EXHIBIT 10.113
FINANCING AGREEMENT
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS AGENT)
AND
THE INSTITUTIONS FROM TIME TO
TIME PARTY HERETO AS LENDERS
(AS LENDERS)
AND
AIRCRAFT INTERIOR DESIGN, INC., XXXXX MANUFACTURING COMPANY, INC.,
TIMCO AVIATION SERVICES, INC.,
TIMCO ENGINE CENTER, INC., TIMCO ENGINEERED SYSTEMS, INC. AND
TRIAD INTERNATIONAL MAINTENANCE CORPORATION
(AS BORROWERS)
DATED: APRIL 5, 2004
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS....................................................................2
SECTION 2. CONDITIONS PRECEDENT..........................................................26
SECTION 3. REVOLVING LOANS...............................................................31
SECTION 4. TERM LOAN.....................................................................36
SECTION 5. LETTERS OF CREDIT.............................................................37
SECTION 6. COLLATERAL ...................................................................40
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS.....................................43
SECTION 8. INTEREST, FEES AND EXPENSES...................................................56
SECTION 9. POWERS........................................................................62
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................62
SECTION 11. TERMINATION...................................................................66
SECTION 12. JOINT AND SEVERAL LIABILITY; CROSS-GUARANTY; RIGHT OF SUBROGATION;
WAIVER OF SURETYSHIP DEFENSES; SUBORDINATION;.................................66
SECTION 13. MISCELLANEOUS.................................................................68
SECTION 14 AGREEMENT BETWEEN THE LENDERS ................................................71
SECTION 15 AGENCY .......................................................................73
(ii)
EXHIBIT
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Assignment and Transfer Agreement
Exhibit E - Hilco Intercreditor Agreement
SCHEDULES
Schedule 1 - Specific Permitted Encumbrances
Schedule 2 - Specific Permitted Indebtedness; Guaranties
Schedule 3 - Consignment Agreements
Schedule 4 - General Intangibles
Schedule 5 - Chief Executive Offices, Locations of Collateral, Formation
Locations, Qualification to Do Business Jurisdictions, Etc.
Schedule 6 - Real Estate; Leases
Schedule 7 - Litigation
Schedule 8 - Benefit Plans
Schedule 9 - Investments
Schedule 10 - Subordinated Debt
(iii)
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, with
offices located at Two Wachovia Center, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 (hereinafter "CIT", together with any other
party hereafter becoming a Lender hereunder pursuant to Paragraph 14.9 of
Section 14 hereof being collectively called the "Lenders" and, individually, a
"Lender"), and CIT as Agent for the Lenders (hereinafter the "Agent") are
pleased to confirm the terms and conditions under which the Lenders acting
through the Agent shall make revolving loans, the term loan and other financial
accommodations to AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation ("AID"),
XXXXX MANUFACTURING COMPANY, INC., a California corporation ("Xxxxx"), XXXXX
AVIATION SERVICES, INC., a Delaware corporation ("Parent"), TIMCO ENGINE CENTER,
INC., a Delaware corporation ("Engine"), TIMCO ENGINEERED SYSTEMS, INC., a
Delaware corporation ("Engineered Systems"), and TRIAD INTERNATIONAL MAINTENANCE
CORPORATION, a Delaware corporation ("TIMCO"; AID, Xxxxx, Parent, Engine,
Engineered Systems and TIMCO being collectively called the "Borrowers" and
individually, a "Borrower"), the payment and performance of which loans and
financial accommodations is guaranteed by AVIATION SALES DISTRIBUTION SERVICES
COMPANY, a Delaware corporation ("Distribution Services"), AVIATION SALES
LEASING COMPANY, a Delaware corporation ("Leasing"), AVIATION SALES PROPERTY
MANAGEMENT CORP., a Delaware corporation ("Property Management"), AVS/CAI, INC.,
a Florida corporation ("AVS/CAI"), AVS/M-1, INC., a Delaware corporation
("AVS/M-1"), AVS/M-2, INC., a Delaware corporation ("AVS/M-2"), AVS/M-3, INC., a
Delaware corporation ("AVS/M-3"), AVSRE, L.P., a Delaware limited partnership
("AVSRE"), HYDROSCIENCE, INC., a Texas corporation ("Hydroscience"), TMAS/ASI,
INC., an Arkansas corporation ("TMAS/ASI"), and WHITEHALL CORPORATION, a
Delaware corporation ("Whitehall"; Distribution Services, Leasing, Property
Management, AVS/CAI, AVS/M-1, AVS/M-2, AVS/M-3, AVSRE, Hydroscience, TMAS/ASI
and Whitehall being collectively called the "Guarantors" and, individually, a
"Guarantor"; and the Borrowers and the Guarantors being collectively called the
"Companies" and, individually, a "Company").
BACKGROUND STATEMENT
The Parent and each Borrower have requested that the Lenders make
available a revolving credit facility, a term loan and other financial
accommodations to the Borrowers, which shall be used by the Borrowers to (a)
refinance and replace, in part, the Existing Credit Facility (as defined
herein), and (b) finance their mutual and collective enterprise of providing
aviation maintenance, repair and overhaul services. In order to utilize the
financial powers of the Parent and each Borrower in the most efficient and
economical manner, and in order to facilitate the financing of the Parent's and
each Borrower's needs, the Lenders will, at the request of the Parent or a
Borrower, make revolving loans and extend financial accommodations to all
Borrowers on a combined basis in accordance with the provisions set forth in
this Financing Agreement. The Parent's and the Borrowers' business is a mutual
and collective enterprise, and the Parent and the Borrowers believe that the
consolidation of all loans and other financial accommodations under this
Financing Agreement will enhance the aggregate borrowing powers of the Parent
and each Borrower and ease the administration of their loan relationship with
the Agent on behalf of the Lenders, all to the mutual advantage of the
Companies. The Agent's and the Lenders' willingness to extend credit to the
Borrowers and to
administer each Borrower's collateral security therefor on a combined basis as
more fully set forth in this Financing Agreement is done solely as an
accommodation to the Companies and at the Companies' request in furtherance of
the Companies' mutual and collective enterprise.
The Companies intend that the revolving credit facility, the term loan
and all other Obligations (as defined herein) under this Financing Agreement
constitute "Designated Senior Debt" as such term is defined in each of the
Indentures (as defined herein).
STATEMENT OF AGREEMENT
SECTION 1. DEFINITIONS
ACCOUNTS shall mean all of each Company's now existing and future: (a) accounts
(as defined in the UCC), and any and all other receivables (whether or not
specifically listed on schedules furnished to Agent), including, without
limitation, all accounts created by, or arising from, all of such Company's
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of such Company's
trade names or styles, or through any of such Company's divisions; (b) any and
all instruments, documents, chattel paper (including electronic chattel paper)
(all as defined in the UCC); (c) unpaid seller's or lessor's rights (including
rescission, replevin, reclamation, repossession and stoppage in transit)
relating to the foregoing or arising therefrom; (d) rights to any goods
represented by any of the foregoing, including rights to returned, reclaimed or
repossessed goods; (e) reserves and credit balances arising in connection with
or pursuant hereto; (f) guarantees, supporting obligations, payment intangibles
and letter of credit rights (all as defined in the UCC); (g) insurance policies
or rights relating to any of the foregoing; (h) general intangibles pertaining
to any and all of the foregoing (including all rights to payment, including
those arising in connection with bank and non-bank credit cards), and including
books and records and any electronic media and software thereto; (i) notes,
deposits or property of account debtors securing the obligations of any such
account debtors to such Company; and (j) cash and non-cash proceeds (as defined
in the UCC) of any and all of the foregoing.
ADMINISTRATIVE MANAGEMENT FEE shall mean the fee set forth in the Fee Agreement
which shall be paid to Agent for its own account in accordance with Paragraph
8.3 of Section 8 of this Financing Agreement to offset the expenses and costs
(excluding Out-of-Pocket Expenses and auditor fees) of Agent in connection with
administration, record keeping, periodic examinations, analyzing and evaluating
the Collateral.
AFFILIATE shall mean a person, firm, entity or corporation (other than a
subsidiary of Parent): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with, a
person, firm, entity or corporation; (ii) which beneficially owns or holds ten
percent (10%) or more of any class of the capital stock of a person, firm,
entity or corporation; or (iii) ten percent (10%) or more of the capital stock
(or in the case of a person, firm or entity which is not a corporation, ten
percent (10%) or more of the equity interest) of which is beneficially owned or
held by a person, firm, entity or corporation or a subsidiary of a person, firm,
entity or corporation.
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ANNIVERSARY DATE shall mean December 31, 2007 and December 31 of each year
thereafter.
APPLICABLE PERCENTAGE shall mean, for any day, the rate per annum set forth
below opposite the applicable Level then in effect:
Applicable Percentage for Prime Rate Loans
Level Revolving Loans Term Loan
----- --------------- ---------
Level I 0.00% 1.00%
Level II 0.25% 1.25%
Level III 0.50% 1.50%
Level IV 0.75% 1.75%
Applicable Percentage for LIBOR Loans
Level Revolving Loans Term Loan
----- --------------- ---------
Level I 2.50% 3.50%
Level II 3.00% 4.00%
Level III 3.50% 4.50%
Level IV 4.00% 5.00%
The Applicable Percentage shall, in each case, be determined after receipt by
the Agent of the financial statements as of the end of each Fiscal Quarter of
the Companies and for that portion of the Fiscal Year of the Companies then
ended which are required to be delivered to the Agent in accordance with the
provisions of Paragraph 7.8 of Section 7 of this Agreement, commencing with the
second Fiscal Quarter of Fiscal Year ending December 31, 2004, and shall be
adjusted based on the Level as of the end of such Fiscal Quarter effective on
the first (1st) day of the month following the receipt by the Agent of such
financial statements (each, an "Adjustment Date"). Such Applicable Percentage
shall be effective from such Adjustment Date until the next such Adjustment
Date. Level III of the Applicable Percentage shall be effective as of the
Closing Date until the first such Adjustment Date.
ASSIGNMENT AND TRANSFER AGREEMENT shall mean the Assignment and Transfer
Agreement in the form of Exhibit D hereto.
AVAILABILITY shall mean at any time the amount by which: (a) the Borrowing Base
exceeds (b) the outstanding aggregate amount of all Obligations, including
without limitation, all Obligations with respect to Revolving Loans and Letters
of Credit, but excluding the Term Loan.
AVAILABILITY RESERVE shall mean the sum of: (a) the Minimum Availability
Reserve; (b) (i) three (3) months rental payments or similar charges for any of
any Company's leased premises or other Collateral locations for which such
Company has not delivered to the Agent a landlord's waiver in
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form and substance reasonably satisfactory to the Agent, plus (ii) three (3)
months estimated payments plus any other fees or charges owing by such Company
to any applicable warehousemen or third party processor (as determined by the
Agent in its reasonable business judgment), provided that any of the foregoing
amounts shall be adjusted from time to time hereafter upon (x) delivery to the
Agent of any such acceptable waiver, (y) the opening or closing of a Collateral
location and/or (z) any change in the amount of rental, storage or processor
payments or similar charges; (c) that portion of the Obligations constituting
any Borrower's obligation to reimburse the Lenders for all amounts paid by any
Lender under or with respect to any Letter of Credit or Letter of Credit
Guaranty; (d) any reserve which the Agent, based on such credit, collateral and
other considerations customarily taken into account by the Agent in making such
determination, may require from time to time pursuant to this Financing
Agreement, including without limitation, (x) negative forecasts and/or trends in
such Company's business, industry, prospects, profits, operations or financial
condition or (y) other issues, circumstances or facts that could otherwise
negatively impact such Company, its business, prospects, profits, operations,
industry, financial condition or assets; and (e) the Foreign Account Reserve.
BENEFIT PLAN shall mean a defined benefit plan as defined in Section 3(35) of
ERISA (other than a "multiemployer plan", as such term is defined in ERISA) in
respect of which a Company or any ERISA Affiliate is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
BOND LETTER OF CREDIT shall mean the irrevocable direct pay letter of credit,
dated the Closing Date, as amended from time to time, in the original undrawn
face amount of $9,588,543.37 naming Citibank, N.A., as beneficiary, which has
been issued for the account of TIMCO pursuant to the Bond Letter of Credit
Application and Paragraph 5.1 of Section 5 of this Financing Agreement, and
which entitles the beneficiary thereunder to make a drawing thereunder for the
unpaid principal, premium or interest due on the Bonds or upon the occurrence of
an event of default under the Bonds and a drawing under letter of credit number
NY-20517-30024234 issued by Citibank, N.A. to the Bond Trustee, as beneficiary.
BOND LETTER OF CREDIT APPLICATION shall mean the Application and Reimbursement
Agreement For Standby Letter of Credit, dated on or about the Closing Date,
executed by TIMCO, pursuant to which TIMCO has applied for and requested the
Agent on behalf of the Lenders to issue, or cause to be issued, the Bond Letter
of Credit.
BOND ORDER shall mean that certain Bond Order, adopted October 31, 1989,
Authorizing and Securing Piedmont Triad Airport Authority Special Facility
Revenue Bonds (Triad International Maintenance Corporation Project).
BOND GUARANTY shall mean that certain Guaranty Agreement, dated November 1,
1989, between the Piedmont Triad Airport Authority and Primark Storage Leasing
Corporation, as guarantor, pursuant to which the guarantor has unconditionally
guaranteed the obligations of TIMCO pursuant to the Lease (as defined in the
Bond Order) of the Project (as defined in the Bond Order).
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BOND TRUSTEE shall mean Wachovia Bank, National Association (formerly known as
First Union National Bank).
BONDS shall mean those certain Piedmont Triad Airport Authority Special Facility
Revenue Bonds (Triad International Maintenance Corporation Project), Series
1989, dated November 1, 1989, in the original aggregate principal amount of
$13,800,000.
BORROWER AGREEMENT shall mean the Borrower Agreement, dated on or about the
Closing Date, among each Borrower and Ex-Im Bank, together with the consent of
each other Company, as a guarantor of the Obligations.
BORROWING BASE shall mean the sum of the Domestic Borrowing Base and the Foreign
Borrowing Base.
BUSINESS DAY shall mean any day on which the Agent and JPMorgan Chase Bank are
open for business.
CAPITAL EXPENDITURES shall mean, for any period, the aggregate expenditures of
the Companies during such period on account of property, plant, equipment or
similar fixed assets that, in conformity with GAAP, are required to be reflected
as property, plant, equipment or similar fixed assets in the balance sheet of
the Companies.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
which, in conformity with GAAP, is accounted for as a capital lease in the
balance sheet of the Companies.
CAPITALIZED LEASE OBLIGATIONS shall mean all Indebtedness represented by
obligations under a Capital Lease.
CASH EQUIVALENTS shall mean (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any commercial bank organized under the laws of the United
States of America or any state thereof having combined capital and surplus of
not less than $500,000,000; (c) commercial paper of an issuer rated at least A-2
by Standard & Poor's Ratings Services ("S&P") or P-2 by Xxxxx'x Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing within
six months from the date of acquisition; (d) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than thirty (30) days with respect to securities
issued or fully guaranteed or insured by the United States government; (e)
securities with maturities of one (1) year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision,
5
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the requirements of clause (b) of this definition;
and (g) shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of this
definition.
CHANGE OF CONTROL shall mean at any time: (a) during any period of twelve (12)
months, individuals who at the beginning of such period constituted the board of
directors of the Parent (together with any new directors whose election or
appointment by such board of directors, or whose nomination for election by
shareholders of the Parent, as the case may be, was approved by a vote of a
majority of the directors still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors then in office; (b) the acquisition by any group of Persons
(within the meaning of the Securities Exchange Act of 1934, as amended) or any
Person, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission), directly or indirectly, of more of the
issued and outstanding Voting Stock of the Parent than that owned and Controlled
by the Xxxxxx Group (on a fully-diluted basis); (c) as a result of the sale of
other disposition of Voting Stock of the Parent, the Xxxxxx Group shall cease to
have beneficial ownership and Control of more than twenty percent (20%) of the
issued and outstanding Voting Stock of the Parent(on a fully-diluted basis); or
(d) the Parent fails at any time to own, directly or indirectly, 100% of the
capital stock or other equity interests of each other Company free and clear of
all Liens (other than the Liens in favor of the Agent and Hilco).
CHASE BANK RATE shall mean the rate of interest per annum announced by JPMorgan
Chase Bank from time to time as its prime rate in effect at its principal office
in New York City. (The prime rate is not intended to be the lowest rate of
interest charged by JPMorgan Chase Bank to its borrowers).
CLOSING DATE shall mean the date on or after the date hereof on which (i) all
conditions precedent set forth in Section 2 of this Agreement have either been
met to the Agent's and the Required Lenders' satisfaction or waived by them and
(ii) the Agent and the Lenders are obligated hereunder.
COLLATERAL shall mean all present and future assets of each Company, including,
without limitation, all Accounts, Equipment, Inventory, Documents of Title,
General Intangibles, Real Estate, Pledged Stock of each Company's Subsidiaries
and Other Collateral.
COMMITMENT LETTER shall mean the commitment letter, dated February 11, 2004,
issued by CIT to, and accepted by, the Parent, for itself and each of its
subsidiaries.
COMMITMENT PERCENTAGE shall mean with respect to any Lender the percentage set
forth below such Lender's name on the signature page of this Financing Agreement
as the same may be adjusted from time to time in accordance with the provisions
of this Financing Agreement or any Assignment and Transfer Agreement to which
such Lender is a party.
CONSOLIDATED BALANCE SHEET shall mean a consolidated or compiled, as applicable,
balance sheet for the Parent, each of the other Companies and the consolidated
subsidiaries of each, eliminating all intercompany transactions and prepared in
accordance with GAAP.
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CONSOLIDATING BALANCE SHEET shall mean a Consolidated Balance Sheet plus
individual balance sheets for the Parent, each of the other Companies and the
subsidiaries of each, showing all eliminations of intercompany transactions, all
prepared in accordance with GAAP.
CONTROL shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
COPYRIGHT SECURITY AGREEMENT shall mean that certain Copyright Security
Agreement, dated the Closing Date, pursuant to which the Parent shall grant to
the Agent on behalf of the Lenders liens and security interests in all its
Copyrights.
COPYRIGHTS shall mean all present and hereafter acquired copyrights, copyright
registrations, recordings, applications, designs, styles, licenses, marks,
prints and labels bearing any of the foregoing, goodwill, any and all general
intangibles, intellectual property and rights pertaining thereto, and all cash
and non-cash proceeds thereof.
DEFAULT shall mean any event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum on any
Obligations hereunder, equal to: (a) two percent (2%) and (b) the Applicable
Percentage then in effect over the Chase Bank Rate (as set forth in Paragraph
8.1 of Section 8 of this Financing Agreement) plus the Chase Bank Rate, or the
Applicable Percentage then in effect over the LIBOR Rate (as set forth in
Paragraph 8.12 of Section 8 of this Financing Agreement) plus the LIBOR Rate,
which the Agent on behalf of the Lenders shall be entitled to charge the
Companies on all Obligations due the Agent on behalf of the Lenders by any and
each Company, as further set forth in Paragraph 10.2 of Section 10 of this
Financing Agreement.
DEPOSITORY ACCOUNTS shall mean the collection accounts, which are subject to the
Agent's instructions, as specified in Paragraph 3.4 of Section 3 of this
Financing Agreement.
DOCUMENTATION FEE shall mean subsequent to the Closing Date, the Agent's
standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing Agreement,
the Collateral and/or the Obligations, which fees shall be based on the Agent's
then current fees in effect from time to time and the complexity of and issues
addressed in such modifications, waivers, releases, amendments and additional
collateral.
DOCUMENTS OF TITLE shall mean all present and future documents (as defined in
the UCC), and any and all warehouse receipts, bills of lading, shipping
documents, chattel paper, instruments and similar documents, all whether
negotiable or not and all goods and Inventory relating thereto and all cash and
non-cash proceeds of the foregoing.
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DOMESTIC BORROWING BASE shall mean, on any date of determination, the sum of (a)
eighty-five percent (85%) of the Borrowers' aggregate outstanding Eligible
Domestic Accounts Receivable at such date, plus (b) the least of (i) $11,000,000
or (ii) seventy percent (70%) of the Borrowers' aggregate outstanding Eligible
Unbilled Accounts Receivable at such date or (iii) thirty five percent (35%) of
the Borrowers' aggregate outstanding Eligible Domestic Accounts Receivable at
such date plus (c) the least of (i) forty-five percent (45%) of the aggregate
value of the Borrowers' Eligible Inventory, valued at the lower of cost or
market, on a first in, first out basis, at such date or (ii) eighty-five percent
(85%) of the Net Orderly Liquidation Value of Eligible Inventory at such date or
(iii) the Inventory Loan Cap, less (d) any applicable Availability Reserves
which shall not include any Availability Reserves which have been subtracted
from the Foreign Borrowing Base.
EARLY TERMINATION DATE shall mean the date on which the Parent or a Borrower
terminates this Financing Agreement or the Revolving Line of Credit which date
is prior to an Anniversary Date.
EARLY TERMINATION FEE shall mean the fee the Agent on behalf of the Lenders is
entitled to charge the Borrowers in the event the Borrowers terminate the
Revolving Line of Credit or this Financing Agreement on a date prior to an
Anniversary Date, calculated in accordance with the provisions of the Fee
Agreement.
EBITDA shall mean, in any period, all earnings of the Companies for said period
before interest and all tax, depreciation and amortization expenses and all
other non-cash charges of the Companies for said period, determined in
accordance with GAAP on a consistent basis with the latest audited financial
statements of the Companies, but excluding the effect of extraordinary or
non-reoccurring gains or losses for such period.
ELIGIBLE DOMESTIC ACCOUNTS RECEIVABLE shall mean the gross amount of each
Borrower's Trade Accounts Receivable that are subject to a valid, exclusive,
first priority and fully perfected security interest in favor of the Agent on
behalf of the Lenders, which conform to the warranties contained herein and
which, at all times, continue to be acceptable to the Agent based on such
credit, collateral and other considerations customarily taken into account by
the Agent in making such determinations, less, without duplication, the sum of:
(a) any returns, discounts, claims, credits and allowances of any nature
(whether issued, owing, granted, claimed or outstanding), and (b) reserves for
any such Trade Accounts Receivable that arise from or are subject to or include:
(i) sales to the United States of America, any state or other governmental
entity or to any agency, department or division thereof, except for any such
sales as to which the Borrower to which such Trade Account Receivable is owed
has complied with the Assignment of Claims Act of 1940 or any other applicable
statute, rules or regulation, to the Agent's satisfaction in the exercise of its
reasonable business judgment; (ii) foreign sales, other than sales which
otherwise comply with all of the other criteria for eligibility hereunder and
are secured by letters of credit (in form and substance satisfactory to the
Agent) issued or confirmed by, and payable at, banks having a place of business
in the United States of America; (iii) Accounts that remain unpaid more than
ninety (90) days from invoice date; (iv) contra accounts; (v) sales to any
subsidiary, or to any company which is an Affiliate of any Company; (vi) xxxx
and hold (deferred shipment) or consignment sales; (vii) sales to any customer
which is: (A) insolvent, (B) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law, unless: (1) the account debtor is a debtor-in-possession;
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(2) such account debtor has reached consensual agreement for
debtor-in-possession financing from sources and under terms acceptable to Agent,
in its discretion; (3) Agent has approved the inclusion of all or any portion of
the Trade Accounts Receivable owing by such account debtor as Eligible Domestic
Accounts Receivable; and (4) the payment of all post-petition Trade Account
Receivables owing by such account debtor are entitled to, and have received,
priority under Section 507(a)(1) of the Bankruptcy Code as administrative
expenses under Section 503(b)(1)(A) of the Bankruptcy Code, and, if requested by
Agent, Agent shall have received an opinion of counsel, in form and substance
satisfactory to Agent, of such priority of payment under the Bankruptcy Code,
(C) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts, or (D) financially unacceptable to the
Agent or has a credit rating unacceptable to the Agent; provided as to United
Air Lines, Inc., a debtor-in-possession as of the Closing Date, Trade Account
Receivables owing by United Air Lines, Inc. to a Borrower shall on the Closing
Date be included as Eligible Domestic Accounts Receivable to the extent such
Trade Account Receivables comply with all of the other criteria for eligibility
hereunder, however the inclusion such Trade Account Receivables shall not
establish a custom and any such inclusion after the Closing Date shall be in
Agent's sole discretion; (viii) all sales to any customer if fifty percent (50%)
or more of the aggregate dollar amount of all outstanding invoices to such
customer are unpaid more than ninety (90) days from invoice date; (ix) fifty
percent (50%) of Input Xxxxxxxx; (x) receivables arising from progress billing
(other than Eligible Unbilled Accounts Receivable); (xi) an amount representing,
historically, returns, discounts, claims, credits, allowances and applicable
terms; (xii) sales not payable in United States currency; and (xiii) any other
reasons deemed necessary by the Agent in its reasonable business judgment,
including without limitation those which are customary either in the commercial
finance industry or in the lending practices of the Agent.
ELIGIBLE FOREIGN ACCOUNTS RECEIVABLES shall mean, at the date of determination,
all Foreign Accounts of each Borrower which would be included in the
determination of the Foreign Borrowing Base in accordance with the Ex-Im Bank
Documents and would otherwise be Eligible Domestic Accounts Receivable but for
clause (b)(ii) of the definition thereof.
ELIGIBLE INVENTORY shall mean the gross amount of each Borrower's Inventory that
is subject to a valid, exclusive, first priority and fully perfected security
interest in favor of the Agent on behalf of the Lenders and which conforms to
the warranties contained herein and which, at all times, continues to be
acceptable to the Agent based on such credit, collateral and other
considerations customarily taken into account by the Agent in making such
determinations, less, without duplication, any (a) work-in-process, (b) supplies
(other than raw materials), (c) Inventory not present in the United States of
America, (d) Inventory returned or rejected by a Borrower's customers (other
than goods that are undamaged and resalable in the normal course of business)
and goods to be returned to a Borrower's suppliers, (e) Inventory in transit to
third parties (other than the Borrowers' agents or warehouses), or in the
possession of a warehouseman, bailee, third party processor, or other third
party, unless such warehouseman, bailee or third party has executed a notice of
security interest agreement or a landlord's agreement(in form and substance
satisfactory to the Agent) and the Agent shall have a first priority perfected
security interest in such Inventory, and (f) less any reserves required by the
Agent based on such credit, collateral and other considerations customarily
taken into account by the Agent in making such determinations, including without
limitation for special order goods, discontinued, slow-moving and obsolete
Inventory, market value declines, xxxx and hold
9
(deferred shipment), consignment sales, shrinkage and any applicable customs,
freight, duties and Taxes.
ELIGIBLE UNBILLED ACCOUNTS RECEIVABLE shall mean a Trade Accounts Receivable
which otherwise would be an Eligible Domestic Account Receivable if such Trade
Account Receivable were not created from the sale or leasing of goods or the
rendering of services under a contract or agreement pursuant to which the
account debtor's obligation to pay such invoice is conditioned upon a Borrower's
completion of any further performance required by the contract or agreement;
provided no Trade Account Receivable shall be an Eligible Unbilled Account
Receivable if (a) the sale of goods or the rendering of services relating to
completion required under such contract or agreement has ceased (i) if the
account debtor is (A) insolvent, (B) the debtor in any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under any
federal or state law, (C) negotiating, or has called a meeting of its creditors
for purposes of negotiating, a compromise of its debts, or (D) financially
unacceptable to such Borrower or the Agent or has a credit rating unacceptable
to the Agent, and (ii) for a period of fourteen (14) or more consecutive days
unless the Borrower to which such Trade Account Receivable is owed has provided
written notice of such cessation to the Agent, and the Agent, in its sole
discretion and subject to such limitations as the Agent may determine in its
discretion, has agreed in writing that such Trade Account Receivable shall
continue to be an Eligible Domestic Account Receivable, (b) a Trade Account
Receivable has not been created within thirty (30) Business Days of the
completion required, or (c) more than sixty (60) days have passed since the
first sale of goods or rendering of services creating such Eligible Unbilled
Account Receivable.
ENVIRONMENTAL INDEMNITY AGREEMENTS shall mean those certain Environmental
Indemnity Agreements, dated the Closing Date, executed by each Company which is
a lessee or lessor of Real Estate, each in form and substance reasonably
satisfactory to the Agent, pursuant to which each Company which is a party
thereto shall indemnify the Agent and each Lender as to the claims, costs and
expenses more particularly described therein.
ENVIRONMENTAL LAWS shall mean applicable federal, state or local laws, rules or
regulations, and any applicable judicial interpretations thereof, including any
judicial or administrative order, judgment, permit, approval decision or
determination, in each case pertaining to conservation or protection of the
environment, in effect at the time in question, including the Clean Air Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Federal Water Pollution Control Act, the Occupational Safety and Health Act, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Materials Transportation Act and analogous state and local
laws, each as amended from time to time thereby imposing either more or less
stringent requirements as relates to activity occurring after the date hereof.
EQUIPMENT shall mean all present and hereafter acquired equipment (as defined in
the UCC) including, without limitation, all machinery, equipment, furnishings
and fixtures, and all additions, substitutions and replacements thereof,
wherever located, together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort.
10
EQUIPMENT APPRAISAL shall mean an appraisal of each Company's Equipment
conducted at the Companies' expense by an appraiser selected by the Companies
and acceptable to the Agent in its sole discretion, which shall be received on
or before the Closing Date and thereafter conducted with such frequency as the
Agent may require.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.
ERISA AFFILIATE shall mean any (i) corporation which is or was at any time a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Internal Revenue Code) as any Companies; (ii) partnership
or other trade or business (whether or not incorporated) at any time under
common control (within the meaning of Section 414(c) of the Internal Revenue
Code) with any Company; and (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as any
Company, any corporation described in clause (i) above, or any partnership or
trade or business described in clause (ii) above.
EUROCURRENCY RESERVE REQUIREMENTS for any day, as applied to a LIBOR Loan, shall
mean the aggregate (without duplication) of the maximum rates of reserve
requirements (expressed as a decimal fraction) in effect with respect to any
present or future Lender or participant on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves) under
Regulation D or any other applicable 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, dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by such
Lenders or participants (such rate to be adjusted to the nearest one sixteenth
of one percent (1/16 of 1%) or, if there is not a nearest one sixteenth of one
percent (1/16 of 1%), to the next higher one sixteenth of one percent (1/16 of
1%)).
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10 of this
Financing Agreement.
EX-IM BANK shall mean the Export-Import Bank of the United States.
EX-IM BANK DOCUMENTS shall mean the Borrower Agreement, the Ex-Im Guarantee and
the Loan Authorization Agreement, dated on or about the Closing Date, between
the Agent and Ex-Im Bank.
EX-IM GUARANTEE shall mean the Master Guarantee Agreement, dated on or about the
Closing Date, executed by Ex-Im Bank in favor of the Agent and in form and
substance satisfactory to the Agent, together with all amendments, modifications
and supplements thereto, pursuant to which, among other things, the Ex-Im Bank
has guaranteed the payment of ninety percent (90%) of the Foreign Revolving
Loans.
EXISTING AGENT shall mean the Citicorp USA, Inc. as agent for the Existing
Lenders under the Existing Credit Facility.
11
EXISTING CREDIT FACILITY shall mean the Fifth Amended and Restated Credit
Agreement, dated as of July 12, 2002, as amended, among the Borrowers, the
Parent, the Guarantors, the Existing Agent, the Existing Lenders and Citibank,
N.A., as the Issuing Bank.
EXISTING LENDERS shall mean the lenders party to the Existing Credit Facility.
EXPORT TRANSACTION shall mean any transaction in which a Borrower will sell
goods or services to an account debtor located in a foreign country.
FCC LEVEL shall mean as at the determination thereof at the end of each Fiscal
Quarter of the Companies, the level set forth below corresponding to the Fixed
Charge Coverage Ratio as of the end of such Fiscal Quarter:
Level Fixed Charge Coverage Ratio
----- ---------------------------
Level I less than 2.0 to 1.0
Level II equal to or greater than 2.0 to 1.0
but less than 2.25 to 1.0
Level III equal to or greater than 2.25 to 1.0
but less than 2.5 to 1.0
Level IV equal to or greater than 2.5 to 1.0
but less than 2.75 to 1.0
12
Level Fixed Charge Coverage Ratio
----- ---------------------------
Level V equal to or greater than 2.75 to 1.0
but less than 3.0 to 1.0
Level VI equal to or greater than 3.0 to 1.0
The Minimum Availability Reserve shall, in each case, be determined after
receipt by the Agent of the financial statements as of the end of each Fiscal
Quarter of the Companies and for that portion of the Fiscal Year of the
Companies then ended which are required to be delivered to the Agent in
accordance with the provisions of Paragraph 7.8 of Section 7 of this Financing
Agreement, commencing with the first Fiscal Quarter of Fiscal Year ending
December 31, 2004, and shall be adjusted based on the Level as of the end of
such Fiscal Quarter effective on the first (1st) day of the month following the
receipt by the Agent of such financial statements (each, a "Reserve Adjustment
Date"); provided, however, if (a) a Default or an Event of Default has occurred,
or (b) accounts payable to trade creditors and current operating expenses are
aged more than ninety (90) days from billing date or more than thirty (30) days
from the due date, then, Level I of the FCC Level shall be effective. Such
Minimum Availability Reserve shall be effective from such Reserve Adjustment
Date until the next such Reserve Adjustment Date. Level I of the FCC Level shall
be effective as of the Closing Date until the first such Reserve Adjustment
Date.
FEE AGREEMENT shall mean the letter agreement, dated of even date herewith,
between the Agent for itself and on behalf of the Lenders and the Parent, for
itself and each of its subsidiaries, as such letter agreement may be amended,
modified, supplemented or restated from time to time in accordance with its
terms.
FISCAL QUARTER shall mean, with respect to the Companies, each three (3) month
period ending on March 31, June 30, September 30 and December 31 of each Fiscal
Year.
FISCAL YEAR shall mean each twelve (12) month period commencing on January 1 of
each year and ending on the following December 31.
FIXED CHARGE COVERAGE RATIO shall mean with respect to any period of
determination, the ratio of (a) EBITDA minus Capital Expenditures of the
Companies incurred during such period which are not financed by Indebtedness
secured by Purchase Money Liens for such period to (b) the sum of (i) payments
of principal on all Indebtedness required to be paid by the Companies during
such period (excluding non-cash interest paid on Subordinated Debt) plus (ii)
payments of interest on all Indebtedness required to be paid by the Companies
during such period plus (iii) dividends or distributions paid during such period
plus (iv) federal, state and local income taxes paid during such period, in each
case as determined in accordance with GAAP.
FOREIGN ACCOUNT RESERVE shall mean a reserve established upon the Agent's
receipt of a Foreign Line of Credit Reduction Notice and for so long as such
Foreign Line of Credit Reduction Notice is effective and has not been withdrawn
or terminated by Hilco equal to, on any date of determination, the sum of (a)
the Foreign Revolving Loans in excess of $1,000,000 on such date, less (b)
proceeds
13
of Foreign Accounts received after the Agent's receipt of the Foreign Line of
Credit Reduction Notice, plus (c) any Foreign Revolving Loans made after such
date.
FOREIGN ACCOUNTS shall mean those Accounts of each Borrower that are an
obligation of an account debtor of such Borrower located in a foreign country
and which arise from an Export Transaction.
FOREIGN BORROWING BASE shall mean, on any date of determination, the sum of (a)
ninety percent (90%) of the Borrowers' aggregate outstanding Eligible Foreign
Accounts Receivable, less (b) the Foreign Account Reserve, if any, less (c) any
applicable Availability Reserves which shall not include any Availability
Reserves which have been subtracted from the Domestic Borrowing Base.
FOREIGN LINE OF CREDIT AMOUNT shall mean $2,000,000; provided, however, if (a)
an "Event of Default" (as such term is defined in the Hilco Documents) shall
have occurred as a result of Companies' violation of one or more of the
provisions of Paragraph 7.10 of Section 7 of the Hilco Financing Agreement, (b)
such Event of Default shall not have been waived in writing by Hilco or cured by
Companies, and (c) the Agent and TIMCO shall each have received written notice
from Hilco that such an event of default has occurred and is continuing and
requesting that the Foreign Line of Credit Amount be reduced (a "Foreign Line of
Credit Reduction Notice"), then the Foreign Line of Credit Amount shall mean
$1,000,000.
FOREIGN REVOLVING LOANS shall mean Revolving Loans made in respect of the
Foreign Borrowing Base. For the purposes of determining on any date of
determination whether Revolving Loans then outstanding are Foreign Revolving
Loans, that portion of the Revolving Loans equal to the Foreign Borrowing Base
on such date shall be deemed Foreign Revolving Loans and Revolving Loans made in
respect of the Foreign Borrowing Base shall be deemed to be the first Revolving
Loans made and the last Revolving Loans repaid.
GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such
accounting principles are to apply, provided that in the event the Companies
modify their accounting principles and procedures as applied as of the Closing
Date, the Companies shall provide such statements of reconciliation as shall be
in form and substance reasonably acceptable to the Agent.
GENERAL INTANGIBLES shall mean all present and hereafter acquired general
intangibles (as defined in the UCC), including, without limitation, all present
and future right, title and interest in and to: (a) all Trademarks, tradenames,
corporate names, business names, logos and any other designs or sources of
business identities, (b) Patents, together with any improvements on said
Patents, utility models, industrial models, and designs, (c) Copyrights, (d)
trade secrets, (e) licenses, permits and franchises, (f) all applications with
respect to the foregoing, (g) all right, title and interest in and to any and
all extensions and renewals, (h) goodwill with respect to any of the foregoing,
(i) any other forms of similar intellectual property, (j) all customer lists,
distribution agreements, supply agreements, blueprints, indemnification rights
and tax refunds, together with all monies and claims for monies now or hereafter
due and payable in connection with any of the foregoing or otherwise, and all
cash and non-cash proceeds thereof, including, without limitation, the proceeds
or royalties of any
14
licensing agreements between any Company and any licensee of any of such
Company's General Intangibles.
GUARANTORS shall mean the Guarantors listed on page 1 of this Financing
Agreement and any other person or entity which may hereafter guarantee all or a
portion of the Obligations.
XXXXXX GROUP shall mean (a) Xxxx Xxxxxx, (b) during the lifetime of Xxxx Xxxxxx,
(i) any entity (including any trust) formed for estate planning purposes which
is under the Control of Xxxx Xxxxxx, (ii) any member of Xxxx Xxxxxx'x immediate
family (so long as Xxxx Xxxxxx shall be solely responsible for voting the Voting
Shares of such family member pursuant to one or more written agreements
reasonably acceptable to the Agent), and (iii) at any time after the death of
Xxxx Xxxxxx, the spouse, children or lineal descendants of Xxxx Xxxxxx of any
trust or other entity established for the benefit thereof or the Scottish Rights
Hospital.
HAZARDOUS MATERIAL shall mean (a) any petroleum or petroleum products, flammable
explosives, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated biphenyls
(PCBs); (b) any chemicals or other materials or substances which are now or
hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law; and (c) any other
chemical or other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated by any governmental or regulatory authority
under any Environmental Law.
HILCO shall mean Hilco Capital LP, a Delaware limited partnership.
HILCO DOCUMENTS shall mean the Financing Agreement dated on or about the Closing
Date among the Companies and Hilco ("Hilco Financing Agreement"), and all other
documents, instruments and agreements executed or delivered in connection
therewith.
HILCO INTERCREDITOR AGREEMENT shall mean the Intercreditor Agreement between the
Agent and Hilco described in Section 2(k) below, substantially in the form of
Exhibit E attached hereto.
HILCO LOAN shall mean the loan in the original principal amount of $8,000,000
made by Hilco to the Borrowers pursuant to the Hilco Documents.
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
otherwise, which are any of the following: (a) obligations in respect of
borrowed money or for the deferred purchase price of property, services or
assets, other than Inventory, or (b) lease obligations which, in accordance with
GAAP, have been, or which should be capitalized.
INDENTURES shall mean (a) the Indenture dated as of February 17, 1998 under
which the 8-1/8% Senior Subordinated Notes Due 2008 were issued by the Parent,
(b) the Indenture dated as of September 20, 2002 under which the 8% Junior
Subordinated Convertible PIK Notes due 2007 were
15
issued by the Parent and (c) the Indenture dated as of February 28, 2002 under
which the 8% Senior Subordinated Convertible PIK Notes due 2006 were issued by
the Parent.
INPUT BILLING shall mean an invoice issued by a Borrower upon delivery of an
aircraft to such Borrower pursuant to, and in accordance with, the terms and
provisions of a written maintenance contract between such Borrower and an
account debtor for the providing of maintenance services and sales of Inventory.
INSURANCE PROCEEDS shall mean proceeds or payments from an insurance carrier
with respect to any loss, casualty or damage to Collateral.
INTEREST PERIOD shall mean: (a) with respect to any initial request by the
Borrowers for a LIBOR Loan, a one month, two month or three month period
commencing on the borrowing or conversion date with respect to a LIBOR Loan and
ending one, two or three months thereafter, as applicable; and (b) thereafter
with respect to any continuation of, or conversion to, a LIBOR Loan, at the
option of the Borrowers, any one month, two month or three month period
commencing on the last day of the immediately preceding Interest Period
applicable to such LIBOR Loan and ending one, two or three months thereafter, as
applicable; provided that, the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period would otherwise end on a day which
is not a Working Day, that Interest Period shall be extended to the
next succeeding Working Day, unless the result of such extension would
extend such payment into another calendar month in which event such
Interest Period shall end on the immediately preceding Working Day;
(ii) any Interest Period that begins on the last Working Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month, at the end of such Interest
Period) shall end on the last Working Day of a calendar month; and
(iii) for purposes of determining the availability of Interest
Periods, such Interest Periods shall be deemed available if (x) XX
Xxxxxx Xxxxx Bank quotes an applicable rate or the Agent determines
LIBOR, as provided in the definition of LIBOR, (y) the LIBOR determined
by XX Xxxxxx Chase Bank or the Agent will adequately and fairly reflect
the cost of maintaining or funding its loans bearing interest at LIBOR,
for such Interest Period, and (z) such Interest Period will end on or
before the earlier of an Anniversary Date or the last day of the then
current term of this Financing Agreement. If a requested Interest
Period shall be unavailable in accordance with the foregoing sentence,
the Borrowers shall continue to pay interest on the Obligations at the
applicable per annum rate based upon the Chase Bank Rate.
INTERNAL REVENUE CODE means the Internal Revenue Code of 1986, as amended from
time to time and the rules and regulations promulgated thereunder from time to
time.
INVENTORY shall mean all of each Company's present and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used
16
or usable in manufacturing, processing, packaging or shipping same in all stages
of production - from raw materials through work-in-process to finished goods -
and all proceeds thereof of whatever sort.
INVENTORY APPRAISAL shall mean an appraisal of each Borrower's Inventory
conducted at the Borrowers' expense by an appraiser selected by the Borrowers
and acceptable to the Agent in its sole discretion, which shall be received on
or before the Closing Date and thereafter conducted with such frequency as the
Agent may require.
INVENTORY LOAN CAP shall mean the amount of $15,000,000.
INVESTMENT PROPERTY shall mean all now owned and hereafter acquired investment
property (as defined in the UCC) and all proceeds thereof.
ISSUER shall mean Piedmont Triad Airport Authority.
ISSUING BANK shall mean the bank issuing Letters of Credit for any Borrower.
LETTERS OF CREDIT shall mean all letters of credit issued in accordance with the
assistance of the Agent on behalf of the Lenders by the Issuing Bank for or on
behalf of a Borrower, including, without limitation, the Bond Letter of Credit,
the reimbursement obligations of such Borrower with respect to which have been
guaranteed by the Agent on behalf of the Lenders pursuant to a Letter of Credit
Guaranty.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by the Agent on
behalf of the Lenders to the Issuing Bank of a Borrower's reimbursement
obligations under the Issuing Bank's reimbursement agreement, application for
Letter of Credit or other like document.
LETTER OF CREDIT GUARANTY FEE shall mean the fee the Agent on behalf of the
Lenders may charge the Borrowers pursuant to the Fee Agreement: (a) issuing a
Letter of Credit Guaranty, and/or (b) otherwise aiding any Borrower in obtaining
Letters of Credit, all pursuant to Section 5 hereof.
LETTER OF CREDIT SUB-LINE shall mean $10,000,000 in the aggregate for the
Borrowers.
LEVEL shall mean as at the determination thereof at the end of each Fiscal
Quarter of the Companies, the level set forth below corresponding to the
Leverage Ratio as of the end of such Fiscal Quarter:
17
Level Leverage Ratio
----- --------------
Level I less than or equal to 4.0 to 1.0
Level II greater than 4.0 to 1.0 but less than
or equal to 4.5 to 1.0
Level III greater than 4.5 to 1.0 but less than
or equal to 5.5 to 1.0
Level IV greater than 5.5 to 1.0
LEVERAGE RATIO shall mean at any date the ratio of (a) Total Liabilities of the
Companies as of such date to (b) Tangible Net Worth of the Companies as of such
date.
LIBOR shall mean, at any time of determination, and subject to availability, for
each applicable Interest Period, a variable rate of interest equal to: (a) at
the Agent's election (i) the rate set forth in the New York edition of The Wall
Street Journal under the "Money Rates" section for "London Interbank Offered
Rates" for deposits in U.S. dollars, for a period of time comparable to such
Interest Period, (ii) the applicable LIBOR quoted to the Agent by JPMorgan Chase
Bank (or any successor thereof), or (iii) the rate of interest determined by the
Agent at which deposits in U.S. dollars are offered for the relevant Interest
Period based on information presented on Telerate Systems at Page 3750 as of
11:00 A.M. (London time) on the day which is two (2) Business Days prior to the
first day of such Interest Period, provided that, if at least two such offered
rates appear on the Telerate Page (or any successor thereof) 3750 in respect of
such Interest Period, the arithmetic mean of all such rates (as determined by
the Agent) will be the rate used; divided by (b) a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of Eurocurrency Reserve Requirements in effect on the day which is two
(2) Business Days prior to the beginning of such Interest Period.
LIBOR LOAN shall mean any loans made pursuant to this Financing Agreement which
are made or maintained at a rate of interest based upon LIBOR, provided that (i)
no Default or Event of Default has occurred hereunder, which has not been cured
or waived in writing by the Required Lenders, and (ii) no LIBOR Loan shall be
made with an Interest Period that ends subsequent to an Anniversary Date or any
applicable Early Termination Date.
LINE OF CREDIT shall mean the aggregate commitment of the Lenders to (a) make
Revolving Loans pursuant to Section 3 of this Financing Agreement, (b) assist
the Borrowers in opening Letters of Credit pursuant to Section 5 of this
Financing Agreement and (c) make the Term Loan pursuant to Section 4 of this
Financing Agreement, in the aggregate amount equal to $41,400,000.
LINE OF CREDIT FEE shall mean the credit facility fee due the Agent at the end
of each month for the Line of Credit, as set forth in the Fee Agreement.
LJH LEASES shall mean the LJH Dallas Lease, LJH Equipment Lease and LJH Goodyear
Lease.
LJH, LTD. shall mean LJH, Ltd., a Texas limited partnership with an address at
000 Xxxx Xxxx, Xxxxxxx, Xxxxx 00000.
18
LJH DALLAS LEASE shall mean that certain lease, dated October 4, 2002, between
LHJ, Ltd. and AID, in respect of the premises located at 0000 Xxxx Xxxxx, Xxxxxx
Xxxxx.
LJH DOCUMENTS shall mean the (a) $14,411,704 Amended and Restated Consolidated
Term Promissory Note, dated March 31, 2004, executed by the Parent to the order
of LJH, Ltd., (b) the Amended and Restated Guaranty, dated March 31, 2004,
executed by each Company in favor of LJH, Ltd., (c) the Amended and Restated
Security Agreement, dated March 31, 2004, among each Company and LJH, Ltd. and
(d) the LJH Equipment Lease.
LJH EQUIPMENT LEASE shall mean the Equipment Lease, dated March 31, 2004 between
LJH and the Parent.
LJH GOODYEAR LEASE shall mean that certain sublease agreement, dated as of April
1, 2003, between LHJ, Ltd. and TIMCO, in respect of the real property known as
Hangars 18 and 52 and additional land located at Phoenix-Goodyear Airport,
Goodyear, Arizona.
LJH SUBORDINATED DEBT shall mean the Indebtedness owing by a Company to LJH,
Ltd. described on Schedule 10 hereto.
LJH SUBORDINATION AGREEMENT shall mean the Intercreditor and Subordination
Agreement between the Agent and LJH, Ltd. described in Section 2(aa) below.
LOAN DOCUMENTS shall mean this Financing Agreement, the Notes, the Mortgages,
the Pledge Agreements, the Hilco Intercreditor Agreement, the LJH Subordination
Agreement, the Trademark Security Agreement, the Patent Security Agreement, the
Copyright Security Agreement, the Environmental Indemnity Agreements, the Ex-Im
Bank Documents, the other closing documents and any other ancillary loan and
security agreements executed from time to time in connection with this Financing
Agreement, all as may be renewed, amended, extended, increased or supplemented
from time to time.
LOAN FACILITY FEE shall mean the loan facility fee payable to the Agent for the
benefit of the Lenders on the Closing Date, as set forth in the Fee Agreement.
MANDATORY PREPAYMENT shall be determined as set forth in Paragraph 4.6 of
Section 4 of this Financing Agreement.
MATERIAL ADVERSE EFFECT shall mean, relative to any occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), (a) a material adverse effect on the
financial condition, business, operations, prospects or assets of a Company on
an individual basis or the Companies taken as a whole, or (b) a material
impairment of the ability of a Company on an individual basis or the Companies
taken as a whole to perform obligations under the Loan Documents or (c) an
impairment of the validity or enforceability of any Loan Document in any manner
which materially and adversely affects any material rights and/or material
benefits intended to be bestowed on the Agent and the Lenders under the Loan
Documents.
19
MINIMUM AVAILABILITY RESERVE shall mean for any date, the amount set forth below
opposite the applicable FCC Level then in effect:
Level Minimum Availability Reserve
----- ----------------------------
Level I $3,000,000
Level II $2,400,000
Level III $1,800,000
Level IV $1,200,000
Level V $ 600,000
Level VI $ -0-
MORTGAGES shall mean the mortgages, deeds of trust, leasehold mortgages,
leasehold deeds of trust, assignments of leases, subleases and rents to be
executed by the Company which owns or leases such Real Estate on or about the
Closing Date in favor of Agent for the benefit of the Lenders and by which such
Company shall grant and convey to the Agent, as security for the Obligations,
liens and security interests upon the Real Estate owned or leased by such
Company.
NET ORDERLY LIQUIDATION VALUE shall mean, with respect to any Inventory, the
liquidation proceeds of such Inventory, net of the anticipated liquidation
expenses associated therewith, which proceeds may be expected to be realized
from an orderly liquidation of such Inventory.
NET WORTH shall mean, at any date of determination, an amount equal to (a) Total
Assets minus (b) Total Liabilities, and shall be determined in accordance with
GAAP, on a consistent basis with the latest audited financial statements of the
Companies.
NOTE or NOTES shall collectively mean the Revolving Credit Note and the Term
Note, as each may be amended, modified, supplemented, restated or extended from
time to time pursuant to the terms and provisions hereof.
OBLIGATIONS shall mean all loans, advances and extensions of credit made or to
be made by the Agent and/or the Lenders to any Borrower or to others for any
Borrower's account (including, without limitation, all Revolving Loans, Letter
of Credit Guaranties and the Term Loan), any and all indebtedness and
obligations which may at any time be owing by any Borrower to the Agent and/or
any Lender pursuant to or under this Financing Agreement, whether now in
existence or incurred by a Borrower from time to time hereafter, whether
principal, interest, fees, costs, expenses or otherwise, whether secured by
pledge, lien upon or security interest in any of any Company's Collateral,
assets or property or the assets or property of any other person, firm, entity
or corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether any Borrower is
liable to the Agent or such Lender for such indebtedness as principal, surety,
endorser, guarantor or otherwise. Obligations shall also include indebtedness
owing to the Agent and/or the Lenders by any Company under any Loan Document or
under any other agreement or arrangement now or hereafter entered into between
any Company and the Agent and/or any Lender related or pursuant to this
Financing Agreement; indebtedness or obligations
20
incurred by, or imposed on, the Agent and/or any Lender as a result of
environmental claims arising out of any Company's operations, premises or waste
disposal practices or sites in accordance with Paragraph 7.7 of Section 7 of
this Financing Agreement; each Company's liability to the Agent and/or any
Lender as maker or endorser of any promissory note or other instrument for the
payment of money; each Company's liability to the Agent and/or any Lender under
any instrument of guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which the Agent and/or any Lender may make or issue
to others for any Company's account, including any Letter of Credit Guaranty or
other accommodation extended with respect to applications for Letters of Credit,
the Agent's (on behalf of the Lenders) acceptance of drafts or the Agent's (on
behalf of the Lenders) endorsement of notes or other instruments for any
Company's account and benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal or
mixed) other than Capital Leases.
OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
blocked account and any other deposit accounts of each Company maintained with
any bank or financial institutions into which the proceeds of Collateral are or
may be deposited; all other deposit accounts and all Investment Property of each
Company; all cash and other monies and property of each Company in the
possession or control of the Agent or any Lender; all books, records, ledger
cards, disks and related data processing software of each Company at any time
evidencing or containing information relating to any of the Collateral described
herein or otherwise necessary or helpful in the collection thereof or
realization thereon; all Cash Equivalents of each Company; and all cash and
non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of the Agent's present and the Agent's and
each Lender's future reasonable expenses incurred relative to this Financing
Agreement or any other Loan Documents, whether incurred heretofore or hereafter,
which expenses shall include, without being limited to: the cost of record
searches; all costs and expenses incurred by the Agent in opening bank accounts,
depositing checks, receiving and transferring funds, and wire transfer charges;
any charges imposed on the Agent or any Lender due to returned items and
"insufficient funds" of deposited checks and the Agent's and such Lender's
standard fees relating thereto; any amounts paid by, incurred by or charged to,
the Agent or any Lender by the Issuing Bank under a Letter of Credit Guaranty or
any Borrower's reimbursement agreement, application for Letters of Credit or
other like document which pertain either directly or indirectly to such Letters
of Credit, and each Lender's standard fees relating to the Letters of Credit and
any drafts thereunder; reasonable travel, lodging and similar expenses of the
Agent's personnel in connection with inspecting and monitoring the Collateral
from time to time hereunder; the costs and expenses for any Inventory Appraisals
and any Equipment Appraisals; any applicable reasonable counsel fees and
disbursements; fees and taxes relative to the filing of financing statements;
all expenses, costs and fees set forth in Paragraph 10.3 of Section 10 of this
Financing Agreement; and title insurance premiums and real estate survey costs,
if any, and costs of preparing and recording Mortgages against the Real Estate.
OVERADVANCE RATE shall mean a rate equal to two percent (2%) per annum in excess
of the applicable contract rate of interest determined in accordance with
Paragraph 8.1(a) of Section 8 of this Financing Agreement.
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OVERADVANCES shall mean the amount by which (a) the sum of all outstanding
Revolving Loans, Letters of Credit and advances made hereunder exceed (b) the
Borrowing Base.
PATENT SECURITY AGREEMENT shall mean that certain Patent Security Agreement,
dated the Closing Date, pursuant to which Xxxxx shall xxxxx to the Agent on
behalf of the Lenders liens and security interests in all its Patents.
PATENTS shall mean all of each Company's present and hereafter acquired patents,
patent applications, registrations, any reissues or renewals thereof, licenses,
any inventions and improvements claimed thereunder, and all general intangible,
intellectual property and patent rights with respect thereto of such Company,
and all income, royalties, cash and non-cash proceeds thereof.
PERMITTED ENCUMBRANCES shall mean: (a) liens existing on the date hereof as set
forth on Schedule 1 hereto, liens securing the Permitted Indebtedness described
in clause (f) of the definition thereof, and other liens expressly permitted, or
consented to in writing by the Agent; (b) Purchase Money Liens; (c) liens of
local or state authorities for franchise or other like Taxes, provided that the
aggregate amounts of such liens shall not exceed $250,000 in the aggregate at
any one time; (d) statutory liens of landlords and liens of carriers,
warehousemen, bailees, mechanics, materialmen and other like liens imposed by
law, created in the ordinary course of business and for amounts not yet due (or
which are being contested in good faith, by appropriate proceedings or other
appropriate actions which are sufficient to prevent imminent foreclosure of such
liens) and with respect to which adequate reserves or other appropriate
provisions are being maintained by the Companies in accordance with GAAP; (e)
deposits made (and the liens thereon) in the ordinary course of business of a
Company (including, without limitation, security deposits for leases, indemnity
bonds, surety bonds, appeal bonds and performance bonds) in connection with
workers' compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, contracts (other than
for the repayment or guarantee of borrowed money or purchase money obligations),
leases, surety bonds, appeal bonds and performance bonds and other similar
obligations arising in the ordinary course of business; (f) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, encroachments, minor defects or irregularities in
title, variation and other restrictions, charges or encumbrances (whether or not
recorded) affecting the Real Estate, if applicable, and which in the aggregate
(A) do not materially interfere with the occupation, use or enjoyment by the
Company owing or leasing such Real Estate of its business or property so
encumbered and (B) in the reasonable business judgment of the Agent do not
materially and adversely affect the value of such Real Estate; (g) liens granted
the Agent by each Company; (h) liens of judgment creditors provided such liens
do not exceed, in the aggregate, at any time, $250,000 (other than liens bonded
or insured to the reasonable satisfaction of the Agent); (i) tax liens which are
not yet due and payable or which are being diligently contested in good faith by
the Company owing such taxes by appropriate proceedings, and which liens are not
(x) filed on any public records, (y) other than with respect to Real Estate,
senior to the liens of the Agent or (z) for Taxes due the United States of
America or any state thereof having similar priority statutes, as further set
forth in Paragraph 7.6 of Section 7 of this Financing Agreement; (j) liens in
favor of Hilco as security for the Hilco Loan; (k) liens in favor of LJH, Ltd.
securing the LJH Subordinated Debt; and (k) normal and customary rights of set
off on deposits of cash in favor of banks or other depository institutions
unless the Agent and such bank or other
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depository institution agree otherwise pursuant to an account control agreement,
which the Agent may request be executed in connection with any such accounts.
PERMITTED INDEBTEDNESS shall mean: (a) current Indebtedness maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, Taxes or labor; (b) the Indebtedness secured by
Purchase Money Liens; (c) Subordinated Debt, including (i) extensions and
renewals thereof that do not increase the outstanding principal amount of such
Indebtedness as of the date of such extension or renewal and do not increase the
amount of interest paid in cash thereon, or, with respect to the LJH Equipment
Lease, do not increase the lease payments thereunder, and (ii) replacements
thereof that do not increase the outstanding principal amount of such
Indebtedness as of the date of such extension or renewal, do not increase the
amount of interest paid in cash thereon, or, with respect to the LJH Equipment
Lease, do not increase the lease payments thereunder, and which is subject to
subordination terms or a Subordination Agreement satisfactory to the Agent, in
its sole discretion; (d) Indebtedness arising under the Letters of Credit and
this Financing Agreement; (e) deferred Taxes and other expenses incurred in the
ordinary course of business; (f) other Indebtedness existing on the date of
execution of this Financing Agreement and listed in the most recent financial
statement delivered to the Agent or otherwise set forth on Schedule 2 hereto;
(g) the Hilco Loan; (h) the loans evidenced by the LJH Documents; and (i)
Indebtedness of any Company to any other Company; and (i) Indebtedness not
included in clauses (a) through (h) above which does not exceed in the
aggregate, at any time, the sum of $100,000.
PIK SUBORDINATED DEBT shall mean Indebtedness evidenced by (a) the 8% Junior
Subordinated Convertible PIK Notes due 2007 issued by the Parent under that
certain Indenture dated as of September 20, 2002 and (b) the 8% Senior
Subordinated Convertible PIK Notes due 2006 issued by the Parent under that
certain Indenture dated as of February 28, 2002.
PLEDGE AGREEMENTS shall mean (a) those Stock Pledge Agreements, dated the
Closing Date, executed by the Parent, AVS/M-1, AVSRE and Whitehall pledging to
the Agent on behalf of the Lenders as additional collateral for the Obligations
all of the issued and outstanding stock of each of their respective corporate
subsidiaries, and (b) those Partnership Interests Pledge Agreements, dated the
Closing Date, executed by Property Management and Whitehall pledging to the
Agent on behalf of the Lenders as additional collateral for the Obligations all
of the issued and outstanding partnership interests of each of them in AVRSE,
all in form and substance satisfactory to the Agent.
PRIME RATE LOANS shall mean any loans or advances pursuant to this Financing
Agreement made or maintained at a rate of interest based upon the Chase Bank
Rate.
PRO RATA SHARE shall mean, with respect to any Lender, the product of (a) such
Lender's Commitment Percentage on any date of determination times (b) the
Revolving Line of Credit (notwithstanding the termination of the Revolving Line
of Credit) and the outstanding principal balance of the Term Loan on such date.
PURCHASE MONEY LIENS shall mean liens on any item of Equipment acquired after
the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired,
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(b) a description of the Equipment so acquired is furnished to the Agent, and
(c) the debt incurred in connection with such acquisitions shall not exceed, in
the aggregate, $2,500,000 in any Fiscal Year and $10,000,000 in the aggregate
during the term of this Financing Agreement.
REAL ESTATE shall mean each Company's fee and/or leasehold interests in the real
property, including any such real property which has been, or will be,
encumbered, mortgaged, pledged or assigned to the Agent or its designee other
than the Real Estate leased by (a) Xxxxx located at 10252 and 00000 Xxxxxx
Xxxxxx, Xxxxxxx, Los Angeles County, California and (b) AID located in Opa
Locka, Miami-Dade County, Florida.
REQUIRED LENDERS shall mean Lenders whose Pro Rata Shares, in the aggregate, are
greater than fifty-five percent (55%); provided, however, that, in the event any
of the Lenders shall have failed to fund its Pro Rata Share of any loan
requested by or on behalf of a Borrower which Lenders are obligated to fund
under the terms of this Agreement and any such failure has not been cured, then
for so long as such failure continues, "Required Lenders" means Lenders
(excluding all Lenders whose failure to fund their respective Pro Rata Shares of
such Loans have not been so cured) whose Pro Rata Shares represent more than
fifty-five percent (55%) of the aggregate Pro Rata Shares of such Lenders;
provided, further, however, that, in the event that the any Lender's portion of
the Revolving Line of Credit has been terminated pursuant to the terms of this
Agreement, "Required Lenders" means Lenders (without regard to such Lenders'
performance of their respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all loans are greater than fifty-five percent (55%).
REVOLVING LINE OF CREDIT shall mean the aggregate commitment of the Lenders to
make loans and advances pursuant to Section 3 of this Financing Agreement and
issue Letters of Credit Guaranties pursuant to Section 5 hereof to the
Borrowers, in the aggregate amount of $35,000,000.
REVOLVING LOAN ACCOUNT shall mean the account on the Agent's books, in the
Borrowers' names, pursuant to Paragraph 3.4 of Section 3 of this Agreement, in
which the Borrowers will be charged with all Obligations under this Financing
Agreement.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
for the account of the Borrowers by the Agent on behalf of the Lenders pursuant
to Section 3 of this Financing Agreement.
REVOLVING CREDIT NOTE shall mean the promissory note, in the form of Exhibit A
attached hereto, delivered by the Borrowers to the Agent to evidence the
Revolving Loans pursuant to, and repayable in accordance with, the provisions of
Section 3 of this Financing Agreement.
SETTLEMENT DATE shall mean the date, weekly, and more frequently, at the
discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans that the Agent and the
Lenders shall settle among themselves so that (i) the Agent shall not have, as
the Agent, any money at risk and (ii) on such Settlement Date the Lenders shall
have a pro rata amount of all outstanding Revolving Loans and Letters of Credit,
provided that each Settlement Date for a Lender shall be a Business Day on which
such Lender and its bank are open for business.
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SUBORDINATED DEBT shall mean the debt due a Subordinating Creditor (and the
note(s) evidencing such) which has been subordinated, by a Subordination
Agreement or by the terms of note(s) evidencing such debt or the documents
executed in connection with such note(s), to the prior payment and satisfaction
of the Obligations of the Borrowers, more particularly described on Schedule 10
hereto.
SUBORDINATING CREDITOR shall mean LJH, Ltd. and any other party now or hereafter
executing a Subordination Agreement.
SUBORDINATION AGREEMENTS shall mean the agreements (in form and substance
satisfactory to the Agent) among the Companies, each Subordinating Creditor and
the Agent pursuant to which (a) Subordinated Debt is subordinated to the prior
payment and satisfaction of the Companies' Obligations to the Agent and the
Lenders and/or (b) liens and security interests in all or portions of the
Collateral are subordinated to the liens and security interests in such
Collateral granted pursuant to this Financing Agreement in favor of the Agent
for the benefit of the Lenders.
TANGIBLE NET WORTH shall mean, as of any date of determination, Net Worth minus
deferred assets (other than prepaid insurance and prepaid taxes), patents,
copyrights, trademarks, trade names, non-compete agreements, franchises and
other similar intangibles, goodwill, including any amounts, however designated
on a Consolidated Balance Sheet, and Accounts, notes and other receivables due
from Affiliates or employees as of such date which would be treated as
intangibles in accordance with GAAP plus the principal amount of Subordinated
Debt as of such date.
TAXES shall mean all federal, state, municipal and other governmental taxes,
levies, charges, claims and assessments which are or may be due by any Company
with respect to its business, operations, Collateral or otherwise.
TERM LOAN shall mean the term loan in the principal amount of $6,400,000 made by
the Agent on behalf of the Lenders pursuant to, and repayable in accordance
with, the provisions of Section 4 of this Financing Agreement.
TERM NOTE shall mean the promissory note, in the form of Exhibit B attached
hereto, delivered by the Borrowers to the Agent to evidence the Term Loan
pursuant to, and repayable in accordance with, the provisions of Section 4 of
this Financing Agreement.
TOTAL ASSETS shall mean total assets determined in accordance with GAAP, on a
basis consistent with the latest audited financial statements of the Companies.
TOTAL LIABILITIES shall mean total liabilities determined in accordance with
GAAP, on a basis consistent with the latest audited financial statements of the
Companies minus PIK Subordinated Debt.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of each Borrower's Accounts
which arises from the sale of Inventory or the rendition of services in the
ordinary course of such Borrower's business.
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TRADEMARK SECURITY AGREEMENT shall mean that certain Trademark Security
Agreement, dated the Closing Date, pursuant to which the Parent shall grant to
the Agent on behalf of the Lenders liens and security interests in all its
Trademarks.
TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications, tradenames, trade styles, service
marks, prints and labels (on which any of the foregoing may appear), licenses,
reissues, renewals, and any other intellectual property and trademark rights
pertaining to any of the foregoing, together with the goodwill associated
therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and in
effect from time to time in the State of North Carolina.
VOTING STOCK shall mean, with respect to any corporation, the outstanding stock
of all classes (or equivalent interests) which ordinarily, in the absence of
contingencies, entitles holders thereof to vote for the election of directors
(or persons performing similar functions) of such corporation, even though the
right so to vote has been suspended by the happening of such contingency.
WORKING DAY shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be transacted.
SECTION 2. CONDITIONS PRECEDENT
The obligation of the Agent and the Lenders to make the initial loans
hereunder is subject to the satisfaction of, extension of or waiver of in
writing, the following conditions precedent:
(A) LIEN SEARCHES - The Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent for each Company's
location (as such term is defined in the UCC) and all locations presently
occupied or used by such Company.
(B) CASUALTY INSURANCE - The Companies shall have delivered to the
Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as additional insured, loss payee or mortgagee, as the case
may be, are in full force and effect, all as set forth in Paragraph 7.5 of
Section 7 of this Financing Agreement.
(C) UCC FILINGS - Any financing statements required to be filed in
order to create, in favor of the Agent, a first perfected security interest in
the Collateral, subject only to the Permitted Encumbrances, shall have been
properly filed in each office in each jurisdiction required in order to create
in favor of the Agent a perfected lien on the Collateral. The Agent shall have
received acknowledgment copies of all such filings (or, in lieu thereof, the
Agent shall have received other evidence satisfactory to the Agent that all such
filings have been made) and the Agent shall have received evidence that all
necessary filing fees and all taxes or other expenses related to such filings
have been paid in full.
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(D) RESOLUTIONS - The Agent shall have received a copy of the
resolutions of the Board of Directors, members or partners of each Company
authorizing the execution, delivery and performance of (i) this Financing
Agreement, and (ii) the other Loan Documents, in each case certified by the
Secretary, Assistant Secretary, managing member or general partner of such
Company as of the date hereof, together with a certificate of the Secretary,
Assistant Secretary, managing member or general partner of such Company as to
the incumbency and signature of the officers, members, managers or partners of
such Company executing such Loan Documents and any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary, Assistant Secretary, managing member or general
partner.
(E) CORPORATE ORGANIZATION - The Agent shall have received (i) a copy
of the Certificate of Incorporation or Organization of each Company certified by
the Secretary of State of the state of its formation, and (ii) a copy of the
bylaws, operating agreement or partnership agreement of each Company certified
by the Secretary, Assistant Secretary, managing member or general partner
thereof, all as amended through the date hereof.
(F) OFFICER'S/GENERAL PARTNER'S CERTIFICATE - The Agent shall have
received an executed Officer's/General Partner's Certificate of each Company,
satisfactory in form and substance to the Agent, certifying that as to such
Company (i) the representations and warranties contained herein are true and
correct in all material respects on and as of the Closing Date; (ii) such
Company is in compliance with all of the terms and provisions set forth herein
applicable to such Company; and (iii) no Default or Event of Default has
occurred.
(G) OPINIONS - Counsel for the Companies shall have delivered to the
Agent opinions satisfactory to the Agent opining, inter alia, that, subject to
the (i) filing, priority and remedies provisions of the applicable Uniform
Commercial Code, (ii) the provisions of the Bankruptcy Code, insolvency statutes
or other like laws, (iii) the equity powers of a court of law and (iv) such
other matters as may be agreed upon with the Agent: this Financing Agreement and
all other Loan Documents of each Company are (x) valid, binding and enforceable
according to their terms, (y) are duly authorized, executed and delivered, and
(z) do not violate any terms, provisions, representations or covenants in the
organizational documents, bylaws, operating agreement or partnership agreement
of any Company or, to the best knowledge of such counsel, of any loan agreement,
mortgage, deed of trust, note, security or pledge agreement, indenture or other
contract to which any Company is a signatory or by which any Company or its
assets are bound, and as to such other matters as the Agent may, in its
discretion require, all in form and substance satisfactory to the Agent. In
addition, counsel to the Subordinating Creditor(s) shall have delivered an
opinion satisfactory to the Agent that the Subordination Agreement(s) have been
duly authorized, executed and delivered and constitute valid and binding
agreements enforceable against such Subordinating Creditor(s) in accordance with
the terms thereof.
(H) ABSENCE OF DEFAULT - As of the Closing Date, no Default or Event of
Default shall have occurred and since December 31, 2002, no material adverse
change shall have occurred in the financial condition, business, prospects,
profits, operations or assets of the Companies.
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(I) LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there shall
be no: (x) litigation, investigation or proceeding (judicial or administrative)
pending or threatened against any Company or their assets, by any agency,
division or department of any county, city, state or federal government arising
out of this Financing Agreement which, in the opinion of the Agent, if adversely
determined, could reasonably be expected to have a Material Adverse Effect on
the business, operation, assets, financial condition or Collateral of such
Company; (y) injunction, writ or restraining order restraining or prohibiting
the consummation of the financing arrangements contemplated under this Financing
Agreement which, in the opinion of the Agent, if adversely determined, could
reasonably be expected to have a Material Adverse Effect on the business,
operation, assets, financial condition or Collateral of such Company; or (z)
suit, action, investigation or proceeding (judicial or administrative) pending
against any Company or their assets, which, in the opinion of the Agent, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on the business, operation, assets, financial condition or Collateral of
the Companies taken as a whole.
(J) SUBORDINATION AGREEMENTS - The Subordinating Creditors shall have
executed and delivered to the Agent Subordination Agreements, each in form and
substance satisfactory to the Agent, subordinating the Indebtedness due such
Subordinating Creditor by one or more of the Companies to the prior payment and
satisfaction of the Obligations of the Company and, if applicable, subordinating
the liens granted to such Subordinating Creditor to secure such Indebtedness to
the liens granted to the Agent hereunder.
(K) HILCO INTERCREDITOR AGREEMENT - Hilco shall have executed and
delivered to the Agent the Hilco Intercreditor Agreement, in form and substance
satisfactory to the Agent, to which each Company shall have agreed.
(L) CASH BUDGET PROJECTIONS - The Agent shall have received, reviewed
and been satisfied with a twelve (12) month cash budget projection prepared by
the Companies on the form provided by the Agent.
(M) PLEDGE AGREEMENTS - The Parent, AVS/M-1, TIMCO, Property Management
and Whitehall shall have each executed and delivered to the Agent each Pledge
Agreement and all stock and other certificates evidencing such ownership
interests together with duly executed stock and other powers (undated and
in-blank) with respect thereto, all in form and substance satisfactory to the
Agent.
(N) TRADEMARK SECURITY AGREEMENT - The Parent shall have delivered to
the Agent a Trademark Security Agreement, in form and substance satisfactory to
the Agent.
(O) LOAN DOCUMENTS - The Companies shall have executed and delivered to
the Agent all Loan Documents and any other documents, instruments and agreements
necessary to consummate the lending arrangement contemplated among the Borrowers
and the Agent and the Lenders.
(P) DISBURSEMENT AUTHORIZATION - The Borrowers shall have delivered to
the Agent and the Lenders all information necessary for the Agent and the
Lenders to issue wire transfer
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instructions on behalf of the Borrowers for the initial and subsequent loans
and/or advances to be made under this Financing Agreement including, but not
limited to, disbursement authorizations in form acceptable to the Agent.
(Q) EXAMINATION & VERIFICATION - The Agent and the Lenders shall have
completed, to its satisfaction, an examination and verification of the Accounts,
Inventory, Equipment, other Collateral, financial statements, books and records
of each Company which examination shall indicate that, after giving effect to
all Revolving Loans, the Term Loan, and any other advances and extensions of
credit to be made at closing, the Borrowers shall have an opening Availability
of at least $5,000,000, as evidenced by a Borrowing Base Certificate delivered
by the Borrowers to CIT as of the Closing Date, substantially in the form of
Exhibit C hereto, all in form and substance satisfactory to the Agent and the
Lenders. It is understood that such requirement contemplates that all debts and
obligations are current, and that all payables are being handled in the normal
course of the Companies' business and consistent with its past practice.
(R) DEPOSITORY ACCOUNTS - The Companies shall have established a system
of lockbox and bank accounts with respect to the collection of Accounts and the
deposit of proceeds of Collateral as shall be acceptable to the Agent and the
Lenders in all respects. Such accounts shall be subject to three party
agreements (between the Company, the Agent and the depository bank), which shall
be in form and substance satisfactory to the Agent.
(S) EXISTING CREDIT FACILITY - The Existing Credit Facility (other than
the Bond Letter of Credit) shall be: (i) terminated and all obligations of the
Existing Lenders to make loans, and all rights of the Companies thereunder to
borrower, shall have been terminated; (ii) all loans and obligations of all
Companies thereunder shall be paid or satisfied in full, including through
utilization of the proceeds of the initial Revolving Loans and the Term Loan to
be made under this Financing Agreement; and (iii) all liens or security
interests in favor of the Existing Agent and any Existing Lender on any of the
Collateral and otherwise in connection therewith shall be terminated and/or
released upon such payment.
(T) HILCO LOAN - The Companies shall have executed the Hilco Documents
and shall have received the proceeds of the Hilco Loan, and the Agent shall have
received satisfactory evidence thereof, all upon terms and conditions
satisfactory to the Agent.
(U) MORTGAGES - The Companies which have any interest in any Real
Estate shall have executed and delivered to the Agent the Mortgages and
Assignments of Leases and Rents relating thereto, granting the Agent for the
benefit of the Lenders first priority liens in such Company's interest in such
Real Estate and in the rents and profits thereof.
(V) APPRAISALS - The Agent shall have received satisfactory appraisals
on each Borrower's Inventory and Equipment, which appraisals: (i) shall be by an
appraiser acceptable to the Agent and the Lenders, and (ii) shall indicate a Net
Orderly Liquidation Value of not less than $7,529,412 with respect to Equipment
owned by the Borrowers.
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(W) BUSINESS VALUATION REPORT - The Agent shall have received a
satisfactory business valuation report of the Companies, which report: (i) shall
be by a valuation company acceptable to the Agent, and (ii) shall indicate a
business valuation acceptable to the Agent and the Lenders.
(X) SCHEDULES - The Companies shall provide the Agent with schedules
of: (a) each Companies' General Intangibles, in such detail as to provide
appropriate recording information with respect thereto, (b) Permitted
Encumbrances, (c) Permitted Indebtedness, (d) consignment agreements, (e)
locations of collateral, (f) Real Estate, (g) litigation, (h) benefit plans, (i)
investments, and (j) such other information as the Agent or the Lenders may
reasonably request, all of the foregoing in form and substance satisfactory to
the Agent or such Lender.
(Y) CONSENTS - The Companies shall have delivered to the Agent any
consents of any persons required to consent to any part or all of the
transactions contemplated by this Financing Agreement and the other Loan
Documents, including, without limitation, Bank of America, N.A.
(Z) ESTOPPEL AND/OR LANDLORD'S AGREEMENTS - The Companies shall have
delivered such estoppel and/or landlord's agreements as may be requested by the
Agent, duly executed by each Person having an interest in any Real Estate and
each Person having an interest in the real property leased by Xxxxx located at
10252 and 00000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, in form and substance
satisfactory to the Agent.
(AA) LJH, LTD. SUBORDINATION AGREEMENT - LJH, Ltd. shall have executed
and delivered to the Agent the LJH Subordination Agreement, in form and
substance satisfactory to the Agent, to which each Company shall have agreed.
(BB) EX-IM GUARANTEE - The Agent shall have received the Ex-Im
Guarantee duly executed by Ex-Im Bank on terms acceptable to the Agent and
Companies shall have entered in to, or consented to, the Borrower Agreement with
Ex-Im Bank in accordance with the Ex-Im Guarantee.
(CC) COMMITMENT LETTER - Companies shall have fully complied, to the
reasonable satisfaction of the Agent and the Lenders, with all of the terms and
conditions of the Commitment Letter.
(DD) BOND DOCUMENTS - The Agent shall have received copies of the Bond
Order, the Bond Guaranty, the Bond Letter of Credit, including all amendments
and endorsements thereto, in form and substance satisfactory to the Agent.
(EE) COPYRIGHT SECURITY AGREEMENT - The Parent shall have delivered to
the Agent a Copyright Security Agreement, in form and substance satisfactory to
the Agent.
(FF) PATENT SECURITY AGREEMENT - Xxxxx shall have delivered to the
Agent a Patent Security Agreement, in form and substance satisfactory to the
Agent.
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(GG) OTHER DOCUMENTS - The Companies shall have delivered to the Agent
such other documents, instruments and agreements as the Agent may reasonably
request, all in form and substance satisfactory to the Agent.
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as otherwise set forth hereinabove or as the Companies and
Agent shall otherwise agree in writing.
2.2 CONDITIONS TO EACH EXTENSION OF CREDIT
Except to the extent expressly set forth in this Financing Agreement,
the agreement of the Agent or any Lender to make any extension of credit
requested to be made by it to the Borrowers on any date (including without
limitation, the initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(A) REPRESENTATIONS AND WARRANTIES - Each of the representations and
warranties made by any Company in or pursuant to this Financing Agreement shall
be true and correct in all material respects on and as of such date as if made
on and as of such date.
(B) NO DEFAULT - No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(C) BORROWING BASE - Except as may be otherwise agreed to from time to
time by the Agent, the Required Lenders and the Borrowers in writing in
accordance with the provisions of this Financing Agreement, after giving effect
to the extension of credit requested to be made by the Borrowers on such date,
the aggregate outstanding balance of the Revolving Loans and outstanding Letters
of Credit owing by the Borrowers will not exceed the lesser of (i) the Revolving
Line of Credit or (ii) the Borrowing Base.
Each borrowing by the Borrowers hereunder shall constitute a representation and
warranty by each Company as of the date of such loan or advance that each of the
representations, warranties and covenants of such Company contained in the
Financing Agreement have been satisfied and are true and correct, except as the
Companies, the Agent and the Lenders shall otherwise agree herein or in a
separate writing.
SECTION 3. REVOLVING LOANS
3.1 Upon receipt of the Revolving Credit Note and the satisfaction of
the conditions precedent set forth in Section 2 hereof, each Lender severally
and not jointly agrees, from time to time (but subject to the Lenders' right to
make "Overadvances"), to make loans and advances to the Borrowers on a revolving
basis (i.e. subject to the limitations set forth herein, the Borrowers may
borrow, repay and re-borrow Revolving Loans) in the following amounts: (a) up to
the lesser of such Lender's Pro Rata Share of (i) $35,000,000 minus the
Obligations outstanding on any date of determination based on the Foreign
Borrowing Base, or (ii) the Domestic Borrowing Base; plus (b) up to the lesser
of such Lender's Pro Rata Share of (i) the Foreign Line of Credit Amount or (ii)
the
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Foreign Borrowing Base. Such requests for loans and advances shall be in
amounts not to exceed the lesser of (a) Availability or (b) the Revolving Line
of Credit. All requests for loans and advances must be received by an officer of
the Agent no later than (i) 1:00 p.m., New York time, of the Business Day on
which any such Prime Rate Loans and advances are required or (ii) three (3)
Business Days prior to any requested LIBOR Loan. Should the Agent for any reason
honor requests for Overadvances, any such Overadvances shall be made in the
Agent's sole discretion and subject to the provisions of Paragraph 15.10 of
Section 15 of this Financing Agreement and any additional terms the Agent deems
necessary. Agent may honor requests for loans and advances to Borrowers upon the
request of any person designated in writing by the Chief Financial Officer or
Treasurer of TIMCO.
3.2 In furtherance of the continuing assignment and security interest
in each Borrower's Accounts and Inventory, each Borrower will, upon the creation
of Accounts and purchase or acquisition of Inventory, execute and deliver to the
Agent in such form and manner as the Agent may reasonably require, solely for
the Agent's convenience in maintaining records of Collateral, such confirmatory
schedules of Accounts and Inventory as the Agent may reasonably request,
including, without limitation, weekly schedules of Accounts and monthly
schedules of Inventory, all in form and substance satisfactory to the Agent, and
such other appropriate reports designating, identifying and describing the
Accounts and Inventory as the Agent may reasonably request, and provided further
that the Agent may request any such information more frequently, from time to
time, upon its reasonable prior request. Borrowers shall deliver to Agent
weekly, or more often if requested by Agent, a Borrowing Base Certificate. In
addition, upon the Agent's request, each Borrower shall provide the Agent with
copies of agreements with, or purchase orders from, such Borrower's customers,
and copies of invoices to customers, proof of shipment or delivery, access to
its computers, electronic media and software programs associated therewith
(including any electronic records, contracts and signatures) and such other
documentation and information relating to said Accounts and other Collateral as
the Agent may reasonably require. Failure to provide the Agent with any of the
foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein. Each Borrower hereby authorizes the Agent to
regard such Borrower's printed name or rubber stamp signature on assignment
schedules or invoices as the equivalent of a manual signature by one of such
Borrower's authorized officers or agents.
3.3 Each Borrower hereby represents and warrants that: each Trade
Account Receivable is based on an actual and bona fide sale and delivery of
Inventory or rendition of services to customers, made by such Borrower in the
ordinary course of its business; the Inventory being sold, and the Trade
Accounts Receivable created, are the exclusive property of such Borrower and are
not and shall not be subject to any lien, consignment arrangement, encumbrance,
security interest or financing statement whatsoever, other than the Permitted
Encumbrances; the invoices evidencing such Trade Accounts Receivable are in the
name of such Borrower; and the customers of such Borrower have accepted the
Inventory or services, owe and are obligated to pay the full amounts stated in
the invoices according to their terms, without dispute, offset, defense,
counterclaim or contra, except for disputes and other matters arising in the
ordinary course of business with respect to which such Borrower has complied
with the notification requirements of Paragraph 3.5 of this Section 3. Each
Borrower confirms to the Agent that any and all Taxes or fees relating to its
business, its sales, the Accounts or Inventory relating thereto, are its sole
responsibility and that same
32
will be paid by such Borrower when due, subject to Paragraph 7.6 of Section 7 of
this Financing Agreement, and that none of said Taxes or fees represent a lien
on or claim against the Accounts. Each Borrower hereby further represents and
warrants that it shall not acquire any Inventory on a consignment basis unless
(i) all such consignment Inventory is segregated from other Inventory of such
Borrower, (ii) all such consignment Inventory is conspicuously marked as being
consigned inventory, and (iii) the consignor of such Inventory has complied will
all applicable laws relating to such consignment, including, without limitation,
any notices required pursuant to the applicable Uniform Commercial Code, nor
will it co-mingle its Inventory with any of its customers or any other person,
including pursuant to any xxxx and hold sale or otherwise, and that its
Inventory is marketable to its customers in the ordinary course of business of
such Borrower, except as it may otherwise report in writing to the Agent
pursuant to Paragraph 3.5 of this Section from time to time. Schedule 3 hereto
describes all consignments of Inventory of each Borrower existing on the Closing
Date. Each Borrower also warrants and represents that it is a duly and validly
existing corporation and is qualified to do business in all states where the
failure to so qualify would have a Material Adverse Effect on the business of
such Borrower or the ability of such Borrower to enforce collection of Accounts
due from customers residing in that state. Each Borrower agrees to maintain such
books and records regarding Accounts and Inventory as the Agent may reasonably
require and agrees that the books and records of such Borrower will reflect the
Agent's interest in the Accounts and Inventory. All of the books and records of
each Borrower will be available to the Agent at normal business hours, including
any records handled or maintained for such Borrower by any other company or
entity.
3.4 (a) Until the Agent has advised the Borrowers to the contrary after
the occurrence of an Event of Default, each Borrower, at its expense, will
enforce, collect and receive all amounts owing on the Accounts in the ordinary
course of its business and any proceeds it so receives shall be subject to the
terms hereof, and held on behalf of and in trust for the Agent and the Lenders.
Such privilege shall terminate automatically upon the institution by or against
any Borrower of any proceeding under any bankruptcy or insolvency law or, at the
election of the Agent, upon the occurrence of an Event of Default. Any checks,
cash, credit card sales and receipts, notes or other instruments or property
received by any Borrower with respect to any Collateral, including Accounts,
shall be held by such Borrower in trust for the Agent and the Lenders, separate
from such Borrower's own property and funds, and promptly turned over to the
Agent for the benefit of the Lenders with proper assignments or endorsements by
deposit to the Depository Accounts. Each Borrower shall: (i) indicate on all of
its invoices that funds should be delivered to and deposited in a Depository
Account; (ii) direct all of its account debtors to deposit any and all proceeds
of Collateral into the Depository Accounts; (iii) irrevocably authorize and
direct any banks which maintain such Borrower's initial receipt of cash, checks
and other items to promptly wire transfer all available funds to a Depository
Account; and (iv) advise all such banks of the Agent's security interest in such
funds. Each Borrower shall provide the Agent with prior written notice of any
and all deposit accounts opened or to be opened subsequent to the Closing Date.
All amounts received by the Agent in payment of Accounts will be credited to the
Revolving Loan Account when the Agent is advised by its bank of its receipt of
"collected funds" at the Agent's bank account in New York, New York on the
Business Day of such advice if advised no later than 1:00 p.m. EST or on the
next succeeding Business Day if so advised after 1:00 PM EST. No checks, drafts
or other instrument received by the
33
Agent shall constitute final payment to the Agent unless and until such
instruments have actually been collected.
(B) Each Borrower shall establish and maintain, in its name and at its
expense, deposit accounts and lockboxes with such banks as are acceptable to the
Agent (the "Blocked Accounts") into which such Borrower shall promptly cause to
be deposited: (i) all proceeds of Collateral received by such Borrower,
including all amounts payable to such Borrower from credit card issuers and
credit card processors, and (ii) all amounts on deposit in deposit accounts used
by such Borrower at each of its locations, all as further provided in Paragraph
3.4(a) above. The banks at which the Blocked Accounts are established shall
enter into an agreement, in form and substance satisfactory to the Agent (the
"Blocked Account Agreements"), providing that all cash, checks and items
received or deposited in the Blocked Accounts are the property of the Agent,
that the depository bank has no lien upon, or right of set off against, the
Blocked Accounts and any cash, checks, items, wires or other funds from time to
time on deposit therein, except as otherwise provided in the Blocked Account
Agreements, and that automatically, on a daily basis the depository bank will
wire, or otherwise transfer, in immediately available funds, all funds received
or deposited into the Blocked Accounts to such bank account as the Agent may
from time to time designate for such purpose. Each Borrower hereby confirms and
agrees that all amounts deposited in such Blocked Accounts and any other funds
received and collected by the Agent, whether as proceeds of Inventory or other
Collateral or otherwise, shall be the property of the Agent for the benefit of
the Lenders.
3.5 Each Borrower agrees to notify the Agent: (a) of any matters
affecting the value, enforceability or collectibility of any Account and of all
customer disputes, offsets, defenses, counterclaims, returns, rejections and all
reclaimed or repossessed merchandise or goods not reported pursuant to clause
(b)(i) below, and of any adverse effect in the value of its Inventory, with its
Borrowing Base Certificate and other weekly and monthly collateral reports (as
applicable) provided to the Agent hereunder, in such detail and format as the
Agent may reasonably require from time to time; and (b) promptly of (i) all
customer disputes, offsets, defenses, counterclaims, returns, rejections and all
reclaimed or repossessed merchandise or goods, the amount of which dispute,
offset, defense, counterclaim, return or rejection is in excess of $500,000, and
(ii) any such matters which are material, as a whole, to the Accounts and/or the
Inventory. Each Borrower agrees to issue credit memoranda promptly (with
duplicates to the Agent upon request after the occurrence of an Event of
Default) upon accepting returns or granting allowances. Upon the occurrence of
an Event of Default (which is not cured or waived in writing by the Agent) and
on notice from the Agent, each Borrower agrees that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by such Borrower, marked
with the Agent's name (as secured party) and held by such Borrower for the
Agent's account.
3.6 In order to utilize the collective borrowing powers of the
Borrowers in the most efficient and economical manner, and in order to
facilitate the handling of the accounts of the Borrowers on the Agent's books,
the Borrowers have requested, and the Agent has agreed to handle accounts of the
Borrowers on the Agent's books on a combined basis, all in accordance with the
following provisions: (a) in lieu of maintaining separate accounts on the
Agent's books in the name of each of the Borrowers, the Agent shall maintain one
account under the name: Triad International Maintenance Corporation ("Revolving
Loan Account"). Confirmatory assignments of Accounts will
34
continue to be made to the Agent by each of the Borrowers. Loans and advances
made by the Agent to any of the Borrowers will be charged to the Revolving Loan
Account indicated above, along with any charges and expenses under this
Financing Agreement, including, without limitation, any other Obligations,
including, without limitation, any and all costs, expenses and reasonable
attorneys' fees which the Agent may incur in connection with the exercise by or
for the Agent of any of the rights or powers herein conferred upon the Agent, or
in the prosecution or defense of any action or proceeding to enforce or protect
any rights of the Agent in connection with this Financing Agreement, any other
Loan Document or the Collateral, or any Obligations owing to the Agent and the
Lenders by any Company. The Revolving Loan Account will be credited with all
amounts received by the Agent from any of the Borrowers or from others for their
account including all amounts received by the Agent in payment of Accounts as
provided in this Financing Agreement; (b) each month the Agent will render to
the Borrowers one extract of the combined Revolving Loan Account, which shall be
deemed to be an account stated as to each of the Borrowers and which will be
deemed correct and accepted by all of the Borrowers unless the Agent receives a
written statement of exceptions from them within thirty (30) days after such
extract has been rendered by the Agent. It is expressly understood and agreed by
each of the Borrowers that the Agent shall have no obligation to account
separately to any of the Borrowers; (c) requests for loans and advances may be
made by TIMCO, as agent for the other Borrowers, and the Agent is hereby
authorized and directed to accept, honor and rely on such instructions and
requests, subject to the limitation and provisions set forth in this Financing
Agreement. It is expressly understood and agreed by each of the Borrowers that
the Agent shall have no responsibility to inquire into the correctness of the
apportionment, allocation, or disposition of (i) any loans and advances made to
any of the Borrowers or (ii) any of the Agent's expenses and charges relating
thereto. All loans and advances are made for the Revolving Loan Account; (d) all
Accounts assigned to the Agent for the benefit of the Lenders by any of the
Borrowers and any other collateral security now or hereafter given to the Agent
and/or the Lenders by any of the Borrowers (be it Accounts or otherwise), shall
secure all loans and advances made hereunder by the Agent and/or the Lenders to
any of the Borrowers, and shall be deemed to be pledged to the Agent as security
for any and all other Obligations of the Borrowers to the Agent and/or the
Lenders as set forth under this Financing Agreement or any other Loan Document;
(e) it is understood that the handling of the accounts of the Borrowers in a
combined fashion, as more fully set forth herein, is done solely as an
accommodation to the Borrowers and at their request, and that the Agent shall
incur no liability to the Borrowers as a result hereof. To induce the Agent and
the Lenders to do so, and in consideration thereof, each of the Borrowers hereby
agrees to indemnify the Agent and the Lenders and hold the Agent and the Lenders
harmless against any and all liability, expense, loss or claim of damage or
injury, made against the Agent and the Lenders by any of the Borrowers or by any
third party whosoever, arising from or incurred solely by reason of (1) the
method of handling the accounts of the Borrowers as herein provided, (2) the
Agent relying on any instructions of any of the Borrowers, or (3) any other
action taken by the Agent in accordance with this Paragraph 3.6 of Section 3 of
this Financing Agreement; and (f) the foregoing request was made because the
Borrowers are engaged in an integrated operation that requires financing on a
basis permitting the availability of credit from time to time to each of the
Borrowers as required for the continued successful operation of each of the
Borrowers and the integrated operation. Each of the Borrowers expects to derive
benefit, directly or indirectly, from such availability since the successful
operation of each of the Borrowers is dependent on the continued successful
performance of the functions of the integrated group. In addition, the Borrowers
have informed the Agent that:
35
(A) to increase the efficiency and productivity of each of the other
Borrowers TIMCO has centralized in itself a cash management system
which entails, in part, central disbursement and operating accounts in
which it provides the working capital needs of each of the other
Borrowers and manages and timely pays the accounts payable of each
other Borrowers;
(B) TIMCO is further enhancing the operating efficiencies of the other
Borrowers by purchasing, or causing to be purchased, in its name for
its account all materials, supplies, inventory and services required by
the other Borrowers which will result in reducing the operating costs
of the other Borrowers; and
(C) since all of the Borrowers are now engaged in an integrated
operation that requires financing on an integrated basis and since each
Borrower expects to benefit from the continued successful performance
of such integrated operations and in order to best utilize the
collective borrowing powers of each Borrower in the most effective and
cost efficient manner and to avoid adverse effects on the operating
efficiencies of each Borrower and the existing practices of the
Borrowers, each Borrower has requested that all Revolving Loans and
advances be disbursed solely upon the request of TIMCO and to bank
accounts managed solely by it and that it will manage for the benefit
of each Borrower the expenditure and usage of such funds.
3.7 After the end of each month, the Agent shall promptly send the
Borrowers a statement showing the accounting for the charges, loans, advances
and other transactions occurring between the Agent and the Borrowers during that
month. The monthly statements shall be deemed correct and binding upon the
Borrowers and shall constitute an account stated between the Borrowers and the
Agent unless the Agent receives a written statement of the exceptions within
thirty (30) days of the date of the monthly statement.
3.8 In the event that any requested advance exceeds Availability or
that (a) the sum of (i) the outstanding balance of Revolving Loans and (ii)
outstanding balance of Letters of Credit exceeds (b)(i) the Borrowing Base or
(ii) the Revolving Line of Credit, any such nonconsensual Overadvance shall be
due and payable to the Agent for the benefit of the Lenders immediately upon the
Agent's demand therefor.
SECTION 4. TERM LOAN
4.1 Each Borrower hereby agrees to execute and deliver to the Agent the
Term Note to evidence the Term Loan to be extended by the Lenders.
36
4.2 Upon receipt of such Term Note and the satisfaction of the
conditions precedent set forth in Section 2 hereof, the Lenders hereby agree to
extend to the Borrowers the Term Loan.
4.3 The principal amount of the Term Loan shall be repaid to the Agent
by the Borrowers by twenty-one (21) equal quarterly principal installments of
$290,909 each, followed by (ii) one (1) installment of principal of $290,911,
whereof the first installment shall be due and payable on October 1, 2004 and
the subsequent installments shall be due and payable on the first Business Day
of each calendar quarter thereafter until paid in full.
4.4 In the event this Financing Agreement or the Line of Credit is
terminated by either the Lenders or the Borrowers for any reason whatsoever, the
Term Loan shall become due and payable on the effective date of such termination
notwithstanding any provision to the contrary in the Term Note or this Financing
Agreement.
4.5 The Borrowers may prepay at any time, at their option, in whole or
in part, the Term Loan, provided that on each such prepayment, the Borrowers
shall pay accrued interest on the principal so prepaid to the date of such
prepayment.
4.6 Except as provided in Paragraph 6.4 of Section 6 and Paragraph 7.5
of Section 7 of this Financing Agreement, if any Borrower sells any of the
Equipment, or if any of the Collateral is lost or destroyed or taken by
condemnation, such Borrower shall pay to the Agent for the benefit of the
Lenders, unless otherwise agreed by the Agent, as and when received by such
Borrower and as a mandatory prepayment of the Term Loan, a sum equal to the
proceeds (including insurance payments) received by such Borrower from such
sale, loss, destruction or condemnation.
4.7 Each prepayment of principal (whether voluntary or mandatory) on
the Term Loan shall be applied to the then last maturing installments of
principal of the Term Loan.
4.8 The Borrowers hereby authorize the Agent to charge the Revolving
Loan Account with the amount of all Obligations owing under this Section 4 as
such amounts become due. The Borrowers confirm that any charges which the Agent
may so make to the Revolving Loan Account as herein provided will be made as an
accommodation to the Borrowers and solely at the Agent's discretion.
SECTION 5. LETTERS OF CREDIT
In order to assist the Borrowers in establishing or opening Letters of
Credit with an Issuing Bank, the Borrowers have requested the Agent on behalf of
the Lenders to join in the applications for such Letters of Credit, and/or
guarantee payment or performance of such Letters of Credit and any drafts or
acceptances thereunder through the issuance of the Letters of Credit Guaranty,
thereby lending the Agent's and the Lenders' credit to the Borrowers and the
Agent and the Lenders have agreed to do so. These arrangements shall be handled
by the Agent subject to the terms and conditions set forth below.
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5.1 Within the Revolving Line of Credit and Availability, the Agent and
the Lenders shall assist the Borrowers in obtaining Letter(s) of Credit in an
amount not to exceed the outstanding amount of the Letter of Credit Sub-Line.
The Agent and the Lenders assistance for amounts in excess of the limitation set
forth herein shall at all times and in all respects be in the Agent's sole
discretion. It is understood that the term, form and purpose of each Letter of
Credit and all documentation in connection therewith, and any amendments,
modifications or extensions thereof, must be mutually acceptable to the Agent,
the Issuing Bank and the Borrowers, provided that Letters of Credit shall not be
used for the purchase of domestic Inventory or to secure present or future debt
of domestic Inventory suppliers. Any and all outstanding Letters of Credit shall
be reserved dollar for dollar from Availability as an Availability Reserve.
5.2 The Agent shall have the right, without notice to the Borrowers, to
charge the Borrowers' Revolving Loan Account with the amount of any and all
indebtedness, liability or obligation of any kind incurred by the Agent under
the Letters of Credit Guaranty at the earlier of (a) payment by the Agent under
the Letters of Credit Guaranty; or (b) the occurrence of an Event of Default.
Any amount charged to Borrowers' Revolving Loan Account shall be deemed a
Revolving Loan hereunder and shall incur interest at the rate provided in
Paragraph 8.1 of Section 8 of this Financing Agreement.
5.3 Each Borrower jointly and severally unconditionally indemnifies the
Agent and the Lenders and holds the Agent and the Lenders harmless from any and
all loss, claim or liability incurred by the Agent and/or the Lenders arising
from any transactions or occurrences relating to Letters of Credit established
or opened for any Borrower's account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or willful misconduct by the Agent
and/or the Lenders under the Letters of Credit Guaranty. This indemnity shall
survive termination of this Financing Agreement. Each Borrower agrees that any
charges incurred by the Agent and/or the Lenders for any Borrower's account by
the Issuing Bank shall be conclusive on the Agent and the Lenders and may be
charged to the Borrowers' Revolving Loan Account.
5.4 Neither the Agent or any Lender shall be responsible for: (a) the
existence, character, quality, quantity, condition, packing, value or delivery
of the goods purporting to be represented by any documents; (b) any difference
or variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; (c) the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; (e) partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit or
documents; (f) any deviation from instructions; (g) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (h) any breach of contract between the shipper or vendors and any
Borrower.
5.5 Each Borrower agrees that any action taken by the Agent and/or the
Lenders, if taken in good faith, or any action taken by any Issuing Bank, under
or in connection with the Letters of
38
Credit, the Letter of Credit Guaranties, the drafts or acceptances, or the
Collateral, shall be binding on each Borrower and shall not result in any
liability whatsoever of the Agent or any Lender to any Borrower. In furtherance
thereof, the Agent shall have the full right and authority to: (a) clear and
resolve any questions of non-compliance of documents; (b) give any instructions
as to acceptance or rejection of any documents or goods; (c) execute any and all
steamship or airways guaranties (and applications therefore), indemnities or
delivery orders; (d) grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances, or documents; and (e)
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in the Agent's sole name. The
Issuing Bank shall be entitled to comply with and honor any and all such
documents or instruments executed by or received solely from the Agent, all
without any notice to or any consent from any Borrower. Notwithstanding any
prior course of conduct or dealing with respect to the foregoing including
amendments and non-compliance with documents and/or any Borrower's instructions
with respect thereto, the Agent may exercise its rights hereunder in its sole
and reasonable business judgment. In addition, without the Agent's express
consent and endorsement in writing, each any Borrower agrees: (a) not to execute
any and all applications for steamship or airway guaranties, indemnities or
delivery orders; to grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances or documents; or to
agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; and (b) after the occurrence of an
Event of Default which is not cured within any applicable grace period, if any,
or waived by the Agent, not to (i) clear and resolve any questions of
non-compliance of documents, or (ii) give any instructions as to acceptances or
rejection of any documents or goods.
5.6 Each Borrower agrees that: (a) any necessary import, export or
other licenses or certificates for the import or handling of the Collateral will
have been promptly procured; (b) all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or the
financing thereof will have been promptly and fully complied with; (c) and any
certificates in that regard that the Agent may at any time request will be
promptly furnished. In connection herewith, each Borrower warrants and
represents that all shipments made under any such Letters of Credit are in
accordance, in all material respects, with the laws and regulations of the
countries in which the shipments originate and terminate, and are not prohibited
by any such laws and regulations. The Borrowers assume all risk, liability and
responsibility for, and agree to pay and discharge, all present and future
local, state, federal or foreign Taxes, duties, or levies with respect to such
shipments. Any embargo, restriction, laws, customs or regulations of any
country, state, city, or other political subdivision, where the Collateral is or
may be located, or wherein payments are to be made, or wherein drafts may be
drawn, negotiated, accepted, or paid, shall be solely the Borrowers' risk,
liability and responsibility.
5.7 Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent for the benefit of the Lenders shall acquire by
subrogation, any rights, remedies, duties or obligations granted or undertaken
by each or any Borrower to the Issuing Bank in any application for Letters of
Credit, any standing agreement relating to Letters of Credit or otherwise, all
of which shall be deemed to have been granted to the Agent and apply in all
respects to the Agent for the benefit of the Lenders and shall be in addition to
any rights, remedies, duties or obligations contained herein.
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SECTION 6. COLLATERAL
6.1 As security for the prompt payment in full of all Obligations, each
Company hereby pledges and grants to the Agent for the benefit of the Lenders a
continuing general lien upon, and security interest in, all of its assets,
including, without limitation, all of its:
(A) Accounts;
(B) Inventory;
(C) General Intangibles;
(D) Documents of Title;
(E) Other Collateral;
(F) Equipment; and
(G) Real Estate.
6.2 The security interests granted hereunder shall extend and attach
to:
(A) All Collateral which is owned by such Company or in which such
Company has any interest, whether held by such Company or others for its
account, and, if any Collateral is Equipment, whether such Company's interest in
such Equipment is as owner, finance lessee or conditional vendee;
(B) All Equipment, whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and
(C) All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or such Company from such
Company's customers, as well as to all supplies, goods, incidentals, packaging
materials, labels and any other items which contribute to the finished goods or
products manufactured or processed by such Company, or to the sale, promotion or
shipment thereof.
6.3 Each Company agrees to safeguard, protect and hold all Inventory
for the Agent's account and make no disposition thereof except in the ordinary
course of its business of such Company, as herein provided. Each Company
represents and warrants that Inventory will be sold and shipped by such Company
to its customers only in the ordinary course of such Company's business, and
then only on open account and on payment terms not exceeding forty-five (45)
days from invoice date, provided that, absent the prior written consent of the
Agent, no Company shall sell Inventory on a consignment basis nor retain any
lien or security interest in any sold Inventory
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(other than Inventory with a value not to exceed $250,000 at any time consigned
to Qantas Airlines, and such other consigned Inventory that is approved in
writing by Agent, after receipt of documentation (i.e. consignment agreement,
notice to creditors having liens in inventory, properly filed UCC financing
statements naming the party receiving such consigned Inventory, as debtor, and
such Company, as secured party, and such other documents, instruments and
agreements as Agent may require). Upon the sale, exchange, or other disposition
of Inventory, as herein provided, the security interest in the Inventory
provided for herein shall, without break in continuity and without further
formality or act, continue in, and attach to, all proceeds, including any
instruments for the payment of money, Trade Accounts Receivable, documents of
title, shipping documents, chattel paper and all other cash and non-cash
proceeds of such sale, exchange or disposition. As to any such sale, exchange or
other disposition, the Agent shall have all of the rights of an unpaid seller,
including stoppage in transit, replevin, rescission and reclamation. Each
Company hereby agrees to immediately forward any and all proceeds of Collateral
to the Depository Account, and to hold any such proceeds (including any notes
and instruments), in trust for the Agent pending delivery to the Agent.
Irrespective of the Agent's perfection status in any and all of the General
Intangibles, including, without limitations, any Patents, Trademarks, Copyrights
or licenses with respect thereto, each Company hereby irrevocably grants the
Agent for the benefit of the Lenders a royalty free license to sell, or
otherwise dispose or transfer, in accordance with Paragraph 10.3 of Section 10
of this Financing Agreement, and the applicable terms hereof, of any of the
Inventory upon the occurrence of an Event of Default which has not been waived
in writing by the Agent and the Required Lenders.
6.4 Subject to the provisions of the fourth sentence of this Paragraph
6.4, each Company agrees at its own cost and expense to keep the Equipment in as
good and substantial repair and condition as the same is now or at the time the
lien and security interest granted herein shall attach thereto, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary. Each Company also agrees to safeguard, protect and hold all Equipment
in accordance with the terms hereof and subject to the Agent's security
interest. Absent the Agent's prior written consent, any sale, exchange or other
disposition of any Equipment shall be made by a Company in the ordinary course
of business and as set forth herein. Each Company may, in the ordinary course of
its business, sell, exchange or otherwise dispose of obsolete or surplus
Equipment provided, however, that: (a) the then value of the Equipment so
disposed of by all Companies in any Fiscal Year does not exceed $500,000 in the
aggregate; and (b) the proceeds of any such sales or dispositions shall be held
in trust by the selling Company for the Agent for the benefit of the Lenders and
shall be immediately delivered to the Agent by deposit to the Depository
Account, except that the selling Company may retain and use such proceeds to
purchase forthwith replacement Equipment which such Company determines in its
reasonable business judgment to have a collateral value at least equal to the
Equipment so disposed of or sold; provided, however, that the aforesaid right
shall automatically cease upon the occurrence of a Default or an Event of
Default which is not waived in writing by the Required Lenders. Upon the sale,
exchange, or other disposition of the Equipment, as herein provided, the
security interest provided for herein shall, without break in continuity and
without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, Accounts, documents of
title, shipping documents, chattel paper and all other cash and non-cash
proceeds of such sales, exchange or disposition. As to any such sale,
41
exchange or other disposition, the Agent shall have all of the rights of an
unpaid seller, including stoppage in transit, replevin, rescission and
reclamation.
6.5 The rights and security interests granted to the Agent hereunder
are to continue in full force and effect, notwithstanding the termination of
this Financing Agreement or the fact that the Revolving Loan Account may from
time to time be temporarily in a credit position, until the final payment in
full to the Agent and the Lenders of all Obligations and the termination of this
Financing Agreement. Any delay, or omission by the Agent or the Lenders to
exercise any right hereunder shall not be deemed a waiver thereof, or be deemed
a waiver of any other right, unless such waiver shall be in writing and signed
by the Agent or the Lenders. A waiver on any one occasion shall not be construed
as a bar to, or waiver of, any right or remedy on any future occasion.
6.6 Notwithstanding the Agent's security interest in the Collateral and
to the extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral or by the guarantee, endorsement, assets or
property of any other person, the Agent shall have the right in its sole
discretion to determine which rights, liens, security interests or remedies the
Agent shall at any time pursue, foreclose upon, relinquish, subordinate, modify
or take any other action with respect to, without in any way modifying or
affecting any of them, or any of the Agent's of the Lenders' rights hereunder.
6.7 Any reserves or balances to the credit of any Borrower and any
other property or assets of any Company in the possession or control of the
Agent or any Lender may be held by the Agent or such Lender as security for any
Obligations and applied in whole or partial satisfaction of such Obligations
when due. The liens and security interests granted herein, and any other lien or
security interest the Agent may have in any other assets of any Company, shall
secure payment and performance of all now existing and future Obligations. The
Agent may in its discretion charge any or all of the Obligations to the
Revolving Loan Account when due.
6.8 Each Company possesses all General Intangibles and rights thereto
as set forth in Schedule 4 hereto reasonably necessary to conduct its business
as conducted as of the Closing Date and each Company shall maintain its rights
in, and the value of, the foregoing in the ordinary course of its business,
including, without limitation, by making timely payment with respect to any
applicable licensed rights. Each Company shall deliver to the Agent, and/or
shall use reasonable commercial efforts to cause the appropriate party to
deliver to the Agent, from time to time such pledge or security agreements with
respect to General Intangibles (now or hereafter acquired) of such Company as
the Agent shall require to obtain valid first liens thereon. In furtherance of
the foregoing, each Company shall provide timely notice to the Agent of any
additional Patents, Trademarks, tradenames, service marks, Copyrights, brand
names, trade names, logos and other trade designations acquired or applied for
subsequent to the Closing Date and such Company shall execute such documentation
as the Agent may reasonably require to obtain and perfect its lien thereon. Each
Company hereby confirms that it shall deliver, or cause to be delivered, any
pledged stock issued subsequent to the Closing Date to the Agent in accordance
with the applicable terms of the Pledge Agreement and prior to such delivery,
shall hold any such stock in trust for the Agent for the benefit of the Lenders.
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6.9 This Financing Agreement and the obligation of the Companies to
perform all of their covenants and obligations hereunder are further secured by
the Mortgage(s) on the Real Estate.
6.10 Each Company shall give to the Agent from time to time such
mortgage(s), deed(s) of trust or assignment(s) on the Real Estate or real estate
acquired after the date hereof as the Agent shall require to obtain a valid
first lien thereon subject only to those exceptions of title as set forth in
future title insurance policies that are satisfactory to the Agent.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 Each Company hereby warrants and represents to the Agent and each
Lender as follows:
(A)(i) the fair value of the Total Assets exceeds the book value of the
Total Liabilities; (ii) each Company is generally able to pay its debts as they
become due and payable; and (iii) no Company has unreasonably small capital to
carry on its business as it is currently conducted absent extraordinary and
unforeseen circumstances;
(B)(i) Schedule 5 hereto correctly and completely sets forth each
Company's (A) exact corporate or partnership name in its jurisdiction of
organization, (B) corporate or partnership name in each jurisdiction in which
such Company is qualified to do business, if different from its name in its
jurisdiction of organization, (C) chief executive office, (D) Collateral
locations, (E) jurisdiction of incorporation or formation, (F) federal taxpayer
identification number, and (G) organizational number or that no such number was
issued; (ii) except for the Permitted Encumbrances, after (1) the filing of
financing statements in the applicable filing offices at the jurisdictions of
organization set forth in Schedule 5, (2) delivery by the Companies of any
Collateral requiring the Agent's possession of the same to perfect its liens and
security interests therein, and (3) delivery by third parties of control
agreements required to perfect the Agent's liens and security interests in any
Collateral related thereto, this Financing Agreement creates a valid, perfected
and first priority security interest in the Collateral to the extent such
security interest may be perfected by any of the actions described in clause
(1), (2) or (3) above, and the security interests granted herein constitute and
shall at all times constitute the first and only liens on the Collateral except
for Permitted Encumbrances; (iii) except for the Permitted Encumbrances, each
Company is, or will be, at the time additional Collateral is acquired by it, the
absolute owner of the Collateral with full right to pledge, sell, consign,
transfer and create a security interest therein, free and clear of any and all
claims or liens in favor of others; (iv) each Company will, at its expense,
forever warrant and, at the Agent's request, defend the same from any and all
claims and demands of any other person other than a holder of a Permitted
Encumbrance; (v) no Company will grant, create or permit to exist, any lien
upon, or security interest in, the Collateral, or any proceeds thereof, in favor
of any other person other than the holders of the Permitted Encumbrances; and
that the Equipment does not comprise a part of the Inventory of such Company;
and (vi) the Equipment is and will only be used by each Company in its business
and will not be held for sale or lease, or removed from its premises (other than
to move it to any other premises of any Company upon not less than ten (10) days
prior written notice to the Agent), or otherwise disposed of by such Company
except as otherwise permitted in this Financing Agreement;
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(C) Each Company (i) is duly organized validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (ii) has the corporate or limited partnership (as the case may be)
power to own its property and to carry on its business as now conducted and
(iii) is duly qualified to do business and is in good standing in each
jurisdiction set forth on Schedule 5 hereto, in each case, in each jurisdiction
in which the failure to be so qualified or in good standing would reasonably be
expected to have a Material Adverse Effect on the business, operation, assets,
financial condition or Collateral of such Company;
(D) Each Company has the corporate or limited partnership (as the case
may be) power and authority to execute, deliver and perform its obligations
hereunder and under the other Loan Documents to which such Company is a party
and all such action has been duly authorized by all necessary corporate or
partnership proceedings on its part. The Loan Documents to which it is a party
have been duly and validly executed and delivered by each Company and constitute
valid and legally binding agreements of each Company enforceable against such
Company in accordance with the respective terms thereof, except, in each case,
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally and general principles of equity.
(E) No authorization, consent, approval, license or exemption (other
than such exemptions that exist under applicable law, that are permitted, or
that have been obtained) of any person or filing or registration with any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is necessary for the valid delivery or
performance by any Company of any Loan Document to which it is a party or for
the grant of a security interest in or mortgage on the Collateral covered by the
Loan Documents, except such matters relating to performance as would ordinarily
be done in the ordinary course of business after the date hereof.
(F) Neither the delivery of the Loan Documents nor compliance with the
terms and provisions hereof or thereof will be contrary to the provisions of, or
constitute a default under (i) the charter or bylaws, operating agreement or
partnership agreement (as the case may be) of any Company or (ii) any applicable
law or any applicable regulation, order, writ, injunction or decree of any court
or governmental instrumentality or (III) any material agreement to which any
Company is a party or by which it is bound or to which it is subject.
(G) Each Company has good title to all personal property and good and
indefeasible title to or a subsisting leasehold interest in, all Real Estate as
reflected as of the date hereof on its books and records as being owned or
leased by it after giving effect to the transaction contemplated herein, except,
as to the Real Estate, for minor defects in title that do not interfere with
such Company's ability to conduct its business as currently conducted or to
utilize such properties for their intended uses. Schedule 6 hereto lists all
Real Estate owned or leased by any Company and if leased, descriptions of such
leases, including all amendments, extensions and supplements thereto. All of
such assets are being maintained by the appropriate person in good working
condition, reasonable wear and tear excepted, in accordance with industry
standards.
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(H) Except as listed on Schedule 7 hereto, no proceedings before any
court or governmental agency or department are pending against or affecting any
Company and to the knowledge of each Company, none of same have been threatened
which if adversely determined could reasonably be expected to have a Material
Adverse Effect on the business, operation, assets, financial condition or
Collateral of the Companies taken as a whole.
(I) No Company is in default (i) under any material provisions of any
instrument evidencing any Indebtedness or of any agreement relating thereto in
such manner as to cause a Material Adverse Effect on the business, operation,
assets, financial condition or Collateral of the Companies taken as a whole or
(ii) in any respect under or in violation of any order, writ, injunction or
decree of any court or governmental instrumentality, in such manner as to cause
a Material Adverse Effect on the business, operation, assets, financial
condition or Collateral of the Companies taken as a whole or (iii) under any
provision of any material contract to which such Company is a party, which
default would reasonably be expected to have a Material Adverse Effect on the
business, operation, assets, financial condition or Collateral of the Companies
taken as a whole. Each Company will give the Agent prompt written notice of any
event or circumstance that may constitute such a default and, in any event, will
provide it upon receipt with copies of all material notices from landlords or
other property owners with respect to any business location or operation of such
Company.
(J) No Company is an "investment company," as such term is defined in,
or subject to registration under, the Investment Company Act of 1940, as
amended.
(K) No Company maintains or contributes to any Benefit Plan other than
those listed on Schedule 8 hereto. Each Benefit Plan has been and is being
maintained and funded in accordance with its terms and in compliance in all
material respects with all provisions of ERISA and the Internal Revenue Code
applicable thereto. Each Company and each ERISA Affiliate have fulfilled all
obligations related to the minimum funding standards of ERISA and the Internal
Revenue Code for each Benefit Plan and no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code, has occurred or is reasonably likely to occur, nor do the
conditions for imposition of a lien under Section 302(f) of ERISA exist or are
reasonably likely to exist, with respect to any Benefit Plan, and neither any
Company nor any ERISA Affiliate has incurred any liability (other than routine
liability for premiums) under Title IV of ERISA with respect to any Benefit
Plan. No event or events have occurred with respect to any Benefit Plan in
connection with which any Company, any ERISA Affiliate, or, to the knowledge of
any Company, any fiduciary of a Benefit Plan, directly or indirectly, would be
subject to any material liability (other than routine liability for premiums,
contributions (if required) and, with respect to a Benefit Plan, routine
liabilities for benefits), individually or in the aggregate, under ERISA or the
Internal Revenue Code.
(L) To the best of each Company's knowledge, such Company (i) possesses
all environmental, health and safety licenses, permits, authorizations,
registrations, approvals and similar rights necessary under Environmental Laws
for such Company to conduct its operations as now being conducted, except where
failure to have such licenses, permits, authorizations, registrations,
approvals, and similar rights would not reasonably be expected to have a
Material
45
Adverse Effect on the business, operation, assets, financial condition or
Collateral of the Companies taken as a whole, and (ii) each of such licenses,
permits, authorizations, registrations, approvals and similar rights is valid
and subsisting, in full force and effect and enforceable by such Company, and
such Company is in compliance with all terms, conditions or other provisions of
such permits, authorizations, regulations, approvals and similar rights except
for such failure or noncompliance that, individually or in the aggregate for
such Company, would not reasonably be expected to have a Material Adverse Effect
on the business, operation, assets, financial condition or Collateral of the
Companies taken as a whole. No Company has received any written notices of any
violation or noncompliance with, or remedial obligation under, any Environmental
Laws (which violation, non-compliance, or remedial obligation has not been cured
or would not reasonably be expected to have a Material Adverse Effect on the
business, operation, assets, financial condition or Collateral of the Companies
taken as a whole) and there are no writs, injunctions, decrees, orders or
judgments outstanding under the Environmental Laws, or lawsuits, claims,
proceedings, or, to the knowledge of each Company, investigations or inquiries
pending or threatened under Environmental Laws, relating to the ownership, use,
condition, maintenance or operation of, or conduct of business related to, any
property owned, leased or operated by any Company or other assets of any Company
other than those violations, instances of noncompliance, obligations, writs,
injunctions, decrees, orders, judgments, lawsuits, claims, proceedings,
investigations or inquiries that individually or in the aggregate for the
Companies, would not reasonably be expected to have a Material Adverse Effect on
the business, operation, assets, financial condition or Collateral of the
Companies taken as a whole. There are no obligations, undertakings or
liabilities arising out of or relating to Environmental Laws which any Company
has agreed to, assumed or retained, or to the best of each Company's knowledge,
by which any Company is adversely affected, by contract or otherwise, except
such obligations, undertakings or liabilities as would not reasonably be
expected to have a Material Adverse Effect on the business, operation, assets,
financial condition or Collateral of the Companies taken as a whole. No Company
has received a written notice or claim to the effect that it is or may be liable
to any other person as the result of a release or threatened release of a
Hazardous Material except such notice or claim that would not reasonably be
expected to have a Material Adverse Effect on the business, operation, assets,
financial condition or Collateral of the Companies taken as a whole. Each
Company has complied with all Environmental Laws and the requirements of any
permits, licenses or other authorizations issued under any Environmental Laws,
except any noncompliance that would not reasonably be expected to have a
Material Adverse Effect on the business, operation, assets, financial condition
or Collateral of the Companies taken as a whole.
(M) The proceeds of the initial Revolving Loan and the Term Loan,
together with the proceeds of the Hilco Loan, shall be used to refinance and
replace the Existing Credit Facility and to pay the costs of closing the
transactions contemplated hereby. It is the intent of the parties hereto that
this Financing Agreement, together with the Hilco Financing Agreement, be deemed
the "Credit Facility" (as such term is defined in the Indentures), that the
Revolving Loans and the Term Loan and all other Obligations constitute
"Designated Senior Debt" (as such term is defined in the Indentures) and that
all Indebtedness under the Indentures be subordinated to the Obligations as set
forth in such Indentures. The proceeds of each Revolving Loan made after the
Closing Date will be used by the Borrowers for working capital purposes. None of
the proceeds of such loans will be used directly or indirectly for the purpose
of purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve (herein called "margin stock")
or for
46
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry margin stock, or for any other purpose which might
constitute this transaction as a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve. No Borrower nor
any agent acting on its behalf has taken or will take any action which might
cause this Financing Agreement or any other Loan Document to violate Regulations
U or X of the Board of Governors of the Federal Reserve or any other regulation
of the Board of Governors of the Federal Reserve or to violate the Securities
Exchange Act of 1934.
(N) The Companies maintain insurance of such types as is usually
carried by corporations engaged in the same or similar businesses and similarly
situated with financially sound, responsible and reputable insurance companies
or associations (or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdiction in which its
operations are carried on) and in such amounts (and with co-insurance and
deductibles) as such insurance is usually carried by corporations and engaged in
the same or similar businesses and similarly situated, but in any event, with
respect to improvements to real property and tangible personal property
(assuming the subject improvements are in fact replaced or restored), in amounts
acceptable to the Agent and the Lenders. No Company maintains any formalized
self-insurance program with respect to its assets or operations or material
risks with respect thereto.
(O) Except for Permitted Indebtedness, no Company has any outstanding
Indebtedness (excluding the loans and advances hereunder) or material
contractually assumed contingent liabilities.
(P) This Financing Agreement and the other Loan Documents create valid
security interests and liens in all of the Collateral described therein in favor
of the Agent securing the Obligations and constitute (subject to (i) the filing
of financing statements on the date hereof and thereafter from time to time on
the Agent's request therefor, (ii) delivery of any collateral after the date
hereof as provided herein or any other Loan Document, (iii) the execution of
Blocked Account Agreements with the banks which maintain Depository Accounts and
(iv) delivery of mortgages and/or deeds of trust to obtain liens on the Real
Estate), except for Permitted Encumbrances, perfected first priority liens and
security interests in substantially all of such Collateral described therein
subject to no liens other than Permitted Encumbrances
(Q) Neither the making of the Revolving Loans and the Term Loan
hereunder (or the extension of any other credit contemplated hereunder) nor the
Borrowers' use of the proceeds thereof will violate either Executive Order 13224
or Sections 326 and 371 through 377 of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Pub. L. No. 107-56 (also known as the USA Patriot Act) or any enabling
legislation or rules, regulations or executive orders relating thereto.
7.2 Each Company agrees to maintain books and records pertaining to the
Collateral in accordance with GAAP and in such additional detail, form and scope
as the Agent shall reasonably require. Each Company agrees that the Agent or its
agents (including, without limitation, Xxxxx Fargo Foothill, LLC, if at such
time (a) Xxxxx Fargo Foothill, LLC is a Lender hereunder and has funded its Pro
Rata Share of any loan requested by or on behalf of a Borrower which it is
obligated to
47
fund under the terms of this Agreement, and (b) Xxxxx Fargo Foothill, LLC's
Commitment Percentage is not less than fifty percent (50%)) may enter upon such
Company's premises at any time during normal business hours, and from time to
time in its reasonable business judgment, for the purpose of inspecting the
Collateral and any and all records pertaining thereto. In the event Xxxxx Fargo
Foothill as an agent of Agent conducts any such inspections, Xxxxx Fargo
Foothill's inspection shall be in the place and stead of, and not in addition
to, the Agent's inspection, and Xxxxx Fargo Foothill shall forward copies of
reports of such inspections to those Persons and Lenders to which Agent
disseminates such information. Each Company agrees to afford the Agent fifteen
(15) days prior written notice of any change in the location of any Collateral,
other than to locations, that as of the Closing Date, are known to the Agent.
Each Company shall also advise the Agent promptly, in sufficient detail, of any
material adverse change relating to the type, quantity or quality of the
Collateral or on the security interests granted to the Agent herein.
7.3 Each Company agrees to: (a) execute and deliver to the Agent, from
time to time, solely for the Agent's convenience in maintaining a record of the
Collateral, such written statements, and schedules as the Agent may reasonably
require, designating, identifying or describing the Collateral; (b) provide the
Agent with Inventory Appraisals, on request, but no more frequently than
semiannually prior to the occurrence of a Default or an Event of Default unless
the Agent in the exercise of its reasonable business judgment requires
additional Inventory Appraisals, which Inventory Appraisals shall be at the
Borrowers' expense and otherwise acceptable to the Agent; and (c) provide the
Agent with Equipment Appraisals, on request, but no more frequently than
annually prior to the occurrence of a Default or an Event of Default unless the
Agent in the exercise of its reasonable business judgment requires additional
Equipment Appraisals, which Equipment Appraisals shall be at the Borrowers'
expense and otherwise acceptable to the Agent. Any Company's failure, however,
to promptly give the Agent such statements, or schedules shall not affect,
diminish, modify or otherwise limit the Agent's security interests in the
Collateral.
7.4 Each Company agrees to comply with the requirements of all state
and federal laws in order to grant to the Agent valid and perfected first
security interests in the Collateral, subject only to the Permitted
Encumbrances. The Agent is hereby authorized by each Company to file (including
pursuant to the applicable terms of the UCC) from time to time any financing
statements, continuations or amendments covering the Collateral. Each Company
hereby consents to and ratifies any and all execution and/or filing of financing
statements on or prior to the Closing Date by the Agent. Each Company agrees to
do whatever the Agent may reasonably request, from time to time, by way of: (a)
filing notices of liens, financing statements, amendments, renewals and
continuations thereof; (b) cooperating with the Agent's agents and employees;
(c) keeping Collateral records; (d) transferring proceeds of Collateral to the
Agent's possession; and (e) performing such further acts as the Agent may
reasonably require in order to effect the purposes of this Financing Agreement,
including but not limited to obtaining control agreements with respect to
deposit accounts and/or Investment Property.
7.5(A) Each Company agrees to maintain insurance on the Real Estate,
Equipment and Inventory under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as are
at all times reasonably satisfactory to the Agent. All policies covering the
Real Estate, Equipment and Inventory are, subject to the rights of any
48
holders of Permitted Encumbrances holding claims senior to the Agent, to be made
payable to the Agent for the benefit of the Lenders, in case of loss, under a
standard non-contributory "mortgagee", "lender" or "secured party" clause and
are to contain such other provisions as the Agent may reasonably require to
fully protect the Agent's interest in the Real Estate, Inventory and Equipment
and to any payments to be made under such policies. All original policies or
true copies thereof are to be delivered to the Agent, premium prepaid, with the
loss payable endorsement in the Agent's favor, and shall provide for not less
than thirty (30) days prior written notice to the Agent of the exercise of any
right of cancellation. At any Company's request, or if any Company fails to
maintain such insurance, the Agent may arrange for such insurance, but at the
Borrowers' expense and without any responsibility on the Agent's part for: (i)
obtaining the insurance; (ii) the solvency of the insurance companies; (iii) the
adequacy of the coverage; or (iv) the collection of claims. Upon the occurrence
of an Event of Default which is not waived in writing by the Agent, the Agent
shall, subject to the rights of any holders of Permitted Encumbrances holding
claims senior to the Agent, have the sole right, in the name of the Agent or any
Company, to file claims under any insurance policies, to receive, receipt and
give acquittance for any payments that may be payable thereunder, and to execute
any and all endorsements, receipts, releases, assignments, reassignments or
other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
(B)(I) In the event of any loss or damage by fire or other casualty,
Insurance Proceeds relating to Inventory shall first reduce the Borrowers'
Revolving Loans, then the Term Loan. Upon the occurrence of a Default or Event
of Default, the Agent may apply Insurance Proceeds to the Obligations in such
manner as it may deem advisable in its sole discretion;
(II) In the event any part of the Real Estate or Equipment of a
Borrower is damaged by fire or other casualty and the Insurance Proceeds for
such damage or other casualty is less than or equal to $100,000, the Agent shall
promptly apply such Insurance Proceeds first, as a mandatory prepayment of the
Term Loan in accordance with Paragraph 4.6 of Section 4 of this Financing
Agreement, then to the Revolving Loans. Upon the occurrence of a Default or
Event of Default, the Agent may apply Insurance Proceeds to the Obligations in
such manner as it may deem advisable in its sole discretion;
(III) Absent the occurrence of an Event of Default, and provided that
(x) each Borrower has sufficient business interruption insurance to replace the
lost profits of any of such Borrower's facilities, and (y) the Insurance
Proceeds are in excess of $100,000, the Borrowers may elect (by delivering
written notice to the Agent) to replace, repair or restore such Real Estate or
Equipment to substantially the equivalent condition prior to such fire or other
casualty as set forth herein. If the Borrowers do not, or cannot, elect to use
the Insurance Proceeds as set forth above, the Agent may, subject to the rights
of any holders of Permitted Encumbrances holding claims senior to the Agent,
apply the Insurance Proceeds to the payment of the Obligations in such manner
and in such order as the Agent may reasonably elect; and
(IV) If the Borrowers elect in accordance with clause (iii) above to
use the Insurance Proceeds in excess of $100,000 for the repair, replacement or
restoration of any Real Estate and/or Equipment, and there is then no Event of
Default, (x) such Insurance Proceeds will be applied to the reduction of the
Revolving Loans and (y) the Agent may set up an Availability Reserve in an
amount equal to said
49
Insurance Proceeds. The Availability Reserve will be reduced dollar-for-dollar
upon receipt of non-cancelable executed purchase orders, delivery receipts or
contracts for the replacement, repair or restoration of Equipment and/or the
Real Estate and disbursements in connection therewith. Prior to the commencement
of any material restoration, repair or replacement of Real Estate, the Borrowers
shall provide the Agent with a restoration plan and a total budget certified by
an independent third party experienced in construction costing. If there are
insufficient Insurance Proceeds to cover the cost of restoration as so
determined, the Borrowers shall be jointly and severally responsible for the
amount of any such insufficiency, prior to the commencement of restoration and
shall demonstrate evidence of such before the reserve will be reduced.
Completion of restoration shall be evidenced by a final, unqualified
certification of the design architect employed, if any; an unconditional
Certificate of Occupancy, if applicable; such other certification as may be
required by law; or if none of the above is applicable, a written good faith
determination of completion by the Borrowers (herein collectively the
"Completion"). Upon Completion, any remaining reserve as established hereunder
will be automatically released.
(C) In the event the Companies fail to provide the Agent with timely
evidence, acceptable to the Agent, of their maintenance of insurance coverage
required pursuant to Paragraph 7.5(a) above, the Agent may purchase, at the
Companies' expense, insurance to protect the Agent's and the Lenders' interests
in the Collateral. The insurance acquired by the Agent or any Lender may, but
need not, protect the Companies' interest in the Collateral, and therefore such
insurance may not pay claims which the Companies may have with respect to the
Collateral or pay any claim which may be made against the Companies in
connection with the Collateral. In the event the Agent or any Lender purchases,
obtains or acquires insurance covering all or any portion of the Collateral, the
Companies shall be responsible for all of the applicable costs of such
insurance, including premiums, interest (at the applicable Chase Bank Rate for
Revolving Loans set forth in Paragraph 8.1 of Section 8 of this Financing
Agreement), fees and any other charges with respect thereto, until the effective
date of the cancellation or the expiration of such insurance. The Agent may
charge all of such premiums, fees, costs, interest and other charges to the
Borrowers' Revolving Loan Account. Each Company hereby acknowledges that the
costs of the premiums of any insurance acquired by the Agent may exceed the
costs of insurance which the Companies may be able to purchase on their own. In
the event that the Agent purchases such insurance, the Agent will notify the
Companies of said purchase within thirty (30) days of the date of such purchase.
If, within thirty (30) days of the date of such notice, the Companies provides
the Agent with proof that the Companies had the insurance coverage required
pursuant to 7.5(a) above (in form and substance satisfactory to the Agent) as of
the date on which the Agent purchased insurance and the Companies continued at
all times to have such insurance, then the Agent agrees to cancel the insurance
purchased by the Agent and credit the Borrowers' Revolving Loan Account with the
amount of all costs, interest and other charges associated with any insurance
purchased by the Agent, including with any amounts previously charged to the
Revolving Loan Account.
7.6 Each Company agrees to pay, when due, all Taxes, including sales
taxes, assessments, claims and other charges lawfully levied or assessed upon
each Company or the Collateral unless such Taxes are being diligently contested
in good faith by such Company by appropriate proceedings and adequate reserves
are established in accordance with GAAP. Notwithstanding the foregoing, if any
lien shall be filed or claimed thereunder (a) for Taxes due the United States of
America, or (b) which in the
50
Agent's opinion is likely to create a valid obligation having priority over the
rights granted to the Agent herein (exclusive of Real Estate), such lien shall
not be deemed to be a Permitted Encumbrance hereunder and such Company shall
immediately pay such tax and remove the lien of record. If any Company fails to
do so promptly, then at the Agent's election, the Agent may (i) create an
Availability Reserve in such amount as it may deem appropriate in its business
judgment, or (ii) upon the occurrence of a Default or Event of Default, imminent
risk of seizure, filing of any priority lien, forfeiture, or sale of any of the
Collateral, pay Taxes on any Company's behalf, and the amount thereof shall be
an Obligation secured hereby and due on demand.
7.7 Each Company: (a) agrees to comply with all acts, rules,
regulations and orders of any legislative, administrative or judicial body or
official, which the failure to comply with would reasonably be expected to have
a material and adverse impact on the Collateral, or any material part thereof,
or on the business or operations of the Companies taken as a whole, provided
that such Company may contest any acts, rules, regulations, orders and
directions of such bodies or officials in any reasonable manner which will not,
in the Agent's reasonable opinion, materially and adversely effect the Agent's
rights or priority in the Collateral; (b) agrees to comply with all
environmental statutes, acts, rules, regulations or orders as presently existing
or as adopted or amended in the future, applicable to the Collateral, the
ownership and/or use of its real property and operation of its business, which
the failure to comply with would reasonably be expected to have a material and
adverse impact on the Collateral, or any material part thereof, or on the
operation of the business of the Companies taken as a whole; and (c) shall not
be deemed to have breached any provision of this Paragraph 7.7 if (i) the
failure to comply with the requirements of this Paragraph 7.7 resulted from good
faith error or innocent omission, (ii) such Company promptly commences and
diligently pursues a cure of such breach, and (iii) such failure is cured within
(30) days following such Company's receipt of notice of such failure, or if such
cannot in good faith be cured within thirty (30) days, then such breach is cured
within a reasonable time frame based upon the extent and nature of the breach
and the necessary remediation, and in conformity with any applicable consent
order, consensual agreement and applicable law.
7.8 Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Parent agrees that, unless
the Agent shall have otherwise consented in writing, the Parent will furnish to
the Agent and each Lender: (a) within one hundred five (105) days after the end
of each Fiscal Year of the Companies, an audited Consolidated Balance Sheet,
with an unaudited Consolidating Balance Sheet attached thereto, as at the close
of such year, and statements of profit and loss, cash flow and reconciliation of
surplus of the Companies for such year, which consolidated financial statements
shall be audited by independent public accountants selected by the Parent and
satisfactory to the Agent; (b) within sixty (60) days after the end of each
Fiscal Quarter a Consolidated Balance Sheet and Consolidating Balance Sheet as
at the end of such period and statements of profit and loss, cash flow and
surplus of the Companies, certified by the Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer of the Parent; (c) within thirty
(30) days after the end of each month a Consolidated Balance Sheet as at the end
of such period and statements of profit and loss, cash flow and surplus of the
Companies for such period, certified by the Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, Treasurer or Controller of the
Parent; and (d) from time to time, such further information regarding the
business affairs and financial condition of any Company as the Agent may
reasonably request, including,
51
without limitation (i) the accountant's management practice letter and (ii)
annual cash flow projections in form satisfactory to the Agent. Each financial
statement which any Company is required to submit hereunder must be accompanied
by officer's certificates, signed by the President, Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, Vice President, Controller, or
Treasurer of such Company, pursuant to which any one such officer of such
Company must certify that: (x) the financial statement(s) fairly and accurately
represent(s) in all material respects such Company's financial condition at the
end of the particular accounting period, as well as such Company's operating
results during such accounting period, subject to year-end audit adjustments;
and (y) during the particular accounting period: (A) there has been no Default
or Event of Default under this Financing Agreement, provided, however, that if
any such officer has knowledge that any such Default or Event of Default, has
occurred during such period, the existence of and a detailed description of same
shall be set forth in such officer's certificate; (B) such Company has not
received any notice of cancellation with respect to its property insurance
policies; (C) such Company has not received any notice that could reasonably be
expected to result in a Material Adverse Effect on the value of the Collateral
taken as a whole; and (D) the exhibits attached to such financial statement(s)
constitute detailed calculations showing compliance with all financial covenants
contained in this Financing Agreement.
7.9 Until termination of the Financing Agreement and payment and
satisfaction of all Obligations hereunder, each Company agrees that, without the
prior written consent of the Required Lenders, except as otherwise herein
provided, such Company will not:
(A) Mortgage, assign, pledge, transfer or otherwise permit any
lien, charge, security interest, encumbrance or judgment,
(whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to
exist on any of such Company's Collateral or any other assets,
whether now owned or hereafter acquired, except for the
Permitted Encumbrances;
(B) Incur or create any Indebtedness other than Permitted
Indebtedness;
(C) Sell, lease, assign, transfer or otherwise dispose of
Collateral, except (i) sales, leases, assignments, transfers
or other dispositions by a Company to another Company, which
proceeds received from, or other consideration given in
connection with, such sale, lease, assignment, transfer or
other disposition, when aggregated with other sales, leases,
assignments, transfers and other dispositions to other
Companies do not exceed $250,000 in the aggregate in any
consecutive twelve (12) month period, provided the Agent is
given written notice thereof not less than five (5) days after
such sale, lease, assignment, transfer or other disposition
becomes effective, (ii) sales, leases, assignments, transfers
or other dispositions by a Company to another Company other
than pursuant to clause (i) above provided the Agent is given
not less than five (5) days prior written notice of such
transaction and not less than five (5) days prior to the
effective date thereof, the Agent is provided copies of all
documents evidencing or relating to such sale, lease,
assignment, transfer or other disposition, and (iii) as
otherwise specifically permitted by this Financing Agreement
or any other Loan Document, including, but not limited to,
Paragraph 7.13 below,;
(D) Merge, consolidate or otherwise alter or modify its corporate
name, principal place of business, structure, or existence,
re-incorporate or re-organize, or enter into or engage
52
in any operation or activity materially different from that
presently being conducted by such Company, except that such
Company may change its corporate name or address and such
Company may engage in operations and activities reasonably
related to those presently being conducted; provided that: (i)
such Company shall give the Agent thirty (30) days prior
written notice thereof and (ii) such Company shall execute and
deliver, prior to or simultaneously with any such action, any
and all documents and agreements requested by the Agent to
confirm the continuation and preservation of all security
interests and liens granted to the Agent hereunder;
(E) Assume, guarantee, endorse, or otherwise become liable upon
the obligations of any person, firm, entity or corporation,
except (i) by the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business, (ii) guarantees executed by a Company in
the ordinary course of its business guaranteeing Indebtedness
or obligation of another Company if the incurring of such
Indebtedness or obligation is permitted hereunder, and (iii)
guarantees of Indebtedness or obligation of non-Affiliate
third parties in existence on the Closing Date and listed on
Schedule 2 hereto;
(F) Declare or pay any dividend or distributions of any kind on,
or purchase, acquire, redeem or retire, any of the capital
stock or equity interest, of any class whatsoever, whether now
or hereafter outstanding, except (i) the Parent may pay
dividends with respect to any class of its capital stock
payable solely in additional shares of such class of stock,
and (ii) subsidiaries of a Company may pay dividends to Parent
or another Company ratably with respect to their capital
stock;
(G) Make any advance or loan to, or any investment in, any firm,
entity, person or corporation or purchase or acquire all or
substantially all of the stock or assets of any entity, person
or corporation, except (i) investments in Cash Equivalents if
and only if the Agent on behalf of the Lenders has a perfected
first priority lien and security interest in such Cash
Equivalents, (ii) investments existing on the date of this
Financing Agreement described on Schedule 9, (iii) loans made
by one Company to another Company permitted pursuant to clause
(h) of the definition of Permitted Indebtedness, and (iv)
loans and advances to employees of any Company in the ordinary
course of business of such Company (including, without
limitation, for travel, entertainment and relocation expenses)
which do not exceed $100,000 in the aggregate at any time
outstanding; or
(H) Pay any management, consulting or other similar fees to any
person, corporation or other entity which is an Affiliate of
such Company in excess of $100,000 in the aggregate in any
Fiscal Year.
7.10 Until termination of the Financing Agreement and payment and
satisfaction in full of all Obligations hereunder, the Companies shall:
(A) maintain at all times during each Fiscal Quarter ending below
a Tangible Net Worth of not less than the amount set forth
below for the applicable period:
53
PERIOD TANGIBLE NET WORTH
Fiscal Quarter ending June 30, 2004 $21,330,000
Fiscal Quarter ending September 30, 2004 $21,410,000
Fiscal Quarter ending December 31, 2004 $23,646,000
Fiscal Quarter ending March 31, 2005 $24,022,000
Fiscal Quarter ending June 30, 2005 $24,398,000
Fiscal Quarter ending September 30, 2005 $24,774,000
Fiscal Quarter ending December 31, 2005 $25,150,000
Fiscal Quarter ending March 31, 2006 $25,898,000
Fiscal Quarter ending June 30, 2006 $26,646,000
Fiscal Quarter ending September 30, 2006 $27,394,000
Fiscal Quarter ending December 31, 2006 $28,142,000
Fiscal Quarter ending March 31, 2007 $28,704,000
Fiscal Quarter ending June 30, 2007 $29,266,000
Fiscal Quarter ending September 30, 2007 $29,828,000
PERIOD TANGIBLE NET WORTH
Fiscal Quarter ending December 31, 2007 $30,390,000
(B) Maintain a Fixed Charge Coverage Ratio of not less than the
ratio set forth below as of the end of the end of the
applicable period:
PERIOD FIXED CHARGE COVERAGE RATIO
Fiscal Quarter ending June 30, 2004 1.00 to 1.0
Fiscal Quarter ending September 30, 2004 1.00 to 1.0
Fiscal Quarter ending December 31, 2004 1.25 to 1.0
Fiscal Quarter ending March 31, 2005 1.25 to 1.0
Fiscal Quarter ending June 30, 2005 1.25 to 1.0
Fiscal Quarter ending September 30, 2005 1.25 to 1.0
Fiscal Quarter ending December 31, 2005 1.25 to 1.0
Fiscal Quarter ending March 31, 2006 1.35 to 1.0
Fiscal Quarter ending June 30, 2006 1.35 to 1.0
Fiscal Quarter ending September 30, 2006 1.35 to 1.0
Fiscal Quarter ending December 31, 2006 1.35 to 1.0
Fiscal Quarter ending March 31, 2007 1.40 to 1.0
Fiscal Quarter ending June 30, 2007 1.40 to 1.0
Fiscal Quarter ending September 30, 2007 1.40 to 1.0
Fiscal Quarter ending December 31, 2007 1.40 to 1.0
54
(C) Maintain a ratio of (i) the sum of Indebtedness as of such
date minus PIK Subordinated Debt as of such date to
(ii) EBITDA for the four (4) Fiscal Quarters then ending of
not more than the ratio set forth below for the applicable
period:
PERIOD RATIO
Fiscal Quarter ending June 30, 2004 8.5 to 1.0
Fiscal Quarter ending September 30, 2004 7.5 to 1.0
Fiscal Quarter ending December 31, 2004 4.9 to 1.0
Fiscal Quarter ending March 31, 2005 4.5 to 1.0
Fiscal Quarter ending June 30, 2005 4.5 to 1.0
Fiscal Quarter ending September 30, 2005 4.5 to 1.0
Fiscal Quarter ending December 31, 2005 4.5 to 1.0
PERIOD RATIO
Fiscal Quarter ending March 31, 2006 4.3 to 1.0
Fiscal Quarter ending June 30, 2006 4.3 to 1.0
Fiscal Quarter ending September 30, 2006 4.3 to 1.0
Fiscal Quarter ending December 31, 2006 4.3 to 1.0
Fiscal Quarter ending March 31, 2007 4.0 to 1.0
Fiscal Quarter ending June 30, 2007 4.0 to 1.0
Fiscal Quarter ending September 30, 2007 4.0 to 1.0
Fiscal Quarter ending December 31, 2007 4.0 to 1.0
7.11 The Companies agree to advise the Agent in writing of: (a) all
expenditures (actual or anticipated) in excess of $100,000 from the budgeted
amount therefor in any Fiscal Year for (i) environmental clean-up, (ii)
environmental compliance or (iii) environmental testing and the impact of said
expenses on the Companies' working capital; and (b) any notices any Company
receives from any local, state or federal authority advising any Company of any
environmental liability (real or potential) stemming from any Company's
operations, its premises, its waste disposal practices, or waste disposal sites
used by any Company and to provide the Agent with copies of all such notices if
so required.
7.12 Each Company hereby agrees to jointly and severally indemnify and
hold harmless the Agent, each Lender and their respective officers, directors,
employees, attorneys and agents (each an "Indemnified Party") from, and holds
each of them harmless against, any and all losses, liabilities, obligations,
claims, actions, damages, costs and expenses (including reasonable attorney's
fees) and any payments made by the Agent or any Lender pursuant to any indemnity
provided by the Agent or such Lender with respect to or to which any Indemnified
Party could be subject insofar as such losses, liabilities, obligations, claims,
actions, damages, costs, fees or expenses with respect to the Loan Documents,
including without limitation those which may arise from or relate to: (a) the
55
Depository Account, the Blocked Accounts, the lockbox and/or any other
depository account and/or the agreements executed in connection therewith; and
(b) any and all claims or expenses asserted against the Agent or any Lender as a
result of any environmental pollution, hazardous material or environmental
clean-up relating to the Real Estate; or any claim or expense which results from
any Company's operations (including, but not limited to, any Company's off-site
disposal practices) and use of the Real Estate, which the Agent or any Lender
may sustain or incur (other than solely as a result of the physical actions of
the Agent or any Lender on any Company's premises which are determined to
constitute gross negligence or willful misconduct by a court of competent
jurisdiction), all whether through the alleged or actual negligence of such
person or otherwise, except and to the extent that the same results solely and
directly from the gross negligence or willful misconduct of such Indemnified
Party as finally determined by a court of competent jurisdiction. Each Company
hereby agrees that this indemnity shall survive termination of this Financing
Agreement, as well as payments of Obligations which may be due hereunder. The
Agent may, based on such credit, collateral and other considerations customarily
taken into account by the Agent in making such determinations, establish such
Availability Reserves with respect thereto as it determine under the
circumstances and, upon any termination hereof, hold such reserves as cash
reserves for any such contingent liabilities.
7.13 Without the prior written consent of the Required Lenders, each
Company agrees that it will not enter into any transaction, including, without
limitation, any purchase, sale, lease, loan or exchange of property with any
Affiliate of any Company, so long as no Default or Event of Default exists or
will occur hereunder prior to and after giving effect to any such transaction,
(a) each Company may enter into sale and service transactions in the ordinary
course of its business and pursuant to the reasonable requirements of such
Company, and upon standard terms and conditions and fair and reasonable terms,
no less favorable to such Company than such Company could obtain in a comparable
arms length transaction with an unrelated third party, (b) Companies may pay the
management, consulting and similar fees permitted by Paragraph 7.9(h) of Section
7 of this Financing Agreement, and (c) Companies may pay and perform their
respective obligations under the LJH Leases including, without limitation,
payments not to exceed (i) $23,832 each month, increasing on November 1, 2007 to
$25,023 each month under the LJH Dallas Lease, (ii) subject to the terms and
provisions of the LJH Subordination Agreement, $74,076.67 each month under the
LJH Equipment Lease, and (iii) base rent of $50,806.80 each month under the LJH
Goodyear Lease plus additional rent under the "Master Lease" referred to in the
LJH Goodyear Lease.
SECTION 8. INTEREST, FEES AND EXPENSES
8.1 (A) Interest on the Revolving Loans, whether bearing interest
based on the Chase Bank Rate or LIBOR, shall be payable monthly as of the end of
each calendar month. Prime Rate Loans shall bear interest on the unpaid
principal amount thereof at a rate equal to the Chase Bank Rate plus the
Applicable Percentage per annum on the average of the net balances owing by the
Borrowers to the Agent or any Lender in the Revolving Loan Account at the close
of each day during such month. In the event of any change in said Chase Bank
Rate, the rate hereunder for Prime Rate Loans shall change, as of the date of
such change. The rate hereunder for Prime Rate Loans shall be calculated based
on a 360-day year. The Agent and the Lenders shall be entitled to charge the
Borrowers' Revolving Loan Account at the rate provided for herein when due until
all Obligations have been paid in full.
(B) Notwithstanding any provision to the contrary contained in this
Section 8, in the event that the sum of (i) the outstanding Revolving Loans and
(ii) the outstanding Letters of Credit exceed the lesser of either (x) the
Borrowing Base or (y) the Revolving Line of Credit: (A) as a result of Revolving
Loans and/or Letters of Credit advanced by the Agent or any Lender at the
request of the Borrowers (herein "Requested Overadvances"), for any one (1) or
more days in any month, or (B) for any other reason whatsoever (herein "Other
Overadvances") and such Other Overadvances continue for five (5) or more days in
any month, the average net balance of all Revolving Loans for such month shall
bear interest at the Overadvance Rate.
(C) Upon and after the occurrence of an Event of Default and the giving
of any required notice by the Agent in accordance with the provisions of
Paragraph 10.2 of Section 10 of this Financing Agreement, all Obligations shall
bear interest at the Default Rate of Interest.
56
8.2 Interest on the Term Loan, whether bearing interest based on the
Chase Bank Rate or LIBOR, shall be payable quarterly as of the end of each
calendar quarter on the unpaid balance or on payment in full prior to maturity.
Prime Rate Loans shall bear interest on the unpaid principal amount thereof at a
rate equal to the Chase Bank Rate plus the Applicable Percentage per annum. In
the event of any change in said Chase Bank Rate the rate hereunder for any such
Prime Rate Loans shall change, as of the date of such change. The rate hereunder
shall be calculated based on a 360 day year. The Agent and the Lenders shall be
entitled to charge the Borrowers' Revolving Loan Account at the rate provided
for herein when due until all Obligations have been paid in full.
8.3 Borrowers shall pay to the Agent the Letter of Credit Guaranty
Fees, Line of Credit Fee, the Administrative Management Fee, the Loan Facility
Fee, the audit fees, the Early Termination Fee, the Ex-Im Bank application and
facility fees, and other fees in the amounts set forth in the Fee Agreement.
Such fees shall be payable as follows: (a) Letter of Credit Guaranty Fees plus
all normal and customary charges of the Issuing Bank associated with the
issuance and administration of each such Letter of Credit shall be payable upon
the issuance of each Letter of Credit; (b) the Line of Credit Fee shall be
payable on the last Business Day of each month, commencing April 30, 2004; (c)
the Administrative Management Fee shall be payable on the Closing Date and on
the last Business Day of each month, commencing April 30, 2004; (d) the Loan
Facility Fee shall be payable on the Closing Date; (e) the audit fees shall be
payable as set forth in Paragraph 8.7 of this Section 8 of this Financing
Agreement; (f) the Early Termination Fee shall be payable as set forth in
Section 11 of this Financing Agreement; and (g) the Ex-Im Bank application and
facility fees for the administration of the Foreign Borrowing Base shall be
payable on the Closing Date and annually thereafter.
8.4 Any and all charges, fees, commissions, costs and expenses charged
to the Agent or any Lender for the Borrowers' account by any Issuing Bank in
connection with, or arising out of, Letters of Credit or out of transactions
relating thereto will be charged to the Borrowers' Revolving Loan Account in
full when charged to, or paid by the Agent or any Lender, or as may be due upon
any termination of this Financing Agreement hereof, and when made by any such
Issuing Bank shall be conclusive on the Agent or such Lender.
8.5 The Borrowers shall reimburse or pay the Agent, as the case may be,
for: (a) all Out-of-Pocket Expenses and (b) any applicable Documentation Fee.
All such Out-of-Pocket Expenses and any applicable Documentation Fee shall be
chargeable to Borrowers' Revolving Loan Account and shall be Obligations secured
by all of the Collateral, payable on demand to Agent and, if not charged to the
Revolving Loan Account, shall bear interest from the date demand is made until
paid in full at the highest rate applicable to Prime Rate Loans from time to
time.
8.6 Interest will be computed at the rate(s) set forth in this
Financing Agreement and in the manner set forth in Paragraph 8.1 of Section 8 of
this Financing Agreement.
8.7 The Borrowers shall pay the Agent's standard charges and fees for
the Agent's personnel used by the Agent for reviewing the books and records of
the Borrowers and for verifying, testing, protecting, safeguarding, preserving
or disposing of all or any part of the Collateral (which fees shall be in
addition to the Administrative Management Fee and any Out-of-Pocket Expenses) as
set forth
57
in the Fee Agreement. All such charges and fees shall be chargeable to
Borrowers' Revolving Loan Account and shall be Obligations secured by all of the
Collateral, payable on demand to Agent and, if not charged to the Revolving Loan
Account, shall bear interest from the date demand is made until paid in full at
the highest rate applicable to Prime Rate Loans from time to time.
8.8 The Borrowers hereby authorize the Agent to charge the Revolving
Loan Account with the amount of all payments due hereunder as such payments
become due. The Borrowers confirm that any charges which the Agent may so make
to the Revolving Loan Account as herein provided will be made as an
accommodation to the Borrowers and solely at the Agent's discretion.
8.9 In the event that the Agent, any Lender or any participant
hereunder (or any financial institution which may from time to time become a
participant or lender hereunder) shall have determined in the exercise of its
reasonable business judgment that, subsequent to the Closing Date, any change in
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration thereof, or compliance by the
Agent, such Lender or such participant with any new request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Agent's, such Lender's or such participant's
capital as a consequence of its obligations hereunder to a level below that
which the Agent, such Lender or such participant could have achieved but for
such adoption, change or compliance (taking into consideration the Agent's, such
Lender's or such participant's policies with respect to capital adequacy) by an
amount reasonably deemed by the Agent, such Lender or such participant to be
material, then, from time to time, the Borrowers shall pay no later than five
(5) days following demand to the Agent, such Lender or such participant such
additional amount or amounts as will compensate the Agent, such Lender or such
participant for such reduction. In determining such amount or amounts, the
Agent, such Lender or such participant may use any reasonable averaging or
attribution methods. The protection of this Paragraph 8.9 shall be available to
the Agent, such Lender or such participant regardless of any possible contention
of invalidity or inapplicability with respect to the applicable law, regulation
or condition. A certificate of the Agent, such Lender or such participant
setting forth such amount or amounts as shall be necessary to compensate the
Agent, such Lender or such participant with respect to this Section 8 and the
calculation thereof when delivered to the Borrowers shall be conclusive on the
Borrowers absent manifest error. Notwithstanding anything in this Paragraph to
the contrary, in the event the Agent, such Lender or such participant has
exercised its rights pursuant to this Paragraph, and subsequent thereto
determines that the additional amounts paid by the Borrowers in whole or in part
exceed the amount which the Agent, such Lender or such participant actually
required to be made whole, the excess, if any, shall be promptly returned to the
Borrowers by the Agent, such Lender or such participant.
8.10 In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by the Agent, any Lender or any participant with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(A) subject the Agent, such Lender or such participant to any tax of
any kind whatsoever with respect to this Financing Agreement or change the basis
of taxation of payments to the Agent, such
58
Lender or such participant of principal, fees, interest or any other amount
payable hereunder or under any other documents (except for changes in the rate
of tax on the overall net income of the Agent, such Lender or such participant
by the federal government or the jurisdiction in which it maintains its
principal office);
(B) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by the Agent,
such Lender or such participant by reason of or in respect to this Financing
Agreement and the Loan Documents, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(C) impose on the Agent, such Lender or such participant any other
condition with respect to this Financing Agreement or any other document, and
the result of any of the foregoing is to increase the cost to the Agent, such
Lender or such participant of making, renewing or maintaining its loans
hereunder by an amount that the Agent, such Lender or such participant deems to
be material in the exercise of its reasonable business judgment or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the loans by an amount that the Agent, such Lender or such participant
deems to be material in the exercise of its reasonable business judgment, then,
in any case the Borrowers shall pay the Agent, such Lender or such participant,
within five (5) days following its demand, such additional cost or such
reduction, as the case may be. The Agent, such Lender or such participant shall
certify the amount of such additional cost or reduced amount to the Borrowers
and the calculation thereof and such certification shall be conclusive upon the
Borrowers absent manifest error. Notwithstanding anything in this Paragraph to
the contrary, in the event the Agent, such Lender or such participant has
exercised its rights pursuant to this Paragraph, and subsequent thereto
determines that the additional amounts paid by the Borrowers in whole or in part
exceed the amount which the Agent, such Lender or such participant actually
required pursuant hereto, the excess, if any, shall be returned to the Borrowers
by the Agent, such Lender or such participant.
8.11 The Borrowers may request LIBOR Loans on the following terms and
conditions:
(A) The Borrowers may elect, on the Closing Date and from time to time
thereafter, (i) to request any loan made hereunder to be a LIBOR Loan as of the
date of such loan or (ii) to convert Prime Rate Loans to LIBOR Loans, and may
elect from time to time to convert LIBOR Loans to Prime Rate Loans by giving the
Agent at least three (3) Business Days' prior irrevocable notice of such
election, provided that any such conversion of LIBOR Loans to Prime Rate Loans
shall only be made, subject to the second following sentence, on the last day of
an Interest Period with respect thereto. Should the Borrowers elect to convert
Prime Rate Loans to LIBOR Loans, they shall give the Agent at least three (3)
Business Days' prior irrevocable notice of such election. If the last day of an
Interest Period with respect to a loan that is to be converted to a Prime Rate
Loan is not a Business Day or Working Day, then such conversion shall be made on
the next succeeding Business Day or Working Day, as the case may be, and during
the period from such last day of an Interest Period to such succeeding Business
Day, as the case may be, such loan shall bear interest as if it were an Prime
Rate Loan. All or any part of outstanding Prime Rate Loans then outstanding with
respect to Revolving Loans and the Term Loan may be converted to LIBOR Loans as
provided herein,
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provided that partial conversions shall be in multiples in an aggregate
principal amount of $1,000,000 or more.
(B) Any LIBOR Loans may be continued as such upon the expiration of an
Interest Period, provided the Borrowers so notify the Agent, at least three (3)
Business Days' prior to the expiration of said Interest Period, and provided
further that no LIBOR Loan may be continued as such upon the occurrence of any
Default or Event of Default under this Financing Agreement, but shall be
automatically converted to a Prime Rate Loan on the last day of the Interest
Period during which occurred such Default or Event of Default. Absent such
notification, LIBOR Rate Loans shall convert to Prime Rate Loans on the last day
of the applicable Interest Period. Each notice of election, conversion or
continuation furnished by the Borrowers pursuant hereto shall specify whether
such election, conversion or continuation is for a one, two, or three month
period. Notwithstanding anything to the contrary contained herein, neither the
Agent nor any Lender (nor any participant, if applicable) shall be required to
purchase United States Dollar deposits in the London interbank market or from
any other applicable LIBOR Rate market or source or otherwise "match fund" to
fund LIBOR Rate Loans, but any and all provisions hereof relating to LIBOR Rate
Loans shall be deemed to apply as if the Agent or the Lenders (and any
participant, if applicable) had purchased such deposits to fund any LIBOR Rate
Loans.
(C) The Borrowers may request a LIBOR Loan, convert any Prime Rate Loan
or continue any LIBOR Loan provided there is then no Default or Event of Default
in effect.
8.12 (A) The LIBOR Loans shall bear interest for each Interest Period
with respect thereto on the unpaid principal amount thereof at a rate per annum
equal to the LIBOR determined for each Interest Period in accordance with the
terms hereof plus the Applicable Percentage.
(B) If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Prime Rate Loan at the end of the last Interest
Period therefor.
(C) The Borrowers may not have more than three (3) LIBOR Loans
outstanding at any given time.
8.13 (A) Interest in respect of the LIBOR Loans shall be calculated on
the basis of a 360 day year and shall be payable as of the end of each month for
Revolving Loans which are LIBOR Loans and as of the end of each calendar quarter
for any portion of the Term Loan which is a LIBOR Loan.
(B) The Agent shall, at the request of the Borrowers, deliver to the
Borrowers a statement showing the quotations given by JPMorgan Chase Bank and
the computations used in determining any interest rate pursuant to Paragraph
8.12 of Section 8 of this Financing Agreement.
8.14 As further set forth in Paragraph 8.10 of Section 8 of this
Financing Agreement, in the event that the Agent or any Lender (or any financial
institution which may become a participant
60
hereunder) shall have determined in the exercise of its reasonable business
judgment (which determination shall be conclusive and binding upon the
Borrowers) that by reason of circumstances affecting the interbank LIBOR market,
adequate and reasonable means do not exist for ascertaining LIBOR applicable for
any Interest Period with respect to: (a) a proposed loan that the Borrowers have
requested be made as a LIBOR Loan; (b) a LIBOR Loan that will result from the
requested conversion of a Prime Rate Loan into a LIBOR Loan; or (c) the
continuation of LIBOR Loans beyond the expiration of the then current Interest
Period with respect thereto, the Agent shall forthwith give written notice of
such determination to the Borrowers at least one day prior to, as the case may
be, the requested borrowing date for such LIBOR Loan, the conversion date of
such Prime Rate Loan or the last day of such Interest Period. If such notice is
given (i) any requested LIBOR Loan shall be made as a Prime Rate Loan, (ii) any
Prime Rate Loan that was to have been converted to a LIBOR Loan shall be
continued as a Prime Rate Loan, and (iii) any outstanding LIBOR Loan shall be
converted, on the last day of then current Interest Period with respect thereto,
to a Prime Rate Loan. Until such notice has been withdrawn by the Agent, no
further LIBOR Loan shall be made nor shall the Borrowers have the right to
convert a Prime Rate Loan to a LIBOR Loan.
8.15 If any payment on a LIBOR Loan becomes due and payable on a day
other than a Business Day or Working Day, the maturity thereof shall be extended
to the next succeeding Business Day or Working Day unless the result of such
extension would be to extend such payment into another calendar month in which
event such payment shall be made on the immediately preceding Business Day or
Working Day.
8.16 Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive or any change therein or in the interpretation
or application thereof, shall make it unlawful for the Agent or any Lender to
make or maintain LIBOR Loans as contemplated herein, the then outstanding LIBOR
Loans, if any, shall be converted automatically to Prime Rate Loans as of the
end of such month, or within such earlier period as required by law. The
Borrowers hereby agree promptly to pay the Agent, upon demand, any additional
amounts necessary to compensate the Agent and each Lender for any costs incurred
by the Agent or such Lender in making any conversion in accordance with this
Section 8 including, but not limited to, any interest or fees payable by the
Agent or any Lender to lenders of funds obtained by the Agent or such Lender in
order to make or maintain LIBOR Loans hereunder.
8.17 The Borrowers jointly and severally agree to indemnify and to hold
the Agent and each Lender (including any participant) harmless from any loss or
expense which the Agent, such Lender or such participant may sustain or incur as
a consequence of: (a) default by the Borrowers in payment of the principal
amount of or interest on any LIBOR Loans, as and when the same shall be due and
payable in accordance with the terms of this Financing Agreement, including, but
not limited to, any such loss or expense arising from interest or fees payable
by the Agent, such Lender or such participant to lenders of funds obtained by
either of them in order to maintain the LIBOR Loans hereunder; (b) default by
the Borrowers in making a borrowing or conversion after the Borrowers has given
a notice in accordance with Paragraph 8.11 of Section 8 of this Financing
Agreement; (c) any prepayment of LIBOR Loans on a day which is not the last day
of the Interest Period applicable thereto, including, without limitation,
prepayments arising as a result of the application of the proceeds of Collateral
to the Revolving Loans; and (d) default by the Borrowers in making any
61
prepayment after the Borrowers had given notice to the Agent thereof. The
determination by the Agent or any Lender of the amount of any such loss or
expense, when set forth in a written notice to the Borrowers, containing the
Agent's or such Lender's calculations thereof in reasonable detail, shall be
conclusive on the Borrowers in the absence of manifest error. Calculation of all
amounts payable under this Paragraph with regard to LIBOR Loans shall be made as
though the Agent or such Lender had actually funded the LIBOR Loans through the
purchase of deposits in the relevant market and currency, as the case may be,
bearing interest at the rate applicable to such LIBOR Loans in an amount equal
to the amount of the LIBOR Loans and having a maturity comparable to the
relevant Interest Period; provided, however, that the Agent and any Lender may
fund each of the LIBOR Loans in any manner the Agent or such Lender sees fit and
the foregoing assumption shall be used only for calculation of amounts payable
under this Paragraph. In addition, notwithstanding anything to the contrary
contained herein, the Agent and the Lenders shall apply all proceeds of
Collateral and all other amounts received by it from or on behalf of the
Borrowers (i) initially to the Prime Rate Loans and (ii) subsequently to LIBOR
Loans; provided, however, (x) upon the occurrence of an Event of Default or (y)
in the event the aggregate amount of outstanding LIBOR Rate Loans exceeds
Availability or the applicable maximum levels set forth therefor, the Agent and
the Lenders may apply all such amounts received by it to the payment of
Obligations in such manner and in such order as the Agent and the Lenders may
elect in their respective reasonable business judgment. In the event that any
such amounts are applied to Revolving Loans which are LIBOR Loans, such
application shall be treated as a prepayment of such loans and the Agent and the
Lenders shall be entitled to indemnification hereunder. This covenant shall
survive termination of this Financing Agreement and payment of the outstanding
Obligations.
8.18 Notwithstanding anything to the contrary in this Financing
Agreement, in the event that, by reason of any Regulatory Change (for purposes
hereof "Regulatory Change" shall mean, with respect to the Agent and the
Lenders, any change after the date of this Financing Agreement in United States
federal, state or foreign law or regulations (including, without limitation,
Regulation D) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks including the Agent or any
Lender of or under any United States federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful), the Agent or such Lender either (a)
incurs any material additional costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such bank which includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Financing Agreement or a category
of extensions of credit or other assets of the Agent or such Lender which
includes LIBOR Loans; or (b) becomes subject to any material restrictions on the
amount of such a category of liabilities or assets which it may hold, then, if
the Agent or such Lender so elects by notice to the Borrowers, the obligation of
the Agent and any Lender to make or continue LIBOR Loans or convert Prime Rate
Loans into LIBOR Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect.
8.19 For purposes of this Financing Agreement and Section 8 thereof,
any reference to any Lender shall include any financial institution which may
become a participant or co-lender subsequent to the Closing Date.
SECTION 9. POWERS
Each Company hereby constitutes the Agent on behalf of the Lenders, or
any person or agent the Agent may designate, as its attorney-in-fact, at the
Companies' cost and expense, to exercise all of the following powers, which
being coupled with an interest, shall be irrevocable until all Obligations to
the Agent and the Lenders have been paid in full:
(A) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent or such Company, any and all checks, notes, drafts, and other
documents or instruments relating to the Collateral;
(B) To receive, open and dispose of all mail addressed to such Company
and to notify postal authorities to change the address for delivery thereof to
such address as the Agent may designate;
(C) To request from customers indebted on Accounts at any time, in the
name of the Agent information concerning the amounts owing on the Accounts;
(D) To request from customers indebted on Accounts at any time, in the
name of such Company, in the name of certified public accountant designated by
the Agent or in the name of the Agent's designee, information concerning the
amounts owing on the Accounts;
(E) To transmit to customers indebted on Accounts notice of the Agent's
interest therein and to notify customers indebted on Accounts to make payment
directly to the Agent for such Company's account; and
(F) To take or bring, in the name of the Agent or such Company, all
steps, actions, suits or proceedings deemed by the Agent necessary or desirable
to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the
powers set forth in clauses (b), (c), (e) and (f) above may only be exercised
after the occurrence of an Event of Default and until such time as such Event of
Default is waived in writing by the Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Notwithstanding anything hereinabove to the contrary, the Lenders
acting through the Agent may terminate this Financing Agreement immediately upon
the occurrence of any of the following Events of Default:
(A) cessation of the business of any Company or the calling of a
meeting of the creditors of any Company for purposes of
compromising the debts and obligations of the Company (other
than a meeting of the holders of any of the PIK Subordinated
Indebtedness or the Indebtedness evidenced by the 8-1/8%
Senior Subordinated Notes Due 2008 Indenture dated as of
February 17, 1998);
62
(B) the failure of any Borrower to generally meet its debts as
they mature or the failure of the Companies taken as a whole
to generally meet their debts as they mature;
(C) (i) the commencement by any Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or
similar proceedings under any federal or state law; (ii) the
commencement against any Company, of any bankruptcy,
insolvency, arrangement, reorganization, receivership or
similar proceeding under any federal or state law by creditors
of any Company, provided that such Default shall not be deemed
an Event of Default if such proceeding is controverted within
twenty (20) days and dismissed and vacated within forty-five
(45) days of commencement, except in the event that any of the
actions sought in any such proceeding shall occur or any
Company shall take action to authorize or effect any of the
actions in any such proceeding;
(D) breach by any Company of any warranty, representation or
covenant contained herein (other than those referred to in
sub-paragraph (e) below) or in any other Loan Document between
any Company and the Agent or the Lenders, and the breach of
such warranty, representation or covenant is not cured to the
Required Lender's satisfaction within ten (10) days from the
date of such breach; provided, however, no Event of Default
shall be deemed to have occurred solely as a result of the
breach by a Borrower of any warranties, representations or
covenants contained in the Bond Letter of Credit Application
which are more restrictive than the warranties,
representations or covenants contained in this Financing
Agreement;
(E) breach by any Company of any warranty, representation or
covenant of Paragraphs 3.3 (other than the fifth sentence of
Paragraph 3.3) and 3.4 of Section 3 hereof; Paragraphs 6.3 and
6.4 (other than the first sentence of Paragraph 6.4) of
Section 6 hereof; Paragraphs 7.1, 7.5, 7.6, 7.8 through 7.11
and 7.13 hereof;
(F) failure of any Company to pay any of the Obligations within
five (5) Business Days of the due date thereof, provided that
nothing contained herein shall prohibit the Agent from
charging such amounts to the Revolving Loan Account on the due
date thereof;
(G) any Company shall (i) engage in any "prohibited transaction"
as defined in ERISA, (ii) have any "accumulated funding
deficiency" as defined in ERISA, (iii) have any "reportable
event" as defined in ERISA, (iv) terminate any Benefit Plan,
as defined in ERISA or (v) be engaged in any proceeding in
which the Pension Benefit Guaranty Corporation shall seek
appointment, or is appointed, as trustee or administrator of
any "plan", as defined in ERISA, and with respect to this
sub-paragraph (g) such event or condition (x) remains uncured
for a period of thirty (30) days from date of occurrence and
(y) could, in the reasonable opinion of the Agent, subject any
Company to any tax, penalty or other liability material to the
business, operations or financial condition of the Company;
(H) without the prior written consent of the Agent and, except as
permitted in the Subordination Agreement, any Company shall
(x) amend or modify the Subordinated Debt except as permitted
pursuant to clause (c) of the definition of Permitted
Indebtedness, or (y) make any payment on account of the
Subordinated Debt except as permitted by its terms or by the
terms of the Subordination Agreement executed in connection
therewith;
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(I) the occurrence of any default or event of default (after
giving effect to any applicable grace or cure periods) under
any instrument or agreement evidencing (x) Subordinated Debt
or (y) any other Indebtedness of the Company having a
principal amount in excess of $250,000;
(J) without the prior written consent of the Agent and, except as
permitted in the LJH Subordination Agreement or the Hilco
Intercreditor Agreement, any Company shall amend or modify the
Indebtedness described therein;
(K) the occurrence of an "Event of Default" (as defined in the
Hilco Documents) under the Hilco Documents;
(L) the failure of any Company to (i) pay any amounts due under
any lease encumbered pursuant to a Mortgage when such amounts
are due and payable (after giving effect to any applicable
grace or cure periods), and (ii) observe any of such Company's
other obligations or covenants under such lease (and not
involving a payment of the type referred to in clause (i))
which is not remedied within any applicable grace period
specified in such lease;
(M) termination of any lease prior to its expiration date; or
(N) a Change of Control.
10.2 Upon the occurrence of a Default and/or an Event of Default, the
Agent may (at its option) and shall at the direction of the Required Lenders
declare that all loans, advances and extensions of credit provided for in
Sections 3, 4 and 5 of this Financing Agreement, if any, shall be thereafter in
the Agent's sole discretion and the obligation of the Agent or any Lender to
make Revolving Loans, open Letters of Credit and provide Letters of Credit
Guaranties, shall cease unless such Default is cured to the Agent's satisfaction
or Event of Default is waived in writing by the Agent, and the Agent may (at its
option) and shall at the direction of the Required Lenders declare that upon the
occurrence of an Event of Default: (A) all Obligations shall become immediately
due and payable; (B) the Default Rate of Interest shall be charged on all then
outstanding or thereafter incurred Obligations in lieu of the interest provided
for in Section 8 of this Financing Agreement, provided that, with respect to
this clause (b) the Agent has given the Borrowers written notice of the Event of
Default; provided, however, that no notice is required if the Event of Default
is the Event listed in Paragraph 10.1(c) of this Section 10, and (C) this
Financing Agreement shall immediately terminate upon notice to the Borrowers;
provided, however, that upon the occurrence of an Event of Default listed in
Paragraph 10.1(c) of this Section 10, this Financing Agreement shall
automatically terminate and all Obligations shall become due and payable,
without any action, declaration, notice or demand. The exercise of any option is
not exclusive of any other option, which may be exercised at any time by the
Agent and/or the Lenders.
10.3 Immediately upon the occurrence of any Event of Default, the Agent
may and at the request of the Required Lenders shall, to the extent permitted by
law: (A) remove from any premises where same may be located any and all books
and records, computers, electronic media and software programs associated with
any Collateral (including any electronic records, contracts and signatures
pertaining thereto), documents, instruments, files and records, and any
receptacles or cabinets containing same, relating to the Accounts, or the Agent
may use, at the Companies' expense, such of any Company's personnel, supplies or
space at any Company's places of business or otherwise, as may be necessary to
properly administer and control the Accounts or the handling of collections and
64
realizations thereon; (B) bring suit, in the name of any Company or the Agent on
behalf of the Lenders, and generally shall have all other rights respecting said
Accounts, including without limitation the right to: accelerate or extend the
time of payment, settle, compromise, release in whole or in part any amounts
owing on any Accounts and issue credits in the name of any Company or the Agent;
(C) sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed Inventory, with or without advertisement, at public or private sale,
for cash, on credit or otherwise, at the Agent's sole option and discretion, and
the Agent or any Lender may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by each
Company; (D) foreclose the security interests in the Collateral created herein
or by the other Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any Inventory and Equipment and/or Other Collateral may be located for the
purpose of taking possession of or removing the same; and (E) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise. The
Agent shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of any Company
or the Agent, or in the name of such other party as the Agent may designate,
either at public or private sale or at any broker's board, in lots or in bulk,
for cash or for credit, with or without warranties or representations (including
but not limited to warranties of title, possession, quiet enjoyment and the
like), and upon such other terms and conditions as the Agent in its sole
discretion may deem advisable, and the Agent shall have the right to purchase at
any such sale. If any Inventory and Equipment shall require rebuilding,
repairing, maintenance or preparation, the Agent shall have the right, at its
option, to do such of the aforesaid as is necessary, for the purpose of putting
the Inventory and Equipment in such saleable form as the Agent shall deem
appropriate and any such costs shall be deemed an Obligations hereunder. Any
action taken by the Agent pursuant to this Paragraph shall not affect the
commercial reasonableness of the sale. Each Company agrees, at the request of
the Agent, to assemble the Inventory and Equipment and to make it available to
the Agent at premises of any Company or elsewhere and to make available to the
Agent the premises and facilities of any Company for the purpose of the Agent's
taking possession of, removing or putting the Inventory and Equipment in
saleable form. If notice of intended disposition of any Collateral is required
by law, it is agreed that ten (10) days prior written notice shall constitute
reasonable notification and full compliance with the law. The net cash proceeds
resulting from the Agent's exercise of any of the foregoing rights, (after
deducting all charges, costs and expenses, including reasonable attorneys' fees)
shall be applied by the Agent to the payment of the Obligations, whether due or
to become due, in such order as the Agent may elect, and each Company shall
remain jointly and severally liable to the Agent and the Lenders for any
deficiencies, and the Agent in turn agrees to remit to the Companies or their
successors or assigns, any surplus resulting therefrom. The enumeration of the
foregoing rights is not intended to be exhaustive and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be
cumulative. Each Company hereby jointly and severally indemnifies the Agent and
the Lenders and holds the Agent and each Lender harmless from any and all
reasonable costs, expenses, claims, liabilities, Out-of-Pocket Expenses or
otherwise, incurred or imposed on the Agent or such Lender by reason of the
exercise of any of its rights, remedies and interests hereunder, including,
without limitation, from any sale or transfer of Collateral, preserving,
maintaining or securing the Collateral, defending its interests in Collateral
(including pursuant to any claims brought by any Company, any Company as
debtor-in-possession,
65
any secured or unsecured creditors of any Company, any trustee or receiver in
bankruptcy, or otherwise), and each Company hereby agrees to so indemnify and
hold the Agent harmless, absent the Agent's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction. The
foregoing indemnification shall survive termination of this Financing Agreement
until such time as all Obligations (including the foregoing) have been finally
and indefeasibly paid in full. In furtherance thereof the Agent, may establish
such reserves for Obligations hereunder (including any contingent Obligations)
as it may deem advisable in its reasonable business judgment. Any applicable
mortgage(s), deed(s) of trust or assignment(s) issued to the Agent on the Real
Estate shall govern the rights and remedies of the Agent and the Lenders
thereto.
SECTION 11. TERMINATION
Except as otherwise permitted herein, any Lender acting through the
Agent may terminate this Financing Agreement only as of the initial or any
subsequent Anniversary Date and then only by giving the Borrowers at least sixty
(60) days prior written notice of termination. Notwithstanding the foregoing the
Lenders acting through the Agent may terminate the Financing Agreement
immediately upon the occurrence of an Event of Default, provided, however, that
if the Event of Default is an event listed in Paragraph 10.1(c) of Section 10 of
this Financing Agreement, this Financing Agreement shall terminate in accordance
with Paragraph 10.2 of Section 10. This Financing Agreement, unless terminated
as herein provided, shall automatically continue from Anniversary Date to
Anniversary Date. The Borrowers may terminate this Financing Agreement at any
time upon sixty (60) days prior written notice to the Agent, provided that the
Borrowers pay to the Agent for the benefit of the Lenders immediately on demand
the Early Termination Fee. All Obligations shall become due and payable as of
any termination hereunder or under Section 10 hereof and, pending a final
accounting, the Agent and the Lenders may withhold any balances in the
Borrowers' account (unless supplied with an indemnity satisfactory to the Agent
and the Lenders) to cover all of the Obligations, whether absolute or
contingent, including, but not limited to, cash reserves for any contingent
Obligations, including an amount of 110% of the face amount of any outstanding
Letters of Credit with an expiry date on, or within thirty (30) days of the
effective date of termination of this Financing Agreement. All of the Agent's
and the Lender's rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full.
SECTION 12. JOINT AND SEVERAL LIABILITY; CROSS-GUARANTY; RIGHT OF SUBROGATION;
WAIVER OF SURETYSHIP DEFENSES; SUBORDINATION; APPOINTMENT
12.1 Notwithstanding anything to the contrary contained herein, the
Companies shall be jointly and severally liable to the Lenders for all
Obligations hereunder, regardless of whether such Obligations arise as a result
of Revolving Loans, Letters of Credit, the Term Loan or credit extensions to one
Company, it being stipulated and agreed that Revolving Loans, Letters of Credit,
the Term Loan and credit extensions hereunder to one Company inure to the
benefit of all Companies, and that the Lenders are relying on the joint and
several liability of the Companies in making Revolving Loans and the Term Loan,
guaranteeing the Letters of Credit and extending credit hereunder.
66
12.2 Each Company hereby guarantees to the Lenders the timely payment
in full of all of the Obligations of each Borrower and further guarantees the
due performance by the other Companies of their respective duties and covenants
made in favor of the Agent and/or the Lenders hereunder. Each Company agrees
that neither this cross-corporate guaranty nor the joint and several liability
of Companies hereunder nor the liens of the Agent for the benefit of the Lenders
in any of the Collateral of any Company shall be unconditional irrespective of
(i) the validity, enforceability, avoidance or subordination of any of the
Obligations, (ii) the absence of any attempt to collect any of the Obligations
from any other Company or any Collateral or other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance or granting of any indulgence by the Lenders with respect
to any provision of any instrument evidencing or securing the payment of any of
the Obligations, or any other agreement now or hereafter executed by any other
Company and delivered to the Lenders, (iv) the failure by the Agent or the
Lenders to take any steps to perfect or maintain the perfected status of its
lien or security interest in, or to preserve its or their rights to, any of the
Collateral or other security for the payment or performance of any of the
Obligations or the Agent's or the Lenders' release of any Collateral or of its
or their liens and security interests upon any Collateral, (v) the Agent's on
behalf of the Lenders election, in any proceeding instituted under the
Bankruptcy Code, for the application of Section 1111(b)(2) of the Bankruptcy
Code, (vi) any borrowing or grant of a security interest by any Company, as
debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the release
or compromise, in whole or in part, of the liability of any Company for the
payment of any of the Obligations, (ix) any amendment or modification of any of
the provisions of this Financing Agreement or waiver of any Default or Event of
Default, (x) any increase in the amount of the Obligations beyond any limits
imposed herein or in the amount of any interest, fees or other charges payable
in connection therewith, or any decrease in the same, (xi) the disallowance of
all or any portion of the Agent's or the Lenders claims for the repayment of any
of the Obligations under Section 502 of the Bankruptcy Code, or (xii) any other
circumstances that might constitute a legal or equitable discharge or defense of
any Company. After the occurrence and during the continuance of any Event of
Default, the Lenders may proceed directly and at once, without notice to any
Company, against any or all of the Companies to collect and recover all or any
part of the Obligations, without first proceeding against any other Company or
against any Collateral or other security for the payment or performance of any
of the Obligations, and each Company waives any provision that might otherwise
require the Lenders under applicable law to pursue or exhaust its remedies
against any Collateral or Company before pursuing another Company. Each Company
consents and agrees that neither the Agent nor any Lender shall be under any
obligation to xxxxxxxx any assets in favor of any Company or against or in
payment of any or all of the Obligations.
12.3 No payment or payments made by a Company or received or collected
by the Lenders or by the Agent on behalf of the Lenders from a Company or any
other person by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time to time in reduction of or
in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Company under this Financing Agreement,
each of whom shall remain jointly and severally liable for the payment and
performance of all Obligations until the Obligations are paid in full and this
Financing Agreement is terminated in writing.
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12.4 Each Company is unconditionally obligated to repay the Obligations
as a joint and several obligor under this Financing Agreement. If, as of any
date, the aggregate amount of payments made by Company on account of the
Obligations and proceeds of such Company's Collateral that are applied to the
Obligations exceeds the aggregate amount of loan proceeds actually used by such
Company in its business (such excess amount being referred to as an
"Accommodation Payment"), then each of the other Companies (each such Company
being referred to as a "Contributing Company") shall be obligated to make
contribution to such Company (the "Paying Company") in an amount equal to (i)
the product derived by multiplying the sum of each Accommodation Payment of each
Company by the Allocable Percentage of the Company from whom contribution is
sought less (ii) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Company (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such Contributing Company by way of contribution hereunder, and to be
decreased by any amounts theretofore received by such Contributing Company by
way of contribution hereunder); provided, however, that a Paying Company's
recovery of contribution hereunder from the other Companies shall be limited to
that amount paid by the Paying Company in excess of its Allocable Percentage of
all Accommodation Payments then outstanding of all Companies. As used herein,
the term "Allocable Percentage" shall mean, on any date of determination
thereof, a fraction the denominator of which shall be equal to the number of
Companies who are parties to this Financing Agreement on such date and the
numerator of which shall be 1; provided, however, that such percentages shall be
modified in the event that contribution from a Company is not possible by reason
of insolvency, bankruptcy or otherwise by reducing such Company's Allocable
Percentage equitably and by adjusting the Allocable Percentage of the other
Companies proportionately so that the Allocable Percentages of all Companies at
all times equals 100%.
12.5 Each Company hereby subordinates any claims (other than claims
evidenced by notes which have been assigned and delivered to the Agent for the
benefit of the Lenders or to the Lenders), including, without limitation, any
other right of payment, subrogation, contribution and indemnity, that it may
have from or against any other Company, and any successor or assign of any other
Company, including, without limitation, any trustee, receiver or
debtor-in-possession, howsoever arising, due or owing and whether heretofore,
now or hereafter existing, to the payment in full of all of the Obligations.
12.6 Notwithstanding the provisions of Section 5 above, for so long as
no Default or an Event of Default shall exist, each Company may pay to any other
Company indebtedness validly owed to such other Company which arises in the
ordinary course of such Company's business.
SECTION 13. MISCELLANEOUS
13.1 Each Company hereby waives diligence, notice of intent to
accelerate, notice of acceleration, demand, presentment and protest and any
notices thereof as well as notice of nonpayment. No delay or omission of the
Agent, any Lender or any Company to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No
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single or partial exercise by the Agent or any Lender of any right or remedy
precludes any other or further exercise thereof, or precludes any other right or
remedy.
13.2 This Financing Agreement and the other Loan Documents executed and
delivered in connection therewith constitute the entire agreement between the
Companies and the Agent and the Lenders with respect to the subject matter
hereof and thereof; supersede any prior agreements with respect hereto and
thereto; and shall bind and benefit each Company and the Agent and their
respective successors and assigns. This Financing Agreement can be amended,
modified, supplemented or restated only by a writing executed by the Companies,
the Agent and the Required Lenders (unless the consent of all Lenders is
required pursuant to Paragraph 15.10 of Section 15 of this Financing Agreement).
13.3 In no event shall any Company, upon demand by the Agent or the
Lenders for payment of any Indebtedness relating hereto, by acceleration of the
maturity thereof, or otherwise, be obligated to pay interest and fees in excess
of the amount permitted by law. Regardless of any provision herein or in any
agreement made in connection herewith, neither the Agent nor any Lender shall
ever be entitled to receive, charge or apply, as interest on any indebtedness
relating hereto, any amount in excess of the maximum amount of interest
permissible under applicable law. If the Agent or any Lender ever receives,
collects or applies any such excess, it shall be deemed a partial repayment of
principal and treated as such; and if principal is paid in full, any remaining
excess shall be refunded to such Company. This Paragraph shall control every
other provision hereof, the other Loan Documents and of any other agreement made
in connection herewith.
13.4 If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision shall
be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there shall
be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
13.5 EACH COMPANY, THE AGENT AND EACH LENDER EACH HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER. EACH COMPANY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT
WILL THE AGENT OR ANY LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR
CONSEQUENTIAL DAMAGES.
13.6 Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (provided that, any
electronic communications from any Company with respect to any request,
transmission, document, electronic signature, electronic mail or facsimile
transmission shall be deemed binding on the Companies for purposes of this
Financing Agreement, provided further that any such transmission shall not
relieve the Companies from any other obligation hereunder to communicate further
in writing), and shall be deemed to have been validly
served, given or delivered when hand delivered or sent by facsimile, or three
days after deposit in the United State mails, with proper first class postage
prepaid and addressed to the party to be notified or to such other address as
any party hereto may designate for itself by like notice, as follows:
(A) if to the Agent, at:
The CIT Group/Business Credit, Inc.
Two Wachovia Center
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
-
Attn: Regional Credit Manager
Fax No.: 000-000-0000
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(B) if to any Company at:
TIMCO Aviation Services, Inc.
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxxxx Xxxxxxxx
Fax No.: 000-000-0000
With a courtesy copy of any material notice to the Companies' counsel
at:
Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: 000-000-0000
(C) if to any other party becoming a Lender hereunder to the
address specified in the Assignment and Transfer Agreement or
on the signature page to this Financing Agreement for such
Lender
or to such other address as any party may designate for itself by like notice;
provided, however, that the failure of the Agent or the Lenders to provide the
Companies' counsel with a copy of such notice shall not invalidate any notice
given to the Companies and shall not give any Company any rights, claims or
defenses due to the failure of the Agent or any Lender to provide such
additional notice.
13.7 Each Company agrees that (a) it will not setoff all or any portion
of the Obligations owing from time to time to CIT against any accounts or
accounts receivable for products sold or leased or services rendered by such
Company which may be owing at any time and from time to time to such Company by
CIT or any of its Affiliates, including, without limitation, The CIT
Group/Aviation Services, Inc. and C. I. T. Leasing Corporation ("Affiliate
Accounts"), and (b) it will not withhold payment in respect of any of the
Obligations on account of any such Affiliate Accounts; provided, however, each
Company to which an Affiliate Account is owed may offset against such Affiliate
Account any claim arising out of the specific transaction giving rise to such
Affiliate Account.
13.8 THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NORTH CAROLINA, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT
INCLUDES AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
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SECTION 14. AGREEMENT BETWEEN THE LENDERS
14.1 (a) The Agent, for the account of the Lenders, shall disburse all
loans and advances to the Companies and shall handle all collections of
Collateral and repayment of Obligations. It is understood that for purposes of
advances to the Companies and for purposes of this Section 14 the Agent is using
the funds of the Agent.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to any advance to any Borrower that such Lender will not make its Pro Rata
Share of such loan to the Agent, the Agent may assume that such Lender shall
make such amount available to the Agent on a Settlement Date, and the Agent may,
in reliance upon such assumption, make available to the Borrowers a
corresponding amount. A certificate of the Agent submitted to any Lender with
respect to any amount owing under this subsection shall be conclusive, absent
manifest error. If such Lender's Pro Rata Share of such borrowing is not in fact
made available to the Agent by such Lender on the Settlement Date, the Agent
shall be entitled to recover such amount with interest thereon at the rate per
annum applicable to Revolving Loans hereunder, on demand, from the Borrowers
without prejudice to any rights which the Agent may have against such Lender
hereunder. Nothing contained in this subsection shall relieve any Lender which
has failed to make available its Pro Rata Share of any borrowing hereunder from
its obligation to do so in accordance with the terms hereof. Nothing contained
herein shall be deemed to obligate the Agent to make available to the Borrowers
the full amount of a requested advance when the Agent has any notice (written or
otherwise) that any of the Lenders will not advance its Pro Rata Share thereof.
14.2 On the Settlement Date, the Agent and the Lenders shall each remit
to the other, in immediately available funds, all amounts necessary so as to
ensure that, as of the Settlement Date, the Lenders shall have their Pro Rata
Share of all outstanding Obligations.
14.3 The Agent shall forward to each Lender, at the end of each month,
a copy of the account statement rendered by the Agent to the Borrowers.
14.4 The Agent shall, after receipt of any interest and fees earned
under this Financing Agreement, promptly remit to the Lenders: (a) their Pro
Rata Shares of all fees, provided, however, that the Lenders (other than CIT in
its role as the Agent) shall (i) not share in the Collateral Management Fee, the
Documentation Fees, the audit fees or the Ex-Im Bank application and facility
fees or any fees payable to an Issuing Bank for the issuance of a Letter of
Credit, and (ii) receive their shares of the Loan Facility Fee in accordance
with their respective agreements with the Agent; (b) their Pro Rata Shares of
interest computed at the rate and as provided for in Section 8 of this Financing
Agreement on all outstanding amounts advanced by the Lenders on each Settlement
Date, prior to adjustment, that are subsequent to the last remittance by the
Agent to the Lenders of the Borrowers' interest; (c) their Pro Rata Shares of
all principal repaid on the Term Loan; and (d) their Pro Rata Shares of interest
on the Term Loan computed at the rate and as provided for in Section 8 of this
Financing Agreement.
14.5 (a) The Companies acknowledge that the Lenders may sell
participation in the loans and extensions of credit made and to be made to the
Borrowers hereunder. The Borrowers further acknowledge that in doing so, the
Lenders may grant to such participants certain rights which would require the
participant's consent to certain waivers, amendments and other actions with
respect to the
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provisions of this Financing Agreement, provided that the consent of any such
participant shall not be required except for matters requiring the consent of
all Lenders hereunder as set forth in Paragraph 15.10 of Section 15 of this
Agreement.
(b) The Companies authorize each Lender to disclose to any participant
or purchasing lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Companies and their affiliates which has been delivered to such Lender by or on
behalf of the Companies pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Companies in connection with such Lender's
credit evaluation of the Companies and their affiliates prior to entering into
this Agreement.
14.6 The Companies hereby agree that each Lender is solely responsible
for its Pro Rata Share of the Line of Credit and that neither the Agent nor any
Lender shall be responsible for, nor assume any obligations for the failure of
any Lender to make available its Pro Rata Share of the Line of Credit. Further,
should any Lender refuse to make available its Pro Rata Share of the Line of
Credit, then any other Lender may, but without obligation to do so, increase,
unilaterally, its Pro Rata Share of the Line of Credit in which event the
Companies are so obligated to that other Lender.
14.7 In the event that the Agent, the Lenders or any of them is sued or
threatened with suit by the Companies or any of them, or by any receiver,
trustee, creditor or any committee of creditors on account of any preference,
voidable transfer or lender liability issue, alleged to have occurred or been
received as a result of, or during the transactions contemplated under this
Financing Agreement, then in such event any money paid in satisfaction or
compromise of such suit, action, claim or demand and any expenses, costs and
attorneys' fees paid or incurred in connection therewith, whether by the Agent,
the Lenders or any of them, shall be shared in their Pro Rata Shares by the
Lenders. In addition, any costs, expenses, fees or disbursements incurred by
outside agencies or attorneys retained by the Agent to effect collection or
enforcement of any rights in the Collateral, including enforcing, preserving or
maintaining rights under this Financing Agreement and the other Loan Documents
shall be shared in their Pro Rata Shares between and among the Lenders to the
extent not reimbursed by the Companies or from the proceeds of Collateral. The
provisions of this Paragraph shall not apply to any suits, actions, proceedings
or claims that (a) predate the date of this Financing Agreement or (b) are based
on transactions, actions or omissions that predate the date of this Financing
Agreement.
14.8 Each of the Lenders agrees with each other Lender that any money
or assets of the Companies held or received by such Lender, no matter how or
when received, shall be applied to the reduction of the Obligations (to the
extent permitted hereunder) after (a) the occurrence of an Event of Default and
(b) the election by the Required Lenders to accelerate the Obligations. In
addition, the Companies authorize, and the Lenders shall have the right, without
notice, upon any amount becoming due and payable hereunder, to set-off and apply
against any and all property held by, or in the possession of such Lender the
Obligations due such Lenders.
14.9 CIT shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, its obligations under the Line of
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Credit, Term Loan, the Revolving Loans and its rights and obligations with
respect to Letters of Credit). Upon execution of an Assignment and Transfer
Agreement, (a) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment, have the rights and obligations of CIT as the case may be
hereunder and (b) CIT shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such assignment, relinquish its rights and
be released from its obligations under this Financing Agreement. The Companies
shall, if necessary, execute any documents reasonably required to effectuate the
assignments. No other Lender may assign its interest in the loans and advances
and extensions of credit hereunder without the prior written consent of the
Agent.
14.10 If Hilco gives CIT an Exercise Notice (as defined in the Hilco
Intercreditor Agreement) under the Hilco Intercreditor Agreement and CIT elects
to sell to Hilco its rights under the Loan Documents and the Obligations owing
to CIT hereunder and thereunder, each other Lender agrees to sell its rights
under the Loan Documents and the Obligations owing to such other Lender
hereunder and thereunder, at the same time and on the same terms and conditions
as the sale by CIT to Hilco, including the purchase price as set forth in
Section 9.4 of the Hilco Intercreditor Agreement that excludes the Early
Termination Fee that may otherwise be due and owing.
SECTION 15. AGENCY
15.1 Each Lender hereby irrevocably designates and appoints CIT as the
Agent for the Lenders under this Financing Agreement and any other Loan
Documents and irrevocably authorizes CIT as the Agent for such Lender, to take
such action on its behalf under the provisions of this Financing Agreement and
all other Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Agent by the terms of this Financing Agreement
and all other Loan Documents together with such other powers as are reasonably
incidental thereto. Without limiting the generality of the foregoing, each
Lender hereby (a) acknowledges and agrees that CIT, individually and as the
Agent for the Lenders, has entered into the Hilco Intercreditor Agreement, and
(b) grants its consent thereto and specifically authorizes and directs CIT to
enter into the Hilco Intercreditor Agreement on behalf of each of the Lenders.
Notwithstanding any provision to the contrary elsewhere in this Financing
Agreement, the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into Financing Agreement and the other Loan Documents
or otherwise exist against the Agent.
15.2 The Agent may execute any of its duties under this Financing
Agreement and all other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to the advice of counsel concerning all matters pertaining
to such duties.
15.3 Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (a) liable to any Lender for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Financing Agreement and all other Loan Documents (except
for its or such person's own gross negligence or willful misconduct), or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Companies or any officer thereof
contained in this Financing Agreement and all other Loan
73
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Financing Agreement and all other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Financing
Agreement and all other Loan Documents or for any failure of the Companies to
perform their obligations thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Financing Agreement and all other Loan Documents or to inspect the properties,
books or records of the Companies.
15.4 The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Companies), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Financing Agreement and all other Loan Documents
unless it shall first receive such advice or concurrence of the Lenders, or the
Required Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Financing Agreement and all other Loan
Documents in accordance with a request of the Lenders, or the Required Lenders,
as the case may be, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
15.5 The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or a Company describing such Default or Event of
Default. In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Lenders, or Required Lenders, as the case may be; provided that unless
and until the Agent shall have received such direction, the Agent may in the
interim (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable and in the best interests of the Lenders.
15.6 Each Lender expressly acknowledges that neither the Agent nor any
of its officers, directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of any Company shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Companies and made its own decision to enter into this
Financing Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or
74
not taking action under the Financing Agreement and to make such investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition or creditworthiness of the Companies. The Agent,
however, shall provide the Lenders with copies of all financial statements,
projections and business plans which come into the possession of the Agent or
any of its officers, employees, agents or attorneys-in-fact.
15.7 The Lenders agree to indemnify the Agent in its capacity as such
(to the extent not reimbursed by the Companies and without limiting the
obligation of the Companies to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever (including negligence on the
part of the Agent) which may at any time be imposed on, incurred by or asserted
against the Agent in anyway relating to or arising out of this Financing
Agreement or any other Loan Documents or any documents contemplated by or
referred to herein or the transactions contemplated hereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this Paragraph shall survive
the payment of the obligations.
15.8 The Agent may make loans to, and generally engage in any kind of
business with any of the Companies as though the Agent were not the Agent
hereunder. With respect to its loans made or renewed by it or loan obligations
hereunder as Lender, the Agent shall have the same rights and powers, duties and
liabilities under this Financing Agreement as any Lender and may exercise the
same as though it was not the Agent and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacities.
15.9 The Agent may resign as the Agent upon thirty (30) days notice to
the Lenders and the Companies and such resignation shall be effective upon the
appointment of a successor Agent. If the Agent shall resign as Agent, then the
Lenders shall appoint a successor Agent for the Lenders whereupon such successor
Agent shall succeed to the rights, powers and duties of the Agent and the term
"the Agent" shall mean such successor Agent effective upon its appointment, and
the former Agent's rights, powers and duties as the Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Financing Agreement. After any retiring Agent's
resignation hereunder as the Agent the provisions of this Section 15 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
the Agent. The Lenders and/or the Agent shall use reasonable efforts to inform
Companies of the identity of the successor Agent and to obtain the agreement of
TIMCO to the appointment of such successor Agent; however, the Lenders' or the
Agent's failure to inform or obtain such agreement from the Companies shall not
restrict or limit the rights, powers and duties of such successor Agent.
15.10 Notwithstanding anything contained in this Financing Agreement to
the contrary, the Agent will not:
(a) without the prior written consent of all Lenders: (i) amend the
Financing Agreement to (1) increase the Line of Credit, (2) reduce the interest
rates, (3) reduce or waive (x) any fees in
75
which the Lenders share hereunder, or (y) the repayment of any Obligations due
the Lenders; (4) extend the maturity of the Obligations; or (5) alter or amend
(x) this Paragraph 15.10 or (y) the definitions of Eligible Domestic Accounts
Receivable, Eligible Foreign Accounts Receivable, Eligible Inventory, Domestic
Borrowing Base, Foreign Borrowing Base, Inventory Loan Cap, Collateral or
Required Lenders; (ii) release Collateral in bulk without a corresponding
reduction in the Obligations to the Lenders; or (iii) intentionally make any
Revolving Loan or assist in opening any Letter of Credit hereunder if after
giving effect thereto the total of Revolving Loans and Letters of Credit
hereunder for the Companies would exceed one hundred and ten percent (110%) of
the Borrowing Base on such date, which aggregate Revolving Loans and Letters of
Credit shall in no event be greater than the Revolving Line of Credit; and
(b) without the prior written consent of the Required Lenders: (i)
agree to the terms and provisions of any subordination of any Subordinated Debt
permitted to be incurred pursuant to this Financing Agreement; (ii) waive or
consent to the departure from the provisions of Section 7, Paragraphs 7.9 and
7.1 of Section 7 of this Financing Agreement; (iii) agree to the cure of any
Default or Event of Default arising from the violation or purported violation of
Paragraph 10.1(d) of Section 10 of this Financing Agreement; (iii) amend or
modify provisions in Subordination Agreements or allow any payments on account
of Subordinated Debt; or (iv) waive any Default or Event of Default.
Except as set forth in Paragraph 13.2 of Section 13 and this Paragraph,
in all other respects the Agent is authorized to take such actions or fail to
take such actions if the Agent, in its reasonable discretion, deems such to be
advisable and in the best interest of the Lenders, including, but not limited
to, (i) the making of a Overadvances if and for so long as (1) such Overadvance
does not continue for a period of more than ten (10) consecutive days, (2) the
amount of the Revolving Loans outstanding at any time does not exceed the
Revolving Line of Credit at such time, and (3) the Overadvance is not known by
Agent at the time in question to exceed $1,000,000, and if Agent discovers the
existence of an Overadvance not previously known by it to exist, then such
Overadvance may not be increased by more than $1,000,000 above the amount
determined by Agent to exist on the date of discovery thereof and for a period
not to exceed five (5) Business Days or (ii) the termination of the Financing
Agreement upon the occurrence of an Event of Default unless it is specifically
instructed to the contrary by the Required Lenders. In the event such an
Overadvance is made by Agent, Lenders shall continue to make Revolving Loans up
to their Commitment Percentages and will forbear from requiring Borrowers to pay
such Overadvance on demand if no Event of Default exists (or if an Event of
Default exists, when the existence of such Event of Default is not known). In no
event shall any Company be deemed to be a beneficiary of this Paragraph 15.10 or
authorized to enforce any of the provisions of this Paragraph 15.10.
15.11 In the event any Lender's consent is required pursuant to the
provisions of this Financing Agreement and such Lender does not respond to any
request by the Agent for such consent within ten (10) days after such request is
made to such Lender, such failure to respond shall be deemed a consent. In
addition, in the event that any Lender declines to give its consent to any such
request, it is hereby mutually agreed that the Agent and/or any other Lender
shall have the right (but not the obligation) to purchase such Lender's share of
the Loans for the full amount thereof together with accrued interest thereon to
the date of such purchase.
76
15.12 Each Lender agrees that notwithstanding the provisions of Section
11 of this Financing Agreement any Lender may terminate this Financing Agreement
and the Line of Credit only as of the initial or any subsequent Anniversary Date
and then only by giving the Agent ninety (90) days prior written notice thereof.
Within thirty (30) days after receipt of any such termination notice, the Agent
shall, at its option, either (a) give notice of termination to the Borrowers
hereunder or (b) purchase such Lender's share of the Obligations hereunder for
the full amount thereof plus accrued interest thereon. Unless so terminated this
Financing Agreement and the Line of Credit shall be automatically extended from
Anniversary Date to Anniversary Date.
[SIGNATURES BEGIN ON NEXT PAGE]
77
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be effective, executed, accepted and delivered under seal in
Greensboro, North Carolina, by their proper and duly authorized officers on this
5th day of April, 2004.
AIRCRAFT INTERIOR DESIGN, INC.
By: /s/
---------------------------------
Title:
------------------------------
XXXXX MANUFACTURING COMPANY, INC.
By: /s/
--------------------------------
Title:
-----------------------------
TIMCO AVIATION SERVICES, INC.
By: /s/
--------------------------------
Title:
------------------------------
TIMCO ENGINE CENTER, INC.
By: /s/
--------------------------------
Title:
------------------------------
TIMCO ENGINEERED SYSTEMS, INC.
By: /s/
---------------------------------
Title:
-------------------------------
78
TRIAD INTERNATIONAL MAINTENANCE
CORPORATION
By: /s/
---------------------------------
Title:
--------------------------------
AVIATION SALES DISTRIBUTION
SERVICES COMPANY
By: /s/
---------------------------------
Title:
--------------------------------
AVIATION SALES LEASING COMPANY
By: /s/
---------------------------------
Title:
--------------------------------
AVIATION SALES PROPERTY
MANAGEMENT CORP.
By: /s/
---------------------------------
Title:
--------------------------------
AVS/CAI, INC.
By: /s/
---------------------------------
Title:
--------------------------------
AVS/M-1, INC.
By: /s/
---------------------------------
Title:
--------------------------------
79
AVS/M-2, INC.
By: /s/
---------------------------------
Title:
--------------------------------
AVS/M-3, INC.
By: /s/
---------------------------------
Title:
--------------------------------
AVSRE, L.P.
By: Aviation Sales Property Management
Corp., its general partner
By: /s/
---------------------------------
Title:
--------------------------------
HYDROSCIENCE, INC.
By: /s/
---------------------------------
Title:
--------------------------------
TMAS/ASI, INC.
By: /s/
---------------------------------
Title:
--------------------------------
WHITEHALL CORPORATION
By: /s/
---------------------------------
Title:
--------------------------------
80
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent
By: /s/
---------------------------------
Title:
--------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/
---------------------------------
Title:
--------------------------------
Commitment Percentage 50%
Two Wachovia Center
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Regional Credit Manager
Fax No.: 000-000-0000
XXXXX FARGO FOOTHILL, LLC
as a Lender
By: /s/
---------------------------------
Title:
--------------------------------
Commitment Percentage 50%
Xxxxx Fargo Foothill, LLC
Syndicated Finance 0000
Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, V.P.
Fax No.: 000-000-0000
