leasehold Property.
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"NOTE" shall mean, collectively and each individually, the Revolving
Notes and the Term Notes.
"NOTE PURCHASE AGREEMENT" shall mean that certain Note Purchase
Agreement dated as of March 27, 1998 between Borrower and Dresdner Kleinwort
Xxxxxx Private Equity Partners LP, as amended through and in the form existing
on the Closing Date.
"OBLIGATIONS" shall mean all shall mean all present and future
obligations, Indebtedness and liabilities of Borrower and/or Guarantors to Agent
or Lenders at any time and from time to time of every kind, nature and
description, direct or indirect, secured or unsecured, joint and several,
absolute or contingent, due or to become due, matured or unmatured, now existing
or hereafter arising, contractual or tortious, liquidated or unliquidated, under
any of the Loan Documents or otherwise relating to Notes and/or Loans,
including, without limitation, all applicable fees, charges and expenses and/or
all amounts paid or advanced by Agent or Lenders on behalf of or for the benefit
of Borrower and/or Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.
"PAYMENT OFFICE" shall mean initially the address set forth beneath
the Agent's name on the signature page of the Agreement, and thereafter, such
other office of Agent, if any, which it may designate by notice to Borrower to
be the Payment Office.
"PERMIT" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.
"PERMITTED DISCRETION" shall mean a determination or judgment made
in good faith in the exercise of reasonable (from the perspective of a secured
lender) business judgment.
"PERSON" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
"PREFERRED STOCK DESIGNATION" shall mean the Determination of Terms
of Series C Convertible Preferred Stock and Determination of Terms of Series D
Convertible Preferred Stock of Borrower, each filed on the Closing Date.
"PRIME RATE" shall mean a fluctuating interest rate per annum equal
at all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; PROVIDED, that such rate is not necessarily the
best rate offered to its customers, and, should Agent be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Agent; PROVIDED, that each change in the fluctuating
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate.
"PRO RATA SHARE" shall mean (a) with respect to matters relating to
a particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of that Lender by (ii) all such Commitments of all Lenders;
PROVIDED, HOWEVER, that if any Commitment is terminated pursuant to the terms
hereof, then "Pro Rata Share" means the percentage obtained
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by dividing (x) the aggregate amount of such Lender's outstanding Loans related
to such Commitment by (y) the aggregate amount of all outstanding Loans related
to such Commitment, (b) with respect to matters relating to a particular Term
Loan of a Lender, the percentage obtained by dividing (i) the aggregate amount
of such Lender's outstanding Term Loans by (ii) the aggregate amount of all
outstanding Term Loans, and (c) with respect to all other matters, the
percentage obtained by dividing (i) the aggregate amount of a Lender's Term
Loans outstanding and such Lender's Commitment by (ii) the aggregate amount of
all Lenders' Term Loans outstanding and all Lender's Commitments; in any case as
such percentage may be adjusted by assignments permitted pursuant to SECTION
12.3.
"REQUISITE LENDERS" shall mean Lenders holding or being responsible
for 66-2/3% or more of the sum of (a) all outstanding Loans and (b) all
unutilized Commitments.
"REVOLVING FACILITY TERM" shall mean the period commencing on the
Closing Date and ending on December 15, 2004; PROVIDED, that this period shall
be automatically extended to the earlier of (i) January 10, 2007 and (ii) the
date which is one hundred five (105) days prior to the first scheduled principal
payment (excluding Excess Cash Flow payments permitted under SECTION 7.11) under
the Note Purchase Agreement, if (x) Borrower requests such extension on or
before 90 days prior to the last day of the Revolving Loan Term, (y) the
Preferred Stock Designations are amended or exchanged such that the first
scheduled principal payment or redemption thereunder is at least three hundred
sixty-five (365) days after the Maturity Date under the Note Purchase Agreement
and (z) Borrower delivers to Agent a certified copy of the Note Purchase
Agreement, as amended, and the Preferred Stock Designations, as amended, each in
form and substance satisfactory to Agent.
"REVOLVING NOTE(S)" shall mean the Revolving Note and any additional
promissory note(s) payable to the order of each Lender executed by Borrower
evidencing the Revolving Facility, as the same may be modified, amended or
supplemented from time to time.
"SECURITY AGREEMENT" shall mean that certain Security Agreement
executed by Borrower in favor of Agent, for the benefit of itself and Lenders,
as such may be modified, amended or supplemented from time to time.
"SECURITY DOCUMENTS" shall mean the Notes, Security Agreement,
Mortgages, Guarantees, Intellectual Property Security Agreement, Lockbox
Agreements, Uniform Commercial Code Financing Statements and all other documents
or instruments necessary to create or perfect the Liens in the Collateral, as
such may be modified, amended or supplemented from time to time.
"SERIES A AND B PREFERRED STOCK" shall mean Series A Preferred Stock
of Borrower, no par value, Series B Preferred Stock of Borrower, no par value,
and/or any other series of preferred stock of Borrower having the same terms as
Series A Preferred Stock and Series B Preferred Stock.
"SUBORDINATED DEBT" shall mean the Indebtedness evidenced by the
Note Purchase Agreement.
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"SUBSIDIARY" shall mean, (i) as to Borrower, any Person in which
more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by Borrower or one or more of its
Subsidiaries, and (ii) as to any other Person, any Person in which more than 50%
of all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Person or by one or more of such Person's
Subsidiaries.
"TERM LOAN TERM" shall mean the period commencing on the Closing
Date and ending on December 15, 2004; PROVIDED, that this period shall be
automatically extended to the earlier of (i) January 10, 2007 and (ii) the date
which is one hundred five (105) days prior to the first scheduled principal
payment (excluding Excess Cash Flow payments permitted under SECTION 7.11) under
the Note Purchase Agreement, if (x) Borrower requests such extension on or
before 90 days prior to the last day of the Term Loan Term, (y) the Preferred
Stock Designations are amended or exchanged such that the first scheduled
principal payment or redemption thereunder is at least three hundred sixty-five
(365) days after the Maturity Date under the Note Purchase Agreement and (z)
Borrower delivers to Agent a certified copy of the Note Purchase Agreement, as
amended, and the Preferred Stock Designations, as amended, each in form and
substance satisfactory to Agent.
"TERM NOTE(S)" shall mean the Term Note and any additional
promissory note(s) payable to the order of each Lender executed by Borrower
evidencing the Term Loan, as the same may be modified, amended or supplemented
from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of Maryland from time to time.
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