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EXECUTION COPY
EXHIBIT 10.16
FINANCING AGREEMENT
Financing Agreement, dated as of March 27, 2001, by and among
TRI-STATE OUTDOOR MEDIA GROUP, INC., a Kansas corporation ("the Borrower"), SGH
HOLDINGS, INC., a Delaware corporation (the "Parent"), and ABLECO FINANCE LLC, a
Delaware limited liability company (the "Lender").
RECITALS
The Borrower and the Guarantor have asked the Lender to extend
credit to the Borrower consisting of (a) a term loan in the principal amount of
$13,000,000.00 and (b) a revolving credit facility in an aggregate principal
amount not to exceed $7,000,000.00 at any time outstanding. The proceeds of the
Loan shall be used to: (i) to refinance the Borrower's existing line of credit
of up to $20,000,000; (ii) to pay interest on the Borrower's Senior Notes,
issued pursuant to that certain Indenture, dated as of May 15, 1998, by and
between the Borrower and IBJ Xxxxxxxx Bank & Trust Company, as Trustee (the
"Senior Notes"); (iii) for general working capital requirements; (iv) for
Lender-approved Capital Expenditures (as defined below); (v) for Lender-approved
Acquisitions (as defined below); (vi) to purchase the Borrower's Senior Notes on
terms to be approved by Lender; and (vii) to pay fees and expenses related to
this transaction.. The Lender is willing to extend such credit to the Borrower
subject to the terms and conditions hereinafter set forth.
In consideration of the premises and the covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural forms of such
terms:
"Account Debtor" means each debtor, customer or obligor in any
way obligated on or in connection with any Account Receivable.
"Account Receivable" means any and all rights of the Borrower
to payment for goods sold and services rendered, including accounts, general
intangibles and any and all such rights evidenced by chattel paper, instruments
or documents, whether due or to become due and whether or not earned by
performance, and whether now or hereafter acquired or arising in the future and
any proceeds arising therefrom or relating thereto.
"Acquisition" means the acquisition of all or substantially
all of the Capital Stock of any Person or all or substantially all of the assets
of any Person.
"Action" has the meaning specified therefor in Section 10.12.
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"Affiliate" means, as to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the Capital Stock having ordinary voting power
for the election of directors of such Person or (ii) direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise. Notwithstanding anything herein to the contrary, in no event shall
the Lender be considered an "Affiliate" of any Loan Party.
"Agreement" means this Financing Agreement, together with all
Exhibits and Schedules hereto.
"Appraisal Fee" has the meaning specified therefor in Section
2.06(b).
"Authorized Officer" means the Chief Executive Officer or
Chief Financial Officer of the Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that the Borrower is entitled to borrow as Revolving
Credit Loans under Section 2.01(b)(i) and (ii) (after giving effect to all then
outstanding Obligations and all sublimits and reserves applicable hereunder).
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" has the meaning specified therefor in the preamble
hereto.
"Borrowing Base" means, at any time, the aggregate amount of
those Collections received in the ordinary course of business in connection with
or in consideration for providing outdoor advertising services to customers by
the Borrower for the period of the preceding four (4) full calendar months prior
to such date of determination.
"Borrowing Base Certificate" means a certificate signed by the
chief financial officer of the Borrower and setting forth the calculation of the
Borrowing Base in compliance with Section 6.01(a)(vi), substantially in the form
of Exhibit I.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
to close.
"Capital Expenditures" means, with respect to any Person for
any period, the sum of (i) the aggregate amount of all expenditures by such
Person and its Subsidiaries during such period that in accordance with GAAP are
or should be included in "property, plant equipment" or similar fixed asset
account on its balance sheet, whether such expenditures are paid in cash or
financed but excluding all Capitalized Lease Obligations paid or payable during
such period, and (ii) to the extent not covered by clause (i) above, the
aggregate of all expenditures by such Person and its Subsidiaries to acquire by
purchase or otherwise the business or fixed assets of, or the Capital Stock of,
any other Person.
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"Capitalized Lease" means, with respect to any Person, any
lease of real or personal property by such Person as lessee which is required
under GAAP to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means, with respect to any
Person, obligations of such Person and its Subsidiaries under Capitalized
Leases, and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof at such time as determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash and Cash Equivalents" means all cash and any presently
existing or hereafter arising deposit account balances, certificates of deposit
or other financial instruments properly classified as cash equivalents under
GAAP.
"Certificates" has the meaning specified therefor in Section
2.07.
"Change of Control" means each occurrence of any of the
following:
(a) the acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Exchange Act) other than
the Permitted Holders of beneficial ownership of more than 20% of the aggregate
outstanding voting power of the Capital Stock of the Borrower or the Guarantor,
as the case may be;
(b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Borrower or the Guarantor, as the case may be, (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the shareholders of the Borrower or the Guarantor, as the case may be, was
approved by a vote of at least 66 2/3% of the directors of the Borrower or the
Guarantor, as the case may be, then still in office who were either directors at
the beginning of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Borrower or the Guarantor, as the case may be, then in
office; and
(c) (i) the Borrower or the Guarantor, as the case may be,
consolidates with or merges into another entity or conveys, transfers or leases
all or substantially all of its property and assets to any Person, or (ii) any
entity consolidates with or merges into the Borrower or the Guarantor, as the
case may be.
"Code" means the Internal Revenue Code of 1986, as amended (or
any successor statute thereto) and the regulations thereunder.
"Collateral" means all of the property and assets and all
interests therein and proceeds thereof now owned or hereafter acquired by any
Person upon which a Lien is granted or purported to be granted by such Person as
security for all or any part of the Obligations.
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"Collections" means all cash, checks, drafts, notes, money
orders, acceptances, instruments, and other items of payment and evidence of
Indebtedness (including insurance and condemnation proceeds, cash proceeds of
sales and other voluntary or involuntary dispositions of property, rental
proceeds, and tax refunds).
"Commitment Fee" has the meaning specified therefor in Section
2.06(c).
"Commitments" means the Revolving Credit Commitment and the
Term Loan Commitment.
"Concentration Account" has the meaning specified therefor in
Section 7.01(a).
"Concentration Account Agreement" means the Concentration
Account Agreement, substantially in the form of Exhibit J, by and among the
Borrower, the Lender and a depositary bank reasonably satisfactory to Lender.
"Concentration Account Bank" means a depositary bank to be
determined after the Effective Date, reasonably satisfactory to Lender.
"Consolidated EBITDA" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period, plus,
without duplication, the sum of the following amounts of such Person and its
Subsidiaries for such period and to the extent deducted in determining
Consolidated Net Income of such Person for such period: (A) Consolidated Net
Interest Expense, (B) income tax expense, (C) depreciation expense, and (D)
amortization expense net of negative goodwill amortization.
"Consolidated Net Income" means, with respect to any Person
for any period, the net income (loss) of such Person and its Subsidiaries for
such period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination of Consolidated Net Income (without
duplication) (a) any extraordinary or non-recurring gains or losses or gains or
losses from Dispositions, (b) restructuring charges, (c) effects of discontinued
operations and (d) interest income.
"Consolidated Net Interest Expense" means, with respect to any
Person for any period, gross interest expense of such Person and its
Subsidiaries for such period determined in conformity with GAAP (including,
without limitation, interest expense paid to Affiliates of such Person), less
(i) the sum of (A) interest income for such period and (B) gains for such period
on Hedging Agreements (to the extent not included in interest income above and
to the extent not deducted in the calculation of such gross interest expense),
plus (ii) the sum of (A) losses for such period on Hedging Agreements (to the
extent not included in such gross interest expense) and (B) the upfront costs or
fees for such period associated with Hedging Agreements (to the extent not
included in gross interest expense), each determined on a consolidated basis and
in accordance with GAAP for such Person and its Subsidiaries.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, (i) the direct or indirect guaranty,
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endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (B) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (C) to
purchase property, assets, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (D) otherwise to assure or
hold harmless the holder of such primary obligation against loss in respect
thereof; provided, however, that the term "Contingent Obligation" shall not
include any products warranties extended in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation with respect to which
such Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the terms of
the instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder), as determined by such
Person in good faith.
"Credit Line to EBITDA Ratio" means, for any period, the ratio
of (i) the sum of (A) the aggregate principal amount of the Term Loans
outstanding at the end of such period plus (B) the Revolving Loans outstanding
at the end of such period plus (C) any other Obligations to (ii) the
Consolidated EBITDA of the Borrower.
"Debt to EBITDA Ratio" means, for any period, the ratio of (i)
Indebtedness of the Borrower at the end of such period to (ii) Consolidated
EBITDA of the Borrower and its Subsidiaries for such period, to the extent paid
or required to be paid in cash, for such period.
"Default" means an event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Disposition" means any transaction, or series of related
transactions, pursuant to which any Loan Party or any of its Subsidiaries sells,
assigns, transfers or otherwise disposes of any property or assets (whether now
owned or hereafter acquired) to any other Person, in each case whether or not
the consideration therefor consists of cash, securities or other assets owned by
the acquiring Person, excluding any sales of Inventory in the ordinary course of
business on ordinary business terms or sales, other dispositions of Permitted
Investments, and sales of any assets which become subject to a Capitalized
Lease.
"Dollar," "Dollars" and the symbol "$" each means lawful money
of the United States of America.
"Effective Date" means the date, on or before March 27, 2001,
on which all of the conditions precedent set forth in Article IV are satisfied
(or waived by the Lender) and the initial Loan is made.
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"Employee Plan" means an employee benefit plan (other than a
Multiemployer Plan) covered by Title IV of ERISA and maintained (or was
maintained at any time during the six (6) calendar years preceding the date of
any borrowing hereunder) for employees of the Borrower or any of its ERISA
Affiliates.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter or other communication from any
Governmental Authority involving violations of Environmental Laws or Releases of
Hazardous Materials (i) from any assets, properties or businesses of the
Borrower or any of its Subsidiaries or any predecessor in interest; (ii) from
adjoining properties or businesses; or (iii) onto any facilities which received
Hazardous Materials generated by the Borrower or any of its Subsidiaries or any
predecessor in interest.
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), the
Federal Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 2601 et seq.) and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as such laws may be amended or otherwise modified from
time to time, and any other present or future federal, state, local or foreign
statute, ordinance, rule, regulation, order, judgment, decree, permit, license
or other binding determination of any Governmental Authority imposing liability
or establishing standards of conduct for protection of the environment.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and consultants
and costs of investigations and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any environmental
condition or a Release of Hazardous Materials from or onto (i) any property
presently or formerly owned by the Borrower or any of its Subsidiaries or (ii)
any facility which received Hazardous Materials generated by the Borrower or any
of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.
"ERISA Affiliate" means, with respect to any Person, any trade
or business (whether or not incorporated) which is a member of a group of which
such Person is a member and which would be deemed to be a "controlled group"
within the meaning of Sections 414(b), (c), (m) and (o) of the Code.
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"Event of Default" means any of the events set forth in
Section 8.01.
"Existing Credit Agreement" means the Amended and Restated
Credit Agreement, dated as of August 12, 1999, among the Borrower, as borrower,
the Existing Lender, and Bank One, NA (f/k/a The First National Bank of
Chicago), as Agent, as amended on October 15, 1999, and as the same may be
further amended, restated, supplemented or modified.
"Existing Lender" means Bank One, NA, as the sole lender under
the Existing Credit Agreement.
"Expense Deposit" means the expense deposit in the amount of
$150,000 paid by the Borrower to the Lender on or prior to the Effective Date to
pay the out-of-pocket costs and expenses of the Lender in connection with the
performance of due diligence, the appraising and securing of Collateral and
other property and assets of the Loan Parties and their respective Subsidiaries,
and the preparation of agreements, instruments and other documents in connection
with the transactions contemplated hereby and by the other Loan Documents, and
otherwise in connection with the consummation of such transactions.
"Facility" means, individually and collectively, 0000 Xxxxxxx
00 Xxxxx, Xxxxxx, Xxxxxxx 00000 and 00xx & Xxxx Xxxxxx, Xxxxxx Xxxxxxx, XX
00000, including, without limitation, the land on which such facilities are
located, all buildings and other improvements thereon, all fixtures, equipment,
inventory and other tangible personal property located at or used in connection
with such facilities and all accounts receivable and other intangible personal
property relating to the operations of such facilities, all whether now or
hereafter existing.
"Final Maturity Date" means the third anniversary of the
Effective Date, or such earlier date on which any Loan shall become due and
payable, in whole or in part, in accordance with the terms of this Agreement and
the other Loan Documents.
"Financial Statements" means (i) the audited consolidated
balance sheet of the Borrower and its Subsidiaries for the Fiscal Years ended
December 31, 1999, 1998 and 1997 and the related consolidated statement of
operations, shareholders' equity and cash flows for the Fiscal Year then ended
and (ii) the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries for the twelve (12) months ended December 31, 2000 and the related
consolidated statement of operations, shareholder's equity and cash flows for
such period.
"Fiscal Year" means the fiscal year of the Borrower and its
Subsidiaries ending on December 31 of each year.
"Funding Fee" has the meaning specified therefor in Section
2.06(a).
"GAAP" means generally accepted accounting principles in
effect from time to time in the United States, applied on a consistent basis,
provided that for the purpose of Section 6.03 hereof and the definitions used
therein, "GAAP" shall mean generally accepted accounting principles in effect on
the date hereof and consistent with those used in the preparation of the
Financial Statements, provided, further, that if there occurs after the date of
this Agreement any change in GAAP that affects in any respect the calculation of
any covenant contained in Section 6.03 hereof, the Lender and the Borrower shall
negotiate in good faith amendments to the
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provisions of this Agreement that relate to the calculation of such covenant
with the intent of having the respective positions of the Lender and the
Borrower after such change in GAAP conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the covenants in Section 6.03 hereof shall be
calculated as if no such change in GAAP has occurred.
"Governmental Authority" means any nation or government, any
Federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantor" means each of (i) the Parent, and (ii) each other
Person which guarantees, pursuant to Section 6.01(b) or otherwise, all or any
part of the Obligations.
"Guaranty" means the guaranty made by the Parent in favor of
the Lender pursuant to Section 6.01(b).
"Hazardous Materials" means (a) any element, compound or
chemical that is defined, listed or otherwise classified as a contaminant,
pollutant, toxic pollutant, toxic or hazardous substances, extremely hazardous
substance or chemical, hazardous waste, special waste, or solid waste under
Environmental Laws; (b) petroleum and its refined products; (c) polychlorinated
biphenyls; (d) any substance exhibiting a hazardous waste characteristic,
including, but not limited to, corrosivity, ignitability, toxicity or reactivity
as well as any radioactive or explosive materials; and (e) any raw materials,
building components, including, but not limited to, asbestos-containing
materials and manufactured products containing hazardous substances.
"Hedging Agreement" means any interest rate, foreign currency,
commodity or equity swap, collar, cap, floor or forward rate agreement, or other
agreement or arrangement designed to protect against fluctuations in interest
rates or currency, commodity or equity values (including, without limitation,
any option with respect to any of the foregoing and any combination of the
foregoing agreements or arrangements), and any confirmation executed in
connection with any such agreement or arrangement.
"Indebtedness" means, without duplication, with respect to any
Person, (i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables or other account payables and insurance
premiums incurred in the ordinary course of such Person's business); (iii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments or upon which interest payments are customarily made; (iv)
all obligations and liabilities of such Person created or arising under any
conditional sales or other title retention agreement with respect to property
used and/or acquired by such Person, even though the rights and remedies of the
lessor, seller and/or lender thereunder are limited to repossession or sale of
such property; (v) all Capitalized Lease Obligations of such Person; (vi) all
obligations and liabilities, contingent or otherwise, of such Person, in respect
of letters of credit, acceptances and similar facilities; (vii) all obligations
and liabilities, calculated on a basis satisfactory to the Lender and in
accordance with
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accepted practice, of such Person under Hedging Agreements; (viii) all
Contingent Obligations; (ix) liabilities incurred under Title IV of ERISA with
respect to any plan (other than a Multiemployer Plan) covered by Title IV of
ERISA and maintained for employees of such Person or any of its ERISA
Affiliates; (x) withdrawal liability incurred under ERISA by such Person or any
of its ERISA Affiliates to any Multiemployer Plan; and (xi) all obligations
referred to in clauses (i) through (x) of this definition of another Person
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien upon property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Matters" has the meaning specified therefor in
Section 10.15.
"Indemnitees" has the meaning specified therefor in Section
10.15.
"Inventory" means all goods and merchandise of the Borrower,
including, without limitation, all raw materials, work-in-process, piece goods,
trim and finished goods, whether now owned or hereafter acquired, and all such
other property the sale or other disposition of which would give rise to an
Account Receivable or cash.
"IRS" means the Internal Revenue Service or any successor
federal tax Governmental Authority.
"Lease" means any lease of real property to which the Borrower
or any of its Subsidiaries is a party as lessor or lessee.
"Lender" has the meaning specified therefor in the preamble
hereto.
"Lender Account" means an account at a bank designated by the
Lender from time to time as the account into which the Borrower shall make all
payments to the Lender under this Agreement and the other Loan Documents.
"Lender's Office" means the Lender's office located at 000
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 or at such other office or offices
of the Lender as may be designated in writing from time to time by the Lender to
the Borrower.
"Liabilities" has the meaning specified therefor in Section
2.07.
"Lien" means any mortgage, deed of trust, pledge, lien
(statutory or otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including, without
limitation, any conditional sale or title retention arrangement, any Capitalized
Lease and any assignment, deposit arrangement or financing lease intended as, or
having the effect of, security.
"Loan" means any of the Term Loan and the Revolving Loans.
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"Loan Account" means an account maintained hereunder by the
Lender on its books of account, at the Lender's office and with respect to the
Borrower, in which the Borrower will be charged with all Loans made to, and all
other Obligations incurred by, the Borrower.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Security Agreement, the Pledge Agreement, the Mortgage, the
Concentration Account Agreement and all other agreements, instruments, and other
documents executed and delivered pursuant hereto or thereto or otherwise
evidencing or securing any Loan or other Obligation.
"Loan Parties" means the Borrower and the Guarantor.
"Loan Servicing Fee" has the meaning specified therefor in
Section 2.06(b).
"Material Adverse Effect" means a material adverse effect on
any of (i) the operations, business, assets, properties, condition (financial or
otherwise) or prospects of any Loan Party or any one or more of its
Subsidiaries, (ii) the ability of any Loan Party to perform any of its
obligations under any Loan Document to which it is a party, (iii) the legality,
validity or enforceability of this Agreement or any other Loan Document, (iv)
the rights and remedies of the Lender under any Loan Document, or (v) the
validity, perfection or priority of a Lien in favor of the Lender on any of the
Collateral.
"Material Contract" means, with respect to any Loan Party,
each contract or agreement to which such Loan Party or its Subsidiary is a party
involving aggregate consideration payable to or by such Loan Party or such
Subsidiary of $50,000 or more (other than purchase orders in the ordinary course
of the business of such Loan Party) or otherwise material to the business,
operations, condition (financial or otherwise), performance, prospects or
properties of the Loan Parties or any Subsidiary.
"Moody's" means Xxxxx'x Investors Service, Inc. and any
successor thereto.
"Mortgage" means each Mortgage, Deed of Trust or Deed to
Secure Debt, in form and substance satisfactory to the Lender, made by the
Borrower or any of its Subsidiaries in favor of the Lender, securing the
Obligations and delivered to the Lender pursuant to Article IV or Section
6.01(b).
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA for which the Borrower or any ERISA Affiliate has
contributed to, or has been obligated to contribute to, at any time during the
preceding six (6) years.
"Net Cash Proceeds" means, (i) with respect to any Disposition
by any Person, the amount of cash received (directly or indirectly) from time to
time (whether as initial consideration or through the payment of deferred
consideration) by or on behalf of such Person or any of its Subsidiaries or
Affiliates, in connection therewith after deducting therefrom only (A) the
principal amount of any Indebtedness secured by any Lien permitted by Section
6.02(a) on any asset (other than Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such
Disposition (other than Indebtedness under this Agreement), (B) reasonable
expenses related thereto reasonably incurred by the Borrower or such Affiliate
in connection therewith, (C) transfer taxes paid by the Borrower or such
Affiliate
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in connection therewith and (D) net income taxes to be paid in connection with
such Disposition (after taking into account any tax credits or deductions and
any tax sharing arrangements and (ii) with respect to the issuance or incurrence
of any Indebtedness by any Person, or the sale or issuance by any Person of any
shares of its Capital Stock, the aggregate amount of cash received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of such Person or any of its
Subsidiaries or Affiliates in connection therewith after deducting therefrom
only reasonable brokerage commissions, underwriting fees and discounts, legal
fees and similar fees and commissions.
"Notes" means the Revolving Credit Note and the Term Note.
"Notice of Borrowing" has the meaning specified therefor in
Section 2.02.
"Obligations" means (i) the obligations of the Borrower to
pay, as and when due and payable (by scheduled maturity, required prepayment,
acceleration, demand or otherwise), all amounts from time to time owing by it in
respect of the Loan Documents, whether for principal, interest (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of the Borrower), fees, indemnification payments, expense
reimbursements or otherwise, and (ii) the obligations of the Borrower and any
other Loan Party to perform or observe all of its obligations from time to time
existing under the Loan Documents.
"Operating Lease Obligations" means all obligations for the
payment of rent for any real or personal property under leases or agreements to
lease, other than Capitalized Lease Obligations and Site Lease Obligations.
"Other Indebtedness" means, without duplication, (i) accounts
payable, (ii) deferred revenues and (iii) accrued expenses excluding interest
payable on the 11% Senior Notes due 2008, Capitalized Lease Obligations and
other obligations for interest payments.
"Overadvance" means the amount, if any, by which the
outstanding Revolving Loans exceed the lesser of (i) the Borrowing Base, or (ii)
the Revolving Loan Commitment.
"Participant Register" has the meaning specified therefor in
Section 10.07(b)(ii).
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Acquisition" has the meaning specified therefor in
Section 6.02(e).
"Permitted Holders" means Xxxxxxx X. Xxxxx or Xxxxx
Enterprises, L.P., Xxxxxxx X. XxXxxxxx, A. Xxxxx Xxxx, Xxxxxxx Xx Xxxxx or any
trust existing solely for the benefit of any of the above individuals and the
estate or any executor, administrator, conservator or other legal representative
of any of the above individuals, Mesirow Capital Partners VI, Mesirow Capital
Partners VII or any Affiliate and Caravelle Investment Fund LLC or any
Affiliate.
"Permitted Indebtedness" means:
(a) any Indebtedness owing to the Lender;
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(b) any other Indebtedness listed on Schedule 6.02(b),
and any Indebtedness representing the extension of maturity, refinancing or
modification of the terms thereof; provided, however, that (i) such extension,
refinancing or modification is pursuant to terms that are not less favorable to
the Borrower than the terms of the Indebtedness being extended, refinanced or
modified and (ii) after giving effect to the extension, refinancing or
modification, such Indebtedness is not greater than the amount of Indebtedness
outstanding immediately prior to such extension, refinancing or modification;
(c) Indebtedness evidenced by Capitalized Lease
Obligations entered into in order to finance Capital Expenditures made by the
Borrower or any of its Subsidiaries in accordance with the provisions of
Section 6.02(g), which indebtedness, when aggregated in the principal amount
of all indebtedness incurred under this clause (c) and clause (d) of this
definition, does not exceed $5,000,000 at any time outstanding;
(d) Indebtedness secured by Liens permitted by clause (d)
of the definition of "Permitted Lien"; and
(e) such other Indebtedness as the Lender may consent to
in writing from time to time (in its sole and absolute discretion).
"Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within six months from the date of
acquisition thereof; (ii) commercial paper, maturing not more than 270 days
after the date of issue rated P-1 by Moody's or A-1 by Standard & Poor's; (iii)
certificates of deposit maturing not more than 270 days after the date of issue,
issued by commercial banking institutions and money market or demand deposit
accounts maintained at commercial banking institutions, each of which is a
member of the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000; and (iv) repurchase agreements
having maturities of not more than 90 days from the date of acquisition which
are entered into with major money center banks included in the commercial
banking institutions described in clause (iii) above and which are secured by
readily marketable direct obligations of the Government of the United States of
America or any agency thereof, (v) money market accounts maintained with mutual
funds having assets in excess of $2,500,000,000, and (vi) tax exempt securities
rated A or better by Moody's or A+ or better by Standard & Poor's.
"Permitted Liens" means:
(a) Liens securing the Obligations;
(b) Liens for taxes, assessments and governmental charges
the payment of which is not required under Section 6.01(c);
(c) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and other similar Liens arising
(provided they are subordinate to the Lender's Liens on Collateral) in the
ordinary course of business and securing obligations (other than Indebtedness
for borrowed money) that are not overdue by more than 30 days or are being
contested in good faith and by appropriate proceedings promptly initiated and
diligently conducted,
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and a reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(d) Liens described on Schedule 6.02(a), but not the
extension of coverage thereof to other property or the modification of the terms
thereof or the increase of the Indebtedness secured thereby;
(e) deposits and pledges securing (i) obligations
incurred in respect of workers' compensation, unemployment insurance or other
forms of governmental insurance or benefits, (ii) the performance of bids,
tenders, leases, contracts (other than for the payment of money) and statutory
obligations or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits or pledges are incurred or otherwise arise in the ordinary
course of business and secure obligations not past due;
(f) easements, zoning restrictions and similar
encumbrances on real property and minor irregularities in the title thereto that
do not (i) secure obligations for the payment of money or (ii) materially impair
the value of such property or its use by the Borrower or any of its Subsidiaries
in the normal conduct of such Person's business;
(g) Liens on assets leased to Borrower pursuant to
Capitalized Leases securing Capitalized Lease Obligations with respect to such
assets; and
(h) such other Liens as the Lender may consent to in
writing from time to time (in its sole and absolute discretion).
"Person" means an individual, corporation, limited liability
company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or Governmental Authority.
"Pledge Agreement" means the Pledge and Security Agreement,
dated as of the date hereof, made by Parent, in favor of the Lender in respect
of the outstanding Capital Stock of Borrower, substantially in the form of
Exhibit D hereto.
"Post-Default Rate" means a rate of interest per annum equal
to the rate of interest otherwise in effect from time to time pursuant to the
terms of this Agreement plus 3%, or, if a rate of interest is not otherwise in
effect, the Reference Rate plus 6%.
"property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Rating Agencies" has the meaning specified therefor in
Section 2.07.
"Reference Bank" means Chase Manhattan Bank, N.A., its
successors or any other commercial bank designated by the Lender to the Borrower
from time to time.
"Reference Rate" means the rate of interest publicly announced
by the Reference Bank in New York, New York from time to time as its prime rate
or base rate. The prime rate or base rate is determined from time to time by the
Reference Bank as a means of pricing some loans
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to its borrowers and neither is tied to any external rate of interest or index
nor necessarily reflects the lowest rate of interest actually charged by the
Reference Bank to any particular class or category of customers. Each change in
the Reference Rate shall be effective from and including the date such change is
publicly announced as being effective.
"Register" has the meaning specified therefor in Section
10.07(b)(i).
"Registered Loan" has the meaning specified therefor in
Section 2.03(c).
"Registered Note" has the meaning specified therefor in
Section 2.03(c).
"Regulation T", "Regulation U" and "Regulation X" mean,
respectively, Regulations T, U and X of the Board or any successor, as the same
may be amended or supplemented from time to time.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, seeping,
migrating, dumping or disposing of any Hazardous Material (including the
abandonment or discarding of barrels, containers and other closed receptacles
containing any Hazardous Material) into the indoor or outdoor environment,
including ambient air, soil, surface or ground water.
"Remedial Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment; (ii) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Reportable Event" means an event described in Section 4043 of
ERISA (other than an event not subject to the provision for 30-day notice to the
PBGC under the regulations promulgated under such Section).
"Revolving Credit Commitment" means the commitment of the
Lender to make Revolving Loans to the Borrower in an aggregate principal amount
at any time outstanding not to exceed the lesser of (i) $7,000,000.00 and (ii)
the Borrowing Base, as such amount may be terminated or reduced from time to
time in accordance with the terms of this Agreement.
"Revolving Credit Note" means a promissory note of the
Borrower, substantially in the form of Exhibit A, made payable to the order of
the Lender, evidencing the Indebtedness resulting from the making by the Lender
to the Borrower of Revolving Loans and delivered to the Lender pursuant to
Article IV, as such promissory note may be amended, supplemented, restated,
modified or extended from time to time, and any promissory note or notes issued
in exchange or replacement therefor. The term "Revolving Credit Note" shall
include any Registered Note evidencing the Revolving Loan and delivered pursuant
to Section 2.03(c).
"Revolving Loan" means a loan made by the Lender to the
Borrower pursuant to Section 2.01(b).
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"Revolving Loan Commitment Termination Date" means the third
anniversary of the Effective Date, or such earlier date on which the Revolving
Credit Commitment is terminated in full pursuant to Section 2.05 or 8.01.
"SEC" means the Securities and Exchange Commission or any
other similar or successor agency of the Federal government administering the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"Securitization" has the meaning specified therefor in Section
2.07.
"Securitization Party" the meaning specified therefor in
Section 2.07.
"Security Agreement" means the Security Agreement made by the
Borrower in favor of the Lender, substantially in the form of Exhibit C.
"Seller" means any Person that sells Capital Stock or other
property or assets to the Borrower or a Subsidiary of the Borrower in a
Permitted Acquisition.
"Senior Notes" has the meaning specified therefor in the
preamble hereto.
"Site Leases" means those leases of real property upon which
billboard structures are erected.
"Site Lease Obligations" means all obligations for the payment
of rent for any real property pursuant to the Site Leases.
"Solvent" means, with respect to any Person on a particular
date, that on such date (i) the fair value of the property of such Person is not
less than the total amount of liabilities of such Person, (ii) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its existing debts
as they become absolute and matured, (iii) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business, (iv) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Standard & Poor's" means Standard & Poor's Ratings Services,
division of The XxXxxx-Xxxx Companies, Inc. and any successor thereto.
"Subsidiary" means, with respect to any Person at any date,
any corporation, limited or general partnership, limited liability company,
trust, association or other entity (i) the accounts of which would be
consolidated with those of such Person in such Person's consolidated financial
statements if such financial statements were prepared in accordance with GAAP or
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(ii) of which more than 50% of (A) the outstanding Capital Stock having (in the
absence of contingencies) ordinary voting power to elect a majority of the board
of directors of such corporation, (B) the interest in the capital or profits of
such partnership or limited liability company or (C) the beneficial interest in
such trust or estate is, at the time of determination, owned or controlled,
directly or indirectly through one or more intermediaries, by such Person.
"Term Loan" means the loan made by the Lender to the Borrower
on the Effective Date pursuant to Section 2.01(a).
"Term Loan Commitment" means the commitment of the Lender to
make the Term Loan to the Borrower in the principal amount not to exceed the
lesser of (i) $13,000,000 and (ii) the difference between thirty percent (30%)
of the quick sale of all of the Borrower's outdoor media business and operations
as determined by a third party and the Revolving Credit Commitment.
"Term Note" means the promissory note of the Borrower,
substantially in the form of Exhibit B, made payable to the order of the Lender,
evidencing the Indebtedness resulting from the making by the Lender to the
Borrower of the Term Loan and delivered to the Lender pursuant to Article IV, as
such promissory note may be amended, supplemented, restated, modified or
extended from time to time, and any promissory note or notes issued in exchange
or replacement therefor. The term "Term Note" shall include any Registered Note
evidencing the Term Loan and delivered pursuant to Section 2.03(c).
"Termination Event" means (i) a Reportable Event with respect
to any Employee Plan, (ii) any event that causes the Borrower or any of its
ERISA Affiliates to incur liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971 or 4975 of
the Code, (iii) the filing of a notice of intent to terminate an Employee Plan
or the treatment of an Employee Plan amendment as a termination under Section
4041 of ERISA, (iv) the institution of proceedings by the PBGC to terminate an
Employee Plan, or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Employee Plan.
"WARN" has the meaning specified therefor in Section 5.01(j).
SECTION 1.02. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise, (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and
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Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights. References in this Agreement to "determination" by
the Lender include good faith estimates by the Lender (in the case of
quantitative determinations) and good faith beliefs by the Lender (in the case
of qualitative determinations).
SECTION 1.03. Accounting and Other Terms. Unless otherwise
expressly provided herein, each accounting term used herein shall have the
meaning given it under GAAP applied on a basis consistent with those used in
preparing the Financial Statements. All terms used in this Agreement which are
defined in Article 8 or Article 9 of the Uniform Commercial Code in effect in
the State of New York from time to time and that are not otherwise defined
herein shall have the same meanings herein as set forth therein.
SECTION 1.04. Time References. Unless otherwise indicated
herein, all references to time of day refer to Eastern standard time or Eastern
daylight saving time, as in effect in New York City on such day. For purposes of
the computation of a period of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding"; provided, however, that with respect to a
computation of fees or interest payable to the Lender, such period shall in any
event consist of at least one full day.
ARTICLE II
THE LOANS
SECTION 2.01. Commitments. (a) The Lender agrees, on the terms
and conditions hereinafter set forth, to make a single loan (the "Term Loan") to
the Borrower on the Effective Date in an amount not to exceed the amount of the
Term Loan Commitment. Any principal amount of the Term Loan which is repaid or
prepaid by the Borrower may not be reborrowed.
(b) The Lender agrees, on the terms and conditions hereinafter
set forth, to make loans (the "Revolving Loans") to the Borrower from time to
time on any Business Day during the period commencing on the date hereof and
ending on, but excluding, the Revolving Loan Commitment Termination Date, in an
aggregate principal amount at any time outstanding not to exceed the amount of
the Revolving Loan Commitment. Within the limit of the amount of the Revolving
Credit Commitment the Borrower may borrow, prepay and reborrow Revolving Loans
pursuant to this Article II.
SECTION 2.02. Making the Loans. The Borrower shall give the
Lender prior telephone notice (immediately confirmed in writing, in
substantially the form of Exhibit E hereto (a "Notice of Borrowing")), not later
than 9:00 a.m. (New York City time) five Business Days prior to the date of the
proposed Loan. Such Notice of Borrowing shall be irrevocable and shall specify
(i) the principal amount of the proposed Loan, (ii) in the case of Loans
requested on the Effective Date, such Loan must be a Term Loan, unless the
Borrower has requested Loans in
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excess of the Term Loan Commitment in which case the Borrower may request Term
Loans in an amount equal to the Term Loan Commitments and the balance of the
requested Loans may be Revolving Loans, (iii) the use of the proceeds of such
proposed Loan and (iv) the proposed borrowing date, which must be a Business
Day, and, with respect to the Term Loan, must be the Effective Date. Any Notice
of Borrowing for any Loan after the Effective Date, the proceeds of which will
be used to finance a Permitted Acquisition, shall include copies of the
agreements, instruments and other documents specified in Section 6.02(e)(v)(B).
The Lender may act without liability upon the basis of written, telecopied or
telephonic notice believed by the Lender in good faith to be from the Borrower
(or from any Authorized Officer thereof designated in writing purportedly from
the Borrower to the Lender). The Borrower hereby waives the right to dispute the
Lender's record of the terms of any such telephonic Notice of Borrowing. Each
Notice of Borrowing shall be irrevocable and binding on the Borrower. Each
Revolving Loan shall be made in a minimum amount of $500,000 and shall be in an
integral multiple of $500,000. No more than one Revolving Loan shall be made in
any week. The Lender will make the proceeds of such Loan available to the
Borrower on the day of the proposed Loan by causing an amount, in immediately
available funds, to be deposited in an account designated by the Borrower to the
Lender at a commercial bank reasonably satisfactory to the Lender.
SECTION 2.03. Notes; Repayment of Loans. (a) The Term Loan
shall be evidenced by a single Term Note, duly executed on behalf of the
Borrower, dated the Effective Date, and delivered to and made payable to the
order of the Lender in a principal amount equal to the amount of the Term Loan
Commitment. All Revolving Loans made by the Lender to the Borrower shall be
evidenced by a single Revolving Credit Note, duly executed on behalf of the
Borrower, dated the Effective Date, and delivered to and made payable to the
order of the Lender in a principal amount equal to $7,000,000.
(b) The outstanding principal of each Loan shall
be due and payable on the Final Maturity Date.
(c) The Borrower agrees to record each Loan on
the Register referred to in Section 10.07(c). Each Loan recorded on the Register
(the "Registered Loan") may not be evidenced by promissory notes other than the
Term Note or the Revolving Credit Note, each of which is a Registered Note (as
defined below). Upon the registration of any Loan, any promissory note (other
than a Registered Note) evidencing the same shall be null and void and shall be
returned to the Borrower. The Borrower agrees, at the request of the Lender, to
execute and deliver to Lender a promissory note in registered form to evidence
such Registered Loan (i.e. containing the registered note language set forth in
Exhibits A and B hereto) and registered as provided in Section 10.07(c) (a
"Registered Note"), dated the date hereof, payable to the Lender and otherwise
duly completed. Once recorded on the Register, the Loan or Loans evidenced by
such Note may not be removed from the Register so long as it remains
outstanding, and a Registered Note may not be exchanged for a promissory note
that is not a Registered Note.
SECTION 2.04. Interest.
(a) Loans. The Term Loan and each Revolving
Loan shall bear interest on the principal amount thereof from time to time
outstanding, from the date of such Loan until such principal amount becomes due,
at a rate per annum equal to:
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(i) in the case of the Term Loans, the greater of (y) the
Reference Rate plus three percent (3.00%) and (z) eleven percent (11.00%).
(ii) in the case of Revolving Loans, the greater of (y) the
Reference Rate plus two percent (2.00%) and (z) ten percent (10.00%).
(b) Default Interest. To the extent permitted
by law, upon the occurrence and during the continuance of an Event of Default,
the principal of, and all accrued and unpaid interest on, all Loans, and all
fees, indemnities or any other Obligations of the Borrower under this Agreement,
the Notes and other Loan Documents shall bear interest, from the date such Event
of Default occurred until such Event of Default is cured or waived in writing in
accordance herewith, at a rate per annum equal at all times to the Post-Default
Rate.
(c) Interest Payment. Interest on each Loan
shall be payable monthly, in arrears, on the first day of each month, commencing
on the first day of the month following the month in which such Loan is made and
at maturity (whether upon demand, by acceleration or otherwise). Interest at the
Post-Default Rate shall be payable on demand. The Borrower hereby authorizes the
Lender to, and the Lender may, from time to time, charge the Loan Account
pursuant to Section 3.01 with the amount of any interest payment due hereunder.
(d) General. All interest shall be computed on
the basis of a year of 360 days for the actual number of days, including the
first day but excluding the last day, elapsed.
SECTION 2.05. Reduction of Commitment; Prepayment of Loans.
(a) Reduction of Revolving Credit Commitment.
The Borrower may, without premium or penalty, reduce the Revolving Credit
Commitment to an amount (which may be zero) not less than the sum of (i) the
aggregate unpaid principal amount of all Revolving Loans then outstanding and
(ii) the aggregate principal amount of all Revolving Loans not yet made as to
which a Notice of Borrowing has been given by the Borrower under Section 2.02.
Each such reduction shall be in an amount which is an integral multiple of
$100,000, shall be made by providing not less than three Business Days' prior
written notice to the Lender and shall be irrevocable. Once reduced, the
Revolving Credit Commitment may not be increased.
(b) Optional Prepayment. The Borrower may, upon
at least three Business Days' prior written notice to the Lender, prepay without
penalty the principal of any Revolving Loan, in whole or in part subject to
prepayment premiums payable in connection with the termination of this
Agreement. In the case of a prepayment of all or any portion of the Term Loan or
in the event Borrower makes an optional prepayment of Revolving Loans in
connection with the Termination of this Agreement, such prepayment shall be
made, (i) from the Effective Date until the first anniversary of the Effective
Date, with a premium in an amount equal to 3.00% of the greater of (A) the
initial Term Loan Commitment and (B) the principal amount of Loans so prepaid,
(ii) from the first anniversary of the Effective Date until the second
anniversary of the Effective Date, with a premium in an amount equal to 2.00% of
the greater of (A) the initial Term Loan Commitment and (B) the principal amount
of Loans so prepaid, and (iii) from the second anniversary of the Effective Date
until the date that is six months after the second anniversary of the Effective
Date, with a premium in an amount equal to 1.00% of the
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greater of (A) the initial Term Loan Commitment and (B) the principal amount of
Loans so prepaid. Each prepayment made pursuant to this clause (b) shall be
accompanied by the payment of accrued interest to the date of such payment on
the amount prepaid.
(c) Mandatory Prepayment.
(i) At any time when an Overadvance exists,
the Borrower shall immediately prepay the Revolving Loans to the full extent of
such Overadvance. On each day that any Revolving Loans are outstanding, the
Borrower shall hereby be deemed to represent and warrant to the Lender that the
Borrowing Base calculated as of such day equals or exceeds the aggregate
principal amount of all Revolving Loans outstanding on such day.
(ii) The Borrower shall immediately
prepay the outstanding principal amount of the Term Loan in the event that the
Revolving Credit Commitment is terminated by the Lender for any reason.
(iii) Dispositions; Casualty Events;
Reinvestment. Immediately upon any Disposition by the Borrower or any of its
Subsidiaries pursuant to Section 6.02(d)(ii), the Borrower shall prepay the
outstanding principal of the Term Loan (or, if the Term Loan has been paid in
full, the Borrower shall prepay the Revolving Loans and permanently reduce the
Revolving Credit Commitment by the amount of such prepayment) in an amount equal
to 100% of the Net Cash Proceeds received by the Borrower or its Subsidiaries in
connection with such Disposition. Upon the loss, destruction or taking by
condemnation of any Collateral, the Borrower shall immediately prepay the
outstanding principal of the Term Loan (or, if the Term Loan has been paid in
full, the Revolving Loans and permanently reduce the Revolving Credit Commitment
by the amount of such prepayment) in an amount equal to 100% of the proceeds
received by the Borrower or its Subsidiaries, in connection therewith, net of
any reasonable expenses incurred in collecting such net proceeds.
Notwithstanding the foregoing and if no Event of Default has occurred or is
continuing, the Borrower may reinvest the Net Cash Proceeds of any Disposition
or proceeds from any loss, destruction or condemnation in lieu of prepaying any
Loan so long as each of the following conditions is satisfied: (i) the Net Cash
Proceeds are used solely for the purchase of assets used in the business within
270 days of the receipt of such Net Cash Proceeds; (ii) Borrower shall give the
Lender advance written notice that it intends to reinvest such Net Cash Proceeds
in accordance with this subsection (iii); (iii) Lender shall receive a fully
perfected, first priority security interest, free and clear of all Liens, in any
assets purchased in accordance with this subsection (iii); and (iv) until such
Net Cash Proceeds are reinvested, all such Net Cash Proceeds shall be held in a
bank account or securities account in which the Lender has a fully perfected,
first priority security interest and has received a control agreement, in form
and substance satisfactory to the Lender, with respect thereto (the "Net Cash
Proceeds Account"); provided; however, that Borrower shall not be obligated to
deposit any such Net Cash Proceeds in a Net Cash Proceeds Account (but shall
still deposit such Net Cash Proceeds in the Concentration Account) until the
aggregate Net Cash Proceeds received in any twelve (12) month period exceed
$1,000,000, so long as Borrower provides written notice to Lender of receipt and
any reinvestment of such Net Cash Proceeds; provided, further, however, that if
at any time Net Cash Proceeds received in any twelve (12) month period exceed
$1,000,000, Borrower shall be obligated to deposit the full amount of such Net
Cash Proceeds in a Net Cash Proceeds Account, except those Net Cash Proceeds
that are used to purchase assets in accordance with clause (i) of this clause
(iii).
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(iv) Upon the issuance or incurrence by
the Borrower or any of its Subsidiaries of any Indebtedness representing
Permitted Indebtedness under clause (e) of the definition of Permitted
Indebtedness or the sale or issuance by the Borrower or any of its Subsidiaries
of any shares of its Capital Stock, the Borrower shall immediately prepay the
outstanding amount of the Term Loan in an amount equal to 100% of the Net Cash
Proceeds received by the Borrower or any of its Subsidiaries in connection
therewith. The provisions of this subsection (c)(vii) shall not be deemed to be
implied consent to any such issuance, incurrence or sale otherwise prohibited by
the terms and conditions hereof.
(d) Application of Payments. Unless application
of the prepayments is described or referenced in subsection (c) above, each
prepayment pursuant to subsection (c) above shall be applied, first, to the Term
Loan, and second, to the Revolving Loans. Each such prepayment of the Revolving
Loans shall be accompanied by a permanent reduction of the Revolving Credit
Commitments in an amount equal to such prepayment.
(e) Interest and Fees. Any prepayment made
pursuant to this Section 2.05 shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment, and if such prepayment
would reduce the amount of the outstanding Loans to zero at a time when the
Revolving Credit Commitment has been terminated, such prepayment shall be
accompanied by the payment of the fees accrued to such date pursuant to Section
2.06.
(f) Cumulative Prepayments. Except as otherwise
expressly provided in this Section 2.05, payments with respect to any subsection
of this Section 2.05 are in addition to payments made or required to be made
under any other subsection of this Section 2.05.
(g) Term of Agreement. Subject to the right of
the Lender to cease making Loans to Borrower upon or after the occurrence of any
Default or Event of Default, this Agreement shall be in effect for the period
commencing on the Effective Date and ending on the Final Maturity Date, unless
sooner terminated as provided in Section 2.05(h).
(h) Termination of Agreement by Lender. Lender
may terminate this Agreement at any time without notice upon or after the
occurrence of an Event of Default.
(i) Effect of Termination. All of the
Obligations shall be immediately due and payable upon the termination date
stated in any notice of termination of this Agreement. All undertakings,
agreements, covenants, warranties, and representations of the Borrower and the
other Loan Parties contained in the Loan Documents shall survive any such
termination, and, notwithstanding such termination, Lender shall retain its
Liens in the Collateral, and the Lender shall retain all of its rights and
remedies under the Loan Documents, until the Borrower has paid to Lender, all of
Borrowers Obligations to Lender, in full, in immediately available funds,
together with the applicable termination charge, if any. Notwithstanding the
payment in full of the Obligations, Lender shall not be required to terminate
its security interests in the Collateral unless, with respect to any loss or
damage the Lender may incur as a result of dishonored checks or other items of
payment received by the Lender from the Borrower or any Account Debtor and
applied to the Obligations, Lender shall, at its option (a) have received a
written agreement, executed by the Borrower and by any Person whose loans or
other advances to the Borrower are used in whole or in part to satisfy the
Obligations, indemnifying the Lender from any such loss or damage, or (b)
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have retained such monetary reserves, and Lender shall have retained such Liens
on the Collateral, for such period of time as Lender, in its reasonable
discretion, may deem necessary to protect the Lender from any such loss or
damage.
SECTION 2.06. Fees.
(a) Funding Fee. On or prior to the Effective
Date, the Borrower shall pay to the Lender a non-refundable closing fee (the
"Funding Fee") equal to $675,000.
(b) Loan Servicing Fee. From and after the
Effective Date and until the Final Maturity Date, the Borrower shall pay to the
Lender a non-refundable loan servicing fee (the "Loan Servicing Fee") equal to
$25,000 each quarter, payable quarterly in advance on the first day of each
April, July, October and January of each year, commencing April 1, 2001, and on
the date the Loans shall be paid in full.
(c) Unused Line Fee. From and after the
Effective Date and until the Final Maturity Date, the Borrower shall pay to the
Lender a non-refundable monthly unused line fee equal to one-half of one percent
(0.50%) per annum on the average unused portion of the Revolving Loan
Commitment, payable monthly in arrears on the first day of each month,
commencing April 1, 2001 and on the Final Maturity Date with the first and last
payments being made for the pro rata portion of the month for which the
Revolving Credit Commitment was available.
(d) Audit, Appraisal, Maintenance and Valuation
Charges. Borrower shall pay to the Lender audit, appraisal, maintenance and
valuation fees and charges as follows (i) a fee of $1,500 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Lender and (ii) the actual charges paid or incurred by
Lender if it elects to employ the services of one or more third Persons to
perform financial audits of Borrower, to appraise the Collateral, or any portion
thereof, or to assess Borrower's business valuation; provided, however, that
unless there has been an Event of Default, Borrower shall be required to pay for
financial audits no more than two (2) times per year and appraisals no more than
once per year.
SECTION 2.07. Securitization. The Borrower hereby acknowledges
that the Lender and any of its Affiliates may sell or securitize the Loans (a
"Securitization") through the pledge of the Loans as collateral security for
loans to the Lender or its Affiliates or through the sale of the Loans or the
issuance of direct or indirect interests in the Loans, which loans to the Lender
or its Affiliate or direct or indirect interests will be rated by Xxxxx'x,
Standard & Poor's or one or more other rating agencies (the "Rating Agencies").
The Borrower shall cooperate with the Lender and its Affiliates to effect the
Securitization, including, without limitation, by (a) amending this Agreement
and the other Loan Documents, and executing such additional documents, as
requested by the Lender, any of the Rating Agencies, or any party providing
credit support or otherwise participating in the Securitization (collectively,
"Securitization Parties"), provided that (i) any such amendment or additional
documentation does not impose material additional costs on the Borrower and (ii)
any such amendment or additional documentation does not materially adversely
affect the rights, or materially increase the obligations, of the Borrower under
the Loan Documents or change or affect in a manner adverse to the Borrower the
financial
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terms of the Loans, (b) providing such information as may be reasonably
requested by the Lender, any Rating Agency or other Securitization Party in
connection with the rating of the Loans or the Securitization, (c) providing in
connection with any rating of the Loans, as applicable, a certificate (i)
certifying that the Borrower has examined specified sections of the Credit
Review Memorandum prepared by the Lender with respect to the Loans, and that
such sections of the Credit Review Memorandum do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading, (ii) agreeing to indemnify the Lender and any of its
Affiliates and other Securitization Parties for any losses, claims, damages or
liabilities (the "Liabilities") to which the Lender, its Affiliates or such
Securitization Parties may become subject insofar as the Liabilities arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such sections or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and such
indemnity shall survive any transfer by the Lender or its successors or assigns
of the Loans and (iii) agreeing to reimburse the Lender and any of its
Affiliates and other Securitization Parties for any legal or other expenses
reasonably incurred by such Persons in connection with defending the
Liabilities; (d) causing to be rendered such customary opinion letters as shall
be requested by the Lender, the Rating Agencies or other Securitization Parties;
(e) making such representations, warranties and covenants with respect to the
Loan Parties, and their property, as may be requested by the Rating Agencies or
other Securitization Parties, but which do not materially adversely affect the
rights, or materially increase the obligations, of the Borrower or other Loan
Parties under the Loan Documents; and (f) providing such information regarding
the Borrower and its Subsidiaries and Affiliates or other Loan Parties, the
Collateral and other property, assets and business of the Borrower (including
appraisals and valuations) as may be requested by the Rating Agencies and other
Securitization Parties.
ARTICLE III
PAYMENTS AND OTHER COMPENSATION
SECTION 3.01. Payments; Computations and Statements. The
Borrower will make each payment under this Agreement, the Notes and the other
Loan Documents (whether of principal, interest, fees, expense reimbursements or
otherwise) not later than 11:00 a.m. (New York City time) on the day when due,
in lawful money of the United States of America and in immediately available
funds, to the Lender at the Lender Account. All such payments received by the
Lender after 11:00 a.m. (New York City time) on any Business Day will be
credited to the Loan Account on the next succeeding Business Day. All such
payments shall be made by the Borrower without defense, set-off or counterclaim
to the Lender. The Borrower hereby authorizes the Lender to, and the Lender may,
from time to time charge the Loan Account with all Obligations and any other
amount due and payable under any Loan Document to which the Borrower is a party,
whether or not any Event of Default or Default shall have occurred or be
continuing or whether any of the conditions precedent in Section 4.02 have been
satisfied. Any amount charged to the Loan Account shall be deemed a Revolving
Loan hereunder made by the Lender to the Borrower. The Borrower confirms that
any charges which the Lender may so make to the Loan Account as herein provided
will be made as an accommodation to the Borrower and
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solely at the Lender's discretion. It is expressly understood and agreed by the
Borrower that the Lender shall have no responsibility to inquire into the
correctness of the apportionment, allocation or disposition of the Loans made to
the Borrower or any fees, costs or expenses for which the Borrower is obligated
under this Agreement. Whenever any payment to be made under any such Loan
Document shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be, provided that, if any such payment is made by a charge to the
Loan Account, such charge may be made by the Lender on any day, whether or not a
Business Day. All computations of interest and fees shall be made by the Lender
on the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fee is payable. Each determination by the Lender of an interest
rate, fees or expense reimbursement hereunder shall be conclusive and binding
for all purposes in the absence of manifest error.
SECTION 3.02. All Loans to Constitute One Obligation. The
Loans shall constitute one general Obligation of the Borrower, and shall be
secured by Lender's Lien upon all of the Collateral.
SECTION 3.03. Loan Account; Statements of Account. Lender
shall enter all Loans as debits to the Loan Account and also shall record in the
Loan Account all payments made by the Borrower on any Obligations and all
proceeds of Collateral which are finally paid to the Lender, and may record
therein, in accordance with its customary practices, other debits and credits,
including interest and all charges and expenses properly chargeable to the
Borrower. Lender will account to the Borrower monthly with a statement of Loans,
charges, and payments made pursuant to this Agreement, and such accounting
rendered by Lender shall be deemed final, binding and conclusive upon the
Borrower unless Lender is notified by the Borrower in writing to the contrary
within 30 days of the date each accounting is mailed to the Borrower. Such
notice only shall be deemed an objection to those items specifically objected to
therein.
ARTICLE IV
CONDITIONS TO LOANS
SECTION 4.01. Conditions Precedent to Effectiveness and the
Initial Loan. The obligation of the Lender to make the initial Loan is subject
to the fulfillment, in a manner satisfactory to the Lender, of each of the
following conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall
have paid on or before the date of this Agreement all fees, costs, expenses and
taxes then payable pursuant to Sections 2.06 and 10.04 (it being understood that
the Expense Deposit will be applied to reduce the amount of such fees, costs,
expenses and taxes).
(b) Representations and Warranties; No Event of
Default. The following statements shall be true and correct: (i) the
representations and warranties contained in Article V and in each other Loan
Document, certificate or other writing delivered to the Lender pursuant hereto
or thereto on or prior to the Effective Date are true and correct on and as of
the Effective Date as though made on and as of such date and (ii) no Default or
Event of Default shall
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have occurred and be continuing on the Effective Date or would result from this
Agreement or the other Loan Documents becoming effective in accordance with its
or their respective terms, both immediately before and immediately after giving
effect to the initial Loan.
(c) Legality. The making of the initial Loan
shall not contravene any law, rule or regulation applicable to the Lender, the
Borrower or any other Loan Party.
(d) Delivery of Documents. The Lender shall
have received on or before the Effective Date the following, each in form and
substance satisfactory to the Lender and, unless indicated otherwise, dated the
Effective Date:
(i) the Term Note payable to the order
of the Lender, duly executed by the Borrower;
(ii) the Revolving Credit Note payable to
the order of the Lender, duly executed by the Borrower;
(iii) the Security Agreement, duly
executed by the Borrower and Parent;
(iv) the Concentration Account Agreement,
duly executed by each of the parties thereto;
(v) a Mortgage on the Tifton, Georgia
facility, duly executed and acknowledged by the Borrower;
(vi) evidence of the recording of the
Mortgage in such office or offices as may be necessary or, in the opinion of the
Lender, desirable to perfect each Lien purported to be created thereby or to
otherwise protect the rights of the Lender thereunder;
(vii) an estoppel certificate duly
executed by each Person (other than the Lender) having a Lien on the Facility as
of the Effective Date, certifying and covenanting as to such matters relating
thereto as the Lender may reasonably request;
(viii) a Pledge Agreement, duly executed by
the Parent, together with (A) such original stock certificates or other
certificated securities or instruments representing all of the Capital Stock of
the Borrower owned by the Guarantor, (B) undated stock powers executed in blank
with signature guaranteed, (C) such opinion of counsel and such approving
certificate of the issuer of such Capital Stock as the Lender may reasonably
request with respect to complying with any legend on any such certificate or any
other matter relating to such Capital Stock, and (D) all promissory notes
evidencing Indebtedness owing to the Borrower or the Guarantor in the principal
amount exceeding $10,000, duly endorsed in blank, and Borrower shall use its
reasonable best efforts to obtain an estoppel certificate after the Effective
Date from the maker of each such promissory note;
(ix) appropriate financing statements on
Form UCC-1, duly executed by the Borrower and duly filed in such office or
offices as may be necessary or, in the opinion of the Lender, desirable to
perfect the security interests purported to be created by the Security
Agreement, the Pledge Agreement and the Mortgages;
(x) certified copies of request for
copies of information on Form UCC-11, listing all effective financing statements
which name as debtor any Loan Party or
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any of its Subsidiaries and which are filed in the offices referred to in
paragraph (ix) above, together with copies of such financing statements, none of
which, except as otherwise agreed in writing by the Lender, shall cover any of
the Collateral and the results of searches for any tax Lien and judgment Lien
filed against such Person or its property, which results, except as otherwise
agreed to in writing by the Lender, shall not show any such Liens;
(xi) a copy of the resolutions of each
Loan Party, certified as of the Effective Date by the Secretary of such Loan
Party thereof, authorizing (A) the borrowings hereunder and the transactions
contemplated by the Loan Documents to which such Loan Party is or will be a
party, and (B) the execution, delivery and performance by such Loan Party of
each Loan Document and the execution and delivery of the other documents to be
delivered by such Person in connection herewith and therewith;
(xii) a certificate of the Secretary of
each Loan Party, certifying the names and true signatures of the representatives
of such Loan Party authorized to sign each Loan Document to which such Loan
Party is or will be a party and the other documents to be executed and delivered
by such Loan Party in connection herewith and therewith, together with evidence
of the incumbency of such authorized officers;
(xiii) a certificate of the appropriate
official(s) of the state of organization and each state of foreign qualification
of each Loan Party certifying as to the subsistence in good standing of, and the
payment of taxes by, such Loan Party in such states, together with confirmation
by telephone or telegram (where available) on the Effective Date from such
official(s) as to such matters;
(xiv) a true and complete copy of the
charter, certificate of formation, certificate of limited partnership or other
publicly filed organizational document of each Loan Party certified as of a date
not more than 30 days prior to the Effective Date by an appropriate official of
the state of organization of such Loan Party;
(xv) a copy of the charter and by-laws,
limited liability company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party, together with
all amendments thereto, certified as of the Effective Date by the Secretary of
such Loan Party;
(xvi) an opinion of St. Xxxx & Xxxxx LLC,
counsel to the Loan Parties, substantially in the form of Exhibit F and as to
such other matters as the Lender may reasonably request;
(xvii) a certificate of an Authorized
Officer of the Borrower, certifying as to the matters set forth in subsection
(b) of this Section 4.01;
(xviii) a copy of the Financial Statements,
together with a certificate of an Authorized Officer of the Borrower setting
forth all existing Indebtedness, pending or threatened litigation or claims and
other contingent liabilities of the Borrower and its Subsidiaries;
(xix) evidence of the insurance coverage
required by Section 6.01 and the terms of the Mortgage and the Security
Agreement and such other insurance coverage with respect to the business and
operations of the Borrower and its Affiliates as the Lender may reasonably
request, in each case, where requested by the Lender, with such indorsements as
to the named insureds or loss payees thereunder as the Lender may request and
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providing that such policy may be terminated or canceled (by the insurer or the
insured thereunder) only upon 30 days' prior written notice to the Lender and
each such named insured or loss payee, together with evidence of the payment of
all premiums due in respect thereof for such period as the Lender may request;
(xx) a certificate of the chief financial
officer of the Borrower, setting forth in reasonable detail the calculations
required to establish compliance with each of the financial covenants contained
in Section 6.03;
(xxi) a certificate of an Authorized
Officer of the Borrower, certifying the names and true signatures of the persons
that are authorized to provide Notices of Borrowings and all other notices under
this Agreement and the other Loan Documents;
(xxii) copies of the Material Contracts as
in effect on the Effective Date, certified as true and correct copies thereof by
an Authorized Officer of the Borrower, together with a certificate of an
Authorized Officer of the Borrower stating that such agreements remain in full
force and effect and that the Borrower and its Subsidiaries have not breached or
defaulted in any of their obligations under such agreements;
(xxiii) a termination and release agreement
with respect to the Existing Credit Agreement and all related documents, duly
executed by the Borrower and the Existing Lender, together with UCC-3
termination statements for all UCC-1 financing statements filed by the Existing
Lender and covering any portion of the Collateral;
(xxiv) consents to the transactions
contemplated by this Agreement from Mesirow Capital Partners and Caravelle
Investment Fund LLC;
(xxv) an opinion of McDowell, Rice, Xxxxx
& Xxxx, P.C., special Kansas counsel to the Loan Parties, substantially in the
form of Exhibit G hereto;
(xxvi) an opinion of Xxxxx & Xxxxx, special
Georgia counsel to the Loan Parties, substantially in the form of Exhibit H
hereto; and
(xxv) such other agreements, instruments,
approvals, opinions and other documents, each satisfactory to the Lender in form
and substance, as the Lender may reasonably request.
(e) Material Adverse Change. The Lender shall
have determined, in its sole judgment, that no material adverse change shall
have occurred in the business, operations, condition (financial or otherwise),
properties or prospects of the Borrower or any Affiliate of the Borrower since
December 31, 1999;
(f) Proceedings; Receipt of Documents. All
proceedings in connection with the making of the initial Loan and the other
transactions contemplated by this Agreement and the other Loan Documents, and
all documents incidental hereto and thereto, shall be satisfactory to the Lender
and its counsel, and the Lender and such counsel shall have received all such
information and such counterpart originals or certified or other copies of such
documents as the Lender or such counsel may reasonably request.
(g) Management Reference Checks. The Lender
shall have received satisfactory reference checks for key management of the
Borrower.
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(h) Due Diligence. The Lender shall have
completed its due diligence with respect to each Loan Party and its Subsidiaries
and the results thereof shall be acceptable to the Lender, in its sole and
absolute discretion. Without limiting the foregoing, the Lender shall have
received (i) an appraisal of the Collateral, dated not earlier than 30 days
prior to the Effective Date, from such appraisal firm as selected by Lender, and
such appraisal and the results thereof shall be acceptable to the Lender, in its
sole and absolute discretion; (ii) the Borrower's business plan, which shall be
acceptable to the Lender, in its sole and absolute discretion.
(i) Availability. The Borrower shall have
availability under the Revolving Credit Commitment and cash on hand of not less
than $3,000,000 in the aggregate, after giving pro forma effect to the payment
of all financing fees and expenses related to the transactions contemplated by
this Agreement and provided the Borrower's accounts payable are at a level and
in a condition reasonably satisfactory to Lender.
(j) Rating. The Rating Agencies shall have
completed their preliminary review of the Loans, and the preliminary rating
estimate therefor shall be satisfactory to the Lender in its sole and absolute
discretion.
SECTION 4.02. Conditions Precedent to Subsequent Loans. The
obligation of the Lender to make any Loan (subsequent to the initial Loan) is
subject to the fulfillment, in a manner satisfactory to the Lender, of each of
the following conditions precedent:
(a) Payment of Fees, Etc. The Borrower shall
have paid all fees, costs, expenses and taxes then payable by the Borrower
pursuant to this Agreement and the other Loan Documents, including, without
limitation, Sections 2.06 and 10.04 hereof.
(b) Representations and Warranties; No Event of
Default. The following statements shall be true and correct, and the submission
by the Borrower to the Lender of a Notice of Borrowing with respect to such
Loan, and the Borrower's acceptance of the proceeds of such Loan, shall each be
deemed to be a representation and warranty by the Borrower on the date of such
Loan that: (i) the representations and warranties contained in Article V and in
each other Loan Document, certificate or other writing delivered to the Lender
pursuant hereto or thereto on or prior to the date of such Loan are true and
correct on and as of such date as though made on and as of such date, (ii) at
the time of and after giving effect to the making of such Loan and the
application of proceeds thereof, no Default or Event of Default has occurred and
is continuing or would result from the making of the Loan to be made on such
date and (iii) the conditions set forth in this Section 4.02 have been satisfied
as of the date of such request.
(c) Legality. The making of such Loan shall not
contravene any law, rule or regulation applicable to the Lender, the Borrower or
any other Loan Party.
(d) Borrowing Notice. The Lender shall have
received a Notice of Borrowing pursuant to Section 2.02.
(e) Delivery of Documents. The Lender shall
have received such other agreements, instruments, approvals, opinions and other
documents, each in form and substance satisfactory to the Lender, as the Lender
may reasonably request.
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(f) Proceedings; Receipt of Documents. All
proceedings in connection with the making of such Loan and the other
transactions contemplated by this Agreement and the other Loan Documents, and
all documents incidental hereto and thereto, shall be satisfactory to the Lender
and its counsel, and the Lender and such counsel shall have received all such
information and such counterpart originals or certified or other copies of such
documents, in form and substance satisfactory to the Lender, as the Lender or
such counsel may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties. Each of the
Loan Parties hereby represents and warrants to the Lender as follows:
(a) Organization, Good Standing, Etc. Each of
the Loan Parties and its respective Subsidiaries (i) is a corporation, limited
liability company or limited partnership duly organized, validly existing and
in good standing under the laws of the state of its organization, (ii) has all
requisite power and authority to conduct its business as now conducted and as
presently contemplated and, in the case of the Borrower, to make the
borrowings hereunder, and to execute and deliver each Loan Document to which
it is a party, and to consummate the transactions contemplated thereby, and
(iii) is duly qualified to do business and is in good standing in each state
set forth on Exhibit K hereto.
(b) Authorization, Etc. The execution,
delivery and performance by each of the Loan Parties and its respective
Subsidiaries of each Loan Document to which it is or will be a party, (i) have
been duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, its limited liability company or operating
agreement or its certificate of partnership or partnership agreement, as
applicable, or any applicable law or any contractual restriction binding on or
otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any Lien (other than pursuant to any Loan
Document) upon or with respect to any of its properties, and (iv) do not and
will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties.
(c) Governmental Approvals. No authorization
or approval or other action by, and no notice to or filing with, any
Governmental Authority is required in connection with the due execution,
delivery and performance by any Loan Party or any of its Subsidiaries of any
Loan Document to which it is or will be a party.
(d) Enforceability of Loan Documents. This
Agreement is, and each other Loan Document to which any Loan Party or any of
its Subsidiaries is or will be a party, when delivered hereunder, will be, a
legal, valid and binding obligation of such Person, enforceable against such
Person in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws.
(e) Capitalization. On the Effective Date,
after giving effect to the transactions contemplated hereby to occur on the
Effective Date, the authorized Capital Stock of
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the Borrower and the issued and outstanding Capital Stock of the Borrower are as
set forth on Schedule 5.01(e). All of the issued and outstanding shares of
Capital Stock of the Borrower have been validly issued and are fully paid and
nonassessable, and the holders thereof are not entitled to any preemptive, first
refusal or other similar rights. There are no securities issuable under any
stock option or similar equity incentive plan. Except as described on Schedule
5.01(e), as of the Effective Date, there are no outstanding debt or equity
securities of the Borrower or any of its Subsidiaries, and no outstanding
obligations of the Borrower or any of its Subsidiaries, convertible into or
exchangeable for, or warrants, options or other rights for the purchase or
acquisition from the Borrower, or other obligations of the Borrower to issue,
directly or indirectly, any shares of Capital Stock of the Borrower.
(f) Subsidiaries. Schedule 5.01(f) is a
complete and correct description of the name, jurisdiction of incorporation
and ownership of the outstanding Capital Stock of such Subsidiaries of the
Borrower in existence on the date hereof. All of the issued and outstanding
shares of Capital Stock of such Subsidiaries have been validly issued and are
fully paid and nonassessable, and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights. Except as indicated on such
Schedule, all such Capital Stock is owned by the Borrower or one or more of
its wholly-owned Subsidiaries, free and clear of all Liens. There are no
outstanding debt or equity securities of the Borrower or any of its
Subsidiaries and no outstanding obligations of the Borrower or any of its
Subsidiaries convertible into or exchangeable for, or warrants, options or
other rights for the purchase or acquisition from the Borrower or any of its
Subsidiaries, or other obligations of any Subsidiary to issue, directly or
indirectly, any shares of Capital Stock of any Subsidiary of the Borrower.
(g) Litigation. Except as set forth in
Schedule 5.01(g), there is no pending or, to the knowledge of any Loan Party
or any of its Subsidiaries, threatened action, suit or proceeding affecting
such Loan Party or any of its Subsidiaries before any court or other
Governmental Authority or any arbitrator that (i) if adversely determined,
could have a Material Adverse Effect or (ii) relates to this Agreement, the
Notes or any other Loan Document or any transaction contemplated hereby or
thereby.
(h) Financial Condition.
(i) The Financial Statements, copies
of which have been delivered to the Lender, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at the respective
dates thereof and the consolidated results of operations of the Borrower and
its Subsidiaries for the fiscal periods ended on such respective dates, all in
accordance with GAAP, and since December 31, 1999, no event or development has
occurred that has had or could have a Material Adverse Effect.
(ii) The Borrower has heretofore
furnished to the Lender (i) projected monthly balance sheets, income
statements and statements of cash flows of the Borrower and its Subsidiaries
for the period from January 1, 2001 through December 31, 2001 and (ii)
projected annual balance sheets, income statements and statements of cash
flows of the Borrower and its Subsidiaries for the Fiscal Years ending in 2001
through 2005, in each case as updated from time to time pursuant to Section
6.01(a)(vii). Such projections, as so updated, are believed by the Borrower at
the time furnished to be reasonable, have been prepared on a
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reasonable basis and in good faith by the Borrower, and have been based on
assumptions believed by the Borrower to be reasonable at the time made and upon
the best information then reasonably available to the Borrower, and the Borrower
is not aware of any facts or information that would lead it to believe that such
projections, as so updated, are incorrect or misleading in any material respect.
(i) Compliance with Law, Etc. None of the
Loan Parties nor any of their respective Subsidiaries is in violation of its
organizational documents, any law, rule, regulation, judgment or order of any
Governmental Authority applicable to it or any of its property or assets, or
any material term of any agreement or instrument (including, without
limitation, any Material Contract) binding on or otherwise affecting it or any
of its properties, and no Default or Event of Default has occurred and is
continuing.
(j) ERISA. Except as set forth on Schedule
5.01(j), (i) each Employee Plan is in substantial compliance with ERISA and
the Code, (ii) no Termination Event has occurred nor is reasonably expected to
occur with respect to any Employee Plan, (iii) the most recent annual report
(Form 5500 Series) with respect to each Employee Plan, including any required
Schedule B (Actuarial Information) thereto, copies of which have been filed
with the Internal Revenue Service and delivered to the Lender, is complete and
correct and fairly presents the funding status of such Employee Plan, and
since the date of such report there has been no material adverse change in
such funding status, (iv) no Employee Plan had an accumulated or waived
funding deficiency or permitted decreases which would create a deficiency in
its funding standard account or has applied for an extension of any
amortization period within the meaning of Section 412 of the Code at any time
since the 5 year period immediately preceding the Effective Date, and (v) no
Lien imposed under the Code or ERISA exists or is likely to arise on account
of any Employee Plan within the meaning of Section 412 of the Code at any time
since the 5 year period immediately preceding the Effective Date. Except as
set forth on Schedule 5.01(j), none of the Borrower or any of its ERISA
Affiliates have incurred any withdrawal liability under ERISA with respect to
any Multiemployer Plan, or are aware of any facts indicating that the Borrower
or any of its ERISA Affiliates may in the future incur any such withdrawal
liability. Except as required by Section 4980B of the Code, none of the
Borrower or any of its ERISA Affiliates maintains an employee welfare benefit
plan (as defined in Section 3(1) of ERISA) which provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employee of the Borrower or any of its ERISA Affiliates or coverage
after a participant's termination of employment. None of the Borrower or any
of its ERISA Affiliates has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act ("WARN") or similar state
law, which remains unpaid or unsatisfied.
(k) Taxes, Etc. All Federal, state and local
tax returns and other reports required by applicable law to be filed by the
Borrower and each of its Subsidiaries have been filed, or extensions have been
obtained, and all taxes, assessments and other governmental charges imposed
upon the Borrower or any of its Subsidiaries or any property of the Borrower
or any of its Subsidiaries and which have become due and payable on or prior
to the date hereof have been paid, except to the extent contested in good
faith by proper proceedings which stay the imposition of any penalty, fine or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof.
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(l) Regulation U. Neither the Borrower nor
any of its Subsidiaries is nor will be engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T, U or X), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
(m) Nature of Business. Neither the Borrower
nor any of its Subsidiaries is engaged in any business other than highway
directional outdoor advertising.
(n) Adverse Agreements, Etc. Neither the
Borrower nor any of its Subsidiaries is a party to any agreement or
instrument, or subject to any charter, limited liability company agreement,
partnership agreement or other corporate, partnership or limited liability
company restriction or any judgment, order, regulation, ruling or other
requirement of a court or other Governmental Authority, which has, or in the
future could have, a Material Adverse Effect.
(o) Permits, Etc. Each of the Borrower and
its Subsidiaries has, and is in compliance with, all permits, licenses,
authorizations, approvals, entitlements and accreditations required for such
Person lawfully to own, lease, manage or operate, or to acquire, each business
currently owned, leased, managed or operated, or to be acquired, by such
Person. No condition exists or event has occurred which, in itself or with the
giving of notice or lapse of time or both, would result in the suspension,
revocation, impairment, forfeiture or non-renewal of any such permit, license,
authorization, approval, entitlement or accreditation, and there is no claim
that any thereof is not in full force and effect.
(p) Properties.
(i) Each of the Borrower and its
Subsidiaries has good and marketable title to, or valid leasehold interests
in, all property and assets material to its business, free and clear of all
Liens except Permitted Liens. The properties are in good working order and
condition, ordinary wear and tear excepted.
(ii) Schedule 5.01(p) sets forth a
complete and accurate list as of the Effective Date of the location, by state
and street address, of all real property owned or leased by any of the
Borrower and its Subsidiaries, except for the Site Leases which are identified
by county and state only, not by street address. As of the Effective Date,
each of the Borrower and its Subsidiaries has valid leasehold interests in the
Leases described on Schedule 5.01(p) to which it is a party. Schedule 5.01(p)
sets forth with respect to each such Lease, the commencement date, termination
date and annual base rents. Each such Lease is valid and enforceable in
accordance with its terms in all material respects and is in full force and
effect. No consent or approval of any landlord or other third party in
connection with any such Lease is necessary for the Borrower or any of its
Subsidiaries to enter into and execute the Loan Documents to which it is a
party, except as set forth on Schedule 5.01(p). To the knowledge of the
Borrower, no other party to any such Lease is in default of its obligations
thereunder, and none of the Borrower and its Subsidiaries (or any other party
to any such Lease) has not at any time delivered or received any notice of
default which remains uncured under any such Lease and, as of the Effective
Date, no event has occurred which, with the giving of notice or the passage of
time or both, would constitute a default under any such Lease.
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(q) Full Disclosure. The Borrower has
disclosed to the Lender all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could result in a
Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which it was made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time. There is no contingent liability or fact that may have
a Material Adverse Effect which has not been set forth in a footnote included
in the Financial Statements or a schedule hereto.
(r) Operating Lease Obligations. On the
Effective Date, neither the Borrower nor any of its Subsidiaries has any
obligations as lessee for the payment of rent for any real or personal
property other than the Operating Lease Obligations set forth on Schedules
5.01(p) and 5.01(r).
(s) Environmental Matters. Except as set
forth on Schedule 5.01(s), (i) the operations of each of the Borrower and its
Subsidiaries are in compliance with Environmental Laws; (ii) there has been no
Release at any of the properties owned or operated by the Borrower or its
Subsidiaries or a predecessor in interest, or at any disposal or treatment
facility which received Hazardous Materials generated by the Borrower or its
Subsidiaries or any predecessor in interest which could have a Material
Adverse Effect; (iii) no Environmental Action has been asserted against the
Borrower or its Subsidiaries or any predecessor in interest nor does the
Borrower or any of its Subsidiaries have knowledge or notice of any threatened
or pending Environmental Action against the Borrower or its Subsidiaries or
any predecessor in interest which could have a Material Adverse Effect; and
(iv) no Environmental Actions have been asserted against any facilities that
may have received Hazardous Materials generated by the Borrower or its
Subsidiaries or any predecessor in interest which could have a Material
Adverse Effect.
(t) Insurance. Each of the Borrower and its
Subsidiaries keeps its property adequately insured and maintains (i) insurance
to such extent and against such risks, including fire, as is customary with
companies in the same or similar businesses, (ii) workmen's compensation
insurance in the amount required by applicable law, (iii) public liability
insurance, which shall include product liability insurance, in the amount
customary with companies in the same or similar business against claims for
personal injury or death on properties owned, occupied or controlled by it,
and (iv) such other insurance as may be required by law or as may be
reasonably required by the Lender (including, without limitation, against
larceny, embezzlement or other criminal misappropriation). Schedule 5.01(t)
sets forth a list of all insurance maintained by the Borrower and its
Subsidiaries on the Effective Date.
(u) Use of Proceeds. The proceeds of the
Loans shall be used for the purposes set forth in the preamble hereto.
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(v) Solvency. After giving effect to the
transactions contemplated by this Agreement and before and after giving effect
to each Loan, each of the Borrower and its Subsidiaries is, and the Borrower
and its Subsidiaries on a consolidated basis are, Solvent.
(w) Location of Bank Accounts. Schedule
5.01(w) sets forth a complete and accurate list as of the Effective Date of
all deposit, checking and other bank accounts, all securities and other
accounts maintained with any broker dealer and all other similar accounts
maintained by the Borrower, or any of its Subsidiaries, together with a
description thereof (i.e., the bank or broker dealer at which such deposit or
other account is maintained and the account number and the purpose thereof).
(x) Intellectual Property. Except as set
forth on Schedule 5.01(x), each of the Borrower and its Subsidiaries owns or
licenses or otherwise has the right to use all licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks,
tradenames, copyrights, copyright applications, franchises, authorizations and
other intellectual property rights that are necessary for the operations of
its businesses, without infringement upon or conflict with the rights of any
other Person with respect thereto, except for such infringements and conflicts
which, individually or in the aggregate, could not have a Material Adverse
Effect. Set forth on Schedule 5.01(x) is a complete and accurate list as of
the Effective Date of all such material licenses, permits, patents, patent
applications, trademarks, trademark applications, service marks, tradenames,
copyrights, copyright applications, franchises, authorizations and other
intellectual property rights of the Borrower and its Subsidiaries. No slogan
or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the
Borrower or its Subsidiaries infringes upon or conflicts with any rights owned
by any other Person, and no claim or litigation regarding any of the foregoing
is pending or threatened, except for such infringements and conflicts which
could not have, individually or in the aggregate, a Material Adverse Effect.
To the best knowledge of the Borrower, no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or proposed, which, individually or in the aggregate, could have a
Material Adverse Effect.
(y) Material Contracts. Set forth on Schedule
5.01(y) is a complete and accurate list as of the Effective Date of all
Material Contracts of the Borrower and its Subsidiaries, showing the parties
and subject matter thereof and amendments and modifications thereto. Each such
Material Contract (i) is in full force and effect and is binding upon and
enforceable against each of the Borrower and its Subsidiaries that is a party
thereto and, to the best knowledge of the Borrower, all other parties thereto
in accordance with its terms, (ii) has not been otherwise amended or modified,
and (iii) is not in default due to the action of the Borrower or its
Subsidiaries or, to the best knowledge of the Borrower, any other party
thereto.
(z) Holding Company and Investment Company
Acts. None of the Loan Parties nor any of their respective Subsidiaries is
(i) a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended, or (ii) an "investment
company" or an "affiliated person" or "promoter" of, or "principal
underwriter" of or for, an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
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(aa) Employee and Labor Matters. (i) There is
(A) no unfair labor practice complaint pending or, to the best knowledge of
the Borrower, threatened against the Borrower or any of its Subsidiaries
before any Governmental Authority and no grievance or arbitration proceeding
pending or threatened against the Borrower or any of its Subsidiaries which
arises out of or under any collective bargaining agreement, (B) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or
threatened against the Borrower or any of its Subsidiaries and (C) to the best
knowledge of the Borrower, no union representation question existing with
respect to the employees of the Borrower or any of its Subsidiaries and no
union organizing activity taking place with respect to any of the employees of
any of them.
(bb) Customers and Suppliers. There exists no
actual or threatened termination, cancellation or limitation of, or
modification to or change in, the business relationship between (A) the
Borrower or any of its Subsidiaries, on the one hand, and any customer or any
group thereof, on the other hand, whose agreements with the Borrower or any
such Subsidiary are individually or in the aggregate material to the business
or operations of the Borrower or any of its Subsidiaries, or (B) the Borrower
or any of its Subsidiaries, on the one hand, and any material supplier
thereof, on the other hand; and there exists no present state of facts or
circumstances that could give rise to or result in any such termination,
cancellation, limitation, modification or change.
(cc) No Bankruptcy Filing. None of the Loan
Parties nor any of their respective Subsidiaries is contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of the Borrower's or such
Subsidiary's assets or property, and neither the Borrower nor any of its
Subsidiaries has any knowledge of any Person contemplating the filing of any
such petition against it.
(dd) Separate Existence.
(i) All customary formalities
regarding the corporate existence of each of the Loan Parties and their
respective Subsidiaries have been at all times since its formation and will
continue to be observed.
(ii) Each of the Loan Parties and their
respective Subsidiaries has at all times since its formation accurately
maintained, and will continue to accurately maintain, its financial
statements, accounting records and other organizational documents separate
from those of any Affiliate of the Borrower and its Subsidiaries and any other
Person. Neither the Borrower nor any of its Subsidiaries has at any time since
its formation commingled, and will not commingle, its assets with those of any
of its Affiliates or any other Person. Each of the Borrower and its
Subsidiaries has at all times since its formation accurately maintained, and
will continue to accurately maintain its own bank accounts and separate books
of account.
(iii) Each of the Loan Parties and their
respective Subsidiaries has at all times since its formation paid, and will
continue to pay, its own liabilities from its own separate assets.
(iv) Each of the Loan Parties and their
respective Subsidiaries has at all times since its formation identified
itself, and will continue to identify itself, in all dealings with the public,
under its own name and as a separate and distinct Person. Each of the
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Loan Parties and their respective Subsidiaries has not at any time since its
formation identified itself, and will not identify itself, as being a division
or a part of any other Person.
(ee) Location of Inventory; Place of Business;
Chief Executive Office. There is no location at which each of the Loan
Parties and their respective Subsidiaries has any Inventory (except for
Inventory in transit) other than (i) those locations listed on Schedule
5.01(ee) and (ii) any other locations approved in writing by the Lender.
Schedule 5.01(ee) hereto contains a true, correct and complete list, as of the
Effective Date, of the legal names and addresses of each warehouse at which
Inventory of each of the Loan Parties and their respective Subsidiaries is
stored. None of the receipts received by each of the Loan Parties and their
respective Subsidiaries from any warehouse states that the goods covered
thereby are to be delivered to bearer or to the order of a named Person or to
a named Person and such named Person's assigns. Schedule 5.01(ee) sets forth a
complete and accurate list as of the date hereof of (A) each place of business
(except Site Leases) of each of the Loan Parties and their respective
Subsidiaries and (B) the chief executive office of each of the Loan Parties
and their respective Subsidiaries.
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01 Affirmative Covenants. So long as any principal
of or interest on any Loan or any other Obligations (whether or not due) shall
remain unpaid or the Lender shall have any Commitment hereunder, the Borrower
will, unless the Lender shall otherwise consent in writing:
(a) Reporting Requirements. Furnish to the
Lender:
(i) as soon as available and in any
event within 45 days after the end of each fiscal quarter of the Borrower and
its Subsidiaries, consolidated balance sheets, consolidated statements of
operations and retained earnings and consolidated statements of cash flows of
the Borrower and its Subsidiaries as at the end of such quarter, and for the
period commencing at the end of the immediately preceding Fiscal Year and
ending with the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding date or period of the immediately
preceding Fiscal Year, all in reasonable detail and certified by an Authorized
Officer as fairly presenting, in all material respects, the financial position
of the Borrower and its Subsidiaries as of the end of such quarter and the
results of operations and cash flows of the Borrower and its Subsidiaries for
such quarter, in accordance with GAAP applied in a manner consistent with that
of the most recent audited financial statements of the Borrower and its
Subsidiaries furnished to the Lender, subject to normal year-end adjustments;
(ii) as soon as available, and in any
event within 90 days after the end of each Fiscal Year consolidated balance
sheets, consolidated statements of operations and retained earnings and
consolidated statements of cash flows of the Borrower and its Subsidiaries as
at the end of such Fiscal Year, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal Year, all in
reasonable detail and prepared in accordance with GAAP, and accompanied by a
report and an unqualified opinion,
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prepared in accordance with generally accepted auditing standards, of
independent certified public accountants of recognized standing selected by the
Borrower and satisfactory to the Lender (which opinion shall be without (A) a
"going concern" or like qualification or exception, (B) any qualification or
exception as to the scope of such audit or (C) any qualification which relates
to the treatment or classification of any item and which, as a condition to the
removal of such qualification, would require an adjustment to such item, the
effect of which would be to cause any noncompliance with the provisions of
Section 6.03), together with a written statement of such accountants (1) to the
effect that, in making the examination necessary for their certification of such
financial statements, they have not obtained any knowledge of the existence of
an Event of Default or a Default and (2) if such accountants shall have obtained
any knowledge of the existence of an Event of Default or such Default,
describing the nature thereof;
(iii) as soon as available, and in any
event within 30 days of the end of each fiscal month of the Borrower and its
Subsidiaries internally prepared consolidated balance sheets, consolidated
statements of operations and consolidated statements of cash flows for such
fiscal month of the Borrower and its Subsidiaries for such fiscal month and
for the period from the beginning of such Fiscal Year to the end of such
fiscal month, all in reasonable detail and certified by an Authorized Officer
as fairly presenting, in all material respects, the financial position of the
Borrower and its Subsidiaries as of the end of such fiscal month and the
results of operations and cash flows of the Borrower and its Subsidiaries for
such fiscal month, in accordance with GAAP applied in a manner consistent with
that of the most recent audited financial statements furnished to the Lender,
subject to normal year-end adjustments;
(iv) simultaneously with the delivery
of the financial statements of the Borrower required by clauses (i), (ii) and
(iii) of this Section 6.01(a), a certificate of an Authorized Officer (A)
stating that such Authorized Officer has reviewed the provisions of this
Agreement and the other Loan Documents and has made or caused to be made under
his or her supervision a review of the condition and operations of the
Borrower and its Subsidiaries during the period covered by such financial
statements with a view to determining whether the Borrower and its
Subsidiaries were in compliance with all of the provisions of such Loan
Documents at the times such compliance is required by the Loan Documents, and
that such review has not disclosed, and such Authorized Officer has no
knowledge of, the existence during such period of an Event of Default or
Default or, if an Event of Default or Default existed, describing the nature
and period of existence thereof and the action which the Borrower and its
Subsidiaries propose to take or have taken with respect thereto and (B)
attaching a schedule showing the calculations specified in Section 6.03;
(v) as soon as available and in any
event within 20 days of the end of each fiscal month of the Borrower, or more
frequently as Lender may reasonably request from time to time, summary reports
(A) listing all Accounts Receivable of the Borrower and its Subsidiaries as of
the last Business Day of such month, which shall include the amount and age of
each Account Receivable, showing separately those which are more than 30, 60,
90 and 120 days old and a description of all Liens, set-offs, defenses and
counterclaims with respect thereto, together with a reconciliation of such
schedule with the schedule delivered to the Lender pursuant to this clause
(v)(A) for the immediately preceding month, the name and mailing address of
each Account Debtor with respect to each such Account Receivable and such
other information as the Lender may request, (B) listing all accounts payable
of the Borrower and its Subsidiaries as of the last Business Day of such month
which shall include the amount and age
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of each account payable, the name and mailing address of each account creditor
and such other information as the Lender may request, and (C) listing all
Inventory of the Borrower and its Subsidiaries as of the last Business Day of
such month, and containing a breakdown of such Inventory by type and amount, the
cost and the current market value thereof (by location), the date of
acquisition, the warehouse and production facility location and such other
information as the Lender may request, all in detail and in form satisfactory to
the Lender; provided, however, that if Lender requests a more detailed report
than the aforementioned summary, Borrower shall provide a report in detail
satisfactory to the Lender and certified by an Authorized Officer as being
accurate and complete;
(vi) by the third Business Day of each
week, a Borrowing Base Certificate as of the close of business on the last day
of the prior week supported by schedules showing the derivation thereof and
containing such detail and other information as the Lender may request from
time to time provided, that (A) the Borrowing Base set forth in the Borrowing
Base Certificate shall be effective from and including the date such Borrowing
Base Certificate is duly received by the Lender but not including the date on
which a subsequent Borrowing Base Certificate is received by the Lender,
unless the Lender disputes the eligibility of any property for inclusion in
the calculation of the Borrowing Base or the valuation thereof by notice of
such dispute to the Borrower and (B) in the event of any dispute about the
eligibility of any property for inclusion in the calculation of the Borrowing
Base or the valuation thereof, the Lender's good faith judgment shall control;
(vii) on or before December 15 of each
year, preliminary financial projections (A) supplementing and superseding the
financial projections for such period referred to in Section 5.01(h)(ii),
prepared on a monthly basis and otherwise in form and substance satisfactory
to the Lender, for the immediately succeeding Fiscal Year for the Borrower and
its Subsidiaries; provided, however, that final financial projections shall be
provided to Lender by January 31 of the fiscal year covered by such
projections, and the final projections shall be substantially similar in all
material respects to the preliminary projections previously provided and (B)
on or before the 45th day after the end of a fiscal quarter, financial
projections supplementing and superseding the financial projections for such
period referred to in Section 5.01(h)(ii), prepared on a monthly basis and
otherwise in form and substance satisfactory to the Lender, for each remaining
quarterly period in such Fiscal Year, all such financial projections to be
reasonable, to be prepared on a reasonable basis and in good faith, and to be
based on assumptions believed by the Borrower to be reasonable at the time
made and from the best information then available to the Borrower;
(viii) promptly after submission to any
Governmental Authority, all documents and information furnished to such
Governmental Authority in connection with any investigation of the Borrower or
any of its Subsidiaries other than routine inquiries by such Governmental
Authority;
(ix) as soon as possible, and in any
event within three days after the occurrence of an Event of Default or Default
or the occurrence of any event or development that could have a Material
Adverse Effect, the written statement of an Authorized Officer setting forth
the details of such Event of Default, Default, other event or development and
the action which the Borrower and its Subsidiaries propose to take with
respect thereto;
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(x) (A) as soon as possible and in any
event (1) within 10 days after the Borrower or any ERISA Affiliate thereof
knows or has reason to know that any Termination Event described in clause (i)
of the definition of Termination Event with respect to any Employee Plan has
occurred, (2) within 10 days after the Borrower or any ERISA Affiliate thereof
knows or has reason to know that any other Termination Event with respect to
any Employee Plan has occurred, or (3) within 10 days after the Borrower or
any ERISA Affiliate thereof knows or has reason to know that an accumulated
funding deficiency has been incurred or an application has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including installment payments) or an extension of any amortization
period under Section 412 of the Code with respect to an Employee Plan, a
statement of an Authorized Officer setting forth the details of such
occurrence and the action, if any, which the Borrower or such ERISA Affiliate
propose to take with respect thereto, (B) promptly and in any event within
three days after receipt thereof by the Borrower or any ERISA Affiliate
thereof from the PBGC, copies of each notice received by the Borrower or any
ERISA Affiliate thereof of the PBGC's intention to terminate any Plan or to
have a trustee appointed to administer any Plan, (C) promptly and in any event
within 10 days after the filing thereof with the Internal Revenue Service if
requested by the Lender, copies of each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) with respect to each Employee Plan and
Multiemployer Plan, (D) promptly and in any event within 10 days after the
Borrower or any ERISA Affiliate thereof knows or has reason to know that a
required installment within the meaning of Section 412 of the Code has not
been made when due with respect to an Employee Plan, (E) promptly and in any
event within three days after receipt thereof by the Borrower or any ERISA
Affiliate thereof from a sponsor of a Multiemployer Plan or from the PBGC, a
copy of each notice received by the Borrower or any ERISA Affiliate thereof
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or indicating that such Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA, and (F) promptly and in any event within
10 days after the Borrower or any ERISA Affiliate thereof send notice of a
plant closing or mass layoff (as defined in WARN) to employees, copies of each
such notice sent by the Borrower or any ERISA Affiliate thereof;
(xi) promptly after the commencement
thereof but in any event not later than 5 days after service of process with
respect thereto, or the obtaining of knowledge thereof by, the Borrower or any
Subsidiary, notice of each action, suit or proceeding before any court or
other Governmental Authority or other regulatory body or any arbitrator which,
if adversely determined, could have a Material Adverse Effect;
(xii) promptly after the sending or
filing thereof, copies of all statements, reports and other information the
Borrower or any of its Subsidiaries sends to any holders of its Indebtedness
or its securities or files with the SEC or any national (domestic or foreign)
securities exchange;
(xiii) promptly upon receipt thereof,
copies of all financial reports (including, without limitation, management
letters), if any, submitted to the Borrower or any of its Subsidiaries by its
auditors in connection with any annual or interim audit of the books thereof;
and
(xiv) promptly upon request, such other
information concerning the condition or operations, financial or otherwise, of
the Borrower or any of its Affiliates as the Lender from time to time may
reasonably request.
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(b) Additional Guaranties and Collateral
Security. Cause:
(i) each Subsidiary of the Borrower
not in existence on the Effective Date, to execute and deliver to the Lender
promptly and in any event within three days after the formation, acquisition
or change in status thereof (A) a Guaranty guaranteeing the Obligations, (B) a
Security Agreement, (C) if such Subsidiary has any Subsidiaries, a Pledge
Agreement together with (x) certificates evidencing all of the Capital Stock
of any Person owned by such Subsidiary, (y) undated stock powers executed in
blank with signature guaranteed, and (z) such opinion of counsel and such
approving certificate of such Subsidiary as the Lender may reasonably request
in respect of complying with any legend on any such certificate or any other
matter relating to such shares, (D) one or more Mortgages creating on the real
property of such Subsidiary a perfected, first priority Lien on such real
property, a title insurance policy covering such real property, a current ALTA
survey thereof and a surveyor's certificate, each in form and substance
satisfactory to the Lender, together with such other agreements, instruments
and documents as the Lender may require whether comparable to the documents
required under Section 6.01 (m) or otherwise, and (E) such other agreements,
instruments, approvals, legal opinions or other documents reasonably requested
by the Lender in order to create, perfect, establish the first priority of or
otherwise protect any Lien purported to be covered by any such Security
Agreement, Pledge Agreement or Mortgage or otherwise to effect the intent that
such Subsidiary shall become bound by all of the terms, covenants and
agreements contained in the Loan Documents and that all property and assets of
such Subsidiary shall become Collateral for the Obligations; and
(ii) each owner of the Capital Stock of
any such Subsidiary to execute and deliver promptly and in any event within
three days after the formation or acquisition of such Subsidiary a Pledge
Agreement, together with (A) certificates evidencing all of the Capital Stock
of such Subsidiary, (B) undated stock powers or other appropriate instruments
of assignment executed in blank with signature guaranteed, (C) such opinion of
counsel and such approving certificate of such Subsidiary as the Lender may
reasonably request in respect of complying with any legend on any such
certificate or any other matter relating to such shares and (D) such other
agreements, instruments, approvals, legal opinions or other documents
requested by the Lender;
(c) Compliance with Laws, Etc. Comply, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders (including, without limitation,
all Environmental Laws), such compliance to include, without limitation, (i)
paying before the same become delinquent all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits
or upon any of its properties, and (ii) paying all lawful claims which if
unpaid might become a Lien or charge upon any of its properties, except to the
extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves have been set aside for the payment
thereof.
(d) Preservation of Existence, Etc. Maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, its
existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the
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properties owned or leased by it or in which the transaction of its business
makes such qualification necessary.
(e) Keeping of Records and Books of Account.
Keep, and cause each of its Subsidiaries to keep, adequate records and books
of account, with complete entries made in accordance with GAAP.
(f) Inspection Rights. Permit, and cause each
of its Subsidiaries to permit, the Lender or any agents or representatives
thereof at any time and from time to time (i) prior to the occurrence of an
Event of Default, during normal business hours on reasonable notice, and (ii)
after the occurrence and during the continuance of an Event of Default, at
such times as Lender, or any of its agents or representatives shall determine,
in each case at the expense of the Borrower, to examine and make copies of and
abstracts from their records and books of account, to visit and inspect their
properties, to verify materials, leases, notes, accounts receivable, deposit
accounts and other assets of the Borrower, any Loan Party and their respective
Subsidiaries, to conduct audits, physical counts, valuations, appraisals,
environmental assessments or examinations and to discuss their affairs,
finances and accounts with any of the officers thereof, who shall take
reasonable efforts to make the directors, managerial employees, independent
accountants or other representatives thereof available to Lender. The Borrower
agrees to pay the reasonable cost of such audit, appraisal, assessment or
examination.
(g) Maintenance of Properties, Etc. Maintain
and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of their properties which are necessary or useful in the proper conduct of
their business in good working order and condition, ordinary wear and tear
excepted, and comply, and cause each of its Subsidiaries to comply, at all
times with the provisions of all leases to which each of them is a party as
lessee or under which each of them occupies property, so as to prevent any
loss or forfeiture thereof or thereunder.
(h) Maintenance of Insurance. Maintain, and
cause each of its Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations (including, without limitation,
comprehensive general liability, hazard, rent and business interruption
insurance) with respect to their properties (including all real properties
leased or owned by them) and business, in such amounts and covering such risks
as is required by any Governmental Authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice
by companies in similar businesses similarly situated and in any event in
amount, adequacy and scope reasonably satisfactory to the Lender. All policies
covering the Collateral are to be made payable to the Lender, as its interests
may appear, in case of loss, under a standard non-contributory "lender" or
"secured party" clause and are to contain such other provisions as the Lender
may require to fully protect the Lender's interest in the Collateral and to
any payments to be made under such policies. All certificates of insurance are
to be delivered to the Lender and the policies are to be premium prepaid, with
the loss payable and additional insured endorsement in favor of Lender and
such other Persons as the Lender may designate for time to time, and shall
provide for not less than 30 days' prior written notice to the Lender of the
exercise of any right of cancellation. If the Borrower or any of its
Subsidiaries fails to maintain such insurance, the Lender may arrange for such
insurance, but at the Borrower's expense and without any responsibility on the
Lender's part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims.
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Upon the occurrence of an Event of Default, the Lender shall have the sole
right, in the name of the Lender and the Borrower and its Subsidiaries, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.
(i) Obtaining of Permits, Etc. Obtain,
maintain and preserve, and cause each of its Subsidiaries to obtain, maintain
and preserve, all permits, licenses, authorizations, approvals, entitlements
and accreditations which are necessary or useful in the proper conduct of its
business and become or remain, and cause each of its Subsidiaries to become or
remain, duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary.
(j) Environmental. (i) Keep any property
either owned or operated by it or any of its Subsidiaries free of any
Environmental Liens; (ii) comply, and cause its Subsidiaries to comply, in all
material respects with Environmental Laws and provide to the Lender
documentation of such compliance which the Lender reasonably requests; (iii)
immediately notify the Lender of any Release of a Hazardous Material in excess
of any reportable quantity from or onto property owned or operated by the
Borrower or any of its Subsidiaries and take any Remedial Actions required by
law to xxxxx said Release; (iv) promptly provide the Lender with written
notice within 10 days of the receipt of any of the following: (A) notice that
an Environmental Lien has been filed against any property of the Borrower or
any of its Subsidiaries; (B) commencement of any Environmental Action or
notice that an Environmental Action will be filed against the Borrower or any
of its Subsidiaries; and (C) notice of a violation, citation or other
administrative order which could have a Material Adverse Effect and (v)
defend, indemnify and hold harmless the Lender and its transferees, and their
respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses (including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation expenses)
arising out of (A) the presence, disposal, Release or threatened Release of
any Hazardous Materials on any property at any time owned or occupied by the
Borrower or any of its Subsidiaries (or its respective predecessors in
interest or title) or at any disposal facility which received Hazardous
Materials generated by the Borrower or any of its Subsidiaries (or its
respective predecessors in interest or title), (B) any personal injury
(including wrongful death) or property damage (real or personal) arising out
of or related to such Hazardous Materials, (C) any investigation, lawsuit
brought or threatened, settlement reached or government order relating to such
Hazardous Materials, (D) any violation of any Environmental Law and/or (E) any
Environmental Action.
(k) Further Assurances. Take such action and
execute, acknowledge and deliver, and cause each of its Subsidiaries to take
such action and execute, acknowledge and deliver, at its sole cost and
expense, such agreements, instruments or other documents as the Lender may
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement and the other Loan Documents, (ii) to subject to
valid and perfected first priority Liens any of the Collateral or any other
property of the Borrower and its Subsidiaries, (iii) to establish and maintain
the validity and effectiveness of any of the Loan Documents and the validity,
perfection and priority of the Liens intended to be created thereby, and (iv)
to better assure,
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convey, grant, assign, transfer and confirm unto the Lender the rights now or
hereafter intended to be granted to the Lender under this Agreement or any other
Loan Document.
(l) Change in Collateral; Collateral Records.
(i) Give the Lender not less than 30 days' prior written notice of any change
in the location of any Collateral, other than to locations set forth on
Schedule 6.01(l) and with respect to which the Lender has filed financing
statements and otherwise fully perfected its Liens thereon, (ii) advise the
Lender promptly, in sufficient detail, of any material adverse change relating
to the type, quantity or quality of the Collateral or the Lien granted thereon
and (iii) execute and deliver, and cause each of its Subsidiaries to execute
and deliver, to the Lender for the benefit of the Lender from time to time,
solely for the Lender's convenience in maintaining a record of Collateral,
such written statements and schedules as the Lender may reasonably require,
designating, identifying or describing the Collateral.
(m) After Acquired Real Property. Upon the
acquisition by the Borrower or any of its Subsidiaries after the date hereof
of any interest (whether fee or leasehold) in any real property (wherever
located) (each such interest being an "After Acquired Property") (x) with a
Current Value (as defined below) in excess of $250,000 in the case of a fee
interest, or (y) requiring the payment of annual rent exceeding in the
aggregate $36,000 in the case of a leasehold interest, immediately so notify
the Lender, setting forth with specificity a description of the interest
acquired, the location of the real property, any structures or improvements
thereon and either an appraisal or the Borrower's good-faith estimate of the
current value of such real property (for purposes of this Section, the
"Current Value"). The Lender shall notify the Borrower whether it intends to
require a Mortgage and the other documents referred to below or in the case of
leasehold, a leasehold mortgage. Upon receipt of such notice requesting a
mortgage, the Person which has acquired such After Acquired Property shall
immediately furnish to the Lender the following, each in form and substance
satisfactory to the Lender: (i) a mortgage and an Environmental Indemnity
Agreement with respect to such real property and related assets, each duly
executed by such Person and in recordable form; (ii) evidence of the recording
of the mortgage referred to in clause (i) above in such office or offices as
may be necessary or, in the opinion of the Lender, desirable to create and
perfect a valid and enforceable first priority lien on the property purported
to be covered thereby or to otherwise protect the rights of the Lender
thereunder, (iii) a title insurance policy, (iv) a survey of such real
property, certified to the Lender and to the issuer of the Title Insurance
Policy by a licensed professional survey or reasonably satisfactory to the
Lender, (v) phase I environmental assessment reports with respect to such real
property, certified to the Lender by a company reasonably satisfactory to the
Lender, (vi) in the case of a leasehold interest, a certified copy of the
lease between the landlord and such Person with respect to such real property
in which such Person has a leasehold interest, and the certificate of
occupancy with respect thereto, and (vii) such other documents or instruments
(including guarantees and opinions of counsel) as the Lender may reasonably
require. The Borrower shall pay all fees and expenses, including reasonable
attorneys' fees and expenses, and all title insurance charges and premiums, in
connection with its obligations under this Section 6.01(m).
(n) Fiscal Year. Cause the Fiscal Year of the Borrower
and its Subsidiaries to end on December 31 of each calendar year unless the
Lender consents to a change in such Fiscal Year (and appropriate related
changes to this Agreement).
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(o) Hiring of Chief Financial Officer. Hire, within
six (6) months of the Effective Date, a Chief Financial Officer reasonably
satisfactory to Lender.
(p) Good Standing. Within forty-five (45) days, obtain
good standing status in each jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, other than in those jurisdictions where
the failure to qualify would not have a Material Adverse Effect.
SECTION 6.02. Negative Covenants. So long as any principal
of or interest on any Loan or any other Obligation (whether or not due) shall
remain unpaid or the Lender shall have any Commitment hereunder, the Borrower
shall not, unless the Lender shall otherwise consent in writing:
(a) Liens, Etc. Create, incur, assume or
suffer to exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon or with respect to any of its property, whether
now owned or hereafter acquired, to file or suffer to exist under the Uniform
Commercial Code or any similar law or statute of any jurisdiction, a financing
statement (or the equivalent thereof) that names the Borrower or any of its
Subsidiaries as debtor, to sign or suffer to exist any security agreement
authorizing any secured party thereunder to file such financing statement (or
the equivalent thereof), to sell any of its property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable) with recourse to
the Borrower or any of its Subsidiaries or assign or otherwise transfer, or
permit any of its Subsidiaries to assign or otherwise transfer, any account or
other right to receive income, other than Permitted Liens.
(b) Indebtedness. Create, incur, assume,
guarantee or suffer to exist, or otherwise become or remain liable with
respect to, or permit any of its Subsidiaries to create, incur, assume,
guarantee or suffer to exist or otherwise become or remain liable with respect
to, any Indebtedness other than Permitted Indebtedness.
(c) Fundamental Changes. Wind-up, liquidate
or dissolve itself (or permit or suffer any thereof) or merge, consolidate or
amalgamate with any Person, convey, sell, lease or sublease, transfer or
otherwise dispose of, whether in one transaction or a series of related
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or (agree to do any of the foregoing) or purchase
or otherwise acquire, whether in one transaction or a series of related
transactions, all or substantially all of the assets of any Person (or any
division thereof) (or agree to do any of the foregoing), or permit any of its
Subsidiaries to do any of the foregoing; provided, however, that
(i) any wholly owned Subsidiary of the
Borrower may be merged into the Borrower or another such wholly owned
Subsidiary of the Borrower, or may consolidate with another such wholly owned
Subsidiary of the Borrower, so long as (A) no other provision of this
Agreement would be violated thereby, (B) the Borrower gives the Lender at
least 60 days' prior written notice of such merger or consolidation, (C) no
Default or Event of Default shall have occurred and be continuing either
before or after giving effect to such transaction, (iv) the Lender's rights in
any Collateral, including, without limitation, the existence, perfection and
priority of any Lien thereon, are not adversely affected by such merger or
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consolidation and (v) the surviving Subsidiary, if any, is a party to a Guaranty
and Security Agreement and the Capital Stock of which Subsidiary is the subject
of a Pledge Agreement, in each case which is in full force and effect on the
date of and immediately after giving effect to such merger or consolidation; and
(ii) any of the Borrower and its
Subsidiaries may (A) sell Inventory in the ordinary course of business, (B)
dispose of obsolete or worn-out equipment in the ordinary course of business,
(C) sell or otherwise dispose of other property or assets for cash in an
aggregate amount not less than the fair market value of such property or
assets, provided that the Net Cash Proceeds of such Dispositions do not exceed
$1,000,000 in the aggregate in any consecutive twelve-month period and are
paid to the Lender pursuant to the terms of Section 2.05(c)(iii), and (D) sell
assets that are leased back pursuant to a Capitalized Lease.
(d) Change in Nature of Business. Make, or
permit any of its Subsidiaries to make, any change in the nature of its
business as carried on at the date hereof.
(e) Loans, Advances, Investments, Etc. Make
or commit or agree to make any loan, advance guarantee of obligations, other
extension of credit or capital contributions to, or hold or invest in or
commit or agree to hold or invest in, or purchase or otherwise acquire or
commit or agree to purchase or otherwise acquire any shares of the Capital
Stock, bonds, notes, debentures or other securities of, or make or commit or
agree to make any other investment in, any other Person, or purchase or own
any futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures
contract, or permit any of its Subsidiaries to do any of the foregoing, except
for: (i) Investments existing on the date hereof, as set forth on Schedule
6.02(e) hereto, but not any increase in the amount thereof as set forth in
such Schedule or any other modification of the terms thereof, (iii) Permitted
Investments, (iv) loans to employees made in the ordinary course of its
business, not to exceed at any one time outstanding an aggregate of $100,000
for all such loans; provided, however, that no such loans will be made to
Xxxxxxx X. XxXxxxxx, Xxxxxxx X. Xxxxx, A. Xxxxx Xxxx or Xxxxxxx Xx Xxxxx or
any successor thereo, and (v) any Acquisition by the Borrower or any wholly
owned Subsidiary of the Borrower to the extent that each of the following
conditions shall have been satisfied (a "Permitted Acquisition"):
(A) to the extent the Acquisition will
be financed in whole or in part with the proceeds of any Loan, the
conditions set forth in Article IV shall have been satisfied;
(B) the Borrower shall have furnished
to the Lender at least 10 Business Days prior to the consummation of
such Acquisition (1) an executed term sheet and/or commitment letter
(setting forth in reasonable detail the terms and conditions of such
Acquisition) and, at the request of the Lender, such other
information and documents that the Lender may request, including,
without limitation, executed counterparts of the respective
agreements, documents or instruments pursuant to which such
Acquisition is to be consummated (including, without limitation, any
related management, non-compete, employment, option or other material
agreements), any schedules to such agreements, documents or
instruments and all other material ancillary agreements, instruments
and documents to be executed or delivered in connection
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therewith, (2) pro forma financial statements of the Borrower and its
Subsidiaries after the consummation of such Acquisition, (3) a
certificate of the chief financial officer of the Borrower,
demonstrating on a pro forma basis compliance with all covenants set
forth in Section 6.03 after the consummation of such Acquisition, and
(4) copies of such other agreements, instruments and other documents
(including, without limitation, the Loan Documents required by Section
6.01(b)) as the Lender shall reasonably request;
(C) the agreements, instruments and
other documents referred to in paragraph (B) above shall provide that
(1) neither the Borrower nor any of its Subsidiaries shall, in
connection with such Acquisition, assume or remain liable in respect
of any Indebtedness of the Seller or Sellers, or other obligation of
the Seller or Sellers (except for obligations incurred in the
ordinary course of business in operating the property so acquired and
necessary and desirable to the continued operation of such property
and except for Indebtedness that the Lender otherwise expressly
consents to in writing after its review of the terms of the proposed
Acquisition), and (2) all property to be so acquired in connection
with such Acquisition shall be free and clear of any and all Liens,
except for Permitted Liens (and if any such property is subject to
any Lien not permitted by this clause (2) then concurrently with such
Acquisition such Lien shall be released);
(D) the Subsidiary to be acquired or
formed as a result of such Acquisition shall be engaged in the same
business as the Borrower and such Subsidiary will be a direct, wholly
owned Subsidiary of the Borrower;
(E) such Acquisition shall be effected
in such a manner so that the acquired Capital Stock or assets are
owned either by the Borrower or a wholly owned Subsidiary of the
Borrower and, if effected by merger or consolidation involving the
Borrower, the Borrower shall be the continuing or surviving Person;
(F) any such Subsidiary (and its
equityholders) shall execute and deliver the agreements, instruments
and other documents required by Section 6.01(b); and
(H) the Lender shall otherwise have
consented to the Acquisition.
(f) Lease Obligations. Create, incur or
suffer to exist, or permit any of its Subsidiaries to create, incur or suffer
to exist, any obligations as lessee (i) for the payment of rent for any real
or personal property in connection with any sale and leaseback transaction, or
(ii) for the payment of rent for any real or personal property under leases or
agreements to lease other than (A) Capitalized Lease Obligations which would
not cause the aggregate amount of all obligations under Capitalized Leases
entered into after the Effective Date owing by the Borrower and its
Subsidiaries in any Fiscal Year to exceed the amounts set forth in clause (c)
of the definition of "Permitted Indebtedness", (B) Operating Lease Obligations
which would not cause the aggregate amount of all Operating Lease Obligations
owing by the Borrower and its Subsidiaries in any Fiscal Year to exceed
$5,000,000, and (C) Site Leases.
(g) Capital Expenditures. Make or commit or agree to make,
or permit any of its Subsidiaries to make or commit or agree to make, any
Capital Expenditure (by purchase but
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47
excluding by Capitalized Lease) that would cause the aggregate amount of all
such Capital Expenditures made by the Borrower and its Subsidiaries at the end
of each fiscal quarter of Borrower to exceed the amount set forth below;
provided, however, that any difference between actual Capital Expenditures and
the Capital Expenditure Limit during any one fiscal quarter (the "Carried Over
Amount") may be carried over to increase the Capital Expenditure Limit during
the immediately following fiscal quarter by such Carried Over Amount; provided,
further, however, that the Carried Over Amount may only be carried over to such
immediately following fiscal quarter and may not be carried over to any
subsequent fiscal quarter:
Fiscal Quarter End Capital Expenditure Limit
------------------ -------------------------
June 30, 2001 $1,472,000
September 30, 2001 $1,200,000
December 31, 2001 $1,200,000
March 31, 2002 $875,000
June 30, 2002 $875,000
September 30, 2002 $875,000
December 31, 2002 $872,000
March 31, 2003 $656,000
June 30, 2003 $656,000
September 30, 2003 $656,000
December 31, 2003 $656,000
March 31, 2004 $689,000
June 30, 2004 $689,000
(h) Restricted Payments. (i) Declare or pay
any dividend or other distribution, direct or indirect, on account of any
Capital Stock of the Borrower or any of its Subsidiaries, now or hereafter
outstanding, (ii) make any repurchase, redemption, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any Capital Stock of the Borrower or any direct or
indirect parent of the Borrower, now or hereafter outstanding, (iii) make any
payment to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights for the purchase or acquisition of shares of any class
of Capital Stock of the Borrower, now or hereafter outstanding, (iv) return
any capital to any shareholders or other equity holders of the Borrower or any
of its Subsidiaries, or make any other distribution of property, assets,
shares of Capital Stock, warrants, rights, options, obligations or securities
thereto as such, (v) make any repurchase, redemption, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any of the 11% Senior Notes due 2008 without the prior
written consent of Lender, or (vi) pay any management fees or any other fees
or expenses (including the reimbursement thereof by the Borrower or any of its
Subsidiaries) pursuant to any management, consulting or other services
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48
agreement to any of the shareholders or other equityholders of the Borrower or
any of its Subsidiaries or other Affiliates, or to any other Subsidiaries or
Affiliates or the Borrower; provided, however, that:
(A) Subsidiaries of the Borrower may declare and pay
cash and stock dividends, return capital and make distributions of assets to
the Borrower;
(B) the Borrower may (y) declare and pay dividends and
distributions payable solely in shares of the Borrower's common stock, and (z)
purchase or otherwise acquire shares of its Capital Stock concurrently with
proceeds received from the issue of new shares of its Capital Stock; and
(C) Management fees may be paid to Parent not to exceed
$50,000 in any one year.
(i) Federal Reserve Regulations. Permit any
Loan or the proceeds of any Loan under this Agreement to be used for any
purpose that would cause such Loans to be margin loans under the provisions of
Regulation T, U or X of the Board.
(j) Transactions with Affiliates. Enter into,
renew, extend or be a party to, or permit any of its Subsidiaries to enter
into, renew, extend or be a party to any transaction or series of related
transactions (including, without limitation, the purchase, sale, lease,
transfer or exchange of property or assets of any kind or the rendering of
services of any kind) with any of its Affiliates, except in the ordinary
course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to the Borrower or such
Subsidiary than would be obtainable in a comparable arm's length transaction
with a Person that is not an Affiliate thereof.
(k) Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries. Create or otherwise cause, incur, assume,
suffer or permit to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any of its Subsidiaries (i) to pay
dividends or to make any other distribution on any shares of Capital Stock of
such Subsidiary owned by the Borrower or any of its Subsidiaries, (ii) to pay
or prepay or to subordinate any Indebtedness owed to the Borrower or any of
its Subsidiaries, (iii) to make loans or advances to the Borrower or any of
its Subsidiaries or (iv) to transfer any of its property or assets to the
Borrower or any of its Subsidiaries, or permit any of its Subsidiaries to do
any of the foregoing; provided, however, that nothing in any of clauses (i)
through (iv) of this Section 6.02(k) shall prohibit or restrict:
(A) this Agreement and the other Loan Documents;
(B) any applicable law, rule or regulation (including,
without limitation, applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances);
(C) in the case of clause (iv) any agreement setting
forth customary restrictions on the subletting, assignment or transfer of any
property or asset that is a lease, license, conveyance or contract of similar
property or assets; or
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(D) in the case of clause (iv) any holder of a Permitted
Lien from restricting on customary terms the transfer of any property or
assets subject thereto.
(l) Limitation on Issuance of Capital Stock.
(i) Issue or sell or enter into any
agreement or arrangement for the issuance and sale of any shares of its
Capital Stock, any securities convertible into or exchangeable for its Capital
Stock or any warrants, options or other rights for the purchase or acquisition
of any of its Capital Stock.
(ii) Permit any of its Subsidiaries to
issue or sell or enter into any agreement or arrangement for the issuance and
sale of any shares of its Capital Stock, any securities convertible into or
exchangeable for its Capital Stock or any warrants.
(m) Modifications of Indebtedness,
Organizational Documents and Certain Other Agreements; Etc. (i) Amend, modify
or otherwise change (or permit the amendment, modification or other change in
any manner of) any of the provisions of any Indebtedness of the Borrower or
any of its Subsidiaries or of any instrument or agreement (including, without
limitation, any purchase agreement, indenture, loan agreement or security
agreement) relating to any such Indebtedness if such amendment, modification
or change would shorten the final maturity or average life to maturity of, or
require any payment to be made earlier than the date originally scheduled on,
such Indebtedness, would increase the interest rate applicable to such
Indebtedness, or would change the subordination provision, if any, of such
Indebtedness, or would otherwise be adverse to the issuer of such Indebtedness
in any respect, (ii) except for the Obligations, make any voluntary or
optional payment, prepayment, redemption or other acquisition for value of any
Indebtedness of the Borrower or any of its Subsidiaries (including, without
limitation, by way of depositing money or securities with the trustee therefor
before the date required for the purpose of paying any portion of such
Indebtedness when due), or refund, refinance, replace or exchange any other
Indebtedness for any such Indebtedness, or make any prepayment, redemption or
repurchase of any outstanding Indebtedness as a result of any asset sale,
change of control, issuance and sale of debt or equity securities or similar
event, or give any notice with respect to any of the foregoing, or (iii)
amend, modify or otherwise change its certificate of incorporation or bylaws
(or other similar organizational documents), including, without limitation, by
the filing or modification of any certificate of designation, or any agreement
or arrangement entered into by it, with respect to any of its Capital Stock
(including any shareholders' agreement), or enter into any new agreement with
respect to any of its Capital Stock except any such amendments, modifications
or changes or any such new agreements or arrangements pursuant to this clause
(iii) that either individually or in the aggregate, could have a Material
Adverse Effect.
(n) Investment Company Act of 1940. Engage in
any business, enter into any transaction, use any securities or take any other
action or permit any of its Subsidiaries to do any of the foregoing, that
would cause it or any of its Subsidiaries to become subject to the
registration requirements of the Investment Company Act of 1940, as amended,
by virtue of being an "investment company" or a company "controlled" by an
"investment company" not entitled to an exemption within the meaning of such
Act.
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(o) Compromise of Accounts Receivable.
Compromise or adjust any Account Receivable (or extend the time of payment
thereof) or grant any discounts, allowances or credits or permit any of its
Subsidiaries to do so other than, provided no Default or Event of Default has
occurred and is continuing, in the ordinary course of business of the
Borrower; provided, however, in no event shall any such discount, allowance or
credit exceed $1,500,000 in the aggregate in any one year and no such
extension of the time for payment extend beyond 150 days from the original due
date.
(p) Environmental. Permit the use, handling,
generation, storage, treatment, release or disposal of Hazardous Materials at
any property owned or leased by the Borrower or any of its Subsidiaries except
in compliance with Environmental Laws and so long as such use, handling,
generation, storage, treatment, release or disposal of Hazardous Materials
does not result in a Material Adverse Effect.
SECTION 6.03 Financial Covenants. So long as any principal of
or interest on any Loan or any other Obligations (whether or not due) shall
remain unpaid or the Lender shall have any Commitment hereunder, the Borrower
will not, unless the Lender shall otherwise consent in writing:
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(a) Debt to EBITDA Ratio. Permit the Debt to EBITDA Ratio
for each period of four (4) consecutive fiscal quarters of the Borrower ending
on a date set forth below to be less than the ratio set forth opposite such
date:
Fiscal Quarter End Debt to EBITDA Ratio
------------------ --------------------
June 30, 2001 10.1
September 30, 2001 9.9
December 31, 2001 9.2
March 31, 2002 8.5
June 30, 2002 8.2
September 30, 2002 8.1
December 31, 2002 8.1
March 31, 2003 7.9
June 30, 2003 7.7
September 30, 2003 7.5
December 31, 2003 7.4
March 31, 2004 7.2
June 30, 2004 7.0
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(b) Credit Line to EBITDA Ratio. Permit the Credit Line
to Consolidated EBITDA Ratio for each period of four (4) consecutive fiscal
quarters of the Borrower for which the last quarter ends on a date set forth
below to be less than the amount set forth opposite such date:
Fiscal Quarter End Credit Line to EBITDA Ratio
------------------ ---------------------------
June 30, 2001 2.0
September 30, 2001 2.0
December 31, 2001 2.0
March 31, 2002 2.0
June 30, 2002 2.0
September 30, 2002 2.0
December 31, 2002 2.0
March 31, 2003 2.0
June 30, 2003 2.0
September 30, 2003 2.0
December 31, 2003 2.0
March 31, 2004 2.0
June 30, 2004 2.0
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(c) Consolidated EBITDA. Permit Consolidated EBITDA of
the Borrower at the end of each fiscal quarter of the Borrower to be less than
the applicable amount set forth below:
Fiscal Quarter End Consolidated EBITDA
------------------ -------------------
June 30, 2001 $12,000,000
September 30, 2001 $12,200,000
December 31, 2001 $13,500,000
March 31, 2002 $14,500,000
June 30, 2002 $15,000,000
September 30, 2002 $15,300,000
December 31, 2002 $15,400,000
March 31, 2003 $15,800,000
June 30, 2003 $16,200,000
September 30, 2003 $16,500,000
December 31, 2003 $16,900,000
March 31, 2004 $17,300,000
June 30, 2004 $17,700,000
(d) Liquidity. In the case of the Borrower, allow its and
its Subsidiaries' unencumbered and unrestricted Cash and Cash Equivalents, on
a consolidated basis and valued on a lower of cost or market basis plus the
amount of Availability, to be less than $500,000 at any one time.
(e) Other Indebtedness. In the case of the Borrower,
allow its and its Subsidiaries' Other Indebtedness, other than any Obligations
under this Agreement, on a consolidated basis, to be more than $4,000,000 at
any one time.
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ARTICLE VII
MANAGEMENT, COLLECTION AND STATUS OF
ACCOUNTS RECEIVABLE AND OTHER COLLATERAL
SECTION 7.01. Collection of Accounts Receivable; Management
of Collateral. (a) Borrower shall establish, within 60 days of the Effective
Date, and at all times maintain a concentration account (the "Concentration
Account") at the Concentration Account Bank and promptly deposit all
Collections received by the Borrower from any source immediately upon receipt
into the Concentration Account. The Borrower, Lender, and the Concentration
Account Bank shall enter into a concentration account agreement, in form and
substance satisfactory to Lender, relative to the Concentration Account (the
"Concentration Account Agreement"). Neither the Concentration Account
Agreement nor the arrangement contemplated thereby shall be modified by the
Borrower without the prior written consent of Lender. Upon the occurrence of
an Event of Default, upon the terms and subject to the conditions set forth in
the Concentration Account Agreement, all amounts received in the Concentration
Account shall be wired each Business Day into the Lender Account. Upon the
occurrence and during the continuation of an Event of Default, or if the
Lender deems itself insecure with respect to the Lender's good faith belief or
suspicion that the Borrower has engaged in defalcation, intentional
misrepresentation, or fraud, the Lender shall have the right to require the
Borrower to establish, and thereafter maintain, lockbox arrangements
satisfactory to Lender in respect of the Collections and to instruct all
Account Debtors of Borrower to remit all Collections to such lockboxes. With
respect to the Account Receivables, the Borrower shall and shall cause its
Subsidiaries to, irrevocably instruct the Account Debtors to remit to the
Concentration Account all payments to be made by check or other draft and all
payments to be made by wire transfer. Until the Lender has advised the
Borrower to the contrary after the occurrence and during the continuance of an
Event of Default, the Borrower and its Subsidiaries may and will enforce,
collect and receive all amounts owing on the Account Receivables for the
Lender's benefit and on the Lender's behalf, but at the Borrower's expense;
such privilege shall terminate, at the election of the Lender, upon the
occurrence and during the continuance of any Event of Default. All Collections
received directly by the Borrower or any Subsidiary from any Account Debtor or
any other source (exclusive of Lender), whether as proceeds from Accounts
Receivable, or as proceeds of any other Collateral, or otherwise, shall be
received and held by the Borrower in trust for the Lender and deposited by the
Borrower in original form and no later than the next Business Day after
receipt thereof into the Concentration Account. The Borrower shall not
commingle such collections with the Borrower's own funds or the funds of any
Subsidiary or Affiliate of the Borrower or with the proceeds of any assets not
included in the Collateral. All funds received in the Lender Account pursuant
to this Section 7.01(a) shall be credited to the Loan Account for application
at the end of each Business Day to reduce the then principal balance of the
Revolving Loans, conditional upon final payment to the Lender. No checks,
drafts or other instruments received by the Lender shall constitute final
payment to the Lender unless and until such instruments have actually been
collected.
(b) After the occurrence and during the
continuance of an Event of Default, the Lender may send a notice of assignment
and/or notice of the Lender's security interest to any and all Account Debtors
or third parties holding or otherwise concerned with any
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of the Collateral, and thereafter the Lender shall have the sole right to
collect the Accounts Receivable and/or take possession of the Collateral and the
books and records relating thereto. The Borrower shall not, and shall not permit
its Subsidiaries to, without prior written consent of the Lender, grant any
extension of time of payment of any Account Receivable, compromise or settle any
Account Receivable for less than the full amount thereof, release, in whole or
in part, any Person or property liable for the payment thereof, or allow any
credit or discount whatsoever thereon, except, in the absence of a continuing
Event of Default, as permitted by Section 6.02(o).
(c) The Borrower hereby appoints the Lender or
its designee on behalf of the Lender as the Borrower's attorney-in-fact with
power exercisable during the continuance of any Default or Event of Default to
endorse the Borrower's name upon any notes, acceptances, checks, drafts, money
orders or other evidences of payment relating to the Accounts Receivable, to
sign the Borrower's name on any invoice or xxxx of lading relating to any of
the Accounts Receivable, drafts against Account Debtors with respect to
Accounts Receivable, assignments and verifications of Accounts Receivable and
notices to Account Debtors with respect to Accounts Receivables, to send
verification of Accounts Receivable, and, to notify the Postal Service
authorities to change the address for delivery of mail addressed to the
Borrower or any of its Subsidiaries to such address as the Lender may
designate and to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney or designee are hereby ratified and
approved, and said attorney or designate shall not be liable for any acts of
omission or commission (other than acts or omissions constituting gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction), or for any error of judgment or mistake of fact or
law; this power being coupled with an interest is irrevocable until all of the
Loans and other Obligations under the Loan Documents are paid in full and all
of the Loan Documents are terminated.
(d) Nothing herein contained shall be
construed to constitute the Lender as agent of the Borrower or any Subsidiary
for any purpose whatsoever, and the Lender shall not be responsible or liable
for any shortage, discrepancy, damage, loss or destruction of any part of the
Collateral wherever the same may be located and regardless of the cause
thereof (other than from acts or omissions of the Lender constituting gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction). The Lender shall not, under any circumstance or in
any event whatsoever, have any liability for any error or omission or delay of
any kind occurring in the settlement, collection or payment of any of the
Accounts Receivable or any instrument received in payment thereof or for any
damage resulting therefrom (other than acts or omissions of the Lender
constituting gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction). The Lender, by anything herein
or in any assignment or otherwise, does not assume any of the obligations
under any contract or agreement assigned to the Lender and shall not be
responsible in any way for the performance by the Borrower or any Subsidiary
of any of the terms and conditions thereof.
(e) If any Account Receivable includes a
charge for any tax payable to any Governmental Authority, the Lender is hereby
authorized (but in no event obligated) in its discretion to pay the amount
thereof to the proper taxing authority for the Borrower's account and to
charge the Borrower therefor. The Borrower shall notify the Lender if any
Account Receivable includes any taxes due to any such Governmental Authority
and, in the absence of
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such notice, the Lender shall have the right to retain the full proceeds of such
Account Receivable and shall not be liable for any taxes that may be due by
reason of the sale and delivery creating such Account Receivable.
SECTION 7.02. Accounts Receivable Documentation. The
Borrower will at such intervals as the Lender may require, execute and deliver
confirmatory written assignments of the Accounts Receivable to the Lender and
furnish such further schedules and/or information as the Lender may require
relating to the Accounts Receivable, including, without limitation, sales
invoices or the equivalent, credit memos issued, remittance advises, reports
and copies of deposit slips and copies of original shipping or delivery
receipts for all merchandise sold. In addition, the Borrower shall notify the
Lender of any non-compliance in respect of the representations, warranties and
covenants contained in Section 7.03. The items to be provided under this
Section 7.02 are to be in form reasonably satisfactory to the Lender and are
to be executed and delivered to the Lender from time to time solely for its
convenience in maintaining records of the Collateral. The Borrower's failure
to give any of such items to the Lender shall not affect, terminate, modify or
otherwise limit the Lender's Lien on the Collateral. The Borrower has not
re-dated any invoice or sale or made sales on extended dating beyond that
customary in the Borrower's industry, and shall not re-xxxx any Accounts
Receivable without promptly disclosing the same to the Lender and providing
the Lender with copy of such re-billing, identifying the same as such. If the
Borrower becomes aware of anything materially detrimental to any of the
Borrower's customers' credit, the Borrower will promptly advise the Lender
thereof.
SECTION 7.03. Status of Accounts Receivable and Other
Collateral. With respect to Collateral of the Borrower at the time the
Collateral becomes subject to the Lender's Lien, the Borrower covenants,
represents and warrants: (a) the Borrower shall be the sole owner, free and
clear of all Liens except in the favor of the Lender or otherwise permitted
hereunder, and fully authorized to sell, transfer, pledge and/or grant a
security interest in each and every item of said Collateral; (b) each Account
Receivable shall be a good and valid account representing an undisputed bona
fide indebtedness incurred or an amount indisputably owed by the Account
Debtor therein named, for a fixed sum as set forth in the invoice relating
thereto with respect to any absolute sale and delivery upon the specified
terms of goods sold or services rendered by the Borrower; (c) except as
disclosed in writing to Lender or as is customary in the Borrower's business,
no Account Receivable shall be subject to any defense, offset, counterclaim,
discount or allowance except as may be stated in the invoice relating thereto;
(d) none of the transactions underlying or giving rise to any Account
Receivable shall violate any applicable state or federal laws or regulations,
and all documents relating thereto shall be legally sufficient under such laws
or regulations and shall be legally enforceable in accordance with their
terms; (e) no agreement under which any deduction or offset of any kind, other
than normal trade discounts, may be granted or shall have been made by the
Borrower at or before the time such Account Receivable is created; (f) all
agreements, instruments and other documents relating to any Account Receivable
shall be true and correct and in all material respects what they purport to be
the Borrower shall not re-date any invoice or sale or make sales on extended
dating beyond that which is customary in the ordinary course of its business
and in the industry; and (g) all signatures and endorsements that appear on
all material agreements, instruments and other documents relating to any
Account Receivable shall be genuine and all signatories and endorsers shall
have full capacity to contract. The Borrower shall maintain books and records
pertaining to
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said Collateral in such detail, form and scope as the Lender shall reasonably
require. The Borrower shall immediately notify the Lender if any accounts arise
out of contracts with the United States or any department, agency, or
instrumentality thereof and will execute any instruments and take any steps
required by the Lender in order that all monies due or to become due under any
such contract shall be assigned to the Lender and notice thereof given to the
United States Government under the Federal Assignment of Claims Act. The
Borrower will, immediately upon learning thereof, report to the Lender any
material loss or destruction of, or substantial damage to, any of the
Collateral, and any other matters affecting the value, enforceability or
collectibility of any of the Collateral. If any amount payable under or in
connection with any Account Receivable is evidenced by a promissory note or
other instrument, such promissory note or instrument shall be immediately
pledged, endorsed, assigned and delivered to the Lender as additional
Collateral. The Borrower shall conduct a physical count of the Inventory at such
intervals as the Lender may request and the Borrower shall promptly supply the
Lender with a copy of such count accompanied by a report of the value (based on
the lower of cost (on a first in first out basis) and market value) of such
Inventory. The Borrower is not and shall not be entitled to pledge the Lender's
credit on any purchases or for any purpose whatsoever.
SECTION 7.04. Collateral Custodian. Upon the occurrence and
during the continuance of any Default or Event of Default, the Lender may at
any time and from time to time employ and maintain on the premises of the
Borrower a custodian selected by the Lender who shall have full authority to
do all acts necessary to protect the Lender's interests. The Borrower hereby
agrees to, and to cause its Subsidiaries to, cooperate with any such custodian
and to do whatever the Lender may reasonably request to preserve the
Collateral. All costs and expenses incurred by the Lender by reason of the
employment of the custodian shall be the responsibility of the Borrower and
charged to the Loan Account.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following
Events of Default shall occur and be continuing:
(a) the Borrower fails to pay when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) any Obligation within the meaning of clause (i) of such term,
including, without limitation any principal of or interest on any Loan or any
fee or other amount due hereunder;
(b) any representation or warranty made or
deemed made by or on behalf of any Loan Party or by any officer of the
foregoing under or in connection with any Loan Document or under or in
connection with any report, certificate, or other document delivered to the
Lender pursuant to any Loan Document shall have been incorrect in any material
respect when made or deemed made;
(c) the Borrower fails to perform or comply
with any covenant
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or agreement contained in Article VI, or any Loan Party fails to perform or
comply with any covenant or agreement contained in Sections 4 or 5 of any
Security Agreement to which it is a party or Section 7 of any Pledge Agreement
to which it is a party;
(d) any Loan Party fails to perform or comply
with any other term, covenant or agreement contained in any Loan Document
(except the Mortgage, a Default under which shall be remedied in accordance
with its terms and shall not be deemed an Event of Default under this
Agreement) to be performed or observed by it and, except as set forth in
subsections (a), (b) and (c) of this Section 8.01, such failure, if capable of
being remedied, shall remain unremedied for 15 days after the earlier of the
date a senior officer of any Loan Party becomes aware of such failure and the
date written notice of such default shall have been given by the Lender to the
Borrower;
(e) any Loan Party fails to pay any principal
of or interest on any of its Indebtedness (excluding Indebtedness evidenced by
the Notes) in excess of $1,000,000, or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness, or any other default under any agreement or instrument relating
to any such Indebtedness, or any other event, shall occur and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof;
(f) any Loan Party (i) shall institute any
proceeding or voluntary case seeking to adjudicate it a bankrupt or insolvent,
or seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for any such Person or for any
substantial part of its property, (ii) shall be generally not paying its debts
as such debts become due or shall admit in writing its inability to pay its
debts generally, (iii) shall make a general assignment for the benefit of
creditors, or (iv) shall take any action to authorize or effect any of the
actions set forth above in this subsection (f);
(g) any proceeding shall be instituted against
any Loan Party seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official
for any such Person or for any substantial part of its property, and either
such proceeding shall remain undismissed or unstayed for a period of 60 days
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against any such Person or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property) shall occur;
(h) any provision of any Loan Document shall
at any time for any reason (other than pursuant to the express terms thereof)
cease to be valid and binding on or
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enforceable against any Loan Party intended to be a party thereto, or the
validity or enforceability thereof shall be contested by any party thereto, or a
proceeding shall be commenced by any Loan Party or any Governmental Authority
having jurisdiction over any of them, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party shall deny in writing that it has
any liability or obligation purported to be created under any Loan Document;
(i) any Security Agreement, any Mortgage, any
Pledge Agreement or any other security document, after delivery thereof
pursuant hereto, shall for any reason fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien in favor of the Lender on any Collateral purported to be
covered thereby;
(j) one or more judgments or orders for the
payment of money exceeding $250,000 in the aggregate shall be rendered against
any Loan Party and remain unsatisfied and either (i) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order, or
(ii) there shall be a period of 10 consecutive days after entry thereof during
which a stay of enforcement of any such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; provided, however, that
any such judgment or order shall not give rise to an Event of Default under
this subsection (j) if and for so long as (A) the amount of such judgment or
order is covered by a valid and binding policy of insurance between the
defendant and the insurer covering full payment thereof and (B) such insurer
has been notified, and has not disputed the claim made for payment, of the
amount of such judgment or order; or
(k) the Borrower or any of its Subsidiaries or
any of their ERISA Affiliates shall have made a complete or partial withdrawal
from a Multiemployer Plan, and, as a result of such complete or partial
withdrawal, the Borrower or any of its Subsidiaries or such ERISA Affiliate
incurs a withdrawal liability in an annual amount exceeding $100,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof, the Borrower's or such Subsidiary's, or such ERISA
Affiliate's annual contribution requirement with respect to such Multiemployer
Plan increases in an annual amount exceeding $200,000;
(l) any Termination Event with respect to any
Employee Plan shall have occurred, and, 30 days after notice thereof shall
have been given to the Borrower by the Lender, (i) such Termination Event (if
correctable) shall not have been corrected, and (ii) the then current value of
such Employee Plan's vested benefits exceeds the then current value of assets
allocable to such benefits in such Employee Plan by more than $100,000 (or, in
the case of a Termination Event involving liability under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
4971 or 4975 of the Code, the liability is in excess of such amount);
(m) a Change of Control shall have occurred;
or
(n) an event or development occurs which has a
Material Adverse Effect,
then, and in any such event, the Lender may, by notice to
the Borrower, (i) terminate the Commitments, whereupon the Commitments shall
terminate immediately, (ii) declare
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all Loans then outstanding to be due and payable, whereupon the aggregate
principal of such Loans, all accrued and unpaid interest thereon, all fees and
all other amounts payable under this Agreement shall become due and payable
immediately, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower and (iii) exercise any
and all of its other rights and remedies under applicable law, hereunder and
under the other Loan Documents; provided, however, that upon the occurrence of
any Event of Default with respect to the Borrower described in subsection (f) or
(g) of this Section 8.01, without any notice to the Borrower or any other Person
or any act by the Lender, the Commitments shall automatically terminate and the
Loans then outstanding, together with all accrued and unpaid interest thereon,
all fees and all other amounts due under this Agreement shall become due and
payable automatically and immediately, without presentment, demand, protest or
notice of any kind, all of which are expressly waived by the Borrower.
ARTICLE IX
GUARANTY
SECTION 9.01. Guaranty; Limitation of Liability. The Guarantor
hereby unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all obligations of
the Borrower now or hereafter existing under any Loan Document, whether for
principal, interest, fees, expenses or otherwise (such obligations, to the
extent not paid by the Borrower, being the "Guaranteed Obligations"), and agrees
to pay any and all expenses (including reasonable counsel fees and expenses)
incurred by the Lender in enforcing any rights under the guaranty set forth in
this Article. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrower to the Lender under any Loan
Document but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Borrower.
SECTION 9.02. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Lender with respect thereto. The obligations of the Guarantor under this Article
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against the Guarantor to enforce such obligations,
irrespective of whether any action is brought against the Borrower or whether
the Borrower is joined in any such action or actions. The liability of the
Guarantor under this Article shall be irrevocable, absolute and unconditional
irrespective of, and the Guarantor hereby irrevocably waives any defenses it may
now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations, or any
other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the
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Guaranteed Obligations resulting from the extension of additional credit to the
Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of
any Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
the Borrower; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by the Lender that might otherwise constitute a defense
available to, or a discharge of, the Guarantor, the Borrower or any other
guarantor or surety.
This Article shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the
Lender or any other Person upon the insolvency, bankruptcy or reorganization
of the Borrower or otherwise, all as though such payment had not been made.
SECTION 9.03. Waiver. The Guarantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this Article and any requirement that
the Lender exhaust any right or take any action against the Borrower or any
other Person or any collateral. The Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 9.03 is
knowingly made in contemplation of such benefits. The Guarantor hereby waives
any right to revoke this Article, and acknowledges that this Article is
continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
SECTION 9.04. Continuing Guaranty; Assignments. This Article
is a continuing guaranty and shall (a) remain in full force and effect until
the later of the cash payment in full of the Guaranteed Obligations (other
than indemnification obligations as to which no claim has been made) and all
other amounts payable under this Article and the Revolving Credit Termination
Date, (b) be binding upon the Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Lender and its successors,
pledgees, transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Lender may pledge, assign or otherwise transfer all
or any portion of its rights and obligations under this Agreement (including,
without limitation, all or any portion of its Commitments, the Loans owing to
it and any Note held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted the
Lender herein or otherwise, in each case as provided in Section 11.07.
SECTION 9.05. Subrogation. The Guarantor will not exercise
any rights that it may now or hereafter acquire against the Borrower or any
other insider guarantor that arise from the existence, payment, performance or
enforcement of the Guarantor's obligations under this Article, including,
without limitation, any right of subrogation, reimbursement, exoneration,
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contribution or indemnification and any right to participate in any claim or
remedy of the Lender against the Borrower or any other insider guarantor or
any collateral, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower or any other insider guarantor,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security solely on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other
amounts payable under this Article shall have been paid in full in cash and
the Revolving Commitment Termination Date shall have occurred. If any amount
shall be paid to the Guarantor in violation of the immediately preceding
sentence at any time prior to the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Article and
the Revolving Commitment Termination Date, such amount shall be held in trust
for the benefit of the Lender and shall forthwith be paid to the Lender to be
credited and applied to the Guaranteed Obligations and all other amounts
payable under this Article, whether matured or unmatured, in accordance with
the terms of this Agreement, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Article thereafter arising. If
(i) the Guarantor shall make payment to the Lender of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Article shall be paid in full in cash and (iii) the
Revolving Commitment Termination Date shall have occurred, the Lender will, at
the Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor
of an interest in the Guaranteed Obligations resulting from such payment by
the Guarantor.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and shall be mailed,
telecopied or delivered, if to the Borrower, at the following address:
Tri-State Outdoor Media Group, Inc.
0000 Xxxxxxx 00 Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
St. Xxxx & Xxxxx LLC
Xxx Xxxx Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx
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Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to the Lender, to it at the following address:
Ableco Finance LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with the
terms of this Section 10.01. All such notices and other communications shall
be effective, (i) if mailed, when received or five days after deposited in the
mails, whichever occurs first, (ii) if telecopied, when transmitted and
confirmation received, or (iii) if delivered, upon delivery, except that
notices to the Lender pursuant to Article II shall not be effective until
received by the Lender.
SECTION 10.02. Amendments, Etc. No amendment or waiver of
any provision of this Agreement, any Note or any other Loan Document, and no
consent to any departure by the Borrower or any other Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10.03. No Waiver; Remedies, Etc. No failure on the
part of the Lender to exercise, and no delay in exercising, any right
hereunder or under any other Loan Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Lender provided herein and in the other
Loan Documents are cumulative and are in addition to, and not exclusive of,
any rights or remedies provided by law. The rights of the Lender under any
Loan Document against any party thereto are not conditional or contingent on
any attempt by the Lender to exercise any of their rights under any other Loan
Document against such party or against any other Person.
SECTION 10.04. Expenses; Taxes; Attorneys' Fees. The
Borrower will pay on demand, all costs and expenses incurred by or on behalf
of the Lender, regardless of whether the
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transactions contemplated hereby are consummated, including, without limitation,
reasonable fees, costs, client charges and expenses of counsel for the Lender
(including the Lender's in-house counsel), accounting, due diligence, periodic
field audits, physical counts, valuations, fees of Rating Agencies associated
with the rating of the Loans, investigations, monitoring of assets, appraisals
of Collateral, environmental assessments, miscellaneous disbursements,
examination, travel, lodging and meals, arising from or relating to: (a) the
negotiation, preparation, execution, delivery, performance and administration of
this Agreement and the other Loan Documents, (including, without limitation, the
preparation of any additional Loan Documents, pursuant to Section 6.01(b) or the
review of any of the agreements, instruments and documents referred to in
Section 6.02(f)), (b) any requested amendments, waivers or consents to this
Agreement or the other Loan Documents whether or not such documents become
effective or are given, (c) the preservation and protection of any of the
Lender's rights under this Agreement or the other Loan Documents, (d) the
defense of any claim or action asserted or brought against the Lender by any
Person that arises from or relates to this Agreement, any other Loan Document,
the Lender's claims against the Borrower and each other Loan Party, or any and
all matters in connection therewith, (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Loan Document, (f) the filing of any petition, complaint, answer,
motion or other pleading by the Lender, or the taking of any action in respect
of the Collateral or other security, in connection with this Agreement or any
other Loan Document, (g) the protection, collection, lease, sale, taking
possession of or liquidation of, any Collateral or other security in connection
with this Agreement or any other Loan Document, (h) any attempt to enforce any
Lien or security interest in any Collateral or other security in connection with
this Agreement or any other Loan Document, (i) any attempt to collect from the
Borrower or any other Loan Party, (j) the receipt by the Lender of any advice
from its professionals with respect to any of the foregoing, (k) all liabilities
and costs arising from or in connection with the past, present or future
operations of the Borrower, its Subsidiaries and each other Loan Party involving
any damage to real or personal property or natural resources or harm or injury
alleged to have resulted from any Release of Hazardous Materials on, upon or
into such property, (l) any Environmental Liabilities and Costs incurred in
connection with the investigation, removal, cleanup and/or remediation of any
Hazardous Materials present or arising out of the operations of any facility of
the Borrower and its Subsidiaries and any other Loan Party, or (m) any
Environmental Liabilities and Costs incurred in connection with any
Environmental Lien. Without limitation of the foregoing or any other provision
of any Loan Document: (x) the Borrower agrees to pay all stamp, document,
transfer, recording or filing taxes or fees and similar impositions now or
hereafter determined by the Lender to be payable in connection with this
Agreement or any other Loan Document, and the Borrower agrees to save the Lender
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions, (y) the Borrower agrees to pay all broker
fees that may become due in connection with the transactions contemplated by
this Agreement, and (z) if the Borrower fails to perform any covenant or
agreement contained herein or in any other Loan Document, the Lender may itself
perform or cause performance of such covenant or agreement, and the expenses of
the Lender incurred in connection therewith shall be reimbursed on demand by the
Borrower.
SECTION 10.05. Right of Set-off. (a) Upon the occurrence and
during the continuance of any Event of Default and in addition to (and without
limitation of) any right of set-off, banker's lien, or counterclaim Lender may
otherwise have, Lender may, and is hereby authorized by Borrower to, at any
time and from time to time, without notice to the Borrower
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(any such notice being expressly waived by the Borrower) and to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender to or for the credit or the account of
the Borrower against any and all obligations of either now or hereafter existing
under any Loan Document, irrespective of whether or not Lender shall have made
any demand hereunder or thereunder and although such obligations may be
contingent or unmatured. The Lender agrees to notify the Borrower promptly after
any such set-off and application made by the Lender provided that the failure to
give such notice shall not affect the validity of such set-off and application.
(b) Nothing contained in this Section 10.05 shall require Lender to exercise any
such right or shall affect the right of Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, Lender receives a secured claim in lieu of a set-off to which this
Section 10.05 applies, Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders
SECTION 10.06. Severability. Any provision of this
Agreement, which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.07. Assignments and Participations.
(a) This Agreement and the Notes shall be
binding upon and inure to the benefit of the Borrower and the other the Loan
Parties and the Lender and their respective successors and assigns; provided,
however, that (i) each of the Borrower and the other Loan Parties may not
assign or transfer any of its rights hereunder, or under the Notes, without
the prior written consent of the Lender and any such assignment without the
Lender's prior written consent shall be null and void, and (ii) the Lender may
pledge, assign or transfer any of its rights hereunder, or under the Notes, to
any Person without notice to or the prior written consent of the Borrower.
Except as provided in this Section 10.07, this Agreement shall not inure to
the benefit of any party other than the Borrower and the Lender.
(b) The Lender may at any time sell, assign or
participate to an Affiliate of the Lender or any other Person its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Loans made by it, and the Notes held by it)
without notice to or the consent of the Borrower or any other Loan Party. The
Borrower and each other Loan Party shall execute and deliver such Notes and
any amendment or other modification restatement of this Agreement or any Loan
Document as may be requested by the Lender to reflect any such sale or
assignment.
(i) the Borrower shall maintain, or
cause to be maintained, a register (the "Register") on which it enters the
name of the Lender as the registered owner of the Loan held by the Lender. A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
assigned or sold in whole or in part only by registration of such assignment
or sale on the Register (and each Registered Note shall expressly so provide).
Any assignment or sale of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected only by
registration of such assignment or sale on the Register, together with the
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surrender of the Registered Note, if any, evidencing the same duly endorsed by
(or accompanied by a written instrument of assignment or sale duly executed
by) the holder of such Registered Note, whereupon, at the request of the
designated assignee(s) or transferee(s), one or more new Registered Notes in
the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale
of any Registered Loan (and the Registered Note, if any evidencing the same),
the Borrower shall treat the Person in whose name such Loan (and the
Registered Note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon and for all other
purposes, notwithstanding notice to the contrary.
(ii) In the event that the Lender sells
participations in the Registered Loan, the Lender shall maintain a register on
which it enters the name of all participants in the Registered Loans held by
it (the "Participant Register"). A Registered Loan (and the Registered Note,
if any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). Any participation of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
(iii) Any foreign Person who purchases
or is assigned or participates in any portion of such Loan shall provide the
Borrower (in the case of a purchase or assignment) or the Lender (in the case
of a participation) with a completed Internal Revenue Service Form W-8
(Certificate of Foreign Status) or a substantially similar form for such
purchaser, participant or any other affiliate who is a holder of beneficial
interests in the Loan.
SECTION 10.08. Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED IN THE STATE OF NEW YORK.
SECTION 10.10. CONSENT TO JURISDICTION; SERVICE OF PROCESS
AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX
IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPT IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH LOAN PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO BORROWER AT ITS ADDRESS FOR NOTICES AS SET FORTH IN SECTION 10.01,
SUCH SERVICE TO BECOME EFFECTIVE
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TEN (10) DAYS AFTER SUCH MAILING. EACH LOAN PARTY HEREBY IRREVOCABLY APPOINTS
THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR SERVICE OF
PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF THE LENDER TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH LOAN
PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
EACH LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
SECTION 10.11. WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY
AND THE LENDER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE
NOTES OR OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY
BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY
SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE,
AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM,
SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN PARTY HEREBY ACKNOWLEDGES
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT.
SECTION 10.12. Consent by the Lender. Except as otherwise
expressly set forth herein to the contrary, if the consent, approval,
satisfaction, determination, judgment, acceptance or similar action (an
"Action") of the Lender shall be permitted or required pursuant to any
provision hereof or any provision of any other agreement to which the Borrower
and any other Loan Party are parties and to which the Lender has succeeded
thereto, such Action shall be required to be in writing and may be withheld or
denied by the Lender with or without any reason, and without being subject to
question or challenge on the grounds that such Action was not taken in good
faith.
SECTION 10.13. No Party Deemed Drafter. Each of the
parties hereto agrees that no party hereto shall be deemed to be the drafter
of this Agreement.
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SECTION 10.14. Reinstatement; Certain Payments. If any claim
is ever made upon the Lender for repayment or recovery of any amount or
amounts received by the Lender in payment or on account of any of the
Obligations, the Lender shall give prompt notice of such claim to the
Borrower, and if the Lender repays all or part of such amount by reason of (i)
any judgment, decree or order of any court or administrative body having
jurisdiction over the Lender or any of its property, or (ii) any good faith
settlement or compromise of any such claim effected by the Lender with any
such claimant, then and in such event the Borrower agrees that (A) any such
judgment, decree, order, settlement or compromise shall be binding upon it
notwithstanding the cancellation of any Note or other instrument evidencing
the Obligations or the other Loan Documents or the termination of this
Agreement or the other Loan Documents, and (B) it shall be and remain liable
to the Lender hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by the Lender.
SECTION 10.15. Indemnification. In addition to the
Borrower's other Obligations under this Agreement, the Borrower agrees to
defend, protect, indemnify and hold harmless the Lender, any Securitization
Party and all of their respective officers, directors, employees, attorneys,
consultants and agents (collectively called the "Indemnitees") from and
against any and all losses, damages, liabilities, obligations, penalties,
fees, reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, costs and expenses) incurred by such Indemnitees, whether
prior to or from and after the Effective Date, whether direct, indirect or
consequential, as a result of or arising from or relating to or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance or enforcement of this Agreement, any other Loan Document or of
any other document executed in connection with the transactions contemplated
by this Agreement, (ii) the Lender's furnishing of funds to the Borrower under
this Agreement, including, without limitation, the management of any such
Loans, (iii) any matter relating to the financing transactions contemplated by
this Agreement or the other Loan Documents or by any document executed in
connection with the transactions contemplated by this Agreement or the other
Loan Documents, or (iv) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto (collectively, the "Indemnified Matters"); provided, however, that the
Borrower shall not have any obligation to any Indemnitee under this Section
10.15 for any Indemnified Matter caused by the gross negligence or willful
misconduct of such Indemnitee, as determined by a final judgment of a court of
competent jurisdiction. Such indemnification for all of the foregoing losses,
damages, fees, costs and expenses of the Indemnitees are chargeable against
the Loan Account. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in this Section 10.15 may be unenforceable because it
is violative of any law or public policy, the Borrower shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees. This Indemnity shall survive the repayment of the Obligations and
the discharge of the Liens granted under the Loan Documents.
SECTION 10.16. Records. The unpaid principal of and interest
on the Notes, the interest rate or rates applicable to such unpaid principal
and interest, the duration of such applicability, the Revolving Credit
Commitment, and the accrued and unpaid fees payable pursuant to Section 2.06
hereof, including, without limitation, the Funding Fee, Loan Servicing Fee,
the Appraisal Fee and Commitment Fee, shall at all times be ascertained from
the records of the Lender, which shall be conclusive and binding absent
manifest error.
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SECTION 10.17. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Lender and
when the conditions precedent set forth in Section 4.01 hereof have been
satisfied or waived in writing by the Lender, and thereafter shall be binding
upon and inure to the benefit of the Borrower and the Lender, and their
respective successors and assigns, except that the Borrower shall not have the
right to assign their rights hereunder or any interest herein without the
prior written consent of the Lender, and any assignment by the Lender shall be
governed by Section 10.07 hereof.
SECTION 10.18. Joint and Several. The obligations of the
Loan Parties hereunder are joint and several. The Lender may, in its sole and
absolute discretion, enforce the provisions hereof against either of the Loan
Parties and shall not be required to proceed against both Loan Parties jointly
or seek payment from the Loan Parties ratably. In addition, the Lender may, in
its sole and absolute discretion, select the Collateral of any one or more of
the Loan Parties for sale or application to the Obligations, without regard to
the ownership of such Collateral, and shall not be required to make such
selection ratably from the Collateral owned by each of the Loan Parties. The
release or discharge of any Loan Party by the Lender shall not release or
discharge the other Loan Party from the obligations of such Person hereunder.
SECTION 10.19. Confidentiality. The Lender agrees (on behalf
of itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for handling confidential information
of this nature and in accordance with safe and sound practices of comparable
commercial finance companies, any non-public information supplied to it by the
Borrower pursuant to this Agreement or the other Loan Documents which is
identified by the Borrower as being confidential at the time the same is
delivered to such Person (and which at the time is not, and does not
thereafter become, publicly available or available to such Person from another
source not known to be subject to a confidentiality obligation to such Person
not to disclose such information), provided that nothing herein shall limit
the disclosure of any such information (i) to the extent required by statute,
rule, regulation or judicial process, (ii) to counsel for the Lender, (iii) to
examiners, auditors, accountants or Securitization Parties, (iv) in connection
with any litigation to which the Lender is a party or (v) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first agrees, in
writing, to be bound by confidentiality provisions similar in substance to
this Section 10.19. The Lender agrees that, upon receipt of a request or
identification of the requirement for disclosure pursuant to clause (iv)
hereof, it will make reasonable efforts to keep the Borrower informed of such
request or identification; provided that the Borrower acknowledges that the
Lender may make disclosure as required or requested by any Governmental
Authority or representative thereof and that the Lender may be subject to
review by Securitization Parties or other regulatory agencies and may be
required to provide to, or otherwise make available for review by, the
representatives of such parties or agencies any such non-public information.
SECTION 10.20. Additional Debt Financing. The Borrower shall
give reasonable notice to the Lender that the Borrower intends to seek debt
financing in addition to the Loans provided by the Lender hereunder or other
Permitted Indebtedness in accordance with this Agreement (the "Additional Debt
Notice"). The Additional Debt Notice shall set forth all of
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the terms agreed to with such third party lender, as such terms are memorialized
in an executed term sheet or commitment letter.
SECTION 10.21. Power of Attorney.
Borrower hereby irrevocably designates, makes, constitutes,
and appoints Lender (and all Persons designated by Lender) as Borrower's true
and lawful attorney (and agent-in-fact), and Lender, or Lender's agent, may,
without notice to Borrower and in either Borrower's or Lender's name, but at
the cost and expense of Borrower:
(a) At such time or times upon or after the
occurrence of a Default or an Event of Default as Lender or said agent, in its
sole discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders, or any other evidence of payment or
proceeds of the Collateral which come into the possession of Lender or under
Lender's control and shall deposit such item of payment into the Lender's
Account or credit the amount thereof (in accordance with the provisions of
this Agreement) to the Obligations.
(b) At such time or times upon or after the
occurrence of an Event of Default as Lender or its agent, in its sole
discretion, may determine: (i) demand payment of the Accounts from the Account
Debtors, enforce payment of the Accounts by legal proceedings or otherwise,
and generally exercise all of Borrower's rights and remedies with respect to
the collection of the Accounts, (ii) settle, adjust, compromise, discharge, or
release any of the Accounts or other Collateral or any legal proceedings
brought to collect any of the Accounts or other Collateral, (iii) sell or
assign any of the Accounts and other Collateral upon such terms, for such
amounts, and at such time or times as Lender deems advisable, (iv) take
control, in any manner, of any item of payment or proceeds relating to any
Collateral, (v) prepare, file, and sign Borrower's name to a proof of claim in
bankruptcy or similar document against any Account Debtor, or to any notice of
lien, assignment, or satisfaction of lien or similar document in connection
with any of the Collateral, (vi) receive, open and dispose of all mail
addressed to Borrower, and notify postal authorities to change the address for
delivery thereof to such address as Lender may designate, (vii) endorse the
name of Borrower upon any of the items of payment or proceeds relating to any
Collateral, and deposit the same to the account of Lender on account of the
Obligations, (viii) endorse the name of Borrower upon any chattel paper,
document, instrument, invoice, freight xxxx, xxxx of lading or similar
document, or agreement relating to the Accounts, Inventory and any other
Collateral, (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors, (x) use
the information recorded on or contained in any data processing equipment,
computer hardware, and software relating to the Accounts, Inventory,
Equipment, and any other Collateral, (xi) make and adjust claims under
policies of insurance, and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill Borrower's obligations under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER:
--------
TRI-STATE OUTDOOR MEDIA GROUP,
INC.
By:
-------------------------------
Name:
Title:
LENDER:
-------
ABLECO FINANCE LLC
By:
-------------------------------
Name:
Title:
GUARANTOR:
----------
SGH HOLDINGS, INC.
By:
-------------------------------
Name:
Title:
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EXECUTION COPY
FINANCING AGREEMENT
Dated as of March 27, 2001
by and among
TRI-STATE OUTDOOR MEDIA GROUP, INC.,
ABLECO FINANCE LLC
and
SGH HOLDINGS, INC.
73
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CERTAIN TERMS.............................................................................1
SECTION 1.01. Definitions..............................................................................1
SECTION 1.02. Terms Generally..........................................................................16
SECTION 1.03. Accounting and Other Terms..............................................................17
SECTION 1.04. Time References.........................................................................17
ARTICLE II THE LOANS.............................................................................................17
SECTION 2.01. Commitments.............................................................................17
SECTION 2.02. Making the Loans........................................................................17
SECTION 2.03. Notes; Repayment of Loans...............................................................18
SECTION 2.04. Interest................................................................................18
SECTION 2.05. Reduction of Commitment; Prepayment of Loans............................................19
SECTION 2.06. Fees....................................................................................22
SECTION 2.07. Securitization..........................................................................22
ARTICLE III PAYMENTS AND OTHER COMPENSATION......................................................................23
SECTION 3.01. Payments; Computations and Statements...................................................23
SECTION 3.02. All Loans to Constitute One Obligation..................................................24
SECTION 3.03. Loan Account; Statements of Account.....................................................24
ARTICLE IV CONDITIONS TO LOANS...................................................................................24
SECTION 4.01. Conditions Precedent to Effectiveness and the Initial Loans.............................24
SECTION 4.02. Conditions Precedent to Subsequent Loans................................................28
ARTICLE V REPRESENTATIONS AND WARRANTIES.........................................................................29
SECTION 5.01. Representations and Warranties..........................................................29
ARTICLE VI COVENANTS OF THE BORROWER.............................................................................36
SECTION 6.01 Affirmative Covenants....................................................................36
SECTION 6.02. Negative Covenants......................................................................44
SECTION 6.03 Financial Covenants......................................................................50
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74
ARTICLE VII MANAGEMENT, COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL........................54
SECTION 7.01. Collection of Accounts Receivable; Management of Collateral.............................54
SECTION 7.02. Accounts Receivable Documentation.......................................................56
SECTION 7.03. Status of Accounts Receivable and Other Collateral......................................56
SECTION 7.04. Collateral Custodian....................................................................57
ARTICLE VIII EVENTS OF DEFAULT...................................................................................57
SECTION 8.01. Events of Default.......................................................................57
ARTICLE IX GUARANTY.............................................................................................60
SECTION 9.01. Guaranty; Limitation of Liability........................................................60
SECTION 9.02. Guaranty Absolute........................................................................60
SECTION 9.03. Waiver.................................................................................. 61
SECTION 9.04. Continuing Guaranty; Assignments.........................................................61
SECTION 9.05. Subrogation..............................................................................61
ARTICLE X MISCELLANEOUS..........................................................................................62
SECTION 10.01. Notices, Etc...........................................................................62
SECTION 10.02. Amendments, Etc........................................................................63
SECTION 10.03. No Waiver; Remedies, Etc...............................................................63
SECTION 10.04. Expenses; Taxes; Attorneys' Fees.......................................................63
SECTION 10.05. Right of Set-off.......................................................................64
SECTION 10.06. Severability...........................................................................65
SECTION 10.07. Assignments and Participations.........................................................65
SECTION 10.08. Counterparts...........................................................................66
SECTION 10.09. GOVERNING LAW..........................................................................66
SECTION 10.10. CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE..................................66
SECTION 10.11. WAIVER OF JURY TRIAL, ETC..............................................................67
SECTION 10.12. Consent by the Lender..................................................................67
SECTION 10.13. No Party Deemed Drafter................................................................67
SECTION 10.14. Reinstatement; Certain Payments........................................................68
SECTION 10.15. Indemnification........................................................................68
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SECTION 10.16. Records................................................................................68
SECTION 10.17. Binding Effect.........................................................................69
SECTION 10.18. Joint and Several......................................................................69
SECTION 10.19. Confidentiality........................................................................69
SECTION 10.20. Additional Debt Financing..............................................................69
SECTION 10.21. Power of Attorney......................................................................70
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Schedule 5.01(e) Capitalization
Schedule 5.01(f) Subsidiaries
Schedule 5.01(g) Litigation
Schedule 5.01(j) ERISA
Schedule 5.01(p) Real Property
Schedule 5.01(r) Operating Lease Obligations
Schedule 5.01(s) Environmental Matters
Schedule 5.01(t) Insurance
Schedule 5.01(w) Bank Accounts
Schedule 5.01(x) Intellectual Real Property
Schedule 5.01(y) Material Contracts
Schedule 5.01(ee) Location of Inventory; Place of Business; Chief Executive Office
Schedule 6.01(l) Collateral Locations
Schedule 6.02(a) Permitted Liens
Schedule 6.02(b) Permitted Indebtedness
Schedule 6.02(e) Existing Investments
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Term Note
Exhibit C Form of Security Agreement
Exhibit D Form of Pledge Agreement
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Opinion of St. Xxxx & Xxxxx LLC
Exhibit G Form of Opinion of McDowell, Rice, Xxxxx & Gaar, P.C.
Exhibit H Form of Opinion of Xxxxx & Xxxxx
Exhibit I Form of Borrowing Base Certificate
Exhibit J Form of Concentration Account Agreement
Exhibit K States of Good Standing
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