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EXHIBIT 10.2
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CREDIT AGREEMENT
BETWEEN
THE SOURCE INFORMATION MANAGEMENT COMPANY
AND
BANK OF AMERICA, N.A.
$50,000,000 REVOLVING LINE OF CREDIT
DECEMBER 22, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.....................................................................................1
Section 1.1 Defined Terms..........................................................................1
Section 1.2 Accounting Terms......................................................................13
Section 1.3 Singular/Plural.......................................................................13
Section 1.4 Other Terms...........................................................................13
ARTICLE II REVOLVING LOANS................................................................................14
Section 2.1 Revolving Line of Credit..............................................................14
Section 2.2 Term..................................................................................15
Section 2.3 Repayment.............................................................................15
Section 2.4 Use of Proceeds.......................................................................16
Section 2.5 Guaranty Agreement....................................................................16
Section 2.6 Non-Use Fee...........................................................................16
Section 2.7 Termination of Facility...............................................................16
Section 2.8 Termination Fee.......................................................................17
Section 2.9 Commitment Fee........................................................................17
ARTICLE III INTEREST ON THE REVOLVING LOANS................................................................17
Section 3.1 Interest..............................................................................17
Section 3.2 Computation...........................................................................18
Section 3.3 Maximum Interest Rate.................................................................18
Section 3.4 Default Rate; Post-Petition Interest..................................................18
Section 3.5 Payment...............................................................................18
Section 3.6 Taxes.................................................................................18
ARTICLE IV CLOSING; CONDITIONS OF CLOSING AND BORROWING...................................................19
Section 4.1 Closing...............................................................................19
Section 4.2 Conditions of Loans and Advances......................................................19
(a) Executed Documents....................................................................19
(b) Certificate of the Borrower...........................................................19
(c) Certificate of Secretary of Borrower and Guarantors...................................19
(d) Real Estate Reports; Negative Pledges.................................................20
(e) UCC Searches..........................................................................20
(f) Payment of Wachovia Debt..............................................................20
(g) Opinion of Counsel....................................................................20
(h) Certificates of Good Standing.........................................................20
(i) Borrowing Base Report.................................................................20
(j) Commitment Fee........................................................................21
(k) No Event of Default...................................................................21
(l) Other Documents.......................................................................21
Section 4.3 Conditions to all Loans and Advances..................................................21
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Section 4.4 Waiver of Conditions Precedent........................................................21
ARTICLE V REPRESENTATIONS AND WARRANTIES.................................................................21
Section 5.1 Corporate Organization and Power......................................................21
Section 5.2 Authority; No Conflict With Other Instruments or Law..................................22
Section 5.3 Due Execution and Delivery............................................................22
Section 5.4 Enforceability........................................................................22
Section 5.5 Governmental Approval.................................................................22
Section 5.6 Margin Stock..........................................................................22
Section 5.7 Investment Company....................................................................23
Section 5.8 Taxes.................................................................................23
Section 5.9 Litigation............................................................................23
Section 5.10 Compliance with Laws..................................................................23
Section 5.11 ERISA.................................................................................23
Section 5.12 No Other Debt.........................................................................24
Section 5.13 Real Estate; Material Locations.......................................................24
Section 5.14 Financial Statements; No Material Adverse Change......................................24
Section 5.15 Full Disclosure.......................................................................24
Section 5.16 No Default............................................................................24
Section 5.17 Year 2000 Compliance..................................................................24
ARTICLE VI AFFIRMATIVE COVENANTS..........................................................................25
Section 6.1 Financial and Business Information....................................................25
Section 6.2 Notice of Certain Events..............................................................27
Section 6.3 Existence.............................................................................27
Section 6.4 Maintenance of Properties.............................................................28
Section 6.5 Compliance with Law...................................................................28
Section 6.6 Compliance with ERISA.................................................................28
Section 6.7 Payment of Indebtedness...............................................................28
Section 6.8 Payment of Taxes......................................................................28
Section 6.9 Maintenance of Insurance..............................................................28
Section 6.10 Maintenance of Books and Records; Inspection..........................................29
Section 6.11 Name Change...........................................................................29
Section 6.12 New Material Locations................................................................29
Section 6.13 New Subsidiaries......................................................................29
Section 6.14 After-Acquired Real Estate............................................................30
Section 6.15 Further Assurances....................................................................30
ARTICLE VII NEGATIVE COVENANTS.................................................................................30
Section 7.1 Transfer of Assets....................................................................30
Section 7.2 Merger or Consolidation...............................................................31
Section 7.3 Acquisitions..........................................................................31
Section 7.4 Liens.................................................................................31
Section 7.5 Investments...........................................................................31
Section 7.6 Restricted Payments...................................................................32
Section 7.7 Indebtedness..........................................................................32
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Section 7.8 Related Party Transactions............................................................32
Section 7.9 Character of Business.................................................................33
Section 7.10 Management Change.....................................................................33
Section 7.11 Environmental Compliance..............................................................33
Section 7.12 Other Ventures........................................................................34
Section 7.13 Dissolution, etc......................................................................34
Section 7.14 Fiscal Year...........................................................................34
Section 7.15 Limitation on Negative Pledge Clauses.................................................34
ARTICLE VIII FINANCIAL COVENANTS............................................................................35
Section 8.1 Financial Condition...................................................................35
(a) Debt to Tangible Net Worth............................................................35
(b) Cash Flow Coverage Ratio..............................................................35
(c) Funded Debt to EBITDA.................................................................35
(d) Minimum EBITDA........................................................................35
ARTICLE IX EVENTS OF DEFAULT; REMEDIES....................................................................35
Section 9.1 Events of Default.....................................................................35
Section 9.2 Remedies..............................................................................37
(a) Termination of Revolving Line of Credit; Acceleration of
Indebtedness..........................................................................37
(b) Right of Setoff.......................................................................37
(c) Rights and Remedies Cumulative; Non-Waiver; etc.......................................38
ARTICLE X MISCELLANEOUS..................................................................................38
Section 10.1 Expenses..............................................................................38
Section 10.2 Waiver, Amendments, Etc...............................................................38
Section 10.3 Address for Notices, Etc..............................................................38
Section 10.4 Enforcement and Waiver................................................................39
Section 10.5 Survival of Agreements................................................................40
Section 10.6 Assignment and Participation..........................................................40
Section 10.7 Governing Law.........................................................................41
Section 10.8 Arbitration...........................................................................41
Section 10.9 Waivers by the Borrower...............................................................42
Section 10.10 Severability..........................................................................42
Section 10.11 Entire Agreement......................................................................42
Section 10.12 Binding Effect........................................................................42
Section 10.13 Definitional Provisions...............................................................42
Section 10.14 Conflict of Terms.....................................................................42
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement" or "Agreement"), dated
as of December 22, 1999, is made and entered into by and between THE SOURCE
INFORMATION MANAGEMENT COMPANY, a Missouri corporation (the "Borrower"), and
BANK OF AMERICA, N.A., a national banking association with offices in
Greensboro, North Carolina (the "Bank").
W I T N E S S E T H:
A. The Borrower has requested that the Bank make a $50,000,000
revolving line of credit available to the Borrower.
B. The Bank is willing to make such revolving line of credit available
to the Borrower, subject to and on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to extend the revolving line of credit described herein, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. In addition to the words and terms defined
elsewhere in this agreement, the following terms when used herein shall have the
following respective meanings:
"Acquisition" shall mean the acquisition, whether by purchase, merger
or otherwise, of (i) a controlling equity interest in another Person (including
the purchase of an option, warrant or convertible or similar type security to
acquire such a controlling interest at the time it becomes exercisable by the
holder thereof), whether by purchase of such equity interest or upon exercise of
an option or warrant for, or conversion of securities into, such equity
interest, or (ii) assets of another Person which constitute all or substantially
all of the assets of such Person or of a line or lines of business conducted by
such Person.
"Acquisition Cost" shall mean, with respect to any Acquisition, as at
the date of entering into an agreement therefor, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or options
to acquire capital stock of Borrower or any Subsidiary to be transferred in
connection therewith, (ii) the amount of any cash and the fair market value of
other property (excluding property described in clause (i) and the unpaid
principal amount of any debt instrument) given as consideration, (iii) the
amount (determined by using the face amount or the amount payable at maturity,
whichever is greater) of any Indebtedness incurred, assumed or acquired by the
Borrower or any Subsidiary in connection with such Acquisition, (iv) all
additional purchase price amounts in the form of earn-outs and other contingent
obligations that should be recorded on the financial statements of Borrower and
its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements
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that should be recorded on financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, and other affiliated contracts in
connection with such Acquisition, (vi) the aggregate fair market value of all
other consideration given by the Borrower in connection with such Acquisition,
(vii) out-of-pocket transaction costs for the services and expenses of
attorneys, accountants and other consultants incurred in effecting such
transaction, and other similar transaction costs so incurred. For purposes of
determining the Acquisition Cost for any transaction, (A) the capital stock of
the Borrower or its Subsidiaries shall be valued (i) in the case of capital
stock that is then listed on a national securities exchange or a national market
system, the average of the last reported bid and ask quotations or the last
prices reported thereon, and (ii) with respect to any other shares of capital
stock of the Borrower or its Subsidiaries, as determined by the Board of
Directors of Borrower, and (B) with respect to any Acquisition accomplished
pursuant to the exercise of options or warrants or the conversion of securities,
the Acquisition Cost shall include both the cost of acquiring such option,
warrant or convertible security, as well as the cost of exercise or conversion.
"Affiliate" shall mean, as to any Person, (i) any other Person which
directly, or indirectly through one or more intermediaries, controls such
Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or
(iii) any other Person of which such Person owns, directly or indirectly, 20% or
more of the common stock or equivalent equity interests. As used herein, the
term "control" means possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or otherwise.
"Agreement" or "this Agreement" or "Credit Agreement" shall mean this
Credit Agreement and all schedules and exhibits hereto, together with any
amendments, modifications, replacements and supplements hereto, any substitutes
therefor, and any restatements, replacements, renewals or extensions hereof, in
whole or in part, and shall refer to this Agreement as the same may be in effect
at the time such reference becomes operative.
"Applicable Margin" shall mean, for the three-month period beginning on
the first day of April, July, October and January of each year (the "Calculation
Date") and ending on the day preceding the next succeeding Calculation Date, the
percentage set forth below determined with reference to the Funded Debt to
EBITDA Ratio of Borrower at the end of the Fiscal Quarter most recently ended as
of such Calculation Date:
Funded Debt to Applicable
EBITDA Ratio Margin
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Greater than or equal to 2.25 to 1.0 Default Rate applies
Greater than or equal to 2.00 to 1.0 but less than 2.25 to 1.0 2.10%
Greater than or equal to 1.75 to 1.0 but less than 2.00 to 1.0 1.85%
Greater than or equal to 1.50 to 1.0 but less than 1.75 to 1.0 1.60%
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Funded Debt to Applicable
EBITDA Ratio Margin
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Greater than or equal to 1.0 to 1.0 but less than 1.50 to 1.0 1.35%
Less than 1.00 to 1.0 1.0%
At least five Business Days prior to each Calculation Date, the Borrower shall
submit a duly completed interest rate calculation worksheet in form satisfactory
to the Bank reflecting the computation of Funded Debt to EBITDA Ratio as of the
end of the applicable Fiscal Quarter. Changes in the Applicable Margin will be
effective on the Calculation Date. From the date of this Credit Agreement until
the first Calculation Date following the date of this Credit Agreement, the
Applicable Margin shall be one percent (1%). If the annual financial statements
of Borrower delivered to the Bank pursuant to Section 6.1(b) hereof shall
indicate that an incorrect interest rate has been applied to the Loans based on
the unaudited quarterly financial statements delivered to the Bank with respect
to the last quarter of Borrower's then most recently completed Fiscal Year, or
if an interest rate calculation worksheet contains an error resulting in an
incorrect interest rate applied to the Loans less than the rate derived from an
interest rate calculation worksheet absent error (the incorrect interest rate in
any such case being the "Error Rate" and the correct rate in any such case being
the "Correct Rate"), then the Borrower shall pay to the Bank, on demand, an
amount equal to the sum of (a) the difference between (i) the total interest
amount on the Loans calculated with the Correct Rate for the period the Error
Rate was applied to the Loans and (ii) the total interest amount on the Loans
paid to the Bank calculated using the Error Rate and (b) interest at the Correct
Rate on the amount derived in (a) above. If the Error Rate is greater than the
Correct Rate, the Bank shall refund the amount of any excess interest paid by
the Borrower. If on any Calculation Date the Borrower shall have failed to
deliver to the Bank the financial statements required to be delivered pursuant
to Section 6.1(a) hereof with respect to the Fiscal Quarter most recently ended
prior to such Calculation Date, then for the period beginning on such
Calculation Date and ending on the earlier of (A) the date on which Borrower
shall deliver to the Bank the financial statements of the Borrower to be
delivered pursuant to Section 6.1(a) with respect to such Fiscal Quarter or any
subsequent Fiscal Quarter, or (B) the date on which the Borrower shall deliver
to the Bank annual financial statements of the Borrower required to be delivered
pursuant to Section 6.1 with respect to the Fiscal Year which includes such
Fiscal Quarter, the Applicable Margin shall be determined as if the Funded Debt
to EBITDA Ratio was greater than or equal to 2.25 to 1.0 at all times during
such period.
"Bank" shall mean Bank of America, N.A., a national banking association
with offices in Greensboro, North Carolina, and its successors and assigns.
"Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended, and any successor statute or statutes having substantially the same
function.
"Borrowing Base" shall have the meaning set forth in Section 2.1(b)
hereof.
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"Borrowing Base Certificate" shall mean the certificates of the
Borrower submitted to the Bank pursuant to Section 2.1(c) hereof.
"Business Day" shall mean any day of the year on which banks are open
for business in Greensboro, North Carolina.
"Capitalized Lease" shall mean any lease or similar arrangement which
is of such a nature that payment obligations of the lessee or obligor thereunder
at the time are or should be capitalized and shown as liabilities (other than
current liabilities) upon a balance sheet of such lessee or obligor prepared in
accordance with GAAP, including Statement of Financial Accounting Standards No.
13.
"Change of Control" shall mean, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(iii) and 14(d)(ii) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of voting securities of the Borrower (or securities
convertible into or exchangeable for such voting securities)
representing thirty percent (30%) or more of the combined voting power
of all voting securities of the Borrower (on a fully diluted basis), or
(B) otherwise has the ability, directly or indirectly, to elect a
majority of the Board of Directors of the Borrower; or
(ii) during any period of up to twenty-four (24) consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were directors of the Borrower shall
cease for any reason (other than the death, disability or retirement of
an officer of the Borrower who is serving as a director at such time,
so long as another officer of the Borrower replaces such person as a
director), to constitute a majority of the Board of Directors of the
Borrower; or
(iii) the Borrower shall merge or consolidate, or shall be a
party to a merger or consolidation, in a transaction in which Borrower
is not the surviving entity or in a transaction that results in the
voting securities of Borrower outstanding immediately prior to such
merger or consolidation not continuing to represent at least eighty
percent (80%) of the combined voting power of the voting securities of
Borrower outstanding immediately after such merger or consolidation.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also include the income tax regulations promulgated thereunder, whether final,
temporary or proposed.
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"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Credit Documents" shall mean and collectively refer to this Agreement,
the Note, the Guaranty Agreement, and any and all agreements, instruments and
documents, including, without limitation, notes, guaranties, mortgages, deeds to
secure debt, deeds of trust, negative pledge agreements, chattel mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, trust account agreements and all other written matters whether
heretofore, now or hereafter executed by or on behalf of the Borrower or the
Guarantors with respect to this Agreement or with respect to the transactions
contemplated by this Agreement, and in each case, together with any amendments,
modifications and supplements thereto, any replacements, renewals, extensions
and restatements thereof, and any substitutes therefor, in whole or in part.
"Current Maturities" shall mean, with reference to the period of four
(4) consecutive Fiscal Quarters ending on the date of calculation thereof, the
sum of: (a) interest expense of the Borrower and its Subsidiaries (including
payments in the nature of interest with respect to Capitalized Lease
obligations), plus (b) the aggregate amount of all mandatory scheduled payments
of principal on any Funded Debt, plus (c) the aggregate amount of all payments
in the nature of principal under Capitalized Lease obligations, all of the
foregoing as determined on a consolidated basis for Borrower and its
Subsidiaries in accordance with GAAP, plus (d) an amount equal to one seventh
(1/7) of the principal and accrued interest outstanding under the Revolving Line
of Credit.
"Default" shall mean any event which with the giving of notice, lapse
of time, or both, would become an Event of Default.
"Default Rate" shall mean (i) the LIBOR Rate, plus the Applicable
Margin, plus three percent (3%) per annum, and (ii) in any case, the maximum
rate permitted by applicable law, if lower.
"Depreciation" shall mean for any period the sum of all depreciation
expenses of the Borrower and its Subsidiaries for such period, as determined on
a consolidated basis in accordance with GAAP.
"Dollar" or "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for the applicable period of four (4) consecutive
Fiscal Quarters, the net income (or loss) of the Borrowers and its Subsidiaries
determined in accordance with GAAP on a consolidated basis (excluding the
write-up of assets, retirement of debt for less than face value and
extraordinary gains), plus the sum of (a) all amounts deducted in computing such
combined net income in respect of interest expense (including payments in the
nature of interest under Capitalized Leases), (b) taxes based upon or measured
by net income, (c) Depreciation, and (d) amortization.
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"Eligible Accounts Receivable" shall mean good and bona fide accounts
owed to members of the Source Group by their account debtors, but excluding
therefrom all the following: (a) accounts which are not due and payable within
three hundred sixty-five (365) days after their invoice dates; (b) all of the
accounts owing by a single account debtor, to the extent that the aggregate
balance of such accounts exceeds twenty five percent (25%) of the aggregate
amount of all Eligible Accounts Receivable; (c) all of the accounts owing by a
single account debtor, together with its Affiliates, to the extent that the
aggregate balance of such accounts collectively exceeds thirty five percent
(35%) of all Eligible Accounts Receivable; (d) all of the accounts owing by a
single account debtor, together with its Affiliates, if as much as thirty five
percent (35%) of the balance owing by said account debtor and its Affiliates to
the Source Group remains unpaid more than 365 days after their respective
invoice due dates; (e) accounts with respect to which the account debtor is the
United States of America or any state, city, county or governmental authority or
any department, agency or instrumentality of any of them; (f) all accounts that
have not been invoiced to the account debtor as of any particular date; (g) all
accounts owed by any debtor situated in a foreign country (other than Canada)
unless payment of any such account is secured by a letter of credit acceptable
to the Bank; (h) accounts that are subject to offset, discount, counterclaim,
contra accounts, or any other account owed by an account debtor to whom such
Person owes an account payable; (i) accounts owed by any account debtor if such
account debtor generally suspends business, becomes insolvent, makes a general
assignment for the benefit of creditors, or fails to pay its debts generally as
they become due; (j) accounts owed by any account debtor if a petition is filed
by or against such account debtor under any state or federal bankruptcy law or
any other receivership, insolvency relief or other law for the relief of
debtors; (k) accounts owed to a member of the Source Group by any Affiliate
thereof; (l) accounts evidenced by chattel paper or an instrument of any kind,
unless such chattel paper or instrument is duly endorsed to and is in the
possession of the Bank; or (m) any other account reasonably deemed doubtful or
uncollectible by the Bank.
"Environmental Law" shall mean any federal, state or local law,
statute, ordinance, rule, Regulation, permit, license, approval, interpretation,
order, guidance or other legal requirement (including without limitation any
subsequent enactment, amendment or modification) relating to the Protection of
human health or the environment, including, but not limited to, any requirement
Pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of materials that are or may constitute a threat to
human health or the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"Event of Default" shall have the meaning specified in Article IX
hereof.
"Financial Statements" shall mean the annual audited financial
statements of the Borrower at January 31, 1999, and for the Fiscal Year then
ended.
"Fiscal Quarter" means the three month fiscal Period of Borrower and
its Subsidiaries ending on April 30, July 31, October 31 and January 31 of each
Fiscal Year.
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"Fiscal Year" means the twelve month fiscal period of Borrower and its
Subsidiaries commencing on February 1 of each calendar year and ending on
January 31 of the following calendar year.
"Funded Debt" shall mean, without duplication, as of the end of the
applicable Fiscal Quarter, all obligations of the Borrower and its Subsidiaries
on a consolidated basis, whether contingent or otherwise, in respect of (a)
Indebtedness for Money Borrowed, (b) other obligations classified as long-term
Indebtedness, including any letter of credit reimbursement obligations, (c)
Capitalized Lease Obligations, and (d) guarantees of any of the foregoing
Indebtedness, other than guarantees now or hereafter arising pursuant to the
Guaranty Agreement.
"Funded Debt to EBITDA Ratio" shall mean, as of the end of any Fiscal
Quarter of Borrower, the ratio of (a) Funded Debt on such date to (b) EBITDA for
the period of four consecutive Fiscal Quarters ending on such date.
"GAAP" shall mean generally accepted accounting principles, as
recognized by the American Institute of Certified Public Accountants,
consistently applied and maintained on a consistent basis for the Borrower
throughout the period indicated and consistent with the financial practice of
the Borrower after the date hereof, provided, however, that, in the event that
changes in generally accepted accounting principles shall be mandated by the
Financial Accounting Standards Board, or similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify the accounting terms
contained or referenced herein or the interpretation or computation thereof,
such changes shall be followed in defining such accounting terms only from and
after the date this Agreement shall have been amended to the extent necessary to
reflect any such changes in the financial covenants and other terms and
conditions of this Agreement.
"Governmental Authority" shall mean any nation or government, any
state, department, agency or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government, and any corporation or other
entity owned or controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
"Guarantors" shall collectively mean each of the present and, as
applicable, future Subsidiaries of the Borrower, other than Inactive
Subsidiaries. Reference to a particular "Guarantor" shall mean the particular
Subsidiary indicated.
"Guaranty Agreement" shall mean a Guaranty Agreement substantially in
the form of Exhibit A attached hereto, as executed and delivered by the
Guarantors as of the Closing Date and as otherwise delivered to the Bank
pursuant to Section 2.5 and Section 6.13 hereof, in each case as such Guaranty
Agreement may be amended, modified, supplemented or restated from time to time.
"Hazardous Material" shall mean any substance or material meeting any
one or more of the following criteria: (i) it is or contains a substance
designated as a hazardous waste, hazardous
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substance, pollutant, contaminant or toxic substance under any Environmental
Law; (ii) it is toxic, explosive, corrosive, ignitable, infectious, radioactive,
mutagenic or otherwise hazardous, (iii) its presence requires investigation or
remediation under an Environmental Law or common law; (iv) it constitutes a
danger, nuisance, trespass or health or safety hazard to persons or property;
and/or (v) it is or contains, without limiting the foregoing, petroleum
hydrocarbons.
"Inactive Subsidiary" shall mean a Subsidiary of the Borrower that is
not engaged in any business or activity and that does not own, hold or lease
assets with a fair market value exceeding $10,000.
"Indebtedness" shall mean as to any Person at any particular time,
without duplication, (i) indebtedness for borrowed money or for the deferred
purchase price of property or services in respect of which such Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, and (ii)
obligations under leases which shall have been or should be, in accordance with
GAAP, recorded as a Capitalized Lease, in respect of which such Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise.
"Indebtedness for Money Borrowed" shall mean, at any time with respect
to any Person, all indebtedness of such Person, or any Subsidiary of such
Person, in respect of money borrowed, including without limitation the deferred
purchase price of any property or asset or indebtedness evidenced by a
promissory note, bond or similar written obligation for the payment of money
(including, but not limited to, conditional sales or similar title retention
agreements), but excluding open accounts payable.
"LIBOR Rate" shall mean, for any day, that rate per annum quoted for
such day by the Bank, in its discretion, as its LIBOR Rate, as such rate may
change from time to time. The LIBOR Rate shall be based upon the rate per annum
at which, as determined by the Bank, United States Dollars in the amount of
$5,000,000 are being offered to major banks from time to time for settlement in
immediately available funds by major banks in the London Interbank Market for a
period of thirty (30) days, which rate shall be adjusted for the Bank's
Eurocurrency reserve requirements and any other applicable fees or assessments.
The LIBOR Rate represents a reference rate used by the Bank in determining the
interest rate on certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any customer. If quotations of
interest rates are not being provided by the relevant Persons in the relevant
amounts for the relevant maturities for the purposes of determining the LIBOR
Rate (as determined by the Bank in good faith), the Bank shall give the Borrower
prompt notice thereof, and so long as such condition remains in effect, the rate
of interest announced from time to time by the Bank as its prime rate will be
substituted therefor.
"Lien" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For the purpose of this Agreement, the Borrower and its Subsidiaries
shall be deemed to own subject to a Lien any asset leased under any "sale and
lease back" or similar arrangement and any asset acquired or held subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
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"Loan Documents" shall mean the "Credit Documents."
"Loans" shall mean and refer to the Revolving loans made under the
Revolving Line of Credit referred to in Article II hereof.
"Material Adverse Effect" or "Material Adverse Change" shall mean a
material adverse effect upon, or a material adverse change in, any of (i) the
financial condition, operations, business, properties or prospects of the
Borrower and its Subsidiaries, taken as a whole; (ii) the ability of the
Borrower or any of its Subsidiaries to perform under this Agreement or any
Credit Document in any material respect or in any material respect under any
other material contract to which any the Borrower or such Subsidiary is a party;
(iii) the legality, validity or enforceability of this Agreement or any other
Credit Document; or (iv) the perfection or priority of the Liens of the Bank
granted under this Agreement or any other Credit Document or the rights and
remedies of the Bank under this Agreement or any other Credit Document (other
than a change resulting from any action or inaction by the Bank).
"Material Location" shall mean any office, place of business or
facility owned or leased by the Borrower or any Subsidiary, excluding leased or
other nonowned locations or places of business (i) at which no books and records
are maintained with respect to the accounts receivable of Borrower or any
Subsidiary and at which no payment for any such account receivable is received
or collected, and (ii) at which the property of the Borrower or its Subsidiaries
owned or leased and located thereon does not exceed $5,000.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
"Myco Letter of Credit" shall mean the Irrevocable Letter of Credit in
the amount of $4,073,973, as issued by Wachovia Bank, National Association, in
favor of Amalgamated Bank of Chicago, as trustee, in respect of the Industrial
Project Revenue Bonds, Series 1995 (MYCO, Inc. Project), as issued pursuant to
the Indenture of Trust dated as of January 1, 0000 xxxxxxx xxx Xxxx xx Xxxxxxxx,
Xxxxxxxx and Amalgamated Bank of Chicago, as trustee and tender agent.
"Myco Letter of Credit Reimbursement Obligation" shall mean (i) the
obligations of Borrower and its Subsidiary, Source-Myco, Inc., pursuant to the
terms of that certain Reimbursement Agreement dated February 26, 1999, among
Source-Myco, Inc., the Borrower and Wachovia Bank, National Association, in
respect of the Myco Letter of Credit, as the same may be amended, modified,
supplemented, restated or replaced from time to time, and (ii) any other
obligation of the Borrower, any Subsidiary or the Bank (pursuant to standby
letter of credit or otherwise) to Wachovia Bank, National Association, for
payment or reimbursement of amounts paid by Wachovia Bank, National Association,
under the Myco Letter of Credit.
"Net Fixed Assets" shall mean the net fixed assets of Borrower and its
Subsidiaries, expressed as a number, as determined on a consolidated basis in
accordance with GAAP, but excluding all assets of the kind deducted from the
total assets of Borrower and its Subsidiaries for purposes of determining
Tangible Net Worth. For purposes of the Borrowing Base, Net
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Fixed Assets shall change on a quarterly basis based upon the financial
statements delivered to the Bank pursuant to Section 6.1 hereof. The parties
agree that, as of November 30, 1999, and until changed as provided herein, Net
Fixed Assets shall equal $21,329,531.
"Note" shall mean the Revolving Credit Note.
"Obligations" shall mean and include, without duplication, (i) the
Loans and all other loans, advances, indebtedness, liabilities, obligations,
covenants and duties owing, arising, due or payable from the Borrower or the
Guarantors to the Bank of any kind or nature, present or future, arising under
this Agreement, the Note or the other Credit Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired; and (ii) all interest (including, to the extent permitted
by law, all post-petition interest), charges, expenses, fees, attorneys' fees
and any other sums payable by the Borrower or the Guarantors to the Bank under
this Agreement or any of the other Credit Documents.
"Permitted Asset Dispositions" shall mean the sale, transfer,
assignment or other disposition of properties or assets by Borrower and its
Subsidiaries, determined on a consolidated basis, for an aggregate consideration
not exceeding $1,000,000 in any Fiscal Year.
"Permitted Liens" shall mean any of the following Liens securing any
Indebtedness of the Borrower or any of its Subsidiaries on the property, real or
personal, of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired:
(a) Liens granted to the Bank;
(b) Liens imposed by mandatory provisions of law of carriers,
warehousemen, mechanics or materialmen incurred in the ordinary course of
business for sums not yet due and payable;
(c) Liens incurred in the ordinary course of business in connection
with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits;
(d) Liens for current taxes, assessments or other governmental charges
that are not delinquent or remain payable without any penalty;
(e) Liens incurred by the Borrower or any of its Subsidiaries after the
date hereof in connection with the acquisition of an asset and created
contemporaneously with such acquisition to secure or provide for all or a
portion of the cost of such acquisition, provided that such a Lien is limited
exclusively to the asset so acquired, does not exceed the purchase price
thereof, and the aggregate purchase price of property subject to such
outstanding Liens does not exceed $1,000,000 at any time;
(f) Liens on personal property physically located at a Nonmaterial
Location;
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(g) Those existing Liens, if any, set forth in Schedule 1.1 hereof; and
(h) Any other Liens or encumbrances as the Bank may approve in writing
from time to time.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust, a limited liability company, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" shall mean, at any time, an employee pension benefit plan which
is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group, or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Prime Rate" shall mean that interest rate so denominated and set by
the Bank from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by the Bank. The Bank lends
at interest rates above and below the Prime Rate. A change in the Prime Rate
shall be effective on the date of such change.
"RDP Receivables" shall mean accounts receivable of the Borrower or any
Subsidiary representing amounts due the Borrower or such Subsidiary in respect
of fees for placement of publications, periodicals, magazines and similar items
in a particular display location. Such receivables are sometimes referred to by
Borrower as "retail display placement receivables."
"Real Estate" shall mean all real property owned, leased or operated by
Borrower or any of its Subsidiaries.
"Receivables Report" shall mean a report in form and substance
satisfactory to the Bank, certified by the chief financial officer or other
authorized officer of the Borrower, regarding the accounts and accounts
receivable of the Borrower.
"Reportable Event" shall mean a reportable event as defined in Section
4043(c) of ERISA.
"Restricted Payment" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any Subsidiary (other than those payable or distributable solely to the
Borrower or a Subsidiary) now or hereafter outstanding, except a dividend
payable solely in shares of a class of stock to the holders of that class; (b)
any redemption, conversion, exchange, retirement or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock of Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower or a Subsidiary) now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the surrender of,
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any outstanding warrants, options or other rights to acquire shares of any class
of stock of Borrower or any Subsidiary now or hereafter outstanding (other than
those payable or distributable solely to the Borrower or a Subsidiary).
"Revolving Credit Note" shall mean the promissory note of the Borrower,
dated the date hereof, in the form of Exhibit B attached hereto, executed and
delivered by the Borrower to the Bank pursuant to Article II hereof, evidencing
the obligation of the Borrower to repay the Revolving loans, together with any
amendments, modifications and supplements thereto, any replacements, statements,
renewals and extensions thereof, and any substitutes therefor, in whole or in
part.
"Revolving Line of Credit" shall mean the revolving line of credit made
available by the Bank to the Borrower pursuant to Article II hereof.
"Revolving Loan Termination Date" shall mean the earliest of (i)
December 31, 2002, (ii) the date of termination by Bank of its obligation to
make Revolving Loans after the occurrence of an Event of Default; (iii) such
date of termination of Bank's obligation to make Revolving Loans as is mutually
agreed upon by the Bank and the Borrower; (iv) the date of termination of the
Revolving Line of Credit pursuant to Section 2.7 hereof; and (v) the date after
all Obligations have been paid in full and the Bank is no longer obligated to
make Revolving Loans hereunder.
"Revolving Loans" shall mean the Loans made by the Bank to the Borrower
under the Revolving Line of Credit.
"Solvent" shall mean as to any Person on any particular date, that such
Person (i) does not have unreasonably small capital to carry on its business as
now conducted and as presently proposed to be conducted, (ii) is able to pay its
debts as they become due in the ordinary course of business and (iii) has assets
with a present fair saleable value greater than their total stated liabilities
and identified contingent liabilities, including any amounts necessary to
satisfy preferential rights of shareholders.
"Source Group" shall mean Borrower and its Subsidiaries, considered
collectively.
"Sources for Coverage" shall mean EBITDA minus: (a) any dividends or
like distributions paid by the Borrower, (b) taxes based upon or measured by net
income, and (c) to the extent not previously deducted from net income, unfunded
cash expenditures for capital assets.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association joint
venture, limited liability company, or other
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entity in which such Person and/or one or more Subsidiaries of such Person has
more than a 50% equity interest at the time. Unless the context indicates
otherwise, all references herein to Subsidiaries are references to Subsidiaries
of the Borrower.
"Tangible Net Worth" shall mean the amount by which total assets of the
Borrower and its Subsidiaries on a consolidated basis exceed total liabilities
of the Borrower and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP, less: (a) accounts receivable from Affiliates (net of any
accounts payable to Affiliates), (b) any surplus resulting from any write up of
assets, (c) goodwill, including any amounts, however designated, representing
the excess of the purchase price paid for assets or stock acquired over the book
value assigned thereto (excluding, however, any goodwill that the Bank may in
its sole discretion agree in writing need not be deducted in determining
Tangible Net Worth), (d) patents, trademarks, service marks, trade names and
copyrights, (e) other intangible assets (including customer lists), (f)
investments in nonmarketable securities or affiliated companies, (g)
organization costs, (h) non-compete agreements, (i) capitalized development
costs, and (j) deferred financing costs.
"Total Liabilities" shall mean all Indebtedness and liabilities of the
Borrower and its Subsidiaries, contingent or otherwise, which in accordance with
GAAP are required to be classified upon the balance sheet of Borrower or any
Subsidiary as liabilities, determined on a consolidated basis.
"Wachovia Debt" shall mean all indebtedness and obligations of the
Borrower and each of its Subsidiaries to Wachovia Bank, N.A., or any of its
Affiliates, including obligations for principal, accrued interest and all fees,
expenses and charges (including any prepayment and breakage fees, expenses and
charges) but excluding any indebtedness and obligations in respect of the Myco
Letter of Credit Reimbursement Obligation.
"Y2K Plan" has the meaning set forth in Section 5.17.
"Year 2000 Compliant and Ready" shall mean that the hardware and
software systems of Borrower and its Subsidiaries will (i) process accurately
date information involving any and all dates before, during and/or after January
1, 2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate without interruption due to an
inability to process date data before, during and/or after January 1, 2000;
(iii) respond to and process two digit year input without creating any ambiguity
as to the century; and (iv) store and provide date input information without
creating any ambiguity as to the century.
Section 1.2 Accounting Terms. Any accounting terms used in this
Agreement that are not specifically defined shall have the meanings customarily
given them in accordance with GAAP.
Section 1.3 Singular/Plural. Unless the context otherwise requires,
words in the singular include the plural and words in the plural include the
singular.
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Section 1.4 Other Terms. All other terms contained in this Agreement
shall, when the context so indicates, have the meanings provided for by the
Uniform Commercial Code of the State of North Carolina, as in effect from time
to time, to the extent the same are used or defined therein.
ARTICLE II
REVOLVING LOANS
Section 2.1 Revolving Line of Credit. (a) The Bank hereby establishes,
on the terms and conditions of this Agreement. and in reliance upon the
representations and warranties made hereunder, a revolving line of credit in
favor of the Borrower in the aggregate principal amount of up to Fifty Million
Dollars ($50,000,000.00) (the "Revolving Line of Credit") and agrees to make and
remake one or more Revolving Loans to the Borrower, upon the terms and
conditions set forth in this Article II, from time to time on any Business Day
during the period from the date hereof through the Revolving Loan Termination
Date. The Borrower may borrow, repay and reborrow any amount of the Revolving
Line of Credit, provided that the aggregate principal amount outstanding at any
one time under the Revolving Line of Credit may not exceed the lesser of (i) the
Borrowing Base or (ii) $50,000,000. The Revolving Loans shall be evidenced by
the Revolving Credit Note and the amount of principal owing on the Revolving
Credit Note at any given time shall be the aggregate amount of all advances made
under the Revolving Line of Credit, less all payments of principal theretofore
paid by the Borrower. Notwithstanding the foregoing, the Bank shall have no
obligation to lend funds at any time when a Default or Event of Default exists,
and the Bank may terminate the Revolving Line of Credit upon an Event of Default
in accordance with Article IX hereof.
(b) As used herein, the term "Borrowing Base" shall mean at any time
the amount, as determined with reference to the Borrowing Base Certificate most
recently delivered by the Borrower to the Bank, unless such Borrowing Base
Certificate is rejected by the Bank as not being prepared in accordance with
Section 2.1(c) of this Agreement, equal to:
(i) Eighty-five percent (85%) of Eligible Accounts Receivable
outstanding not more than ninety (90) days or, in the case of RDP
Receivables, not more than one hundred eighty (180) days, from invoice
date ("Tier I Receivables"), plus
(ii) Seventy percent (70%) of Eligible Accounts Receivable
outstanding more than ninety (90) days or, in the case of RDP
Receivables, more than one hundred eighty (180) days, but less than
three hundred sixty-five days (365) days from invoice date ("Tier II
Receivables"), plus
(iii) Fifty percent (50%) of Net Fixed Assets, minus
(iv) A reserve against the Borrowing Base in an amount equal
to one hundred percent (100%) of any letter of credit or other
guarantee or obligation which the Bank may in its discretion agree to
issue at the request of Borrower in support of the Myco
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Letter of Credit Reimbursement Obligation (and for which the Bank may
charge its usual and customary fees) or in replacement of the Myco
Letter of Credit (for which the Bank's letter of credit fee will not
exceed seventy-five (75) basis points on the face amount of such letter
of credit). Borrower and the Bank acknowledge and agree that if Bank
shall make any payment on or in respect of the Myco Letter of Credit
Reimbursement Obligation or in respect of any letter of credit issued
by the Bank in replacement of the Myco Letter of Credit, or if any
amount shall become due by Borrower to the Bank pursuant to the terms
of any agreement between Borrower and the Bank with respect to issuance
of a standby letter of credit evidencing or supporting the Myco Letter
of Credit Reimbursement Obligation, Borrower shall be unconditionally
obligated to pay or reimburse the Bank on demand therefor, and any such
payment by Bank or reimbursement obligation shall be deemed a Revolving
Loan or, at Bank's election, advanced and charged as a Revolving Loan,
in each case under the Revolving Line of Credit.
(c) Within fifteen (15) Business Days after the end of each Fiscal
Quarter, the Borrower shall deliver to the Bank a Borrowing Base Certificate in
a form acceptable to the Bank setting forth the Calculation of the Borrowing
Base and the aggregate amount of Revolving Loans outstanding as of the end of
such Fiscal Quarter. The Borrower covenants that each Borrowing Base Certificate
will be prepared in good faith by the Borrower using the Borrower's best
estimate of the information called for therein based on past experience and
using consistent calculation methods.
(d) The Borrower hereby irrevocably authorizes the Bank to disburse the
proceeds of each Revolving Loan under this Agreement (i) in accordance with the
terms of any written instructions from the Borrower, (ii) in accordance with
telephone instructions from any of the Borrower's officers or other persons in
each case designated from time to time in writing by the Borrower, (iii) to pay
itself interest, fees, costs and expenses payable hereunder, or (iv) to the
Borrower's controlled disbursement or depository accounts with the Bank in an
amount equal to the sum necessary to cover checks or other items of payment
drawn by the Borrower upon such account and presented for payment, but in no
event shall the Bank be obligated to make Revolving Loans hereunder in amounts
necessary to cover any such checks or other items of payment presented to the
extent that the Borrower is not otherwise entitled to receive Revolving Loans in
such amounts from the Bank pursuant to the terms hereof.
(e) Each request for a Revolving Loan (including, without limitation,
any checks drawn upon any controlled disbursement or depository account of the
Borrower with the Bank) and each Revolving Loan made by the Bank for the benefit
of the Borrower shall constitute a new certification by the Borrower as of the
date of such request or Revolving Loan (i) that the representations and
warranties of the Borrower contained in Article V remain true and correct as of
such date, except to the extent any such representation or warranty relates
solely to a prior date, and (ii) that, with respect to and after giving effect
to such Revolving Loan, no Default or Event of Default has occurred and is
continuing as of such date.
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Section 2.2 Term. The term of the Revolving Line of Credit will be from
the date hereof to and including the Revolving Loan Termination Date, unless
terminated sooner in accordance with the terms and conditions of this Agreement.
Section 2.3 Repayment. The Borrower shall repay the Revolving Credit
Note:
(a) In full, on the Revolving Loan Termination Date;
(b) In full, upon the occurrence of any Event of Default and
acceleration of the Obligations by the Bank pursuant to Article IX hereof; and
(c) In part, immediately, in the event that the total principal amount
outstanding at any time under the Revolving Credit Note exceeds the maximum
amount permitted under Section 2.1, in the amount of such excess.
Section 2.4 Use of Proceeds. The proceeds of the Revolving Loans shall
be used by the Borrower solely (i) to pay the Wachovia Debt in full on the
Closing Date, (ii) to provide working capital for the Borrower and its
Subsidiaries, (iii) to provide funding for Acquisitions by Borrower and its
Subsidiaries, including amounts due in respect of Borrower's Acquisition of Huck
Store Fixture Company, (iv) to fund amounts payable by Borrower in respect of
the Myco Letter of Credit Reimbursement Obligation, or to reimburse the Bank,
upon its demand, for any amounts paid by the Bank in respect of the Myco Letter
of Credit Reimbursement Obligation or pursuant to any letter of credit issued by
the Bank in replacement for the Myco Letter of Credit, and (vi) to pay fees and
expenses in connection with the transactions contemplated by this Agreement.
Section 2.5 Guaranty Agreement. The Revolving Line of Credit and all
Obligations of Borrower to the Bank shall be jointly and severally guaranteed by
each of the Subsidiaries of Borrower (other than those Inactive Subsidiaries
listed on Schedule 5.1 hereto), whether now or hereafter existing, pursuant to
the terms and conditions of the Guaranty Agreement.
Section 2.6 Non-Use Fee. Borrower agrees to pay to Bank a quarterly
unused facility fee in an amount equal to (a) one-quarter of one percent (1/4 of
1%) per annum on the difference between (i) $25,000,000, and (ii) the average
principal amount outstanding under the Revolving Line of Credit during the
applicable quarter (if less than $25,000,000), plus (b) one-eighth of one
percent (of 1%) per annum of the difference between $50,000,000 and the
greater of (i) $25,000,000, or (ii) the average principal amount outstanding
under the Revolving Line of Credit for the applicable quarter. Such unused
facility fee shall be payable in arrears (a) for the preceding calendar quarter,
on the first day of the calendar month next following such calendar quarter end,
commencing April 1, 2000, and (b) on the Revolving Loan Termination Date. All
computations of the unused facility fee shall be made by the Bank on the basis
of a three hundred sixty (360) day year, and for the actual number of days
occurring in the period for which such fee is payable.
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Section 2.7 Termination of Facility. Borrower shall have the right
at any time, upon thirty (30) days' prior written notice to Bank, to terminate
voluntarily the Revolving Line of Credit (in whole but not in part) without
premium or penalty other than payment of the termination fee provided for in
Section 2.8 hereof. Immediately upon such termination, Borrower's right to
receive Revolving Loans pursuant to the Revolving Line of Credit will terminate,
Borrower's obligation to pay the non-use fee provided for in Section 2.6 shall
terminate, and notwithstanding anything to the contrary contained herein or in
the Revolving Credit Note, the entire outstanding principal balance of the
Revolving Loans, together with accrued but unpaid interest thereon, shall be
immediately due and payable in full. On the date of such termination, Borrower
shall pay to Bank in immediately available funds all of the Obligations,
including any accrued but unpaid non-use fee due pursuant to Section 2.6 and the
termination fee provided for in Section 2.8.
Section 2.8 Termination Fee. In the event that, prior to the first
anniversary of the Closing Date, Borrower terminates the Revolving Line of
Credit pursuant to Section 2.7 hereof, the Borrower shall pay to the Bank a
prepayment fee in an amount equal to one percent (1%) of the maximum principal
amount of the Revolving Line of Credit. After the first anniversary of the
Closing Date, if the Borrower shall terminate the Revolving Line of Credit
pursuant to Section 2.7 hereof, and if, in connection therewith, the Revolving
Line of Credit shall be paid with the proceeds of financing provided by a bank
or other financial institution other than the Bank or its Affiliates, Borrower
shall pay to Bank a prepayment fee in an amount equal to one percent (1%) of the
maximum principal amount of the Revolving Line of Credit. The termination fee
provided for in this Section shall be due and payable to Bank in immediately
available funds concurrently with the termination of the Revolving Line of
Credit. In the event that the Bank terminates the Revolving Line of Credit
pursuant to Section 9.2(a) of this Agreement as the result of the occurrence of
any Event of Default arising out of any willful action (or inaction) taken (or
not taken) by or on behalf of the Borrower with the intention and for the
purpose of avoiding payment of the termination fee provided for herein, such
termination fee shall nevertheless be due and payable by Borrower to the Bank,
to the extent permitted by law, as if the Borrower had elected to terminate the
Revolving Line of Credit pursuant to Section 2.7 hereof.
Section 2.9 Commitment Fee. The Borrower shall pay to the Bank
at Closing a nonrefundable commitment fee in the amount of $50,000.
ARTICLE III
INTEREST ON THE REVOLVING LOANS
Section 3.1 Interest. (a) The Borrower covenants and agrees to
continue to pay to the Bank interest on the unpaid principal amount of the
Revolving Loans at a floating rate per annum equal to the LIBOR Rate plus the
Applicable Margin.
(b) Interest on the Loans shall be due and payable, in arrears, on
the last Business Day of each calendar month. Notwithstanding the foregoing, all
interest accrued on the Loans shall
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be due and payable on each date when all or any amount of the unpaid principal
balance of the Loans shall be due (whether by maturity, optional or mandatory
prepayment, acceleration or otherwise).
(c) The Bank shall send to the Borrower statements of amounts due
hereunder, which statements shall be considered correct and conclusively binding
(absent manifest error) on the Borrower thirty (30) days after the Borrower
receives such statements unless the Borrower shall have objected in writing to
such statements within such period. Any failure of the Bank to send such
statements shall not relieve the Borrower from its obligation to pay promptly
all sums when and as due hereunder.
Section 3.2 Computation. Interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed.
Section 3.3 Maximum Interest Rate. Nothing contained in this
Agreement or in the Notes shall be deemed to establish or require the payment of
interest to the Bank at a rate in excess of the maximum rate permitted by
governing law. In the event that the rate of interest required to be paid under
this Agreement or the Note exceeds the maximum rate permitted by governing law,
the rate of interest required to be paid hereunder and under the Note shall be
automatically reduced to the maximum rate permitted by governing law and any
amounts collected in excess of the permissible amount shall be deemed a
prepayment of principal on the Note.
Section 3.4 Default Rate; Post-Petition Interest. Notwithstanding
any other provision of this Agreement, upon and during the continuance of any
Event of Default, at the option of the Bank without any required notice to the
Borrower, the outstanding principal amount of the Loans, and to the full extent
permitted by law, all interest accrued on the Loans, shall bear interest at the
Default Rate, and such default interest shall be payable on demand. To the full
extent permitted by applicable law, interest shall continue to accrue on the
Notes after the filing by or against the Borrower of any petition seeking any
relief in bankruptcy or under any act or law pertaining to insolvency or debtor
relief, whether state, federal or foreign.
Section 3.5 Payment. All payments (including prepayments) by
the Borrower on account of principal and interest on the Loans shall be made in
immediately available funds to the Bank at its offices at 000 Xxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, prior to 2:00 p.m., Greensboro, North
Carolina time on the date payment is due, or at such other place as is
designated in writing by the Bank. If any payment of principal or interest falls
due on a day that is not a Business Day, then such due date shall be extended to
the next succeeding Business Day, and interest shall continue to accrue on the
outstanding principal and be payable for such period of extension.
Section 3.6 Taxes. Any and all payments by the Borrower hereunder
or under any of the Credit Documents shall be made, in accordance with the terms
hereof and thereof, free and clear of and without deduction for any and all
present or future taxes, levies, imports, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding taxes measured by net
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income and franchise taxes imposed on the Bank, by the jurisdiction under the
laws of which the Bank is organized or any political subdivision thereof (all
such non-excluded taxes, levies, imports, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to the Bank, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), the Bank receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make the deduction, (iii) the Borrower shall pay the
full amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (iv) the Borrower shall deliver to the Bank
evidence of such payment to the relevant taxation authority or other authority.
The Borrower agrees to indemnify the Bank for the full amount of Taxes paid by
the Bank and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date the Bank makes written demand therefor. Without prejudice to the
survival of any other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section shall survive the payment
in full of the principal and interest hereunder.
ARTICLE IV
CLOSING; CONDITIONS OF CLOSING AND BORROWING
Section 4.1 Closing. The closing of the transaction provided for in
this Agreement (the "Closing") shall take place on the Closing Date, beginning
at 10:00 a.m., at the offices of the Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx
P.L.L.C., 000 Xxxxx Xxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx, or at
such other time and place as the parties hereto shall mutually agree. The
parties agree that the Loans shall be made in North Carolina and that the Credit
Documents were prepared and negotiated in North Carolina.
Section 4.2 Conditions of Loans and Advances. The obligation of the
Bank to close this financing or to make the Loans is subject to: (a) the
accuracy and correctness of the representations and warranties of the Borrower
contained herein and in the other Credit Documents and in any certificate
delivered pursuant to this Agreement or the other Credit Documents; (b) the
performance by Borrower of its agreements contained in and in the other Credit
Documents; and (c) the satisfaction of the following conditions:
(a) Executed Documents. This Agreement, the Revolving Credit Note and
the Guaranty Agreement shall have been duly authorized, executed and delivered
by the Borrower and the Guarantors, as appropriate, and shall be in full force
and effect.
(b) Certificate of the Borrower. The Bank shall have received a
certificate dated as of the Closing Date from the Chairman and Chief Executive
Officer of the Borrower, in form and substance satisfactory to the Bank, to the
effect that all representations and warranties of the Borrower contained in this
Agreement and the other Credit Documents are true, correct and complete; that
the Borrower is not in violation of any of the covenants contained in this
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Agreement and the other Credit Documents; that, giving effect to the
transactions contemplated by this Agreement, no Event of Default nor any event
or condition that with notice, lapse of time, or both would constitute such an
Event of Default, has occurred and is continuing; and that the Borrower has
satisfied each of the closing conditions.
(c) Certificate of Secretary of Borrower and Guarantors. The Bank
shall have received a certificate dated as of the Closing Date from the
Secretary of the Borrower and each of the Guarantors certifying with respect to
each such corporation: (i) that attached thereto is a true and complete copy of
the articles or certificate of incorporation and all amendments thereto of such
corporation, certified as of a recent date by the appropriate Governmental
Authority in its jurisdiction of incorporation, and that such organizational
documents have not been amended since such date; (ii) that attached thereto is a
true and complete copy of the bylaws of such corporation as in effect on the
date thereof; (iii) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of such corporation, authorizing,
in the case of Borrower, the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the other Credit
Documents and, in the case of the Guarantors, the execution, delivery and
performance of the Guaranty Agreement; and (iv) as to the incumbency and
genuineness of the signature of each officer of such corporation executing this
Agreement, the Note, the Guaranty Agreement or any of the other Credit
Documents.
(d) Real Estate Reports; Negative Pledges. The Bank shall have
received title opinions in favor of the Bank, or other evidence satisfactory to
the Bank in its discretion, confirming that, after payment in full of the
Wachovia Debt, none of the Real Estate shall be encumbered by any Lien securing
Indebtedness for Money Borrowed or by any other Lien, other than Permitted
Liens. The Borrower shall have recorded or caused to be recorded with respect to
its owned Real Estate such instruments of negative pledge as the Bank may
require to evidence the obligation of Borrower and its Subsidiaries to maintain
their respective Real Estate free and clear of any Lien other than Permitted
Liens.
(e) UCC Searches. The Bank shall have received UCC search reports, or
other evidence satisfactory to the Bank in its discretion, confirming that,
after payment in full of the Wachovia Debt and release of UCC financing
statements in connection therewith, there will be no UCC financing statements of
record against Borrower or any of its Subsidiaries in any jurisdiction
evidencing any Lien other than Permitted Liens.
(f) Payment of Wachovia Debt. The Bank shall have received a payoff
letter from Wachovia Bank, National Association ("Wachovia"), or other evidence
satisfactory to the Bank confirming the amount of the Wachovia Debt as of the
Closing Date and further confirming that, after payment in full of the Wachovia
Debt on the Closing Date, all Liens against the assets of Borrower or any
Subsidiary securing the Wachovia Debt will be canceled and released and the Bank
shall be unconditionally entitled to receive, for appropriate filing and
recordation, UCC termination statements, canceled deeds of trust and mortgages,
and such other documents and instruments as may be reasonably required by the
Bank, to terminate and evidence of record the cancellation of all Liens of
Wachovia against the assets of Borrower and its Subsidiaries.
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(g) Opinion of Counsel. The Bank shall have received an opinion of
Xxxxxxxxx Xxxxxxxx, LLP, counsel to the Borrower and the Guarantors, in form and
substance reasonably acceptable to the Bank in its discretion.
(h) Certificates of Good Standing. The Bank shall have received
certificates as of a recent date of the good standing of the Borrower and each
of the Guarantors under the laws of each state where the Borrower or such
Guarantor is incorporated or authorized to transact business.
(i) Borrowing Base Report. The Bank shall have receiving a Borrowing
Base Certificate dated as of the Closing Date, prepared as of the end of the
Borrower's most recently ended Fiscal Quarter.
(j) Commitment Fee. The commitment fee provided for in Section 2.9
hereof shall have been paid in full.
(k) No Event of Default. No Event of Default, nor any event or
condition that, with notice or lapse of time would constitute an Event of
Default, shall have occurred and be continuing.
(l) Other Documents. The Borrower shall have delivered to the Bank
such other documents, certificates and opinions as the Bank may reasonably
request.
Section 4.3 Conditions to all Loans and Advances. The obligation of
the Bank to make any Loan hereunder (including any Loans made on the Closing
Date), is subject to the continued validity of all Credit Documents and the
satisfaction of the following conditions:
(a) Each of the representations and warranties made by the Borrower
in Article VI shall be true and correct on and as of the date of such Loan with
the same effect as if made on and as of such date, unless such representation or
warranty relates solely to the Closing Date; and
(b) No Default or Event of Default shall have occurred and be
continuing on the date of such Loan or after giving effect to the Loans to be
made on such date.
Section 4.4 Waiver of Conditions Precedent. If the Bank makes any
Loan hereunder prior to the fulfillment of any of the conditions precedent set
forth in this Article V, the making of such Loan shall constitute only an
extension of time for the fulfillment of such condition and not a waiver
thereof, and the Borrower shall thereafter use its best efforts to fulfill each
such condition within thirty (30) days after the Closing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank as follows:
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Section 5.1 Corporate Organization and Power. The Borrower and each
Guarantor (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (except as set
forth on Schedule 5.1(a)); (ii) is duly qualified or licensed to do business and
is in good standing in every other jurisdiction where the nature of its business
or its properties makes such qualification or licensing necessary (except where
the failure to be so qualified or licensed would not have a Material Adverse
Effect); (iii) has the corporate power and authority to own or lease its
properties and to carry on its business as it is now being conducted; and (iv)
has all governmental licenses, permits, franchises, certificates, inspections,
authorizations, consents and approvals required to carry on its business as it
is now being conducted (except where the failure to have such governmental
authorization would not have a Material Adverse Effect). Schedule 5.1(b) hereto
lists all Subsidiaries of the Borrower (including all Inactive Subsidiaries) and
the jurisdiction of incorporation of Borrower and each active Subsidiary.
Section 5.2 Authority; No Conflict With Other Instruments or Law.
The execution, delivery and performance of this Agreement and the other Credit
Documents and the consummation of the transactions contemplated hereby and
thereby (i) are within the power and authority of the Borrower and the
Guarantors, (ii) have been duly authorized by all necessary action on the part
of the Borrower and the Guarantors, (iii) do not and will not conflict with,
contravene or violate any provision of, or result in a breach of or default
under, or require the waiver (not already obtained) of any provision of or the
consent (not already given) of any Person under the terms of the organizational
documents of the Borrower and the Guarantors, or any indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument to which the
Borrower or any Guarantor is a party or by which the Borrower or any Guarantor
is bound or to which any of their respective properties are subject, (iv) will
not violate, conflict with, give rise to any liability under, or constitute a
default under any applicable law, regulation, order (including, without
limitation, all applicable state and federal securities laws) or any other
requirement of any court, tribunal, arbitrator, or Governmental Authority, and
(v) will not result in the creation, imposition, or acceleration of any
indebtedness or tax or any mortgage, lien, reservation, covenant, restriction,
or other encumbrance of any nature upon, or with respect to, the Borrower or any
Guarantor or any of their respective properties, except as expressly
contemplated herein.
Section 5.3 Due Execution and Delivery. This Agreement and the
other Credit Documents to which Borrower and the Guarantors are parties have
been duly executed and delivered to the Bank on behalf of such parties by
authorized officers of Borrower and the Guarantors.
Section 5.4 Enforceability. This Agreement and the other Credit
Documents constitute the legal, valid and binding obligations of the Borrower
and the Guarantors, enforceable against them in accordance with their terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws, statutes or rules of general application
affecting the enforcement of creditor's rights or general principles of equity.
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Section 5.5 Governmental Approval. The execution, delivery and
performance of this Agreement and the other Credit Documents and the
transactions contemplated hereby and thereby do not require any authorization,
exemption, consent or approval of, notice to, or declaration or filing with, any
Governmental Authority.
Section 5.6 Margin Stock. The Borrower is not engaged principally
or as one of its important activities in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation G, X or U of the Board of Governors of the Federal Reserve System).
The execution, delivery and performance of this Agreement and the use of the
proceeds of the extension of credit hereunder, do not and will not constitute a
violation of said Regulations.
Section 5.7 Investment Company. The Borrower is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
Section 5.8 Taxes. Except as disclosed in Schedule 5.8 attached
hereto, neither the Borrower nor any Guarantor is delinquent in the payment of
any taxes that have been levied or assessed by any Governmental Authority
against it or assets unless such tax is being contested in good faith and by
proper proceedings and the Borrower or such Guarantor has established and
maintained adequate reserves with respect thereto in accordance with GAAP. The
Borrower and each of its Subsidiaries has timely filed all tax returns that are
required by law to be filed, and has paid all taxes shown on said returns and
all other assessments or fees levied upon it or upon its properties to the
extent that such taxes, assessments or fees have become due, and if not due,
such taxes have been adequately provided for and sufficient reserves therefor
established on its books of account. No material controversy in respect of such
income taxes is pending or, to the knowledge of the Borrower, threatened.
Section 5.9 Litigation. Except as disclosed in Schedule 5.9 hereto,
there is no judgment, injunction or similar order or decree which, and no
action, suit, claim, investigation or proceeding pending or, to the knowledge of
the Borrower, threatened against or affecting any the Borrower or any Guarantor,
before any court, commission, panel, board, bureau, arbitrator or any
Governmental Authority which would have a Material Adverse Effect.
Section 5.10 Compliance with Laws. To the knowledge of the Borrower,
Borrower and each Guarantor is in full compliance with all applicable laws,
statutes and governmental regulations, including all Environmental Laws, unless
noncompliance would not have a Material Adverse Effect.
Section 5.11 ERISA.
(a) The Borrower and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan. The Borrower and each member of the Controlled
Group are in compliance in all material
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respects with the presently applicable provisions of ERISA and the Code and have
not incurred any liability to the Pension Benefit Guaranty Corporation or a Plan
under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group has
incurred any withdrawal liability with respect to any Multiemployer Plan under
Title IV of ERISA, and no such liability is expected to be incurred.
(c) Neither the Borrower nor any member of the Controlled Group has
participated in a prohibited transaction, as defined in Section 406 of ERISA or
Section 4975(c) of the Code, which could subject the Borrower or a member of the
Controlled Group to any material civil penalty under ERISA or material tax under
the Code.
Section 5.12 No Other Debt. Upon consummation of the Closing and
payment in full of the Wachovia Debt, except for the Obligations, neither the
Borrower nor any of its Subsidiaries will have any Indebtedness for Money
Borrowed.
Section 5.13 Real Estate; Material Locations. All Real Estate owned
by the Borrower or any of its Subsidiaries is listed in Schedule 5.13 hereto.
All Material Locations of the Borrower and its Subsidiaries are also listed in
Schedule 5.13 hereto.
Section 5.14 Financial Statements; No Material Adverse Change. The
Financial Statements contain no material misstatement or omission and fairly
present the financial position, assets and liabilities of the Borrower and its
Subsidiaries for the periods then ended on a consolidated basis. From and after
date of such Financial Statements through the Closing Date, except for the
transactions contemplated under this Agreement, (a) there has been no Material
Adverse Change, nor to the knowledge of the Borrower, is any Material Adverse
Change threatened or reasonably likely to occur, and (b) neither the Borrower
nor any Subsidiary has incurred any obligation or liability that would be
reasonably likely to have a Material Adverse Effect or entered into any material
contracts not specifically contemplated by this Agreement or not in the ordinary
course of business consistent with past practice.
Section 5.15 Full Disclosure. All information heretofore furnished
by the Borrower to the Bank for purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all such information hereafter
furnished by the Borrower to the Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified. The Borrower has disclosed to the Bank
in writing any and all facts which materially and adversely affect the business,
operations, future prospects or condition, financial or otherwise, of the
Borrower, or the ability of the Borrower to perform its obligations under this
Agreement or any of the Credit Documents to which the Borrower is a party.
Section 5.16 No Default. No Default or Event of Default under this
Agreement has occurred and is continuing.
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Section 5.17 Year 2000 Compliance. The Borrower and its Subsidiaries
have developed a comprehensive plan (the "Y2K Plan") designed to ensure that
their respective software and hardware systems which, if not Year 2000 Compliant
and Ready could have a material adverse impact on the business operations of the
Borrower and its Subsidiaries will be Year 2000 Compliant and Ready.
As of the date hereof (except for the areas noted below), Borrower and
the Subsidiaries have completed Y2K testing under the Plan and all Y2K problems
identified by the testing or otherwise known to Borrower or Subsidiaries have,
to the best of Borrower's and its Subsidiaries' knowledge, been corrected;
provided, however, that the following exceptions are hereby noted, none of which
is expected to have a Material Adverse Effect:
(a) Remediation work is still underway at Borrower's Display Rack
and Store Fixture Manufacturing Subsidiary and Borrower
presently expects this remediation to be complete by year-end.
(b) Source-MYCO, Inc.'s inventory and raw materials control
software is not Y2K compliant and is being replaced with a new
purchase order system which is expect to be installed and
functional by year-end.
(c) Brand Manufacturing, Inc. utilizes a Novell network which is
not Y2K compliant and Borrower intends to correct the problem
by upgrading software which Borrower expect to be complete by
year-end.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until the Bank's obligation to make Revolving Loans has terminated and
all of the Obligations have been paid in full, the Borrower covenants and agrees
that it will, unless the Bank otherwise consents in writing:
Section 6.1 Financial and Business Information. Deliver or cause
to be delivered to the Bank:
(a) As soon as practicable and in any event within forty-five (45)
days after the close of each Fiscal Quarter of the Borrower, beginning with the
current Fiscal Quarter, a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the close of such Fiscal Quarter, and
consolidated and consolidating statements of income, retained earnings and cash
flows for the Borrower and its Subsidiaries, all in reasonable detail setting
forth in comparative form the corresponding figures for the preceding Fiscal
Year, subject only to normal audit and normal year-end adjustments, and
certified by the Borrower's President or Chief Financial Officer to be true and
accurate;
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(b) As soon as practicable and in any event within one hundred fifty
(150) days after the close of each Fiscal Year of the Borrower, beginning with
the close of the current Fiscal Year, an audited consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as of the close of such
Fiscal Year and audited consolidated and consolidating statements of income,
retained earnings and cash flows for the Borrower and its Subsidiaries for the
Fiscal Year then ended, including the notes to each, all in reasonable detail
setting forth in comparative form the corresponding figures for the preceding
Fiscal Year, prepared by an independent certified public accountant satisfactory
to the Bank, in accordance with GAAP applied on a basis consistent with that of
the preceding Fiscal Year or containing disclosure of the effect on the
financial position or results of operation of any change in the application of
accounting principles and practices during the year, and accompanied by a report
thereon by such certified public accountant which is unqualified as to the scope
of the audit performed and as to the "going concern" status of the Borrower and
without any exception not acceptable to the Bank;
(c) Concurrently with the delivery of the financial statements
described in subsection (b) above, a certificate addressed to the Bank from the
independent certified public accountant that in making its compilation of the
financial statements of the Borrower, it obtained no knowledge of the occurrence
or existence of any Default or Event of Default under this Agreement, or
specifying the nature and period of existence of any such Default or Event of
Default; provided, however, that such accountant shall not be liable to anyone
by reason of its failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of compilation conducted in
accordance with generally accepted auditing standards;
(d) Concurrently with the delivery of the financial statements
described in subsections (a) and (b) above, a certificate from the Borrower's
President or Chief Financial Officer certifying to the Bank that to the best of
his knowledge, after review of this Agreement and other appropriate inquiry, the
Borrower has kept, observed, performed and fulfilled in all respects each and
every covenant, obligation and agreement binding upon the Borrower contained in
this Agreement and the Credit Documents (and with respect to the financial
covenants in Article VIII, a calculation of those covenants in reasonable
detail), and that no Default or Event of Default under this Agreement, has
occurred or specifying any such Default or Event of Default and what action the
Borrower and/or Guarantors propose to take with respect thereto;
(e) Promptly upon request by the Bank, a copy of (i) all regular or
special reports or effective registration statements that Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Borrower or any Subsidiary to its shareholders, bondholders
or the financial community in general, and (iii) any management letter or other
report submitted to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit of the Borrower or any
Subsidiary;
(f) At least ten (10) Business Days prior to consummation of any
Acquisition involving an Acquisition Cost in excess of $1,000,000, written
notice of intent to consummate such transaction, together with a general
description of the proposed terms and conditions thereof, including supporting
financial information, and together with a certification by the
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President or Chief Financial Officer of the Borrower to the effect that (i) upon
consummation of such Acquisition and after giving effect thereto, no Default or
Event of Default shall arise or exist under this Agreement as a result thereof,
and (ii) such Acquisition, to the best knowledge of such officer, will not cause
to occur any breach or violation of the financial covenants contained in Article
VIII hereof;
(g) Upon any officer of the Borrower obtaining knowledge of any
Default or Event of Default hereunder or under any other obligation of the
Borrower or any Subsidiary to the Bank, or any event, development or occurrence
which could reasonably be expected to have a Material Adverse Effect, prompt
notification by such officer or another authorized representative of the
Borrower of the nature thereof, the period of existence thereof, and what action
the Borrower or such Subsidiary proposes to take with respect thereto;
(h) Within five (5) Business Days after the Borrower becomes aware of
any deviations from the Y2K Plan which would cause compliance with the Plan to
be delayed or not achieved, a statement of the chief executive officer, chief
financial officer, or chief technology officer of the Borrower setting forth the
details thereof and the action which the Borrower and its Subsidiaries are
taking or propose to take with respect thereto;
(i) Promptly upon the receipt thereof, a copy of any third party
assessments of the Y2K Plan of Borrower and its Subsidiaries, together with any
recommendations made by such third party with respect to Year 2000 compliance;
and
(j) Within a reasonable time, upon the Bank's request, such other
information about the property, financial condition, operations and proposed
Acquisitions of the Borrower or any Subsidiary as the Bank may from time to time
request.
Section 6.2 Notice of Certain Events. Promptly give notice in
writing to the Bank of:
(a) The commencement of, or any material determination in, any
action, suit or proceeding with any third party or any material proceeding
before any Governmental Authority affecting the Borrower or any Subsidiary and
involving an amount in excess of $500,000;
(b) Any judgment, attachment, levy, execution or other similar
process instituted against the Borrower or any Subsidiary or any of their
respective assets involving an amount in excess of $250,000;
(c) Any dispute which may exist between Borrower and any Subsidiary
and any Governmental Authority or any threatened action by any Governmental
Authority to acquire or condemn any of the properties of Borrower or any
Subsidiary where the amount involved is in excess of $500,000;
(d) If and when any member of the Controlled Group (i) gives or is
required to give notice to the Pension Benefit Guaranty Corporation of any
Reportable Event with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or
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knows that the plan administrator of any Plan has given or is required to give
notice of any such Reportable Event; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA; or (iii) receives notice from the
Pension Benefit Guaranty Corporation under Title IV of ERISA of an intent to
ten-terminate or appoint a trustee to administer any Plan, and provide the Bank
with a copy of such notice; and
(e) Any Default or Event of Default.
Each notice pursuant to this Section 6.2 shall be accompanied by a
statement of an officer of the Borrower setting forth details with reasonable
particularity of the occurrence referred to therein and stating what action the
Borrower is taking and proposes to take with respect thereto.
Section 6.3 Existence. Maintain and preserve in full force in
effect and cause each Subsidiary to maintain and preserve in full force and
effect its existence, rights and franchises.
Section 6.4 Maintenance of Properties. Maintain and keep and cause
each Subsidiary to maintain and keep its property in good working order and
condition (normal wear and tear excepted) and repair (except to the extent that
any such property is obsolete or is being replaced).
Section 6.5 Compliance with Law. Comply and cause each Subsidiary
to comply in all respects with all applicable laws, ordinances, rules,
regulations and requirements of any Governmental Authority (including, without
limitation, all Environmental Laws), unless noncompliance would not have a
Material Adverse Effect.
Section 6.6 Compliance with ERISA.
(a) The Borrower will, and will cause each of its Subsidiaries and
each member of the Controlled Group to, comply with ERISA and the Code and the
regulations and requirements of the Pension Benefit Guaranty Corporation, except
where the necessity of such compliance is being contested in good faith through
appropriate proceedings.
(b) The Borrower and each member of the Controlled Group will make
timely payment of contributions required to meet the minimum funding standards
set forth in ERISA and the Code with respect to any Plan, and will not take any
action or fail to take action the result of which action or inaction could be a
material liability for the Borrower or a member of the Controlled Group to the
Pension Benefit Guaranty Corporation or a Multiemployer Plan. Neither the
Borrower nor a member of the Controlled Group will participate in a prohibited
transaction, as defined in Section 406 of ERISA or Section 4975(c) of the Code,
which could subject the Borrower or a member of the Controlled Group to any
material civil penalty under ERISA or material tax under the Code.
Section 6.7 Payment of Indebtedness. Pay and cause each Subsidiary
to pay all Indebtedness for Borrowed Money when due, and all other obligations
in accordance with customary trade practices, and comply with all acts, rules,
regulations and orders of any
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legislative, administrative or judicial body or official applicable to its
property or to the operation of its business.
Section 6.8 Payment of Taxes. Pay and discharge and cause each
Subsidiary to pay and discharge all taxes, assessments and other governmental
charges or levies imposed upon it or any of its property prior to the date on
which interest or penalties would attach thereto; provided, however, that no
Obligor shall be required to pay any such tax, assessment or governmental charge
or levy, the payment of which is being contested in good faith and by
appropriate proceedings, if such Obligor has established and maintained adequate
reserves with respect thereto satisfactory to the Bank.
Section 6.9 Maintenance of Insurance. Maintain and pay and cause
each Subsidiary to maintain and pay for insurance upon its property, wherever
located, covering casualty, hazard, public liability, product liability,
business interruption, boiler, fidelity and such other risks and in such amounts
and with such insurance companies as shall be reasonably satisfactory to the
Bank. The Borrower also agrees to maintain and pay and cause each Subsidiary to
maintain and pay for insurance in such amounts, with such companies and in such
form as shall be reasonably satisfactory to the Bank, insuring the Borrower and
its Subsidiaries against any claims, suits, losses or damages suffered by any
Person on any property owned or leased by the Borrower or its Subsidiaries, and
against such other casualties and contingencies as is customary in the
businesses in which Borrower and the Subsidiaries are engaged.
Section 6.10 Maintenance of Books and Records; Inspection. Maintain
and cause each Subsidiary to maintain adequate books, accounts and records and
prepare all financial statements required under this Agreement in accordance
with GAAP, and in compliance with the regulations of any governmental
regulatory body having jurisdiction over it. The Borrower shall permit and cause
each Subsidiary to permit any employee or representative of the Bank to visit
and inspect any of its properties, to examine and audit its books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss its affairs, finances and accounts with its officers and, upon prior
notice to the Borrower or such Subsidiary and subject to mutually satisfactory
arrangements between Borrower and Bank with regard to any additional fees to be
incurred, its independent public accountants (and by this provision the
Borrower, for itself and its Subsidiaries, authorizes said accountants to
discuss their finances and affairs with the Bank), at such reasonable times and
as often as may be reasonably requested. After expiration of a period of one (1)
year from the date of this Agreement, Borrower agrees to pay or reimburse Bank,
upon its demand, for the reasonable expenses incurred by Bank, not to exceed
$5,000 per year, of field examinations by the Bank's personnel of Borrower's
trading assets; provided, however, that this provision shall not limit or
otherwise affect Bank's right to conduct such examinations at any time at Bank's
expense.
Section 6.11 Name Change. The Borrower shall notify the Bank at
least thirty (30) days prior to the effective date of any change of Borrower's
or any Subsidiary's name, and prior to such effective date the Borrower and such
Subsidiary, as the case may be, shall have executed such necessary and
instruments as the Bank shall reasonably require in connection with this
Agreement and the Credit Documents on account of such name change.
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Section 6.12 New Material Locations. If Borrower or any of its
Subsidiaries shall acquire or establish a new Material Location subsequent to
the date of this Agreement, Borrower shall promptly, and in any event within
thirty (30) days after such location is acquired or established, notify the Bank
thereof and provide to Bank, promptly upon its request, such additional
information regarding such new Material Location as the Bank may reasonably
require.
Section 6.13 New Subsidiaries. Simultaneously with the acquisition
or creation of any Subsidiary after the date of this Agreement, or if any
Inactive Subsidiary shall no longer qualify as such because of the nature and
extent of its business and assets, Borrower shall cause to be delivered to the
Bank a Guaranty Agreement executed by such Subsidiary substantially in the form
of Exhibit A attached hereto or as otherwise acceptable to the Bank in its
discretion, together with, if requested by the Bank, an opinion of legal counsel
to the Subsidiary reasonably satisfactory to the Bank (which opinion may include
assumptions and qualifications of similar effect to those contained in the
opinion of counsel delivered pursuant to Section 4.2(g) hereof) to the effect
that (a) such Subsidiary is duly organized, validly existing and in good
standing in the jurisdiction of its formation, has the requisite power and
authority to own its properties and conduct its business as then owned and then
conducted and to execute deliver and perform the Guaranty Agreement, and (b) the
execution, delivery and performance of the Guaranty Agreement by such Subsidiary
has been duly authorized by all requisite corporate or other required action,
and has been duly executed and delivered and constitutes the valid and binding
agreement of such Subsidiary, enforceable against such Subsidiary in accordance
with its terms, subject to the effect of applicable bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
(whether considered in a proceeding at law or in equity).
Section 6.14 After-Acquired Real Estate. If Borrower or any of its
Subsidiaries acquires any Real Estate after the Closing Date, Borrower will (and
will cause its Subsidiaries to) promptly upon such acquisition, and in any event
within thirty (30) days thereafter, cause to be recorded in the real estate
records of the applicable jurisdiction such instrument of negative pledge as the
Bank may require to confirm the obligation of Borrower and its Subsidiaries to
maintain their respective Real Estate free and clear of any Lien other than
Permitted Liens. Promptly upon any such acquisition of additional Real Estate,
and in any event within thirty (30) days thereafter, Borrower will also cause to
be furnished to Bank a title opinion in favor of Bank (if available), or other
evidence satisfactory to Bank in its discretion, confirming that such Real
Estate is subject to no Liens other than Permitted Liens.
Section 6.15 Further Assurances. The Borrower shall make, execute,
endorse, acknowledge and deliver to the Bank any amendments, restatements,
modifications or supplements hereto and any other agreements, instruments or
documents, and take any and all such other actions, as may from time to time be
reasonably requested by the Bank to effect, confirm or further assure or protect
and preserve the interests, rights and remedies of the Bank under this Agreement
and the other Credit Documents.
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ARTICLE VII
NEGATIVE COVENANTS
Until the Bank's obligation to make Revolving Loans has terminated and
all of the Obligations have been paid in full, the Borrower covenants and agrees
that it will not, nor will it permit any Subsidiary to, without the written
consent of the Bank:
Section 7.1 Transfer of Assets. Conduct, permit or suffer, or agree
to conduct or permit, or acquiesce in, any sale, lease, assignment or other
transfer or disposition of any assets other than (i) the sale in the ordinary
course of business of inventory, merchandise, goods and other personal property
held by Borrower and its Subsidiaries for such sale, (ii) other sales or
transfers of assets in Permitted Asset Dispositions, and (iii) payments by
Borrower and its Subsidiaries for goods and services in the ordinary course of
business and not in violation of any covenant contained herein; provided,
however, that this Section 7.1 shall not be deemed violated by any involuntary
damage to or destruction of any properties or assets of the Borrower or any
Subsidiary.
Section 7.2 Merger or Consolidation. Consolidate with or merge into
any other Person, or permit any other Person to merge into it, in a transaction
in which Borrower or its Subsidiary, as the case may be, is not the surviving
entity, or consummate any other merger or consolidation unless (a) at the time
of such merger or consolidation and immediately after giving effect thereto,
there shall exist no Default or Event of Default under this Agreement, including
any Event of Default on account of a Change in Control, and (b) the President or
a Vice President of Borrower shall have delivered to the Bank, prior to
consummation of such transaction, a certificate to the effect set forth in the
foregoing clause (a); provided, however, that so long as no Default or Event of
Default shall exist hereunder at the time of such transaction or immediately
after giving effect thereto, any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any other Subsidiary; provided further that, effective upon
consummation of any merger or consolidation described in this Section, any
resulting or surviving entity shall execute and deliver such agreements and
other documents, including, if requested by the Bank, a guaranty substantially
in the form of the Guaranty Agreement, and take such other action as the Bank
may require to evidence or confirm its express assumption of the obligations and
liabilities of its predecessor entities under this Agreement and the other
Credit Documents.
Section 7.3 Acquisitions. Complete or consummate any Acquisition,
unless the Bank shall have been given the notice and certification in respect
thereof as required by Section 6.1(f) hereof or if, at the time thereof or
immediately after giving effect thereto, there shall exist any Default or Event
of Default under this Agreement.
Section 7.4 Liens. Grant, suffer or permit any Lien on or security
interest in any of its properties or assets, except for (i) liens in favor of
Bank, and (ii) Permitted Liens, or fail to pay promptly when due all lawful
claims, whether for labor, materials or otherwise, where the failure to pay the
same could have a Material Adverse Effect.
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Section 7.5 Investments. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any stock or other securities, or make or
permit to exist any interest whatsoever in any other Person or permit to exist
any loans or advances to any Person, except that Borrower and its Subsidiaries
may make or maintain:
(a) investments in securities of any other Person acquired in an
acquisition consummated in compliance with this Agreement;
(b) investments in direct obligations of, or obligations the timely
payment of principal and interest on which are fully and unconditionally
guaranteed by, the United States of America or any agency thereof;
(c) investments in interest-bearing demand or time deposits or
certificates of deposit issued by the Bank;
(d) investments existing as of the date hereof and set forth on
Schedule 7.5 hereto;
(e) accounts receivable arising in trade credit granted in the
ordinary course of business;
(f) investments in Subsidiaries; and
(g) loans or advances between the Borrower and the Subsidiaries in
the ordinary course of business.
Section 7.6 Restricted Payments. Make any Restricted Payment or
apply or set apart any assets of Borrower or any Subsidiary therefor or agree to
do any of the foregoing.
Section 7.7 Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, howsoever evidenced, except:
(a) Indebtedness owing to the Bank in connection with this Agreement,
the Note or any other Credit Document;
(b) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(c) purchase money Indebtedness incurred in the ordinary course of
business and not in violation of any covenant or other term or provision of this
Agreement;
(d) obligations under Capital Leases incurred in the ordinary course
of business and not in violation of any covenant or other term or provision of
this Agreement;
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(e) unsecured intracompany Indebtedness for loans and advances made
by the Borrower or any Subsidiary to the Borrower or any Subsidiary;
(f) additional unsecured Indebtedness for Money Borrowed not
otherwise covered by clauses (a) through (e) above, provided that the aggregate
outstanding principal amount of all such other Indebtedness permitted under this
clause (f) shall in no event exceed $1,000,000 at any time; and
(g) Indebtedness existing as of the Closing Date and set forth in
Schedule 7.7(g) hereto.
Section 7.8 Related Party Transactions. Except as otherwise
expressly permitted by this Agreement, and except for routine advances for
travel expenses in the ordinary course of business, directly or indirectly, make
any loan or advance to, or purchase, assume or guarantee any note, to or from
any of its directors, officers, employees or Affiliates, or to or from any
member of the immediate family of any of its directors, officers, employees or
Affiliates, or contract and operations to any Affiliate, or enter into, or be a
party, any transaction with any Affiliate of the Borrower or any of its
Subsidiaries, except for transactions in the ordinary course of and pursuant to
the reasonable requirements of the business of the Borrower and its Subsidiaries
and upon fair and reasonable terms no less favorable to the Borrower (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate.
Section 7.9 Character of Business. Change the general character of
business as conducted by Borrower and its Subsidiaries at the date hereof, or
engage in any type of business not reasonably related to the business of
Borrower and its Subsidiaries as presently conducted, or make any material
change in Borrower's business objectives.
Section 7.10 Management Change. Make any substantial change in its
present executive or management personnel.
Section 7.11 Environmental Compliance. The Borrower shall ensure
that the Real Estate of Borrower and its Subsidiaries and their respective
businesses and operations at all times complies with the Environmental Laws
(provided, however, that this covenant shall not be deemed violated by an
unintentional violation that could not reasonably be expected to have a Material
Adverse Effect). The Borrower will not permit any Hazardous Material to be
brought onto any of the property owned, leased or obligated by Borrower or its
Subsidiaries (unless such Hazardous Material is used in the normal course of
business, maintenance and repairs of Borrower or such Subsidiary and is handled
in compliance with applicable Environmental Laws). If any Hazardous Material is
brought or found thereon or therein, except as may be permitted above (and then
only in compliance with all applicable Environmental Laws), the Borrower, at its
expense, shall immediately remove it, with proper offsite disposal, or, if the
Hazardous Material is in the soil or groundwater, perform in a diligent matter
any environmental response, investigation, removal, corrective and remedial
actions required under applicable Environmental Laws. The Borrower shall
promptly, after any officer of the Borrower learns or obtains
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knowledge of the occurrence thereof, give written notice to the Bank of receipt
of any written notice of personal injury, property damage, violation, claim or
noncompliance, or order or request for information, from any Governmental
Authority or other third party with respect to any Environmental Law or
Hazardous Material, and shall promptly remedy or cause to be remedied any breach
of any Environmental Law by Borrower or any of its Subsidiaries; provided,
however, nothing in this section shall be construed to prevent Borrower or its
Subsidiaries from contesting, negotiating, litigating, appealing, settling or
otherwise resolving any claim or allegation made by a Government Authority or
third party of a personal injury, property damage, violation, claim of
noncompliance, order or request for information with respect to any
Environmental Law or Hazardous Material. Borrower or its Subsidiaries shall not
be considered in Default under this section so long as Borrower or its
Subsidiaries are contesting the claim or allegation of the Government Authority
or third party or are complying with the terms and conditions of any compliance
schedule, order, settlement or other agreement to resolve any disputed claim or
allegation. Following reasonable notice, the Bank shall have the right to enter
upon the property owned, leased or operated by Borrower or its Subsidiaries, or
any part thereof (through its employees and/or agents), to verify compliance by
Borrower with the terms of this Agreement and to conduct such environmental
assessments and audits as Bank shall deem advisable to facilitate such
verification; provided, however, that THE BORROWER HEREBY ACKNOWLEDGES THAT FOR
SO LONG AS THE BANK HAS NOT FORECLOSED AND TAKEN TITLE TO, AND POSSESSION AND
CONTROL OF THE REAL PROPERTY, AND TAKEN OVER CONTROL OF WASTE HANDLING
PRACTICES, ALL HAZARDOUSWASTE HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES AN
PROCEDURES ARE THE SOLE RESPONSIBILITY OF THE BORROWER AND ITS SUBSIDIARIES AND
THE BORROWER AND ITS SUBSIDIARIES HAVE FULL DECISION-MAKING POWER WITH RESPECT
THERETO. THE BORROWER FURTHER ACKNOWLEDGES THAT THE BANK IS NOT AN ENVIRONMENTAL
CONSULTANT, ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE WHATSOEVER. NO ACT
(OR DECISION NOT TO ACT) OF THE BANK RELATED TO THIS AGREEMENT OR ANY LOAN
DOCUMENT SHALL GIVE RISE TO ANY OBLIGATION OR LIABILITY ON THE PART OF THE BANK
WITH RESPECT TO ENVIRONMENTAL MATTERS UNLESS SUCH ACTION IS AFTER THE BANK HAS
FORECLOSED ON AND TAKEN POSSESSION AND CONTROL OF THE SUBJECT PROPERTY AND SUCH
ACTION PROXIMATELY RESULTS IN SUCH CONTAMINATION. IN NO EVENT SHALL ANY
INFORMATION OBTAINED FROM THE BANK PURSUANT TO THIS AGREEMENT OR ANY LOAN
DOCUMENT CONCERNING THE ENVIRONMENTAL CONDITION OF THE REAL PROPERTY BE
CONSIDERED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES (OR ANY OTHER RECIPIENT OF
SAID INFORMATION) AS CONSTITUTING LEGAL OR ENVIRONMENTAL CONSULTING,
ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND NEITHER THE BORROWER NOR
ANY OF ITS SUBSIDIARIES (NOR ANY OTHER RECIPIENT OF SAID INFORMATION) SHALL RELY
ON SAID INFORMATION. THE RESPONSIBILITY FOR COMPLIANCE WITH LAWS AND REGULATIONS
RESTS SOLELY WITH THE BORROWER AND ITS SUBSIDIARIES FOR SO LONG AS THE BANK HAS
NOT FORECLOSED AND TAKEN TITLE TO, AND POSSESSION AND CONTROL OF THE REAL
PROPERTY, AND TAKEN OVER CONTROL OF WASTE HANDLING PRACTICES.
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The Bank shall have the right to require annually an examination by an
outside specialist of all files involving the Borrower's environmental matters
maintained by state and federal regulatory agencies. The Borrower agrees to pay
the reasonable costs of such examination and to cooperate fully with the Bank in
connection therewith. The Bank agrees not to initiate any such examination
without prior consultation with the Borrower.
Section 7.12 Other Ventures. Become a partner, joint venturer,
member or manager in any partnership, joint venture or limited liability
company, except pursuant to a Permitted Acquisition.
Section 7.13 Dissolution, etc. Wind up, liquidate or dissolve
(voluntarily or involuntarily) or commence or suffer any proceeding seeking any
such winding up, liquidation or dissolution, except in connection with a merger
or consolidation permitted pursuant to Section 7.2.
Section 7.14 Fiscal Year. Change its Fiscal Year.
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Section 7.15 Limitation on Negative Pledge Clauses. Enter into,
directly or indirectly, any agreement with any Person that prohibits or limits
the ability of Borrower or any Subsidiary to create, incur, assume or suffer to
exist any Lien in favor of Bank upon any of the property, assets or revenues of
Borrower or any of its Subsidiaries, whether now owned or hereafter
acquired.
ARTICLE VIII
FINANCIAL COVENANTS
Until all of the Obligations have been paid in full, the Borrower
covenants and agrees that it will, unless the Bank otherwise consents in
writing:
Section 8.1 Financial Condition. Maintain the financial condition
of the Borrower and its Subsidiaries as follows, determined on a consolidated
basis in accordance with GAAP applied on a consistent basis throughout the
period involved:
(a) Debt to Tangible Net Worth. Maintain a ratio of Total Liabilities
to Tangible Net Worth, determined as of the end of each Fiscal Quarter, of not
greater than 1.50 to 1.0.
(b) Cash Flow Coverage Ratio. Maintain a ratio of Sources for
Coverage to Current Maturities, determined as of the end of each Fiscal Quarter
for the then most recently completed period of four (4) consecutive Fiscal
Quarters, of not less than 1.25 to 1.0.
(c) Funded Debt to EBITDA. Maintain a Funded Debt to EBITDA Ratio,
determined as of the end of each Fiscal Quarter, of not greater than 2.25 to
1.0.
(d) Minimum EBITDA. Maintain, as of the end of each Fiscal Quarter
for the then most recently completed period of four (4) consecutive Fiscal
Quarters, EBITDA of not less than $15,000,000.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
Section 9.1 Events of Default. The occurrence of any one or more
of the following events all constitute an Event of Default hereunder:
(a) The Borrower shall fail to pay when due any amount payable under
this Agreement, the Note or any other Credit Document;
(b) The Borrower shall fail to observe or perform any covenant,
restriction or agreement contained in Sections 6.1, 6.2 and 6.3 of this
Agreement for ten (10) days after receipt of written notice of such failure from
the Bank, or the Borrower shall fail to observe or perform any covenant,
restriction or agreement contained in Article VII or Article VIII of this
Agreement;
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(c) The Borrower or any Subsidiary shall fail to observe or perform
any other covenant, restriction or agreement contained in this Agreement and not
described in Section 9.1(a) and (b) of this Agreement for thirty (30) days after
receipt of written notice of such failure from the Bank or, if a Default is not
reasonably capable of being cured within such thirty (30) days, the Borrower or
any Subsidiary does not within such thirty (30) days commence such act or acts
as shall be necessary to remedy such Default and complete such act or acts with
diligence and continuity;
(d) Any representation, warranty, certification or statement made or
deemed made by the Borrower in Article V of this Agreement, in any Credit
Document or in any certificate, financial statement or other document delivered
pursuant to this Agreement or any Credit Document shall prove to have been
incorrect in any material respect when made or deemed made;
(e) An event of default or any event that, with the passage of time
or giving of notice, or both, would constitute an event of default under the
Guaranty Agreement or any other Credit Document, including any Guaranty
Agreement executed and delivered to Bank subsequent to the date hereof;
(f) An event of default or any event that, with the passage of time
or giving of notice, or both, would constitute an event of default under any
agreement between the Bank and the Borrower and any of the Subsidiaries.
(g) The Borrower or any Subsidiary (i) files a petition for relief
under the Bankruptcy Code or any other insolvency law or seeking to adjudicate
it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or falls to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (ii) takes any action to
authorize or effect any of the foregoing actions, (iii) generally fails to pay,
or admits in writing its inability to pay, its debts as such debts become due;
(iv) shall apply for, seek or consent to, or acquiesce in, the appointment of a
custodian, receiver, trustee, examiner, liquidator or similar official for it or
for any material portion of its assets; (v) benefits from or is subject to the
entry of an order for relief under any bankruptcy or insolvency law; or (vi)
makes an assignment for the benefit of creditors;
(h) Failure of the Borrower or any Subsidiary, within sixty (60) days
after the commencement of any proceeding against it seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, to have such
proceeding dismissed, or to have all orders or proceedings thereunder affecting
the operations or the business of such the Borrower or any Subsidiary stayed, or
failure of the Borrower or any Subsidiary, within sixty (60) days after the
appointment, without its consent or acquiescence, of any custodian, receiver,
trustee, examiner, liquidator or similar official for it or for any material
portion of its assets, to have such appointment vacated;
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(i) The Borrower or any Subsidiary ceases to be Solvent, or ceases
to conduct its business substantially as now conducted or is enjoined,
restrained or in any way prevented by court order from conducting all or any
material part of its business affairs;
(j) The entry of one or more judgments or orders for the payment of
money in excess of $100,000 in the aggregate against the Borrower or any
Subsidiary, and such judgments or order (s) shall continue satisfied and
unstayed for a period of thirty (30) days;
(k) The issuance of a writ of execution, attachment or similar
process against the Borrower or any Subsidiary, or any assets of the Borrower or
any Subsidiary, involving an amount in excess of $250,000, which shall not be
dismissed, stayed, discharged or bonded within thirty (30) days after the
Borrower acquires knowledge thereof,
(l) The Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay to the
Pension Benefit Guaranty Corporation or to a Plan under Title IV of ERISA; or
the Pension Benefit Guaranty Corporation shall institute proceedings under Title
IV of ERISA to terminate or to cause a trustee to be appointed to administer any
such Plan or Plans or a proceeding shall be instituted by a fiduciary of any
such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the Pension Benefit Guaranty
Corporation would be entitled to obtain a decree adjudicating that any such Plan
or Plans must be terminated;
(m) The occurrence of a Change in Control; or
(n) The occurrence of any Material Adverse Change, or of any event,
condition, or state of facts which could reasonably be expected to result in a
Material Adverse Effect.
Section 9.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default:
(a) Termination of Revolving Line of Credit; Acceleration of
Indebtedness. The Bank may, in its sole discretion, (i) terminate its obligation
to make Revolving Loans under the Revolving Line of Credit; (ii) declare all
Obligations to be immediately due and payable, and upon such declaration the
same shall become and be immediately due and payable, without presentment,
protest or other notice of any kind, all of which are hereby waived by the
Borrower, and (iii) pursue all remedies available to it by contract, at law or
in equity.
(b) Right of Setoff. The Bank may, and is hereby authorized by the
Borrower, at any time and from time to time, to the fullest extent permitted by
applicable laws, without advance notice to the Borrower (any such notice being
expressly waived by the Borrower) to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
any other indebtedness at any time owing by the Bank or any of its affiliates to
or for the credit or the account of the Borrower or any of its Subsidiaries
against any or all of the Obligations of the Borrower under this Agreement or
the other Credit Documents now or
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hereafter existing, whether or not such obligations have matured. The Bank
agrees promptly to notify the Borrower after any such set-off or application;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.
(c) Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration
of the Bank's rights and remedies set forth in this Agreement is not intended to
be exhaustive and the exercise by the Bank of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative, and shall be in addition to any other right or remedy given
hereunder, under the other Credit Documents or under any other agreement between
the Borrower and the Bank or that may now or hereafter exist in law or in equity
or by suit or otherwise. No delay or failure to take action on the part of the
Bank in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrower and its Subsidiaries
and the Bank or their agents or employees shall be effective to change, modify
or discharge any provision of this Agreement or any of the other Credit
Documents or to constitute a waiver of any Event of Default.
ARTICLE X
MISCELLANEOUS
Section 10.1 Expenses. The Borrower agrees to pay on demand all
reasonable expenses of the Bank incurred in connection with the preparation,
execution, delivery, performance and enforcement of this Agreement and the other
Credit Documents, and all other instruments and documents required hereby or
thereby, including the reasonable fees and out-of-pocket expenses of counsel to
the Bank (based upon counsel's customary charges and not upon any statutory
presumption based on a percentage of the indebtedness involved), and the cost of
any field audits or reports, appraisals, insurance costs and recording fees.
Borrower's obligation for payment of attorneys' fees and field examination costs
in connection with the negotiation and preparation of the Credit Documents and
the initial closing of the transactions provided for herein shall not exceed
$25,000, plus the reasonable costs and expenses incurred by counsel to the Bank.
Section 10.2 Waiver, Amendments, Etc. Neither any provision of this
Agreement, nor the performance thereof, may be waived, amended, or otherwise
modified, except by the prior written consent of the parties given in accordance
with Section 10.3 hereof.
Section 10.3 Address for Notices, Etc. Any notice, request, demand,
consent, Borrower's Certificate, Borrowing Base Report, direction, or other
communication shall be in writing, and shall be deemed delivered and received
only (i) when personally received or received by facsimile reproduction by an
authorized person for each party, or (ii) three days after the date when placed
in the United States Mail sent by registered or certified mail, return receipt
requested, postage prepaid, delivery restricted to addressee, addressed as
follows:
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If to the Bank: If to the Borrower:
Bank of America, N.A. The Source Information Management
Attention: Commercial Banking Company
000 Xxxx Xxxxxxxx Xxxxxx 00000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 Xx. Xxxxx, Xxxxxxxx 00000
Post Office Box 21848 Telecopier No.: (000) 000-0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 Attention: Mr. S. Xxxxxx Xxxxxx
Telecopier No. (000) 000-0000
with a copy to: with a copy to:
Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx Xxxxxxxxx Xxxxxxxx XXX
X.X.X. Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
000 Xxxxx Xxx Xxxxxx, Xxxxx 0000 Xx. Xxxxx, Xxxxxxxx 00000-0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 Telecopier No.: (000) 000-0000
Post Office Box 21847 Attention: Xxxx Xxxxxx, Esq.
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
The addresses and persons for attention shown above may be changed from time to
time by a Borrower's Certificate, in the case of the Borrower, or by a notice in
the case of the Bank, in such case in the form required by, and delivered to the
other party in accordance with this Section 10.3 as in effect prior to such
change.
Section 10.4 Enforcement and Waiver. The Bank shall have the right
at all times to enforce the provisions of this Agreement and the Credit
Documents in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the Bank in refraining from
so doing at any time or times. The failure of the Bank at any time or times to
enforce its rights under such provisions, strictly in accordance with the same,
shall not be construed as having created a custom in any way or manner contrary
to specific provisions of this Loan Agreement or as having in any way or manner
modified or waived the same. Except as otherwise stated in this Agreement, the
covenants in Articles VI and VII hereof shall apply to each Subsidiary as if it
were the Borrower.
Section 10.5 Survival of Agreements. All agreements, representations
and warranties contained in any of the Loan Documents or made in writing by or
on behalf of the Borrower in connection with the transactions contemplated
thereby shall survive the execution and delivery of this Agreement and the other
Loan Documents. No termination of this Agreement shall in any way affect or
impair the powers, obligations, duties, rights and liabilities of the parties
hereto in any way with respect to (a) any transaction or event occurring before
such termination or
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cancellation, or (b) any of the Borrower's undertakings, agreements, covenants,
warranties and representations contained in the Loan Documents.
Section 10.6 Assignment and Participation.
(a) The Borrower may not sell, assign or transfer this Agreement, the
other Loan Documents, or any part thereof. The Borrower consents to the Bank's
participation, sale, assignment, delegation, transfer or other disposition at
any time hereafter of the Loans, this Agreement or the other Loan Documents, or
of any portion hereof or thereof.
(b) The Bank may assign to banks or other Persons ("Assignees") all
or a portion of its rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, all or a portion of the
outstanding Loans and its obligations to extend credit under Section 2.1 hereof)
and may act as agent for any or all such Assignees; provided, however, that, in
connection with any such assignment, the Bank shall act as administrative agent
for all such Assignees, and the Bank, in any such event, shall retain not less
than a fifty percent (50%) interest in all outstanding Loans and in the
obligation hereunder to extend credit under Section 2.1 hereof. Upon any
assignment and written notice to the Borrower, unless otherwise agreed between
the Bank and the particular Assignee, (i) the Assignee thereunder shall be
deemed a party hereto and, to the extent that rights and obligations (including
any portion of any Loans or obligations to extend credit under Section 2.1
hereof) hereunder have been assigned to it, shall have the rights and
obligations of the Bank hereunder with respect thereto and, upon notice to the
Borrower, shall have the right to receive copies of all documents and notices
required to be sent by the Borrower to the Bank hereunder, and (ii) the Bank
shall, to the extent that rights and obligations hereunder have been assigned by
it, relinquish its rights and be released from its obligations under this
Agreement (and, in the case of an assignment covering all or the remaining
portion of the Bank's rights and obligations under this Loan Agreement, the Bank
shall cease to be a party hereto, provided that the Assignee or Assignees have
assumed all of the Bank's obligations under this Loan Agreement and the other
Loan Documents). However, no assignment by the Bank shall release or otherwise
affect the obligations of the Bank with respect to any breach by the Bank of
this Loan Agreement occurring prior to such assignment.
(c) The Bank, in its sole discretion, may allow other Persons to
participate with the Bank in its Loans hereunder, pursuant to a participation
agreement in a form acceptable to the bank (a "Participation Agreement"). The
Participant shall not have any rights under this Agreement or any of the other
Loan Documents (the Participant's rights against the Bank in respect of such
participation to be those set forth in the Participation Agreement) and all
amounts payable by the Borrower hereunder shall be determined as if the Bank had
not sold such participation. In the event that the Bank includes other
Participants herein at any time hereafter, the Borrower will execute any
necessary documents to effectuate the rights of the Participants and to
delineate the rights, powers and obligations of the Bank, as the Bank may
reasonably require.
(d) The Bank may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 10.6, disclose
to the Assignee or Participant
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or proposed Assignee or Participant any information relating to the Borrower
furnished to the Bank by the Borrower, including the Financial Statements.
Further, in connection with any such assignment or participation, the Borrower
agrees to furnish to the Bank such additional financial or other information
regarding the Borrower as the Bank may reasonably request.
Section 10.7 Governing Law. THIS AGREEMENT HAS BEEN EXECUTED,
DELIVERED AND ACCEPTED IN, AND SHALL BE DEEMED TO HAVE BEEN MADE IN, GREENSBORO,
NORTH CAROLINA, AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) OF NORTH CAROLINA.
Section 10.8 Arbitration. Any controversy or claim between or among
the Bank and the Borrower including but not limited to those arising out of or
relating to this Agreement or the other Loan Documents, including any claim
based on or arising from an alleged tort, shall be determined by binding
arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state law), the rules of practice and procedure for
the arbitration of commercial disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.) as then in effect and the "special rules" set forth
below. In the event of any inconsistency, the special rules shall control.
Judgment upon any arbitration award may be entered in any court having
jurisdiction. Any arbitration under this Agreement may, at the request of any
party or as directed by the arbitrator, be joined or consolidated with any
arbitration between Bank and any Guarantor. The Bank or the Borrower may bring
an action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this Agreement applies in any court having
jurisdiction over such action.
The arbitration shall be conducted in Greensboro, North Carolina and
administered by J.A.M.S. If J.A.M.S. is unable or legally precluded from
administering the arbitration, then the American Arbitration Association will
serve. All arbitration hearings will be commenced within 90 days of the demand
for arbitration; further, the arbitrator shall only, upon a showing of cause, be
permitted to extend the commencement of such hearing for an additional 60 days.
Nothing in this Agreement shall be deemed to (a) limit the
applicability of any otherwise applicable statutes of limitation or repose and
any waivers contained in this Agreement; or (b) be a waiver by the Bank of the
protection afforded to it by 12 U.S.C. ss.91 or any substantially equivalent
state law; or (c) limit the right of the Bank (i) to exercise self help remedies
such as (but not limited to) setoff, or (ii) to foreclosure against any real or
personal property collateral, or (iii) to obtain from a court provisional or
ancillary remedies such as (but not limited to) injunctive relief, writ of
possession or the appointment of a receiver. The Bank may exercise such
self-help rights, foreclose upon such property, or obtain such provisional or
ancillary remedies before, during or after the pendency of any arbitration
proceeding brought pursuant to this Agreement. Neither the exercise or self-help
remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in such action, to arbitrate the merits of the
controversy or claim occasioning resort to such remedies.
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Section 10.9 Waivers by the Borrower. Except as otherwise provided
in this Agreement, the Borrower waives to the fullest extent permitted by law
(a) presentment, demand, protest, and notice of protest; (b) notice prior to
taking possession or control of the Collateral or any bond or security which
might be required by any court prior to allowing the Bank to exercise any of the
Bank's remedies; and (c) the benefit of all valuation, appraisement and
exemption laws.
Section 10.10 Severability. To the extent any provision of this
agreement is prohibited by or invalid under applicable law, such provision shall
be ineffective, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 10.11 Entire Agreement. This Agreement and the other
documents, certificates and instruments referred to herein constitute the entire
agreement between the parties and supersede any prior agreements concerning the
subject matter hereof.
Section 10.12 Binding Effect. All of the terms of this Agreement and
the other Loan Documents, as the same may from time to time be amended, shall be
binding upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the Borrower and the Bank.
Section 10.13 Definitional Provisions. Unless otherwise stated
therein, all terms defined in this Agreement shall have the meanings stated
herein when used in any of the Credit Documents or any certificate or other
document made or delivered pursuant hereto. As used herein and in any of the
Credit Documents, and any certificate or other document made or delivered
pursuant hereto, accounting terms relating to the Borrower not defined in this
Agreement and accounting terms partly defined in this Agreement, to the extent
not defined, shall have the respective meanings given to them under GAAP. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Credit Agreement as a whole and not to any
particular provision of this Agreement, and section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified. The
captions to the various sections and subsections of this Agreement have been
inserted for convenience only and shall not limit or affect any of the terms
hereof.
Section 10.14 Conflict of Terms. Except as otherwise provided in this
Agreement or the other Loan Documents, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision of the other
Loan Documents, the provision contained in this Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
THE SOURCE INFORMATION
MANAGEMENT COMPANY
By:
--------------------------
Title: Chairman and Chief Executive Officer
--------------------------
BANK OF AMERICA, N.A.
By: Xxxx
--------------------------
Title: Senior Vice President
--------------------------
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