EXHIBIT 10.1
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 3, 2007
AMONG
LASALLE BUSINESS CREDIT, LLC,
SUCCESSOR BY MERGER TO LASALLE BUSINESS CREDIT, INC.,
AS AGENT,
AND
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME A PARTY HERETO,
AS LENDERS,
AND
PROTECTIVE APPAREL CORPORATION OF AMERICA
POINT BLANK BODY ARMOR INC.
AND NDL PRODUCTS, INC.,
AS BORROWERS
AND
DHB INDUSTRIES, INC., AS GUARANTOR
TABLE OF CONTENTS
PAGE
1. DEFINITIONS..............................................................................................5
2. LOANS....................................................................................................5
(A) REVOLVING LOANS.................................................................................5
(B) REPAYMENTS......................................................................................5
(C) NOTES...........................................................................................5
(D) BORROWER REPRESENTATIVE.........................................................................5
3. LETTERS OF CREDIT........................................................................................5
(A) GENERAL TERMS...................................................................................5
(B) REQUESTS FOR LETTERS OF CREDIT..................................................................5
(C) OBLIGATIONS ABSOLUTE............................................................................5
(D) EXPIRATION DATES OF LETTERS OF CREDIT...........................................................5
(E) PARTICIPATION...................................................................................5
4. INTEREST, FEES AND CHARGES...............................................................................5
(A) INTEREST RATE...................................................................................5
(B) OTHER LIBOR PROVISIONS..........................................................................5
(C) FEES AND CHARGES................................................................................5
(D) MAXIMUM INTEREST................................................................................5
5. COLLATERAL...............................................................................................5
(A) REAFFIRMATION OF GRANT OF SECURITY INTEREST TO AGENT............................................5
(B) OTHER SECURITY..................................................................................5
(C) POSSESSORY COLLATERAL...........................................................................5
(D) ELECTRONIC CHATTEL PAPER........................................................................5
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN..................................5
7. POSSESSION OF COLLATERAL AND RELATED MATTERS.............................................................5
8. COLLECTIONS..............................................................................................5
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.............................................5
(A) BORROWING REPORTS...............................................................................5
(B) MONTHLY REPORTS AND FINANCIAL STATEMENTS........................................................5
(C) QUARTERLY AND ANNUAL FINANCIAL STATEMENTS.......................................................5
(D) ANNUAL PROJECTIONS..............................................................................5
(E) EXPLANATION OF BUDGETS AND PROJECTIONS..........................................................5
(F) PUBLIC REPORTING................................................................................5
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(G) ERISA...........................................................................................5
(H) OTHER INFORMATION...............................................................................5
10. TERMINATION; AUTOMATIC RENEWAL...........................................................................5
11. REPRESENTATIONS AND WARRANTIES...........................................................................5
(A) THE FINANCIAL AND OTHER INFORMATION.............................................................5
(B) LOCATIONS.......................................................................................5
(C) LOANS BY THE BORROWERS..........................................................................5
(D) ACCOUNTS AND INVENTORY..........................................................................5
(E) LIENS...........................................................................................5
(F) ORGANIZATION, AUTHORITY AND NO CONFLICT.........................................................5
(G) LITIGATION......................................................................................5
(H) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.................................................5
(I) AFFILIATE TRANSACTIONS..........................................................................5
(J) NAMES AND TRADENAMES............................................................................5
(K) EQUIPMENT.......................................................................................5
(L) ENFORCEABILITY..................................................................................5
(M) SOLVENCY........................................................................................5
(N) INDEBTEDNESS....................................................................................5
(O) MARGIN SECURITY AND USE OF PROCEEDS.............................................................5
(P) PARENT, SUBSIDIARIES AND AFFILIATES.............................................................5
(Q) NO DEFAULTS.....................................................................................5
(R) EMPLOYEE MATTERS................................................................................5
(S) INTELLECTUAL PROPERTY...........................................................................5
(T) ENVIRONMENTAL MATTERS...........................................................................5
(U) ERISA MATTERS...................................................................................5
(V) LEVY, SEIZURE OR ATTACHMENT.....................................................................5
(W) FORMER DHB SUBSIDIARIES.........................................................................5
(X) GOVERNMENT CONTRACTS............................................................................5
12. AFFIRMATIVE COVENANTS....................................................................................5
(A) MAINTENANCE OF RECORDS..........................................................................5
(B) NOTICES.........................................................................................5
(C) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.................................................5
(D) INSPECTION AND AUDITS...........................................................................5
(E) INSURANCE.......................................................................................5
(F) COLLATERAL......................................................................................5
(G) USE OF PROCEEDS.................................................................................5
(H) TAXES...........................................................................................5
(I) INTELLECTUAL PROPERTY...........................................................................5
(J) MANAGEMENT TEAM.................................................................................5
(K) PATRIOT ACT, BANK SECRECY ACT AND OFFICE OF FOREIGN ASSETS CONTROL..............................5
(L) LISTING DEVELOPMENTS............................................................................5
13. NEGATIVE COVENANTS.......................................................................................5
(A) GUARANTIES......................................................................................5
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(B) INDEBTEDNESS....................................................................................5
(C) LIENS...........................................................................................5
(D) MERGERS, SALES, ACQUISITIONS, SUBSIDIARIES AND OTHER TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF
BUSINESS........................................................................................5
(E) DIVIDENDS AND DISTRIBUTIONS.....................................................................5
(F) INVESTMENTS; LOANS..............................................................................5
(G) FUNDAMENTAL CHANGES, LINE OF BUSINESS...........................................................5
(H) EQUIPMENT.......................................................................................5
(I) USE OF PROCEEDS.................................................................................5
(J) AFFILIATE TRANSACTIONS..........................................................................5
(K) SETTLING OF ACCOUNTS............................................................................5
(L) SUBORDINATION OF INTERCOMPANY INDEBTEDNESS......................................................5
(M) TRANSFER OF ASSETS..............................................................................5
(N) FINANCIAL COVENANT AMENDMENT....................................................................5
(O) OFAC............................................................................................5
14. FINANCIAL COVENANTS......................................................................................5
(A) CAPITAL EXPENDITURES............................................................................5
(B) NET SALES.......................................................................................5
15. DEFAULT..................................................................................................5
(A) PAYMENT.........................................................................................5
(B) BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS...............................................5
(C) BREACHES OF OTHER OBLIGATIONS...................................................................5
(D) BREACH OF REPRESENTATIONS AND WARRANTIES........................................................5
(E) LOSS OF COLLATERAL..............................................................................5
(F) BANKRUPTCY OR SIMILAR PROCEEDINGS...............................................................5
(G) APPOINTMENT OF RECEIVER.........................................................................5
(H) JUDGMENT........................................................................................5
(I) DISSOLUTION OF OBLIGOR..........................................................................5
(J) DEFAULT OR REVOCATION OF GUARANTY...............................................................5
(K) LEVY, SEIZURE OR ATTACHMENT.....................................................................5
(L) CRIMINAL PROCEEDINGS............................................................................5
(M) CHANGE OF CONTROL...............................................................................5
(N) MATERIAL ADVERSE CHANGE.........................................................................5
16. REMEDIES UPON AN EVENT OF DEFAULT........................................................................5
17. CONDITIONS PRECEDENT.....................................................................................5
18. SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.................................................5
19. AGENT....................................................................................................5
(A) APPOINTMENT OF AGENT............................................................................5
(B) NATURE OF DUTIES OF AGENT.......................................................................5
(C) LACK OF RELIANCE ON AGENT.......................................................................5
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(D) CERTAIN RIGHTS OF AGENT.........................................................................5
(E) RELIANCE BY AGENT...............................................................................5
(F) INDEMNIFICATION OF AGENT........................................................................5
(G) AGENT IN ITS INDIVIDUAL CAPACITY................................................................5
(H) HOLDERS OF NOTES................................................................................5
(I) SUCCESSOR AGENT.................................................................................5
(J) COLLATERAL MATTERS..............................................................................5
(K) ACTIONS WITH RESPECT TO DEFAULTS................................................................5
(L) DELIVERY OF INFORMATION.........................................................................5
(M) DEMAND..........................................................................................5
(N) NOTICE OF DEFAULT...............................................................................5
20. ASSIGNABILITY............................................................................................5
21. AMENDMENTS, ETC..........................................................................................5
22. NONLIABILITY OF AGENT AND LENDERS........................................................................5
23. INDEMNIFICATION..........................................................................................5
24. NOTICE...................................................................................................5
25. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION...................................................5
26. CONFIRMATION OF EXISTING OBLIGATIONS.....................................................................5
27. HEADINGS OF SUBDIVISIONS.................................................................................5
28. POWER OF ATTORNEY........................................................................................5
29. CONFIDENTIALITY..........................................................................................5
30. SYNDICATION..............................................................................................5
31. COUNTERPARTS.............................................................................................5
32. ELECTRONIC SUBMISSIONS...................................................................................5
33. WAIVER OF JURY TRIAL; OTHER WAIVERS......................................................................5
34. JOINT AND SEVERAL OBLIGATIONS; GUARANTEES................................................................5
35. WAIVER OF EXISTING DEFAULTS..............................................................................5
36. EFFECT OF AMENDMENT AND RESTATEMENT......................................................................5
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EXHIBITS
Exhibit A.........Compliance Certificate
Exhibit B.........Business and Collateral Locations
Exhibit C.........Commercial Tort Claims
Exhibit D.........Form of Intercompany Note
Exhibit E.........Form of Assignment and Acceptance
SCHEDULES
Schedule 2(a)(ii) Eligible Inventory Valuation
Schedule 9(b)(iii) Financial Condition Matters
Schedule 11(g) Litigation
Schedule 11(h) Compliance with Laws
Schedule 11(i) Affiliate Transactions
Schedule 11(j) Names and Trade Names
Schedule 11(k) Equipment
Schedule 11(o) Margin Security
Schedule 11(p) Parents, Subsidiaries and Affiliates
Schedule 11(u) Plans
Schedule 11(x) Government Contracts
Schedule 12(a) Maintenance of Records
Schedule 13(b) Indebtedness
Schedule 17(a) Closing Document Checklist
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as amended,
modified or supplemented from time to time, this "AGREEMENT") made this 3rd day
of April, 2007 by and among LASALLE BUSINESS CREDIT, LLC, a Delaware limited
liability company, successor by merger to LaSalle Business Credit, Inc. (in its
individual capacity, "LASALLE"), as administrative agent and collateral agent
(in such agent capacities, "AGENT") for itself and all other lenders from time
to time a party hereto ("LENDERS"), located at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000-0000, and PROTECTIVE APPAREL CORPORATION OF AMERICA, a
New York corporation ("PACA"), POINT BLANK BODY ARMOR INC., a Delaware
corporation ("POINT BLANK") and NDL PRODUCTS, INC., a Florida corporation
("NDL", and together with PACA and Point Blank, collectively, the "BORROWERS"
and each, individually, a "BORROWER"), and DHB INDUSTRIES, INC., a Delaware
corporation (f/k/a DHB Capital Group, Inc.) (the "PARENT" and a "GUARANTOR").
WITNESSETH:
WHEREAS, LaSalle extended a term credit facility and a revolving credit
facility to Borrowers pursuant to that certain Loan and Security Agreement,
dated September 24, 2001 (as amended, restated, supplemented or otherwise
modified from time to time prior to giving effect to this Agreement, the "PRIOR
LOAN AGREEMENT," and together with all Other Agreements as in effect immediately
prior to giving effect to this Agreement, the "PRIOR LOAN DOCUMENTS"), by and
among the Borrowers, Parent and LaSalle; and
WHEREAS, Borrowers, Parent, Agent, and Lenders have agreed to further
amend and to restate the terms of the Prior Loan Agreement as set forth herein.
NOW, THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) or Letter of Credit heretofore or hereafter made to or for
the benefit of the Borrowers by Agent and/or Lenders, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, including without limitation, any Lender,
the parties hereto agree to amend and restate the Prior Loan Agreement in its
entirety, as follows:
1. DEFINITIONS.
"ACCOUNT", "ACCOUNT DEBTOR", "CHATTEL PAPER", "COMMERCIAL TORT CLAIMS",
"DEPOSIT ACCOUNTS", "DOCUMENTS", "ELECTRONIC CHATTEL PAPER", "EQUIPMENT",
"FIXTURES", "GENERAL INTANGIBLES", "GOODS", "INSTRUMENTS", "INVENTORY",
"INVESTMENT PROPERTY", "LETTER-OF-CREDIT RIGHT", "PROCEEDS" and "TANGIBLE
CHATTEL PAPER" shall have the respective meanings assigned to such terms in the
New York Uniform Commercial Code, as the same may be in effect from time to
time.
"0014 CONTRACT" means contract number W91CRB-04-D-0014, dated as of
June 7, 2004, by and between the United States Government and Point Blank, as
amended, restated or otherwise modified from time to time, including, without
limitation, by 0014 Modification P00006.
"0014 MODIFICATION P00006" means amendment number P00006 to the 0014
Contract, dated and effective as of January 24, 2007.
"0030 CONTRACT" means contract number W91CRB-06-D-0030, dated as of
August 3, 2006, by and between the United States Government and Point Blank, as
amended, restated or otherwise modified from time to time, including, without
limitation, by 0030 Modification P00003.
"0030 MODIFICATION P00003" means amendment number P00003 to the 0030
Contract, dated and effective as of December 11, 2006.
"ACQUIRED DEBT" means indebtedness with respect to capitalized leases
or purchase money security interest financing of a Person existing at the time
such Person became a Subsidiary or assumed by Parent or any Subsidiary of Parent
pursuant to a Permitted Acquisition (and not created or incurred in connection
with or in anticipation of such Permitted Acquisition).
"ADJUSTED AVAILABILITY" shall mean, as of any date of determination, an
amount, determined by the Agent in a commercially reasonable manner, equal to
the excess of (a) the Revolving Loan Limit OVER (b) the sum of (i) the principal
amount of all outstanding Revolving Loans and all Letter of Credit Obligations
PLUS (ii) the aggregate amount of all outstanding and unpaid trade payables and
other obligations of Parent and the Borrowers which are more than sixty (60)
days past due as of such date (excluding payables for professional and
restructuring costs and expenses).
"AFFILIATE" shall mean any Person (i) which directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with, Parent or any Borrower, (ii) which beneficially owns or
holds ten percent (10%) or more of the voting control or outstanding equity
interests of Parent or any Borrower, or (iii) ten percent (10%) or more of the
voting control or outstanding equity interests of which is beneficially owned or
held by Parent or any Borrower.
"APPLICABLE MARGIN" means a percentage equal to: (i) with respect to
all Prime Rate Loans, 0.25%; and (ii) with respect to all LIBOR Rate Loans,
2.25%.
"APPRAISAL" means a Monthly Desktop Appraisal or Quarterly Appraisal.
"APPRAISER" means Hilco Appraisal Services LLC or another appraiser
selected by Borrowers which is reasonably acceptable to Agent.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning in SUBSECTION 20(C)
hereof.
"AUDIT FEE" shall have the meaning specified in SUBSECTION 12(D)
hereof.
"AVAILABILITY" shall mean, as of any date of determination, an amount,
determined by the Agent in a commercially reasonable manner, equal to the excess
of (a) the Revolving Loan Limit OVER (b) the sum of the principal amount of all
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outstanding Revolving Loans and all Letter of Credit Obligations.
"BLOCKED ACCOUNT" shall have the meaning specified in SUBSECTION 8(A)
hereof.
"BORROWER REPRESENTATIVE" shall mean Point Blank or any other Borrower
that Borrowers and Parent shall collectively designate in writing from time to
time after the Closing Date upon not less than five (5) Business Days' written
notice to Agent.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
(i) with respect to all matters, determinations, fundings and payments in
connection with LIBOR Rate Loans, any day on which banks in London, England or
Chicago, Illinois are required or permitted to close, and (ii) with respect to
all other matters, any day that banks in Chicago, Illinois are required or
permitted to close.
"CAPITAL ADEQUACY CHARGE" shall have the meaning specified in
SUBSECTION 4(C)(V) hereof.
"CAPITAL ADEQUACY DEMAND" shall have the meaning specified in
SUBSECTION 4(C)(V) hereof.
"CAPITAL EXPENDITURES" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) made by Parent and
its Subsidiaries during such period that are required by generally accepted
accounting principles, consistently applied, to be included in or reflected by
the property, plant and equipment or similar fixed asset accounts (or intangible
accounts subject to amortization) on the consolidated balance sheet of Parent
and its Subsidiaries.
"CLOSING DATE" shall mean April 3, 2007.
"CLOSING DATE AVAILABILITY RESERVES" shall mean, collectively, the
First Availability Reserve and the Second Availability Reserve.
"CLOSING DOCUMENT CHECKLIST" shall have the meaning specified in
SUBSECTION 17(A)(I) hereof.
"COLLATERAL" shall mean all of the property of the Parent and the
Borrowers described in SECTION 5 hereof, together with all other real or
personal property of any Obligor or any other Person now or hereafter pledged or
assigned to Agent, for the benefit of Agent and Lenders, to secure, either
directly or indirectly, repayment of any of the Liabilities.
"COMPLETED FINANCIAL PACKAGE" means all of the following, each in form
and substance reasonably acceptable to Agent:
(a) the annual projections of Parent and its
Subsidiaries described in SUBSECTION 9(D) hereof for the Fiscal Year
ending December 31, 2008, which shall be accompanied by a written
certification by the Chief Financial Officer of Parent (on behalf of
3
Parent and its Subsidiaries) that such annual projections were prepared
in good faith based upon estimates, information and assumptions that
Parent and its Subsidiaries believed were reasonable at the time of
preparation thereof; and
(b) the Form 10-K of Parent and its Subsidiaries for
Fiscal Year 2006 (which shall include a consolidated balance sheet as
at each of December 31, 2005 and December 31, 2006, and a consolidated
income statement and consolidated statement of cash flow for each of
Fiscal Year 2004, Fiscal Year 2005 and Fiscal Year 2006), which Form
10-K (and all financial statements included therein) shall be prepared
in accordance with generally accepted accounting principles
(consistently applied) and all other applicable SEC reporting
requirements, and shall be accompanied by: (i) an unqualified audit
opinion by independent certified public accountants selected by Parent
and reasonably satisfactory to Agent that such consolidated financial
statements for each such Fiscal Year present fairly in all material
respects the financial condition and results of operations of Parent
and its Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for each
such Fiscal Year; and (ii) copies of all related management letters
sent to Parent or any Subsidiary thereof by such accountants. Parent
and Borrowers shall further use commercially reasonable efforts to
cause such accountants to deliver to Agent (for the benefit of Agent
and Lenders) a letter acknowledging that such accountants are aware
that a primary intent of Parent and Borrowers in obtaining such
financial statements and unqualified audit opinion is to influence
Agent and Lenders and that Agent and Lenders are relying upon such
financial statements and unqualified audit opinion in connection with
the exercise of their rights hereunder.
"COMPLIANCE CERTIFICATE" shall mean a certificate in the form attached
hereto as EXHIBIT A and signed by the Chief Financial Officer of Parent and
Borrowers.
"DEFAULT" shall have the meaning specified in SUBSECTION 2(A) hereof.
"DEFAULTING LENDER" shall have the meaning specified in SUBSECTION 2(A)
hereof.
"DFAS" shall mean the Defense Financing & Account Service or any
department thereof, wherever located.
"DISPROPORTIONATE ADVANCE" shall have the meaning specified in
SUBSECTION 2(A) hereof.
"DISTRIBUTION" shall have the meaning specified in SUBSECTION 13(L)
hereof.
"EBITDA" shall having the meaning specified in Schedule 1 to EXHIBIT A
hereto.
"ELIGIBLE ACCOUNT" shall mean an Account owing to a Borrower which is
acceptable to Agent in its sole discretion, exercised in a commercially
reasonable manner, for lending purposes. Without limiting Agent's discretion,
Agent shall consider an Account (or portion thereof) to be an Eligible Account
if it meets, and so long as it continues to meet, the following requirements:
(i) it is genuine and in all respects what it purports to be;
4
(ii) it is owned by a Borrower, such Borrower has the right to
subject it to a security interest in favor of Agent or assign it to Agent and it
is subject to a first priority perfected security interest in favor of Agent and
to no other claim, lien, security interest or encumbrance whatsoever, other than
Permitted Liens;
(iii) it arises from (A) the performance of services by a Borrower
in the ordinary course of such Borrower's business, and such services have been
fully performed and acknowledged and accepted by the Account Debtor thereunder;
or (B) the sale or lease of Goods by a Borrower in the ordinary course of such
Borrower's business, and (w) such Goods have been completed in accordance with
the Account Debtor's specifications (if any) and shipped to the Account Debtor,
(x) or, in the case of Accounts where the United States Government is the
Account Debtor, such Goods have been segregated in an area of a warehouse where
such Borrower to which such Accounts are owed stores Inventory, clearly
designated as containing Goods to be shipped to the United States Government and
which Goods have been accepted and approved by the United States Government on a
completed and signed form DD-250, (y) and shall not include any portion of Goods
which such Account Debtor has refused to accept, returned or offered to return,
which are the subject of such Account, and (z) such Borrower has possession of,
or such Borrower has delivered to Agent (at Agent's request), shipping and
delivery receipts evidencing shipment of such Goods;
(iv) it is evidenced by an invoice rendered to the Account Debtor
thereunder and is not outstanding beyond the earlier of: (i) sixty (60) days
past the due date; and (ii) (x) in the case of all Account Debtors other than
the United States Government, ninety (90) days past the invoice date, and (y) in
the case of the United States Government, one hundred and twenty (120) days past
the invoice date; PROVIDED, HOWEVER, that Accounts owing by DFAS up to an
aggregate maximum of $5,000,000 at any time outstanding shall not be deemed to
be ineligible under this CLAUSE (IV) if, and to the extent, such Accounts are
not outstanding beyond one hundred and fifty (150) days past the invoice date;
(v) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder; PROVIDED that any portion of such
Account, and only such portion, which is subject to setoff, counterclaim,
credit, allowance or adjustment by such Account Debtor, or to any claim by such
Account Debtor denying liability thereunder in whole or in part, shall not be
deemed an "ELIGIBLE ACCOUNT" hereunder;
(vi) it does not arise out of a contract or order which fails in
any material respect to comply with the requirements of applicable law;
(vii) the Account Debtor thereunder is not a current or former
director, officer, employee or agent of Parent or a Borrower, a current or
former Subsidiary of a Borrower or Parent or a current or former Affiliate of
Parent or a Borrower;
(viii) the Account Debtor is located within the United States of
America or is owing by the United States Government wherever located;
(ix) it is not an Account owing by the United States Government,
unless the Borrower to which the Account is payable has duly assigned its right
5
to payment of such Account to the Agent pursuant to, and in full compliance
with, the Federal Assignment of Claims Act of 1940; PROVIDED, HOWEVER, that an
Account that is an "ELIGIBLE ACCOUNT" in all other respects shall not be deemed
to be ineligible under this CLAUSE (IX) solely because it has not been duly
assigned in compliance with the Federal Assignment of Claims Act of 1940, so
long as: (A) the face amount of each such Account does not exceed $10,000 and
(B) the aggregate outstanding amount of all such Accounts referenced in the
immediately preceding CLAUSE (A) does not exceed $60,000 at any time; PROVIDED,
FURTHER, that from and after the Second Availability Reserve Termination Date,
Accounts owing by the United States Government that have not been duly assigned
to Agent pursuant to the Federal Assignment of Claims Act of 1940 as indicated
above, up to an aggregate maximum of $500,000 at any time outstanding, shall be
deemed "ELIGIBLE ACCOUNTS" if, and to the extent, such Accounts are otherwise
deemed to be "ELIGIBLE ACCOUNTS" hereunder;
(x) it is not an Account owing by any state or local government,
or any department, agency or instrumentality thereof, unless the Borrower to
which the Account is payable has assigned its right to payment of such Account
to the Agent pursuant to, and in full compliance with, any local applicable law
comparable to the Federal Assignment of Claims Act of 1940; PROVIDED, HOWEVER,
that an Account that is an "ELIGIBLE ACCOUNT" in all other respects shall not be
deemed to be ineligible under this CLAUSE (X) solely because it has not been
duly assigned in compliance with such applicable local law, so long as: (A) the
face amount of each such Account does not exceed $15,000 and (B) the aggregate
outstanding amount of all such Accounts referenced in the immediately preceding
CLAUSE (A) does not exceed $50,000 at any time;
(xi) it is not an Account owing by an Account Debtor located in a
state which requires the Borrower to which the Account is payable, as a
precondition to commencing or maintaining an action in the courts of that state,
either to (A) receive a certificate of authority to do business and be in good
standing in such state; or (B) file a notice of business activities report or
similar report with such state's taxing authority, unless (x) such Borrower has
taken the actions described in the immediately preceding CLAUSES (A) or (B); (y)
the failure to take one of the actions described in either immediately preceding
CLAUSE (A) or (B) may be cured retroactively by such Borrower at its election;
or (z) such Borrower has proven, to Agent's satisfaction, that it is exempt from
any such requirements under any such state's laws;
(xii) it is not an Account owing by an Account Debtor if, when such
Account is added to such Account Debtor's other indebtedness to Parent and
Borrowers, the result is that more than fifty percent (50%) of the face amount
of all Accounts then owing by such Account Debtor are not "ELIGIBLE ACCOUNTS"
hereunder;
(xiii) it is not an Account with respect to which the Account
Debtor's obligation to pay is subject to any repurchase obligation or return
right, as with sales made on a xxxx-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;
(xiv) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue; or (B) which
violates any of the covenants of Parent or any Borrower contained in this
Agreement;
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(xv) it is not an Account owing by an Account Debtor which, when
added to all other indebtedness to Parent and Borrowers owing by such Account
Debtor, exceeds: (A) 20% of all Accounts owing by all Account Debtors except
DFAS; provided, HOWEVER, that at no time shall the Accounts owing by DFAS exceed
80% of all Accounts owing by all Account Debtors, or (B) a credit limit
determined by Agent in its sole discretion, exercised in a commercially
reasonable manner, for that Account Debtor (except that (i) Accounts excluded
from "ELIGIBLE ACCOUNTS" solely by reason of this CLAUSE (XV) shall be "ELIGIBLE
ACCOUNTS" to the extent of such credit limit and (ii) Agent will not establish
any credit limit under this CLAUSE (B) for the United States Government so long
as no Default or Event of Default has occurred and is continuing);
(xvi) it does not arise out of progress xxxxxxxx or prior to
completion of an order, or is not subject to any adverse security deposit or
other similar advance made by or for the benefit of the applicable Account
Debtor;
(xvii) it is not an Account which constitutes advertising, finance
charges, service charges or excise taxes; and
(xix) it is not an Account that is otherwise deemed to be ineligible
by Agent in its sole discretion, exercised in a commercially reasonable manner.
"ELIGIBLE ACCOUNT EXCESS AVAILABILITY" means, as of any date of
determination, the amount by which the Eligible Account sublimit calculated
pursuant to SUBSECTION 2(A)(I) hereof as of such date of determination exceeds
the sum of (a) the aggregate unpaid principal balance of all Revolving Loans
made to all Borrowers PLUS (b) the aggregate amount of all Letter of Credit
Obligations of all Borrowers, in each case as of such date of determination.
"ELIGIBLE INVENTORY" shall mean Inventory of a Borrower which is
acceptable to Agent in its sole discretion, exercised in a commercially
reasonable manner, for lending purposes. Without limiting Agent's discretion,
Agent shall consider Inventory to be Eligible Inventory if it meets, and so long
as it continues to meet, the following requirements:
(i) it is owned by a Borrower, such Borrower has the right to
subject it to a security interest in favor of Agent and it is subject to a first
priority perfected security interest in favor of Agent and to no other claim,
lien, security interest or encumbrance whatsoever, other than Permitted Liens;
(ii) it is located on one of the premises listed on EXHIBIT B (or
other locations of which Agent has been advised in writing pursuant to
SUBSECTION 12(B)(I) hereof) and is not in transit except between such locations;
(iii) if held for sale or lease or furnishing under contracts of
service, it is (except as Agent may otherwise consent in writing) new and unused
and free from defects which would, in Agent's sole determination, made in a
commercially reasonable manner, affect its market value;
(iv) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless Agent has given its prior written approval and
the relevant Borrower has caused any such bailee, consignee, warehouseman,
processor or similar party to issue and deliver to Agent, in form and substance
acceptable to Agent, such Uniform Commercial Code financing statements,
7
warehouse receipts, waivers and other documents as Agent shall require, or is on
consignment to a Borrower from any Person;
(v) Agent has determined, in accordance with Agent's customary
business practices, that it is not unacceptable due to age, type, category or
quantity;
(vi) it does not consist of supplies, packaging, parts or sample
Inventory;
(vii) no Borrower has returned, has attempted to return, is in
the process of returning or intends to return such Inventory to the vendor
thereof;
(viii) it is not damaged, obsolete, slow moving or not currently
usable or saleable in the normal course of the applicable Borrower's operations;
and
(ix) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue; or (B)
which violates any of the covenants of any Borrower contained in this Agreement.
"ENVIRONMENTAL LAWS" shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to any Borrower's business or
facilities owned or operated by any Borrower, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes into the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) or otherwise
relating to the generation, manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, modified or restated from time to time.
"ERISA AFFILIATE" shall mean, with respect to Parent or any Borrower,
any trade or business (whether or not incorporated) that, together with Parent
or such Borrower, are treated as a single employer under Section 4001(b)(1) of
ERISA or Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"ERISA EVENT" shall mean, with respect to Parent, any Borrower or any
ERISA Affiliate, (i) any event described in Section 4043 of ERISA with respect
to a Title IV Plan; (ii) the withdrawal of Parent, any Borrower or any ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (iii) the complete or partial withdrawal of Parent, any Borrower or any
ERISA Affiliate from any Multiemployer Plan; (iv) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (v) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure by
Parent, any Borrower or any ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (vii) any other event or condition that might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
8
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (viii) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 or 4245 of ERISA; or (ix) the loss of a Qualified Plan's
qualification or tax exempt status; or (x) the termination of a Plan described
in Section 4064 of ERISA.
"EVENT OF DEFAULT" shall have the meaning specified in SECTION 15
hereof.
"FEDERAL ASSIGNMENT OF CLAIMS ACT OF 1940" shall mean, collectively,
the Assignment of Claims Act of 1940, as amended, 31 U.S.C. ss. 3727, 41 U.S.C.
ss. 15, any applicable rules, regulations and interpretations issued pursuant
thereto, and any amendments to any of the foregoing.
"FINANCIAL COVENANT AMENDMENT" shall mean an amendment to this
Agreement, in form and substance acceptable to Agent and Requisite Lenders in
their sole discretion and duly executed and delivered by Parent, Borrowers,
Agent and Requisite Lenders in accordance with the terms hereof, which shall,
among other things: (i) establish financial covenants with respect to Senior
Leverage Ratio, Total Leverage Ratio, minimum Tangible Net Worth, Fixed Charge
Coverage Ratio and minimum Consolidated EBITDA, in each case, at levels
reasonably acceptable to Parent, Borrowers, Agent and Requisite Lenders; and
(ii) amend the definition of "Applicable Margin" to include a pricing grid for
determination of "Applicable Margin" percentages that is reasonably acceptable
to Parent, Borrowers, Agent and Requisite Lenders.
"FIRST AVAILABILITY RESERVE" shall have the meaning specified in
SUBSECTION 2(A) hereof.
"FIRST AVAILABILITY RESERVE TERMINATION DATE" means the earliest
Business Day on which all of the following conditions shall have been satisfied
by Borrowers or waived by Agent in its sole discretion: (i) Agent shall have
received evidence satisfactory to the Agent that the Borrowers have established
and implemented a perpetual inventory reporting system reasonably satisfactory
to Agent; and (ii) no Default or Event of Default shall have occurred and be
continuing as of such Business Day.
"FISCAL QUARTER" shall mean any of the quarterly accounting periods of
Parent ending on March 31, June 30, September 30 and December 31 of each year.
"FISCAL YEAR" shall mean each twelve (12) month accounting period of
Parent, which ends on December 31 of each year.
"FIXED CHARGES" shall having the meaning specified in Schedule 2 to
EXHIBIT A.
"FORMER DHB SUBSIDIARY" shall mean each of DHB Armor Group, Inc., a
Delaware corporation, DHB Sports Group, Inc., a Delaware corporation, Lanxide
Armor Products Inc., a Delaware corporation, and Orthopedic Products, Inc., a
Florida corporation.
"GUARANTOR" or "GUARANTORS" shall have the respective meanings
specified in SUBSECTION 34(B) hereof.
9
"HAZARDOUS MATERIALS" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
"INDEMNIFIED PARTY" shall have the meaning specified in SECTION 23
hereof.
"INTEREST PERIOD" shall mean, with respect to any LIBOR Rate Loans, any
continuous period of thirty (30), sixty (60), ninety (90) or one hundred eighty
(180) days, as selected from time to time by the Borrower Representative by
irrevocable notice (in writing, by mail, facsimile, telecopy or other electronic
transmission) given to Agent not less than two (2) Business Days prior to the
first day of each respective Interest Period; PROVIDED that: (i) each such
Interest Period occurring after such initial Interest Period shall commence on
the day on which the immediately preceding Interest Period expires; (ii) the
final Interest Period shall be such that its expiration occurs on or before the
end of the Original Term or any Renewal Term, as applicable; and (iii) if for
any reason a requesting Borrower shall fail to timely select an Interest Period,
then such Loans shall continue as, or revert to, Prime Rate Loans.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, and all regulations promulgated thereunder.
"INVENTORY ADVANCE LIMIT" shall have the meaning specified in
SUBSECTION 2(A) hereof.
"LASALLE BANK" shall mean LaSalle Bank National Association, Chicago,
Illinois.
"LETTER OF CREDIT" shall mean any Letter of Credit issued on behalf of
a Borrower in accordance with this Agreement.
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit not already converted to Loans hereunder.
"LIABILITIES" shall mean any and all obligations, liabilities and
indebtedness of Parent and each Borrower to Agent or any Lender or to any
parent, affiliate or subsidiary of Agent or any Lender, of any and every kind
and nature, arising under or pursuant to any of this Agreement, the Other
Agreements or the Prior Loan Documents or the transactions contemplated
hereunder or thereunder or, howsoever created, arising or evidenced and
howsoever owned, held or acquired, whether now or hereafter existing, whether
now due or to become due, whether primary, secondary, direct, indirect,
absolute, contingent or otherwise (including, without limitation, obligations of
performance), whether several, joint or joint and several, and whether arising
or existing under written or oral agreement or by operation of law.
10
"LIBOR RATE" shall mean, with respect to any LIBOR Rate Loan for any
Interest Period, a rate per annum equal to (a) the offered rate for deposits in
United States dollars for a period equal to such Interest Period as it appears
on Reuters Screen LIBOR01 Page (or such other page as may replace the Reuters
Screen LIBOR01 Page of that service or such other service) as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period,
divided by (b) a number equal to 1.0 minus the maximum reserve percentages
(express as a decimal fraction) including, without limitation, basic
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect, for Eurocurrency funding (currently referred to as "EUROCURRENCY
LIABILITIES" in Regulation D of such Board) which are required to be maintained
by the Lenders by the Board of Governors of the Federal Reserve System. The
LIBOR Rate shall be adjusted automatically on and as of the effective date of
any change in such reserve percentage.
"LIBOR RATE LOANS" shall mean the Loans bearing interest with reference
to the LIBOR Rate.
"LOANS" shall mean all loans and advances made by Agent and/or any
Lender to or on behalf of any Borrower hereunder or under the Prior Loan
Agreement.
"LOCK BOX" shall have the meaning specified in SUBSECTION 8(B) hereof.
"LOCK BOX ACCOUNT" shall have the meaning specified in SUBSECTION 8(B)
hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, property, assets, prospects, operations or condition, financial or
otherwise, of a Person.
"MAXIMUM REVOLVING LOAN LIMIT" shall have the meaning specified in
SUBSECTION 2(A) hereof.
"MONTHLY DESKTOP APPRAISAL" shall mean, at any time, the then most
recently completed monthly desktop evaluation and appraisal of Borrowers'
Inventory completed by Appraiser in a manner acceptable to Agent and
substantially in the same form as the Monthly Hilco Report.
"MONTHLY HILCO REPORT" means the updated monthly "desktop" inventory
evaluation and appraisal of DHB Industries, Inc. dated January 9, 2007 and
prepared by Hilco Appraisal Services LLC.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section (3)(7) of ERISA, and to which Parent, any Borrower or any ERISA
Affiliate is making, is obligated to make or has made or been obligated to make
in the past five years contributions on behalf of participants who are or were
employed by any of them or withdrawal liability payments.
"NET ORDERLY LIQUIDATION VALUE" means, with respect to Inventory of any
Borrower, the orderly liquidation value thereof as set forth in the then most
recently prepared Appraisal, net of all costs of liquidation thereof; PROVIDED,
HOWEVER, that the orderly liquidation value of Inventory consisting of raw
11
materials and work-in-process shall be calculated in accordance with the
"conversion scenario" methodology applied in the Monthly Hilco Report.
"NET SALES" shall have the meaning specified in Schedule 6 to EXHIBIT
A.
"OBLIGOR" shall mean Parent, each Borrower and each other Person who is
or shall become primarily or secondarily liable for any of the Liabilities.
"ORIGINAL TERM" shall have the meaning specified in SECTION 10 hereof.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents, other than this Agreement, including, without limitation, guaranties,
mortgages, trust deeds, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements and all
other writings heretofore, now or from time to time hereafter executed by or on
behalf of Parent, one or more Borrowers, or any other Obligor and delivered to
Agent and/or any Lender or to any parent, affiliate or subsidiary of Agent
and/or any Lender in connection with the Liabilities or the transactions
contemplated hereby (including, without limitation, the Prior Loan Documents),
as each of the same may be amended, modified or supplemented from time to time.
"PBGC" shall have the meaning specified in SUBSECTION 12(B)(V) hereof.
"PERMITTED ACQUISITION" shall have the meaning specified in SUBSECTION
13(D) hereof.
"PERMITTED INVESTMENTS" shall mean (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 of America, in each case, maturing within one year from the date of the
acquisition thereof; (ii) commercial paper, maturing not more than 270 days
after the date of issue rated P-1 by Xxxxx'x 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; (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 United States Government 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 Xxxxx'x or A+ or better by Standard & Poor's.
"PERMITTED LIENS" shall mean (i) liens of lessors under lease
agreements and statutory liens of landlords, carriers, warehousemen, processors,
mechanics, materialmen or suppliers incurred in the ordinary course of business
and securing amounts not yet due or declared to be due by the claimant
thereunder; (ii) liens or security interests in favor of Agent; (iii) zoning
restrictions and easements, licenses, covenants and other restrictions affecting
the use of real property that do not individually or in the aggregate have a
material adverse effect on Parent's or any Borrower's ability to use such real
property for its intended purpose in connection with such Parent's or Borrower's
business; (iv) liens in connection with purchase money indebtedness and
12
capitalized leases otherwise permitted pursuant to this Agreement; provided,
that such liens attach only to the specific assets the purchase of which was
financed by such purchase money indebtedness or which is the subject of such
capitalized leases; (v) liens securing the payment of taxes not yet due or the
payment of which is being contested in good faith and by appropriate
proceedings; PROVIDED, that (a) adequate reserves for such taxes have been
established to the extent required by generally accepted accounting principles,
consistently applied, and (b) no notice of any such lien has been filed in any
jurisdiction; (vi) deposits under workers compensation, unemployment insurance
or social security laws, or to secure the performance of bids, tenders,
contracts or leases, or to secure statutory obligations, surety or appeal bonds,
or other bonds in the ordinary course of business; (vii) liens securing
judgments or awards which do not constitute Events of Default hereunder and
which are being appealed while a stay is in effect; (viii) the filing of Uniform
Commercial Code financing statements solely as a precautionary measure in
connection with operating leases or consignment of goods; (ix) leases or
subleases of property of Parent or any Borrower, in each case entered into in
the ordinary course of such Person's business; (x) licenses or sublicenses of
intellectual property granted by Parent or any Borrower in the ordinary course
of its business and not interfering in any material respect with the conduct of
the business of Parent and the Borrowers, taken as a whole; (xi) liens securing
Acquired Debt incurred or assumed in connection with any Permitted Acquisition;
PROVIDED such liens attach only (a) in the case of mortgage indebtedness, to the
real estate previously financed by such lienholder, (b) in the case of
indebtedness with respect to capitalized leases, to the assets which are the
subject of such capitalized leases, or (c) in the case of any other indebtedness
in respect of purchase money security interest financing, to the assets which
are the subject of such purchase money security interest financing; it being
understood and agreed that in no event shall any liens under this clause (xii)
attach to any assets constituting Collateral; (xiii) other liens that secure
obligations, the aggregate principal amount of which does not exceed, as of any
date of determination, One Hundred Thousand and No/100 Dollars ($100,000); and
(xiv) liens to which Agent has given its prior written consent.
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, entity, party or foreign or United
States government (whether federal, state, county, city, municipal or
otherwise), including, without limitation, any instrumentality, division,
agency, body or department thereof.
"PLAN" shall mean, at any time, an "employee benefit plan," as defined
in Section 3(3) of ERISA, that Parent, any Borrower or any ERISA Affiliate
maintains, contributes to or has an obligation contribute to on behalf of its
employees.
"PRE-SETTLEMENT DETERMINATION DATE" shall have the meaning specified in
SUBSECTION 18(A) hereof.
"PRIMARY SYNDICATION" shall have the meaning specified in SECTION 30
hereof.
"PRIME RATE" shall mean LaSalle Bank's publicly announced prime rate
(which is not intended to be LaSalle Bank's lowest or most favorable rate in
effect at any time) in effect from time to time.
13
"PRIME RATE LOANS" shall mean the Loans bearing interest with reference
to the Prime Rate.
"PRIOR CLOSING DATE" means September 24, 2001.
"PRIOR LIABILITIES" shall have the meaning specified in SECTION 36
hereof.
"PRO RATA SHARE" shall mean at any time, with respect to any Lender, a
fraction (expressed as a percentage in no more than nine (9) decimal places),
the numerator of which shall be the sum of the Revolving Loan Commitment of such
Lender at such time and the denominator of which shall be the Maximum Revolving
Loan Limit at such time.
"QUALIFIED PLAN" shall mean a Plan that is intended to be tax-qualified
under Section 401(a) of the Internal Revenue Code.
"QUARTERLY APPRAISAL" shall mean, at any time, the then most recently
completed full quarterly evaluation and appraisal of Borrowers' Inventory
completed by Appraiser in a manner acceptable to Agent and substantially in the
same form as the Quarterly Hilco Report.
"QUARTERLY HILCO REPORT" means the Inventory Evaluation and Appraisal
of DHB Industries, Inc. dated September 22, 2006 and prepared by Hilco Appraisal
Services LLC.
"REGISTER" shall have the meaning specified in SUBSECTION 20(E) hereof.
"REGULATORY CHANGE" shall have the meaning specified in SUBSECTION
4(B)(III) hereof.
"RENEWAL TERM" shall have the meaning specified in SECTION 10 hereof.
"REQUISITE LENDERS" shall mean, at any time, Lenders having Pro Rata
Shares aggregating at least fifty and one-tenth percent (50.1%), unless there
are only two Lenders, in which case both Lenders.
"REVOLVING LOAN COMMITMENT" shall mean, with respect to each Lender,
the maximum amount of Revolving Loans which such Lender has agreed to make to
Borrowers, subject to the terms and conditions of this Agreement, as set forth
on the signature page hereto or an Assignment and Acceptance executed by such
Lender.
"REVOLVING LOAN LIMIT" shall have the meaning specified in SUBSECTION
2(A) hereof.
"REVOLVING LOANS" shall have the meaning specified in SUBSECTION 2(A)
hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECOND AVAILABILITY RESERVE" shall have the meaning ascribed to such
term in SUBSECTION 2(A) hereof.
"SECOND AVAILABILITY RESERVE TERMINATION DATE" means the earliest
Business Day on which all of the following conditions shall have been satisfied
by the Borrowers or waived by Agent in its sole discretion: (i) the First
Availability Reserve Termination Date shall have occurred; (ii) the Financial
14
Covenant Amendment shall have been duly executed and delivered by Borrowers,
Parent, Agent, and Requisite Lenders and shall have become effective and
enforceable against the parties thereto in accordance with its terms; (iii)
Agent shall have received the Completed Financial Package; and (iv) no Default
or Event of Default shall have occurred and be continuing as of such Business
Day.
"SENIOR LEVERAGE RATIO" shall having the meaning specified in Schedule
4 to EXHIBIT A hereto.
"SETTLEMENT DATE" shall have the meaning specified in SUBSECTION 18(A)
hereof.
"SUBSIDIARY" shall mean, as to any Person, any corporation of which
more than fifty percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by such Person,
or any partnership, joint venture or limited liability company of which more
than fifty percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by such Person or any partnership of which such
Person is a general partner.
"TANGIBLE NET WORTH" shall having the meaning specified in Schedule 5
to EXHIBIT A hereto.
"TAX" shall mean any tax, levy, impost, duty, deduction, withholding or
charges of whatever nature required to be paid by Agent or any Lender (i) in
relation to any LIBOR Rate Loans and the applicable LIBOR Rate, and/or (ii) to
be withheld or deducted from any payment otherwise required hereby to be made by
one or more Borrowers to Agent or any Lender; PROVIDED, that the term "TAX"
shall not include any taxes imposed upon the net income of Agent or any Lender.
"TITLE IV PLAN" shall mean a Plan (other than a Multiemployer Plan),
that is covered by Title IV of ERISA or Section 412 of the Internal Revenue
Code, and that Parent, any Borrower or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"TOTAL LEVERAGE RATIO" shall having the meaning specified in Schedule 3
to EXHIBIT A hereto.
"UNFUNDED PENSION LIABILITY" shall mean, at any time, the aggregate
amount, if any, of the amount by which the present value of all accrued benefits
under each Title IV Plan exceeds the fair market value of all assets of such
Title IV Plan allocable to such benefits in accordance with Title IV of ERISA,
all determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions for purposes of determining the funded status of
each such Title IV Plan under Section 412 of the Internal Revenue Code.
"UNITED STATES GOVERNMENT" means the United States of America or any
department, agency, instrumentality or other subdivision thereof.
15
2. LOANS.
(A) REVOLVING LOANS.
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Original Term and each Renewal Term, if any, commencing
on the date the conditions in SUBSECTION 17(A) are satisfied, each Lender,
severally and not jointly, agrees to make its Pro Rata Share of revolving loans
and advances to the Borrowers (the "REVOLVING LOANS") upon the request of the
Borrower Representative, on behalf of the Borrowers, up to such Lender's
Revolving Loan Commitment, so long as after giving effect to such Revolving
Loans, the sum of the aggregate unpaid principal balance of the Revolving Loans
and the Letter of Credit Obligations does not exceed an amount up to the sum of
the following sublimits (the "REVOLVING LOAN LIMIT"):
(i) Up to eighty-five percent (85%) of the face amount of
the Borrowers' Eligible Accounts (less maximum discounts, credits and
allowances which may be taken by or granted to the Account Debtors in
connection therewith in the ordinary course of the Borrowers'
business); PLUS
(ii) Up to the lesser of: (A) sixty-five percent (65%) of
the Borrowers' Eligible Inventory valued at cost (in accordance with
the procedures described in SCHEDULE 2(A)(II)); (B) eighty-five percent
(85%) of the Net Orderly Liquidation Value of the Borrowers' Eligible
Inventory as determined by the then most recently completed Appraisal;
(C) fifty percent (50%) of the Maximum Revolving Loan Limit; or (D)
$17,500,000 (the "INVENTORY ADVANCE LIMIT"); MINUS
(iii) Prior to the First Availability Reserve Termination
Date, an additional reserve in the amount of $3,500,000 (the "FIRST
AVAILABILITY RESERVE"); MINUS
(iv) Prior to the Second Availability Reserve Termination
Date, an additional reserve in the amount of $3,500,000 (the "SECOND
AVAILABILITY RESERVE"); MINUS
(v) such additional reserves Agent elects to establish
from time to time in its sole discretion, exercised in a commercially
reasonable manner;
PROVIDED, that (x) the aggregate undrawn amount of all Letters of Credit issued
or guaranteed by Lenders, with respect to all Borrowers, shall at no time exceed
Five Million and No/100 Dollars ($5,000,000), and (y) the Revolving Loan Limit
with respect to Revolving Loans made to all Borrowers, at any one time
outstanding, shall in no event exceed Thirty-Five Million and No/100 Dollars
($35,000,000) (the "MAXIMUM REVOLVING LOAN LIMIT").
The aggregate unpaid principal balance of the Revolving Loans made to
all Borrowers, at any one time outstanding, shall not at any time exceed the
lesser of (i) the Revolving Loan Limit MINUS the Letter of Credit Obligations of
all Borrowers and (ii) the Maximum Revolving Loan Limit MINUS the Letter of
Credit Obligations of all Borrowers. If at any time the outstanding aggregate
principal amount of such Revolving Loans exceeds the Revolving Loan Limit MINUS
such Letter of Credit Obligations, or any portion of the outstanding principal
of such Revolving Loans and such Letter of Credit Obligations exceeds any
16
applicable sublimit within the Revolving Loan Limit, the Borrowers shall
immediately, on a joint and several basis, and without the necessity of demand
by Agent, pay to Agent such amount as may be necessary to eliminate such excess,
and Agent shall apply such payment to the Revolving Loans in such order as Agent
shall determine in its sole discretion; PROVIDED, that Agent may, in its sole
discretion, permit such excess (the "INTERIM ADVANCE") to remain outstanding and
continue to advance Revolving Loans to any Borrower on behalf of Lenders without
the consent of any Lender for a period of up to sixty (60) calendar days, so
long as (i) the amount of the Interim Advances does not exceed at any time One
Million and No/100 Dollars ($1,000,000), (ii) the aggregate outstanding
principal balance of the Revolving Loans and Letter of Credit Obligations does
not exceed the Maximum Revolving Loan Limit, and (iii) Agent has not been
notified by Requisite Lenders to cease making such Revolving Loans. If the
Interim Advance is not repaid in full within time period specified above, no
future advances may be made to any Borrower without the consent of Requisite
Lenders until the Interim Advance is repaid in full.
Neither Agent nor any Lender shall be responsible for any failure by
any other Lender to perform its obligations to make Revolving Loans hereunder,
and the failure of any Lender to make its Pro Rata Share of any Revolving Loan
hereunder shall not relieve any other Lender of its obligation, if any, to make
its Pro Rata Share of any Revolving Loans hereunder.
If Borrower Representative, on behalf of any Borrower, makes a request
for a Revolving Loan as provided herein, Agent shall advance the amount of the
proposed Revolving Loan to such Borrower(s) disproportionately (a
"DISPROPORTIONATE ADVANCE") out of Agent's own funds on behalf of Lenders, which
advance shall be on the same day as Borrower Representative's request therefor
with respect to Prime Rate Loans if Borrower Representative notifies Agent of
such request by 1:00 p.m. (New York time) on such day, and shall request
settlement in accordance with SECTION 18 hereof such that upon such settlement
each Lender's share of the outstanding Revolving Loans (including, without
limitation, the amount of any Disproportionate Advance) equals its Pro Rata
Share.
If and to the extent that a Lender does not settle with Agent as
required under this Agreement (a "DEFAULTING LENDER"), each Borrower and
Defaulting Lender severally agree to repay to Agent forthwith on demand such
amount required to be paid by such Defaulting Lender to Agent, together with
interest thereon, for each day from the date such amount is made available to
the applicable Borrower(s) until the date such amount is repaid to Agent (x) in
the case of a Defaulting Lender, at the rate published by the Federal Reserve
Bank of New York on the next succeeding Business Day as the "Federal Funds Rate"
or if no such rate is published for any Business Day, at the average rate quoted
for such day for such transactions from three (3) federal funds brokers of
recognized standing selected by Agent, and (y) in the case of any Borrower, at
the interest rate applicable at such time for such Loans; provided, that
Borrowers' obligation to repay such advance to Agent shall not relieve such
Defaulting Lender of its liability to Agent for failure to settle as provided in
this Agreement.
Each Borrower hereby authorizes Agent, in its sole discretion,
exercised in a commercially reasonable manner, to charge any of such Borrower's
accounts or advance Revolving Loans to make any payments of principal, interest,
fees, costs or expenses required to be made to Agent under this Agreement or the
Other Agreements.
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A request for a Revolving Loan shall be made or shall be deemed to be
made, each in the following manner: Borrower Representative, on behalf of the
Borrowers, shall give Agent same day notice, no later than 11:30 a.m. (New York
time) for such day, of its request for a Revolving Loan as a Prime Rate Loan,
and at least two (2) Business Days' prior notice of its request for a Revolving
Loan as a LIBOR Rate Loan, in which notice Borrower Representative shall specify
the amount and type of the proposed borrowing and the proposed borrowing date;
PROVIDED, HOWEVER, that no such request may be made at a time when there exists
an Event of Default or an event which, with the passage of time or giving of
notice, will become an Event of Default (a "DEFAULT"). In the event that a
Borrower maintains a control disbursement account at LaSalle Bank, each check
presented for payment against such control disbursement account and any other
charge or request for payment against such control disbursement account shall
constitute a request for a Revolving Loan as a Prime Rate Loan. As an
accommodation to each Borrower, Agent may permit telephone requests for
Revolving Loans and electronic transmittal of instructions, authorizations,
agreements or reports to Agent by such Borrower. Unless a Borrower specifically
directs Agent in writing not to accept or act upon telephonic or electronic
communications from such Borrower, Agent shall have no liability to such
Borrower for any loss or damage suffered by such Borrower as a result of Agent's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Agent by such Borrower, and
Agent shall have no duty to verify the origin of any such communication or the
authority of the Person sending it.
Each Borrower hereby irrevocably authorizes Agent to disburse the
proceeds of each Revolving Loan requested by such Borrower, or deemed to be
requested by such Borrower, as follows: the proceeds of each Revolving Loan
requested under this SUBSECTION 2(A) shall be disbursed by Agent in lawful money
of the United States of America in immediately available funds, in the case of
the initial borrowing by such Borrower, in accordance with the terms of the
written disbursement letter from Borrower Representative, and in the case of
each subsequent borrowing, by wire transfer or Automated Clearing House (ACH)
transfer to such bank account as may be agreed upon by such Borrower and Agent
from time to time, or elsewhere if pursuant to a written direction from Borrower
Representative.
(B) REPAYMENTS.
The obligation of the Borrowers to repay the Liabilities shall be joint
and several. The Revolving Loans and all other Liabilities shall be repaid in
full on the last day of the Original Term, or any Renewal Term, if this
Agreement is renewed pursuant to SECTION 10 hereof. Revolving Loans borrowed as
Prime Rate Loans may be repaid at any time in whole or in part. Revolving Loans
borrowed as LIBOR Rate Loans may be repaid at the end of the relevant Interest
Period. Any proceeds of tax refunds received by Borrowers shall be promptly
delivered to Agent to be applied to the outstanding principal amount of the
Revolving Loans which are Prime Rate Loans until paid in full, and thereafter,
to any other outstanding Revolving Loans, in such order as Agent shall determine
in its sole discretion; PROVIDED that so long as no Event of Default has
occurred and is continuing, tax refund payments received by Agent shall not be
applied to the unmatured portion of the LIBOR Rate Loans, but shall be held in
an interest bearing cash collateral account maintained by Agent until the
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earlier of (i) the last Business Day of the Interest Period applicable to such
LIBOR Rate Loans and (ii) the occurrence of an Event of Default.
(C) NOTES.
The Loans shall, in Agent's and Lender's sole discretion, exercised in
a commercially reasonable manner, be evidenced by one or more promissory notes
in form and substance satisfactory to each Lender, and the entries on such
promissory notes shall be deemed to be accurate, absent manifest error. However,
if such Loans are not so evidenced, such Loans may be evidenced solely by
entries upon the books and records maintained by Agent and each Lender, absent
manifest error.
(D) BORROWER REPRESENTATIVE.
Each Borrower hereby designates Borrower Representative as its
representative and agent on its behalf for the purpose of requesting Loans,
giving instructions with respect to the disbursement of the proceeds of the
Loans, selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the Other
Agreements and taking all other actions (including in respect of compliance with
covenants) on behalf of Borrowers under this Agreement or the Other Agreements.
Borrower Representative hereby accepts such appointment. Agent and each Lender
may regard any notice or other communication pursuant to this Agreement or any
Other Agreement from Borrower Representative as a notice or communication from
all Borrowers. Each warranty, covenant, agreement and undertaking made on any
Borrower's behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.
3. LETTERS OF CREDIT.
(A) GENERAL TERMS.
Subject to the terms and conditions of the Agreement and the Other
Agreements, during the Original Term and each Renewal Term, commencing on the
date the conditions in SUBSECTION 17(A) are satisfied, Agent shall from time to
time cause to be issued and co-sign for or otherwise guarantee, upon Borrower
Representative's request in respect of any Borrower, documentary and/or standby
Letters of Credit; PROVIDED, that the aggregate undrawn face amount of all such
Letters of Credit shall at no time exceed Five Million and No/100 Dollars
($5,000,000). Payments made by the issuer of a Letter of Credit to any Person on
account of any Letter of Credit shall constitute Revolving Loans hereunder, and
each Borrower agrees that each payment made by the issuer of a Letter of Credit
in respect of a Letter of Credit shall constitute a request by the Borrowers for
a Revolving Loan to reimburse such issuer. For each month during which any
Letter of Credit Obligation shall remain outstanding, the Borrowers agree on a
joint and several basis to remit to Agent, for the benefit of Lenders, a Letter
of Credit fee in an amount equal to the product of the average daily undrawn
face amount of all Letters of Credit issued, co-signed for or otherwise
guaranteed hereunder multiplied by a per annum rate equal to the Applicable
Margin in respect of LIBOR Rate Loans in effect from time to time. Such Letter
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of Credit fee shall be payable to Agent monthly in arrears on the last Business
Day of each month. The Borrowers shall also agree on a joint and several basis
to pay on demand the normal and customary administrative charges of the issuer
of the Letter of Credit for issuance, amendment, negotiation, renewal or
extension of any Letter of Credit.
(B) REQUESTS FOR LETTERS OF CREDIT.
The request by Borrower Representative, on behalf of Borrowers, for the
issuance of a Letter of Credit shall be made in writing at least two (2)
Business Days prior to the date such Letter of Credit is to be issued. Each such
request shall specify the date such Letter of Credit is to be issued, the amount
thereof, the name and address of the beneficiary thereof and a description of
the transaction to be supported thereby. Any such notice shall be accompanied by
the form of Letter of Credit requested and any application or reimbursement
agreement required by the issuer of such Letter of Credit. If any term of such
application or reimbursement agreement is inconsistent with this Agreement, then
the provisions of this Agreement shall control to the extent of such
inconsistency.
(C) OBLIGATIONS ABSOLUTE.
The Borrowers shall be obligated jointly and severally to reimburse the
issuer of any Letter of Credit, or Agent and/or Lenders, if Agent and/or Lenders
have reimbursed such issuer on any one or more of the Borrowers' behalf, for any
payments made in respect of any Letter of Credit, which obligation shall be
unconditional and irrevocable and shall be paid regardless of: (i) any lack of
validity or enforceability of any Letter of Credit, (ii) any amendment or waiver
of or consent or departure from all or any provisions of any Letter of Credit,
this Agreement or any Other Agreement, (iii) the existence of any claim, set
off, defense or other right which any Borrower or any other Person may have
against any beneficiary of any Letter of Credit, or Agent, any Lender or the
issuer of the Letter of Credit, (iv) any draft or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid, or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect, (v) any payment under any Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit, and (vi) any other act or omission to act or delay of any kind of the
issuer of such Letter of Credit, Agent, any Lender or any other Person or any
other event or circumstance that might otherwise constitute a legal or equitable
discharge of any of the Borrowers' obligations hereunder, except in any case to
the extent of the issuer's or the Lender's gross negligence or willful
misconduct. It is understood and agreed by each Borrower that the issuer of any
Letter of Credit may accept documents that appear on their face to be in order
without further investigation or inquiry, regardless of any notice or
information to the contrary.
(D) EXPIRATION DATES OF LETTERS OF CREDIT.
The expiration date of each Letter of Credit shall be no later than the
earlier of (i) one (1) year from the date of issuance and (ii) the thirtieth
(30th) day prior to the end of the Original Term or any Renewal Term.
Notwithstanding the foregoing, a Letter of Credit may provide for automatic
extensions of its expiration date for one or more one (1) year periods, so long
as the issuer thereof has the right to terminate the Letter of Credit at the end
of each one (1) year period and no extension period extends past the thirtieth
20
(30th) day prior to the end of the Original Term or any Renewal Term.
(E) PARTICIPATION.
Immediately upon the issuance of a Letter of Credit in accordance with
this Agreement, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from Agent, without recourse or warranty,
an undivided interest and participation therein to the extent of such Lender's
Pro Rata Share (including, without limitation, all obligations of Borrowers with
respect thereto). Each Borrower hereby indemnifies Agent and each Lender against
any and all liability and expense it may incur in connection with any Letter of
Credit and agrees to reimburse Agent and each Lender for any payment made by
Agent or any Lender to the issuer.
4. INTEREST, FEES AND CHARGES.
(A) INTEREST RATE.
Subject to the terms and conditions set forth below, the Loans shall
bear interest at the per annum rates of interest set forth in SUBSECTION (I),
(II), or (III) below:
(i) Revolving Loans borrowed as Prime Rate Loans (and
all other Liabilities (other than contingent indemnification
obligations as to which no unsatisfied claim has been asserted) not
otherwise referenced in this SECTION 4(A)) shall bear interest for each
day at the Prime Rate in effect for such day PLUS the Applicable Margin
in respect of Prime Rate Loans in effect for such day.
(ii) Each Revolving Loan borrowed as a LIBOR Rate Loan
shall bear interest each day of the Interest Period therefor at the
LIBOR Rate in effect for such Interest Period PLUS the Applicable
Margin in respect of LIBOR Rate Loans in effect for such day.
(iii) Upon the occurrence of an Event of Default and
during the continuance thereof, all Loans and other Liabilities shall
bear interest at the rate of two percent (2.0%) per annum in excess of
the interest rate otherwise payable thereon, which interest shall be
payable on demand.
(iv) All interest shall be calculated on the basis of
a 360-day year. Unless otherwise indicated herein, interest shall be
payable in arrears on the first Business Day of each month.
(B) OTHER LIBOR PROVISIONS.
(i) Subject to the provisions of this Agreement, the
Borrowers shall have the option (A) as of any date, to convert all or
any part of the Prime Rate Loans to, or request that new Loans be made
as, LIBOR Rate Loans of various Interest Periods; (B) as of the last
day of any Interest Period, to continue all or any portion of the
relevant LIBOR Rate Loans as LIBOR Rate Loans; (C) as of the last day
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of any Interest Period, to convert all or any portion of the LIBOR Rate
Loans to Prime Rate Loans; and (D) at any time, to request new Loans as
LIBOR Rate Loans or Prime Rate Loans; PROVIDED that Loans may not be
continued as or converted to LIBOR Rate Loans, if the continuation or
conversion thereof would violate the provisions of SUBSECTIONS 4(B)(II)
or 4(B)(III) of this Agreement or if an Event of Default has occurred
and is continuing.
(ii) Agent's determination of LIBOR as provided above,
shall be conclusive, absent manifest error. Furthermore, if Agent or
any Lender determines, in good faith (which determination shall be
conclusive, absent manifest error), prior to the commencement of any
Interest Period, that (A) U.S. Dollar deposits of sufficient amount and
maturity for funding the Loans are not available to Agent or such
Lender in the London Interbank Eurodollar market in the ordinary course
of business, or (B) by reason of circumstances affecting the London
Interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the rate of interest to be applicable to the Loans
requested by Borrower Representative, on behalf of Borrowers, to be
LIBOR Rate Loans or the Loans bearing interest at the rates set forth
in SUBSECTION 4(A) of this Agreement shall not represent the effective
pricing to such Lender for U.S. Dollar deposits of a comparable amount
for the relevant period (such as for example, but not limited to,
official reserve requirements required by Regulation D to the extent
not given effect in determining the rate), Agent shall promptly notify
Borrower Representative and (1) all existing LIBOR Rate Loans shall
convert to Prime Rate Loans upon the end of the applicable Interest
Period, and (2) no additional LIBOR Rate Loans shall be made until such
circumstances are cured.
(iii) If, after the date hereof, the introduction of,or any
change in, any applicable law, treaty, rule, regulation or guideline or
in the interpretation or administration thereof by any governmental
authority or any central bank or other fiscal, monetary or other
authority having jurisdiction over Agent or any Lender or its lending
offices (a "REGULATORY CHANGE"), shall, in the opinion of counsel to
Lender, make it unlawful for Agent or such Lender to make or maintain
LIBOR Rate Loans, then Agent shall promptly notify Borrower
Representative and (A) the LIBOR Rate Loans shall immediately convert
to Prime Rate Loans on the last Business Day of the then existing
Interest Period or Interest Periods, or on such earlier date as
required by law and (B) no additional LIBOR Rate Loans shall be made
until such circumstance is cured.
(iv) If, for any reason, a LIBOR Rate Loan is repaid prior
to the last Business Day of any Interest Period or if a LIBOR Rate Loan
does not occur on a date specified by Borrower Representative in its
request (other than as a result of a default by Agent or a Lender), the
Borrowers agree jointly and severally to indemnify Agent and each
Lender against any loss (including any loss on redeployment of the
deposits or other funds acquired by Agent or such Lender to fund or
maintain such LIBOR Rate Loan), cost or expense incurred by Agent or
such Lender as a result of such prepayment.
(v) If any Regulatory Change (whether or not having the
force of law) shall (A) impose, modify or deem applicable any
assessment, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of or loans by, or
any other acquisition of funds or disbursements by, Agent or any
Lender; (B) subject Agent or any Lender or the LIBOR Rate Loans to any
22
Tax or change the basis of taxation of payments to Agent or any Lender
of principal or interest due from the Borrowers to Agent or such Lender
hereunder (other than a change in the taxation of the overall net
income of Agent or such Lender); or (C) impose on Lenders any other
condition regarding the LIBOR Rate Loans or Agent's or any Lender's
funding thereof, and Agent or any Lender shall determine (which
determination shall be conclusive, absent any manifest error) that the
result of the foregoing is to increase the cost to Agent or such Lender
of making or maintaining the LIBOR Rate Loans or to reduce the amount
of principal or interest received by Agent or such Lender hereunder,
then the Borrowers shall be jointly and severally obligated to pay to
such party, on demand, such additional amounts as such party shall,
from time to time, determine are sufficient to compensate and indemnify
such party from such increased cost or reduced amount.
(vi) Each of Agent and each Lender shall receive payments
of amounts of principal of and interest with respect to the LIBOR Rate
Loans free and clear of, and without deduction for, any Taxes. If (A)
Agent or any Lender shall be subject to any Tax in respect of any LIBOR
Rate Loans or any part thereof or, (B) the Borrowers shall be required
to withhold or deduct any Tax from any such amount, the LIBOR Rate
applicable to such LIBOR Rate Loans shall be adjusted by Agent or such
Lender to reflect all additional costs incurred by Agent or such Lender
in connection with the payment by Agent or such Lender or the
withholding by the Borrowers of such Tax and the Borrowers shall
provide Agent or such Lender with a statement detailing the amount of
any such Tax actually paid by the Borrowers. Determination by Agent or
any Lender of the amount of such costs shall be conclusive, absent
manifest error. If after any such adjustment any part of any Tax paid
by Agent or any Lender is subsequently recovered by Agent or such
Lender, such party shall reimburse the Borrowers to the extent of the
amount so recovered. A certificate of an officer of Agent or any Lender
setting forth the amount of such recovery and the basis therefor shall
be conclusive, absent manifest error.
(vii) Each request for LIBOR Rate Loans shall be in an
amount of not less than Five Hundred Thousand and No/100 Dollars
($500,000), and in integral multiples of One Hundred Thousand and
No/100 Dollars ($100,000).
(viii) Unless otherwise specified by Borrower Representative,
all Loans shall be Prime Rate Loans.
(ix) No more than three (3) Interest Periods may be in
effect with respect to outstanding LIBOR Rate Loans at any one time.
(x) No more than ninety percent (90%) of the aggregate
principal amount of Loans outstanding at any one time may be LIBOR Rate
Loans.
(C) FEES AND CHARGES.
(i) COMMITMENT FEE: The Borrowers shall jointly and
severally pay to Agent, for the benefit of Lenders according to their
respective Pro Rata Shares, a commitment fee of Two Hundred Sixty Two
Thousand Five Hundred and No/100 Dollars ($262,500), which fee shall be
23
fully earned and payable in immediately available funds on the Closing
Date and non-refundable upon receipt by Agent.
(ii) UNUSED LINE FEE: The Borrowers jointly and severally
agree to pay to Agent, for the benefit of Lenders according to their
respective Pro Rata Shares, an unused line fee of half of one percent
per annum (0.50%) of the difference each month between (i) the Maximum
Revolving Loan Limit and (ii) the average daily balance of the
Revolving Loans, PLUS the outstanding Letter of Credit Obligations, in
each case for such month, PROVIDED, HOWEVER, that such fee shall not
exceed One Hundred Thousand and No/100 Dollars ($100,000) per calendar
year for all years following the year in which the Second Availability
Reserve Termination Date occurred. Said fee shall be fully earned by
Lenders and payable in immediately available funds monthly in arrears
on the first Business Day of each month for the previous month, and
shall be calculated on the basis of a 360 day year.
(iii) COLLATERAL MANAGEMENT FEE: The Borrowers jointly and
severally agree to pay to Agent, for its own account, a collateral
management fee of Seven Thousand Five Hundred and No/100 Dollars
($7,500) per month, provided, however, that such fee will be reduced to
Two Thousand Five Hundred and No/100 Dollars ($2,500) per month for all
months following the month in which the Second Availability Reserve
Termination Date occurred. Said fee shall be fully earned by Agent and
payable in immediately available funds monthly in arrears on the first
Business Day of each month for the previous month, shall be calculated
on the basis of a 360 day year and shall be non-refundable upon receipt
by Agent.
(iv) COSTS AND EXPENSES: The Borrowers shall be obligated
jointly and severally to reimburse Agent for all out-of-pocket costs
and expenses, including, without limitation, legal expenses and
reasonable attorneys' fees incurred by Agent, in connection with the
(i) negotiation, documentation and consummation of this transaction and
any other transactions among the Parent and/or Borrowers, Agent and
Lenders, including, without limitation, Uniform Commercial Code and
other public record searches and filings, overnight courier or other
express or messenger delivery, appraisal costs, surveys, title
insurance and environmental audit or review costs; (ii) collection,
protection or enforcement of any rights in or to the Collateral; (iii)
collection of any Liabilities; and (iv) administration and enforcement
of any of Agent's and/or any Lender's rights or remedies under this
Agreement or any Other Agreement (including, without limitation,
reasonable costs and expenses of any third party provider engaged by
Agent for such purposes). The Borrowers shall also agree jointly and
severally to pay all normal service charges with respect to all
accounts maintained by each Borrower with any Lender, Affiliate of any
Lender or LaSalle Bank and any additional services requested by any of
the Borrowers from any Lender, Affiliate of any Lender or LaSalle Bank,
as applicable. All such costs, expenses and charges shall, if owed to
LaSalle Bank, be reimbursed by the Lenders (according to their
respective Pro Rata Shares) and, in such event or in the event such
costs and expenses are owed to Agent and Lenders, constitute
Liabilities hereunder, shall be payable by the Borrowers jointly and
severally to Agent on demand, and, until paid, shall bear interest at
the highest rate then applicable to Loans hereunder.
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(v) CAPITAL ADEQUACY CHARGE. If any Lender shall have
determined that the adoption after the date hereof of any law, rule or
regulation regarding capital adequacy, or after the date hereof any
change therein or in the interpretation or application thereof, or
compliance by such Lender with any request or directive after the date
hereof regarding capital adequacy (whether or not having the force of
law) from any central bank or governmental authority enacted after the
date hereof, does or shall have the effect of reducing the rate of
return on such party's capital as a consequence of its obligations
hereunder to a level below that which such Lender could have achieved
but for such adoption, change or compliance (taking into consideration
such party's policies with respect to capital adequacy) by a material
amount, then from time to time, after submission by such Lenders to
Borrower Representative of a written demand therefor ("CAPITAL ADEQUACY
DEMAND") together with the certificate described below, Borrowers shall
pay to such party such additional amount or amounts ("CAPITAL ADEQUACY
CHARGE") as will compensate such party for such reduction, such Capital
Adequacy Demand to be made with reasonable promptness following such
determination. A certificate of Agent or such Lender claiming
entitlement to payment as set forth above shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature
of the occurrence giving rise to such reduction, the amount of the
Capital Adequacy Charge to be paid to Agent or such Lender, and the
method by which such amount was determined. In determining such amount,
the applicable party may use any reasonable averaging and attribution
method, applied on a non-discriminatory basis.
(D) MAXIMUM INTEREST.
It is the intent of the parties that the rate of interest and other
charges to the Borrowers under this Agreement and the Other Agreements shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Agent or any Lender may lawfully charge
the Borrowers, then the obligation to pay interest and other charges shall
automatically be reduced to such limit and, if any amount in excess of such
limit shall have been paid, then such amount shall be refunded to the Borrowers.
5. COLLATERAL.
(A) REAFFIRMATION OF GRANT OF SECURITY INTEREST TO AGENT.
As security for the payment of all Loans and Letters of Credit
outstanding or in the future made or issued to Borrowers hereunder and for the
payment or other satisfaction of all other Liabilities (including, without
limitation, all Prior Liabilities), each of Parent and each Borrower, pursuant
to Section 5 of the Prior Loan Agreement, assigned and granted to LaSalle a
continuing security interest in all property referenced in Section 5 of the
Prior Loan Agreement. Each of Parent and each Borrower hereby ratifies and
reaffirms such assignment and grant of continuing security, and acknowledges and
agrees that such assignment and grant of security shall continue and remain in
full force and effect from and after the execution, delivery and effectiveness
of this Agreement with the same validity, enforceability, perfection and
priority under this Agreement as existed under the Prior Loan Agreement. Without
in any way limiting or otherwise affecting such existing assignment and grant of
continuing security (including, without limitation, the attachment, validity,
25
enforceability, perfection or priority thereof), and out of the abundance of
caution, each of Parent and each Borrower hereby re-assigns and grants to Agent,
for the benefit of itself and the Lenders, a continuing security interest in the
following property of Parent or such Borrower, whether now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located: (a) all
Accounts (whether or not Eligible Accounts) and all Goods whose sale, lease or
other disposition by Parent or such Borrower, has given rise to Accounts and
have been returned to, or repossessed or stopped in transit by, Parent or such
Borrower; (b) all Chattel Paper, Instruments, Documents and General Intangibles
(including, without limitation, all patents, patent applications, trademarks,
trademark applications, tradenames, trade secrets, goodwill, copyrights,
copyright applications, registrations, licenses, software, franchises, customer
lists, tax refund claims, claims against carriers and shippers, guarantee
claims, contracts rights, payment intangibles, security interests, security
deposits and rights to indemnification); (c) all Inventory (whether or not
Eligible Inventory); (d) all Goods (other than Inventory), including, without
limitation, Equipment, vehicles and Fixtures; (e) all Investment Property; (f)
all Deposit Accounts, bank accounts, deposits, cash and such cash equivalents;
(g) all Letter-of-Credit Rights; (h) Commercial Tort Claims listed on EXHIBIT C
hereto; (i) all policies and certificates of insurance of Parent insuring the
property and assets of any of the Borrowers and the Life Insurance Policy, and
all policies and certificates of insurance of each Borrower; (j) any other
property of Parent and each Borrower, now or hereafter in the possession,
custody or control of Agent or any Lender or any agent or any parent, affiliate
or subsidiary of Agent or any Lender or any participant with any Lender in the
Loans or Letters of Credit, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise) and (k) all additions
and accessions to, substitutions for, and replacements, products and Proceeds of
the foregoing property, including, without limitation, proceeds of all insurance
policies insuring the foregoing property, and all of Parent's or such Borrower's
books and records relating to any of the foregoing and to such Parent's or
Borrower's business.
(B) OTHER SECURITY.
Agent, in its sole discretion, without waiving or releasing any
obligation, liability or duty of Parent or any Borrower under this Agreement or
the Other Agreements or any Default or Event of Default, may at any time or
times hereafter, but shall not be obligated to, pay, acquire or accept an
assignment of any security interest, lien, encumbrance or claim (other than
Permitted Liens) asserted by any Person in, upon or against the Collateral. All
sums paid by Agent in respect thereof and all costs, fees and expenses
including, without limitation, reasonable attorney fees, all court costs and all
other charges relating thereto incurred by Agent shall constitute Liabilities,
payable by the Borrowers on a joint and several basis to Agent on demand and,
until paid, shall bear interest at the highest rate then applicable to Loans
hereunder.
(C) POSSESSORY COLLATERAL.
Immediately upon the receipt by Parent and/or one or more Borrowers of
any portion of the Collateral evidenced by an agreement, Instrument or Document,
including, without limitation, any Tangible Chattel Paper and any Investment
Property consisting of certificated securities, Parent and/or such Borrower or
Borrowers shall deliver the original thereof to Agent together with an
appropriate endorsement, issuer acknowledgment, irrevocable proxy or other
26
specific evidence of assignment thereof to Agent (in form and substance
acceptable to Agent). PARENT AND EACH BORROWER EACH HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS AGENT (ON BEHALF OF THE LENDERS) AS THE PROXY AND
ATTORNEY-IN-FACT OF SUCH PERSON WITH RESPECT TO THE PLEDGED COLLATERAL
REFERENCED IN THIS SUBSECTION 5(C), INCLUDING THE RIGHT TO VOTE THE PLEDGED
SHARES, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE APPOINTMENT OF AGENT AS
PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE
UNTIL THE INDEFEASIBLE SATISFACTION IN FULL OF ALL LIABILITIES (OTHER THAN
CONTINGENT INDEMNIFICATION OBLIGATIONS AS TO WHICH NO UNSATISFIED CLAIM HAS BEEN
ASSERTED). IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT
OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL
OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED
COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS
OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE
RECORD BOOKS OF PARENT OR ANY BORROWER) BY ANY PERSON (INCLUDING PARENT, ANY
BORROWER OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF ANY EVENT OF
DEFAULT. NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY DUTY TO
EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.
(D) ELECTRONIC CHATTEL PAPER.
To the extent that Parent and/or one or more Borrowers obtain or
maintain any Electronic Chattel Paper, Parent and/or such Borrower or Borrowers
shall create, store and assign the record or records comprising the Electronic
Chattel Paper in such a manner that (i) a single authoritative copy of the
record or records exists which is unique, identifiable and except as otherwise
provided in clauses (iv), (v) and (vi) below, unalterable, (ii) the
authoritative copy identifies Agent as the assignee of the record or records,
(iii) the authoritative copy is communicated to and maintained by the Agent or
its designated custodian, (iv) copies or revisions that add or change an
identified assignee of the authoritative copy can only be made with the
participation of Agent, (v) each copy of the authoritative copy and any copy of
a copy is readily identifiable as a copy that is not the authoritative copy and
(vi) any revision of the authoritative copy is readily identifiable as an
authorized or unauthorized revision.
6. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
The Parent and the Borrowers shall, at Agent's request, at any time and
from time to time, authenticate, execute and deliver to Agent such financing
statements, documents and other agreements and instruments (and pay the cost of
filing or recording the same in all public offices deemed necessary or desirable
by Agent) and do such other acts and things or cause third parties to do such
other acts and things as Agent may deem necessary or desirable in its sole
27
discretion in order to establish and maintain a valid, attached and perfected
security interest in the Collateral in favor of Agent (free and clear of all
other liens, claims, encumbrances and rights of third parties whatsoever,
whether voluntarily or involuntarily created, except Permitted Liens) to secure
payment of the Liabilities, and in order to facilitate the collection of the
Collateral. Each of Parent and each Borrower irrevocably hereby makes,
constitutes and appoints Agent (and all Persons designated by Agent for that
purpose) as Parent's or such Borrower's true and lawful attorney and
agent-in-fact to execute and file such financing statements, documents and other
agreements and instruments and do such other acts and things as may be necessary
to preserve and perfect Agent's security interest in the Collateral. Each of
Parent and each Borrower further agrees that a carbon, photographic, photostatic
or other reproduction of this Agreement or of a financing statement shall be
sufficient as a financing statement. Each of Parent and each Borrower further
ratifies and confirms the prior filing by Agent of any and all financing
statements which identify Parent or such Borrower as debtor, Agent as secured
party (or LaSalle in its individual capacity as a secured party pursuant to the
Prior Loan Agreement) and any or all Collateral as collateral.
7. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Unless an Event of Default has occurred and is continuing, each
Borrower shall have the right, except as otherwise expressly provided in this
Agreement, in the ordinary course of such Borrower's business, to (a) sell,
lease or furnish under contracts of service any of such Borrower's Inventory
normally held by such Borrower for any such purpose; and (b) use and consume any
raw materials, work in process or other materials normally held by such Borrower
for such purpose; PROVIDED, HOWEVER, that a sale in the ordinary course of
business shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owed by such Borrower.
8. COLLECTIONS.
(a) Each Obligor shall direct all of its Account Debtors that remit
payment on the Accounts due to such Obligor by electronic funds transfer to
remit such amounts directly to one or more deposit accounts in Agent's name
established by such Obligor at LaSalle Bank or at another financial institution
acceptable to Agent (each a "BLOCKED ACCOUNT," and collectively the "BLOCKED
ACCOUNTS"). The financial institution with which such Blocked Account is
established shall acknowledge and agree, in a manner satisfactory to Agent, that
the amounts in such Blocked Accounts are the sole and exclusive property of
Agent, that such financial institution will follow the instructions of Agent
with respect to the disposition of funds in the Blocked Accounts without further
consent of such Obligor, that such financial institution has no right of setoff
or recoupment against the Blocked Accounts or against any account maintained by
such financial institution into which any amounts are remitted by Account
Debtors of such Obligor, and that the financial institution shall wire, or
otherwise transfer in immediately available funds to Agent in a manner
satisfactory to Agent, funds deposited into the Blocked Accounts on a daily
basis as such funds are collected. Each Obligor agrees that all payments made to
the Blocked Accounts of such Obligor or otherwise received by Agent, whether in
respect of the Accounts or as Proceeds of other Collateral or otherwise, will be
applied on account of the Liabilities then due and payable in accordance with
the terms of this Agreement; PROVIDED that so long as no Event of Default has
occurred and is continuing, payments received by Agent shall not, unless
requested by Borrower Representative in advance of such payment, be applied to
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the unmatured portion of the LIBOR Rate Loans, but shall be held in an interest
bearing cash collateral account maintained by Agent, until the earlier of (i)
the last Business Day of the Interest Period applicable to such LIBOR Rate Loans
and (ii) the occurrence of an Event of Default. The Obligors jointly and
severally agree to pay all fees, costs and expenses in connection with opening
and maintaining the Blocked Accounts. All of such fees, costs and expenses, if
not paid by the Obligors, may be paid by Agent and in such event all amounts
paid by Agent shall constitute Liabilities hereunder, shall be payable to Agent
by the Obligors jointly and severally upon demand, and, until paid, shall bear
interest at the highest rate then applicable to Loans hereunder. For the purpose
of this section, each Obligor irrevocably hereby makes, constitutes and appoints
Agent (and all Persons designated by Agent for that purpose) as such Obligor's
true and lawful attorney and agent-in-fact to perform all acts and other things
that Agent reasonably deems necessary to perfect, preserve, or realize upon such
Obligor's property or assets and Agent's liens thereon.
(b) Each Obligor shall direct all of its Account Debtors to make
all payments on the Accounts due to such Obligor, other than payments by
electronic funds transfer addressed in SUBSECTION 8(A) above, directly to a post
office box (a "LOCK BOX") designated by, and under the exclusive control of
Agent at a financial institution acceptable to Agent. Each Obligor shall
establish an account (the "LOCK BOX ACCOUNT") in Agent's name with LaSalle Bank
or another financial institution acceptable to Agent, into which all payments
received in the Lock Box shall be deposited, and into which such Obligor will
immediately deposit all payments received by such Obligor on Accounts in the
identical form in which such payments were received, whether by cash or check.
If an Obligor, any Affiliate or Subsidiary of any Obligor, any shareholder,
officer, director, employee or agent of any Obligor or any Affiliate or
Subsidiary of any Obligor, or any other Person acting for or in concert with any
Obligor shall receive any monies, checks, notes, drafts or other payments
relating to or as Proceeds of Accounts or other Collateral, such Obligor and
each such other Person shall receive all such items in trust for, and as the
sole and exclusive property of, Agent and, except as otherwise permitted
pursuant to SUBSECTION (F) below, shall remit the same (or cause the same to be
remitted) in kind to the Lock Box Account immediately upon the receipt thereof.
The financial institution with which the Lock Box Account is established shall
acknowledge and agree, in a manner satisfactory to Agent, that the amounts on
deposit in such Lock Box and Lock Box Account are the sole and exclusive
property of Agent, that such financial institution will follow the instructions
of Agent with respect to disposition of funds in the Lock Box and Lock Box
Account without further consent from such Obligor, that such financial
institution has no right to setoff against the Lock Box or Lock Box Account or
against any other account maintained by such financial institution into which
the contents of the Lock Box or Lock Box Account are transferred, and that such
financial institution shall wire, or otherwise transfer in immediately available
funds to Agent in a manner satisfactory to Agent, funds deposited in the Lock
Box Account on a daily basis as such funds are collected. Each Obligor agrees
that all payments made to such Lock Box Account or otherwise received by Agent,
whether in respect of the Accounts or as Proceeds of other Collateral, will be
applied on account of the Liabilities in accordance with the terms of this
Agreement; PROVIDED, that so long as no Event of Default has occurred, payments
received by Agent shall not, unless requested by Borrower Representative in
advance of Agent receiving such payment, be applied to the unmatured portion of
the LIBOR Rate Loans, but shall be held in an interest bearing cash collateral
account maintained by Agent, until the earlier of (i) the last Business Day of
the Interest Period applicable to such LIBOR Rate Loan and (ii) the occurrence
of an Event of Default;
29
PROVIDED, FURTHER, that so long as no Event of Default has occurred, the
immediately available funds in such cash collateral account may be disbursed, at
the Borrowers' discretion, to one or more of the Borrowers so long as after
giving effect to such disbursement, the Borrowers' Availability at such time
equals or exceeds the sum of outstanding Revolving Loans and outstanding Letter
of Credit Obligations at such time. All checks, drafts, instruments and other
items of payment or Proceeds of Collateral shall be endorsed by the applicable
Obligor to Agent, and, if that endorsement of any such item shall not be made
for any reason, Agent is hereby irrevocably authorized to endorse the same on
such Obligor's behalf. For the purpose of this section, each Obligor irrevocably
hereby makes, constitutes and appoints Agent (and all persons designated by
Agent for that purpose) as such Obligor's true and lawful attorney and
agent-in-fact (i) to endorse such Obligor's name upon said items of payment
and/or Proceeds of Collateral and upon any Chattel Paper, Document, Instrument,
invoice or similar document or agreement relating to any Account of such Obligor
or Goods pertaining thereto; (ii) to take control in any manner of any item of
payment or Proceeds thereof and (iii) to have access to any lock box or postal
box into which any of such Obligor's mail is deposited, and open and process all
mail addressed to such Obligor and deposited therein.
(c) Agent may, at any time and from time to time after the
occurrence and during the continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or after the
maturity of any of the Liabilities, (i) enforce collection of any of any
Obligor's Accounts or other amounts owed to any Obligor by suit or otherwise;
(ii) exercise all of Obligor's respective rights and remedies with respect to
proceedings brought to collect any Accounts or other amounts owed to such
Obligor; (iii) surrender, release or exchange all or any part of any Accounts or
other amounts owed to such Obligor, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder, as Agent may deem appropriate in its reasonable judgment; (iv) sell
or assign any Account of any Obligor or other amount owed to any Obligor upon
such terms, for such amount and at such time or times as Agent deems advisable
in its reasonable judgment; (v) prepare, file and sign any Obligor's name on any
proof of claim in bankruptcy or other similar document against any Account
Debtor or other Person obligated to any Obligor; and (vi) do all other acts and
things which are necessary, in Agent's sole discretion, exercised in a
commercially reasonable manner, to fulfill any Obligor's obligations under this
Agreement and to allow Agent to collect the Accounts or other amounts owed to
any Obligor. In addition to any other provision hereof, Agent may at any time,
after the occurrence and during the continuance of an Event of Default, at
Obligors' expense, notify any parties obligated on any of the Accounts to make
payment directly to Agent of any amounts due or to become due thereunder.
(d) For purpose s of calculating interest and fees, Agent shall,
within one (1) Business Day after receipt by Agent at its office in Chicago,
Illinois of (i) checks and (ii) cash or other immediately available funds from
collections of items of payment and Proceeds of any Collateral, apply such
collections or Proceeds against the Liabilities then due in such order as
provided herein or, if any Event of Default shall have occurred and be
continuing, as Agent shall determine in its sole discretion. For purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and Proceeds of any Collateral shall be applied against the Liabilities then
due, in such order as Agent shall determine in its sole discretion, on the day
of receipt, subject to actual collection.
30
(e) On a monthly basis, Agent shall deliver to Borrower
Representative an account statement showing all Loans, charges and payments,
which shall be deemed final, binding and conclusive upon the Borrowers, unless
Borrower Representative notifies Agent in writing, specifying any error therein,
within sixty (60) days of the date such account statement is received by
Borrower Representative and any such notice shall only constitute an objection
to the items specifically identified.
(f) Notwithstanding anything in this SECTION 8 to the contrary,
Parent and Borrowers shall not be required to make Account Number 2000015077343
maintained by Point Blank at Wachovia Bank, N.A. or Account Number 3601061876
maintained by PACA at Regions Bank a Blocked Account and may deposit monies,
checks, notes, drafts or other payments relating to or as Proceeds of Accounts
or other Collateral into such accounts; PROVIDED that the aggregate amount of
all funds deposited into such accounts shall at no time exceed Twenty-Five
Thousand and No/Dollars ($25,000) in the aggregate.
9. COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.
(A) BORROWING REPORTS.
Borrower Representative, on behalf of the Borrowers, shall deliver to
Agent an executed loan report and certificate in Agent's then current form on
each day on which Borrower Representative, on behalf of the Borrowers, requests
a Revolving Loan. Not less than once each week, Borrower Representative, on
behalf of the Parent and Borrowers, shall deliver to Agent (i) copies of each
Borrower's and Parent's sales journal, cash receipts journal and credit memo
journal for the immediately preceding week, and (ii) and a calculation of
Borrowers' aggregate Availability as at the immediately preceding Business Day.
Such report shall reflect the activity of each such Borrower and Parent with
respect to Accounts of each such Borrower for the immediately preceding week,
and shall be in a form and with such specificity as is reasonably satisfactory
to Agent, and shall contain such additional information concerning Accounts and
Inventory as may be reasonably requested by Agent, including, without
limitation, but only if specifically requested by Agent, copies of all invoices
prepared in connection with such Accounts. To the extent that information
concerning Inventory is required to be provided more often than monthly under
this SUBSECTION 9(A), Agent acknowledges and agrees that such information shall
only be required to be updated on a monthly basis.
(B) MONTHLY REPORTS AND FINANCIAL STATEMENTS.
Borrower Representative, on behalf of Parent and the Borrowers, shall
deliver to Agent (in addition to any other reports), in form and substance
reasonably acceptable to Agent, as soon as practicable and in any event:
(i) within fifteen(15)days after the end of each calendar
month, (A) an amended SCHEDULE 11(X), (B) a detailed trial balance of
Accounts, aged per invoice date, that shall include without limitation,
the names and addresses (which may be in a separate document or ledger)
or such comparable information as is reasonably satisfactory to the
Agent of all Accounts, and (C) a summary and detail of accounts payable
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(such Accounts and accounts payable divided into such time intervals as
Agent may require in its reasonable discretion), including a listing of
any held checks, in the case of CLAUSES (A), (B) and (C), as of the
last day of such calendar month;
(ii) within forty-five (45) days after the end of each
calendar month, (A) the general ledger inventory account balance and an
inventory report in Agent's standard form of Inventory report then in
effect or in the form most recently requested from the Borrower
Representative by Agent, in each case for Parent and Borrowers by each
category of Inventory, together with a description of the monthly
change in each category of Inventory; and (B) prior to the month during
which the First Availability Reserve Termination Date occurred, a
Monthly Desktop Appraisal, in the case of CLAUSES (A) and (B), as of
the last day of such calendar month; PROVIDED, HOWEVER, that the items
referenced in CLAUSES (A) and (B) above shall be delivered within
thirty (30) days after the end of each calendar month from and after
the earliest to occur of: (x) the first calendar month in which
Availability for any Business Day during such month does not exceed Ten
Million and No/100 Dollars ($10,000,000), (y) the calendar month during
which the First Availability Reserve Termination Date occurs, or (z)
the calendar month ending September 30, 2007; PROVIDED, FURTHER, that
Borrowers shall not be required to deliver a Monthly Desktop Appraisal
for any month if the Eligible Account Excess Availability as at the
last day of such month exceeds Fifteen Million and No/100 Dollars
($15,000,000); and
(iii) within forty-five (45) days after the end of each
calendar month from the calendar month ending on January 31, 2007
through and including the calendar month ending on September 30, 2007,
and thereafter within thirty (30) days after the end of each subsequent
calendar month, unaudited consolidated and consolidating monthly
balance sheets, statements of income, and shareholders' equity and
consolidated statements of cash flows of Parent and its Subsidiaries as
of the last day of each such calendar month, as certified in writing by
the Chief Financial Officer of Parent (on behalf of Parent and its
Subsidiaries) as presenting fairly in all material respects the
financial condition and results of operations of Parent and its
Subsidiaries for such calendar month; PROVIDED, HOWEVER, that for each
month from and after the month during which the First Availability
Reserve Termination Date occurred, such financial statements must be
(A) prepared in accordance with generally accepted accounting
principles consistently applied for each such month, and (B) certified
in writing by the Chief Financial Officer of Parent (on behalf of
Parent and its Subsidiaries) as presenting fairly in all material
respects the financial condition and results of operations of Parent
and its Subsidiaries on a consolidated basis in accordance with
generally accepted accounting principles consistently applied for each
such calendar month, subject to the finalization of the matters listed
in SCHEDULE 9(B)(III).
(C) QUARTERLY AND ANNUAL FINANCIAL STATEMENTS.
The Borrower Representative, on behalf of the Parent and Borrowers,
shall deliver to Agent the following financial information, all of which shall
be accompanied by a Compliance Certificate which shall include a calculation of
all financial covenants referenced therein (both prior to and after execution
and delivery of the Financial Covenant Amendment):
32
(i) within sixty (60) days after the end of each Fiscal
Quarter through and including the Fiscal Quarter ending on or about
June 30, 2007, and thereafter within forty-five (45) days after the end
of each subsequent Fiscal Quarter, unaudited consolidated and
consolidating balance sheets, statements of income and shareholders'
equity and consolidated statements of cash flows of Parent and its
Subsidiaries as of the last day of each such Fiscal Quarter, as
certified in writing by the Chief Financial Officer of Parent (on
behalf of Parent and its Subsidiaries) as presenting fairly in all
material respects the financial condition and results of operations of
Parent and its Subsidiaries on a consolidated and consolidating basis
for such Fiscal Quarter; PROVIDED, HOWEVER, that for each Fiscal
Quarter from and after the Fiscal Quarter during which the First
Availability Reserve Termination Date occurred, such financial
statements must be (A) prepared in accordance with generally accepted
accounting principles consistently applied for each such Fiscal
Quarter, and (B) certified in writing by the Chief Financial Officer of
Parent (on behalf of Parent and its Subsidiaries) as presenting fairly
in all material respects the financial condition and results of
operations of Parent and its Subsidiaries on a consolidated basis in
accordance with generally accepted accounting principles consistently
applied for each such Fiscal Quarter;
(ii) within sixty (60) days after the end of each Fiscal
Quarter through and including the Fiscal Quarter ending on or about
June 30, 2007, and thereafter within forty-five (45) days after the end
of each subsequent Fiscal Quarter, in each case until the First
Availability Reserve Termination Date, a Quarterly Appraisal as of the
last day of such Fiscal Quarter; and
(iii) within ninety (90) days after the end of each Fiscal
Year (except for the Fiscal Year ended December 31, 2006, which
deadline shall be September 30, 2007), audited annual financial
statements including, without limitation, balance sheets and statements
of income, retained earnings, cash flows and stockholders equity, of
Parent and its Subsidiaries, on a consolidated basis, which shall be
accompanied by (A) an unqualified audit opinion by independent
certified public accountants selected by Parent and reasonably
satisfactory to Agent, that such consolidated financial statements
present fairly in all material respects the financial condition and
results of operations of Parent and its Subsidiaries on a consolidated
basis in accordance with generally accepted accounting principles
consistently applied for each such Fiscal Year; and (B) copies of all
related management letters sent to Parent or any Subsidiary thereof by
such accountants. Parent and Borrowers shall further use commercially
reasonable efforts to cause such accountants to deliver to Agent (for
the benefit of Agent and Lenders) a letter acknowledging that such
accountants are aware that a primary intent of Parent and Borrowers in
obtaining such financial statements and unqualified audit opinion is to
influence Agent and Lenders and that Agent and Lenders are relying upon
such financial statements and unqualified audit opinion in connection
with the exercise of their rights hereunder.
(D) ANNUAL PROJECTIONS.
As soon as practicable and in any event no later than thirty (30) days
following the beginning of each Fiscal Year from and after the Fiscal Year
ending December 31, 2008, Borrower Representative shall deliver to Agent and
33
each Lender projected balance sheets, statements of income, cash flow and
Availability for Parent and its Subsidiaries, on a consolidated and
consolidating basis, for each of the twelve (12) months during such Fiscal Year,
which shall include the assumptions used therein, together with appropriate
supporting details as reasonably requested by Agent.
(E) EXPLANATION OF BUDGETS AND PROJECTIONS.
In conjunction with the delivery of the annual presentation of
projections or budgets referred to in SUBSECTION 9(D) above, Borrower
Representative, on behalf of the Borrowers, shall deliver a letter, signed by
the President or a Vice President of Parent and by the Treasurer or Chief
Financial Officer of Parent and otherwise in a form and with reasonable detail
reasonably acceptable to Agent, describing and analyzing such projections or
budgets.
(F) PUBLIC REPORTING.
Promptly upon the filing thereof, Borrower Representative shall deliver
to Agent copies of all registration statements and annual, quarterly, monthly or
other regular reports which Parent or any of its Subsidiaries files with the
SEC, as well as promptly providing to Agent copies of any reports and proxy
statements delivered to its shareholders.
(G) ERISA.
Borrower Representative shall provide Agent copies of the then most
recent actuarial reports with respect to any Title IV Plans within five (5)
Business Days of each such report becoming available. Promptly upon Parent or
any Borrower becoming aware of any fact or condition which could reasonably be
expected to result in an ERISA Event, Borrower Representative shall deliver to
Agent a summary of such facts and circumstances and any action Parent and
Borrowers intend to take regarding such facts and circumstances.
(H) OTHER INFORMATION.
Promptly following request therefor by Agent, such other business or
financial data, reports, appraisals and projections as Agent may reasonably
request, which may include, but not be limited to, reports showing daily sales
and collections, monthly accounts receivable agings and reconciliations,
Inventory by category and location, and accounts payable agings.
10. TERMINATION; AUTOMATIC RENEWAL.
THIS AGREEMENT SHALL BE IN EFFECT FOR A PERIOD (SUCH PERIOD, THE
"ORIGINAL TERM") FROM THE DATE HEREOF UNTIL APRIL 3, 2010, AND SHALL BE EXTENDED
THEREAFTER FOR SUCCESSIVE TWELVE MONTH PERIODS (EACH SUCH EXTENSION BEING
REFERRED TO HEREIN AS A "RENEWAL TERM") SOLELY AT THE OPTION OF THE AGENT OR
REQUISITE LENDERS, AS APPLICABLE, UNLESS (A) AGENT, AT THE REQUEST OF THE
REQUISITE LENDERS, MAKES DEMAND FOR REPAYMENT PRIOR TO THE END OF THE ORIGINAL
TERM OR THE THEN CURRENT RENEWAL TERM; (B) THE DUE DATE OF THE LIABILITIES IS
ACCELERATED PURSUANT TO SECTION 16 HEREOF OR (C) ANY BORROWER OR ANY LENDER
34
ELECTS TO TERMINATE THIS AGREEMENT AT THE END OF THE ORIGINAL TERM OR AT THE END
OF ANY RENEWAL TERM BY GIVING THE OTHER PARTIES HERETO WRITTEN NOTICE OF SUCH
ELECTION AT LEAST THIRTY (30) DAYS PRIOR TO THE END OF THE ORIGINAL TERM OR THE
THEN CURRENT RENEWAL TERM AND BY THE BORROWERS PAYING ALL OF THE LIABILITIES
(OTHER THAN CONTINGENT INDEMNIFICATION OBLIGATIONS AS TO WHICH NO UNSATISFIED
CLAIM HAS BEEN ASSERTED) IN FULL ON THE LAST DAY OF SUCH TERM. If one or more of
the events specified in clauses (A), (B) or (C) occurs, or this Agreement
otherwise expires, then (i) Agent and Lenders shall not make any additional
Loans or issue any additional Letters of Credit on or after the date identified
as the date on which such Liabilities are to be repaid; and (ii) this Agreement
shall terminate on the date thereafter that such Liabilities are paid in full.
At such time as the Borrowers have repaid all of the Liabilities (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and this Agreement has terminated in accordance with the terms hereof,
(i) Parent and the Borrowers shall deliver to Agent and Lenders a release, in
form and substance reasonably satisfactory to Agent and Lenders, of all
obligations and liabilities of Agent and Lenders and their respective officers,
directors, employees, agents, parents, subsidiaries and affiliates to Parent and
the Borrowers, and if the Parent and/or Borrowers are obtaining new financing
from another lender, Parent and the Borrowers shall deliver such lender's
indemnification of Agent and Lenders, in form and substance reasonably
satisfactory to Agent, effective for a period not longer than ninety (90) days
after the termination of this Agreement, for checks which Agent has credited to
any account of Parent and the Borrowers, but which subsequently are dishonored
for any reason or for automatic clearinghouse or wire transfers not yet posted
to any account of Parent or the Borrowers, and (ii) the Agent shall deliver to
the Borrowers and all other Obligors, in form and substance reasonably
satisfactory to the Borrowers, a release of all obligations and shall discharge
all liens and security interests, including any filed financing statements, and
shall provide Borrowers copies thereof. Borrowers may terminate this Agreement
and prepay all of the Liabilities in full in cash solely upon satisfaction of
all of the following conditions: (i) Agent shall have received from Borrowers
not less than thirty (30) days' written notice of such prepayment and
termination, and (ii) Borrowers shall pay Agent, for the benefit of the Lenders
according to their respective Pro Rata Shares, a prepayment premium (in addition
to the payment of all other Liabilities) in immediately available funds as
follows: (A) in the event Borrowers terminate this Agreement and prepay all of
the Liabilities on or before April 3, 2008, then, in such event, on the date of
such prepayment the Borrowers shall jointly and severally pay to Agent an amount
equal to one and one-half percent (1.5%) of the Maximum Revolving Loan Limit in
effect on such date; (B) in the event Borrowers terminate this Agreement and
prepay all of the Liabilities after April 3, 2008 but on or before April 3,
2009, then, in such event, on the date of such prepayment the Borrowers shall
jointly and severally pay to Agent an amount equal to three-fourths percent
(0.75%) of the Maximum Revolving Loan Limit in effect on such date; or (C) in
the event Borrowers terminate this Agreement and prepay all of the Liabilities
after April 3, 2009 but before the expiration of the Original Term or any then
current Renewal Term, as applicable, then, in such event, on the date of such
prepayment the Borrowers shall jointly and severally pay to Agent an amount
equal to one-fourth percent (0.25%) of the Maximum Revolving Loan Limit in
effect on such date.
35
11. REPRESENTATIONS AND WARRANTIES.
Parent and each Borrower hereby represent and warrant to Agent and each
Lender, as applicable, which representations and warranties (whether appearing
in this SECTION 11 or elsewhere) shall be true at the time of such Borrower's
execution hereof and the closing of the transactions described herein or related
hereto, shall remain true until the repayment in full and satisfaction of all
the Liabilities and termination of this Agreement, and shall be remade by Parent
and each Borrower, as applicable, at the time each Loan is made pursuant to this
Agreement.
(A) THE FINANCIAL AND OTHER INFORMATION.
The financial information delivered or to be delivered by Parent and
the Borrowers to Agent or any Lender at or prior to the date of this Agreement
accurately reflect the financial condition of Parent and each Borrower as of the
dates thereof and for the periods covered thereby. As of the date of this
Agreement, there has been no material adverse change in the financial condition,
the operations or any other status of Parent or any Borrower since August 22,
2006. All written information furnished since August 22, 2006 by Parent and the
Borrowers to LaSalle, Agent or any Lender is true and correct in all material
respects as of the date with respect to which such information was furnished.
(B) LOCATIONS.
The office where Parent and each Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, such Parent's and
Borrower's principal place of business and all of such Parent's and Borrower's
other places of business, locations of Collateral and post office boxes and
locations of bank accounts are as set forth in EXHIBIT B and at other locations
within the continental United States of which Agent has been advised by the
Parent and Borrowers in accordance with SUBSECTION 12(B)(I). The Collateral,
including, without limitation, the Equipment (except any part thereof which the
Parent or any Borrower shall have advised Agent in writing consists of
Collateral normally used in more than one state) is kept, or, in the case of
vehicles, based, only at the addresses set forth on EXHIBIT B, and at other
locations within the continental United States of which Agent has been advised
by the Parent or any Borrower in writing in accordance with SUBSECTION 12(B)(I)
hereof.
(C) LOANS BY THE BORROWERS.
Neither Parent nor any Borrower has made any loans or advances to any
Affiliate or other Person except for advances authorized hereunder to employees,
officers and directors of Parent or any of the Borrowers for travel and other
expenses arising in the ordinary course of Parent's or such Borrower's business
and loans permitted pursuant to SUBSECTION 13(F) hereof.
(D) ACCOUNTS AND INVENTORY.
Each Account or item of Inventory which the Borrowers shall, expressly
or by implication, request Agent to classify as an Eligible Account or as
Eligible Inventory, respectively, shall, as of the time when such request is
made, conform in all respects to the requirements of such classification as set
36
forth in the respective definitions of "ELIGIBLE ACCOUNT" and "ELIGIBLE
INVENTORY" as set forth herein.
(E) LIENS.
Parent and each Borrower is the lawful owner of all Collateral now
purportedly owned or hereafter purportedly acquired by Parent or such Borrower,
free from all liens, claims, security interests and encumbrances whatsoever,
whether voluntarily or involuntarily created and whether or not perfected, other
than the Permitted Liens.
(F) ORGANIZATION, AUTHORITY AND NO CONFLICT.
(i) PACA is duly organized, validly existing and in good
standing in the State of New York, but does not have a state
organizational identification number; (ii) Point Blank is duly
organized, validly existing and in good standing in the State of
Delaware, and its state organizational identification number is
2475533; (iii) NDL is duly organized, validly existing and in good
standing in the State of Florida, and its state organizational
identification number is P94000091162; and (iv) Parent is duly
organized, validly existing and in good standing in the State of
Delaware and its state organizational identification number is 2431782.
Parent and each Borrower is duly qualified and in good standing in all
states where the nature and extent of the business transacted by it or
the ownership of its assets makes such qualification necessary and
where the failure to be so qualified would not have a Material Adverse
Effect on the Parent or such Borrower. Parent and each Borrower has the
right and power and is duly authorized and empowered to enter into,
execute and deliver this Agreement and the Other Agreements and perform
its obligations hereunder and thereunder. Parent's and each Borrower's
execution, delivery and performance of this Agreement and the Other
Agreements does not conflict with the provisions of the organizational
documents of Parent or such Borrower, any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document
which may now or hereafter be binding on Parent or such Borrower, and
Parent's and such Borrower's execution, delivery and performance of
this Agreement and the Other Agreements shall not result in the
imposition of any lien or other encumbrance upon any of Parent's or
such Borrower's property under any existing indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument by
which Parent or such Borrower or any of its property may be bound or
affected.
(G) LITIGATION.
Except as disclosed on SCHEDULE 11(G) attached hereto, there are no
actions or proceedings which are pending or threatened against Parent or any
Borrower which could reasonably be expected to have a Material Adverse Effect on
Parent and the Borrowers, taken as a whole, and Parent and each Borrower shall,
promptly upon becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to Agent. Neither Parent nor any
Borrower has any Commercial Tort Claims other than those set forth on EXHIBIT C
hereto, as EXHIBIT C may be amended from time to time.
37
(H) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
Parent and each Borrower has obtained all governmental consents,
franchises, certificates, licenses, authorizations, approvals and permits, the
lack of which would have a Material Adverse Effect on Parent and the Borrowers,
taken as a whole. Parent and each Borrower are in compliance in all material
respects with all applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances (including, without limitation, Environmental
Laws and, except as described on SCHEDULE 11(H) attached hereto, statutes,
orders, regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, ERISA or employee health
and safety) the failure to comply with which would have a Material Adverse
Effect on Parent and the Borrowers, taken as a whole.
(I) AFFILIATE TRANSACTIONS.
Except as set forth on SCHEDULE 11(I) hereto or as permitted pursuant
to SUBSECTIONS 13(B), 13(D), 13(E) and 13(F) hereof, neither Parent nor any
Borrower is conducting, permitting or suffering to be conducted, any transaction
with any Affiliate other than: (i) transactions in the ordinary course of
business pursuant to terms that are no less favorable to Parent or such Borrower
than the terms upon which such transfers or transactions would have been made
had they been made to or with a Person that is not an Affiliate, or (ii)
transactions between Parent and its Subsidiaries with respect to the purchase
from third parties of raw materials, other inventory and centralized services by
Parent on behalf of Borrowers, payment of taxes and similar charges, repayment
of indebtedness permitted under SUBSECTION 13(F) hereof, expenses of litigation
and other legal and administrative proceedings, and general and administrative
expenses, in each case pursuant to transfer pricing and other terms compliant
with generally accepted accounting principles.
(J) NAMES AND TRADENAMES.
Parent's and each Borrower's name has always been as set forth on the
first page of this Agreement and Parent and each Borrower uses no tradenames,
assumed names, fictitious names or division names in the operation of its
business, except in each case as set forth on SCHEDULE 11(J) hereto.
(K) EQUIPMENT.
Except as described in SCHEDULE 11(K), Parent and each Borrower has
good and indefeasible and merchantable title to and ownership of all of its
Equipment, and no Equipment is a Fixture to real estate unless such real estate
is owned by Parent or such Borrower and is subject to a mortgage in favor of
Agent, or if such real estate is leased, is subject to a landlord's agreement in
favor of Agent on terms acceptable to Agent, or an accession to other personal
property unless such personal property is subject to a first priority lien in
favor of Agent.
(L) ENFORCEABILITY.
This Agreement and the Other Agreements to which Parent or any Borrower
is a party are the legal, valid and binding obligations of Parent or such
Borrower, and are enforceable against Parent or such Borrower in accordance with
their respective terms, except as such enforceability may be limited by
38
bankruptcy, insolvency, fraudulent conveyance and other laws affecting
creditors' rights, and by general limitations on the availability of equitable
remedies.
(M) SOLVENCY.
Parent and its Subsidiaries, taken as a whole, are, and Parent and each
Borrower, individually, is, after giving effect to the transactions contemplated
hereby, solvent, able to pay its debts as they become due, has capital
sufficient to carry on its business, now owns property having a value both at
fair valuation and at present fair saleable value greater than the amount
required to pay its debts, and will not be rendered insolvent by the execution
and delivery of this Agreement or any of the Other Agreements or by completion
of the transactions contemplated hereunder or thereunder.
(N) INDEBTEDNESS.
Except for indebtedness permitted under SUBSECTION 13(B) hereof,
neither Parent nor any Borrower is obligated (directly or indirectly), for any
loans or other indebtedness for borrowed money other than the Loans and the
Letters of Credit.
(O) MARGIN SECURITY AND USE OF PROCEEDS.
Except as set forth on SCHEDULE 11(O) hereto, none of Parent or any
Borrower owns any margin securities, and none of the proceeds of the Loans
hereunder shall be used for the purpose of purchasing or carrying any margin
securities or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for any other purpose
not permitted by Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
(P) PARENT, SUBSIDIARIES AND AFFILIATES.
Except as set forth on SCHEDULE 11(P) hereto, Parent and each Borrower
has no parents, Subsidiaries or other Affiliates or divisions, and neither
Parent nor any Borrower is engaged in any joint venture or partnership with any
other Person. The percentage of ownership of each Subsidiary and Affiliate of
Parent or any Borrower listed on SCHEDULE 11(P) (which Schedule may be amended
from time to time with the prior written consent of Agent) and all certificates
representing such ownership, are set forth on SCHEDULE 11(P) hereto.
(Q) NO DEFAULTS.
Neither Parent nor any Borrower is in default in any respect under any
contract, lease or commitment to which it is a party or by which it is bound,
nor does Parent nor any Borrower know of any dispute regarding any such
contract, lease or commitment which in any such case would have a Material
Adverse Effect on Parent and the Borrowers, taken as a whole.
(R) EMPLOYEE MATTERS.
There are no controversies pending or, to any Borrower's or Parent's
knowledge threatened between Parent or any Borrower and any of its respective
employees, agents or independent contractors other than employee grievances
39
arising in the ordinary course of business which would not, in the aggregate,
have a Material Adverse Effect on Parent and the Borrowers, taken as a whole,
and Parent and each Borrower is in compliance with all federal and state laws
respecting employment and employment terms, conditions and practices, except for
such non-compliance which would not have a Material Adverse Effect on Parent and
the Borrowers, taken as a whole.
(S) INTELLECTUAL PROPERTY.
Parent and each Borrower possess adequate licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
tradestyles and tradenames to continue to conduct their respective businesses
substantially as heretofore conducted by them.
(T) ENVIRONMENTAL MATTERS.
Neither Parent nor any Borrower has generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder, and the operations of
Parent and each Borrower comply in all material respects with all Environmental
Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder. There has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person, nor is any pending or to the best of Parent's and
each Borrower's knowledge threatened with respect to any non-compliance with or
violation of the requirements of any Environmental Law by Parent or such
Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects Parent or such
Borrower or its business, operations or assets or any properties at which Parent
or such Borrower has transported, stored or disposed of any Hazardous Materials.
Neither Parent nor any Borrower has material liability (contingent or otherwise)
in connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(U) ERISA MATTERS.
(i) SCHEDULE 11 (U) lists all Title IV Plans and
Multiemployer Plans to which Parent or any Borrower is subject as of
the Closing Date. As of the Closing Date, copies of all such listed
Plans, together with a copy of the three most recent form IRS/DOL
5500-series for each such Plan, to the extent applicable, have been
delivered to Agent. Parent and each Borrower has paid and discharged
all obligations and liabilities arising under ERISA of a character
which, if unpaid or unperformed, might result in the imposition of a
lien against any of its properties or assets. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the
Internal Revenue Service to qualify under Section 401(a) of the
Internal Revenue Code, and to the knowledge of Parent or the applicable
Borrower, nothing has occurred that would cause the loss of such
40
qualification. Except as would not reasonably be expected to have a
Material Adverse Effect, each Plan is in material compliance with the
applicable provisions of ERISA and the Internal Revenue Code. Neither
Parent, any Borrower nor any ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of
the Internal Revenue Code or Section 302 of ERISA or the terms of any
Title IV Plan. Neither Parent nor any Borrower has engaged in any
"prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the Internal Revenue Code, in connection with any Plan,
that would subject Parent or any Borrower to any material tax on
prohibited transactions imposed by Section 502(i) of ERISA or Section
4975 of the Internal Revenue Code.
(ii) As of the Closing Date: (A) no Title IV Plan has
any Unfunded Pension Liability; (B) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (C) there are no pending,
or to the knowledge of Parent or any Borrower, threatened claims (other
than claims for benefits in the normal course), sanctions, actions or
lawsuits, asserted or instituted against any Plan or any Person as
fiduciary or sponsor of any Plan that could result in liability to
Parent or any Borrower; (D) within the last five years no Title IV Plan
of Parent, any Borrower or any ERISA Affiliate has been terminated,
whether or not in a "standard termination" as that term is used in
Section 404(b)(1) of ERISA, that remains unsatisfied or could
reasonably be expected to result in liability to Parent and Borrowers,
nor has any Title IV Plan of Parent, any Borrower or any ERISA
Affiliate (determined at any time within the past five years) with
Unfunded Pension Liabilities been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of Parent, any Borrower or any ERISA Affiliate that has or could
reasonably be expected to result in a Material Adverse Effect.
(V) LEVY, SEIZURE OR ATTACHMENT.
No Person has made or has attempted to make any levy, seizure or
attachment upon any of the Collateral which could reasonably be expected to have
a Material Adverse Effect on the Parent and the Borrowers, taken as a whole.
(W) FORMER DHB SUBSIDIARIES.
Each Former DHB Subsidiary has either been dissolved in accordance with
applicable law or is an inactive Subsidiary of the Parent or Borrowers, as
applicable, and in any event does not (i) own, lease or otherwise have any
interest in any assets or properties, (ii) have any liabilities, or (iii) engage
in any business activities.
(X) GOVERNMENT CONTRACTS.
Attached hereto as SCHEDULE 11(X) is a complete and accurate list of
all contracts in effect as of the Closing Date between any of Parent or any
Borrower, on the one hand, and the United States Government, on the other hand,
concerning the sale of Inventory and other products to the United States
Government. All of the following information set forth in SCHEDULE 11(X) with
respect to each contract listed therein is true and correct as of the Closing
Date: (i) the name and address of the particular department, agency or
41
instrumentality of the United States Government that is the counter-party to the
contract; (ii) the name and address of the contracting officer and disbursing
officer of the United States Government, (iii) the contract term, (iv) the
contract number, and (v) the general description of the subject Inventory and
other products. Each amended SCHEDULE 11(X) delivered to Agent pursuant to
SUBSECTION 9(B)(I) hereof, and all information of the type described above which
is contained therein, shall be true and correct as of the last day of the month
for which it is delivered. No Account owing by the United States Government
exists that (i) arose under the 0014 Contract prior to the effectiveness of the
0014 Modification P00006, or (ii) arose under the 0030 Contract prior to the
effectiveness of the 0030 Modification P00003.
12. AFFIRMATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and termination of this Agreement in accordance with the terms hereof,
unless Parent or the Borrowers obtain Requisite Lenders' prior written consent
waiving or modifying any of their covenants hereunder in any specific instance,
Parent and each Borrower, as applicable, covenant and agree as follows:
(A) MAINTENANCE OF RECORDS.
Parent and each Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of such Borrower's business
activities, in accordance with sound accounting practices and generally accepted
accounting principles consistently applied, except as described on SCHEDULE
12(A) hereto, and shall keep such books, records and accounts, and any copies
thereof, only at the addresses indicated for such purpose on EXHIBIT B.
(B) NOTICES.
Parent and the Borrowers shall:
(i) LOCATIONS. Promptly (but in no event less than ten
(10) days prior to the occurrence thereof) notify Agent of the proposed
opening of any new place of business or new location of Collateral, the
closing of any existing place of business or location of Collateral,
any change in the location of any Borrower's books, records and
accounts (or copies thereof), the opening or closing of any post office
box, the opening or closing of any bank account or, if any of the
Collateral consists of Goods of a type normally used in more than one
state, the use of any such Goods in any state other than a state in
which the Borrowers have previously advised Agent that such Goods will
be used.
(ii) ELIGIBLE ACCOUNTS AND INVENTORY. Promptly upon senior
management of Parent or any Borrower becoming aware thereof, notify
Agent if any Account with a face amount, or any Inventory with a book
value, greater than Twenty-Five Thousand and No/100 Dollars ($25,000)
identified by the Borrowers to Agent as an Eligible Account or Eligible
Inventory, as applicable, becomes ineligible for any reason.
(iii) LITIGATION AND PROCEEDINGS. Promptly upon becoming
aware thereof, notify Agent of any actions or proceedings which are
pending or threatened against Parent or any Borrower which might have a
42
Material Adverse Effect on Parent and Borrowers, taken as a whole, and
of each Commercial Tort Claim in excess of $100,000 of Parent or any
Borrower which may arise, which notice shall constitute Parent's or
such Borrower's authorization to amend EXHIBIT C to add such Commercial
Tort Claim.
(iv) NAMES AND TRADENAMES. Notify Agent within ten (10)
days of any change of any Borrower's or Parent's name or the use of any
tradename, assumed name, fictitious name or division name not
previously disclosed to Agent in writing by a Borrower or Parent.
(v) ERISA MATTERS. Promptly notify Agent of (x) the
occurrence of any "reportable event" (as defined in ERISA) which might
result in the termination by the Pension Benefit Guaranty Corporation
(the "PBGC") of any Plan covering any officers or employees of the
Parent or any Borrower, any benefits of which are, or are required to
be, guaranteed by the PBGC, (y) receipt of any notice from the PBGC of
its intention to seek termination of any Plan or appointment of a
trustee therefor or (z) its intention to terminate or withdraw from any
Plan.
(vi) ENVIRONMENTAL MATTERS. Immediately notify Agent
upon becoming aware of any investigation, proceeding, complaint, order,
directive, claim, citation or notice with respect to any non-compliance
with or violation of the requirements of any Environmental Law by
Parent or any Borrower or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter
which affects Parent or any Borrower or its respective business
operations or assets or any properties at which Parent or any Borrower
has transported, stored or disposed of any Hazardous Materials.
(vii) DEFAULT; MATERIAL ADVERSE CHANGE. Promptly advise
Agent of any material adverse change in the business, property, assets,
prospects, operations or condition, financial or otherwise, of Parent
and the Borrowers, taken as a whole, and of the occurrence of any
Default or Event of Default hereunder.
(viii) UNITED STATES GOVERNMENT CONTRACTS. Within ten (10)
Business Days of entering into any new contract with the United States
Government, notify Agent of such event and provide Agent a copy of such
new contract and all information and documentation Agent may request,
such as size and duration of such contract, the existence of a "no
offset commitment" provision, and all information necessary for due
submission of a Notice of Assignment under the Federal Assignment of
Claims Act of 1940, including any required instruments of assignment
executed by the applicable Borrower as required under the Federal
Assignment of Claims Act of 1940 (and any comparable notice of
assignment under applicable state or local law) with respect to such
contract; PROVIDED, HOWEVER, that Parent and Borrowers shall not be
required to notify Agent of any new contract with the United States
Government so long as at such time the aggregate of all payments
contemplated under all contracts with the United States Government not
previously disclosed to the Agent (including the contract in question)
do not exceed $500,000 in the aggregate. Each contract entered into
with the United States Government by Parent or any Borrower on or after
the Closing Date shall: (i) not prohibit the assignment thereof to
43
Agent (for the benefit of Agent and Lenders), and (ii) if Accounts
arising under such contract will be included in Eligible Accounts,
expressly provide that, in compliance with 48 C.F.R. 52.232.23
Alternate I (April 1984), all payments to an assignee of any amounts
due or to become due under such contract shall not, to the extent
specified in the Federal Assignment of Claims Act of 1940, be subject
to reduction or setoff by the United States Government.
(ix) NOTICE OF DEFAULT UNDER CERTAIN LEASES. Promptly, but
in any event within three (3) Business Days of senior management of
Parent or any Borrower becoming aware of such default, provide Agent
written notice of any default or alleged default under any lease of any
property of any Obligor subject to a landlord waiver or similar
agreement that could give the applicable landlord the right to
terminate such lease.
All of the foregoing notices shall be provided by the Borrowers to Agent in
writing.
(C) COMPLIANCE WITH LAWS AND MAINTENANCE OF PERMITS.
(i) Parent and each Borrower shall maintain all
governmental consents, franchises, certificates, licenses,
authorizations, approvals and permits, the lack of which would have a
Material Adverse Effect on Parent and the Borrowers, taken as a whole,
and Parent and each Borrower shall remain in compliance with all
applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances (including, without limitation,
Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and
similar items, securities, ERISA or employee health and safety) the
failure with which to comply would have a Material Adverse Effect on
Parent and the Borrowers, taken as a whole. Following any commercially
reasonable determination by Agent that there is non-compliance, or any
condition which requires any action by or on behalf of Parent or any
Borrower in order to avoid non-compliance, with any Environmental Law,
Agent may cause, at such Borrower's expense, an independent
environmental engineer acceptable to Agent to conduct such tests of the
relevant site(s) as are appropriate and prepare and deliver a report to
Agent setting forth the results of such tests, a proposed plan for
remediation and an estimate of the costs thereof.
(ii) Parent and each Borrower shall use its best efforts to
comply with all of the provisions of the Federal Assignment of Claims
Act of 1940 within sixty (60) days of the Closing Date with respect to
each material contract such Borrower entered into with the United
States Government prior to the date of this Agreement; PROVIDED that
the failure by a Borrower to obtain countersignatures on any notice of
assignment shall not, of itself, constitute a Default hereunder. After
the Closing Date, each Borrower shall provide Agent with all necessary
information and instruments of assignment for each new contract such
Borrower enters into with the United States Government that would
require notice to Agent pursuant to SUBSECTION 12(B)(VIII) hereof,
within five (5) Business Days of entering into such new contract. If
within sixty (60) days of the Agent sending a Notice of Assignment to
the applicable contracting or disbursement officer indicated by such
Borrower with respect to each such new contract, the Agent shall not
44
have received an acknowledgement by the United States Government of
receipt of such Notice of Assignment, then Agent may, in its sole
discretion, deem any Account related to such new contract to be
thereafter excluded from the definition of Eligible Account herein.
(D) INSPECTION AND AUDITS.
Parent and the Borrowers shall permit Agent, or any Person designated
by Agent, to call at any of the respective places of business of Parent and
Borrowers, upon reasonable notice and at any reasonable times, and, without
hindrance or delay, but without undue disruption to the Parent's and Borrowers'
business, to inspect the Collateral and to inspect, audit, check and make
extracts from any books, records, journals, orders, receipts and any
correspondence of Parent or any Borrower and other data relating to Parent's or
any Borrower's business, the Collateral or any transactions between the parties
hereto, and shall have the right to make such verification concerning Parent's
or any Borrower's business as Agent may consider commercially reasonable under
the circumstances. Parent and the Borrowers shall furnish to Agent such
information relevant to Agent's and/or any rights under this Agreement and the
Other Agreements as Agent shall at any time and from time to time request.
Notwithstanding whether the Parent and Borrowers are required to deliver Monthly
Desktop Appraisals or Quarterly Appraisals pursuant to SUBSECTIONS 9(B) or 9(C)
hereto, Agent hereby expressly reserves the right to require such appraisals be
delivered from time to time upon the Agent's reasonable request pursuant to this
SUBSECTION 12(D). Agent, through its officers, employees or agents shall have
the right, at any time and from time to time, in Agent's name, to verify the
validity, amount or any other matter relating to any of the Accounts of any
Borrower, by mail, telephone, facsimile, electronic mail or otherwise. Parent
and each Borrower authorizes Agent and Lenders to discuss the affairs, finances
and business of Parent or such Borrower with any officers, employees or
directors of such Borrower or Parent or any Affiliate thereof, and to discuss
the financial condition of Parent or such Borrower with Parent's and such
Borrower's independent public accountants. Any such discussions shall be without
liability to Agent or any Lender or to Parent's or such Borrower's independent
public accountants. The Borrowers shall agree jointly and severally to pay to
Agent all reasonable and customary fees and all reasonable costs and
out-of-pocket expenses incurred by Agent in the exercise of its rights
hereunder, including fees in connection with any audits or inspections of any
Collateral or Parent's and Borrowers' respective operations or businesses (such
fee, the "AUDIT FEE"), which Audit Fee shall be in the amount of $800 per day,
per person. All of such fees, costs and expenses shall constitute Liabilities
hereunder, shall be payable on demand and, until paid, shall bear interest at
the highest rate then applicable to Loans hereunder.
(E) INSURANCE.
Parent and each Borrower shall:
(i) Keep the Collateral properly housed and insured for the
full insurable value thereof against loss or damage by fire, theft,
explosion, sprinklers, collision (in the case of motor vehicles) and
such other risks as are customarily insured against by Persons engaged
in businesses similar to that of such Borrower, with such companies, in
such amounts, with such deductibles, and under policies in such form,
as shall be reasonably satisfactory to Agent. Original (or certified)
copies of such policies of insurance have been or shall be, within
thirty (30) days of the date hereof, delivered to Agent, together with
45
evidence of payment of all premiums due therefor, and shall contain an
endorsement, in form and substance acceptable to Agent, showing loss
under such insurance policies payable to Agent, for the benefit of
Agent and Lenders. Such endorsement, or an independent instrument
furnished to Agent, shall provide that the insurance company shall give
Agent at least thirty (30) days written notice before any such policy
of insurance is materially altered or canceled and that no act, whether
willful or negligent, or default of Parent, such Borrower or any other
Person shall affect the right of Agent to recover under such policy of
insurance in case of loss or damage. In addition, after the occurrence
and during the continuance of an Event of Default, Parent and each
Borrower shall cause to be executed and delivered to Agent an
assignment of proceeds of its business interruption insurance policies.
Parent and each Borrower hereby directs all insurers under all policies
of insurance to pay all proceeds payable thereunder directly to Agent.
Parent and each Borrower irrevocably makes, constitutes and appoints
Agent (and all officers, employees or agents designated by Agent) as
such Parent's or Borrower's true and lawful attorney (and
agent-in-fact), after the occurrence and during the continuance of an
Event of Default, for the purpose of making, settling and adjusting
claims under such policies of insurance, endorsing the name of such
Parent or Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and making all
determinations and decisions with respect to such policies of
insurance.
(ii) Maintain, at its expense, such public liability and
third party property damage insurance as is customary for Persons
engaged in businesses similar to that of such Borrower with such
companies and in such amounts, with such deductibles and under policies
in such form as shall be reasonably satisfactory to Agent and original
(or certified) copies of such policies have been or shall be, within
thirty (30) days after the date hereof, delivered to Agent, together
with evidence of payment of all premiums due therefor; each such policy
shall contain an endorsement showing Agent and Lenders as additional
insured thereunder and providing that the insurance company shall give
Agent at least thirty (30) days written notice before any such policy
shall be materially altered or canceled.
If Parent or any Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay when due any
premium relating thereto, then Agent, without waiving or releasing any
obligation or default by such Parent or Borrower hereunder, may (but shall be
under no obligation to) obtain and maintain such policies of insurance and pay
such premiums and take such other actions with respect thereto as Agent deems
advisable. Such insurance, if obtained by Agent, may, but need not, protect such
Parent's or Borrower's interests or pay any claim made by or against such Parent
or Borrower with respect to the Collateral. Such insurance may be more expensive
than the cost of insurance such Parent or Borrower may be able to obtain on its
own and may be cancelled only upon such Parent or Borrower providing evidence
that it has obtained the insurance as required above. All sums disbursed by
Agent in connection with any such actions, including, without limitation, court
costs, expenses, other charges relating thereto and reasonable attorneys' fees,
shall constitute Revolving Loans hereunder, shall be payable on demand by the
Borrowers jointly and severally to Agent and, until paid, shall bear interest at
the highest rate then applicable to Revolving Loans hereunder.
46
(F) COLLATERAL.
Parent and each Borrower shall keep the Collateral owned by it in good
condition, repair and order (reasonable wear and tear excepted) and shall make
all commercially reasonable repairs to the Equipment and replacements thereof so
that the operating efficiency and the value thereof shall at all times be
preserved and maintained. Parent and each Borrower shall permit Agent and
Lenders to examine any of the Collateral owned by it at any time and wherever
the Collateral may be located and, Parent and each Borrower shall, immediately
upon request therefor by Agent, deliver to Agent any and all evidence of
ownership of any of the Equipment owned by it, including, without limitation,
certificates of title and applications of title. Parent and each Borrower shall,
at the request of Agent, indicate on its records concerning Collateral owned by
it a notation, in form satisfactory to Agent, of the security interest of Agent
hereunder.
(G) USE OF PROCEEDS.
All monies and other property obtained by Parent and the Borrower from
Agent and Lenders pursuant to this Agreement shall be used (i) for the general
business purposes of the Parent and Borrower, including, without limitation,
funding the ongoing working capital requirements of the Parent and Borrower and
the acquisition of Equipment, and (ii) to fund the payment of transaction costs
and expenses in connection with the transactions described in this Agreement.
(H) TAXES.
Except as set forth on SCHEDULE 11(H), the Parent and each Borrower
shall file all required tax returns and pay all of its taxes when due,
including, without limitation, taxes imposed by federal, state or municipal
agencies, and shall cause any liens for taxes to be promptly released; PROVIDED
that Parent and each Borrower shall have the right to contest the assessment or
payment of such taxes in good faith by appropriate proceedings so long as (i)
the amount so contested is shown on Parent's or such Borrower's financial
statements or in the notes thereto; (ii) the contesting of any such assessment
or payment does not give rise to a lien for taxes; and (iii) Parent or such
Borrower shall establish an adequate reserve therefor to the extent required by
generally accepted accounting principles, consistently applied; and PROVIDED,
FURTHER, that the items set forth on SCHEDULE 11(H) hereto shall not be excepted
from application of this SUBSECTION 12(H) from and after October 1, 2007. If
Parent or any Borrower fails to pay any such taxes and in the absence of any
such contest by Parent or Borrower, the Lenders may (but shall be under no
obligation to) advance and pay any sums required to pay any such taxes and/or to
secure the release of any lien therefor, and any sums so advanced by the Lenders
shall constitute Revolving Loans hereunder, shall be payable by Parent or
Borrowers to Agent (for the benefit of the Lenders) on demand, and, until paid,
shall bear interest at the highest rate then applicable to Revolving Loans
hereunder. Notwithstanding anything in this SUBSECTION 12(H) to the contrary,
Parent and Borrowers shall have thirty (30) days from the filing of the Fiscal
Year 2006 Form 10-K of Parent and its Subsidiaries referenced in clause (b) of
the definition of "Completed Financial Package" to file any amended tax returns
required as a result of the restated financial statements set forth in such Form
10-K.
47
(I) INTELLECTUAL PROPERTY.
Parent and each Borrower shall maintain licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications,
tradestyles and tradenames which such Person reasonably deems to be adequate to
continue its business substantially as heretofore conducted by it or as
hereafter conducted by it.
(J) MANAGEMENT TEAM.
Parent shall at all times employ (in the same or substantially similar
capacities) the senior management personnel that were employed by it as of the
Closing Date, or such other senior management personnel selected by Parent and
reasonably acceptable to Agent.
(K) PATRIOT ACT, BANK SECRECY ACT AND OFFICE OF FOREIGN
ASSETS CONTROL.
As required by federal law and the Agent's and each Lender's policies
and practices, the Agent and each Lender may need to obtain, verify and record
certain customer identification information and documentation in connection with
opening or maintaining accounts, or establishing or continuing to provide
services and Parent and each Borrower agrees to provide such information. In
addition, and without limiting the foregoing sentence, Parent and each Borrower
shall (a) ensure, and cause each Subsidiary to ensure, that no Person who owns a
controlling interest in or otherwise controls Parent or any Borrower or any
Subsidiary thereof is or shall be listed on the Specially Designated Nationals
and Blocked Person List or other similar lists maintained by the Office of
Foreign Assets Control ("OFAC"), the Department of the Treasury or included in
any Executive Orders, (b) not use or permit the use of the proceeds of the Loans
to violate any of the foreign asset control regulations of OFAC or any enabling
statute or Executive Order relating thereto, and (c) comply, and cause each of
its Subsidiaries to comply, with all applicable Bank Secrecy Act ("BSA") laws
and regulations, as amended.
(L) LISTING DEVELOPMENTS.
On or prior to the first Business day of each calendar month commencing
with the calendar month ending October 31, 2007, Parent shall prepare and
deliver to Agent a written summary of the status and anticipated timing of
Parent becoming relisted on the American Stock Exchange or other nationally
recognized stock exchange, which summary shall be in form and substance
reasonably acceptable to Agent. Without limiting the foregoing, within five (5)
Business Days of becoming aware of any adverse determination with respect to
such relisting made by the applicable stock exchange or the SEC, Parent shall
notify Agent in writing of such adverse determination and the asserted basis
therefor.
13. NEGATIVE COVENANTS.
Until payment and satisfaction in full of all Liabilities (other than
contingent indemnification obligations as to which no unsatisfied claim has been
asserted) and termination of this Agreement in accordance with the terms hereof,
unless Parent and Borrowers obtain Requisite Lenders' prior written consent
waiving or modifying any of their covenants hereunder in any specific instance,
Parent and each Borrower, as applicable, agree as follows:
48
(A) GUARANTIES.
No Borrower or Parent shall assume, guarantee or endorse, or otherwise
become liable in connection with, the obligations of any Person, except (i) by
endorsement of instruments for deposit or collection or similar transactions in
the ordinary course of business, (ii) for guaranties given to suppliers, other
vendors and customers in the ordinary course of business, (iii) for
indemnifications given to the officers, directors and professional advisors of
Parent and each Borrower and (iv) pursuant to this Agreement.
(B) INDEBTEDNESS.
Neither Parent nor any Borrower shall create, incur, assume or become
obligated (directly or indirectly), for any loans or other indebtedness for
borrowed money other than the Loans and Liabilities, except that Parent or any
of the Borrowers may (i) borrow money from a Person other than Agent and Lenders
on an unsecured and subordinated basis if a subordination agreement in favor of
Agent and Lenders and in form and substance satisfactory to Agent is executed
and delivered to Agent relative thereto; (ii) maintain the existing indebtedness
listed on SCHEDULE 13(B) hereto; (iii) incur unsecured indebtedness to trade
creditors in the ordinary course of business and for the financing of the
payment of insurance premiums; (iv) incur indebtedness to extend, renew, replace
or refinance any indebtedness expressly permitted hereunder that does not (a)
accelerate the scheduled date for payment thereof, (b) increase the principal
amounts thereof, (c) materially increase any interest rate or fees applicable
thereto, (d) add additional obligors therefor, (e) enhance the collateral
thereof or the priority thereof, or (f) include terms and conditions with
respect to Parent or any Borrower which are more burdensome or restrictive in
any material respect than those included in the indebtedness so extended,
renewed, replaced or refinanced; (v) incur Acquired Debt assumed in a Permitted
Acquisition under SUBSECTION 13(D) hereof; (vi) incur indebtedness consisting of
guaranties or similar contingent obligations if the primary obligations are
permitted hereunder (in which case, such guaranties or contingent obligations
shall not be considered additional indebtedness); (vii) incur purchase money
indebtedness or capitalized lease obligations in connection with Capital
Expenditures permitted pursuant to SUBSECTION 14(A) hereof in an aggregate
principal amount not to exceed One Million and No/100 Dollars ($1,000,000)
during any Fiscal Year; (ix) incur indebtedness on account of intercompany loans
permitted under SUBSECTION 13(F) hereof; and (x) incur other unsecured
indebtedness up to Two Hundred Fifty Thousand and no/100 Dollars ($250,000) in
principal amount in any Fiscal Year.
(C) LIENS.
Neither Parent nor any Borrower shall grant or permit to exist
(voluntarily or involuntarily) any lien, claim, security interest or other
encumbrance whatsoever on any of its assets, other than Permitted Liens.
(D) MERGERS, SALES, ACQUISITIONS, SUBSIDIARIES AND OTHER
TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS.
Neither Parent nor any Borrower shall: (i) enter into any merger or
consolidation; PROVIDED, HOWEVER, that any Borrower may merge with and into any
other Person, so long as such Borrower is the surviving entity of such merger,
49
and any Borrower may merge with and into any other Borrower; (ii) change the
state of its organization or enter into any transaction which has the effect of
changing its state of organization (iii) purchase the stock, other equity
interests or all or a material portion of the assets of any Person or division
of such Person, PROVIDED, HOWEVER, that Parent and Borrowers may purchase out of
the ordinary course of their business assets of other Persons in one or more
transactions in an aggregate amount not to exceed Two Million Five Hundred
Thousand and no/100 Dollars ($2,500,000) in any one Fiscal Year (each a
"PERMITTED ACQUISITION", and collectively, the "PERMITTED ACQUISITIONS") so long
as (A) no Default or Event of Default is then continuing or would result from
the proposed acquisition, and (B) Borrowers' Adjusted Availability exceeds
Twenty Million and no/100 Dollars ($20,000,000) as of each and every day for the
thirty (30) day period prior to the consummation of the proposed acquisition and
immediately after giving effect to such acquisition, and Borrower
Representative, on behalf of Parent and Borrowers, provides evidence reasonably
satisfactory to Agent that such condition has been satisfied; or (iv) purchase,
redeem or retire any shares of any class of its stock or any other equity
interest; PROVIDED, HOWEVER, that Parent may purchase, redeem or retire shares
of its stock (or warrants or other rights to receive or purchase shares thereof)
solely if: (A) no Default or Event of Default is then continuing or would result
from the proposed transaction, (B) both immediately before, and immediately
after, giving effect to the proposed transaction, Parent and each Borrower is
solvent as described in SUBSECTION 11(M) hereof; and (C) Borrowers' Adjusted
Availability shall exceed Twenty Million and no/100 Dollars ($20,000,000) as of
each and every day for the thirty (30) day period prior to the consummation of
the proposed transaction and immediately after giving effect to such
transaction, and Borrower Representative, on behalf of Parent and Borrowers,
provides evidence reasonably satisfactory to Agent that such condition has been
satisfied. Except to the extent permitted by SUBSECTION 13(F) hereof, no
Borrower shall form any Subsidiaries or enter into any joint ventures or
partnerships with any other Person.
(E) DIVIDENDS AND DISTRIBUTIONS.
Neither Parent nor any Borrower shall declare or pay any dividend or
other distribution (whether in cash or in kind) on any class of its stock (if it
is a corporation) or on account of any equity interest in itself (if it is a
partnership, limited liability company or other type of entity), except:
(i) to the extent permitted under SUBSECTION 13(F)hereof,
and solely for the purposes described therein;
(ii) in the event Borrowers file a consolidated income
tax return with Parent, the Borrowers may make distributions to Parent
to permit Parent to pay federal and state income taxes then due and
owing, franchise taxes and other similar licensing taxes incurred in
the ordinary course of business; PROVIDED, that the amount of each such
distribution shall not be greater, nor the receipt by the Borrowers of
tax benefits less, than they would have been had the Borrowers not
filed a consolidated income tax return with Parent;
(iii) any Borrower may make other cash distributions to
Parent not permitted elsewhere in this SUBSECTION 13(E) if: (a) such
distributions are used by Parent for the purposes described in
50
subclause (ii) of SUBSECTION 11(I); (b) no Default or Event of Default
is then continuing or would result from the proposed distribution, (c)
both immediately before, and immediately after, giving effect to such
distribution, such Borrower is solvent as described in SUBSECTION 11(M)
hereof; and (d) at all times on or prior to the Second Availability
Reserve Termination Date, Borrowers' Availability shall exceed Ten
Million and no/100 Dollars ($10,000,000) immediately after giving
effect to the proposed distribution; and
(iv) at any time following the Second Availability Reserve
Termination Date, Parent may pay cash dividends on account of its
outstanding capital stock if: (a) no Default or Event of Default is
then continuing or would result from the proposed dividend, (b) both
immediately before, and immediately after, giving effect to such
dividend, Parent and each Borrower is solvent as described in
SUBSECTION 11(M) hereof, and (c) Borrowers' Adjusted Availability shall
exceed Twenty Million and no/100 Dollars ($20,000,000) as of each and
every day for the thirty (30) day period prior to the making of the
proposed dividend and immediately after giving effect to such dividend,
and Borrower Representative, on behalf of Parent and Borrowers, shall
have provided evidence reasonably satisfactory to Agent that such
condition has been satisfied.
(F) INVESTMENTS; LOANS.
No Borrower or Parent shall purchase or otherwise acquire, or contract
to purchase or otherwise acquire, the obligations or stock of any Person, nor
shall Parent or any Borrower lend or otherwise advance funds to any Person,
except:
(i) to the extent permitted under SUBSECTION 13(E)hereof,
and solely for the purposes described therein;
(ii) for advances made to employees,officers and directors
for travel and other expenses arising in the ordinary course of
business;
(iii) other loans to employees not exceeding Fifty Thousand
Dollars and No/100 Dollars ($50,000) in the aggregate outstanding for
all such Persons at any one time;
(iv) Permitted Investments which, within a reasonable time
following Agent's request, shall be made subject to an account control
agreement in form and substance reasonably acceptable to Agent;
(v) any Obligor (for purposes of this CLAUSE (V), each a
"LENDING OBLIGOR") may loan monies to any other Obligor (for purposes
of this SUBSECTION (V), a "BORROWING OBLIGOR"); PROVIDED, that: (a)
such loan is permitted under all applicable laws, (b) no Default or
Event of Default shall be continuing immediately prior to the time of,
or would occur as a result of, making such loan; (c) the proceeds of
the loan are used for a purpose not otherwise prohibited under this
Agreement or any Other Agreement; (d) both immediately before, and
immediately after, giving effect to the loan, each of the Lending
Obligor and the Borrowing Obligor is solvent as described in SUBSECTION
11(M) hereof, and (e) the Borrowing Obligor shall have duly executed a
51
subordinated intercompany note in the form attached hereto as EXHIBIT D
and the applicable Lending Obligor making such loan shall have executed
an assignment of such subordinated intercompany note in favor of Agent
in the form attached as EXHIBIT D; PROVIDED, HOWEVER, that at all times
prior to the Second Availability Reserve Termination Date, as a further
condition precedent to any Obligor making any loan to any other
Obligor, Borrowers' Availability shall exceed Ten Million and no/100
Dollars ($10,000,000) immediately after giving effect to such loan;
(vi) Parent and Borrowers may make investments in joint
ventures in one or more transactions in an aggregate amount not to
exceed Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000) in any one Fiscal Year (each a "PERMITTED JV INVESTMENT,"
and collectively, the "PERMITTED JV INVESTMENTS") so long as (A) no
Default or Event of Default is then continuing or would result from the
proposed investment, and (B) Borrowers' Adjusted Availability shall
exceed Twenty Million and no/100 Dollars ($20,000,000) as of each and
every day for the thirty (30) day period prior to the consummation of
the proposed investment and immediately after giving effect to such
investment, and Borrower Representative, on behalf of Parent and
Borrowers, shall have provided evidence reasonably satisfactory to
Agent that such condition has been satisfied; PROVIDED, HOWEVER, that
the maximum liability which Parent and the Borrowers can incur in
connection with each Permitted JV Investment shall be limited to the
amount invested therein.
(G) FUNDAMENTAL CHANGES, LINE OF BUSINESS.
Neither Parent nor any Borrower shall amend its organizational
documents or change its fiscal year in any manner adverse to the interests of
the Agent or Lenders, and no Borrower shall enter into a new line of business
materially different from its current business of manufacturing, distributing
and/or selling protective apparel and equipment (and activities incidental
thereto).
(H) EQUIPMENT.
No Borrower or Parent shall (i) permit any Equipment to become a
Fixture to real property unless such real property is owned by such Borrower and
is subject to a mortgage in favor of Agent, or (ii) permit any of its Equipment
(other than Equipment acquired under purchase money arrangements) to become an
accession to any other personal property unless such personal property is
subject to a first priority lien in favor of Agent.
(I) USE OF PROCEEDS.
No Borrower nor any Affiliate thereof shall use any portion of the
proceeds of the Loans, either directly or indirectly, for the purpose of (i)
purchasing any securities underwritten or privately placed by ABN AMRO
Securities (USA) Inc. ("AASI"), an affiliate of Agent, (ii) purchasing from AASI
any securities in which AASI makes a market, or (iii) refinancing or making
payments of principal, interest or dividends on any securities issued by a
Borrower or any Affiliate, and underwritten, privately placed or dealt in by
AASI. The proceeds of distributions made by the Borrowers to Parent pursuant to
SUBSECTION 13(E) hereof shall only be used by Parent for the respective purposes
specified in SUBSECTION 13(E).
52
(J) AFFILIATE TRANSACTIONS.
Except as permitted pursuant to SUBSECTIONS 13(B), 13(D), 13(E) and
13(F) hereof, neither Parent nor any Borrower shall conduct, permit or suffer to
be conducted, transactions with Affiliates other than in the ordinary course of
business (i) pursuant to terms that are less favorable to such Borrower than the
terms upon which such transfers or transactions would have been made had they
been made to or with a Person that is not an Affiliate, or (ii) transactions
between Parent and its Subsidiaries with respect to the purchase from third
parties of raw materials, other inventory and centralized services by Parent on
behalf of Borrowers, payment of taxes and similar charges, repayment of
indebtedness permitted under SUBSECTION 13(F) hereof, expenses of litigation and
other legal and administrative proceedings, and general and administrative
expenses, in each case pursuant to transfer pricing and other terms compliant
with generally accepted accounting principles.
(K) SETTLING OF ACCOUNTS.
Except in the ordinary course of its business, no Borrower shall settle
or adjust any Account identified by the Borrowers as an Eligible Account or with
respect to which the Account Debtor is an Affiliate without the consent of
Lender; PROVIDED that following the occurrence and during the continuance of an
Event of Default, no Borrower shall settle or adjust any Account exceeding
$5,000 in value without the consent of Agent.
( L) SUBORDINATION OF INTERCOMPANY INDEBTEDNESS.
Parent and each Borrower agrees and acknowledges that its right to
receive any distribution, dividend, loan or other payment from Parent or any
other Borrower pursuant to SUBSECTIONS 13(E) and (F) hereof or otherwise (each,
for purposes of this SUBSECTION 13(L), a "DISTRIBUTION") shall be subordinate
and junior in right of payment to Agent's and Lenders' right to receive payment
of the Liabilities. Parent and each Borrower agrees that, until all of the
Liabilities shall have been repaid in full in cash, it shall instruct Parent and
each other Borrower not to pay, and agrees not to accept payment of, any
Distribution of any kind from Parent or any other Borrower except as expressly
permitted under SUBSECTION 13(E). If Parent or any Borrower receives any
Distribution or any other amounts from Parent or any other Borrower in violation
of this SUBSECTION 13(L) or any other terms of this Agreement, Parent and each
Borrower agrees to receive and hold in trust for and promptly turn over to the
Agent, in the form received, any such sums at any time paid to, or received by,
the Parent or such other Borrower until payment in full of the Liabilities, and
to reimburse the Agent for all costs, including reasonable attorney's fees,
incurred by the Agent in the course of collecting said sums, should Parent or
such Borrower fail voluntarily to turn the same over to the Agent as herein
required.
(M) TRANSFER OF ASSETS.
Notwithstanding the terms of SUBSECTION 13(J) hereof, neither Parent
nor any Borrower shall sell, lease, convey or otherwise transfer any of its
interest in any assets or property to any Former DHB Subsidiary.
53
(N) FINANCIAL COVENANT AMENDMENT.
On or prior to December 31, 2007, Parent and Borrowers shall execute
and deliver to Agent the Financial Covenant Amendment, in form and substance
reasonably satisfactory to Agent and Requisite Lenders; PROVIDED, HOWEVER, that
the deadline for execution and delivery of such Financial Covenant Amendment
shall be extended to June 30, 2008 solely if the Borrowers' Availability exceeds
$15,000,000 for each Business Day from and including October 1, 2007 through and
including June 29, 2008; PROVIDED, FURTHER, that if, on any Business Day from
and including January 1, 2008 through and including June 29, 2008 Borrowers'
Availability does not exceed $15,000,000, Parent and Borrowers shall execute and
deliver to Agent the Financial Covenant Amendment within ten (10) Business Days
after the Business Day on which Borrowers' Availability first failed to exceed
$15,000,000.
(O) OFAC.
Neither Holdings nor any Subsidiary of Holdings (i) is a person whose
property or interest in property is blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise
knowingly associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other U.S.
Department of Treasury's Office of Foreign Assets Control regulation or
executive order.
14. FINANCIAL COVENANTS.
Parent and the Borrowers shall maintain and keep in full force and
effect each of the financial covenants set forth below:
(A) CAPITAL EXPENDITURES.
Parent and Borrowers shall not make any Capital Expenditure if, after
giving effect to such Capital Expenditure, the aggregate cost of all such fixed
assets purchased or otherwise acquired by Parent and Borrowers would exceed Ten
Million and No/100 Dollars ($10,000,000) during any Fiscal Year, commencing with
the Fiscal Year ending December 31, 2007.
(B) NET SALES.
Parent and Borrowers on a consolidated basis shall have, at the end of
each period set forth below, Net Sales for such period of not less than the
following:
-------------------------------------------------- ------------------
PERIOD AMOUNT
-------------------------------------------------- ------------------
January 1, 2007 through and including February $47,150,000
28, 2007
-------------------------------------------------- ------------------
54
-------------------------------------------------- ------------------
PERIOD AMOUNT
-------------------------------------------------- ------------------
January 1, 2007 through and including March 31, $68,465,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including April 30, $83,997,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including May 31, $101,260,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including June 30, $120,925,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including July 31, $136,850,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including August 31, $155,210,000
2007
-------------------------------------------------- ------------------
January 1, 2007 through and including September $178,900,000
30, 2007
-------------------------------------------------- ------------------
January 1, 2007 through and including October $186,950,000
31, 2007
-------------------------------------------------- ------------------
January 1, 2007 through and including November $202,580,000
30, 2007
-------------------------------------------------- ------------------
January 1, 2007 through and including December $214,810,000
31, 2007
-------------------------------------------------- ------------------
The twelve month period ending on the last day $214,810,000
of each calendar month from and after the month
ending January 31, 2008
-------------------------------------------------- ------------------
15. DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" hereunder:
(A) PAYMENT.
The failure of any of the Borrowers to pay when due, declared due, or
demanded by Agent, with the consent or at the request of the Requisite Lenders,
any of the Liabilities.
55
(B) BREACH OF THIS AGREEMENT AND THE OTHER AGREEMENTS.
(i) The failure of any Obligor to perform,keep or observe
any of the covenants, conditions, promises, agreements or obligations
of such Obligor under SECTION 5 (other than SECTION 5(C)), SECTION 6,
SECTION 7, SECTION 8, SUBSECTIONS 12(A), 12(B)(I), 12(B)(III),
12(B)(VIII), 12(D), 12(E), 12(G), 12(H), 12(K), SECTION 13 or SECTION
14 of this Agreement or any provision of any Other Agreement to the
extent such breach is not capable of being cured;
(ii) The failure of any Obligor to perform,keep or observe
any covenant contained in any of SUBSECTIONS 9(A), 9(B) or 12(B)(II),
and such failure shall have continued unremedied for a period of five
(5) days;
(iii) The failure of any Obligor to perform,keep or observe
any covenant contained in any of SUBSECTIONS 9(C), 9(D) or 9(E), and
such failure shall have continued unremedied for a period of ten (10)
days; and
(iv) The failure of any Obligor to perform,keep or observe
any of the other covenants, conditions, promises, agreements or
obligations of such Obligor under this Agreement or any of the Other
Agreements (other than any such term, provision, covenant or agreement
that is the subject of another provision of this SECTION 15, in which
event such other provision of this SECTION 15 shall apply) and such
failure continues for a period of thirty (30) days following the
occurrence thereof.
(C) BREACHES OF OTHER OBLIGATIONS.
The failure of any Obligor to (i) pay any amount when due on
indebtedness of such Obligor for borrowed money, the then unpaid aggregate
principal amount of which is One Hundred Thousand and No/100 Dollars ($100,000)
or greater; or (ii) perform, keep or observe any of the covenants, conditions,
promises, agreements or obligations of such Obligor under any other agreement
with any Person if such failure could reasonably be expected to have a Material
Adverse Effect on Parent and Borrower, taken as a whole.
(D) BREACH OF REPRESENTATIONS AND WARRANTIES.
The making or furnishing by any Obligor to Agent or any Lender of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and Lender, which is
untrue or misleading in any material respect.
(E) LOSS OF COLLATERAL.
The loss, theft, damage or destruction of, or (except to the extent
expressly permitted hereunder) sale, lease or furnishing under a contract of
service of any of the Collateral (excluding, for the avoidance of doubt, any
write downs of inventory in accordance with generally accepted accounting
principles) (each, a "LOSS") having a fair market value in excess of Five
Hundred Thousand and No/100 Dollars ($500,000) unless (i) such Loss is
reasonably determined by Agent to be covered by an insurance policy as to which
coverage has been or will be accepted by the applicable insurer (less applicable
56
deductible), and (ii) the insurance proceeds in respect of such Loss are paid to
the applicable Obligor(s) within one hundred twenty (120) days of the occurrence
of such Loss.
(F) BANKRUPTCY OR SIMILAR PROCEEDINGS.
The commencement of any proceedings in bankruptcy by or against any
Obligor or for the liquidation or reorganization of any Obligor, or alleging
that such Obligor is insolvent or unable to pay its debts as they mature, or for
the readjustment or arrangement of any such Obligor's debts, whether under the
United States Bankruptcy Code or under any other law, whether state or federal,
now or hereafter existing, for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any such Obligor;
PROVIDED, HOWEVER, that if such commencement of proceedings against such Obligor
is involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed within forty-five (45) days after the commencement
of such proceedings.
(G) APPOINTMENT OF RECEIVER.
The appointment of a receiver or trustee for any Obligor, for any of
the Collateral or for any substantial part of any such Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation (unless such merger or consolidation
is otherwise permitted hereunder), of any Obligor which is a corporation,
limited liability company or a partnership; PROVIDED, HOWEVER, that if such
appointment or commencement of proceedings against such Obligor is involuntary,
such action shall not constitute an Event of Default unless such appointment is
not revoked or such proceedings are not dismissed within forty-five (45) days
after the commencement of such proceedings.
(H) JUDGMENT.
The entry of any judgment or order in an amount in excess of Two
Hundred Fifty Thousand and No/100 Dollars ($250,000) against any Obligor which
remains unsatisfied or undischarged and in effect for thirty (30) days after
such entry without a stay of enforcement or execution.
(I) DISSOLUTION OF OBLIGOR.
The dissolution of any Obligor, except by operation of law in
connection with a merger transaction expressly permitted under SUBSECTION 13(D)
hereof.
(J) DEFAULT OR REVOCATION OF GUARANTY.
The occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to Agent or any Lender pursuant to which such Person has guaranteed
to Agent or any Lender the payment of all or any of the Liabilities or has
granted Agent a security interest in or lien upon some or all of such Person's
real and/or personal property to secure the payment of all or any of the
Liabilities.
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(K) LEVY, SEIZURE OR ATTACHMENT.
The making by any Person of any levy, seizure or attachment upon any of
the Collateral having a fair market value in excess of One Hundred Thousand and
No/100 Dollars ($100,000).
(L) CRIMINAL PROCEEDINGS.
The indictment or conviction of any Obligor for any felony.
(M) CHANGE OF CONTROL.
The failure of Parent to own beneficially and of record 100% of the
issued and outstanding shares of capital stock of PACA and at least 99.35% of
the issued and outstanding shares of capital stock of Point Blank, or the
failure of Parent and Point Blank to collectively own beneficially and of record
100% of the issued and outstanding shares of capital stock of NDL.
(N) MATERIAL ADVERSE CHANGE.
Any material adverse change in the Collateral, business, property,
assets, prospects, operations or condition, financial or otherwise of Parent and
the Borrowers, taken as a whole, as determined by Requisite Lenders in their
sole judgment, exercised in a commercially reasonable manner, or the occurrence
of any event which, in Requisite Lenders' sole judgment, exercised in a
commercially reasonable manner, could have a Material Adverse Effect on Parent
and the Borrowers, taken as a whole.
16. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in SUBSECTION
15(F) hereof, all of the Liabilities shall immediately and automatically become
due and payable, without notice of any kind. Upon the occurrence of any other
Event of Default, all Liabilities may, at the option of Requisite Lenders, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
(b) Upon the occurrence and during the continuance of an Event of
Default, (i) Agent may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code and any other applicable law
in addition to, and not in lieu of, any rights and remedies expressly granted in
this Agreement or in any of the Other Agreements and all of Agent's rights and
remedies shall be cumulative and non-exclusive to the extent permitted by law,
(ii) in particular, but not by way of limitation of the foregoing, Agent may,
without notice, demand or legal process of any kind (to the extent permitted by
applicable law), take possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be found, and may enter
onto any of premises of the Borrowers where any of the Collateral may be, and
search for, take possession of, remove, keep and store any of the Collateral
until the same shall be sold or otherwise disposed of, and Agent shall have the
right to store the same at any of premises of the Borrowers without cost to
Agent or Lenders, and (iii) at Agent's request, the Borrowers shall, at
Borrowers' expense, which they agree shall be a joint and several obligation,
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assemble the Collateral and make it available to Agent at one or more places to
be designated by Agent and reasonably convenient to Agent and the Borrowers. The
Borrowers recognize that if Borrowers fail to perform, observe or discharge any
of their Liabilities under this Agreement or the Other Agreements, no remedy at
law will provide adequate relief to Agent and Lenders, and agree that Agent
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages. Any notification of intended
disposition of any of the Collateral required by law will be deemed to be a
reasonable authenticated notification of disposition if given at least ten (10)
days prior to such disposition and such notice shall (i) describe Agent and the
Borrowers, (ii) describe the Collateral that is the subject of the intended
disposition, (iii) state the method of the intended disposition, (iv) state that
Borrowers are entitled to an accounting of the Liabilities and state the charge,
if any, for an accounting and (v) state the time and place of any public
disposition or the time after which any private sale is to be made. Agent and
Lenders may disclaim any warranties that might arise in connection with the
sale, lease or other disposition of the Collateral and has no obligation to
provide any warranties at such time. Any Proceeds of any disposition by Agent of
any of the Collateral may be applied by Agent to the payment of reasonable
expenses in connection with the Collateral, including, without limitation, legal
expenses and reasonable attorneys' fees, and any balance of such Proceeds may be
applied by Agent toward the payment of such of the Liabilities, and in such
order of application, as Agent may from time to time elect.
17. CONDITIONS PRECEDENT.
(a) The effectiveness of this Agreement and the obligation of
Agent and Lenders to fund the Loans, and to issue or cause to be issued Letters
of Credit hereunder, is subject to the satisfaction or waiver on or before such
funding date of the following conditions precedent as determined by Agent in its
sole discretion (provided, that Agent shall notify Parent and Borrowers in
writing once it has determined all such conditions have been satisfied or
waived):
(i) Agent shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other
documents set forth on the closing document checklist attached hereto
as SCHEDULE 17(A) (the "CLOSING DOCUMENT CHECKLIST");
(ii) Since August 22, 2006, no event shall have occurred
which has had or could reasonably be expected to have a Material
Adverse Effect on Parent and its Subsidiaries, taken as a whole, or on
Parent or any Borrower, individually, as determined by Agent or
Requisite Lenders in their sole discretion, exercised in a commercially
reasonable manner;
(iii) Agent shall have received payment in full of all fees
and expenses payable to it by the Borrowers or any other Obligor in
connection herewith, on or before the Closing Date;
(iv) Agent shall have determined that immediately after
giving effect to:
(A) the making of any Revolving Loans, if any,
requested to be made on the Closing Date;
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(B) the issuance of any Letter of Credit, if any,
requested to be made on the Closing Date;
(C) the payment of all fees due upon the Closing
Date;
(D) the payment or reimbursement by the Borrowers of
Agent for all closing costs and expenses incurred in
connection with the transactions contemplated hereby;
(E) all Availability Closing Date Reserves; and
(F) assuming all of Borrowers' trade payables and
outstanding debt other than professional fees and
restructuring expenses which remain unpaid more than sixty
(60) days after the due dates thereof on the date of
determination, are paid by drawing additional Revolving Loans,
on a PRO FORMA basis, Adjusted Availability shall not be less
than Ten Million and No/100 Dollars ($10,000,000);
(v) Agent shall have completed to its satisfaction its
due diligence review of the Parent and the Borrowers, their business
and financial affairs and the members of their management team, Agent
shall have received background investigations on the key operating
members of such team, and shall have reviewed to its satisfaction the
results of a field examination performed by Agent, as of a recent date,
of the Collateral, including a Monthly Desktop Appraisal of the
Borrowers' Inventory, based on acceptable valuation definitions, and of
the Parent's and each Borrower's books and records;
(vi) Parent and the Borrowers, taken as a whole, shall be
in compliance in all material respects with all applicable legal
requirements and shall not be in material default of any of their
respective obligations to any third parties;
(vii) Agent shall have received and reviewed to its
satisfaction evidence of each Borrower's insurance coverage and Agent
and Lenders, as applicable, shall have been named as loss payee or
additional insured under each policy of insurance (other than workers
compensation insurance), the terms of each endorsement naming Agent as
loss payee or additional insured to be satisfactory to Agent;
(viii) Agent shall have had satisfactory discussions with
appropriate personnel of financial institutions with which Parent
and/or the Borrowers have had banking or lending relationships;
(ix) Agent and counsel to Agent shall have received and
reviewed to their reasonable satisfaction all documentation and
agreements evidencing and governing any indebtedness of Parent or any
Borrower;
(x) Agent shall have reviewed to its reasonable
satisfaction the corporate and capital structure of Parent and its
Subsidiaries, on a consolidated basis, as of the date of this
Agreement;
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(xi) Agent shall have received (i) landlord's waivers
with respect to each property being leased by Parent or a Borrower and
where a material portion of the Collateral is being stored, and, if
required, a waiver from any landlord's mortgagees and (ii) an
acknowledgement and waiver of liens from each warehouse in which Parent
or a Borrower is storing a material portion of the Inventory;
(xii) Agent shall have received and reviewed to its
reasonable satisfaction (A) the unclassified sections of each
government sales contract to which Parent or a Borrower is party,
including without imitation each material contract between DFAS and a
Borrower and (B) the duly executed amendments to contract number
W91CRB-06-D-0030 between Point Blank and DFAS dated as of August 3,
2006 and contract number W91CRB-04-D-0014 between Point Blank and DFAS
dated as of June 7, 2004 which specify that the United States
Government cannot exercise any offset rights against any of the
Borrowers' Accounts;
(xiii) Agent shall have received and reviewed to its
reasonable satisfaction a Notice of Assignment under the Federal
Assignment of Claims Act of 1940 which has been countersigned by DFAS
with respect to (A) contract number W91CRB-06-D-0030 between Point
Blank and DFAS dated as of August 3, 2006 and (B) contract number
W91CRB-04-D-0014 between Point Blank and DFAS dated as of June 7, 2004;
(xiv) no Default or Event of Default would occur
immediately after giving effect to this Agreement; and
(xv) The Obligors shall have executed and delivered to
Agent all such other documents, instruments and agreements which Agent
determines are reasonably necessary to consummate the transactions
contemplated hereby.
(b) After the date of the making of the initial Revolving Loans
and issuance of the initial Letters of Credit on the Closing Date, if any, the
obligation of Agent and Lenders to make any requested Loan or issue any Letter
of Credit is subject to the satisfaction of the conditions precedent set forth
below. Each such request shall constitute a representation and warranty that
such conditions are satisfied:
(i) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct in all
material respects on and as of the date of such request, as if then
made, other than representations and warranties that relate solely to
an earlier date;
(ii) No Default or Event of Default shall have occurred
and be continuing, or would result from the making of the requested
Loan or issuance of the requested Letter of Credit, which has not been
waived; and
(iii) Since August 22, 2006, no event has occurred which
has had or would be reasonably likely to have a Material Adverse Effect
on Parent and its Subsidiaries, taken as a whole.
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18. SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF PAYMENTS.
(a) On a weekly basis (or more frequently if requested by Agent
(a "SETTLEMENT DATE")), Agent shall provide each Lender with a statement of the
outstanding balance of the Liabilities as of the end of the Business Day
immediately preceding the Settlement Date (the "PRE-SETTLEMENT DETERMINATION
DATE") and the current balance of the Loans funded by each Lender (whether made
directly by such Lender to Borrowers or constituting a settlement by such Lender
of a previous Disproportionate Advance made by Agent on behalf of such Lender to
Borrowers). If such statement discloses that such Lender's current balance of
the Loans as of the Pre-Settlement Determination Date exceeds such Lender's Pro
Rata Share of the Liabilities outstanding as of the Pre-Settlement Determination
Date, then Agent shall, on the Settlement Date, transfer, by wire transfer, the
net amount due to such Lender in accordance with such Lender's instructions, and
if such statement discloses that such Lender's current balance of the Loans as
of the Pre-Settlement Determination Date is less than such Lender's Pro Rata
Share of the Liabilities outstanding as of the Pre-Settlement Determination
Date, then such Lender shall, on the Settlement Date, transfer, by wire transfer
the net amount due to Agent in accordance with Agent's instructions. In
addition, payments actually received by Agent with respect to the following
items shall be distributed by Agent to Lenders as follows:
(b) Within one (1) Business Day of receipt thereof by Agent,
payments to be applied to interest on the Loans shall be paid to each Lender in
proportion to its Pro Rata Share, subject to any adjustments for any
Disproportionate Advances as provided in SUBSECTION 2(A), so that Agent shall
receive interest on the Disproportionate Advances and each Lender shall only
receive interest on the amount of funds actually advanced by such Lender;
(c) Within one (1) Business Day of receipt thereof by Agent,
payments to be applied to the Letter of Credit fee set as provided in SUBSECTION
3(A) hereof shall be paid to each Lender in proportion to its Pro Rata Share;
(d) Within one (1) Business Day of receipt thereof by Agent,
payments to be applied to the commitment fee as provided in SUBSECTION 4(C)(I)
shall be paid to each Lender in proportion to its Pro Rata Share;
(e) Within one (1) Business Day of receipt thereof by Agent,
payments to be applied to the unused line fee set forth in SUBSECTION 4(C)(II)
hereof shall be paid to each Lender in proportion to its Pro Rata Share; and
(f) Within one (1) Business Day of receipt thereof by Agent,
payments to be applied to the prepayment fee set forth in SECTION 10 hereof
shall be paid to each Lender in proportion to its Pro Rata Share.
Notwithstanding the foregoing, Agent shall not be obligated to transfer
to any Defaulting Lender any payment made by any Borrower to Agent, nor shall
such Defaulting Lender be entitled to share any interest, fees or other payment
hereunder, until payment is made by such Defaulting Lender to Agent as required
in this Agreement.
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19. AGENT.
(A) APPOINTMENT OF AGENT.
(i) Each Lender hereby designates LaSalle as Agent to act
as herein specified. Each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement
and the notes and any other instruments and agreements referred to
herein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto. Except as otherwise provided herein, Agent shall
hold all Collateral and all payments of principal, interest, fees,
charges and expenses received pursuant to this Agreement or any of the
Other Agreements for the benefit of Lenders. Agent may perform any of
its duties hereunder by or through its agents or employees.
(ii) The provisions of this SECTION 19 are solely for
the benefit of Agent and Lenders (and their respective successors and
assigns), and neither Parent, Borrowers, nor any other Obligor shall
have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Obligor.
(B) NATURE OF DUTIES OF AGENT.
Agent shall not have duties, obligations or responsibilities except
those expressly set forth in this Agreement and the Other Agreements. Neither
Agent nor any of its officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The duties of Agent shall be mechanical and administrative in nature; Agent
shall not have by reason of this Agreement or the Other Agreements a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or the
Other Agreements, expressed or implied, is intended to or shall be so construed
as to impose upon Agent any obligations in respect of this Agreement or the
Other Agreements except as expressly set forth herein.
(C) LACK OF RELIANCE ON AGENT.
(i) Independently and without reliance upon Agent, each
Lender, to the extent it deems appropriate, has made and shall continue
to make (A) its own independent investigation of the financial or other
condition and affairs of Agent, each Obligor and any other Lender in
connection with the taking or not taking of any action in connection
herewith and (B) its own appraisal of the creditworthiness of Agent,
each Obligor and any other Lender, and, except as expressly provided in
this Agreement, Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into
its possession before the making of the Loans or at any time or times
thereafter.
(ii) Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in
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connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Agreement or the Other Agreements or any notes or the financial or
other condition of any Obligor. Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Other
Agreements, or the financial condition of any Obligor, or the existence
or possible existence of any Event of Default.
(D) CERTAIN RIGHTS OF AGENT.
Agent shall have the right to request instructions from Requisite
Lenders or all Lenders, as applicable, pursuant to this Agreement, by notice to
each Lender. If Agent shall request instructions from Requisite Lenders or all
Lenders, as applicable, with respect to any act or action (including the failure
to act) in connection with this Agreement, Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders or all Lenders, as applicable, and Agent
shall not incur liability to any Person by reason of so refraining. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or refraining from acting hereunder in
accordance with the instructions of Requisite Lenders or all Lenders, as
applicable.
(E) RELIANCE BY AGENT.
Agent shall be under no duty to examine, inquire into, or pass upon the
validity, effectiveness or genuineness of this Agreement, any of the Other
Agreements or any instrument, document or communication furnished pursuant
hereto or thereto or in connection herewith or therewith. Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order, electronic mail or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. Agent
may consult with legal counsel (including counsel for any Obligor with respect
to matters concerning any Obligor), independent public accountants and other
experts and advisors selected by it and shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
(F) INDEMNIFICATION OF AGENT.
To the extent Agent is not promptly reimbursed and indemnified by
Parent and Borrowers, each Lender will reimburse and indemnify Agent, in
proportion to its Pro Rata Share, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
and out-of-pocket costs and expenses (including counsel, consultant and other
professional advisor fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in performing its duties hereunder, in any way relating to or arising out of
this Agreement; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent for any purpose shall,
in the opinion of Agent, be insufficient or become impaired, Agent may call for
64
additional indemnities and cease to do, or not commence, the acts to be
indemnified against, even if so directed by Requisite Lenders or all Lenders, as
applicable, until such additional indemnification is provided. The obligations
of Lenders under this SUBSECTION 19(F) shall survive the payment in full of the
Liabilities and the termination of this Agreement.
(G) AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to the Loans made by it pursuant hereto, Agent shall have
the same rights and powers hereunder as any other Lender or holder of a note or
participation interest and may exercise the same as though it was not performing
the duties specified herein; and the terms "Lenders," "Requisite Lenders" or any
similar terms shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity. Agent may accept deposits from, lend money to,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisor or other business with any Borrower or any Affiliate of any
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Agreement and otherwise without having to account for the same to
Lenders, to the extent such activities are not in contravention of the terms of
this Agreement.
(H) HOLDERS OF NOTES.
Agent may deem and treat the payee of any promissory note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any promissory note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
promissory note or of any promissory note or notes issued in exchange therefor.
(I) SUCCESSOR AGENT.
(i) Agent may, upon five (5) Business Days' notice to
Lenders, Parent and Borrowers, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
SUBSECTION 19(I)) by giving written notice thereof to Lenders, Parent
and Borrowers. Upon any such resignation, Requisite Lenders shall have
the right, upon five (5) days' notice, to appoint a successor Agent. If
no successor Agent shall have been so appointed by Requisite Lenders
and accepted such appointment, within thirty (30) days after the
retiring Agent's giving of notice of resignation, then, upon five (5)
days' notice, the retiring Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a bank or a trust company or other
financial institution which maintains an office in the United States,
or a commercial bank organized under the laws of the United States of
America or of any State thereof, or any affiliate of such bank or trust
company or other financial institution which is engaged in the banking
business, having a combined capital and surplus of at least Fifty
Million and No/100 Dollars ($50,000,000.00).
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(ii) Upon the acceptance of any appointment as an Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be
forever released and discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this SECTION 19 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was an Agent
under this Agreement.
(J) COLLATERAL MATTERS.
(i) Each Lender authorizes and directs Agent to enter
into the Other Agreements for the benefit of Lenders. Each Lender
hereby agrees that, except as otherwise set forth herein, any action
taken by Requisite Lenders in accordance with the provisions of this
Agreement or the Other Agreements, and the exercise by the Requisite
Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized
and binding upon all Lenders. Agent is hereby authorized on behalf of
all Lenders, without the necessity of any notice to or further consent
from any Lender to take any action with respect to any Collateral or
Other Agreements which may be necessary or prudent to perfect and
maintain perfected the security interest in and liens upon the
Collateral granted pursuant to this Agreement and the Other Agreements.
(ii) Without the verbal consent of all Lenders, which
consent shall (a) be confirmed promptly thereafter in writing and (b)
not be unreasonably withheld or delayed, Agent will not execute any
release of Agent's security interest in any Collateral except for
releases relating to dispositions of Collateral (x) permitted by this
Agreement or (y) in connection with the repayment in full of all of the
Liabilities by Borrowers and the termination of all obligations of
Agent and Lenders under this Agreement and the Other Agreements;
provided, that with the consent of Requisite Lenders, Agent may release
its liens on Collateral having a book value not greater than ten
percent (10%) of the total book value of all Collateral, as determined
by Agent, either in a single transaction or series of related
transactions, not to exceed twenty percent (20%) of the book value of
all Collateral in any Fiscal Year. Agent shall not be required to
execute any such release on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any
consequence other than the release of such liens without recourse or
warranty. In the event of any sale or transfer of any of the
Collateral, Agent shall be authorized to deduct all of the expenses
reasonably incurred by Agent from the proceeds of any such sale or
transfer.
(iii) Lenders hereby agree that the lien granted to Agent
in any property sold or disposed of in accordance with the provisions
of the Agreement shall be automatically released; provided, however
that Agent's lien shall attach to and continue for the benefit of Agent
and Lenders in the proceeds and products of such property arising from
any such sale or disposition.
(iv) To the extent, pursuant to the provisions of this
SUBSECTION 19(J), Agent's execution of a release is required to release
66
its lien upon any sale and transfer of Collateral which is consented to
in writing by Requisite Lenders or all Lenders, as applicable, and upon
at least five (5) business days' prior written request by Borrowers,
Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary or prudent to evidence the
release of the liens granted to Agent for the benefit of Lenders herein
or pursuant hereto upon the Collateral that was sold or transferred.
(v) Agent shall not have any obligation whatsoever
to Lenders or to any other Person to assure that the Collateral exists
or is owned by a Borrower or any other Obligor or is cared for,
protected or insured or that the liens granted to Agent herein or
pursuant hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to Agent in this
SECTION 19 or in any of the Other Agreements, it being understood and
agreed that in respect of the Collateral, or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate,
in its sole discretion, given Agent's own interest in the Collateral as
one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its gross negligence or willful
misconduct.
(vi) In the event that any Lender receives any Proceeds of
any Collateral by setoff, recoupment, exercise of any banker's lien or
otherwise, in an amount in excess of such Lender's Pro Rata Share of
such Proceeds, such Lender shall purchase for cash (and other Lenders
shall sell) interests in each of such other Lender's Pro Rata Share of
the Liabilities as would be necessary to cause all Lenders to share the
amount so set off or otherwise received with each other Lender in
accordance with their respective Pro Rata Shares. No Lender shall
exercise any right of setoff, recoupment, banker's lien or other
similar right without the prior written consent of Agent.
(K) ACTIONS WITH RESPECT TO DEFAULTS.
In addition to Agent's right to take actions on its own accord as
permitted under this Agreement, Agent shall take such action with respect to any
Default or Event of Default as shall be directed by Requisite Lenders or all
Lenders, as applicable, under this Agreement; provided, that until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to any such
Default or Event of Default as it shall deem advisable and in the best interests
of Lenders. No Lender shall have any right individually to enforce or seek to
enforce this Agreement or any Other Agreement or to realize upon any Collateral,
unless instructed to do so by Agent.
(L) DELIVERY OF INFORMATION.
Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by Agent from any Borrower or any other Obligor, Requisite
Lenders, any Lender or any other Person under or in connection with this
Agreement or any Other Agreement except (i) as specifically provided in this
Agreement or any Other Agreement and (ii) as specifically requested from time to
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time in writing by any Lender with respect to a specific document, instrument,
notice or other written communication received by and in the possession of Agent
at the time of receipt of such request and then only in accordance with such
specific request.
(M) DEMAND.
Subject to the terms of this Agreement, Agent shall make demand for
repayment by Borrowers of all Liabilities owing by Borrowers hereunder, after
the occurrence of an Event of Default, upon the written request of Requisite
Lenders. Agent shall make such demand in such manner as it deems appropriate, in
its sole discretion, to effectuate the request of the Requisite Lenders. Nothing
contained herein shall limit the discretion of Agent to take reserves, to deem
certain Accounts and Inventory ineligible, or to exercise any other discretion
granted to Agent in this Agreement.
(N) NOTICE OF DEFAULT.
Agent shall not be deemed to have knowledge or notice of the occurrence
of any Event of Default or any event which, with passage of time or giving of
notice, could become an Event of Default, except with respect to Events of
Default arising as a result of any Borrower's failure to pay principal, interest
or fees required to be paid to Agent for the benefit of Lenders, unless Agent
shall have received written notice from a Lender or a Borrower describing such
Event of Default or event which, with the passage of time or giving of notice,
could become an Event of Default, and which identifies such event as a "notice
of default". Upon receipt of any such notice or Agent becoming aware of a
Borrower's failure to pay principal, interest or fees required to be paid to
Agent for the benefit of Lenders, Agent will notify each Lender of such receipt
or event.
20. ASSIGNABILITY.
(a) No Borrower shall have the right to assign this Agreement or
any interest therein except with the prior written consent of Agent and all
Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs to
Borrowers.
(c) Each Lender may, with the consent of Agent which consent shall
not be unreasonably withheld, but without the consent of any other Lender or
Borrowers, assign to one or more banks or other financial institutions generally
involved in extending revolving facilities of the type described herein all or a
portion of its rights and obligations under this Agreement and the Other
Agreements; provided, that (i) for each such assignment, the parties thereto
shall execute and deliver to Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance Agreement in the form
attached hereto as EXHIBIT E (the "ASSIGNMENT AND ACCEPTANCE"), and a processing
and recordation fee of Five Thousand and No/100 Dollars ($5,000.00) to be paid
to Agent by the assignee, and (ii) no such assignment shall be for less than Ten
Million and No/100 Dollars ($10,000,000.00). Upon such execution and delivery of
the Assignment and Acceptance to Agent, from and after the date specified as the
effective date in the Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto, and, to the extent that rights and obligations
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hereunder have been assigned to it pursuant to such Assignment and Acceptance,
such assignee shall have the rights and obligations of a Lender hereunder and
(y) the assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than any rights it may have pursuant to SECTION 23
of this Agreement which will survive) and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the assignee thereunder confirms and agrees as follows: (i) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement and the Other Agreements or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the Other Agreements, (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrowers or any other Obligor or the performance or observance by any
Borrower or any other Obligor of its obligations under this Agreement and the
Other Agreements, (iii) such assignee confirms that it has received a copy of
this Agreement and the Other Agreements, together with copies of the financial
statements referred to in SECTION 9 of this Agreement and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (iv) such assignee will,
independently and without reliance upon Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement, (v) such assignee appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(e) Agent shall maintain at its address referred to in SECTION
24 of the Agreement a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
Lenders and the Revolving Loan Commitment of, and principal amount of the Loans
owing to, each Lender from time to time (the "REGISTER"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and Borrowers, Agent and Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register and copies of each Assignment and Acceptance shall be
available for inspection by Borrowers, Agent or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender, Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT E hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Borrowers. Within five (5)
Business Days after its receipt of such notice, Borrowers shall execute and
deliver to Agent in exchange for the surrendered promissory note or notes, a new
promissory note or notes to the order of the assignee in amounts equal to such
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assignee's commitments and outstanding Loans hereunder and, if the assigning
Lender has retained a portion of the Loans, a new promissory note or notes to
the order of the assigning Lender in an amount equal to the remaining
commitments and outstanding loans hereunder of such assigning Lender under the
terms of this Agreement. Such new promissory note or notes shall re-evidence the
indebtedness outstanding under the old promissory note or notes and shall be in
the aggregate principal amount of such surrendered promissory note or notes,
shall be dated of even date herewith and shall otherwise be in substantially the
form of the promissory note or notes subject to such assignment.
(g) Each Lender may sell participations (without the consent of
Agent, Borrowers or any other Lender) to one or more parties, in or to all (or a
portion) of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Loan Commitment or the Loans owing
to it); provided, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) Borrowers, Agent,
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (iv) such Lender shall not transfer, grant, assign or sell any
participation under which the participant shall have rights to approve any
amendment or waiver of this Agreement.
(h) Each Lender agrees that, without the prior written consent of
Borrowers and Agent, it will not make any assignment hereunder in any manner or
under any circumstances that would require registration or qualification of, or
filings in respect of, any Loan or other Liabilities under the securities laws
of the United States of America or of any jurisdiction.
(i) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may disclose any
information in its possession regarding Borrowers.
21. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement or any of the
Other Agreements, nor consent to any departure by any Obligor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Parent, each Borrower, Agent and Requisite Lenders, or if Lenders shall not be
parties thereto, by the parties thereto and consented to by Requisite Lenders,
and each such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, that
no amendment, waiver or consent shall, unless in writing and signed by all
Lenders, do any of the following: (i) increase the Revolving Loan Commitments of
Lenders or subject Lenders to any additional obligations to extend credit to
Borrowers, (ii) reduce the principal of, or interest on, the Loans (other than
as expressly permitted herein) or any fees hereunder, (iii) postpone any date
fixed for any payment in respect of principal of, or interest on, the Loan or
any fees hereunder, (iv) change the definition of Pro Rata Shares, or any
minimum requirement necessary for Lenders or Requisite Lenders to take any
action hereunder, (v) amend or waive this SECTION 21, or change the definition
of Requisite Lenders, or (vii) except in connection with the financing,
refinancing, sale or other disposition of any asset of Parent or any Borrower
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permitted under this Agreement (or to the extent Requisite Lender approval only
is required with any such release pursuant to SUBSECTION 19(J) hereof), release
or subordinate any liens in favor of Agent, for the benefit of Agent and
Lenders, on any of the Collateral and provided further, that no amendment,
waiver or consent affecting the rights or duties of Agent under this Agreement
or any Other Agreement shall in any event be effective, unless in writing and
signed by Agent in addition to Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, for purposes of voting or
consenting to matters with respect to this Agreement and the Other Agreements, a
Defaulting Lender shall not be considered a Lender and such Defaulting Lender's
Revolving Loan Commitment shall be deemed to be $0 until such Defaulting Lender
makes the payments required in this Agreement.
In the event that any consent, waiver or amendment requiring the
agreement of all Lenders as set forth above is agreed to by the Requisite
Lenders, but not all Lenders, Agent may, in its sole discretion, cause any
non-consenting Lender to assign its rights and obligations under this Agreement
and the Other Agreements to one or more new Lenders or existing Lenders in the
manner and according to the terms set forth in SECTION 20 of this Agreement;
provided, that (i) no Lender may be required to assign its rights and
obligations to a new Lender because such lender is unwilling to increase its own
loan commitments, (ii) such new Lender must be willing to consent to the
proposed amendment, waiver or consent and (iii) in connection with such
assignment the new Lender pays the assigning Lender an amount equal to the
Liabilities owing to such assigning Lender, including all principal, accrued and
unpaid interest and accrued and unpaid fees to the date of assignment. Such
assignment shall occur within thirty (30) days of notice by Agent to such
non-consenting Lender of Agent's intent to cause such non-consenting Lender to
assign its interests hereunder.
22. NONLIABILITY OF AGENT AND LENDERS.
The relationship between Parent and Borrowers, on the one hand, and
Agent and Lenders, on the other hand, shall be solely that of obligor and
lender. Neither Agent nor any Lender shall have any fiduciary responsibilities
to Parent, Borrowers or any other Obligor. Neither Agent nor any Lender
undertakes any responsibility to Parent or Borrowers to review or inform Parent,
Borrowers or any other Obligor of any matter in connection with any phase of
Parent's or Borrowers' business or operations.
23. INDEMNIFICATION.
The Borrowers agree, on a joint and several basis, to defend (with
counsel reasonably satisfactory to Lender), protect, indemnify and hold harmless
Agent and each Lender, each affiliate or subsidiary of Agent and each Lender,
and each of their respective officers, directors, employees, attorneys and
agents (each an "INDEMNIFIED PARTY") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims, and
out-of-pocket and reasonable costs, expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the reasonable fees
of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations, including, without limitation, securities laws and regulations,
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Environmental Laws and commercial laws and regulations, under common law or in
equity, or based on contract or otherwise) in any manner relating to or arising
out of this Agreement or any Other Agreement, or any act, event or transaction
related or attendant thereto, the making or issuance and the management of the
Loans or any Letters of Credit or the use or intended use of the proceeds of the
Loans or any Letters of Credit; PROVIDED, HOWEVER, that the Borrowers shall not
have any obligation hereunder to any Indemnified Party with respect to matters
caused by or resulting from the willful misconduct or gross negligence of any
Indemnified Party. To the extent that the undertaking to indemnify set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrowers shall satisfy such undertaking to the maximum
extent permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by the Borrowers, be added to
the Liabilities of the Borrowers and be secured by the Collateral. The
provisions of this SECTION 23 shall survive the satisfaction and payment of the
other Liabilities and the termination of this Agreement.
24. NOTICE.
All written notices and other written communications with respect to
this Agreement shall be sent by ordinary, certified or overnight mail, by
facsimile, electronic mail or delivered in person, and in the case of Agent
shall be sent to it at LaSalle Business Credit, LLC, 0 Xxxxxxxx Xxxxxx, 0000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, attention Credit
Manager, facsimile number (000) 000-0000, in the case of a Lender shall be sent
to it out the address set forth below its name on the signature page hereto or
in the Assignment and Acceptance Agreement and, in the case of Parent or the
Borrowers shall be sent to it at its principal place of business set forth on
EXHIBIT B hereto or as otherwise directed by Parent or the Borrowers in writing.
All notices shall be deemed received upon actual receipt thereof or refusal of
delivery.
25. CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.
THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL BE GOVERNED AND
CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO SUCH
JURISDICTION'S CONFLICTS OF LAWS PRINCIPLES. If any provision of this Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or remaining
provisions of this Agreement.
To induce Agent and Lenders to accept this Agreement, Parent and the
Borrowers irrevocably agree that, subject to Agent's sole and absolute election,
ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM
OR RELATED TO THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE
LITIGATED IN COURTS HAVING SITUS WITHIN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX;
PROVIDED that Agent may elect to commence an action or proceeding with respect
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to the Collateral in another jurisdiction. PARENT AND THE BORROWERS HEREBY
CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID CITY AND STATE. Parent and the Borrowers hereby irrevocably
appoint and designate The Corporation Trust Company located at Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (or any other person having and
maintaining a place of business in such state whom Parent and the Borrowers may
from time to time hereafter designate upon ten (10) days written notice to Agent
and whom Agent has agreed in its sole discretion in writing is satisfactory and
who has executed an agreement in form and substance satisfactory to Agent
agreeing to act as such attorney and agent), as Parent's and Borrowers' true and
lawful attorney and duly authorized agent for acceptance of service of legal
process. Parent and the Borrowers agree that service of such process upon such
person shall constitute personal service of such process upon Parent and the
Borrowers. PARENT AND THE BORROWERS HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST PARENT OR ANY OF
THE BORROWERS BY AGENT IN ACCORDANCE WITH THIS SECTION.
26. CONFIRMATION OF EXISTING OBLIGATIONS.
Parent, each Borrower, Agent and Lenders each acknowledge and agree
that, as of April 2, 2007, (i) the aggregate principal balance of the
outstanding Loans under the Prior Loan Agreement was $3,472,359.97, (ii) the
aggregate principal balance of the outstanding Letter of Credit Obligations
under the Prior Loan Agreement was $620,654.00 (Agent acknowledges that $475,000
of such Letter of Credit Obligations are presently cash collateralized with Loan
proceeds, which cash collateral Agent and Lenders agree shall be released and
applied to the outstanding Loans within a reasonable time following the
effectiveness of this Agreement), (iii) the accrued and unpaid interest arising
under the Prior Loan Documents was $2,138.03, and (iii) the aggregate amount of
billed but unpaid reimbursable costs and expenses arising under the Prior Loan
Documents known to the Agent was $13,416.40. The foregoing amounts do not
include any unbilled and/or unknown fees, costs, and expenses that are
reimbursable under the Prior Loan Agreement or Prior Loan Documents, all of
which fees, costs and expenses Agent and Lenders shall continue to be
reimbursable in accordance with the terms hereof. All of the foregoing
Liabilities are outstanding, and Borrowers and Parent agree and acknowledge that
(i) they are jointly and severally liable for such Liabilities, and (ii) they
have no right of offset, defense, or counterclaim with respect to any of such
Liabilities, in each case, both prior to and after giving effect to this
Agreement.
27. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
28. POWER OF ATTORNEY.
Parent and the Borrowers acknowledge and agree that their appointment
of Agent as their attorney and agent-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be irrevocable
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until all of the Liabilities (other than inchoate indemnification obligations)
are satisfied and paid in full and this Agreement is terminated.
29. CONFIDENTIALITY.
Agent and each Lender hereby agree to use commercially reasonable
efforts to assure that any and all information relating to Parent and the
Borrowers which is (i) furnished by Parent or a Borrower to Agent or any Lender
(or to any affiliate of Agent or any Lender); and (ii) non-public, confidential
or proprietary in nature, shall be kept confidential by Agent and such Lender or
such affiliate and not used for any purpose other than in connection with this
Agreement, the Agent's syndication of this Agreement, and the transactions
contemplated hereunder; PROVIDED, HOWEVER, that such information and other
credit information relating to Parent or a Borrower may be distributed by Agent
or any Lender or such affiliate (subject, to the extent practicable, to the
restrictions set forth in this SECTION 29) to Agent's or Lender's or such
affiliate's, directors, officers, employees, attorneys, affiliates, assignees,
existing or potential assignees, existing or potential participants, auditors,
agents and regulators, and upon the order of a court or other governmental
agency having jurisdiction over Agent or any other Lender or such affiliate, to
any other party; PROVIDED, FURTHER that Agent will have any potential Lender
execute a nondisclosure agreement which imposes the confidentiality restrictions
contained in this SECTION 29 on such potential Lender prior to distributing any
non-public information concerning Parent or any Borrower to such potential
Lender. In addition, such information may be distributed by Agent or any Lender
to potential participants or assignees of any portion of the Liabilities,
PROVIDED, that such potential participant or assignee agrees to follow the
confidentiality requirements set forth in this SECTION 29. Parent, the
Borrowers, Agent and each Lender further agree that this provision shall survive
the termination of this Agreement. Notwithstanding the foregoing, Parent and the
Borrowers hereby consent to Lender publishing, with Parent's prior reasonable
review) a tombstone or similar advertising material relating to the financing
transaction contemplated by this Agreement.
30. SYNDICATION.
Parent and Borrowers hereby agree and acknowledge that Agent may in its
discretion, prior to and after the Closing Date, initiate discussions with
potential lenders and investors in order to syndicate the Loans. In consultation
with Borrowers, Agent will manage and control all aspects of the syndication of
the Loans to other financial institutions and lenders ("PRIMARY SYNDICATION").
Parent and Borrowers agree to use commercially reasonable efforts to actively
assist and cooperate (and cause each of their respective Affiliates and all
necessary parties to assist and cooperate) with Agent in the Primary Syndication
process. This assistance includes participation in meetings and preparation of
information including the preparation of a confidential information memorandum,
presentations and other offering materials to be used in connection with the
Primary Syndication and confirming the completeness and accuracy of such
materials. Borrowers agree that, until the completion of the Primary
Syndication, they shall not (and shall cause their affiliates not to), without
the prior written consent of Agent attempt or agree to offer, issue, place,
syndicate or arrange any debt securities or debt facilities for the Borrowers or
make or authorize any announcement of any of the foregoing. Any assignments of
the Loans entered into to complete the Primary Syndication shall not be subject
to any consent, minimum amounts and fee provisions set forth in this Agreement.
This paragraph shall survive the execution and delivery of this Agreement and
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shall remain in full force and effect until the completion of the Primary
Syndication.
31. COUNTERPARTS.
This Agreement any of the Other Agreements and any amendments, waivers,
consents or supplements may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed an original, but all of which
counterparts together shall constitute but one agreement. Any counterpart
delivered by facsimile or other electronic transmission shall constitute, and
have the same force and effect as, a manually signed counterpart.
32. ELECTRONIC SUBMISSIONS.
Upon not less than thirty (30) days' prior written notice (the
"APPROVED ELECTRONIC FORM NOTICE"), Agent may permit or require (in Agent's
reasonable judgment, taking into account Borrowers' existing electronic systems)
that any of the documents, certificates, forms, deliveries or other
communications, authorized, required or contemplated by this Agreement or the
Other Agreements, be submitted to Agent in "APPROVED ELECTRONIC FORM" (as
hereafter defined), subject to any reasonable terms, conditions and requirements
in the applicable Approved Electronic Forms Notice. For purposes hereof
"ELECTRONIC FORM" means e-mail, e-mail attachments, data submitted on web-based
forms or any other communication method that delivers machine readable data or
information to Agent, and "APPROVED ELECTRONIC FORM" means an Electronic Form
that has been approved in writing by Agent (which approval has not been revoked
or modified by Agent) and sent to Borrower Representative in an Approved
Electronic Form Notice. Except as otherwise specifically provided in the
applicable Approved Electronic Form Notice, any submissions made in an
applicable Approved Electronic Form shall have the same force and effect that
the same submissions would have had if they had been submitted in any other
applicable form authorized, required or contemplated by this Agreement or the
Other Agreements.
33. WAIVER OF JURY TRIAL; OTHER WAIVERS.
(a) PARENT, THE BORROWERS, AGENT AND EACH LENDER EACH HEREBY
WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE
LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY PARENT OR ANY
BORROWER OR AGENT OR ANY LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY,
ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN PARENT AND THE BORROWERS,
ON THE ONE HAND, AND AGENT AND LENDERS. IN NO EVENT SHALL AGENT OR ANY LENDER BE
LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
(b) Parent and each Borrower hereby waive demand, presentment,
protest and notice of nonpayment, and further waives the benefit of all
valuation, appraisal and exemption laws.
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(c) Parent and each Borrower hereby waive the benefit of any law
that would otherwise restrict or limit Agent or any Lender or any affiliate of
Agent or any Lender in the exercise of its right, which is hereby acknowledged
and agreed to, to set-off against the Liabilities, without notice at any time
hereafter, any indebtedness, matured or unmatured, owing by Agent or any Lender
or such affiliate of Agent or any Lender to Parent or any Borrower, including,
without limitation, any deposit account at Agent or any Lender or such
affiliate.
(d) PARENT AND EACH BORROWER HEREBY WAIVE ALL RIGHTS TO NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY AGENT OR ANY LENDER OF THEIR RIGHTS
TO REPOSSESS THE COLLATERAL OF THE BORROWERS WITHOUT JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL.
(e) Agent and/or Lenders' failure, at any time or times hereafter,
to require strict performance by Parent or any Borrower of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish any
right of Agent or any Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Agent or any Lender of an
Event of Default under this Agreement or any default under any of the Other
Agreements shall not suspend, waive or affect any other Event of Default under
this Agreement or any other default under any of the Other Agreements, whether
the same is prior or subsequent thereto and whether of the same or of a
different kind or character. No delay on the part of Agent or any Lender in the
exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Parent or the Borrowers contained in this Agreement or any of
the Other Agreements and no Event of Default under this Agreement or default
under any of the Other Agreements shall be deemed to have been suspended or
waived by Agent and/or Lenders unless such suspension or waiver is in writing,
signed by a duly authorized officer of Agent, Requisite Lenders or all Lenders,
as required herein, and directed to Parent or the Borrowers specifying such
suspension or waiver.
34. JOINT AND SEVERAL OBLIGATIONS; GUARANTEES.
(a) Each Borrower shall be jointly and severally liable with each
other Borrower for the payment and performance when due of all Liabilities.
(b) For purposes of this SUBSECTION 34(B), each of Parent and each
Borrower shall be referred to individually as a "GUARANTOR" and collectively, as
the "GUARANTORS". Each Guarantor unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor, the due and punctual payment of the principal and interest on each of
the Loans and all Letter of Credit Obligations and all fees due hereunder, in
each case when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, and the due and punctual performance of all other
Liabilities. Each Guarantor further agrees that the Liabilities may be extended
and renewed, in whole or in part, without notice to or further assent from it,
and that it will remain bound upon its guarantee notwithstanding any extension
or renewal of any Liabilities.
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(c) Each Guarantor waives presentment to, demand of payment from
and protest to the Borrowers of any of the Liabilities, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure of
the Agent to assert any claim or demand or to enforce any right or remedy
against the Borrowers or any other Guarantor under the provisions of this
Agreement or any of the Other Documents or otherwise; (b) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Agreement or any of the Other Agreements; (c) the release of any security held
by the Agent for the Liabilities; (d) the failure of the Agent to exercise any
right or remedy against any other Guarantor of the Liabilities; (e) failure by
Agent or any Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
Liabilities; (f) the institution of any proceeding under the Bankruptcy Code, or
any similar proceeding, by or against Parent or any Borrower or Agents or
Lenders' election in any such proceeding of the application of Section
1111(b)(2) of the Bankruptcy Code; (g) any borrowing or grant of a security
interest by any Borrower as debtor-in-possession under Section 364 of the
Bankruptcy Code; (h) the disallowance, under Section 502 of the Bankruptcy Code,
of all or any portion of Agent's or Lenders' claim(s) for repayment of any
Liabilities; or (i) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor.
(d) Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Agent to any security (including, without
limitation, any Collateral) held for payment of the Liabilities or to any
balance of any deposit account or credit on the books of the Agent in favor of
any Guarantor or any other person.
(e) The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Liabilities or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Agent to assert any claim or demand or to enforce any remedy under this
Agreement or under any Other Agreements, by any waiver or modification of any
provision thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Liabilities, or by any other act or omission which may or
might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a discharge of such Guarantor as a matter of law or equity.
(f) Each Guarantor further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Liability is
rescinded or must otherwise be returned by the Agent upon the bankruptcy or
reorganization of a Guarantor or otherwise.
(g) Each Guarantor hereby agrees not to assert or exercise,
until all Liabilities have been paid or satisfied in full and the Borrowers have
no further right to borrow Loans hereunder, any and all rights of subrogation
against the Borrowers and their property and all rights of indemnification,
contribution and reimbursement from the Borrowers and their property, in each
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case in connection with this guarantee and any payments made hereunder, and
regardless of whether such rights arise by operation of law, pursuant to
contract or otherwise.
(h) Notwithstanding any provisions of this Agreement to the
contrary, it is intended that the joint and several nature of the Liabilities of
Parent and Borrowers and the liens and security interests granted by Parent and
Borrowers to secure the Liabilities, not constitute a "Fraudulent Conveyance"
(as defined below). Consequently, Agent, Lenders, Parent and Borrowers agree
that if the Liabilities of Parent or any Borrowers, or any liens or security
interests granted by Parent or such Borrower securing the Liabilities would, but
for the application of this sentence, constitute a Fraudulent Conveyance, the
Liabilities of Parent or such Borrower and the liens and security interests
securing such Liabilities shall be valid and enforceable only to the maximum
extent that would not cause such Liabilities or such lien or security interest
to constitute a Fraudulent Conveyance, and the Liabilities of Parent or such
Borrower and this Agreement shall automatically be deemed to have been amended
accordingly. For purposes hereof, "Fraudulent Conveyance" means a fraudulent
conveyance under Section 548 of Chapter 11 of Title II of the United States Code
(11 U.S.C. ss. 101, et seq.), as amended (the "Bankruptcy Code") or a fraudulent
conveyance or fraudulent transfer under the applicable provisions of any
fraudulent conveyance or fraudulent transfer law or similar law of any state,
nation or other governmental unit, as in effect from time to time.
(i) Parent and each Borrower assumes responsibility for keeping
itself informed of the financial condition of Parent and each other Borrower,
and any and all endorsers and/or guarantors of any instrument or document
evidencing all or any part of Parent or such other Borrower's Liabilities and of
all other circumstances bearing upon the risk of nonpayment by Parent or such
other Borrowers of their Liabilities and Parent and each Borrower agrees that
Agent and Lenders shall not have any duty to advise Parent or such Borrower of
information known to Agent or any Lender regarding such condition or any such
circumstances or to undertake any investigation not a part of its regular
business routine. If Agent or any Lender, in its sole discretion, undertakes at
any time or from time to time to provide any such information to Parent or a
Borrower, neither Agent nor any Lender shall be under any obligation to update
any such information or to provide any such information to Parent or such
Borrower on any subsequent occasion.
35. WAIVER OF EXISTING DEFAULTS.
Subject to the effectiveness of this Agreement, Agent and Lenders
hereby waive any Events of Default arising prior to the Closing Date under the
Prior Loan Documents; provided, that such waiver shall not be deemed or
otherwise construed to constitute a waiver of any other Default or Event of
Default, or to prejudice any right, power or remedy which Agent or any Lender
may now have or may have in the future, under or in connection with this
Agreement or any Other Agreements after giving effect to this Agreement, all of
which rights, powers and remedies are hereby expressly reserved by Agent and
Lenders.
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36. EFFECT OF AMENDMENT AND RESTATEMENT. Upon the
effectiveness of this Agreement, the Prior Loan Agreement shall be amended and
restated by this Agreement; PROVIDED, HOWEVER, that the Loans and other
Liabilities arising under the Prior Loan Agreement and other Prior Loan
Documents (collectively, the "PRIOR LIABILITIES") shall, subject to SECTION 26
hereof, continue in full force and effect and the liens and security interests
securing payment thereof shall be continuing but shall now be governed by the
terms of this Agreement and the Other Agreements. No action or inaction by any
of LaSalle, Agent or any Lender prior to the effectiveness date of this
Agreement shall be deemed to have established a course of conduct between the
parties hereto. Upon the effectiveness of this Agreement, all rights and
obligations of the Parent, Borrowers, Agent and Lenders shall be solely as set
forth in this Agreement and the Other Agreements. This Agreement shall
constitute an amendment and restatement of the terms governing the Prior
Liabilities and shall not be deemed to evidence a novation or a repayment and
reborrowing of the Prior Liabilities.
All references to the "Loan Agreement" in the Other Agreements
delivered pursuant to or otherwise in connection with the Prior Loan Agreement
shall be deemed to refer to this Agreement without further amendment of such
Other Agreements. The Other Agreements executed in connection with the Prior
Loan Agreement that are not superseded by corresponding Other Agreements
executed and delivered in connection with this Agreement shall remain in full
force and effect (collectively, the "CONTINUING OTHER AGREEMENTS"). All
references to the Prior Loan Agreement in the Continuing Other Agreements shall
be deemed to refer to this Agreement without further amendment thereof. Parent,
Borrowers, Agent and Lenders hereby acknowledge and agree that each of the
Continuing Other Agreements remains in full force and effect and hereby ratify
and reaffirm all of their respective payment and performance obligations,
contingent or otherwise, under each of the Continuing Other Agreements to which
they are a party and, to the extent Parent and Borrowers granted liens on or
security interests in any of their properties pursuant to any of the Continuing
Other Agreements as security for the Liabilities, Parent and Borrowers hereby
ratify and reaffirm such grants of security and confirm and agree that such
liens and security interests secure all of the Liabilities and remain in full
force and effect after giving effect to this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amended
and Restated Loan and Security Agreement as of the date first written above.
LASALLE BUSINESS CREDIT, LLC, successor by merger to
LASALLE BUSINESS CREDIT, INC., as Agent and a Lender
By:__________________________________________________
Name: ______________________________
Its:_________________________________________________
REVOLVING LOAN COMMITMENT: $35,000,000
[Signature Page to Amended and Restated Loan and Security Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended
and Restated Loan and Security Agreement as of the date first written above.
PROTECTIVE APPAREL CORPORATION OF AMERICA, as Borrower
By:__________________________________________________
Name: ______________________________
Its:_________________________________________________
POINT BLANK BODY ARMOR INC., as Borrower
By:__________________________________________________
Name: ______________________________
Its:_________________________________________________
NDL PRODUCTS, INC., as Borrower
By:__________________________________________________
Name: ______________________________
Its:_________________________________________________
DHB INDUSTRIES, INC., as Guarantor
By:__________________________________________________
Name: ______________________________
Its:_________________________________________________
[Signature Page to Amended and Restated Loan and Security Agreement]
