EXECUTION COPY
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GROCERS CAPITAL COMPANY
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$10,000,000
CREDIT AGREEMENT
Dated as of September 20, 1996
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NATIONAL COOPERATIVE BANK
AGENT
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms; GAAP Changes . . . . . . . . . . . . . . . . . . 17
(a) Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . 17
(b) GAAP Changes. . . . . . . . . . . . . . . . . . . . . . . . . 17
1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II
THE LOANS
2.1 The Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Borrowing Availability. . . . . . . . . . . . . . . . . . . . 18
(b) Payment of Overadvance. . . . . . . . . . . . . . . . . . . . 18
2.2 Borrowing Procedure. . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Date of Borrowing . . . . . . . . . . . . . . . . . . . . . . 18
(b) Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . 19
(c) Telephonic Notice . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Conversion or Continuation Requirements. . . . . . . . . . . . . . 19
(a) Option to Convert or Continue . . . . . . . . . . . . . . . . 19
(b) Notice of Conversion or Continuation. . . . . . . . . . . . . 19
(c) Telephonic Notice . . . . . . . . . . . . . . . . . . . . . . 20
(d) Irrevocable Notice. . . . . . . . . . . . . . . . . . . . . . 20
2.4 Eurodollar Costs . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.5 Illegality; Impossibility. . . . . . . . . . . . . . . . . . . . . 21
2.6 Disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7 Lending Offices. . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.8 Notes; Recordkeeping; Statements of Obligations. . . . . . . . . . 22
(a) Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Monthly Statements. . . . . . . . . . . . . . . . . . . . . . 22
2.9 Loans By Lenders . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.10 Pro Rata Treatment.. . . . . . . . . . . . . . . . . . . . . . . . 23
2.11 Payments; Application. . . . . . . . . . . . . . . . . . . . . . . 23
(a) Payments by Xxxxxxxx. . . . . . . . . . . . . . . . . . . . . 23
(b) Payments From Account Debtors . . . . . . . . . . . . . . . . 23
(c) Application of Payments . . . . . . . . . . . . . . . . . . . 24
(d) Payments to Lenders . . . . . . . . . . . . . . . . . . . . . 24
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2.12 Non-Receipt of Funds.. . . . . . . . . . . . . . . . . . . . . . . 24
2.13 Termination of the Commitments; Repayment of the Loans . . . . . . 24
2.14 Voluntary Commitment Reductions. . . . . . . . . . . . . . . . . . 25
ARTICLE III
INTEREST, PAYMENTS, FEES AND TAXES
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Overdue Payment Rate. . . . . . . . . . . . . . . . . . . . . 25
3.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . 25
(a) Prime Rate Loans. . . . . . . . . . . . . . . . . . . . . . . 25
(b) Eurodollar Rate Loans . . . . . . . . . . . . . . . . . . . . 26
(c) Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . 26
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Agent's Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Audit Expenses. . . . . . . . . . . . . . . . . . . . . . . . 26
3.4 Computation of Interest and Fees . . . . . . . . . . . . . . . . . 26
3.5 Highest Lawful Rate. . . . . . . . . . . . . . . . . . . . . . . . 27
3.6 Increased Risk-Based Capital Cost. . . . . . . . . . . . . . . . . 27
3.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) No Reduction of Payments. . . . . . . . . . . . . . . . . . . 28
(b) Deduction or Withholding; Tax Receipts. . . . . . . . . . . . 28
(c) Indemnity.. . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) Forms 1001 and 4224.. . . . . . . . . . . . . . . . . . . . . 28
(e) Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Initial Loans. . . . . . . . . . . . . 29
(a) Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . 29
(c) UCC Search. . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Additional Closing Documents. . . . . . . . . . . . . . . . . 29
(e) Corporate Documents.. . . . . . . . . . . . . . . . . . . . . 30
(f) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Due Diligence and Other Matters . . . . . . . . . . . . . . . 31
(h) Termination of Intercompany Obligations . . . . . . . . . . . 31
4.2 Conditions Precedent to All Loans. . . . . . . . . . . . . . . . . 31
(a) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Borrowing Base Certificate and Collateral Reports . . . . . . 31
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(c) Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Material Adverse Effect.. . . . . . . . . . . . . . . . . . . 32
(e) Representations and Warranties; No Default. . . . . . . . . . 32
(f) Additional Documents. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties.. . . . . . . . . . . . . . . . . . 32
(a) Organization and Powers.. . . . . . . . . . . . . . . . . . . 32
(b) Authorization; No Conflict. . . . . . . . . . . . . . . . . . 33
(c) Binding Obligation. . . . . . . . . . . . . . . . . . . . . . 33
(d) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) No Defaults.. . . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Title to Properties; Liens. . . . . . . . . . . . . . . . . . 33
(g) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 33
(h) Compliance with Environmental Laws. . . . . . . . . . . . . . 33
(i) Governmental Regulation.. . . . . . . . . . . . . . . . . . . 34
(j) ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(k) Subsidiaries; Ownership.. . . . . . . . . . . . . . . . . . . 35
(m) Margin Regulations. . . . . . . . . . . . . . . . . . . . . . 36
(n) Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(o) Patents and Other Rights. . . . . . . . . . . . . . . . . . . 36
(p) Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . 36
(q) Financial Statements. . . . . . . . . . . . . . . . . . . . . 36
(r) Liabilities.. . . . . . . . . . . . . . . . . . . . . . . . . 37
(s) Labor Disputes, Etc.. . . . . . . . . . . . . . . . . . . . . 37
(t) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 37
(u) Subordinated Debt; Other Agreements . . . . . . . . . . . . . 37
(v) Material Adverse Effect . . . . . . . . . . . . . . . . . . . 37
(w) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
COVENANTS
6.1 Reporting Covenants. . . . . . . . . . . . . . . . . . . . . . . . 37
(a) Financial Statements and Other Reports. . . . . . . . . . . . 37
(b) Additional Information. . . . . . . . . . . . . . . . . . . . 39
6.2 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Debt Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Minimum Tangible Net Worth. . . . . . . . . . . . . . . . . . 41
(c) Interest Coverage Ratio.. . . . . . . . . . . . . . . . . . . 41
6.3 Additional Affirmative Covenants.. . . . . . . . . . . . . . . . . 41
(a) Preservation of Existence, Etc. . . . . . . . . . . . . . . . 41
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(b) Payment of Taxes. Etc.. . . . . . . . . . . . . . . . . . . . 41
(c) Maintenance of Insurance. . . . . . . . . . . . . . . . . . . 41
(d) Keeping of Records and Books of Account.. . . . . . . . . . . 42
(e) Inspection Rights; Audits.. . . . . . . . . . . . . . . . . . 43
(f) Compliance with Laws, Etc.. . . . . . . . . . . . . . . . . . 43
(g) Maintenance of Properties, Etc. . . . . . . . . . . . . . . . 43
(h) Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(i) Action Under Environmental Laws.. . . . . . . . . . . . . . . 43
(j) Use of Proceeds.. . . . . . . . . . . . . . . . . . . . . . . 44
(k) NCB Stock.. . . . . . . . . . . . . . . . . . . . . . . . . . 44
(l) Further Assurances and Additional Acts. . . . . . . . . . . . 44
6.4 Negative Covenants.. . . . . . . . . . . . . . . . . . . . . . . . 44
(a) Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 44
(b) Liens.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(c) Change in Nature of Business. . . . . . . . . . . . . . . . . 45
(d) Restrictions on Fundamental Changes.. . . . . . . . . . . . . 45
(e) Sales and Leases of Assets. . . . . . . . . . . . . . . . . . 45
(f) Loans and Investments.. . . . . . . . . . . . . . . . . . . . 46
(g) Capital Expenditures. . . . . . . . . . . . . . . . . . . . . 47
(h) Operating Leases. . . . . . . . . . . . . . . . . . . . . . . 47
(i) Sales and Leasebacks. . . . . . . . . . . . . . . . . . . . . 47
(j) Distributions.. . . . . . . . . . . . . . . . . . . . . . . . 47
(k) Amendments of Certain Documents.. . . . . . . . . . . . . . . 48
(l) Amendments of GCC Loan Guidelines.. . . . . . . . . . . . . . 48
(m) Transactions with Related Parties.. . . . . . . . . . . . . . 48
(n) Hazardous Substances. . . . . . . . . . . . . . . . . . . . . 48
(o) Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . 49
(p) Purchases under NCB Loan Purchase Agreement . . . . . . . . . 49
ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Representations and Warranties. . . . . . . . . . . . . . . . 49
(c) Failure by Borrower to Perform Certain Covenants. . . . . . . 49
(d) Failure by Borrower to Perform Other Covenants. . . . . . . . 49
(e) Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . 49
(f) Default Under Other Indebtedness. . . . . . . . . . . . . . . 50
(g) Judgments.. . . . . . . . . . . . . . . . . . . . . . . . . . 50
(h) ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(i) Material Adverse Effect.. . . . . . . . . . . . . . . . . . . 51
(j) Change in Ownership or Control. . . . . . . . . . . . . . . . 52
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(k) Failure to Perform Under Operating Agreement or Certified
Consent; or Invalidity of Operating Agreement or Certified
Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(l) Invalidity of Subordination Provisions. . . . . . . . . . . . 52
(m) Invalidity of or Breach Under Collateral Documents. . . . . . 52
(n) Purchases under NCB Loan Purchase Agreement . . . . . . . . . 52
7.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
AGENT AND LENDERS
8.1 Appointment and Powers of Agent. . . . . . . . . . . . . . . . . . 53
8.2 Agent's Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.4 Rights as a Lender; Rights under NCB Loan Purchase Agreement . . . 55
8.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.6 Non-Reliance by Xxxxxxx. . . . . . . . . . . . . . . . . . . . . . 55
8.7 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.8 Excess Payments. . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.9 Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . 56
8.10 Characterization Of Activity . . . . . . . . . . . . . . . . . . . 57
8.11 Resignation by or Removal of Agent . . . . . . . . . . . . . . . . 57
8.12 No Obligation of Borrower. . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IX
LENDERS' REPRESENTATIONS
9.1 Investment Representation. . . . . . . . . . . . . . . . . . . . . 58
9.2 Participation in the Notes; Compliance with Law. . . . . . . . . . 58
ARTICLE X
EXPENSES AND INDEMNITEES
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Payment by Agent on Behalf of Borrower. . . . . . . . . . . . 58
(b) Agent's Expenses Due on Demand. . . . . . . . . . . . . . . . 59
10.2 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI
MISCELLANEOUS
11.1 Destruction of Borrower's Documents. . . . . . . . . . . . . . . . 60
11.2 Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 60
(a) Amendments with Consent of Agent. . . . . . . . . . . . . . . 60
(b) Amendments with Consent of Lenders. . . . . . . . . . . . . . 61
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11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . 62
11.5 Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.7 Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . . 63
11.8 Assignments and Participations . . . . . . . . . . . . . . . . . . 63
(a) Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 63
(b) Participations. . . . . . . . . . . . . . . . . . . . . . . . 64
(c) Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . 64
(d) Inurement; No Assignment by Xxxxxxxx. . . . . . . . . . . . . 64
11.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.10 JURISDICTION AND VENUE. . . . . . . . . . . . . . . . . . . . 65
11.11 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . 65
11.12 Demand, Protest, Notice . . . . . . . . . . . . . . . . . . . 66
11.13 Confidential Relationships. . . . . . . . . . . . . . . . . . 66
11.14 Limitation on Liability . . . . . . . . . . . . . . . . . . . 66
11.15 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 66
11.16 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 66
11.17 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 67
11.18 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 67
11.19 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 67
SCHEDULES
Schedule 1.1P-1 Existing Liens
Schedule 5.1(k) Subsidiaries
Schedule 6.4(a)(iv) Existing Indebtedness
Schedule 6.4(f)(v) Exempted Transactions and Indebtedness
EXHIBITS
Exhibit 1.1B-1 Form of Borrowing Base Certificate
Exhibit 1.1C-1 Form of Compliance Certificate
Exhibit 1.1G-1 GCC Loan Guidelines
Exhibit 1.1N-1 Form of Note
Exhibit 1.1N-2 Form of Notice of Borrowing
Exhibit 1.1N-3 Form of Notice of Conversion or Continuation
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), dated as of September 20,
1996, is made among GROCERS CAPITAL COMPANY, a California corporation
("Borrower"), the financial institutions listed on the signature pages of this
Agreement under the heading "Lenders" (each a "Lender" and, collectively, the
"Lenders"), and NATIONAL CONSUMER COOPERATIVE BANK, dba National Cooperative
Bank, a federally chartered banking corporation with principal offices located
in Washington, D.C. ("NCB"), as agent for Lenders (NCB in such capacity and any
successor in such capacity is referred to herein as "Agent").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the
following meanings:
"ADDITIONAL LOAN/LEASE RECEIVABLES" means Deposit Fund Loans,
Affiliate Loans, EFT Program Leases, and, if designated as Additional Loan/Lease
Receivables pursuant to Section 6.4(l), New Lease/Loan Products.
"AFFILIATE" means any Person which, directly or indirectly,
controls, is controlled by or is under common control with another Person. For
purposes of the foregoing, "control," "controlled by" and "under common control
with" with respect to any Person shall mean the possession, directly or
indirectly, of the power (i) to vote more than 10% of the securities having
ordinary voting power of the election of directors of such Person, or (ii) to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
The mere fact that a representative of a Certified Patron serves and acts as a
director of Certified or Borrower shall not cause such Certified Patron to be an
Affiliate of Certified or Borrower.
"AFFILIATE LOANS" means loans made by Borrower to wholly-owned,
direct or indirect, subsidiaries of Certified, but excluding GGMC and GSC.
"AGENT" has the meaning set forth in the introduction to this
Agreement.
"AGENT'S ACCOUNT" means the account of Agent maintained at Bank,
bearing such number as Agent from time to time shall designate in a written
notice to Borrower and Lenders, the balance of which account shall be deposited
daily into Borrower's Account except as otherwise provided in Section 7.2(ii).
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"AGENT'S EXPENSES" means and includes all actual out-of-pocket:
(a) costs or expenses (including, without limitation, taxes and insurance
premiums), presently existing or arising hereafter, required to be paid by
Borrower under this Agreement, the Security Agreement or under any of the Notes
which are paid or advanced by Agent or any Lender; (b) filing, recording,
publication and search fees incurred or paid by Agent or any Lender in
connection with Agent's and such Xxxxxx's transactions with Borrower; (c) all
fees, costs and expenses incurred or paid by Agent in connection with any audit
during the existence of an Event of Default, and up to $5,000 fees plus all out-
of-pocket costs and expenses incurred or paid by Agent in connection with not
more than one (1) audit for each fiscal year which is conducted absent an Event
of Default; (d) costs and expenses (including reasonable attorneys' fees)
incurred by Agent or any Lender in collecting the Collateral (with or without
suit), or in gaining possession, of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale or advertising to sell the Collateral,
whether or not a sale is consummated; (e) costs and expenses incurred by Agent
or any Lender in defending this Agreement, the Notes, the Security Agreement and
all other agreements, instruments, and documents contemplated hereby and
thereby, or any portion hereof or thereof, whether or not suit is brought; (f)
the cost of delivering the Notes to Lender pursuant to the provisions of this
Agreement; and (g) the reasonable costs and expenses (including reasonable
attorneys' fees and expenses, including allocated fees and expenses of in-house
counsel or local counsel of Agent) incurred by Agent or any Lender in connection
with any bankruptcy or other insolvency proceeding, reorganization, workout,
composition, or other creditor arrangement of Xxxxxxxx, or of any of Xxxxxxxx's
Subsidiaries; PROVIDED, HOWEVER, that each Lender (other than Agent) agrees to
instruct its counsel to take reasonable steps to avoid duplication of effort
with counsel to Agent.
"AUTHORIZED OFFICER" means any individual authorized by Xxxxxxxx
to act on Xxxxxxxx's behalf in connection with the Loan Documents as specified
in the certificate delivered pursuant to Section 4.1(e)(ii), or in the latest
such certificate delivered by Borrower to Agent to reflect any change in the
authorization of any such individual.
"BANK" means Union Bank of California, N.A.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978.
"BASE LIBOR" means the offered quotation, if any, to first-class
banks in the Eurodollar market by Bank for U.S. Dollar deposits of amounts in
funds comparable to the principal amount of the Eurodollar Rate Loan for which
the Eurodollar Rate is being determined with maturities comparable to the
Interest Period for which such Eurodollar Rate will apply as of approximately
2:00 p.m., Washington, D.C. time, two (2) Business Days prior to the
commencement of such Interest Period.
"BORROWER" has the meaning set forth in the introduction of this
Agreement.
"BORROWER'S ACCOUNT" means the account of Xxxxxxxx maintained at
Bank's branch located at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000, bearing the number
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0700479994, or such other account as Borrower from time to time shall
designate in a written notice to Agent for the deposit of funds borrowed
under this Agreement.
"BORROWING" means a borrowing consisting of simultaneous Loans
made at any one time to Borrower from Lenders pursuant to Article II.
"BORROWING BASE" means at any time the sum of (i) 75% of Eligible
Collateral consisting of Finance Receivables, plus (ii) 50% of Eligible
Collateral consisting of Additional Loan/Lease Receivables.
"BORROWING BASE CERTIFICATE" means a certificate of the chief
financial officer or treasurer of Xxxxxxxx, in substantially the form of EXHIBIT
1.1B-1, with such changes thereto as Agent or any Lender may from time to time
reasonably request.
"BT CREDIT AGREEMENT" means that certain Credit Agreement, dated
as of April 25, 1994, as amended, among Borrower, BT Commercial Corporation, a
Delaware corporation, as agent, and the other lenders party thereto.
"BUSINESS DAY" means a day (i) other than Saturday or Sunday, and
(ii) on which commercial banks are open for business in Washington, D.C., and
Los Angeles, California.
"CAPITAL DEBT" means, as of any date of determination, any and
all Indebtedness of Borrower due more than one year from the date of
determination which is (i) owed to any Affiliate of Borrower, and (ii) by its
terms expressly subordinated to all Senior Debt and to any Subordinated Debt of
Borrower on terms no less favorable to the holders of such Senior Debt and
Subordinated Debt than those set forth in the Investment Agreement.
"CAPITAL LEASE" means, for any Person, any lease of property
(whether real, personal or mixed) which, in accordance with GAAP, would, at the
time a determination is made, be required to be recorded as a capital lease in
respect of which such Person is liable as lessee.
"CERTIFIED" means Certified Grocers of California, Ltd., a
California corporation.
"CERTIFIED CONSENT" means that certain Consent to Assignment and
Agreement, dated as of even date herewith, between Certified and GEC.
"CERTIFIED LOAN AGREEMENT" means the Amended and Restated Loan
and Security Agreement dated as of March 17, 1994, as may be from time to time
amended, among Certified and the other borrowers party thereto, the Lenders
party thereto, BT Commercial Corporation, as agent, and Union Bank and First
National Bank of Boston, as co-agents, or such other credit agreement or credit
facility of Certified as may hereafter replace such Amended and Restated Loan
and Security Agreement.
3
"CERTIFIED NOTE" means that certain Secured Subordinated Note,
dated March 17, 1994, in the amount of Ten Million Dollars ($10,000,000),
executed by Borrower to the order of Certified.
"CERTIFIED PATRONS" means member-patrons and associate patrons of
Certified.
"CERTIFIED SUBORDINATION AND SECURITY AGREEMENT" means that
certain Subordination and Security Agreement, dated as of March 17, 1994, by and
between Borrower and Certified, to secure the Certified Note.
"CLOSING DATE" means the date when all of the conditions set
forth in Section 4.1 have been satisfied.
"COLLATERAL" means the property described in the Collateral
Documents, and all other property now existing or hereafter acquired which may
at any time be or become subject to a Lien in favor of Agent or Lenders pursuant
to the Collateral Documents or otherwise, securing the payment and performance
of Obligations; but in no event shall "Collateral" include Released Collateral.
"COLLATERAL DOCUMENTS" means the Security Agreement, any other
agreement pursuant to which Borrower or any other Person provides a Lien on its
assets in favor of Lenders or Agent for the benefit of Lenders and all financing
statements, fixture filings, patent, trademark and copyright filings,
assignments, acknowledgments and other filings, documents and agreements made or
delivered pursuant thereto.
"COLLATERAL PROCEDURES" means any procedures and documentation
specified in Section 3(b) of the Security Agreement for perfection of the first
priority Lien of Agent (on behalf of Lenders) on the Collateral.
"COMMITMENT" means, when used with reference to any Lender at the
time any determination thereof is to be made, the amount set forth opposite the
name of such Lender on the signature pages of this Agreement, as such amount may
be reduced from time to time pursuant to Section 2.14, or, where the context so
requires, the obligation of such Lender to make Loans up to such amount, as such
amount may be reduced from time to time pursuant to Section 2.14, on the terms
and conditions set forth in this Agreement.
"COMMITMENT TERMINATION DATE" means September 20, 2001.
"COMPLIANCE CERTIFICATE" means a certificate of the chief
financial officer of Xxxxxxxx, in substantially the form of EXHIBIT 1.1C-1, with
such changes thereto as Agent or any Lender may from time to time reasonably
request.
"CONSOLIDATED" means, when used in connection with any financial
statement or financial term, that the statement or term has been prepared or
determined on a consolidated basis
4
in accordance with GAAP for Certified and its Subsidiaries, or for Borrower
and its Subsidiaries, as the case may be.
"CONSOLIDATED ADJUSTED TANGIBLE NET WORTH" means, as of any date
of determination, Consolidated Total Assets plus Capital Debt MINUS Consolidated
Total Liabilities; PROVIDED, HOWEVER, that there shall be excluded from
Consolidated Total Assets the following: (i) all assets which would be
classified as intangible assets in accordance with GAAP, including goodwill,
organizational expense, research and development expense, patent applications,
patents, trademarks, trade names, brands, copyrights, trade secrets, customer
lists, licenses, franchises and covenants not to compete; (ii) all unamortized
debt discount and expense; (iii) all treasury stock; (iv) all receivables from
and other obligations of directors (other than in their capacities as Certified
Patrons), employees or officers of Borrower; and (v) the excess, if any, of
(A) the aggregate balance of Receivables that are more than 90 days past due,
over (B) reserves for loan losses.
"CONSOLIDATED EBIT" means, for any period, Consolidated net
income, PLUS Consolidated Interest Expense, PLUS income tax expense of Borrower
and its Subsidiaries on a Consolidated basis, as determined in accordance with
GAAP; PROVIDED, HOWEVER, that for purposes of determining Consolidated EBIT
there shall be excluded from Consolidated net income any notes or other payment
in kind received by Borrower in payment of any obligations owing to it.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, interest
expense (including that attributable to Capital Leases) and of Borrower and its
Subsidiaries on a Consolidated basis, as determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, Consolidated Total Assets MINUS Consolidated Total Liabilities;
PROVIDED, HOWEVER, that there shall be excluded from Consolidated Total Assets
the following: (i) all assets which would be classified as intangible assets in
accordance with GAAP, including goodwill, organizational expense, research and
development expense, patent applications, patents, trademarks, trade names,
brands, copyrights, trade secrets, customer lists, licenses, franchises and
covenants not to compete; (ii) all unamortized debt discount and expense;
(iii) all treasury stock; and (iv) all receivables from and other obligations of
directors (other than in their capacities as Certified Patrons), employees or
officers of Borrower or Certified.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of
determination, the total assets of Borrower and its Subsidiaries on a
Consolidated basis, as determined in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of Borrower and its Subsidiaries on a
Consolidated basis, as determined in accordance with GAAP.
"DEFAULT" means an Event of Default or an event or condition
which with notice or lapse of time or both would constitute an Event of Default.
5
"DEPOSIT FUND LOANS" means "Deposit Fund Loans" made to Certified
Patrons by Borrower in accordance with the GCC Loan Guidelines.
"DOLLARS" and "$" each means lawful money of the United States.
"EFT PROGRAM LEASES" means leases entered into with Certified
Patrons by Borrower under Borrower's "EFT Financing Program" in accordance with
the GCC Loan Guidelines.
"ELIGIBLE COLLATERAL" means at any time the aggregate amount of
Receivables arising in the ordinary course of Xxxxxxxx's business, excluding the
following:
(i) Receivables for which Xxxxxxxx's right to receive payment
has not been fully earned by performance or is contingent upon the fulfillment
of any condition whatsoever or which otherwise do not arise from a bona fide
completed transaction with Borrower;
(ii) Receivables which have been disputed, or against which there
have been asserted any defenses, offsets, claims, counterclaims, or other
defenses of any nature, whether well-founded or otherwise, or which are
otherwise conditional;
(iii) any Receivable that does not comply with all applicable
legal requirements, including all laws, rules, regulations and orders of any
Governmental Authority;
(iv) Receivables which are not owned by Borrower free and clear
of all Liens and rights of others (other than the Liens in favor of Agent on
behalf of Xxxxxxx and other than other Permitted Liens);
(v) Receivables in which Agent on behalf of Lenders shall not
have a valid and perfected first-priority Lien;
(vi) Receivables owing by any officer, director (other than in
his or her capacity as a Certified Patron), employee, agent, partner, Subsidiary
or Affiliate of Borrower (other than Affiliate Loans);
(vii) Receivables owing by the United States or any department,
agency or instrumentality thereof or by a State or any department, agency,
instrumentality or political subdivision thereof;
(viii) Receivables denominated in a currency other than Dollars or
owing by any non-resident of the United States;
(ix) Receivables not complying with the GCC Loan Guidelines and
other documentation, credit and collection policies and practices of Borrower as
in effect from time to time;
6
(x) Receivables owing by any Receivable Debtor who, as of the
end of the previous collection period, has failed to make full payment within 90
days from the due date on the Receivables or any portion thereof owing to
Borrower by such Receivable Debtor, except that if a good faith dispute exists
as to any such unpaid Receivables of a Receivable Debtor, only such unpaid
Receivables shall be excluded;
(xi) Receivables owing by any Receivable Debtor who is the
subject of a case or proceeding described in Section 7.1(e) or who takes any
other action described in Section 7.1(e);
(xii) Receivables which are subordinated to the prior payment of
any other obligations of the Receivable Debtor obligated in respect of such
Receivable;
(xiii) Receivables with respect to which the terms or conditions
prohibit or restrict assignment or collection rights or which require the
consent of the Receivable Debtor, and such consent has not been obtained; and
(xiv) Receivables with respect to which Agent, in its reasonable
discretion, deems the creditworthiness or financial condition of the Receivable
Debtor to be unsatisfactory or the prospect of payment or performance to be
impaired, and other Receivables which, in Agent's reasonable discretion, are
otherwise ineligible.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directives, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authorities, in each case
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Air Act, the Federal
Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California Hazardous
Waste Control Law, the California Solid Waste Management, Resource Recovery and
Recycling Act, the California Water Code and the California Health and Safety
Code.
"EQUIPMENT LOANS" means "Equipment Loans" made to Certified
Patrons by Borrower in accordance with the GCC Loan Guidelines.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is under common control with Borrower or Certified within
the meaning of Section 4001(a)(14) of ERISA or Sections 414(b), (c) or (m) of
the Internal Revenue Code.
7
"EURODOLLAR BUSINESS DAY" means any Business Day on which major
commercial banks are open for international business (including dealings in
Dollar deposits) in Los Angeles, California, Washington, D.C., and London,
England.
"EURODOLLAR RATE" means the rate per annum (rounded upwards if
necessary to the nearest whole one-hundredth of one percent (.01%)), determined
as the quotient of: (i) Base LIBOR; DIVIDED BY (ii) the number equal to one
hundred percent (100%) MINUS the LIBOR Reserve Percentage. The Eurodollar Rate
shall be adjusted automatically on the effective date of any change in the LIBOR
Reserve Percentage, such adjustment to affect any Eurodollar Loans outstanding
on such effective date to the extent such change is applied retroactively to
eurocurrency funding of a member bank in the Federal Reserve System. Each
determination of a Eurodollar Rate by Agent or Bank, including, but not limited
to, any determination as to the applicability or allocability of reserves to
eurocurrency liabilities or as to the amount of such reserves, shall be
conclusive and final in the absence of manifest error.
"EURODOLLAR RATE LOAN" means any Loan bearing interest by
reference to the Eurodollar Rate pursuant to the designation by Borrower under
Sections 2.2 or 2.3.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.1.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%), as determined by
Agent, equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for any day of determination (or if such day of
determination is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"FINANCE RECEIVABLES" means Store Development Loans, Equipment
Loans, Inventory Loans, and, if designated as Finance Receivables pursuant to
Section 6.4(l), New Lease/Loan Products.
"GAAP" means generally accepted accounting principles in the U.S.
as in effect from time to time.
"GCC LOAN GUIDELINES" means the written guidelines of Borrower
for provision of financing to qualified Certified Patrons and the documentation
thereof as in effect from time to time and furnished to Agent and Lenders in
accordance herewith, described on EXHIBIT 1.1G-1.
"GEC" means Grocers Equipment Company, a California corporation.
8
"GGMC" means Grocers General Merchandise Company, a California
corporation.
"GSC" means Grocers Specialty Company, a California corporation.
"GOVERNMENTAL AUTHORITY" means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank, court,
tribunal or other instrumentality or authority, domestic or foreign, exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTY" means that certain Guaranty, dated as of August 29,
1996, executed by Xxxxxxxx in favor of NCB.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to
any Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (A) for the payment or discharge
of any such primary obligation, or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain he net worth or solvency
or any balance sheet item, level of income or financial condition of the primary
obligor, or (iii) 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 (iv)
otherwise to assure or hold harmless the holder of any such primary obligation
against loss in respect thereof.
"HAZARDOUS SUBSTANCES" means any toxic or-hazardous substances,
materials or wastes, contaminants or pollutants, including asbestos, PCBs,
petroleum products and byproducts, substances defined or listed as "hazardous
substances," "hazardous materials" or "toxic substances" (or similarly
identified), regulated under or forming the basis for liability under any
applicable Environmental Law.
"INCREMENTAL PURCHASE" has the meaning set forth in the NCB Loan
Purchase Agreement.
"INDEBTEDNESS" means, for any Person: (i) all indebtedness or
other obligations of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (iv)
all obligations under Capital Leases; (v) all reimbursement or other obligations
of such Person under or in respect of letters of credit, bankers acceptances,
interest rate swaps, caps, floors
9
and collars, currency swaps, or other similar financial products; (vi) all
Guaranty Obligations; and (vii) all indebtedness of another Person secured by
any Lien upon or in property owned by the Person for whom Indebtedness is
being determined, whether or not such Person has assumed or become liable for
the payment of such indebtedness of such other Person.
"INTEREST PERIOD" means, with respect to each Eurodollar Rate
Loan, the period commencing on the date of such Eurodollar Rate Loan and ending
one (1), two (2), three (3) or six (6) months thereafter, as Borrower may elect
pursuant to the applicable Notice of Borrowing or Notice of Conversion or
Continuation; PROVIDED, HOWEVER, that:
(i) any Interest Period which would otherwise end on a day which
is not a Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless such Eurodollar Business Day falls in another
calendar month in which case such Interest Period shall end on the next
preceding Eurodollar Business Day;
(ii) any Interest Period which begins on the last Eurodollar
Business Day of the calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Eurodollar Business Day of the calendar month in
which it would have ended if there were a numerically corresponding day in such
calendar month; and
(iii) no Interest Period may extend beyond the Commitment
Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.
"INVENTORY LOANS" means "Inventory Loans" and secured "Inventory
Deferred Loans" made to Certified Patrons by Borrower in accordance with the GCC
Loan Guidelines.
"INVESTMENT AGREEMENT" means that certain Second Amended and
Restated Investment Agreement, dated as of April 25, 1994, among Borrower, GEC
and Certified, as may be from time to time amended, supplemented or restated.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"LENDER" and "LENDERS" each has the meaning set forth in the
introduction of this Agreement.
"LENDING OFFICE" has the meaning set forth in Section 2.6.
"LIBOR RESERVE PERCENTAGE" means, for any Interest Period of any
Eurodollar Rate Loan, the daily average of the stated maximum rate (rounded
upward to the nearest one-hundredth of one percent (.01%)), as determined by
Agent in accordance with its usual procedures
10
(which determination shall be conclusive in the absence of manifest error),
at which reserves are required to be maintained during such Interest Period
(including supplemental, marginal, and emergency reserves) under Regulation D
by Agent or Majority Lenders against "Eurocurrency liabilities" (as such term
is defined in Regulation D), but without benefit or credit of proration,
exemptions, or offsets that might otherwise be available to Agent or any
Lender from time to time under Regulation D. Without limiting the generality
of the foregoing, "LIBOR Reserve Percentage" shall include any other reserves
required by law to be maintained by Agent or Majority Lenders against (i) any
category of liabilities that includes deposits by reference to which the
Eurodollar Rate for a Eurodollar Rate Loan is being determined and (ii) any
category of extension of credit or other assets that includes Eurodollar Rate
Loans.
"LIEN" means any mortgage, deed of trust, pledge, security
interest, assignment, deposit arrangement, charge or encumbrance, lien
(statutory or other), or other preferential arrangement (including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing or any agreement
to give any security interest).
"LOAN" has the meaning set forth in Section 2.1(a).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Collateral
Documents, the Certified Consent, and all other certificates, documents,
agreements and instruments delivered to Agent and Lenders under or in connection
with this Agreement.
"LOAN PURCHASE AGREEMENTS" means the NCB Loan Purchase Agreement
and the Other Loan Purchase Agreement.
"MAJORITY LENDERS" means at any time Lenders holding at least 51%
of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, at least three Lenders having at least 51%
of the aggregate Commitments.
"MATERIAL ADVERSE EFFECT" means any event, matter, condition or
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations or condition
(financial or otherwise) of Borrower or any of its Subsidiaries, or Certified
and its Subsidiaries taken as a whole; (ii) would materially impair the ability
of Borrower or any other Person to perform or observe its obligations under or
in respect of the Loan Documents; or (iii) affects the legality, validity or
enforceability of any of the Loan Documents or the perfection or priority of any
Lien granted to Lenders or Agent for the benefit of Lenders under any of the
Collateral Documents.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
11
"NCB" means National Consumer Cooperative Bank, dba National
Cooperative Bank, a federally chartered banking corporation with principal
offices located in Washington, D.C.
"NCB LOAN PURCHASE AGREEMENT" means that certain Loan Purchase
and Servicing Agreement, dated as of August 29, 1996, between Borrower, as
seller and servicer, and NCB, as buyer, as amended or restated from time to
time.
"NCB STOCK" shall have the meaning given to such term in Section
6.3(k).
"NEW LEASE/LOAN PRODUCTS" means new lease and loan products
entered into or made to Certified Patrons under new lease or loan programs in
accordance with the GCC Loan Guidelines.
"NOTE" means a Promissory Note of Borrower payable to the order
of a Lender, in substantially the form of EXHIBIT 1.1N-1.
"NOTICE OF BORROWING" means an irrevocable notice from Borrower
to Agent of Xxxxxxxx's intention to borrow, substantially in the form of EXHIBIT
1.1N-2.
"NOTICE OF CONVERSION OR CONTINUATION" means a written notice
given pursuant to the terms of Section 2.3, substantially in the form of
EXHIBIT 1.1N-3.
"OBLIGATIONS" means the indebtedness, liabilities and other
obligations of Borrower to Agent or any Lender under or in connection with this
Agreement, the Notes or any other Loan Documents, including all Loans, all
interest accrued thereon, all fees due under this Agreement and all other
amounts payable by Borrower to Agent or any Lender thereunder or in connection
therewith, whether now or hereafter existing or arising, and whether due or to
become due, absolute or contingent, liquidated or unliquidated, determined or
undetermined.
"OPERATING AGREEMENT" means that certain Second Amended and
Restated Operating Agreement dated as of April 25, 1994, among Borrower, GEC and
Certified, as may be from time to time amended, supplemented or restated.
"OPERATING LEASE" means, for any Person, any lease of any
property of any kind by that Person as lessee which is not a Capital Lease.
"OTHER LOAN PURCHASE AGREEMENT" means a Loan Purchase and
Servicing Agreement, in form and substance substantially similar in effect to
the NCB Loan Purchase Agreement and which is otherwise satisfactory to Agent in
its reasonable discretion, between Borrower, as seller and servicer, and another
institution as buyer, providing for acquisitions of Finance Receivables and
Additional Loan/Lease Receivables in an aggregate amount not to exceed
$20,000,000, as amended or restated from time to time.
12
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" means any employee pension benefit plan covered by
Title IV of ERISA (other than a Multiemployer Plan) that is maintained for
employees of Borrower, Certified or any ERISA Affiliate or with regard to which
the, Borrower, Certified or an ERISA Affiliate is a contributing sponsor within
the meaning of Sections 4001(a)(13) or 4069 of ERISA.
"PERMITTED INVESTMENTS" means any of the following investments
denominated and payable in Dollars, maturing within one year from the date of
acquisition, selected by Borrower: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof and, at the time of acquisition, having the highest credit rating
obtainable from either Standard & Poor's Corporation ("S&P") or Xxxxx'x
Investors Service, Inc. ("Xxxxx'x"); (iii) commercial paper or corporate
promissory notes bearing at the time of acquisition the highest credit rating
either of S&P or Xxxxx'x issued by United States, Australian, Canadian, European
or Japanese bank holding companies or industrial or financial companies; (iv)
certificates of deposit issued by and bankers acceptances of and interest
bearing deposits with any Lender, or with any United States, Australian,
Canadian, European or Japanese commercial banks having combined capital and
surplus of at least $1,000,000,000 or the equivalent and which has (or the
parent of which has) long-term debt term securities bearing a credit rating from
S&P of "AA" or better or from Moody's of "Aa2" or better; and (v) money market
funds organized under the laws of the United States or any state thereof that
invest predominantly in any of the foregoing investments permitted under clauses
(i), (ii), (iii) and (iv).
"PERMITTED LIENS" means:
(i) Liens in favor of Xxxxxxx or Agent for the benefit of
Lenders to secure the Obligations;
(ii) the existing Liens listed in SCHEDULE 1.1P-1 or incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by such existing Liens, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase;
(iii) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP;
(iv) Liens of materialmen, mechanics, warehousemen, carriers or
employees or other like Liens arising in the ordinary course of business and
securing obligations either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately
13
reserved for in accordance with GAAP and which do not in the aggregate
materially impair the use or value of the property or risk the loss or
forfeiture of title thereto;
(v) Liens consisting of deposits or pledges to secure the
payment of worker's compensation, unemployment insurance or other social
security benefits or obligations, or to secure the performance of bids, trade
contracts, leases, public or statutory obligations, surety or appeal bonds or
other obligations of a like nature incurred in the ordinary course of business
(other than for Indebtedness or any Liens arising under ERISA);
(vi) easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real property and irregularities in
the title to such property which do not in the aggregate materially impair the
use or value of such property or risk the loss or forfeiture of title thereto;
(vii) statutory landlord's Liens under leases to which Borrower or
any of its Subsidiaries is a party;
(viii) any judgment, attachment or similar Lien, unless the
judgment it secures is not fully covered by insurance and has not been
discharged or execution thereof effectively stayed pending appeal within 20 days
of the entry thereof, or shall not have been discharged within 20 days of the
expiration of any such stay;
(ix) Liens in favor of NCB on the NCB Stock; and
(x) Liens granted under the Loan Purchase Agreements, so long as
such Liens attach only to the Released Collateral or to any Separate Account,
Security Account or Lockbox Account (each as defined in the NCB Loan Purchase
Agreement).
"PERSON" means an individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other entity of whatever
nature or any Governmental Authority.
"PLAN" means any employee pension benefit plan as defined in
Section 3(2) of ERISA (including any Multiemployer Plan) and any employee
welfare benefit plan, as defined in Section 3 (1) of ERISA (including any plan
providing benefits to former employees or their survivors).
"PREMISES" means any and all real property, including all
buildings and improvements now or hereafter located thereon and all
appurtenances thereto, now or hereafter owned, leased, occupied or used by
Borrower and its Subsidiaries.
"PRIME RATE" means the higher of: (i) the Federal Funds Rate
plus one-quarter of one (0.25) percentage points (25 basis points); and (ii) the
variable rate of interest, per annum, most recently announced by Agent at its
principal office in Washington, D.C., as its "prime rate," with the
understanding that the Agent's "prime rate" is one of its base rates and serves
as a basis upon
14
which effective rates of interest are calculated for loans making reference
thereto and may not be the lowest of the Agent's base rates.
"PRIME RATE LOAN" means any Loan bearing interest by reference to
the Prime Rate pursuant to the designation by Borrower under Sections 2.2 or
2.3.
"PURCHASE NOTICE" has the meaning set forth in the Security
Agreement.
"RECEIVABLE DEBTOR" means any Person obligated on a Receivable.
"RECEIVABLES" means all present and future rights, interests and
claims of Borrower under and in respect of Finance Receivables and Additional
Loan/Lease Receivables, including all rights of Borrower to receive moneys due
or to become due with respect thereto, other than such rights, interest and
claims in any Released Collateral or proceeds thereof.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System.
"RELEASE" has the meaning set forth in the Security Agreement.
"RELEASED COLLATERAL" means such of the Finance Receivables,
Additional Loan/Lease Receivables, and any related assets of Borrower
constituting Property (as defined in the NCB Loan Purchase Agreement), for which
Borrower has duly executed and delivered to Agent a Purchase Notice, and Agent
has duly executed and delivered a Release pursuant to Section 3(d)(ii) of the
Security Agreement.
"SECURITY AGREEMENT" means that certain Security Agreement
between Borrower and Agent, of even date herewith, securing the Obligations, and
any amendments, supplements or restatements thereto or thereof.
"SENIOR DEBT" means the obligations and any and all other
Indebtedness (if any) of the types referred to in clauses (i), (ii) and (iv) of
the definition of Indebtedness in this Section 1.1 other than Capital Debt and
Subordinated Debt.
"SOLVENT" means, with respect to any Person on the date any
determination thereof is to be made, that on such date: (a) the present fair
valuation of the property and assets of such Person is greater than such
Person's probable liability in respect of existing Indebtedness; (b) such Person
does not intend to, and does not believe that it will, incur Indebtedness beyond
such Person's ability to pay as such Indebtedness matures; and (c) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, which would leave such Person with property and
assets remaining which would constitute unreasonably small capital after giving
effect to the nature of the particular business or transaction. For purposes of
this definition (i) the "fair valuation" of any property or assets means the
amount realizable within a reasonable time, either through collection or sale of
such property or assets at their regular market value, which is the amount
15
obtainable by a capable and diligent Person from an interested buyer willing to
purchase such property or assets within a reasonable time under ordinary
circumstances; and (ii) the term "Indebtedness" includes any payment obligation,
whether or not reduced to judgment, equitable or legal, matured or unmatured,
liquidated or unliquidated, disputed or undisputed, secured or unsecured,
absolute, fixed or contingent.
"STORE DEVELOPMENT LOANS" means "Store Development Loans" (also
referred to as "Buy/Sell Loans") made to Certified Patrons by Borrower in
accordance with the GCC Loan Guidelines.
"SUBORDINATED DEBT" means any Indebtedness of Borrower due more
than one year from the date of determination which is (A) owed to any Person
other than an Affiliate of Borrower, and (B) by its terms expressly subordinated
to the Senior Debt on terms satisfactory to the Majority Lenders.
"SUBSIDIARY" means any corporation, association, partnership,
joint venture or other business entity of which more than 50% of the voting
stock or other equity interest is owned directly or indirectly by any Person or
one or more of the other Subsidiaries of such Person or a combination thereof.
"TAXES" has the meaning set forth in Section 3.8(a).
"TERMINATION EVENT" means any of the following:
(i) with respect to a Pension Plan, a reportable event described
in Section 4043 of ERISA and the regulations issued thereunder (other than a
reportable event not subject to the provisions for 30-day notice to the PBGC
under such regulations);
(ii) the withdrawal of Borrower, Certified or an ERISA Affiliate
from a Pension Plan during a plan year in which the withdrawing employer was a
"substantial employer" as defined in Section 4001(a)(2) or 4062(e) of ERISA;
(iii) the taking of any actions (including the filing of a notice
of intent to terminate) by Xxxxxxxx, Certified, an ERISA Affiliate, the PBGC, a
Plan Administrator, or any other Person to terminate a Pension Plan or the
treatment of a Plan amendment as a termination of a Pension Plan under Section
4041 of ERISA;
(iv) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or
(v) the complete or partial withdrawal of Borrower, Certified or
an ERISA Affiliate from a Multiemployer Plan.
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"UCC" means the Uniform Commercial Code of the jurisdiction the
law of which governs the Loan Document in which such term is used or the
attachment, perfection or priority of the Lien on any Collateral.
"UNFUNDED ACCRUED BENEFITS" means the excess of a Pension Plan's
accrued benefits, as defined in Section 3(23) of ERISA, over the current value
of that Plan's assets, as defined in Section 3(26) of ERISA.
"UNITED STATES" and "U.S." each means the United States of
America.
1.2 ACCOUNTING TERMS; GAAP CHANGES.
(a) ACCOUNTING TERMS. Unless otherwise defined or the context
otherwise requires, all accounting terms used herein shall be construed in
accordance with GAAP, and, except where otherwise specified, all financial data
required to be delivered hereunder shall be prepared in accordance with GAAP.
(b) GAAP CHANGES. If any changes in GAAP from those used in the
preparation of the financial statements referred to in Section 6.1(a) ("GAAP
Changes") hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) result in a change in the method of
calculation of any of the financial covenants, standards or other terms or
conditions found in this Agreement, the parties hereto agree to enter into
negotiations to amend such provisions so as to reflect equitably such GAAP
Changes with the desired result that the criteria for evaluating the financial
condition and performance of Borrower and its Subsidiaries shall be the same
after such GAAP Changes as if such GAAP Changes had not been made.
1.3 INTERPRETATION.
In this Agreement and the other Loan Documents, except to the
extent the context otherwise requires:
(i) Any reference to an Article, a Section, a Schedule or an
Exhibit is a reference to an article or section of the particular agreement in
which the reference appears, or a schedule or an exhibit to the particular
agreement in which the reference appears, respectively, and to a subsection or a
clause is, unless otherwise stated, a reference to a subsection or a clause of
the Section or subsection in which the reference appears.
(ii) The words "hereof," "herein," "hereto," "hereunder" and the
like mean and refer to this Agreement or any other Loan Document as a whole and
not merely to the specific Article, Section, subsection, paragraph or clause in
which the respective word appears.
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(iii) The meaning of defined terms shall be equally applicable to
both the singular and plural forms of the terms defined.
(iv) The words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation."
(v) References to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are not
prohibited by the terms of the Loan Documents.
(vi) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation referred to.
(vii) Any table of contents, captions and headings are for
convenience of reference only and shall not affect the construction of this
Agreement or any other Loan Document.
ARTICLE II
THE LOANS
2.1 THE LOANS.
(a) BORROWING AVAILABILITY. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make revolving loans (each a
"Loan" and, collectively, the "Loans") to Borrower from time to time from the
Closing Date up to but not including the Commitment Termination Date, in an
aggregate principal amount up to but not exceeding at any time such Xxxxxx's
Commitment; PROVIDED, HOWEVER, that immediately after giving effect to such
Loans the aggregate principal amount of Loans then outstanding shall not exceed
the Borrowing Base. Within the foregoing limits, during such period Borrower
may borrow, repay the Loans in whole or in part, and reborrow, all in accordance
with the terms and conditions hereof.
(b) PAYMENT OF OVERADVANCE. All Loans shall be added to and be
deemed part of the Obligations when made or extended. If, at any time and for
any reason, the aggregate amount of the Loans exceeds the percentages or
limitations set forth in Section 2.1(a), Borrower shall immediately pay to
Agent, on behalf of Xxxxxxx, in immediately available Dollars, the amount of
such excess.
2.2 BORROWING PROCEDURE.
(a) DATE OF BORROWING. Each Borrowing of a Prime Rate Loan
shall be made on a Business Day and each Borrowing of a Eurodollar Rate Loan
shall be made on a Eurodollar Business Day.
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(b) NOTICE OF BORROWING. Each Borrowing shall be made upon
written notice by way of a Notice of Borrowing, given by telex, telecopy, mail,
or personal service, delivered to Agent at Agent's office located at 0000 X
Xxxxxx, XX Xxxxx 000, Xxxxxxxxxx, X.X. 00000, setting forth the amount of the
requested Loan in accordance with Section 2.1(a), whether the Borrowing is of a
Prime Rate Loan or a Eurodollar Rate Loan, and, in the latter case, the
requested Interest Period. If for a Prime Rate Loan, Agent shall be given
notice no later than 2:00 p.m., Washington, D.C. time, on the day on which such
Prime Rate Loan is to be made, and, if for a Eurodollar Rate Loan, Agent shall
be given notice at least three (3) Eurodollar Business Days prior to the day on
which such Eurodollar Rate Loan is to be made, and such notice shall state the
amount thereof (subject to the provisions of this Article 2).
(c) TELEPHONIC NOTICE. In lieu of providing a Notice of
Borrowing, an Authorized Officer may give Agent telephonic notice by the
required time of any proposed Prime Rate Loan; PROVIDED, HOWEVER, that, if
requested by Agent, Borrower shall promptly deliver a Notice of Borrowing with
respect to such Borrowing. Agent and Xxxxxxx shall not incur any liability to
Borrower in acting upon any telephonic notice which Agent believes in good faith
to have been given by a Authorized Officer, or for otherwise acting in good
faith under this Section 2.2(c), and in making any Loans pursuant to telephonic
notice.
2.3 CONVERSION OR CONTINUATION REQUIREMENTS.
(a) OPTION TO CONVERT OR CONTINUE. Borrower shall have the
option to: (i) convert, at any time, all or any part of the outstanding Loans
equal to One Million Dollars ($1,000,000), and integral multiples of One Hundred
Thousand Dollars ($100,000) in excess of such amount, from a Prime Rate Loan to
a Eurodollar Rate Loan and vice-versa; or (ii) upon the expiration of any
Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of the Eurodollar Rate Loan as a Eurodollar Rate Loan, with the
succeeding Interest Period(s) of such continued Eurodollar Rate Loan commencing
on the expiration date of the Interest Period previously applicable thereto;
PROVIDED, HOWEVER, that a Eurodollar Rate Loan may only be converted into a
Prime Rate Loan or continued as a Eurodollar Rate Loan on the expiration date of
the Interest Period applicable thereto; PROVIDED FURTHER, HOWEVER, that no
outstanding Loan may be continued as, or be converted into, a Eurodollar Rate
Loan in the event that, on the earlier of the date of the delivery of the Notice
of Conversion or Continuation or the telephonic notice in respect thereof, any
Default has occurred and is continuing; PROVIDED FURTHER, HOWEVER, that if
Borrower fails to deliver the appropriate Notice of Conversion or Continuation
or the telephonic notice in respect thereof, pursuant to the required notice
period, before the expiration of the Interest Period of a Eurodollar Rate Loan,
such Eurodollar Rate Loan shall automatically be converted to a Prime Rate Loan.
(b) NOTICE OF CONVERSION OR CONTINUATION. Borrower shall
deliver a Notice of Conversion or Continuation, given by telex, telecopy, mail,
or personal service, delivered to Agent at 0000 X Xxxxxx, XX Xxxxx 000,
Xxxxxxxxxx, X.X. 00000, no later than 2:00 p.m., Washington, D.C. time, on the
proposed conversion date (in the case of a conversion to a Prime Rate Loan), and
at least three (3) Eurodollar Business Days in advance of the proposed
conversion or continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). If such Notice of
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Conversion or Continuation is received by Agent not later than 2:00 p.m.,
Washington, D.C. time, on a Eurodollar Business Day such day shall be treated
as the first Eurodollar Business Day of the required notice period. In any
other event, such notice will be treated as having been received at the
opening of business of the next Eurodollar Business Day. A Notice of
Conversion or Continuation shall specify: (1) the proposed conversion or
continuation date (which shall be a Business Day or a Eurodollar Business
Day, as applicable); (2) the amount of the Loan to be converted or continued;
(3) the nature of the proposed conversion or continuation; and (4) in the
case of a conversion to, or continuation of, a Eurodollar Rate Loan, the
requested Interest Period.
(c) TELEPHONIC NOTICE. In lieu of delivering a Notice or
Continuation or Conversion, an Authorized Officer may give Agent telephonic
notice by the required time of any proposed conversion or continuation under
this Section 2.3; PROVIDED, HOWEVER, that such notice shall be promptly
confirmed in writing by delivery of an appropriate Notice of Conversion or
Continuation to Agent on or before the proposed conversion or continuation date.
Agent and Xxxxxxx shall incur no liability to Borrower in acting upon any
telephonic notice referred to above which Agent believes in good faith to have
been given by a duly authorized officer or other person authorized to act on
behalf of Borrower or for otherwise acting in good faith under this
Section 2.3(c) and in conversion or continuation by Agent and Lenders in
accordance with this Agreement pursuant to any telephonic notice.
(d) IRREVOCABLE NOTICE. Any Notice or Continuation or
Conversion (or telephonic notice in respect thereof) shall be irrevocable and
Borrower shall be bound to convert or continue in accordance therewith.
2.4 EURODOLLAR COSTS.
Borrower shall reimburse Agent or Lenders for any increase in
their costs (which shall include, but not be limited to, taxes, other than taxes
imposed on the overall net income of Agent or Lenders, fees or charges), or any
loss or expense (including, without limitation, any loss or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by Agent or Lenders to fund or maintain outstanding the principal amount of the
Loans) incurred by them directly or indirectly resulting from the making of any
Eurodollar Rate Loan due to: (i) the modification, adoption, new application or
enactment of any law, regulation or treaty or the interpretation thereof by any
governmental or other authority (whether or not having the force of law); (ii)
compliance by Agent or Lenders with any request or directive (whether or not
having the force of law) of any monetary or fiscal agency or authority;
(iii) violations by Borrower of the terms of this Agreement; or (iv) any
prepayment of a Eurodollar Rate Loan at any time prior to the end of the
applicable Interest Period.
The amount of such costs, losses, or expenses shall be determined
solely by Agent or any Lender asserting such claim for reimbursement based upon
the assumption that Agent or any such Lender funded one hundred percent (100%)
of each Eurodollar Rate Loan in the Eurodollar market. In attributing Agent's
or any such Xxxxxx's general costs relating to its eurocurrency operations to
any transaction under this Agreement, or averaging any costs over a
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period of time, Agent or such Lender may use any reasonable attribution or
averaging methods which it deems appropriate and practical. Agent or such
Lender shall notify Borrower of the amount due Agent or such Lender pursuant
to this Section 2.4 in respect of any Eurodollar Rate Loan as soon as
practicable but in any event within forty-five (45) days after the last day
of the Interest Period of such Loan and Borrower shall pay to Agent or such
Lender the amount due within fifteen (15) days of its receipt of such notice.
A certificate as to the amounts payable pursuant to the foregoing sentence,
together with whatever detail is reasonably available to Agent or such
Lender, shall be submitted by Agent or such Lender to Borrower. Such
determination shall, if not objected to within ten (10) days, be conclusive
and binding upon Borrower in the absence of manifest error. If Agent or any
Lender claim increased costs, losses or expenses pursuant to this Section
2.4, then Agent or such Lender, if requested by Xxxxxxxx, will use reasonable
efforts to take such steps, that Borrower reasonably requests, including
designating different lending offices, as would eliminate or reduce the
amount of such increased costs, losses or expenses, so long as taking such
steps would not, in the judgment of Agent or such Lender, otherwise be
disadvantageous to Agent or such Lender. Any recovery by Agent or any Lender
or their Lending Offices of amounts previously borne by Borrower pursuant to
this Section 2.4 shall be promptly remitted, without interest (unless Xxxxxx
received interest on such recovered amounts), to Borrower by Agent or any
such Lender.
2.5 ILLEGALITY; IMPOSSIBILITY.
In the event that any change in circumstances or any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, shall at any time in the reasonable opinion of Agent or
Majority Lenders make it unlawful or impractical for Agent or Majority Lenders
to fund or maintain a Eurodollar Rate Loan in the Eurodollar market or to
continue such funding or maintaining, or to determine or charge interest rates
based upon any appropriate Eurodollar Rate, Agent shall give notice of such
circumstances to Borrower and (i) in the case of any Eurodollar Rate Loan which
is outstanding, Borrower shall, if requested by Agent, prepay such Eurodollar
Rate Loan on or before the date specified in such request, together with
interest accrued thereon and any amounts due pursuant to Section 2.4, and
concurrently with any such prepayment, Lenders shall make a Prime Rate Loan to
Borrower in a principal amount equal to the principal amount of the Eurodollar
Rate Loan so prepaid, and (ii) Lenders shall not be obligated to make any
further Eurodollar Rate Loans to Borrower until Agent or Majority Lenders shall
determine that it would no longer be unlawful or impractical to do so. If Agent
or Majority Lenders shall give any notice pursuant to this Section 2.5, then
Agent or Majority Lenders, if requested by Borrower, will use reasonable efforts
to take such steps, that Borrower reasonably requests, including designating
different Lending Offices, as would avoid the illegality or impracticality which
is the subject of such notice, so long as taking such steps would not, in the
judgment of Agent or Majority Lenders, otherwise be disadvantageous to Agent or
Lender.
2.6 DISASTER.
Notwithstanding anything herein to the contrary, if Agent
reasonably determines (which determination shall be conclusive) that (a) Agent
is unable to determine the Eurodollar Rate with respect to any Notice of
Borrowing or Notice of Conversion or Continuation
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selecting the Eurodollar Rate because quotations of interest rates for the
relevant deposits are not being provided in the relevant amounts or for the
relative maturities or (b) the Eurodollar Rate will not adequately reflect
the cost to Majority Lenders of making or funding Eurodollar Rate Loans, THEN
(i) the right of Borrower to select the Eurodollar Rate shall be suspended
until Agent notifies Borrower that the circumstances causing such suspension
no longer exist, and (ii) Borrower shall repay in full the then outstanding
principal balance of all Eurodollar Rate Loans, together with interest
accrued thereon, on the last day of the Interest Period applicable to each
such Eurodollar Rate Loan.
2.7 LENDING OFFICES.
The Loans made by each Lender may be made from and maintained at
such offices (each a "Lending Office") of such Lender or its Affiliates as such
Lender may from time to time designate (whether or not such office or Affiliate
is specified on the signature pages hereof). A Lender shall not elect a Lending
Office that, at the time of making such election, increases the amounts which
would have been payable by Borrower to such Lender under this Agreement in the
absence of such election. With respect to Eurodollar Rate Loans made from and
maintained at any Lender's foreign offices or Affiliates, the obligation of
Borrower to repay such Eurodollar Rate Loans shall nevertheless be to such
Lender and shall, for all purposes of this Agreement (including for purposes of
the definition of the term "Majority Lenders") be deemed made or maintained by
it, for the account of any such office or Affiliate.
2.8 NOTES; RECORDKEEPING; STATEMENTS OF OBLIGATIONS.
(a) NOTES. As additional evidence of the Indebtedness of
Borrower to each Lender resulting from the Loans made by such Lender, Borrower
shall execute and deliver for the account of each Lender, a Note, dated the
Closing Date, setting forth such Xxxxxx's Commitment as the maximum principal
amount thereof.
(b) RECORDKEEPING. Each Lender shall record in its internal
records the date and amount of each Loan made, each conversion to a different
interest rate, each relevant Interest Period, the amount of principal and
interest due and payable from time to time hereunder, each payment thereof and
the resulting unpaid principal balance of such Loan. Any such recordation shall
be rebuttable presumptive evidence of the accuracy of the information so
recorded. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligations of Borrower hereunder and under any
Note to pay the principal of and interest on the Loans.
(c) MONTHLY STATEMENTS. Agent shall render monthly statements
of the Obligations, including statements of all principal, interest, and Agent's
Expenses owing, and such statements shall be presumed to be correct and accurate
and constitute an account stated between Borrower and Agent unless, within
thirty (30) days after receipt thereof by Borrower, Borrower shall deliver to
Agent, in accordance with Section 11.3, written objection thereof specifying the
error or errors, if any, contained in any such statement.
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2.9 LOANS BY XXXXXXX.
Agent shall promptly notify each Lender of that Xxxxxx's pro rata
portion of a Borrowing requested pursuant to Section 2.2. Not later than
2:00 p.m., Washington, D.C. time, on the date specified by Agent, which shall be
at least weekly, each Lender, subject to the terms and conditions hereof, shall
make its pro rata portion (as advised by Agent) of the Borrowing available, in
immediately available Dollars, to Agent at Agent's office located at 0000 X
Xxxxxx, XX Xxxxx 000, Xxxxxxxxxx, X.X. 00000, together with interest thereon
accrued from the date of such Borrowing to the date on which Xxxxxx initiates
payment to Agent at the Prime Rate.
Each Lender's obligation to make any Loan pursuant hereto is
several, and not joint or joint and several, and is not conditioned upon the
performance by each, any, or all of the other Lenders of their obligations to
make Loans. The failure by any Lender to perform its obligation to make Loans
will not affect or increase any other Lender's share of the Commitment. Agent
shall notify Lenders of the failure by any Lender to perform its obligation to
make a Loan required to be made by it hereunder and any Lender (other than a
Lender that has failed to perform its obligation to make its Loan) may, if it
desires, assume, in such proportion as Agent may determine, the obligation to
make Loans of the nonperforming Lender or Lenders, but no Lender shall be
obligated to do so.
2.10 PRO RATA TREATMENT.
Except as otherwise provided in this Agreement, each Borrowing
hereunder, each payment (including each prepayment) by Borrower on account of
the principal of and interest on the Loans and on account of any upfront fee or
commitment fee, and each conversion or continuation of Loans, shall be made
ratably in accordance with the Commitments.
2.11 PAYMENTS; APPLICATION.
(a) PAYMENTS BY XXXXXXXX. Borrower shall make each payment
hereunder or under the Notes by making, or causing to be made, the amount
thereof available to Agent, for the account of each Lender, in immediately
available Dollars, by deposit to Agent's Account (or at such other location as
Agent may designate, in writing, from time to time), not later than 2:00 p.m.,
Washington, D.C. time, on the date of payment.
(b) PAYMENTS FROM ACCOUNT DEBTORS. Unless and until Agent gives
Xxxxxxxx other written instructions, Borrower shall instruct all Receivable
Debtors and other account debtors of Borrower to remit all payments as
contemplated under the Operating Agreement. Upon the occurrence of an Event of
Default, Agent may instruct Receivable Debtors and other account debtors to
remit all payments to post office boxes which have been established as lock
boxes by Agent and Borrower, and, in such event, all checks and other payments
received by Agent shall be applied by Agent, in accordance with the provisions
of Section 2.10(c), in reduction of the Obligations. The receipt of any check
or other payment by Agent shall not be considered a payment on account until
23
such check or other payment is honored when presented for payment by Agent and
has been paid to Agent.
(c) APPLICATION OF PAYMENTS. In the event of receipt of direct
collections by Agent, all checks and other instruments received by Agent in
payment of or on account of the Obligations constitute only conditional payment
until such items are actually paid to Agent. Agent will credit Borrower with
any such payments made by check or other instruments on the same day that such
items are credited to Agent by their depositary bank. All such payments shall
be deemed made to each Lender and shall constitute satisfaction of Borrower's
obligations to each Lender with respect to the Loans so repaid on the same day
that such items are credited to Agent by their depositary bank in compliance
with the terms of this Section 2.10(c). Borrower waives the right to direct the
application of any and all payments at any time or times hereafter received by
Agent on account of the Obligations and Xxxxxxxx agrees that Agent shall have
the continuing exclusive right to apply and reapply such payments in any manner
as Agent may deem advisable, notwithstanding any entry by Agent upon its books.
(d) PAYMENTS TO LENDERS. Agent shall, at least weekly, initiate
payment to each Lender of its pro rata share of the Loans repaid. If Agent
shall initiate such payment to a Lender later than the date on which Agent
receives a payment from Borrower, then Agent shall pay to such Lender, in
addition to its pro rata share of the Loans repaid, interest on such amount,
until payment is initiated, at the Prime Rate.
2.12 NON-RECEIPT OF FUNDS.
Unless Agent shall have received notice from Borrower prior to
the date on which any payment is due to any of Lenders hereunder that Borrower
shall not make such payment in full, Agent may assume that Xxxxxxxx has made
such payment in full to Agent on such date and Agent may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent Borrower shall
not have so made such payment in full to Agent, each Lender shall repay to Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to Agent, at the Federal
Funds Rate.
2.13 TERMINATION OF THE COMMITMENTS; REPAYMENT OF THE LOANS.
The Commitments shall terminate on the Commitment Termination
Date. Borrower shall repay to Lenders in full on the Commitment Termination
Date the aggregate principal amount of the Loans outstanding on such date plus
all accrued but unpaid interest thereon.
2.14 VOLUNTARY COMMITMENT REDUCTIONS.
Prior to the Commitment Termination Date, Borrower shall have the
right, at any time and from time to time, subject to Section 2.4, to voluntarily
reduce permanently the
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unfunded and unused portion of the Commitment. Borrower shall give Agent
not less than ten (10) Business Days' prior written notice designating the
date (which shall be a Business Day) of such reduction and the amount of such
reduction. Such reduction shall be effective on the date specified in
Borrower's notice given in compliance herewith. Any reduction shall be in a
minimum amount of Five Million Dollars ($5,000,000) and, thereafter, in any
integral multiple of One Million Dollars ($1,000,000), divided among the
Lenders on a pro-rata basis.
ARTICLE III
INTEREST, PAYMENTS, FEES AND TAXES
3.1 INTEREST.
(a) RATES. Borrower shall pay interest on the unpaid principal
amount of each Loan at the following rates:
(i) in respect of each Prime Rate Loan, at a per annum rate
equal at all times to the Prime Rate PLUS one-quarter of one percent (0.25%).
(ii) in respect of each Eurodollar Rate Loan, at a per annum
rate equal at all times during each Interest Period for such Eurodollar Rate
Loan to the Eurodollar Rate for such Interest Period PLUS one and one-quarter
percent (1.25%).
Unless otherwise requested by Borrower, all Loans shall bear interest at the
rate specified in Section 3.1(a)(i).
(b) OVERDUE PAYMENT RATE. In the event that any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under the Notes, is not paid in full when due (whether at stated maturity, by
acceleration or otherwise), Xxxxxxxx agrees to pay interest on such unpaid
principal, interest or other amount, from the date such amount becomes due until
the date such amount is paid in full, payable on demand, at a per annum rate
equal at all times to two percent (2%) in excess of the rates otherwise
applicable thereto.
3.2 INTEREST PAYMENT DATES. Except as otherwise provided in Section
3.1(b), and, unless sooner accelerated pursuant to Section 7.2, interest on the
Loans shall be payable in arrears on the following dates:
(a) PRIME RATE LOANS. Interest on each Prime Rate Loan shall be
payable (i) monthly on the first Business Day of each month, (ii) on the date of
any prepayment or conversion of any such Prime Rate Loan, and (iii) on the
Commitment Termination Date;
(b) EURODOLLAR RATE LOANS. Interest on each Eurodollar Rate
Loan shall be payable (i) on the last day of each Interest Period for such
Eurodollar Rate Loan, and (ii) on the Commitment Termination Date; PROVIDED that
(A) in the case of any such Interest Period which is
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greater than ninety (90) days, interest on such Eurodollar Rate Loan shall be
payable on each date occurring at ninety (90) day intervals from the
beginning of such Interest Period, and on the last day of such Interest
Period and (B) if any prepayment, conversion or continuation is effected
other than on the last day of such Interest Period, accrued interest on such
Eurodollar Rate Loan shall be due on such prepayment, conversion or
continuation date as to the principal amount of such Eurodollar Rate Loan
prepaid, converted or continued.
(c) HOLIDAYS. Any payment (other than in respect of a
Eurodollar Rate Loan) which would otherwise become due on a day other than a
Business Day, shall instead become due on the next succeeding Business Day and
such extension shall be reflected in the computation of any payments hereunder
on such adjusted date.
3.3 FEES.
(a) UNUSED LINE FEE. Xxxxxxxx agrees to pay to Agent for the
account of each Lender an unused line fee on the average daily unused portion of
such Xxxxxx's Commitment as in effect from time to time from the Closing Date
until the Commitment Termination Date at the rate of one-eighth of one percent
(0.125%) per annum, payable (i) monthly in arrears on the first Business Day of
each month, commencing on the first such date after the Closing Date, and (ii)
on the Commitment Termination Date.
(b) AGENT'S FEE. Xxxxxxxx agrees to pay to Agent an annual fee
in the amount of Twenty-Five Thousand Dollars ($25,000), payable in advance on
the Closing Date with respect to the first year. Each year thereafter, such
annual fee shall be payable, in arrears, in quarterly installments of Six
Thousand Two Hundred Fifty Dollars ($6,250) each, commencing January 1, 1998,
and continuing on the first day of each third month thereafter until the
Commitment Termination Date, at which time a final installment of Six Thousand
Two Hundred Fifty Dollars ($6,250) shall be due and payable.
(c) AUDIT EXPENSES. Xxxxxxxx agrees to pay to Agent and
Xxxxxxx, upon demand therefor, all out of pocket audit expenses actually
incurred by Agent and/or Lenders in connection with each audit conducted
pursuant to Section 6.3(e), regardless of frequency of such audits.
3.4 COMPUTATION OF INTEREST AND FEES.
All computations of interest and unused line fees for any period
shall be calculated on the basis of a year of three hundred sixty (360) days for
the actual days elapsed in such period. Interest shall accrue from the first
day of the making of a Loan to the date of repayment of such Loan in accordance
with the provisions of this Agreement; PROVIDED, HOWEVER, that if a Loan is
repaid on the same day on which it is made, then one (1) day's interest shall be
paid on that Loan. Any and all interest not paid when due shall thereafter be
deemed to be a Prime Rate Loan made under Section 2.1 and shall bear interest
thereafter as provided for in Section 3.1(a)(i) to the greatest extent permitted
by law.
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3.5 HIGHEST LAWFUL RATE.
Anything herein to the contrary notwithstanding, if during any
period for which interest is computed hereunder, the applicable interest rate,
together with all fees, charges and other payments which are treated as interest
under applicable law, as provided for herein or in any other Loan Document,
would exceed the maximum rate of interest which may be charged, contracted for,
reserved, received or collected by any Lender in connection with this Agreement
under applicable law (the "Maximum Rate"), Borrower shall not be obligated to
pay, and such Lender shall not be entitled to charge, collect, receive, reserve
or take, interest in excess of the Maximum Rate, and during any such period the
interest payable hereunder shall be limited to the Maximum Rate.
3.6 INCREASED RISK-BASED CAPITAL COST.
If the amount of capital required or expected to be maintained by
any Lender or any Person directly or indirectly owning or controlling such
Lender (each a "Control Person"), shall be affected by:
(i) the introduction or phasing in of any law, rule or
regulation after the date hereof,
(ii) any change after the date hereof in the interpretation of
any existing law, rule or regulation by any central bank or United States or
foreign governmental authority charged with the administration thereof, or
(iii) compliance by such Lender or such Control Person with any
directive, guideline or request from any central bank or United States or
foreign governmental authority (whether or not having the force of law)
promulgated or made after the date hereof,
and such Lender shall have reasonably determined that such introduction, phasing
in, change or compliance shall have had or will thereafter have the effect of
reducing (x) the rate of return on such Lender's or such Control Person's
capital, or (y) the asset value to such Lender or such Control Person of the
Loans made or maintained by such Lender, in either case to a level below that
which such Lender or such Control Person could have achieved or would thereafter
be able to achieve but for such introduction, phasing in, change or compliance
(after taking into account such Lender's or such Control Person's policies
regarding capital), in either case by an amount which such Lender in its
reasonable judgment deems material, then, promptly upon demand by such Lender
given concurrently to Agent and Borrower, Borrower shall pay to such Lender or
such Control Person such additional amount or amounts as shall be sufficient to
compensate such Lender or such Control Person, as the case may be, for such
reduction. Each Lender shall use its commercial best efforts to notify Agent
and Borrower within 45 days of such Lender obtaining notice that amounts will be
due under this Section 3.6; PROVIDED, HOWEVER, any failure by any Lender to so
notify Agent or Borrower, shall not limit or otherwise affect the obligations of
Borrower hereunder to pay such amounts.
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3.7 TAXES.
(a) NO REDUCTION OF PAYMENTS. Borrower shall pay all amounts of
principal, interest, fees and other amounts due hereunder free and clear of, and
without reduction for or on account of, any present and future taxes, levies,
imposts, duties, fees, assessments, charges, deductions or withholdings and all
liabilities with respect thereto excluding in the case of each Lender and Agent,
income and franchise taxes imposed on it by the jurisdiction under the laws of
which such Lender or Agent is organized or in which its principal executive
offices may be located or any political subdivision or taxing authority thereof
or therein, and by the jurisdiction of such Lender's Lending Office and any
political subdivision or taxing authority thereof or therein (all such
nonexcluded taxes, levies, imposts, duties, fees, assessments, charges,
deductions, withholdings and liabilities being hereinafter referred to as
"Taxes"). If any Taxes shall be required by law to be deducted or withheld from
any payment, Borrower shall increase the amount paid so that the respective
Lender receives, or Agent receives, when due (and is entitled to retain), after
deduction or withholding for or on account of such Taxes (including deductions
or withholdings applicable to additional sums payable under this Section 3.8),
the full amount of the payment provided for in this Agreement.
(b) DEDUCTION OR WITHHOLDING; TAX RECEIPTS. If Borrower makes
any payment hereunder in respect of which it is required by law to make any
deduction or withholding, it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within the time allowed for
such payment under applicable law and promptly thereafter shall furnish to Agent
(for itself or for redelivery to the Lender to or for the account of which such
payment was made) an original or certified copy of a receipt evidencing payment
thereof, together with such other information and documents as Agent or any
Lender (through Agent) may reasonably request.
(c) INDEMNITY. If any Lender or Agent is required by law to
make any payment on account of Taxes, or any liability in respect of any Tax is
imposed, levied or assessed against any Lender or Agent, Borrower shall
indemnify Agent and Lenders for and against such payment or liability, together
with any incremental taxes, interest or penalties, and all costs and expenses,
payable or incurred in connection therewith, including Taxes imposed on amounts
payable under this Section 3.8, whether or not such payment or liability was
correctly or legally asserted. A certificate of Agent or any Lender as to the
amount of any such payment shall, in the absence of manifest error, be
conclusive and binding for all purposes.
(d) FORMS 1001 AND 4224. Each Lender that is incorporated under
the laws of any jurisdiction outside the United States agrees to deliver to
Agent and Borrower on or prior to the Closing Date, and in a timely fashion
thereafter, Form 1001, Form 4224 or such other documents and forms of the United
States Internal Revenue Service, duly executed and completed by such Lender, as
are required under United States law to establish such Xxxxxx's status for
United States withholding tax purposes.
(e) MITIGATION. Each Lender agrees that as promptly as
practicable after it becomes aware of the occurrence of an event that would
cause Borrower to make any payment in respect of Taxes to such Lender or a
payment in indemnification with respect to any Taxes, and in
28
any event if so requested by Borrower following such occurrence, each Lender
shall use reasonable efforts to make, fund or maintain its affected Loan (or
relevant part thereof) through another Lending Office if as a result thereof
the additional amounts so payable by Borrower would be avoided or materially
reduced and if, in the reasonable opinion of such Lender, the making, funding
or maintaining of such Loan (or relevant part thereof) through such other
Lending Office would not in any material respect be disadvantageous to such
Lender or contrary to such Lender's normal banking practices.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE INITIAL LOANS.
The obligations hereunder of each Lender, including the
obligation to make its initial Loan, shall be subject to the satisfaction of
each of the following conditions precedent on or before the Closing Date:
(a) FEES. Borrower shall have paid all fees then due in
accordance with Section 3.3.
(b) LOAN DOCUMENTS. Agent shall have received (i) this
Agreement and the Notes, duly executed by Xxxxxxxx; (ii) the Collateral
Documents duly executed by each of the respective parties thereto; and (iii) the
Certified Consent, duly executed by Certified and GEC.
(c) UCC SEARCH. Agent shall have received the results, dated as
of a recent date prior to the Closing Date, of searches conducted in the UCC
filing records in each of the governmental offices in each jurisdiction in which
personal property and fixture Collateral is located, which shall have revealed
no Liens with respect to any of the Collateral except Permitted Liens.
(d) ADDITIONAL CLOSING DOCUMENTS. Agent shall have received the
following, in form and substance satisfactory to it:
(i) a certificate of the chief financial officer of
Xxxxxxxx, dated the Closing Date, certifying copies of the Investment Agreement
(setting forth such terms and conditions as Agent shall require and otherwise in
form and substance satisfactory to Agent and its counsel), the Operating
Agreement (setting forth such terms and conditions as Agent shall require and
otherwise in form and substance satisfactory to Agent and its counsel), the GCC
Loan Guidelines (including therein descriptions of EFT Program Leases) and all
agreements and documents relating to outstanding Subordinated Debt and Capital
Debt;
(ii) evidence of termination of the BT Credit Agreement and
all related documents;
29
(iii) certificates of one or more nationally recognized
insurance brokers or other insurance specialists acceptable to Agent, dated as
of a recent date prior to the Closing Date, evidencing that all insurance with
respect to Borrower required under this Agreement and the Collateral Documents
is in full force and effect, naming Agent as loss payee with respect to casualty
coverages and as additional insured with respect to all general liability
coverages;
(iv) evidence that all (A) authorizations or approvals, and
all material licenses, permits or authorizations, of any Governmental Authority
and (B) approvals or consents of any other Person, required in connection with
the execution, delivery and performance of the Loan Documents or the operation
and conduct of Xxxxxxxx's business and ownership of its properties shall have
been obtained and shall be in full force and effect;
(v) (in sufficient copies for Lenders) the unaudited
Consolidated financial statements of Borrower and its Subsidiaries as at
July 31, 1996;
(vi) a completed Borrowing Base Certificate as of the date
not more than two Business Days before the Closing Date, together with the
related collateral reports and information, also as of such date, specified in
Section 6.1(a);
(vii) a certificate of the chief financial officer of
Xxxxxxxx, dated the Closing Date, stating that (A) the representations and
warranties contained in Article V and in the other Loan Documents are true and
correct on and as of the date of such certificate as though made on and as of
such date, (B) on and as of the Closing Date, no Default shall have occurred and
be continuing or shall result from the initial Borrowing and (C) no Material
Adverse Effect has occurred and is continuing;
(viii) a certificate of the chief financial officer of
Xxxxxxxx, attesting that both before and after giving effect to the transactions
contemplated by this Agreement, Xxxxxxxx is and will be Solvent; and
(ix) a certificate of the chief financial officer of
Xxxxxxxx, attesting that there is no pending or threatened litigation,
proceeding, inquiry or other action seeking an injunction, restraining order,
damages or other relief of any kind or nature whatsoever, legal or equitable,
with respect to the transactions contemplated by this Agreement, the Collateral
Documents, or Borrower's other business activities.
(e) CORPORATE DOCUMENTS. Agent shall have received the
following, in form and substance satisfactory to it:
(i) certified copies of the articles of incorporation of
Borrower, together with certificates as to good standing and tax status, from
the Secretary of State or other Governmental Authority, as applicable, of
Borrower's state of incorporation and certificates from the Secretary of State
or other Governmental Authority, as applicable, of each other state where
30
Borrower is qualified to do business as a foreign corporation as to Borrower's
status as a foreign corporation and tax status, each dated as of a recent date
prior to the Closing Date; and
(ii) a certificate of the Secretary or Assistant Secretary
of Xxxxxxxx, dated the Closing Date, certifying (A) copies of the bylaws of
Borrower and the resolutions of the Board of Directors of Borrower authorizing
the execution, delivery and performance of the Loan Documents and (B) the
incumbency, authority and signatures of each Authorized officer who will act as
such in connection with the Loan Documents.
(f) LEGAL OPINION. Agent shall have received the opinion of
Xxxxxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx, counsel to Xxxxxxxx, GEC and Certified,
dated the Closing Date, in substantially the form of the opinion rendered by
such law firm in connection with the BT Credit Agreement.
(g) DUE DILIGENCE AND OTHER MATTERS. Agent shall have completed
its due diligence investigation of Borrower, and shall be satisfied, in its sole
discretion, with the results thereof, including an investigation confirming that
there has not occurred a substantial impairment of the financial markets
generally.
(h) TERMINATION OF INTERCOMPANY OBLIGATIONS. All obligations
owing by Borrower to Certified under the Certified Note shall be paid in full,
and Agent shall have received copies of the Certified Note and the Certified
Subordination and Security Agreement marked "Cancelled".
4.2 CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of each Lender to make a Loan on the occasion of
each Borrowing, including the initial Loan, shall be subject to the satisfaction
of each of the following conditions precedent:
(a) NOTICE. Borrower shall have given the Notice of Borrowing
or telephonic notice thereof as provided in Section 2.2.
(b) BORROWING BASE CERTIFICATE AND COLLATERAL REPORTS. Borrower
shall have delivered to Agent a completed Borrowing Base Certificate dated as of
a date at least as recent as that required under Section 6.1(a)(viii), in form
and substance satisfactory to Agent, together with the related collateral
reports and information required under Section 6.1(a)(viii), and the statements
contained therein shall be true and correct on and as of the date thereof. The
giving of any Notice of Borrowing and the acceptance by Borrower of the proceeds
of a Borrowing shall each be deemed a certification to Agent and Lenders that on
and as of the date of such Borrowing such statements are true and correct as of
the date of such Borrowing Base Certificate and that any changes in the
information set forth therein have been only in the ordinary course of business.
31
(c) COLLATERAL. Agent shall have received, in form and
substance satisfactory to it, evidence that all filings, registrations and
recordings have been made in the appropriate governmental offices, and all other
action has been taken, which shall be necessary to create, in favor of Agent on
behalf of Lenders, a perfected first priority Lien on the Collateral, including
the filing of completed UCC-1 financing statements in the appropriate
governmental offices, any necessary deliveries of Collateral (including all
Collateral consisting of instruments) to the extent and in the manner provided
in Section 3 of the Security Agreement, together with appropriate endorsements,
and compliance with all other Collateral Procedures.
(d) MATERIAL ADVERSE EFFECT. On and as of the date of such
Borrowing, there shall have occurred no Material Adverse Effect since the date
of this Agreement (in the case of the initial Borrowing) or the date of the most
recent Borrowing (in the case of any subsequent Borrowing), as the case may be.
(e) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the date of
such Borrowing, both before and after giving effect thereto and to the
application of proceeds therefrom: (i) the representations and warranties
contained in Article V and in the other Loan Documents shall be true and correct
on and as of the date of such Borrowing as though made on and as of such date;
and (ii) no Default shall have occurred and be continuing or shall result from
such Borrowing. For purposes of this Section 4.2(e) in respect of the
representation and warranty contained in Section 5.1(p), clause (i) shall be
deemed to refer to the last day of the most recent fiscal quarter and fiscal
year for which financial statements have then been delivered and shall not be
deemed to refer to any other representations and clause (i) warranties which
relate solely to a specific date (PROVIDED that such other representations and
warranties shall be true and correct as of such date). The giving of any Notice
of Borrowing and the acceptance by Borrower of the proceeds of each Borrowing
following the Closing Date shall each be deemed a certification to Agent and
Lenders that on and as of the date of such Borrowing such statements are true.
(f) ADDITIONAL DOCUMENTS. Agent shall have received, in form
and substance satisfactory to it, such additional approvals, opinions, documents
and other information as Agent or any Lender (through Agent) may reasonably
request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to each Lender and Agent that:
(a) ORGANIZATION AND POWERS. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the law of the jurisdiction of its incorporation, is qualified to
do business and is in good standing in each jurisdiction in which the failure so
to qualify or be in good standing would have a Material Adverse Effect and has
all
32
requisite power and authority to own its assets and carry on its business and
to execute, deliver and perform its obligations under the Loan Documents.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by Borrower of the Loan Documents have been duly authorized by all
necessary corporate action of Borrower and do not and will not (i) contravene
the terms of the certificate or articles, as the case may be, of incorporation
and the bylaws of Borrower or result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which it or its properties may be
bound or affected; (ii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree or the like binding on or affecting
Borrower; or (iii) except as contemplated by this Agreement, result in, or
require, the creation or imposition of any Lien upon or with respect to any of
the properties of Borrower.
(c) BINDING OBLIGATION. The Loan Documents to which Borrower is
or will become a party constitute, or when delivered under this Agreement will
constitute, legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms.
(d) CONSENTS. No authorization, consent, approval, license,
exemption of, or filing or registration with, any Governmental Authority, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by Borrower of any of the Loan Documents, except for
recordings or filings in connection with the perfection of the Liens on the
Collateral in favor of Agent on behalf of Lenders.
(e) NO DEFAULTS. Neither Borrower nor any of its Subsidiaries
is in default under any material contract, lease, agreement, judgment, decree or
order to which it is a party or by which it or its properties may be bound,
which default would have a Material Adverse Effect.
(f) TITLE TO PROPERTIES; LIENS. Borrower and its Subsidiaries
have good and marketable title to their properties and assets, including all
property forming a part of the Collateral, and there is no Lien upon or with
respect to any of such properties or assets, including any of the Collateral,
except for Permitted Liens.
(g) LITIGATION. There are no actions, suits or proceedings
pending or, to the best of Borrower's knowledge, threatened against or affecting
Borrower or any of its Subsidiaries or the properties of Borrower or any of its
Subsidiaries before any Governmental Authority or arbitrator which if determined
adversely to Borrower or any such Subsidiary would have a Material Adverse
Effect.
(h) COMPLIANCE WITH ENVIRONMENTAL LAWS. Each of Borrower and
its Subsidiaries is in full compliance with all Environmental Laws, whether in
connection with the ownership, use, maintenance or operation of its Premises or
the conduct of any business thereon, or otherwise. Neither Borrower, any of its
Subsidiaries nor to the best of Xxxxxxxx's knowledge, after due and diligent
inquiry and investigation, any previous owner, tenant, occupant, user or
operator of the Premises, or any present tenant or other present occupant, user
or operator of
33
the Premises, has used, generated, manufactured, installed, treated,
released, stored or disposed of any Hazardous Substances on, under, or at the
Premises, except in compliance with all applicable Environmental Laws. After
due and diligent inquiry and investigation, Xxxxxxxx has determined that no
Hazardous Substances have at any time been spilled, leaked, dumped,
deposited, discharged, disposed of or released on, under, at or from the
Premises, nor have any of the Premises been used at any time by any Person as
a landfill or waste disposal site. There are no actions, suits, claims,
notices of violation, hearings, investigations or proceedings pending or, to
the best of Borrower's knowledge, threatened against or affecting Borrower or
any of its Subsidiaries or with respect to the ownership, use, maintenance
and operation of the Premises, relating to Environmental Laws or Hazardous
Substances.
(i) GOVERNMENTAL REGULATION. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the
Interstate Commerce Act, any state public utilities code or any other federal or
state statute or regulation limiting its ability to incur Indebtedness.
(j) ERISA.
(i) Borrower and all ERISA Affiliates have satisfied all
applicable contribution requirements under Section 412(c)(11) of the Internal
Revenue Code and have never sought a waiver under Section 412(d) of the Internal
Revenue Code;
(ii) no Termination Event has occurred and is continuing, or
is reasonably expected to occur;
(iii) the aggregate amount of Unfunded Accrued Benefits under
all Pension Plans (excluding in such computation Pension Plans with assets
greater than accrued benefits) does not exceed $250,000;
(iv) there is no condition or event under which Borrower,
any ERISA Affiliate, or any Plan maintained by Borrower or any ERISA Affiliate
could be subject to any risk of material liability under ERISA or the Internal
Revenue Code, regardless of whether Borrower or any ERISA Affiliate engaged in a
transaction giving rise to the liability;
(v) neither Borrower nor any ERISA Affiliate has unfunded,
contingent liability that exceeds $250,000 with respect to Plans that provide
post-retirement welfare benefits; and
(vi) all Plans maintained by, or contributed to by, Borrower
or any ERISA Affiliate comply in all material respects, and have been
administered in material compliance with, the requirements of applicable law
(including, if applicable, foreign law, ERISA and the Internal Revenue Code),
and in accordance with each Plan's terms.
34
(k) SUBSIDIARIES; OWNERSHIP.
(i) The name, capital structure and ownership of each
Subsidiary of Borrower on the date of this Agreement is as set forth in SCHEDULE
5.1(k). All of the outstanding capital stock of, or other interest in, each
such Subsidiary has been validly issued, and is fully paid and nonassessable.
Except as set forth in such Schedule, on the date of this Agreement Borrower has
no material equity interest in any Person.
(ii) Certified is directly, or indirectly through GEC, the
record and beneficial owner of 100% of the issued and outstanding shares of
capital stock of Borrower.
(l) RECEIVABLES.
(i) At the time of the creation of a Receivable, such
Receivable will be a bona fide existing obligation in the ordinary and usual
course of Borrower's business; to the best of Borrower's knowledge at the time
of the creation of a Receivable, such Receivable will be owed to Borrower
without any defenses, disputes, offsets, or counterclaims, or any rights of
cancellation; Borrower shall not have received notice of actual or imminent
bankruptcy or insolvency of any Receivable Debtor at the time the Receivable due
from such Receivable Debtor is created; in accordance with prudent credit
policies, to the best knowledge of Borrower at the time of the creation of any
Receivable, the Receivable Debtor will be able to timely discharge all of its
Indebtedness to Borrower; and, in the event Borrower becomes aware or is
notified that any of the warranties, representations or covenants contained in
this Section 5.1(l) is no longer completely accurate or true, or becomes aware
of any fact or event which would adversely affect any or all of the Receivable
Debtor's ability to timely discharge any or all of their Indebtedness to
Borrower, Borrower will immediately provide Agent with written notification of
such change in circumstances and any and all information Borrower has regarding
same.
(ii) At the time each Receivable is created, all performance
by Borrower giving rise to such Receivable shall have been completed. Borrower
shall deliver to Agent, all originals of all Store Development Loans, Equipment
Loans, Inventory Loans, Deposit Fund Loans, Affiliate Loans, EFT Program Leases,
and such other documentation as Agent may from time to time require. All copies
of all such items, whether retained by Xxxxxxxx, the Receivable Debtor
thereunder, or any other party, shall be conspicuously marked "Copy."
(iii) At the time each Receivable is created, all such
Receivables will be due and payable on terms based upon Xxxxxxxx's historical
ordinary course of business practices, or less (or on such other terms approved
in writing by Agent in advance of the creation of such Receivable and which are
expressly set forth on the face of all Finance Receivables and Additional
Loan/Lease Receivables, copies of which shall be held by Borrower as custodian
for Agent).
(iv) Agent shall retain its security interest in all
Receivables, eligible and ineligible, until all Obligations have been fully
repaid and the Commitments have been terminated. Borrower shall promptly notify
Agent of all recoveries and, on request, promptly notify Agent of all
35
disputes and claims. During the existence of an Event of Default, no
discount, credit or allowance shall be granted to any Receivable Debtor by
Borrower without Agent's consent. Agent may, during the existence of an
Event of Default, settle or adjust disputes and claims directly with
Receivable Debtors for amounts and upon terms which Agent considers
advisable, and in such cases Agent will credit Xxxxxxxx's account with only
the net amounts received by Agent in payment of the Receivables, after
deducting all Agent's Expenses in connection therewith.
(m) MARGIN REGULATIONS. Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying "margin stock"
(within the meaning of Regulations G or U of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of the
Loans will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock.
(n) TAXES. Each of Borrower and its Subsidiaries has duly filed
all tax and information returns required to be filed, and has paid all taxes,
fees, assessments and other governmental charges or levies that have become due
and payable, except to the extent such taxes or other charges are being
contested in good faith and are adequately reserved against in accordance with
GAAP.
(o) PATENTS AND OTHER RIGHTS. Each of Borrower and its
Subsidiaries possesses all permits, franchises, licenses, patents, trademarks'
trade names, service marks, copyrights and all rights with respect thereto, free
from burdensome restrictions, that are necessary for the ownership, maintenance
and operation of its business and neither Borrower nor any such Subsidiary is in
violation of any rights of others with respect to the foregoing.
(p) INSURANCE. The properties of Borrower and its Subsidiaries
are insured, with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily carried
by companies engaged in similar businesses and owning similar properties in the
localities where Borrower or such Subsidiary operates.
(q) FINANCIAL STATEMENTS. The audited Consolidated balance
sheet of Borrower and its Subsidiaries as at August 31, 1995, and the related
Consolidated statements of income, shareholders' equity and cash flows for the
fiscal year then ended, and the unaudited Consolidated balance sheet of Borrower
and its Subsidiaries as at July 31, 1996 and the related Consolidated statement
of income for the month then ended and the eleven month period then ended, are
complete and correct and fairly represent the financial condition of Borrower
and its Subsidiaries as at such dates and the results of operations of Borrower
and its Subsidiaries for the periods covered by such statements, in each case in
accordance with GAAP consistently applied, subject, in the case of the July 31,
1996 financial statements, to normal year-end adjustments. Since August 31,
1995, there has been no Material Adverse Effect.
(r) LIABILITIES. Neither Borrower nor any of its Subsidiaries
has any material liabilities, fixed or contingent, that are not reflected in the
financial statements referred to in subsection (q), in the notes thereto or
otherwise disclosed in writing to Lenders, other than liabilities
36
arising in the ordinary course of business since August 31, 1995 the NCB Loan
Purchase Agreement and the Guaranty.
(s) LABOR DISPUTES, ETC. There are no strikes, lockouts or
other labor disputes against Borrower or any of its Subsidiaries, or, to the
best of Borrower's knowledge, threatened against or affecting Borrower or any of
its Subsidiaries, which may have a Material Adverse Effect.
(t) DISCLOSURE. None of the representations or warranties made
by Borrower or any of its Subsidiaries in the Loan Documents as of the date of
such representations and warranties, and none of the statements contained in
each exhibit or report furnished by or on behalf of Certified, Borrower or any
of its Subsidiaries to Agent and Lenders in connection with the Loan Documents,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they are made, not misleading.
(u) SUBORDINATED DEBT; OTHER AGREEMENTS. Borrower is not in
default under or in breach of the terms of any Subordinated Debt or any other
indentures or agreements to which it is a party.
(v) MATERIAL ADVERSE EFFECT. No other Material Adverse Effect
has occurred and is continuing.
(w) SOLVENCY. Borrower is and shall hereafter be at all times
Solvent.
ARTICLE VI
COVENANTS
6.1 REPORTING COVENANTS.
So long as any of the Obligations shall remain unpaid or any
Lender shall have any Commitment, Xxxxxxxx agrees that:
(a) FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower will
furnish to Agent in sufficient copies for distribution to Lenders:
(i) as soon as available and in any event within 120 days
after the end of each fiscal year of Borrower, a Consolidated balance sheet of
Borrower and its Subsidiaries as of the end of such fiscal year, and the related
Consolidated statements of shareholders' equity and cash flows of Borrower and
its Subsidiaries for such fiscal year, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the previous fiscal year, and accompanied by a report
thereon of independent certified public accountants of recognized national
standing acceptable to Agent, which report shall be unqualified as to scope of
37
audit or the status of Borrower and its Subsidiaries as a going concern,
together with a certificate of such independent public accountants stating that
(1) their audit examination of Borrower and its Subsidiaries has included a
review of the terms of this Agreement as they relate to accounting matters; (2)
in the course of such audit examination, which audit was conducted by such
accountants in accordance with generally accepted auditing standards, such
accountants have obtained no knowledge that any Default has occurred and is
continuing, or, if such Default has occurred and is continuing, indicating the
nature thereof; PROVIDED that such accountants shall not be liable by reason of
any failure to obtain knowledge of any Default that would not be disclosed in
the course of their audit examination; and (3) based on their audit examination
nothing has come to their attention which causes them to believe that the
matters set forth in the Compliance Certificate delivered pursuant to clause (v)
for the applicable fiscal year with respect to compliance with the provisions of
Section 6.2 and subsections (a), (f), (g) and (h) of Section 6.4 are not stated
in accordance with the terms of this Agreement;
(ii) as soon as available and in any event within 45 days
after the end of each calendar month, a Consolidated balance sheet of Borrower
and its Subsidiaries as of the end of such month, and the related Consolidated
and consolidating statement of income of Borrower and its Subsidiaries for such
month and the portion of the fiscal year through such month, prepared in
accordance with GAAP consistently applied, all in reasonable detail and setting
forth in comparative form (A) the figures for the corresponding period in the
preceding fiscal year and (B) the projected figures for the corresponding period
contained in the forecast for the current fiscal year delivered to Lenders
hereunder, together with a certificate of the chief financial officer of
Borrower stating that such financial statements fairly present the financial
condition of Borrower and its Subsidiaries as at such date and the results of
operations of Borrower and its Subsidiaries for the period ended on such date
and have been prepared in accordance with GAAP (except for the absence of
footnote disclosure) consistently applied, subject to changes from normal,
year-end adjustments;
(iii) concurrent with the financial statements delivered
pursuant to subsection (i) above, copies of the reports submitted to Borrower by
its independent certified public accountants in connection with each annual
audit examination of Borrower and its Subsidiaries made by such accountants,
including the "management letter" submitted by such accountants to Borrower in
connection with their annual audit relating to the results of operations of
Borrower and any variance from Borrower's projections;
(iv) as soon as available and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
Borrower and together with the annual financial statements required pursuant to
clause (i), a Compliance Certificate as of the end of such fiscal quarter or
fiscal year;
(v) as soon as available and in any event not more than 90
days after the start of each fiscal year of Borrower and its Subsidiaries, a
Consolidated financial forecast for Borrower and its Subsidiaries for the
following fiscal year, including forecasted Consolidated balance sheets and
statements of income and cash flow of Borrower and its Subsidiaries, which
38
forecast shall (A) state the assumptions used in the preparation thereof, (B)
contain such other information as requested by any Lender and (C) be in form
satisfactory to the Majority Lenders;
(vi) as soon as available, copies of all financial
statements and reports delivered by Certified under Section 6.12 of the
Certified Loan Agreement, together with all certificates accompanying or
delivered in connection such financial statements and reports;
(vii) as soon as available and in any event not later than
fifteen Business Days after the end of each calendar month (or more frequently
if requested by the Majority Lenders), (A) a completed Borrowing Base
Certificate, (B) a report with respect to the Receivables containing (1)
detailed aging information, (2) summaries of the Receivables, including a
breakdown thereof by category, (3) descriptions of any amendments modifications
and waivers entered into with or otherwise granted to any Receivable Debtors,
and (4) a listing of all charge-offs since the date of the last such report, and
(C) the "Watch Report" prepared by Borrower with respect to the Receivable
Debtors, each as of the end of such month (or other reporting period so
requested) and in form and substance satisfactory to Agent;
(viii) such reports and notices as are required by the
Security Agreement;
(ix) prompt written notice of any proposed changes in the
GCC Loan Guidelines and material changes to the other documentation, credit and
collection policies and practices of Borrower, setting forth the details
thereof; and
(x) promptly after the giving, sending or filing thereof,
copies of all reports, if any, which Certified sends to the holders of its
capital stock or other securities and of all reports or filings, if any, by
Certified, Borrower or any of their Subsidiaries with the Securities and
Exchange Commission or any national securities exchange.
(b) ADDITIONAL INFORMATION. Borrower will furnish to Agent:
(i) concurrent with the financial statements delivered
pursuant to Sections 6.1(a)(i) and (ii), a certificate of the chief financial
officer of Borrower certifying that as of the end of the fiscal year, fiscal
quarter or month, as applicable, no Default has occurred and is continuing, or,
if a Default has occurred and is continuing, setting forth details of such
Default and the action which Borrower proposes to take with respect thereto;
(ii) prompt written notice of (A) any proposed acquisition
of stock, assets or property by Borrower that could reasonably be expected to
result in environmental liability under Environmental Laws, and (B) (1) any
spillage, leakage, discharge, disposal, leaching, migration or release of any
Hazardous Substances required to be reported to any Governmental Authority under
applicable Environmental Laws, and (2) all actions, suits, claims, notices of
violation, hearings, investigations or proceedings pending, or to the best of
Xxxxxxxx's knowledge, threatened against or affecting Borrower with respect to
the ownership, use, maintenance and operation of the Premises,
39
relating to Environmental Laws or Hazardous Substances, in each case together
with a statement of an Authorized Officer setting forth the details thereof
and the action which Xxxxxxxx proposes to take with respect thereto;
(iii) prompt written notice of all actions, suits and
proceedings before any Governmental Authority or arbitrator pending, or to the
best of Borrower's knowledge, threatened against or affecting Borrower or any of
its Subsidiaries which (A) if adversely determined would involve an aggregate
liability of $250,000 or more, or (B) otherwise may have a Material Adverse
Effect;
(iv) promptly and in any event within 30 days after Xxxxxxxx
has knowledge that any Termination Event has occurred, a statement of an
Authorized Officer setting forth details as to such Termination Event and the
action which Xxxxxxxx proposes to take with respect thereto, together with a
copy of any notice of such Termination Event to the PBGC; and promptly after
Xxxxxxxx becomes aware thereof, the details concerning any action taken or
proposed to be taken by the IRS, PBGC, Department of Labor or other Person with
respect thereto;
(v) promptly upon the commencement or increase of
contributions to, the adoption of, or an amendment to, a Plan by Borrower or an
ERISA Affiliate, if such commencement or increase of contributions, adoption, or
amendment could reasonably be expected to result in a net increase in unfunded
liability to Borrower or an ERISA Affiliate in excess of $250,000, a calculation
of the net increase in unfunded liability;
(vi) promptly after filing or receipt thereof by Borrower or
any ERISA Affiliate, copies of the following: (A) any notice received from the
PBGC of intent to terminate or have a trustee appointed to administer any
Pension Plan; (B) any notice received from the sponsor of a Multiemployer Plan
concerning the imposition, delinquent payment, or amount of withdrawal
liability; (C) any demand by the PBGC under Subtitle D of Title IV of ERISA; and
(D) any notice received from the IRS regarding the disqualification of a Plan
intended to qualify under Section 401(a) of the Internal Revenue Code;
(vii) the information regarding insurance maintained by
Borrower as required under Section 6.3(c);
(viii) prompt written notice of any Event of Default or any
other condition or event which has resulted, or that could reasonably be
expected to result, in a Material Adverse Effect; and
(ix) such other information respecting the operations,
properties, business or condition (financial or otherwise) of Certified,
Borrower or their respective Subsidiaries (including with respect to the
Collateral) as any Lender (through Agent) may from time to time reasonably
request.
40
6.2 FINANCIAL COVENANTS.
So long as any of the Obligations shall remain unpaid or any
Lender shall have any Commitment, Xxxxxxxx agrees that:
(a) DEBT RATIO. Borrower will maintain a ratio of its
Indebtedness (excluding any Capital Debt) to Consolidated Adjusted Tangible Net
Worth as of the end of each of Borrower's fiscal quarters of not more than 1.6
to 1.0.
(b) MINIMUM TANGIBLE NET WORTH. Borrower will maintain
Consolidated Tangible Net Worth at all times of not less than $12,500,000.
(c) INTEREST COVERAGE RATIO. Borrower will maintain a ratio of
Consolidated EBIT to Consolidated Interest Expense, for the period of four
consecutive fiscal quarters of the Borrower then ended (taken as one accounting
period), of not less than 0.9 to 1.0, as determined as of the end of each of
Borrower's first three fiscal quarters, and of not less than 1.0 to 1.0, as of
each of Borrower's fiscal year ends.
6.3 ADDITIONAL AFFIRMATIVE COVENANTS.
So long as any of the Obligations shall remain unpaid or any
Lender shall have any Commitment, Xxxxxxxx agrees that:
(a) PRESERVATION OF EXISTENCE, ETC. Borrower will, and will
cause each of its Subsidiaries to, maintain and preserve its corporate
existence, its rights to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its business and
operations and the ownership of its properties.
(b) PAYMENT OF TAXES. ETC. Borrower will, and shall cause each
of its Subsidiaries to, pay and discharge all taxes, fees, assessments and
governmental charges or levies imposed upon it or upon its properties or assets
prior to the date on which penalties attach thereto, and all lawful claims for
labor, materials and supplies which, if unpaid, might become a Lien upon any
properties or assets of Borrower or any Subsidiary, except to the extent such
taxes, fees, assessments or governmental charges or levies, or such claims, are
being contested in good faith by appropriate proceedings and are adequately
reserved against in accordance with GAAP.
(c) MAINTENANCE OF INSURANCE. Borrower, at its expense, shall
keep and maintain the Collateral insured against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks ordinarily insured
against by other owners who use such properties in businesses for the full
insurable replacement value thereof. Borrower shall also keep and maintain
business interruption insurance and public liability and property damage
insurance relating to Borrower's ownership and use of the Collateral and its
other assets. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be satisfactory to Agent. Borrower shall
deliver to Agent certified copies of such policies of insurance and, upon
Agent's
41
request, evidence of the payments of all premiums therefor. All such
policies of insurance except those of public liability and those relating to
property damage caused by Borrower or Borrower's agents and employees shall
contain an endorsement in a form satisfactory to Agent showing Agent, on
behalf of Xxxxxxx, as an additional insured thereunder, with a waiver of
warranties thereof, and all proceeds payable thereunder shall be payable to
Agent, on behalf of Lenders, and, upon receipt by Agent, shall be applied on
the account of the Obligations. To secure the payment of the Obligations,
Borrower grants Agent, on behalf of Xxxxxxx, a security interest in and to
all such policies of insurance relating to the Collateral and the proceeds
thereof, and Borrower shall direct all insurers under such policies of
insurance relating to the Collateral to pay all proceeds thereof directly to
Agent, on behalf of Lenders.
Borrower hereby irrevocably appoints Agent, on behalf of
Xxxxxxx (acting through any of Agent's officers, employees or agents designated
by Agent) to act, during the existence of an Event of Default, as Xxxxxxxx's
attorney in fact for the purpose of making, settling, and adjusting claims under
such policies of insurance relating to the Collateral, endorsing the name of
Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. Absent the existence of
an Event of Default, Borrower shall have the right to make, settle and adjust
any and all claims under such policies of insurance; PROVIDED, HOWEVER, that
Borrower shall not legally conclude the settlement or adjustment of any claim in
excess of Two Hundred Fifty Thousand Dollars ($250,000) without first obtaining
the written consent of Agent. Borrower will not cancel any of such policies
without Agent's prior written consent. Each such insurer shall agree by
endorsement upon the policy or policies of insurance issued by it to Borrower as
required above, or by independent instruments furnished to Agent, that it will
give Agent at least ten (10) days' written notice before any such policy or
policies of insurance shall be altered or cancelled, and that no act or default
of Borrower, or any other Person, shall affect the right of Agent to recover
under such policy or policies of insurance required above or to pay any premium
in whole or in part relating thereto. If Borrower fails to obtain such policy
or policies of insurance, Agent may, without waiving or releasing any
Obligations or Default, but shall have no obligation to do so, obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect to such policies which Agent deem advisable. All sums so
disbursed by Agent, as well as reasonable attorneys' fees, court costs,
expenses, and other charges relating thereto, shall be a part of the Obligations
and payable on demand.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Borrower at all
times hereafter shall maintain, and shall cause each of its Subsidiaries to
maintain, a standard and modern system of accounting in accordance with GAAP,
consistently applied, with ledger and account cards or computer tapes and
computer discs, computer printouts and computer records pertaining to the
Collateral which contain information as may from time to time be requested by
Agent. Borrower shall not, and Borrower shall not permit any of its
Subsidiaries to, modify or change its method of accounting or enter into, modify
or terminate any agreement presently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's and its Subsidiaries' accounting records without
written consent of Agent first
42
obtained and without said accounting firm or service bureau agreeing to
provide information regarding the Collateral and Xxxxxxxx's financial
condition to Agent.
(e) INSPECTION RIGHTS; AUDITS. Borrower will at any reasonable
time and from time to time (i) permit Agent and Lenders or any of their
respective agents or representatives to visit and inspect any of the properties
of Borrower and its Subsidiaries and to examine and make copies of and abstracts
from the records and books of account of Borrower and its Subsidiaries, and to
discuss the business affairs, finances and accounts of Borrower and any such
Subsidiary with any of the officers, employees or accountants of Borrower or
such Subsidiary, and (ii) permit Agent or any of its agents or representatives
to conduct one (1) periodic audit of the Collateral each twelve month period,
commencing the Closing Date (or more during the continuance of an Event of
Default and at such other frequencies as Agent or the Majority Lenders shall
reasonably request absent an Event of Default), PROVIDED that communications
between Agent or its agents or representatives and any Receivable Debtor in
connection with any such audit shall be subject to the prior consent of Borrower
at all times other than during the existence of an Event of Default, which
consent of Borrower shall not be unreasonably withheld.
(f) COMPLIANCE WITH LAWS, ETC. Borrower will, and will cause
each of its Subsidiaries to, comply in all material respects with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including all Environmental Laws) and the terms of any
indenture, contract or other instrument to which it may be a party or under
which it or its properties may be bound.
(g) MAINTENANCE OF PROPERTIES, ETC. Borrower will, and will
cause each of its Subsidiaries to, maintain and preserve all of its properties
necessary or useful in the proper conduct of its business in good working order
and condition in accordance with the general practice of other corporations of
similar character and size, ordinary wear and tear excepted.
(h) LICENSES. Borrower will, and will cause each of its
Subsidiaries to, obtain and maintain all licenses, authorizations, consents,
filings, exemptions, registrations and other governmental approvals necessary in
connection with the execution, delivery and performance of the Loan Documents,
the consummation of the transactions therein contemplated or the operation and
conduct of its business and ownership of its properties.
(i) ACTION UNDER ENVIRONMENTAL LAWS. Borrower will, and will
cause each of its Subsidiaries to, upon becoming aware of the presence of any
Hazardous Substance or the existence of any environmental liability under
applicable Environmental Laws with respect to the Premises, take all actions, at
their cost and expense, as shall be necessary or advisable to investigate and
clean up the condition of the Premises, including all removal, containment and
remedial actions, and restore the Premises to a condition in compliance with
applicable Environmental Laws.
(j) USE OF PROCEEDS. Borrower will use the proceeds of the
Loans solely for the purpose of providing financing to the Certified Patrons in
accordance with the GCC Loan Guidelines and to Affiliates of Borrower pursuant
to Affiliate Loans.
43
(k) NCB STOCK. Borrower shall hold that number of shares of
Class B capital stock of NCB ("NCB Stock"), par value $100 per share, which is
equal to one percent (1%) of the maximum amount of NCB's Commitment, and
Borrower shall promptly execute and deliver such additional documents or
instruments as NCB shall deem necessary or appropriate for NCB to obtain a
perfected first priority Lien on such NCB Stock.
(l) FURTHER ASSURANCES AND ADDITIONAL ACTS. Borrower will
execute, acknowledge, deliver, file, notarize and register at its own expense
all such further agreements, instruments, certificates, documents and assurances
and perform such acts as Agent or the Majority Lenders shall deem necessary or
appropriate to effectuate the purposes of the Loan Documents, and promptly
provide Agent with evidence of the foregoing satisfactory in form and substance
to Agent and the Majority Lenders, including, without limitation, any such
agreements, instruments and documents that Agent shall deem necessary or
desirable to reflect the release of any Collateral in connection with an
Incremental Purchase.
6.4 NEGATIVE COVENANTS.
So long as any of the Obligations shall remain unpaid or any
Lender shall have any Commitment, Xxxxxxxx agrees that:
(a) INDEBTEDNESS. Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or otherwise become liable for or
suffer to exist any Indebtedness, other than:
(i) Indebtedness of Borrower to Lenders hereunder;
(ii) accounts payable to trade creditors for goods and
services and current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of Borrower's or such Subsidiary's
business in accordance with customary terms and paid within the specified time,
unless contested in good faith by appropriate proceedings and reserved for in
accordance with GAAP;
(iii) Indebtedness consisting of guarantees resulting from
endorsement of negotiable instruments for collection by Borrower or any of its
Subsidiaries in the ordinary course of business;
(iv) existing Indebtedness of Borrower and its Subsidiaries
set forth in SCHEDULE 6.4(A)(IV);
(v) Senior Debt and Subordinated Debt of Borrower and its
Subsidiaries in an aggregate principal amount not to exceed $30,000,000 at any
time outstanding;
(vi) Indebtedness consisting of Capital Debt;
44
(vii) Indebtedness of Borrower and its Subsidiaries under
Capital Leases in an aggregate principal amount not to exceed $1,000,000 at any
time outstanding;
(viii) Indebtedness of Borrower to any of its wholly-owned
Subsidiaries or of any of its wholly-owned Subsidiaries to another of its
wholly-owned Subsidiaries; and
(ix) Indebtedness of Borrower incurred pursuant to the Loan
Purchase Agreements in a maximum principal amount not to exceed $70,000,000 and
Indebtedness of Borrower under the Guaranty.
(b) LIENS. Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of its properties or assets, whether now owned or hereafter
acquired, other than Permitted Liens.
(c) CHANGE IN NATURE OF BUSINESS. Borrower will not, and will
not permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it at the
date hereof.
(d) RESTRICTIONS ON FUNDAMENTAL CHANGES. Borrower will not, and
will not permit any of its Subsidiaries to, (i) liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or (ii) merge with or
consolidate into, or acquire all or substantially all of the assets of, any
Person, or enter into any partnership or joint venture with any Person, or sell,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets, except that any
of Borrower's wholly-owned Subsidiaries may merge with, consolidate into or
transfer all or substantially all of its assets to another of Borrower's
wholly-owned Subsidiaries or to Borrower.
(e) SALES AND LEASES OF ASSETS. Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease, transfer or otherwise dispose
of, or part with control of (whether in one transaction or a series of
transactions) any assets (including any shares of stock in any Subsidiary or
other Person), except (i) sales or other dispositions of assets in the ordinary
course of business which have become worn out or obsolete or which are promptly
being replaced; (ii) sales or other dispositions of assets by any of its
wholly-owned Subsidiaries to another of its wholly-owned Subsidiaries or to
Borrower; (iii) the sale of any Receivables to Certified to facilitate the
collection of such Receivables in accordance with the provisions of the
Operating Agreement; (iv) the sale or other disposition of Receivables or other
lease or loan assets if (A) such sale or other disposition by Borrower is
effected as part of and contemporaneously with the extension of credit by
Borrower to the Receivables Debtor which gives rise to the Receivable, loan or
lease asset subject of the sale or disposition, and (B) payments by the
Receivable Debtors thereon shall be made directly to the transferees of such
assets and such transferees shall have all other loan servicing obligations with
respect to such assets; (v) the sale or other disposition effected by Borrower
of assets acquired as an Investment permitted under Section 6.4(f)(v) which sale
or other disposition is effected in compliance
45
with obligations of Borrower incurred when such Investment was made; and (vi)
the sale of the Released Collateral in accordance with the Loan Purchase
Agreements.
(f) LOANS AND INVESTMENTS. Borrower will not, and will not
permit any of its Subsidiaries to, purchase or otherwise acquire the capital
stock, assets (constituting a business unit), obligations or other securities of
or any interest in any Person, or otherwise extend any credit to or make any
additional investments in any Person, other than in connection with:
(i) Receivables under the GCC Loan Guidelines in the
ordinary course of Xxxxxxxx's business, except as provided in clause (v);
(ii) extensions of credit to customers of GEC in accordance
with the GCC Loan Guidelines in the ordinary course of Xxxxxxxx's business not
to exceed $750,000 at any time outstanding;
(iii) Affiliate Loans;
(iv) Permitted Investments and the NCB Stock; or
(v) extensions of credit in the form of subordinated
Indebtedness from, and equity investments in, Certified Patrons, PROVIDED that,
except for the investments and subordinated Indebtedness set forth on SCHEDULE
6.4(F)(V), no such extension of credit shall be made or investment consummated
if, after and giving effect thereto, the aggregate amount of such subordinated
Indebtedness and equity investments shall exceed, at the time of the credit
extension or investment, as the case may be, the amount set forth below under
the heading "Maximum Amount" during a time that the amount of Consolidated
Adjusted Tangible Net Worth of Borrower shall be within the range set forth
opposite such Maximum Amount:
Consolidated Adjusted Maximum
Tangible Net Worth Amount
-------------------------- -----------
Less than $14,500,000 $ 0
$14,500,000 to $14,999,999 $ 5,000,000
$15,000,000 to $17,499,999 $ 8,000,000
$17,500,000 to $19,999,999 $10,000,000
$20,000,000 to $22,499,999 $12,000,000
$22,500,000 to $24,999,999 $14,000,000
$25,000,000 to $27,499,999 $16,000,000
$27,500,000 to $29,999,999 $18,000,000
$30,000,000 and above $20,000,000
PROVIDED that nothing in the foregoing clause (v) shall require the liquidation
or redemption of any such subordinated Indebtedness or equity investment that
was permitted hereunder when made; PROVIDED, FURTHER, any increase in the book
or fair market value of any such equity investments in
46
Certified Patrons shall be disregarded for purpose of the computation of
Maximum Amount; PROVIDED FURTHER, for the purpose of calculating Consolidated
Adjusted Tangible Net Worth for this Section 6.4(f)(v), Capital Debt shall
not include that portion, if any, thereof that exceeds fifty percent (50%) of
Consolidated Tangible Net Worth.
(g) CAPITAL EXPENDITURES. Borrower will not, and will not
permit any of its Subsidiaries to, make any expenditures for fixed or capital
assets, including obligations under Capital Leases, in excess of $100,000, on a
Consolidated basis, in any fiscal year of Borrower. For purposes of the
foregoing, the acquisition by Borrower of (i) equipment for the purpose of
leasing such equipment to Certified Patrons in the ordinary course of business
or (ii) assets upon foreclosure of a security interest securing a Receivable, or
in settlement thereof, arising in the ordinary course of business shall not be
deemed an expenditure for fixed or capital assets.
(h) OPERATING LEASES. Borrower will not, and will not permit
any of its Subsidiaries to, make any expenditures in respect of Operating
Leases, except for: (i) Operating Leases between Borrower and any of its
wholly-owned Subsidiaries or between any Subsidiary and any of Borrower's
wholly-owned Subsidiaries; and (ii) Operating Leases which would not cause
Borrower and its Subsidiaries, on a Consolidated basis, to make payments
exceeding $100,000 in any fiscal year of Borrower.
(i) SALES AND LEASEBACKS. Borrower will not, and will not
permit any of its Subsidiaries to, become liable, directly or indirectly, with
respect to any lease, whether an Operating Lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter
acquired, (i) which Borrower or such Subsidiary has sold or transferred or is to
sell or transfer to any other Person or (ii) which Borrower or such Subsidiary
intends to use for substantially the same purposes as any other property which
has been or is to be sold or transferred by Borrower or such Subsidiary to any
other Person in connection with such lease.
(j) DISTRIBUTIONS. (i) Borrower will not declare or pay any
dividends in respect of Borrower's capital stock, or purchase, redeem, retire or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its shareholders as such, or make any
distribution of assets to its shareholders as such, or permit any of its
Subsidiaries to purchase, redeem, retire, or otherwise acquire for value any
stock of Borrower, except that Borrower may declare and deliver dividends and
distributions payable only in common stock of Borrower. (ii) Borrower will not
permit any Subsidiary of Borrower to grant or otherwise agree to or suffer to
exist any consensual restrictions on the ability of such Subsidiary to pay
dividends and make other distributions to Borrower, or to pay any Indebtedness
owed to Borrower or transfer properties and assets to Borrower.
(k) AMENDMENTS OF CERTAIN DOCUMENTS. Borrower will not (i)
agree to or permit any amendment, modification or waiver of Section 8 of the
Operating Agreement, or agree to or permit any amendment, modification or waiver
of any other material provision of, or terminate, the Investment Agreement or
the Operating Agreement; or (ii) agree to or permit any amendment, modification
or waiver of any provision of any agreement related to any Capital Debt or
Subordinated
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Debt (including any amendment, modification or waiver pursuant to an exchange
of other securities or instruments for outstanding Capital Debt or
Subordinated Debt) if the effect of such amendment, modification or waiver is
to (A) increase the interest rate on such Capital Debt or Subordinated Debt
or change (to earlier dates) the dates upon which principal and interest are
due thereon; (B) alter the redemption, prepayment or subordination provisions
thereof; (C) alter the covenants and events of default in a manner which
would make such provisions more onerous or restrictive to Borrower or such
Subsidiary; or (D) otherwise increase the obligations of Borrower in respect
of such Subordinated Debt or Capital Debt or confer additional rights upon
the holders thereof which individually or in the aggregate would be adverse
to Borrower, its Subsidiaries or Lenders.
(l) AMENDMENTS OF GCC LOAN GUIDELINES. Borrower will not agree
to or permit any amendment, modification or waiver of any provision of the GCC
Loan Guidelines or other documentation, credit and collection policies and
practices of Borrower that has the effect of diminishing the credit quality
standards or expanding the credit availability criteria set forth in the GCC
Loan Guidelines, making such policies and practices less rigorous, adding New
Lease/Loan Products, or that otherwise would have a Material Adverse Effect
without the prior written consent of Majority Lenders, which consent will not be
unreasonably delayed or withheld and which consent shall include, with respect
to New Lease/Loan Products, a designation as to whether each such New Lease/Loan
Product shall be considered a Finance Receivable or an Additional Loan/Lease
Receivable.
(m) TRANSACTIONS WITH RELATED PARTIES. Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction,
including the purchase, sale or exchange of property or the rendering of any
services, with any Affiliate, any officer or director thereof or any Person
which beneficially owns or holds five percent (5%) or more of the equity
securities, or five percent (5%) or more of the equity interest, thereof (a
"Related Party"), or enter into, assume or suffer to exist, or permit any
Subsidiary to enter into, assume or suffer to exist, any employment or
consulting contract with any Related Party, except a transaction or contract
which is in the ordinary course of Borrower's or such Subsidiary's business and
which is upon fair and reasonable terms not less favorable to Borrower or such
Subsidiary than it would obtain in a comparable arm's length transaction with a
Person not a Related Party; PROVIDED, HOWEVER, that nothing in this subsection
shall prohibit the Operating Agreement or any Affiliate Loans made by Borrower
in the ordinary course of its business (subject to the limitations thereon set
forth in subsection (f)).
(n) HAZARDOUS SUBSTANCES. Borrower will not, and will not
permit any of its Subsidiaries to, use, generate, manufacture, install, treat,
release, store or dispose of any Hazardous Substances, except in compliance with
all applicable Environmental Laws.
(o) SUBORDINATED DEBT. Borrower will not, and will not permit
any of its Subsidiaries to, prepay, purchase, acquire, redeem or retire any
Subordinated Debt.
(p) PURCHASES UNDER NCB LOAN PURCHASE AGREEMENT. Borrower will
not make Incremental Purchases, or sell, transfer or otherwise dispose of any
Collateral or rights or interest therein to NCB in connection with any
Incremental Purchase, unless Borrower shall,
48
contemporaneously with delivery under the NCB Loan Purchase Agreement to the
Seller (as defined in the NCB Loan Purchase Agreement) of proper written
notice of a request to make an Incremental Purchase, deliver to Agent a duly
executed Purchase Notice and completed, unsigned Release.
ARTICLE VII
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT.
Any of the following events which shall occur shall constitute an
"Event of Default":
(a) PAYMENTS. Borrower shall fail to pay when due any amount of
principal of, or interest on, any Loan or Note, or any fee or other amount
payable hereunder or under any of the other Loan Documents, when due.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty by Borrower under or in connection with this Agreement or the other
Loan Documents shall prove to have been incorrect in any material respect when
made or deemed made.
(c) FAILURE BY XXXXXXXX TO PERFORM CERTAIN COVENANTS. Borrower
shall fail in any material respect to perform or observe any term, covenant or
agreement contained in Section 6.2, subsections (a) or (j) of Section 6.3 or
Section 6.4.
(d) FAILURE BY XXXXXXXX TO PERFORM OTHER COVENANTS. Borrower
shall fail in any material respect to perform or observe any other term,
covenant or agreement contained in this Agreement or any other Loan Document on
its part to be performed or observed and any such failure shall remain
unremedied for a period of twenty (20) days from the occurrence thereof (unless
the Majority Lenders determine that such failure is not capable of remedy).
(e) BANKRUPTCY. Borrower or any of its Subsidiaries, or
Certified or any of its Subsidiaries ("Other Certified Subsidiaries"), shall
admit in writing its inability to, or shall fail generally or be generally
unable to, pay its debts (including its payrolls) as such debts become due, or
shall make a general assignment for the benefit of creditors; or Borrower,
Certified or any such Subsidiary of Borrower or Other Certified Subsidiary shall
file a voluntary petition in bankruptcy or a petition or answer seeking
reorganization, to effect a plan or other arrangement with creditors or any
other relief under the Bankruptcy Code or under any other state or federal law
relating to bankruptcy or reorganization granting relief to debtors, whether now
or hereafter in effect, or shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary petition filed against
Borrower, Certified or any such Subsidiary of Borrower or Other Certified
Subsidiary pursuant to the Bankruptcy Code or any such other state or federal
law; or Borrower, Certified or any such other Certified Subsidiary or Subsidiary
of Borrower shall be adjudicated a bankrupt, or shall make an assignment for the
benefit of creditors, or shall apply for or consent to the
49
appointment of any custodian, receiver or trustee for all or any substantial
part of Borrower's, Certified's or any such Subsidiary of Borrower or Other
Certified Subsidiary's property, or shall take any action to authorize any of
the actions set forth above in this subsection; or an involuntary petition
seeking any of the relief specified in this subsection shall be filed against
Borrower, Certified or any such Subsidiary of Borrower or Other Certified
Subsidiary and shall not be dismissed within twenty (20) days; or any order
for relief shall be entered against Borrower, Certified or any such
Subsidiary of Borrower or Other Certified Subsidiary in any involuntary
proceeding under the Bankruptcy Code or any such other state or federal law
referred to in this subsection (e).
(f) DEFAULT UNDER OTHER INDEBTEDNESS. (i) Borrower, Certified
or any Subsidiary of Borrower shall fail (A) to make any payment of any
principal of, or interest or premium on, any Indebtedness (other than in respect
of the Loans) in an aggregate principal amount outstanding of at least $250,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness, or (B) to perform or observe any term, covenant or condition on
its part to be performed or observed under any agreement or instrument relating
to any such Indebtedness, when required to be performed or observed, and such
failure shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; (ii) any "Event of Default"
shall occur under the Certified Loan Agreement; or (iii) any "Termination Event"
or event of default shall occur under the Loan Purchase Agreements or the
Guaranty.
(g) JUDGMENTS. (i) A final judgment or order for the payment of
money in excess of $250,000 which is not fully covered by insurance shall be
rendered against Borrower or any of its Subsidiaries; or (ii) any non-monetary
judgment or order shall be rendered against Borrower or any of its Subsidiaries
which has or would reasonably be expected to have a Material Adverse Effect; and
in each case there shall be any period of twenty (20) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
(h) ERISA.
(i) Borrower, Certified or an ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under a
Multiemployer Plan;
(ii) Borrower, Certified or an ERISA Affiliate shall fail to
satisfy its contribution requirements under Section 412(c)(11) of the Internal
Revenue Code, whether or not it has sought a waiver under Section 412(d) of the
Internal Revenue Code;
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(iii) in the case of a Termination Event involving the
withdrawal from a Pension Plan of a "substantial employer" (as defined in
Section 4001(a)(2) or Section 4062(e) of ERISA), Borrower's, Certified's or an
ERISA Affiliate's proportionate share of that Pension Plan's Unfunded Accrued
Benefits is more than $250,000;
(iv) in the case of a Termination Event involving the
complete or partial withdrawal from a Multiemployer Plan, Borrower, Certified or
an ERISA Affiliate has incurred a withdrawal liability in an aggregate amount
exceeding $250,000;
(v) in the case of a Termination Event not described in
clause (iii) or (iv), the Unfunded Accrued Benefits of the relevant Pension Plan
or Plans exceed $250,000;
(vi) a Plan of Borrower, Certified or an ERISA Affiliate
that is intended to be qualified under Section 401(a) of the Internal Revenue
Code shall lose its qualification, and the loss can reasonably be expected to
impose on Borrower, Certified or an ERISA Affiliate liability (for additional
taxes, to Plan participants, or otherwise) in the aggregate amount of $250,000
or more;
(vii) the commencement or increase of contributions to, the
adoption of, or the amendment of a Plan by, Borrower, Certified or an ERISA
Affiliate shall result in a net increase in unfunded liabilities to Borrower,
Certified or an ERISA Affiliate in excess of $250,000; or
(viii) the occurrence of any combination of events listed in
clauses (iii) through (vii) that involves a net increase in aggregate Unfunded
Accrued Benefits and unfunded liabilities in excess of $250,000.
(i) MATERIAL ADVERSE EFFECT. A Material Adverse Effect not
otherwise expressly mentioned in this Section 7.1, shall have occurred which
gives reasonable grounds to conclude, in the reasonable judgment of the Majority
Lenders, that Borrower may not, or will be unable to, perform or observe its
obligations under the Loan Documents or Certified or GEC may not, or will be
unable to, perform or observe in the normal course its obligations under the
Operating Agreement.
(j) CHANGE IN OWNERSHIP OR CONTROL. Certified shall (A) cease
to own and control, directly or indirectly, one hundred percent (100%) of the
issued and outstanding shares of capital stock of Borrower or (B) fail to
possess, directly or indirectly, capital stock representing voting control of
Borrower.
(k) FAILURE TO PERFORM UNDER OPERATING AGREEMENT OR CERTIFIED
CONSENT; OR INVALIDITY OF OPERATING AGREEMENT OR CERTIFIED CONSENT. Certified or
GEC shall fail to perform or observe any term, covenant or agreement in Section
8 of the Operating Agreement, or shall fail in any material respect to perform
or observe any other term, covenant or agreement contained in the Operating
Agreement or the Certified Consent on its part to be performed or observed and
any such
51
failure shall remain unremedied for a period of twenty (20) days from the
occurrence thereof (unless the Majority Lenders determine that such failure
in not capable of remedy); or the Operating Agreement or the Certified
Consent shall for any reason be revoked or invalidated, or otherwise
terminate or cease to be in full force and effect, or Certified, GEC or any
other Person shall contest in any manner the validity or enforceability
thereof or deny that it has any further liability or obligation thereunder.
(l) INVALIDITY OF SUBORDINATION PROVISIONS. The Investment
Agreement or any agreement or instrument governing any Subordinated Debt or
Capital Debt shall for any reason be revoked or invalidated, or otherwise cease
to be in full force and effect; or Certified, GEC or any other Person shall
contest in any manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder, or the Indebtedness hereunder
shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement or the Investment Agreement.
(m) INVALIDITY OF OR BREACH UNDER COLLATERAL DOCUMENTS.
Borrower or any other Person shall fail in any material respect to perform or
observe any term, covenant or agreement contained in the Collateral Documents on
its part to be performed or observed and any such failure shall remain
unremedied for a period of twenty (20) days from the occurrence thereof (unless
the Majority Lenders determine that such failure is not capable of remedy); any
of the Collateral Documents after delivery thereof shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect, or
Borrower or any other Person shall contest in any manner the validity or
enforceability thereof, or Borrower or any other Person shall deny that it has
any further liability or obligation thereunder; or any of the Collateral
Documents for any reason, except to the extent permitted by the terms thereof,
shall cease to create a valid and perfected first priority Lien subject only to
Permitted Liens in any of the Collateral purported to be covered thereby.
(n) PURCHASES UNDER NCB LOAN PURCHASE AGREEMENT. Borrower shall
sell, or shall accept any amount in respect of the Purchase Price (as defined in
the NCB Loan Purchase Agreement) for, any Property (as defined in the NCB Loan
Purchase Agreement) without obtaining the execution of and delivery by Agent of
a Release with respect to all Collateral constituting or relating to such
Property.
7.2 EFFECT OF EVENT OF DEFAULT.
If any Event of Default shall occur, Agent may, subject to
Section 8.3, at its election, and without notice of election and without demand,
on behalf of Lenders, do any one or more of the following all of which are
authorized by Xxxxxxxx:
(i) Declare the Obligations, whether evidenced by this
Agreement, by the Notes, or otherwise, immediately due and payable;
52
(ii) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement and terminate the daily automatic funds
transfers from Agent's Account to Xxxxxxxx's Account;
(iii) Terminate this Agreement and the Commitments as to any
future liability or obligation of Agent and Lenders, but without affecting
Agent's and Lenders' rights and security interest in the Collateral and the
Obligations;
(iv) Exercise any or all of Agent's rights and remedies under the
Collateral Documents; and
(v) proceed to enforce all other rights and remedies available
to Agent and Lenders under applicable law.
ARTICLE VIII
AGENT AND LENDERS
8.1 APPOINTMENT AND POWERS OF AGENT.
Each Lender hereby appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the Collateral Documents as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto. Without limiting the foregoing, each Lender hereby expressly
authorizes Agent to execute, deliver, and perform its obligations under this
Agreement and each of the Collateral Documents to which Agent is a party, and to
exercise all rights, powers, and remedies that Agent may have hereunder or
thereunder. As to any matters not expressly provided for by this Agreement or
the Collateral Documents (including enforcement or collection of the Notes),
Agent (which term as used in this sentence, in Section 8.2, in Section 8.5, and
in the first sentence of Section 8.6 shall include reference to its Affiliates
and to its own and its Affiliates' officers, directors, employees, and agents)
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of Majority Lenders, and
such instructions shall be binding upon all Lenders and all holders of the
Notes; PROVIDED, HOWEVER, that Agent shall not be required to take any action
which exposes Agent to personal liability or which is contrary to this
Agreement, the Collateral Documents, the Notes, or applicable law. Agent agrees
to give to each Lender prompt notice of each notice given to it by Borrower
pursuant to the terms of this Agreement or the Collateral Documents.
8.2 AGENT'S RELIANCE.
Agent shall not be liable for any action taken or omitted to be
taken by it under or in connection with this Agreement, the Notes, any Purchase
Notice, any Release, or any Collateral Document, except for its own gross
negligence or wilful misconduct. Without limiting the generality of the
foregoing, Agent: (a) may treat the payee of any Note as the holder thereof
until Agent
53
receives and accepts an assignment and acceptance entered into by the Lender
which is the payee of such Note, as assignor, and an assignee as provided in
Section 11.8; (b) may consult with legal counsel, independent public
accountants, and other experts selected by them and shall not be liable for
any action taken or omitted to be taken in good faith by them in accordance
with the advice of such counsel, accountants, or experts; (c) makes no
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties, or representations made in or in
connection with this Agreement, the Notes, or any Collateral Document; (d)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants, or conditions of this Agreement,
the Notes, or any of the Collateral Documents on the part of any Person party
hereto or thereto or to inspect any asset (including the books and records)
of Borrower or any of its subsidiaries; (e) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement, the Notes, or any
Collateral Document, or any other instrument or document furnished pursuant
hereto or thereto; (f) shall incur no liability under or in respect of this
Agreement, the Notes, or any Collateral Document by acting upon any notice,
consent, certificate, or other instrument or writing (which may be by
telegram, cable, telefacsimile, or telex) believed by them to be genuine and
signed or sent by the proper Person or Persons; and (g) may execute and
deliver, and shall incur no liability under or in respect to this Agreement,
the Notes, or any Collateral Document by executing and delivering, or
executing or delivering any other document, instrument or agreement releasing
any Collateral in connection with such execution and delivery of, a Release
in respect of any Purchase Notice received by it.
8.3 DEFAULTS.
Agent shall not be deemed to have knowledge of the occurrence of
an Event of Default unless Agent has received notice from a Lender or Borrower
specifying the occurrence of such Event of Default and stating that such notice
is a "Notice of Default." In the event that Agent receives such a notice of the
occurrence of an Event of Default, Agent shall give prompt notice thereof to
Lenders (and shall give each Lender prompt notice of each such nonpayment).
Agent shall (subject to Sections 8.1, 8.5, and 8.7) take such action with
respect to such Event of Default as shall be directed by Majority Lenders;
PROVIDED, HOWEVER, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall in its sole and absolute discretion deem advisable in the best interest of
Lenders.
8.4 RIGHTS AS A LENDER; RIGHTS UNDER NCB LOAN PURCHASE AGREEMENT.
With respect to its Commitment and the Loans made by it, NCB (and
any successor acting as Agent), in its capacity as a Lender hereunder, shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not an Agent, and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include NCB (and any successor
acting as Agent), in its individual capacity. NCB (and any successor acting as
Agent), and its Affiliates may (without having to account therefor to any
Lender) accept deposits from (to the extent permitted by law), lend money to,
act as trustee under indentures of, and generally engage in
54
any kind of banking, trust, or other business with Borrower, or any of its
Subsidiaries or Affiliates, as if it were an Agent, and NCB and its
Affiliates, may accept fees and other consideration from Borrower, or any of
its Subsidiaries or Affiliates, for services rendered in connection with this
Agreement or otherwise without having to account for the same to Lenders.
NCB shall have the right to perform its obligations in its capacity as
"Buyer" under the NCB Loan Purchase Agreement.
8.5 INDEMNIFICATION.
Each Lender hereby agrees to indemnify and hold Agent harmless
(to the extent not reimbursed on demand by Xxxxxxxx), ratably according to the
respective principal amount of the Notes then held by each of them (or, if no
principal is outstanding under the Notes at that time, according to their share
of the Commitment) from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgments, demands, damages, costs,
disbursements, or expenses (including attorneys' fees and expenses) of any kind
or nature whatsoever which are imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement, the Notes, or the
Collateral Documents, or as a result of any action taken or omitted to be taken
by Agent; PROVIDED, HOWEVER, that no Lender shall be liable for any portion of
any such losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs, disbursements, or expenses resulting
from the gross negligence or willful misconduct of Agent. Without limiting the
generality of the foregoing, each Lender hereby agrees, in the ratio aforesaid,
to reimburse Agent promptly following demand for reimbursement of any
out-of-pocket expenses (including attorneys' fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings, or otherwise) of, or legal advice in respect of, their rights or
responsibilities under this Agreement, the Notes, or the Collateral Documents,
or any of them or any other documents contemplated by this Agreement, to the
extent that Agent is not reimbursed (or are not entitled to be reimbursed), on
demand, for such amounts by Xxxxxxxx. Each Lender's obligations hereunder shall
survive the termination of this Agreement and the discharge of Borrower's
obligations hereunder.
8.6 NON-RELIANCE BY XXXXXXX.
Each Lender hereby acknowledges that it has, independent by of
and without reliance upon Agent or any other Lender, and based upon the
financial statements referred to in Section 4.1(d) and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently of and without reliance upon Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own independent credit decisions in taking or
omitting to take action under or in connection with this Agreement. Agent shall
not be required to keep informed as to the performance or observance by Borrower
or any other Person of this Agreement, the Notes, or the Collateral Documents,
or to inspect the assets or books and records of Borrower, any of its
Subsidiaries or Affiliates, or any other Person. Agent shall promptly furnish
to Lenders, as and when received by Agent, copies of the financial statements
and reports set forth in Section 6.1(a) and of any other notices, reports, and
other documents as Xxxxxxx
55
may reasonably request of Agent. Except for notices, reports, and other
documents and information expressly required to be furnished to Lenders by
Agent hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition, or business of Borrower or its subsidiaries or
Affiliates which may come into the possession of Agent or any of its
Affiliates.
8.7 FAILURE TO ACT.
Except for action expressly required of Agent hereunder, Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall be indemnified to its satisfaction by Xxxxxxx against any and
all liability and expense which may be incurred by them by reason of taking or
continuing to take any such action.
8.8 EXCESS PAYMENTS.
If any Lender or other holder of a Note shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset,
setoff, or otherwise) on account of principal of or interest on any Note in
excess of its pro rata share of payments and other recoveries obtained by all
Lenders or holders of Notes, such Lender or other holder shall purchase from the
other Lenders or holders such participations in the Notes held by them as shall
be necessary to cause such purchasing Lender or holder to share the excess
payment or other recovery ratably with each of the other Lenders or holders;
PROVIDED, HOWEVER, that, if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender or holder, the
purchase shall be rescinded and the purchase price restored to such Lender or
other holder to the extent of such recovery, but without interest.
8.9 SHARING OF SETOFFS.
Each Lender severally agrees that if it, through the exercise of
the right of setoff, banker's lien, or counterclaim against Borrower or
otherwise, receives payment of the Obligations due it hereunder and under the
Notes that is ratably more than any other Lender, through any means, then: (a)
the Lender exercising the right of setoff, banker's lien, or counterclaim or
otherwise receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Lenders a participation in the
Obligations held by the other Lenders and shall pay to the other Lenders a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien, or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien, or counterclaim or receipt of
payment, and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all Lenders share
any payment obtained in respect of the Obligations ratably in accordance with
each Lender's share of the Obligations immediately prior to, and without taking
into account, the payment; PROVIDED, HOWEVER, that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right of
setoff, banker's lien, counterclaim or otherwise is thereafter recovered from
the purchasing Lender by Xxxxxxxx or any Person claiming through or succeeding
to the rights of
56
Borrower, the purchase of a participation shall be rescinded and the purchase
thereof shall be restored to the extent of the recovery, but without
interest; PROVIDED, FURTHER, HOWEVER, that the rights of NCB with respect to
the NCB Stock shall not be subject to the provisions of this Section 8.9.
Each Lender that purchases a participation in the Obligations pursuant to
this Section 8.9 shall from and after the purchase have the right to give all
notices, requests, demands, directions and other communications under this
Agreement with respect to the portion of the Obligations purchased to the
same extent as though the purchasing Lender were the original owner of the
Obligations purchased. Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation in an
Obligation so purchased may exercise any and all rights of setoff, banker's
lien or counterclaim with respect to the participation as fully as if the
Lender were the original owner of the Obligation purchased; PROVIDED,
HOWEVER, that each Lender agrees that it shall not exercise any right of
setoff, banker's lien or counterclaim without first obtaining the consent of
the Majority Lenders.
8.10 CHARACTERIZATION OF ACTIVITY.
Nothing contained in this Agreement, and no action taken by any
Lender or Agent pursuant hereto or in connection herewith or pursuant to or in
connection with the Notes or the Collateral Documents shall be deemed to
constitute Lenders, together or with or without Agent, a partnership,
association, joint venture, or other entity.
8.11 RESIGNATION BY OR REMOVAL OF AGENT.
Agent may resign at any time as an Agent under this Agreement and
the Collateral Documents by giving written notice thereof to Lenders and
Xxxxxxxx and may be removed at any time with or without cause by Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent. If no successor Agent shall have been
so appointed by Majority Xxxxxxx and shall have accepted such appointment,
within thirty (30) calendar days after the retiring Agent's giving of notice of
resignation or Majority Xxxxxxx' removal of the retiring Agent, then the
retiring Agent may, on behalf of Xxxxxxx, appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all of the
obligations, rights, powers, privileges, and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement, and the Collateral Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article XI
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
8.12 NO OBLIGATION OF BORROWER.
Borrower shall not have any obligations to Agent or any Lender
under this Article VIII which governs solely the rights and obligations of
Xxxxxxx and Agent, INTER SE.
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ARTICLE IX
LENDERS' REPRESENTATIONS
9.1 INVESTMENT REPRESENTATION.
Each Lender hereby represents to Borrower and to each other
Lender that it will make its Loans for its own account in the ordinary course of
its commercial lending business and not with a view to the public distribution
or sale of any Note held by such Lender.
9.2 PARTICIPATION IN THE NOTES; COMPLIANCE WITH LAW.
Each Lender hereby agrees to keep confidential all information
concerning Borrower or its subsidiaries which has been supplied by Borrower to
such Lender other than: (a) information previously filed with any governmental
agency and available to the public; (b) information previously published in any
public medium from a source other than, directly or indirectly, such Lender; and
(c) information previously disclosed by Borrower to any Person not associated
with Borrower without a confidentiality agreement substantially similar to the
terms of this Section 9.2; PROVIDED, HOWEVER, that each Lender shall have the
right at any time to furnish one or more purchasers or potential purchasers of
an interest in its Loans with any and all information concerning Borrower or its
Subsidiaries which has been supplied by Borrower to such Lender, if such
purchaser or potential purchaser shall have agreed to keep confidential any of
such information other than such information as is described in clauses (a),
(b), and (c) of this Section 9.2. Nothing in this Section 9.2 shall be
construed to create or give rise to any fiduciary duty on the part of any Lender
to Borrower.
ARTICLE X
EXPENSES AND INDEMNITEES
10.1 EXPENSES.
(a) PAYMENT BY AGENT ON BEHALF OF XXXXXXXX. If Borrower fails
to pay promptly when due to any other Person, expenses or monies which Borrower
is required to pay by reason of any provision in this Agreement, Agent may, but
shall not be required to, pay the same and charge Xxxxxxxx's account therefor as
Agent's Expenses; PROVIDED, HOWEVER, that Agent shall not pay the same to the
extent and so long as: (a) the same are being diligently contested, in good
faith and by appropriate proceedings, and in such a manner as not to cause any
Material Adverse Effect; and (b) Borrower shall have set aside on its books
reserves (segregated to the extent required by GAAP) adequate with respect
thereto. All such sums shall become additional Obligations owing to Lenders,
shall bear interest at the rate set forth in Section 3.1(a)(i), and shall be
secured by the Collateral. Any payments made by Agent shall not constitute:
(i) an agreement by Agent to make similar payments in the future, or (ii) a
waiver by Agent of any Default. Agent need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance, or lien and
the receipt of any customary official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
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(b) AGENT'S EXPENSES DUE ON DEMAND. Irrespective of whether the
transactions contemplated hereby shall be consummated, Borrower hereby agrees to
pay to Agent, on demand, all Agent's Expenses, and Borrower hereby authorizes
and approves all advances and payments by Agent for items constituting Agent's
Expenses.
10.2 INDEMNITY.
In addition to the payment of Agent's Expenses pursuant to
Section 10.1 and irrespective of whether the transactions contemplated hereby
shall be consummated, Borrower hereby agrees to indemnify, exonerate, pay, and
hold harmless Agent, Lenders, and the holders of any of the Notes, and the
officers, directors, employees, and agents of Agent, Lenders, or such holders
(collectively, the "Indemnitees" and individually, an "Indemnitee") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, causes of action, judgments, suits, claims, costs, expenses, of any
kind or nature whatsoever, including the reasonable fees and expenses of counsel
to Indemnitees (including allocated fees and expenses of in-house counsel of
Agent), in connection with any investigative, administrative, or judicial
proceeding, irrespective of whether such Indemnitee shall be designated a party
thereto, which may be imposed on, incurred by, or asserted against such
Indemnitee, in any manner relating to or arising out of this Agreement, any
Loans hereunder, the use or intended use of the proceeds of the Loans, or the
consummation of the transactions contemplated by this Agreement (the
"Indemnified Liabilities"); PROVIDED, HOWEVER, that Borrower's obligations to
indemnify shall not extend to any losses, damages, liabilities, actions, or
claims against any Indemnitee arising as a result of the gross negligence or
willful misconduct of such Indemnitee. Each Indemnitee shall promptly notify
Borrower of each event of which it has knowledge which may give rise to a claim
under the indemnification provisions of this Section 10.2. If any investigative,
judicial, or administrative proceeding arising from any of the foregoing is
brought against any Indemnitee, Borrower, to the extent and in the manner
directed by such Indemnitee or upon Xxxxxxxx's election (by prior notice to the
Indemnitee) to so do, will resist and defend such action, suit, or proceeding by
counsel designated by Borrower (which counsel shall be reasonably satisfactory
to such Indemnitee); PROVIDED, HOWEVER, that Xxxxxxxx's obligation to so resist
or defend any such action, suit, or proceeding shall exist if and only if
Borrower is directed to do so by the Indemnitee or if Xxxxxxxx has given
Indemnitee prior notice of its election to assume such defense. Such Indemnitee
will use its best efforts to cooperate in all respects in the defense of any
such action, suit, or proceeding. To the extent that the undertaking to
indemnify, exonerate, pay, and hold harmless set forth in this Section 10.2 may
be unenforceable because it is violative of any law or public policy as
determined by a final judgment of a court of competent jurisdiction, Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. The
obligations of Borrower under this Section 10.2 shall survive the termination of
this Agreement and the discharge of Borrower's other obligations hereunder.
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ARTICLE XI
MISCELLANEOUS
11.1 DESTRUCTION OF XXXXXXXX'S DOCUMENTS.
Except for original instruments or chattel paper, any documents,
schedules, invoices or other papers delivered to Agent may be destroyed by Agent
six (6) months after they are delivered to or received by Agent, unless
(i) Borrower does request, in writing, the return of the said documents,
schedules, invoices or other papers and makes arrangements, at Borrower's
expense, for their return or (ii) such documents, schedules, invoices or other
papers relate to any Released Collateral.
11.2 AMENDMENTS, ETC.
(a) AMENDMENTS WITH CONSENT OF AGENT. Borrower and Agent may
enter into one or more amendments to any Collateral Document or this Agreement
without the consent of any Lender for any of the following purposes:
(i) to cure any ambiguity, defect or inconsistency herein
or in any Collateral Document or to make any change not inconsistent with the
provisions hereof;
(ii) to convey, transfer, assign, mortgage, or pledge any
property to or with Agent, or to make any other provisions with respect to
matters or questions arising hereunder or under any Collateral Document, so long
as such action shall not adversely affect the interests of Lenders;
(iii) to add to the covenants of Borrower hereunder for the
benefit of Xxxxxxx; and
(iv) to add to the rights of Xxxxxxx.
Any such amendment must be in writing and signed by Agent to be effective and
then such amendment shall be effective only in the specific instance and for the
specific purpose for which given. Agent shall promptly deliver to each Lender a
copy of any such amendment.
(b) AMENDMENTS WITH CONSENT OF XXXXXXX. Except as provided in
subsection (a) of this Section 11.2, no amendment or waiver of any provision of
this Agreement or any Collateral Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders and then such waiver or consent shall
be effective only in specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that no amendment, waiver, or consent shall, unless in
writing and signed by all Lenders, do any of the following: (i) increase the
Commitments of Lenders or subject Lenders to any additional obligations, (ii)
reduce the principal of, or interest on, the Loans or any fees or other amounts
payable hereunder, (iii) postpone any date fixed for any payment of principal
of, or interest
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on, the Loans or any fees or other amounts payable hereunder, including,
without limitation, to extend the Commitment Termination Date, (iv) change
the percentage, or the aggregate unpaid principal amount of the Notes or
Loans, or the number of Lenders, which shall be required for Lenders or any
of them to take any action hereunder, (v) release any Collateral, except to
the extent expressly provided herein or in the Collateral Documents, or (vi)
amend this Section 11.2; PROVIDED FURTHER, however, that no amendment,
waiver, or consent shall, unless in writing and signed by Agent in addition
to the Lenders required above to take such action, affect the rights or
duties of Agent under this Agreement or any other Collateral Document.
11.3 NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement shall be in writing and either
(a) personally served or (b) sent by regular United States mail, first class
postage prepaid, with a copy sent via facsimile or overnight courier; to
Borrower or to Agent, as the case may be, at its address set forth below:
If to Borrower: GROCERS CAPITAL COMPANY
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Mr. Xxxxx Xxxxxxxx
Chief Financial Officer
With copies to: XXXXXXXX, XXXXXX, XXXXXXX & XXXXXXX
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. XxXxxxxxx, Esq.
If to Agent: NATIONAL COOPERATIVE BANK
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: Corporate Banking Division
With a copy to: BUCHALTER, NEMER, FIELDS & YOUNGER
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx Xxx Xxxxxxxxx, Esq.
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands
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sent in accordance with this Section 11.3 shall be deemed received on the
earlier of the date of actual receipt or five (5) days after the deposit
thereof in the United States mail. Delivery of notice shall not be deemed
defective solely upon the failure to deliver a copy of any notice or demand
to counsel to Borrower or Agent, as the case may be.
11.4 NO WAIVER; CUMULATIVE REMEDIES.
No failure on the part of Agent or any Lender to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights, remedies, powers
and privileges that may otherwise be available to Agent or any Lender.
11.5 RIGHT OF SET-OFF.
Upon the occurrence and during the continuance of any Event of
Default and obtaining the prior written consent of Agent, each Lender hereby is
authorized at any time and from time to time, without notice to Borrower (any
such notice being expressly waived by Borrower), subject to Section 8.9, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of Borrower against any and
all of the obligations of Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such Note and although
such obligations may be unmatured. Each Lender agrees promptly to notify
Borrower (through Agent) after any such set-off and application made by such
Lender; PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section 11.5 are in addition to other rights and remedies (including other
rights of set-off) which such Lender may have.
11.6 SURVIVAL.
All covenants, agreements, representations and warranties made in
any Loan Documents shall, except to the extent otherwise provided therein,
survive the execution and delivery of this Agreement, the making of the Loans
and the execution and delivery of the Notes, and shall continue in full force
and effect so long as Lenders have any Commitments, any Loans remain outstanding
or any other Obligations remain unpaid or any obligation to perform any other
act hereunder or under any other Loan Document remains unsatisfied. Without
limiting the generality of the foregoing, the obligations of Borrower under
Sections 2.4, 2.5, 3.6, 3.7, 3.8, 10.1 and 10.2 and of Lenders under
Sections 3.8 and 8.5, and all similar obligations under the other Loan Documents
(including all obligations to pay costs and expenses and all indemnity
obligations), shall survive the repayment of the Loans and the termination of
the Commitments.
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11.7 BENEFITS OF AGREEMENT.
This Agreement and the other Loan Documents are entered into for
the sole protection and benefit of the parties hereto and their successors and
assigns, and no other Person shall be a direct or indirect beneficiary of, or
shall have any direct or indirect cause of action or claim in connection with,
this Agreement or any other Loan Document.
11.8 ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS. Any Lender may make one or more assignments of
its interests in the Loans to one or more assignees (the "Assignee") with the
prior written consent of Borrower (which consent will not be unreasonably
withheld); PROVIDED, HOWEVER, that any Lender may, subject to the limitations
contained hereinbelow in this Section 11.8(a), assign to another Lender any
portion of its Loans or Commitments without the prior written consent of
Borrower or Agent; PROVIDED FURTHER, however, that Borrower shall not be
obligated to pay the costs and expenses of any assigning Lender or any Assignee
in connection with any such assignment. Each such Assignee shall become a party
to this Agreement as a "Lender" upon: (i) the execution of an amendment to this
Agreement or the execution of a supplemental assignment and acceptance agreement
with the assigning Lender, the Assignee, Agent, and, in the event Borrower's
prior written consent to such assignment is required, Borrower; (ii) the
notification of Borrower and Agent by the assigning Lender of the identity of
the Assignee and the amount of the Loans or Commitment assigned; and (iii) the
payment to Agent, for its own account, of a processing and recordation fee of
Three Thousand Dollars ($3,000); whereupon, from and after the effective date of
such assignment as designated by Agent, the assigning Lender shall be released
and discharged from, and such Assignee shall assume, all rights, duties and
obligations with respect to the interest so assigned. Any such assignment shall
be made pro rata according to all of such Xxxxxx's Loans or portion of the
Commitment. At such time, the Commitment amounts referenced herein shall be
modified to reflect the pro rata share of the Commitment of such new Lender and
of the existing Lenders. In addition, if any such Assignee becomes a Lender
while Loans or the Commitment are outstanding hereunder, Xxxxxxxx will, in
exchange for the assigning Xxxxxx's existing Notes issue new Notes hereunder to
such new Lender and to the assigning Lender in conformity with the requirements
of this Agreement in order to reflect their revised pro rata shares of the
Commitment and, if applicable, Loans. The Notes received by Agent in exchange
for such new Notes shall be cancelled and returned to Borrower. Any partial
assignment under this Agreement (other than to any Affiliate of the assigning
Lender or to any other Lender) shall be in a minimum amount equal to Five
Million Dollars ($5,000,000).
(b) PARTICIPATIONS. Any Lender may grant one or more
participations in its interests in the Loans or portions of the Commitment;
PROVIDED, HOWEVER, that: (i) such Lender shall remain a "Lender" for all
purposes under this Agreement and the participant shall not constitute a
"Lender" under this Agreement; (ii) any such grant of a participation will be
made in compliance with all applicable state or federal laws, rules, and
regulations; (iii) any such participation shall be made pro rata according to
all of such Lender's Loans or portion of the Commitment; and (iv) no Lender
shall grant any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement, the Notes, or the
Collateral Documents, except as to
63
matters specifically relating to rates of interest on the obligations, the
amount of such Xxxxxx's Commitment, and extensions to the Commitment
Termination Date. In the case of any participation, the participant shall
not have any rights under this Agreement or any of the other documents
entered into in connection herewith (the participant's rights against such
Lender in respect of such participation to be those set forth in the
participation or other agreement executed by such Xxxxxx and the participant
relating thereto) and all amounts payable to any Lender hereunder shall be
determined as if such Xxxxxx had not sold such participation. In no event
shall any participant grant a participation in its participation interest in
the Loans or portion of the Commitment without the prior written consent of
Agent.
(c) AFFILIATES. Notwithstanding anything to the contrary
contained in clauses (a) and (b) of this Section 11.8, no Lender shall be
restricted from making assignments or granting participations to any of its
Affiliates.
(d) INUREMENT; NO ASSIGNMENT BY XXXXXXXX. Subject to (a), (b),
and (c) of this Section 11.8, this Agreement shall bind and inure to the benefit
of the respective successors and assigns of Lenders. Borrower may not assign
this Agreement or any rights hereunder without Xxxxxxx' prior written consent
and any prohibited assignment shall be absolutely void. No consent to an
assignment by Xxxxxxx shall release Borrower of its Obligations to Lenders.
11.9 GOVERNING LAW.
EXCEPT AS SPECIFICALLY SET FORTH IN ANY COLLATERAL DOCUMENT:
(A) THIS AGREEMENT, THE NOTES, AND THE COLLATERAL DOCUMENTS SHALL BE DEEMED TO
HAVE BEEN MADE IN THE STATE OF CALIFORNIA; AND (B) THE VALIDITY OF THIS
AGREEMENT, THE NOTES, AND THE COLLATERAL DOCUMENTS, AND THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
11.10 JURISDICTION AND VENUE.
THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT, THE NOTES, OR THE COLLATERAL DOCUMENTS SHALL
BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. EACH OF BORROWER, LENDERS, AND
AGENT HEREBY WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 11.10 AND STIPULATES THAT THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, SHALL HAVE IN
PERSONAM JURISDICTION AND VENUE
64
OVER IT FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE NOTES, OR THE
COLLATERAL DOCUMENTS. SERVICE OF PROCESS SUFFICIENT FOR PERSONAL
JURISDICTION IN ANY ACTION AGAINST EACH OF BORROWER, LENDERS, AND AGENT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS
ADDRESS INDICATED IN SECTION 11.10. EACH OF BORROWER, XXXXXXX, AND AGENT
AGREES THAT ANY FINAL JUDGMENT RENDERED AGAINST IT IN ANY ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AS TO THE SUBJECT OF SUCH FINAL JUDGMENT AND
MAY BE ENFORCED IN OTHER JURISDICTIONS IN ANY MANNER PROVIDED BY LAW.
11.11 WAIVER OF TRIAL BY JURY.
EACH OF BORROWER, LENDERS, AND AGENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, OR THE
COLLATERAL DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL
TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTES, THE COLLATERAL DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. EACH OF BORROWER, XXXXXXX,
AND AGENT XXXXXX AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR
PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.11 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO
WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
11.12 DEMAND, PROTEST, NOTICE.
Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of any or all commercial paper, accounts, documents, instruments, chattel paper,
and guarantees at any time held by Agent or Lenders on which Borrower may in any
way be liable.
11.13 CONFIDENTIAL RELATIONSHIPS.
Borrower waives the right to assert a confidential relationship,
if any, it may have with any accounting firm or service bureau in connection
with any information requested by Agent or Lenders pursuant to or in accordance
with this Agreement, and agrees that Agent or
65
Lenders may contact directly any such accounting firm or service bureau in
order to obtain such information.
11.14 LIMITATION ON LIABILITY.
No claim shall be made by Borrower or its Affiliates against
Agent, Lenders or any of their respective Affiliates, directors, employees,
attorneys or agents for any special, indirect, exemplary, consequential or
punitive damages in respect of any breach or wrongful conduct (whether or not
the claim therefor is based on contract, tort or duty imposed by law), in
connection with, arising out of or in any way related to the transactions
contemplated by this Agreement or the other Loan Documents or any act or
omission or event occurring in connection therewith; and Borrower hereby waives,
releases and agrees not to sue upon any such claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
11.15 ENTIRE AGREEMENT.
This Agreement and the other Loan Documents reflect the entire
agreement among Xxxxxxxx, Lenders and Agent with respect to the matters set
forth herein and therein and supersede any prior agreements, drafts,
communications, commitments, discussions and understandings, oral or written,
with respect thereto.
11.16 INTERPRETATION.
This Agreement and the other Loan Documents are the result of
negotiations between and have been reviewed by counsel to Agent, Borrower and
other parties, and are the product of all parties hereto. Accordingly, this
Agreement and the other Loan Documents shall not be construed against any of
Lenders or Agent merely because of Agent's or any Xxxxxx's involvement in the
preparation thereof.
11.17 CONFIDENTIALITY.
Each Lender and Agent shall hold all non-public information
relating to Certified, Borrower and their respective Subsidiaries obtained by it
under this Agreement in accordance with its customary procedures for handling
confidential information of this nature, except for: (i) disclosure to its
counsel or to any agent or advisor acting on its behalf in connection with the
negotiation, execution or performance of the Loan Documents; (ii) disclosure as
reasonably required in connection with a transfer to a prospective assignee or
participant of all or part of its Loan or any participation therein, as provided
in Section 11.8; (iii) disclosure as may be required or requested by any
Governmental Authority or representative thereof or pursuant to legal process;
and (iv) any other disclosure with the prior written consent of Borrower or
Certified, as the case may be. Prior to any disclosure by any Lender or Agent
of such non-public information permitted under clause (iii) (other than in
connection with an examination of the financial condition of such Lender, Agent
or any of their Affiliates by any Governmental Authority), it shall, if
permitted by applicable laws or judicial order, notify Borrower of such pending
disclosure. In no event shall any Lender or Agent be
66
obligated or required to return any materials furnished by Certified,
Borrower or any of their Subsidiaries. Notwithstanding the foregoing, such
obligation of confidentiality shall not apply if the information or
substantially similar information (A) is rightfully received by any Lender or
Agent from a Person other than Certified, Borrower or any of their Affiliates
without such Lender or Agent being under an obligation to such Person not to
disclose such information, or (B) is or becomes part of the public domain.
11.18 SEVERABILITY.
Whenever possible, each provision of this Agreement and the other
Loan Documents shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of this
Agreement or any of the other Loan Documents shall be prohibited by or invalid
under any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so modified, it shall
be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement and the other Loan
Documents, or the validity or effectiveness of such provision in any other
jurisdiction.
11.19 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement. This
67
Agreement shall become effective when it shall have been executed by Xxxxxxxx
and Agent and when Agent shall have been notified by each Lender that such
Xxxxxx has executed it.
IN WITNESS WHEREOF the parties hereto have duly executed this
Agreement as of the date first above written.
BORROWER
GROCERS CAPITAL COMPANY
By
-----------------------------------------------------
Title:
AGENT
NATIONAL CONSUMER COOPERATIVE BANK
By
-----------------------------------------------------
Title:
COMMITMENT LENDERS
$10,000,000 NATIONAL CONSUMER COOPERATIVE BANK
By
-----------------------------------------------------
Title:
68
SECURED PROMISSORY NOTE
$10,000,000 Los Angeles, California
as of September 20, 1996
FOR VALUE RECEIVED, GROCERS CAPITAL COMPANY, a California corporation
("Maker"), hereby promises to pay to the order of NATIONAL CONSUMER COOPERATIVE
BANK, dba National Cooperative Bank, a federally chartered banking corporation
("Lender"), the principal sum of Ten Million Dollars ($10,000,000) or such
lesser amount as shall equal the aggregate outstanding principal balance of the
Loans severally made by Lender pursuant to the Credit Agreement (as defined
below), and to pay interest on said sum, or such lesser amount, at the rates and
on the dates provided in the Credit Agreement.
Maker shall make all payments hereunder for the account of Xxxxxx as
provided in Section 2.10 of the Credit Agreement.
Maker hereby authorizes Xxxxxx to record on the schedule(s) annexed to
this Note the date and amount of each Loan and of each payment of principal made
by Maker and agrees that all such notations shall constitute prima facie
evidence of the matters noted.
This Note is one of the Notes referred to in the Credit Agreement,
dated as of September 20, 1996, among Maker, on the one hand, and Lender, the
other financial institutions a party thereto (collectively, the "LENDERS"), and
NATIONAL CONSUMER COOPERATIVE BANK, dba National Cooperative Bank, a federally
chartered banking corporation, as Agent for the Lenders, on the other hand (as
such Credit Agreement may be from time to time hereafter amended, restated or
supplemented, the "Credit Agreement"). This Note is subject to the terms of the
Credit Agreement and Maker's obligations under this Note are secured by the
Collateral as provided in the Collateral Documents. Nothing herein shall be
deemed to limit any of the terms or provisions of the Credit Agreement or the
Collateral Documents, and all of Xxxxxx's rights and remedies hereunder and
thereunder are cumulative. Capitalized terms used herein have the meanings
assigns to those terms in the Credit Agreement, unless otherwise defined herein.
The transfer, sale or assignment of any rights under or interest in
this Note is subject to certain restrictions contained in the Credit Agreement,
including Section 11.8 thereof.
1
No waiver or modification of any of the terms or provisions of this
Note shall be valid or binding unless set forth in a writing in compliance with
Section 11.2 of the Credit Agreement, and then only to the extent specifically
set forth.
Maker hereby waives notice of presentment, demand, protest or notice
of any other kind. This Note shall be governed by and construed in accordance
with the laws of the State of California without regard to principles of
conflicts of laws.
GROCERS CAPITAL COMPANY, a California corporation
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
2
SCHEDULE TO PROMISSORY NOTE
Amount of
Date Made, Principal Unpaid Name of
Continued, Continued Principal Person
Converted Amount of Converted Balance Making
or Paid Type Loan or Paid of Note Notation
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4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of September 20,
1996, is made among GROCERS CAPITAL COMPANY, a California corporation
("Borrower"), and NATIONAL CONSUMER COOPERATIVE BANK, dba National Cooperative
Bank, a federally chartered banking corporation with principal offices located
in Washington, D.C. ("Agent"), as agent for the ratable benefit of Xxxxxxx (as
defined below).
Borrower, certain financial institutions as lenders ("Lenders"), and
Agent are parties to a Credit Agreement dated as of even date herewith (as
amended, restated, modified, renewed or extended from time to time, the "Credit
Agreement"). It is a condition precedent to the borrowings under the Credit
Agreement that Borrower enter into this Agreement and grant to Agent, for itself
and for the ratable benefit of Lenders, the security interests hereinafter
provided to secure the obligations of Borrower described below.
Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings assigned
to them in the Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"ACCOUNTS" means any and all accounts, accounts receivable, and all
rights to payment for merchandise, goods, or commodities sold or leased or to be
sold or leased or for services rendered or to be rendered, however evidenced,
and all other forms of obligations owing to Borrower, all guaranties and
security therefor, and letters of credit relating thereto, in each case whether
now existing or hereafter acquired; PROVIDED, HOWEVER, that "Accounts" shall not
include (i) Released Collateral or any proceeds of Released Collateral and (ii)
each Separate Account and Lockbox Account (each as defined in the NCB Loan
Purchase Agreement) or any funds or amounts therein or proceeds thereof.
"BOOKS" means all books, records and other written, electronic or
other documentation in whatever form maintained now or hereafter by or for
Borrower in connection with the ownership of its assets or the conduct of its
business or evidencing or containing information relating to the Collateral,
including: (i) ledgers; (ii) records indicating, summarizing, or evidencing
1
Borrower's assets (including Inventory and Rights to Payment), business
operations or financial condition; (iii) computer programs and software; (iv)
computer discs, tapes, files, manuals, spreadsheets; (v) computer printouts and
output of whatever kind; (vi) any other computer prepared or electronically
stored, collected or reported information and equipment of any kind; and (vii)
any and all other rights now or hereafter arising out of any contract or
agreement between Borrower and any service bureau or computer, data processing
company or other Person charged with preparing or maintaining any of Borrower's
books or records or with credit reporting, including with regard to the
Accounts.
"CHATTEL PAPER" means all writings of whatever sort which evidence a
monetary obligation and a security interest in or lease of specific goods,
whether now existing or hereafter arising; PROVIDED, HOWEVER, that "Chattel
Paper" shall not include Released Collateral.
"COLLATERAL" means the following property of Borrower, wherever
located and whether now existing or owned or hereafter acquired or arising: (i)
all Accounts; (ii) all Chattel Paper; (iii) all Deposit Accounts; (iv) all
Documents; (v) all Equipment; (vi) all General Intangibles; (vii) all
Instruments; (viii) all Inventory; (ix) all Receivable Collateral; (x) all
Books; and (xi) all products and Proceeds of any and all of the foregoing;
PROVIDED, HOWEVER, that "Collateral" shall not include Released Collateral or
any proceeds of Released Collateral.
"DEPOSIT ACCOUNT" means any demand, time, savings, passbook or like
account now or hereafter maintained by or for the benefit of Borrower with a
bank, savings and loan association, credit union or like organization (including
Agent and each Lender) and all funds and amounts therein, whether or not
restricted or designated for a particular purpose; PROVIDED, HOWEVER, that
"Deposit Account" shall not include (i) Released Collateral or any proceeds of
Released Collateral and (ii) each Separate Account and Lockbox Account (each as
defined in the NCB Loan Purchase Agreement) or any funds or amounts therein or
proceeds thereof.
"DOCUMENTS" means any and all documents of title, bills of lading,
dock warrants, dock receipts, warehouse receipts and other documents of
Borrower, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available
to Borrower for the purpose of ultimate sale or exchange of goods or for the
purpose of loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing with goods in a manner preliminary to their sale
or exchange, in each case whether now existing or hereafter acquired; PROVIDED,
HOWEVER, that "Documents shall not include Released Collateral.
"EQUIPMENT" means all now existing or hereafter acquired equipment,
machinery, furniture, furnishings and fixtures in which Borrower now or
hereafter acquires any right, and all other goods and tangible personal property
(other than Inventory), including tools, parts and supplies, automobiles,
trucks, tractors and other vehicles, computer and other electronic data
processing
2
equipment and other office equipment, computer programs and related data
processing software, and all additions, substitutions, replacements, parts,
accessories, and accessions to and for the foregoing, now owned or hereafter
acquired, and including any of the foregoing which are or are to become
fixtures on real property.
"FINANCING STATEMENTS" has the meaning set forth in Section 3.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, now
existing or hereafter acquired, and in any event includes: (i) all tax and other
refunds, rebates or credits of every kind and nature to which Borrower is now or
hereafter may become entitled; (ii) all goodwill, choses in action and causes of
action, whether legal or equitable, whether in contract or tort and however
arising; (iii) all Intellectual Property Collateral; (iv) all uncertificated
securities and interests in limited and general partnerships; (v) all rights of
stoppage in transit, replevin and reclamation; (vi) all licenses, permits,
consents, indulgences and rights of whatever kind issued in favor of or
otherwise recognized as belonging to Borrower by any Governmental Authority; and
(vii) all indemnity agreements, guaranties, insurance policies and other
contractual, equitable and legal rights of whatever kind or nature; PROVIDED,
HOWEVER, that "General Intangibles" shall not include Released Collateral.
"INSTRUMENTS" means any and all negotiable instruments, certificated
securities and every other writing which evidences a right to the payment of
money, in each case whether now existing or hereafter acquired; PROVIDED,
HOWEVER, that "Instruments" shall not include Released Collateral.
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by Borrower or in which Borrower otherwise has any
interest, now existing or hereafter acquired or arising:
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses, all rights to sue for past, present or future
infringement thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and continuations
in-part thereof;
(ii) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to sue
for past, present or future infringement, and all rights of renewal and
extension of copyright;
(iii) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for registration of
such trademarks, service marks and trade names, all licenses relating to any of
the foregoing and all income and royalties with respect to any
3
licenses, whether registered or unregistered and wherever registered, all
rights to sue for past, present or future infringement or unconsented use
thereof, all rights arising therefrom and pertaining thereto and all
reissues, extensions and renewals thereof;
(iv) all trade secrets, confidential information, customer lists,
license rights, advertising materials; operating manuals, methods, processes,
know-how, sales literature, drawings, specifications, blue prints, descriptions,
inventions, name plates and catalogs; and
(v) the entire goodwill of or associated with the businesses now or
hereafter conducted by Borrower connected with and symbolized by any of the
aforementioned properties and assets.
"INVENTORY" means any and all of Borrower's goods (including goods in
transit) whether now owned or hereafter acquired, which are held for sale, lease
or other disposition, including those held for display or demonstration or out
on lease or consignment or to be furnished under a contract of service or are
raw materials, work in process, finished materials, or materials used or
consumed, or to be used or consumed, in Borrower's business, and the resulting
product or mass, and all repossessed, returned, rejected, reclaimed and
replevied goods, together with all materials, parts, supplies, packing and
shipping materials used or usable in connection with the manufacture, packing,
shipping, advertising, selling or furnishing of such goods; and all other items
hereafter acquired by Borrower by way of substitution, replacement, return,
repossession or otherwise, and all additions and accessions thereto, and any
Document representing or relating to any of the foregoing at any time.
"PROCEEDS" means whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral or other assets of Borrower,
including "proceeds" as defined at UCC Section 9306, any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to or for the account of
Borrower from time to time with respect to any of the Collateral, any and all
payments (in any form whatsoever) made or due and payable to Borrower from time
to time in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), any and all other
amounts from time to time paid or payable under or in connection with any of the
Collateral or for or on account of any damage or injury to or conversion of any
Collateral by any Person, any and all other tangible or intangible property
received upon the sale or disposition of Collateral, and all proceeds of
proceeds; PROVIDED, HOWEVER, that "Proceeds" shall not include Released
Collateral or any proceeds of Released Collateral.
"PURCHASE NOTICE" means a Purchase Notice in the form of EXHIBIT 1.
"RECEIVABLE COLLATERAL" means all rights, interests and claims of
Borrower under and in respect of Finance Receivables and Additional Loan/Lease
Receivables, whether now existing or
4
hereafter acquired or arising, including (i) all rights of Borrower in, to
and under the Operating Agreement, and any other agreement, contract,
instrument, collateral document or other document to which Borrower now or
hereafter is a party or now or hereafter issued in its favor, relating to or
evidencing the Receivable Collateral or the servicing thereof, as each such
agreement, contract, instrument, collateral document or other document may be
amended, modified, renewed or extended from time to time; (ii) all rights of
Borrower to receive moneys and other payments and distributions due or to
become due with respect to any Receivable Collateral; (iii) all rights of
Borrower to receive proceeds of any insurance, indemnity, warranty, letter of
credit or guaranty with respect to any Receivable Collateral; (iv) all claims
of Borrower for damages arising out of any breach or default under or in
respect of any Receivable Collateral; and (v) the right of Borrower to
terminate, amend, supplement or modify any such agreement, contract,
insurance policy, indemnity agreement, guaranty, letter of credit,
instrument, collateral document or other document, to perform thereunder and
to compel performance and otherwise exercise all rights and remedies
thereunder; PROVIDED, HOWEVER, that "Receivable Collateral" shall not include
Released Collateral or any proceeds of Released Collateral, or the right,
title or interest of Borrower in or to the NCB Loan Purchase Agreement, the
Guaranty and any other documents, instruments and agreements executed or
delivered in connection with the transactions contemplated by the NCB Loan
Purchase Agreement.
"RELEASE" means an Instrument of Partial Release in the Form of
EXHIBIT 2.
"RIGHTS TO PAYMENT" means all Accounts and any and all rights and
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all Chattel Paper, Documents, General Intangibles,
Instruments, Receivable Collateral and Proceeds; ; PROVIDED, HOWEVER, that
"Rights to Payment" shall not include Released Collateral or any proceeds of
Released Collateral or the right to receive any Released Collateral or proceeds
thereof.
"SECURED OBLIGATIONS" means the indebtedness, liabilities and other
obligations of Borrower to Agent and Lenders under or in connection with the
Credit Agreement, the Notes and the other Loan Documents, including all unpaid
principal of the Loans, all interest accrued thereon, all fees due under the
Credit Agreement and all other amounts payable by Borrower to Agent and Lenders
thereunder or in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; PROVIDED, HOWEVER, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of California, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
5
(c) TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
(d) INTERPRETATION. The rules of interpretation set forth in Section
1.03 of the Credit Agreement shall be applicable to this Agreement and are
incorporated herein by this reference.
SECTION 2 SECURITY INTEREST.
(a) GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, Borrower hereby pledges, assigns,
transfers, hypothecates and sets over to Agent, for itself and on behalf of and
for the ratable benefit of Lenders, and hereby grants to Agent, for itself and
on behalf of and for the ratable benefit of Lenders, a security interest in all
of Borrower's right, title and interest in, to and under the Collateral. The
Agent, for itself and on behalf of the Lenders, hereby acknowledges and agrees
that, notwithstanding the previous sentence, NCB has a first priority perfected
security interest in each Deposit Account, and all funds and amounts therein and
proceeds thereof, that is a Servicing Account or a Separate Account (as each
term is defined in the NCB Loan Purchase Agreement).
(b) BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) Borrower shall remain liable under any contracts and
agreements included in the Collateral (including all contracts and agreements
relating to the Receivable Collateral), to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (ii) the exercise by Agent of any of the
rights hereunder shall not release Borrower from any of its duties or
obligations under such contracts and agreements included in the Collateral and
(iii) Agent shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Agent be obligated to perform any of the obligations or duties of Borrower
thereunder or to take any action to collect or enforce any Receivable Collateral
or other Right to Payment included in the Collateral hereunder.
(c) CONTINUING SECURITY INTEREST. Xxxxxxxx agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 22.
SECTION 3 FINANCING STATEMENTS, ETC.; RELEASES.
(a) FINANCING STATEMENTS. Borrower shall execute and deliver to
Agent concurrently with the execution of this Agreement, and at any time and
from time to time thereafter, all financing statements, continuation financing
statements, termination statements, security agreements, chattel mortgages,
assignments, patent, copyright and trademark collateral assignments, fixture
filings, warehouse receipts, documents of title, affidavits, reports, notices,
schedules of account, letters of authority and all other documents and
instruments, in form satisfactory to Agent (the "Financing Statements"), and
take all such other action, as Agent may request to perfect and con-
6
tinue perfected, maintain the priority of or provide notice of Agent's
security interest in the Collateral and to accomplish the purposes of this
Agreement.
(b) COLLATERAL PROCEDURES. Without limiting the generality of the
foregoing provisions of this Section 3, Xxxxxxxx agrees (i) to deliver to or for
the account of Agent, at the address and to the Person to be designated by
Agent, any certificates, instruments, Chattel Paper, or other writings
evidencing Receivable Collateral, with any necessary endorsements thereon and
other instruments of transfer or assignment, all in form and substance
satisfactory to Agent, as Agent shall require, such delivery to occur on or
prior to the Closing Date and the earlier to occur of (A) the delivery of any
Borrowing Base Certificate and (B) five Business Days following the receipt of
any such certificates, instruments, Chattel Paper, or other writings evidencing
Receivable Collateral; and (ii) otherwise to comply with the procedures
reasonably established by Agent, as modified from time to time by Agent to
conform to current legal requirements or Agent's practices and policies,
relating to the perfection of the first priority security interest in and pledge
of the Receivable Collateral, including Chattel Paper, to Agent for itself and
on behalf of and for the ratable benefit of Lenders.
(c) NOTICE OF SECURITY INTEREST. In accordance with Section
9302(l)(g) of the California UCC, written notice of the security interest of
Agent, for itself and on behalf of and for the ratable benefit of Lenders, in
each Deposit Account maintained with a Lender is hereby given to such Lender.
(d) RELEASES.
(i) Borrower shall have the right to request Agent to release
from time to time any certificates, instruments, Chattel Paper, and other
writings evidencing any Receivable Collateral in connection with any
modifications or terminations thereof permitted hereunder and under the Credit
Agreement. Promptly following delivery by Borrower of a written request to
Agent requesting any such release and describing in reasonable detail the basis
for the release request, and upon receipt of any additional information Agent
may reasonably request, Agent shall release (or cause to be released) the
certificate, instrument or other writing which is the subject of the release
request. In the case of a request contemplating the substitution of any
certificate, instrument or other writing, Borrower shall deliver the substitute
certificate, instrument or other writing on the date of the release; PROVIDED,
HOWEVER, that if such simultaneous substitution shall be impracticable, Borrower
shall deliver the substitute certificate, instrument or other writing within
five Business Days following the release.
(ii) Provided that an Event of Default is not continuing,
Borrower shall have the right to request Agent to release from time to time any
certificates, instruments, Chattel Paper, and other writings evidencing any
Receivable Collateral in connection with any sale of such Receivable Collateral
pursuant to the Loan Purchase Agreements by delivery of a duly executed Purchase
Notice listing the Receivable Collateral requested to be released. Promptly
following receipt thereof, Agent shall execute and deliver to Borrower a
Release, and Agent shall release (or
7
cause to be released), and contemporaneously deliver, or cause to be
delivered to Buyer (as defined is the NCB Purchase Agreement), the
certificates, instruments, Chattel Paper, and other writings evidencing the
Receivable Collateral requested to be released in the such Purchase Notice;
PROVIDED that immediately after giving effect to such release of Receivable
Collateral, the aggregate principal amount of the Loans outstanding shall not
exceed the Borrowing Base. Agent agrees to take all such other actions as
Borrower may reasonably request to accomplish the release of Receivable
Collateral in accordance with the terms of this Section 3(d)(ii).
SECTION 4 REPRESENTATIONS AND WARRANTIES.
In addition to the representations and warranties of Borrower set
forth in the Credit Agreement, which are incorporated herein by this reference,
Borrower represents and warrants to each Lender and Agent that until this
Agreement has been terminated in accordance with Section 22:
(a) LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. Xxxxxxxx's
chief executive office is located at the address set forth in Schedule 1, and
all other locations where Borrower conducts business or Collateral is kept are
set forth in Schedule 1.
(b) LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for Borrower, are set forth in Schedule 1.
(c) TRADE NAMES AND TRADE STYLES. All trade names and trade styles
under which Borrower presently conducts its business operations are set forth in
Schedule 1, and, except as set forth in Schedule 1, Borrower has not, at any
time during the preceding five years: (i) been known as or used any other
corporate, trade or fictitious name; (ii) changed its name; (iii) been the
surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
(d) OWNERSHIP OF COLLATERAL. Borrower is, and, except as permitted
by Section 5(i), shall continue to be, the sole and complete owner of the
Collateral (or, in the case of after-acquired Collateral, at the time Borrower
acquires rights in such Collateral, shall be the sole and complete owner
thereof), free from any Lien other than Permitted Liens.
(e) ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This
Agreement creates a security interest which is enforceable against the
Collateral in which Borrower now has rights and will create a security interest
which is enforceable against the Collateral in which Borrower hereafter acquires
rights at the time Borrower acquires any such rights, and (ii) Agent has a
perfected security interest (to the fullest extent perfection can be obtained by
filing, notification to third parties or possession) and (other than with
respect to each Deposit Account, and all funds and amounts therein and proceeds
thereof, that is a Servicing Account or a Separate Account (as each term is
defined in the NCB Loan Purchase Agreement), as to which NCB has a first
priority perfected security interest) a first priority security interest in the
Collateral in which Borrower now has rights, and (other than with respect to
each Deposit Account, and all funds and amounts therein and proceeds thereof,
that is a Servicing Accounting or Separate Account (as each term is defined in
8
the NCB Loan Purchase Agreement), as to which NCB has a first priority perfected
security interest) will have a perfected and first priority security interest in
the Collateral in which Borrower hereafter acquires rights at the time Borrower
acquires any such rights, in each case securing the payment and performance of
the Secured Obligations.
(f) OTHER FINANCING STATEMENTS. Other than (i) Financing Statements
disclosed to Agent, (ii) Financing Statements in favor of Agent on behalf of
Lenders, and (iii) Financing Statements with respect to NCB's rights to the
Released Collateral and to each Deposit Account, and all funds and amounts
therein and proceeds thereof, that is a Servicing Account or Separate Account
(as each term is defined in the NCB Loan Purchase Agreement), no effective
Financing Statement naming Borrower as debtor, assignor, grantor, mortgagor,
pledgor or the like and covering all or any part of the Collateral is on file in
any filing or recording office in any jurisdiction.
(g) RIGHTS TO PAYMENT.
(i) the Rights to Payment represent valid, binding and
enforceable obligations of the Receivable Debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto, and
are and will be genuine, free from Liens, adverse claims, counterclaims,
setoffs, defaults, disputes, defenses, retainages, holdbacks and conditions
precedent of any kind of character, except to the extent reflected by Borrower's
reserves for uncollectible Rights to Payment or as otherwise disclosed to
Lenders through Agent in writing;
(ii) to the best of Xxxxxxxx's knowledge and belief, all
Receivable Debtors and other obligors on the Rights to Payment are solvent and
generally paying their debts as they come due except as disclosed to Lenders
through Agent;
(iii) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any federal and state consumer credit laws;
(iv) Borrower has not assigned any of its rights under the Rights
to Payment except as provided in this Agreement or as set forth in the other
Loan Documents;
(v) with respect to each Right to Payment constituting Eligible
Collateral, except as disclosed in writing to Agent, Xxxxxxxx has no knowledge
that any of the criteria for eligibility are not or are no longer satisfied;
9
(vi) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct and in all respects what they purport to be; and
(vii) Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectibility of any of the Rights to
Payment.
(h) INVENTORY. No Inventory is stored with any bailee, warehouseman
or similar Person or on any Promises leased to Borrower, nor has any Inventory
been consigned to Borrower or consigned by Borrower to any Person or is held by
Borrower for any Person under any "bill and hold" or other arrangement, except
as set forth in Schedule 1.
(i) INTELLECTUAL PROPERTY.
(i) except as set forth in Schedule 1, Borrower (directly or
through any Subsidiary) does not own, possess or use under any licensing
arrangement any patents, copyrights, trademarks, service marks or trade names,
nor is there currently pending before any Governmental Authority any application
for registration of any patent, copyright, trademark, service mark or trade
name;
(ii) all patents, copyrights, trademarks, service marks and trade
names are subsisting and have not been adjudged invalid or unenforceable in
whole or in part;
(iii) all maintenance fees required to be paid on account of
any patents have been timely paid for maintaining such patents in force, and, to
the best of Xxxxxxxx's knowledge, each of the patents is valid and enforceable
and Borrower has notified Agent in writing of all prior art (including public
uses and sales) of which it is aware;
(iv) to the best of Xxxxxxxx's knowledge after due inquiry, no
material infringement or unauthorized use presently is being made of any
Intellectual Property Collateral by any Person;
(v) Borrower is the sole and exclusive owner of the Intellectual
Property Collateral and the past, present and contemplated future use of such
Intellectual Property Collateral by Borrower has not, does not and will not
infringe or violate any right, privilege or license agreement of or with any
other Person; and
(vi) Borrower owns, has material rights under, is a party to, or
an assignee of a party to all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade names and
all other Intellectual Property Collateral necessary to continue to conduct its
business as heretofore conducted.
10
(j) EQUIPMENT.
(i) none of the Equipment or other Collateral is affixed to real
property, except Collateral with respect to which Borrower has supplied Agent
with all information and documentation necessary to make all fixture filings
required to perfect and protect the priority of Agent's security interest in all
such Collateral which may be fixtures as against all Persons having an interest
in the Premises to which such property may be affixed; and
(ii) none of the Equipment is leased from or to any Person,
except as set forth at Schedule 1 or as otherwise disclosed to Agent and
Lenders.
(k) DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which Borrower maintains its Deposit Accounts, and the account
numbers and account names of such Deposit Accounts, are set forth in Schedule 1.
SECTION 5 COVENANTS.
In addition to the covenants of Borrower set forth in the Credit
Agreement, which are incorporated herein by this reference, until this Agreement
has been terminated in accordance with Section 22, Xxxxxxxx agrees that:
(a) DEFENSE OF COLLATERAL. Borrower shall appear in and defend any
action, suit or proceeding which may affect to a material extent its title to or
right or interest in, or Agent's right or interest in, the Collateral.
(b) PRESERVATION OF COLLATERAL. Borrower shall do and perform all
reasonable acts that may be necessary and appropriate to maintain, preserve and
protect the Collateral.
(c) COMPLIANCE WITH LAWS, ETC. Borrower shall comply with all laws,
regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral.
(d) LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. Borrower shall:
(i) keep all Books pertaining to the Rights to Payment at the locations set
forth in Schedule 1; and (ii) give at least 30 days' prior written notice to
Agent of (A) any changes in any such location where Books pertaining to the
Rights to Payment are kept, including any change of name or address of any
service bureau, computer or data processing company or other Person preparing or
maintaining any Books or collecting Rights to Payment for Borrower or (B) any
change in the location of Borrower's chief executive office or principal place
of business.
(e) LOCATION OF COLLATERAL. Borrower shall: (i) keep the Collateral
at the locations set forth in Schedule 1 and not remove the Collateral from such
locations (other than disposals of
11
Collateral permitted by subsection (i)) except upon at least 30 days' prior
written notice of any removal to Agent by delivering to Agent an amended
Schedule 1; and (ii) give Agent at least 30 days' prior written notice of any
change in the locations set forth in Schedule 1 by delivering to Agent an
amended Schedule 1.
(f) CHANCE IN NAME, TRADE NAME OR TRADE STYLE. Borrower shall give
at least 30 days' prior written notice of any changes in the its name, or of any
changes in, additions to or other modifications of its trade names and trade
styles set forth in Schedule 1 by delivering to Agent an amended Schedule 1.
(g) MAINTENANCE OF RECORDS. Borrower shall keep separate, accurate
and complete Books with respect to the Collateral, disclosing Agent's security
interest hereunder.
(h) INVOICING OF SALES. Borrower shall invoice all of its sales upon
forms customary in the industry and to maintain proof of delivery and customer
acceptance of goods.
(i) DISPOSITION OF COLLATERAL. Borrower shall not surrender or lose
possession of (other than to Agent), sell, lease, rent, or otherwise dispose of
or transfer any of the Collateral or any right or interest therein, except to
the extent permitted by the Credit Agreement.
(j) LIENS; ASSIGNMENTS OF ASSIGNED AGREEMENTS. (i) Borrower shall
keep the Collateral free of all Liens except Permitted Liens. (ii) Without
limiting the generality of the foregoing, Borrower shall not make any other
assignment (other than to Agent) of its rights under the Receivable Collateral.
(k) EXPENSES. Borrower shall pay all expenses of protecting,
storing, warehousing, insuring, handling and shipping the Collateral.
(l) LEASED PREMISES. At Agent's request, Borrower shall obtain from
each Person from whom Borrower leases any Premises at which any Collateral is at
any time present such subordination, waiver, consent and estoppel agreements as
Agent may require, in form and substance satisfactory to Agent.
(m) RIGHTS TO PAYMENT. Borrower shall:
(i) perform and observe all terms and provisions of the Rights
to Payment and all obligations to be performed or observed by it in connection
therewith and maintain the Rights to Payment in full force and effect;
(ii) enforce all Rights to Payment strictly in accordance with
their terms and the GCC Loan Guidelines and Xxxxxxxx's documentation, credit and
collection policies and practices, and take all such action to such end as may
be from time to time reasonably requested by
12
Agent;
(iii) if, to the knowledge of Borrower, any dispute, setoff,
claim, counterclaim or defense shall exist or shall be asserted or threatened
with respect to a Right to Payment (whether with or against Borrower or
otherwise) involving in excess of $50,000, disclose such fact fully to Agent in
the Books relating to such Account or other Right to Payment and in connection
with any report furnished by Borrower to Agent relating to such Right to
Payment;
(iv) not without the prior consent of Agent, (A) cancel or
terminate any of the Receivable Collateral or consent to or accept any
cancellation or termination thereof, except against full payment of the balance
owing thereon; (B) amend or otherwise modify in any material respect any
Receivable Collateral involving in excess of $50,000 or give any material
consent, waiver or approval thereunder; (C) waive any material default under or
breach of any Receivable Collateral involving in excess of $50,000; or (D) take
any other action in connection with the Receivable Collateral that would
materially impair the value of the interest or rights of Borrower thereunder or
that would materially impair the interest or rights of Agent and Lenders;
(v) furnish to Agent promptly upon receipt thereof copies of all
material notices, requests and other documents received by Borrower from any
Receivable Debtor whose obligations in respect of Receivable Collateral equal or
exceed $1,000,000 in aggregate principal amount, and from time to time (A)
furnish to Agent such information and reports regarding the Receivable
Collateral and other Rights to Payment as Agent may reasonably request, and (B)
upon request of Agent make such demands and requests for information and reports
as Xxxxxxxx is entitled to make in respect of the Receivable Collateral and
other Rights to Payment;
(n) DOCUMENTS, ETC. Upon the request of Agent, Borrower shall (i)
immediately deliver to Agent, or an agent designated by it, appropriately
endorsed or accompanied by appropriate instruments of transfer or assignment,
all Documents, Instruments and Chattel Paper, and all other Rights to Payment at
any time evidenced by promissory notes, trade acceptances or other instruments
and (ii) mark all Documents and Chattel Paper with such legends as Agent shall
specify.
(o) INVENTORY. Borrower shall:
(i) at such times as Agent shall request, prepare and deliver to
Agent periodic reports pertaining to the Inventory, in form and substance
satisfactory to Agent;
(ii) upon the request of Agent, take a physical listing of the
Inventory and upon request of Agent promptly deliver a copy of such physical
listing to Agent; and
(iii) not store any Inventory with a bailee, warehouseman or
similar Person or on Premises leased to Borrower, nor dispose of any Inventory
on a bill-and-hold, guaranteed sale, sale and return, sale on approval,
consignment or similar basis, nor acquire any Inventory from any
13
Person on any such basis, without in each case giving Agent prior written
notice thereof.
(p) EQUIPMENT. Borrower shall, upon Agent's request, deliver to
Agent a report of each item of Equipment, in form and substance satisfactory to
Agent.
(q) INTELLECTUAL PROPERTY COLLATERAL. Borrower shall:
(i) not enter into any agreement (including any license or
royalty agreement) pertaining to any Intellectual Property Collateral without in
each case giving Agent prior notice thereof;
(ii) not allow or suffer any Intellectual Property Collateral to
become abandoned, nor any registration thereof to be terminated, forfeited,
expired or dedicated to the public;
(iii) promptly give Agent notice of any rights Borrower may
obtain to any new patentable inventions, copyrightable works or other new
Intellectual Property Collateral, prior to the filing of any application for
registration thereof; and
(iv) diligently prosecute all applications for patents,
copyrights and trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for certificate of
correction and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and all
maintenance, license, registration and other fees, taxes and expenses incurred
in connection with any Intellectual Property Collateral.
SECTION 6 COLLECTION OF RIGHTS TO PAYMENT.
Agent or Agent's designee, at any time during the continuance of an
Event of Default, may notify the Receivable Debtors and the account debtors that
the Receivable Collateral and the Accounts have been assigned to Agent, on
behalf of Lenders, that Agent has a security interest therein, and may collect
payment of all Rights to Payment directly and charge all collection costs and
expenses to the Obligations. Unless and until Agent does so or gives Borrower
other written instructions, Borrower shall instruct the Receivable Debtors and
account debtors to remit all payments of the Rights to Payment to post office
boxes which have been established as lock boxes by Agent and Borrower. All
checks and other payments received on the Rights to Payment by Agent shall be
applied by Agent, in accordance with the provisions of Section 2.10 of the
Credit Agreement, in reduction of the Obligations. The receipt of any check or
other payment by Agent in respect of the Rights to Payment shall not be
considered a payment on account of the Obligations until such check or other
payment is honored when presented for payment by Agent and has been paid to
Agent. If the NCB Loan Purchase Agreement is still in effect, Agent shall
segregate and pay to NCB all funds and amounts received by Agent not
constituting Collateral or as to which NCB has a first priority security
interest. NCB shall have the right to demand an accounting from Agent of all
funds and
14
amounts not constituting collateral or as to which NCB has a first priority
security interest, and Agent shall hold NCB harmless against the loss or
misapplication of any such funds and amounts.
SECTION 7 AUTHORIZATION; AGENT APPOINTED ATTORNEY-IN-FACT.
Agent shall have the right to, in the name of Xxxxxxxx, or in the name
of Agent or otherwise, without notice to or assent by Xxxxxxxx, and Borrower
hereby constitutes and appoints Agent (and any of Agent's officers or employees
or agents designated in writing by Agent) as Xxxxxxxx's true and lawful
attorney-in-fact, with full power and authority to:
(i) sign any of the Financing Statements which must be executed or
filed to perfect or continue perfected, maintain the priority of or provide
notice of Agent's security interest in the Collateral;
(ii) endorse any notes, acceptances, checks, drafts, money orders or
other forms of payment or security which may come into the possession of Agent
and collect any Proceeds of any Collateral;
(iii) sign any invoice or bill of lading relating to any of the
Collateral, on drafts against customers or other obligors, on notices of
assignment, and on notices to customers or other obligors;
(iv) notify the Postal Service authorities to change the address for
delivery of mail addressed to Borrower to such address as Agent may designate
(provided, that, Agent shall reasonably promptly return to Borrower all mail
other than the Collateral in an orderly fashion) and, without limiting the
generality of the foregoing, establish with any Person lockbox or similar
arrangements for the payment of the Rights to Payment;
(v) receive, open and dispose of all mail addressed to Xxxxxxxx;
(vi) send requests for verification of Rights to Payment to the
customers or other obligors of Borrower;
(vii) contact all Receivable Debtors and other obligors on the
Rights to Payment and instruct such Receivable Debtors and other obligors to
make all payments directly to Agent;
(viii) notify each Person maintaining lockbox or similar
arrangements for the payment of the Rights to Payment to remit all amounts
representing collections on the Rights to Payment directly to Agent;
(ix) assert, adjust, sue for, compromise or release any claims under
any policies of insurance;
15
(x) enforce payment or any other rights in respect of the Rights to
Payment and otherwise grant consents, agree to any amendments, modifications or
waivers of the agreements and documents governing the Rights to Payment, file
any claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as Agent may deem necessary
or desirable to maintain, preserve and protect the Collateral, to collect the
Collateral or to enforce the rights of Agent with respect to the Collateral;
(xi) execute any and all applications, documents, papers and
instruments necessary for Agent to use the Intellectual Property Collateral and
grant or issue any exclusive or non-exclusive license or sublicense with respect
to any Intellectual Property Collateral;
(xii) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral; and
(xiii) execute any and all such other documents and instruments,
and do any and all acts and things for and on behalf of Xxxxxxxx, which Agent
may deem necessary or advisable to maintain, protect, realize upon and preserve
the Collateral and Agent's security interest therein and to accomplish the
purposes of this Agreement.
Agent agrees that, except upon and after the occurrence of an Event of Default,
it shall not exercise the power of attorney, or any rights granted to Agent,
pursuant to clauses (ii) through (xii). The foregoing power of attorney is
coupled with an interest and irrevocable so long as Lenders have any Commitments
or the Secured Obligations have not been indefeasibly paid and performed in
full.
SECTION 8 AGENT PERFORMANCE; AGENT'S DUTIES.
(a) AGENT PERFORMANCE OF BORROWERS DUTIES. Agent may perform or pay
any obligation which Xxxxxxxx has agreed to perform or pay under or in
connection with this Agreement, and Xxxxxxxx shall reimburse Agent on demand for
any amounts paid by Agent pursuant to this Section 8(a).
(b) AGENT'S DUTIES. Notwithstanding any provision contained in this
Agreement, Agent shall have no duty to exercise any of the rights, privileges or
powers afforded to it and shall not be responsible to Borrower or any other
Person for any failure to do so or delay in doing so. Beyond the exercise of
reasonable care to assure the safe custody of Collateral in Agent's possession
and the accounting for moneys actually received by Agent hereunder, Agent shall
have no duty or liability to exercise or preserve any rights, privileges or
powers pertaining to the Collateral.
SECTION 9 AGREEMENT FOR SECURITY PURPOSES.
This Agreement is for security purposes only. Accordingly, Agent
shall not, pursuant
16
to this Agreement (except to the extent expressly provided herein), enforce
Borrower's rights with respect to the Collateral, including the exercise of
any rights granted under or in respect of the Receivable Collateral, until
such time as an Event of Default shall have occurred, and until such time,
subject to the terms of the Loan Documents, Borrower reserves the right to
exercise all of its right, title and interest in, to and under the Collateral
(including the Receivable Collateral).
SECTION 10 REMEDIES.
(a) REMEDIES. Upon the occurrence of any Event of Default, Agent
shall have, in addition to all other rights and remedies granted to them in this
Agreement, the Credit Agreement or any other Loan Document, all rights and
remedies of a secured party under the UCC and other applicable laws. Without
limiting the generality of the foregoing, Xxxxxxxx agrees that:
(i) Agent may peaceably and without notice enter the Premises on
which any Collateral may be located and take possession of the Collateral and
remove or dispose of all or part of the Collateral on any Premises or elsewhere,
or, in the case of Equipment, render it nonfunctional, and Borrower shall not
resist or interfere with such action.
(ii) Agent may require Borrower to assemble all or any part of
the Collateral and make it available to Agent, at any place and time designated
by Agent.
(iii) Agent may use or transfer any of Borrower's rights and
interests in any Intellectual Property Collateral, by license, by sublicense (to
the extent permitted by an applicable license) or otherwise, on such conditions
and in such manner as Agent may determine.
(iv) Agent may notify the account debtors under the Receivable
Collateral and collect, pursuant to UCC Section 9502, any and all Rights to
Payment.
(v) Agent may withdraw (or cause to be withdrawn) any and all
funds from Deposit Accounts; PROVIDED, HOWEVER, that (i) the Agent may not
withdraw funds or amounts on deposit in any Deposit Account that do not
constitute Collateral, and (ii) without the prior written consent of NCB, the
Agent may not withdraw funds or amounts on deposit in any Deposit Account that
is a Servicing Account or Separate Account (as each term is defined in the NCB
Loan Purchase Agreement).
(vi) Agent may secure the appointment of a receiver of the
Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(vii) Agent may sell, resell, lease, use, assign, transfer or
otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of Borrower's assets, without charge or liability to
Agent therefor) at public or private sale, by one or more contracts, in one or
more
17
parcels, at the same or different times, for cash or credit, all as Agent
deem advisable; PROVIDED, HOWEVER, that Xxxxxxxx shall be credited with the
net proceeds of sale only when such proceeds are finally collected by Agent.
Borrower hereby agrees that the sending of notice by ordinary mail, postage
prepaid, to the address of Borrower set forth in the Credit Agreement, of the
place and time of any public sale or of the time after which any private sale
or other intended disposition is to be made, shall be deemed reasonable
notice thereof if such notice is sent ten days prior to the date of such sale
or other disposition or the date on or after which such sale or other
disposition may occur, PROVIDED that Agent may provide Borrower shorter
notice or no notice, to the extent permitted by the UCC or other applicable
law.
(b) LICENSE. For the purpose of enabling Agent to exercise its
rights and remedies under this Section 10 or otherwise in connection with this
Agreement, Borrower hereby grants to Agent an irrevocable, non-exclusive and
assignable license (exercisable without payment or royalty or other compensation
to Borrower) to use, license or sublicense any Intellectual Property Collateral.
(c) EFFECTS OF SECURITIES ACT COMPLIANCE. Borrower hereby
acknowledges that the sale by Agent of any Collateral (or any portion thereof)
pursuant to the terms hereof in compliance with the Securities Act of 1933, or
any similar statute hereafter adopted with similar purpose of effect (the
"Securities Act"), as well as applicable "Blue Sky" or other state securities
laws may require limitations as to the manner in which Agent or any subsequent
transferee of the Collateral (or any portion thereof) may offer or dispose
thereof. Xxxxxxxx further acknowledges and agrees that to protect Agent's
interest it may be necessary to sell Collateral (or any portion thereof) that
constitutes a "security" under such statute at a price less than the maximum
price attainable if a sale were delayed in order to be made in a public offering
under the Securities Act. Borrower has no objection to any sale of any such
Collateral in such a manner that avoids the filing of a registration statement
with any Governmental Authority (if and to the extent such sale is otherwise
commercially reasonable) and agrees that Agent shall have no obligation to file
a registration statement as aforesaid in order to obtain the maximum possible
price for the Collateral (or any portion thereof). Without limiting the
generality of the foregoing, Xxxxxxxx agrees that, upon the occurrence and
during the continuation of an Event of Default, Agent may, subject to applicable
law, from time to time attempt to sell all or any part of the Collateral (or any
portion thereof) the sale of which is or may be subject to any federal or state
securities law by a private placement, restricting the bidders and prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution and are qualified for any applicable
private placement exemptions under the Securities Act and Blue Sky laws. In
doing so, Agent may solicit offers to buy the Collateral (or any portion
thereof) subject to such sale or any part thereof, from a limited number of
investors deemed by Agent, in its sole discretion, to be institutional investors
or other responsible parties who might be interested in purchasing the
Collateral (or any portion thereof). If Agent shall solicit such offers, then
the acceptance by Agent of one of the offers shall be conclusively deemed to be
a commercially reasonable method of disposition of such Collateral.
(d) APPLICATION OF PROCEEDS. The cash proceeds actually received
from the sale
18
or other disposition or collection of Collateral, and any other amounts
received in respect of the Collateral the application of which is not
otherwise provided for herein, shall be applied as provided in Section
6.02(d)(ii) of the Credit Agreement. Any surplus thereof which exists after
payment and performance in full of the Secured Obligations shall be promptly
paid over to Borrower or otherwise disposed of in accordance with the UCC or
other applicable law. Borrower shall remain liable to Agent and Lenders for
any deficiency which exists after any sale or other disposition or collection
of Collateral.
SECTION 11 CERTAIN WAIVERS.
Borrower waives any right to require Agent or Lenders (i) to proceed
against any Person; (ii) to exhaust any other collateral or security for any of
the Secured Obligations; (iii) to pursue any remedy in Agent's or any of
Lenders' power; or (iv) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of protests or notices
of dishonor in connection with any of the Collateral.
SECTION 12 NOTICES.
All notices or other communications hereunder shall be given in the
manner and to the addresses specified in the Credit Agreement. All such notices
and other communications shall be effective if delivered by hand, when
delivered; if sent by mail, upon the earlier of the date of receipt or five
Business Days after deposit in the mail, first class, postage prepaid; if sent
by telex, upon receipt by the sender of an appropriate answerback; and if sent
by facsimile transmission, when sent.
SECTION 13 NO WAIVER; CUMULATIVE REMEDIES.
No failure on the part of Agent or any Lender to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under this Agreement are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be available to Agent
or any Lender.
SECTION 14 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(a) COSTS AND EXPENSES. Xxxxxxxx agrees to pay on demand:
(i) the reasonable out-of-pocket costs and expenses of Agent and
any of its Affiliates, and the reasonable fees and disbursements of counsel to
Agent (including allocated costs of internal counsel), in connection with the
negotiation, preparation, execution, delivery and administration of this
Agreement, and any amendments, modifications or waivers of the terms thereof,
and the custody of the Collateral;
19
(ii) all title, appraisal (including the allocated costs of
internal appraisal services), survey, audit, consulting, search, recording,
filing and similar fees, costs and expenses incurred or sustained by Agent or
any of its Affiliates in connection with this Agreement or the Collateral,
including any costs, fees and expenses in respect of the report referred to in
Section 7.01(c)(ii) of the Credit Agreement and the inspections or audits
contemplated by Section 9.03(e) of the Credit Agreement; and
(iii) all costs and expenses of Agent, its Affiliates and
Lenders, and the fees and disbursements of counsel (including the allocated
costs of internal counsel), in connection with the enforcement or attempted
enforcement of, and preservation of any rights or interests under, this
Agreement, any out-of-court workout or other refinancing or restructuring or in
any bankruptcy case, and the protection, sale or collection of, or other
realization upon, any of the Collateral, including all expenses of taking,
collecting, holding, sorting, handling, preparing for sale, selling, or the
like, and other such expenses of sales and collections of Collateral, and any
and all losses, costs and expenses sustained by Agent and any Lender as a result
of any failure by Borrower to perform or observe its obligations contained
herein.
(b) INDEMNIFICATION. Borrower hereby agrees to indemnify Agent and
each Lender, any of its Affiliates, and their respective directors, officers,
employees, agents, counsel and other advisors (each an "Indemnified Person")
against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person (including
allocated costs of internal counsel), which may be imposed on, incurred by, or
asserted against any Indemnified Person, in any way relating to or arising out
of this Agreement or the transactions contemplated hereby or any action taken or
omitted to be taken by it hereunder (the "Indemnified Liabilities"); PROVIDED
that Borrower shall not be liable to any Indemnified Person for any portion of
such Indemnified Liabilities to the extent they are found by a final decision of
a court of competent jurisdiction to have resulted from such Indemnified
Person's gross negligence or willful misconduct. If and to the extent that the
foregoing indemnification is for any reason held unenforceable, Xxxxxxxx agrees
to make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(c) OTHER CHARGES. Xxxxxxxx agrees to indemnify Agent and each of
Lenders against and hold each of them harmless from any and all present and
future stamp, transfer, documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of this Agreement.
(d) INTEREST. Any amounts payable to Agent or any Lender under this
Section 14 or otherwise under this Agreement if not paid upon demand shall bear
interest beginning on the date ten days from the date of such demand until paid
in full, at the rate of interest set forth in Section 3.02 of the Credit
Agreement.
20
SECTION 15 BINDING EFFECT.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by Xxxxxxxx, Agent and each Lender and their respective successors
and assigns; PROVIDED, HOWEVER, Borrower shall not assign this Agreement, nor
delegate any of its duties hereunder, without the prior written consent of Agent
and any such prohibited assignment shall be absolutely void; PROVIDED, FURTHER,
Agent may assign this Agreement at any time in accordance with the terms of the
Credit Agreement.
SECTION 16 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE
EXTENT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE
REMEDIES HEREUNDER, IN RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN CALIFORNIA.
SECTION 17 ENTIRE AGREEMENT; AMENDMENT.
This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and shall not be amended except by the
written agreement of the parties as provided in the Credit Agreement.
SECTION 18 SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Agreement shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Agreement, or the validity or effectiveness of such provision in any other
jurisdiction.
SECTION 19 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
21
SECTION 20 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT.
To the extent the Credit Agreement contains provisions of general
applicability to the Loan Documents, including any such provisions contained in
Article XI thereof, such provisions are incorporated herein by this reference.
SECTION 21 NO INCONSISTENT REQUIREMENTS.
Borrower acknowledges that this Agreement and the other Loan Documents
may contain covenants and other terms and provisions variously stated regarding
the same or similar matters, and agrees that all such covenants, terms and
provisions are cumulative and all shall be performed and satisfied in accordance
with their respective terms.
SECTION 22 TERMINATION.
Upon the termination of the Commitments of Lenders and indefeasible
payment and performance in full of all Secured Obligations, this Agreement shall
terminate and Agent shall promptly execute and deliver to Borrower such
documents and instruments reasonably requested by Borrower as shall be necessary
to evidence termination of all security interests given by Borrower to Agent
hereunder; PROVIDED, HOWEVER, that the obligations of Borrower under Section 14
shall survive
22
such termination.
SECTION 23 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Secured Obligations by Borrower or any guarantor of
the Secured Obligations or the transfer by either or both of such parties to
Agent for the ratable benefit of Lenders of any property of either or both of
such parties should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lenders are required to
repay or restore, in whole or in part, any such Voidable Transfer, or elect to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lenders are required or elect to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Agent
related thereto, the liability of Borrower or such guarantor, and the security
interest granted herein, automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
BORROWER
GROCERS CAPITAL COMPANY
By
-------------------------------------------
Title:
-------------------------------------
AGENT
NATIONAL CONSUMER COOPERATIVE BANK
By
-------------------------------------------
Title:
-------------------------------------
23
SCHEDULE 1
to the Security Agreement
1. LOCATION OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF
COLLATERAL
a. Chief Executive Office:
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
b. Other locations where Borrower conducts business or Collateral is
kept:
At the office of Agent or a Person designated by Agent pursuant to
Section 3(b).
2. LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Note: Books relating to the Rights to Payment are also maintained
by Certified at the above address.
3. TRADE NAMES AND TRADE STYLES OTHER CORPORATE, TRADE OR, FICTITIOUS NAMES;
ETC.
None.
4. INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
None.
24
5. PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
None.
6. LEASED EQUIPMENT
None.
7. DEPOSIT ACCOUNTS
Account No. 700424561 at
Union Bank's branch located at
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
25
