EXHIBIT 10.7
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FIFTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
BY AND AMONG
HPSC, INC.
AS BORROWER,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF AUGUST 5, 2002
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FIFTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this "AGREEMENT"), is entered into as of August 5, 2002, by and among, on the
one hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "LENDER" and collectively as the "LENDERS"),
and FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and
administrative agent for the Lenders ("AGENT") and, on the other hand, HPSC,
INC., a Delaware corporation ("BORROWER").
RECITALS
WHEREAS, Borrower, American Commercial Finance Corporation, a
Delaware corporation ("ACFC"), Existing Lenders (as such term is defined
herein), Fleet National Bank, a national banking association, as the
administrative agent for the Former Lenders (the "EXISTING AGENT"; together with
the Existing Lenders, the "EXISTING LENDER GROUP") are parties to that certain
Fourth Amended and Restated Credit Agreement dated as of May 12, 2000, as
amended by that certain First Amendment to Fourth Amended and Restated Credit
Agreement dated as of December 1, 2000, as further amended by that certain
Second Amendment to Fourth Amended and Restated Credit Agreement dated as of
December 31, 2000, as further amended by that certain Third Amendment to Fourth
Amended and Restated Credit Agreement dated as of May 8, 2001, as further
amended by that certain Fourth Amendment to Fourth Amended and Restated Credit
Agreement dated as of May 6, 2002, and as further amended by that certain Fifth
Amendment to Fourth Amended and Restated Credit Agreement dated as of June 5,
2002 (as amended, restated, supplemented or otherwise modified prior to the date
hereof, the "EXISTING CREDIT AGREEMENT").
WHEREAS, concurrent herewith, Foothill and the Existing Lender
Group are entering into that certain Purchase Agreement (the "PURCHASE
AGREEMENT") whereby the Existing Lender Group has transferred and assigned to
Foothill all of the rights and obligations of the Existing Lender Group under
the Existing Loan Documents (as such term is defined below).
WHEREAS, concurrent herewith, Foothill, Borrower and ACFC are
entering into that certain letter agreement (the "ALLOCATION AGREEMENT")
pursuant to which Foothill, Borrower and ACFC have agreed, among other things,
that (a) the obligations of Borrower under the Existing Credit Agreement will be
amended and restated as set forth in this Agreement, (b) $39,864,154.41 of the
Indebtedness of Borrower and ACFC under the Existing Credit Agreement shall be
allocated to Borrower under this Agreement, shall be
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deemed to be Advances hereunder, and shall be held by the Lenders ratably in
accordance with their Pro Rata Shares, (c) the obligations of ACFC under the
Existing Credit Agreement will be amended and restated as set forth in the ACFC
Loan Agreement, and (d) $10,500,000.00 of the Indebtedness of Borrower and ACFC
under the Existing Credit Agreement shall be allocated to ACFC under the ACFC
Agreement, shall be deemed to be Advances thereunder, and shall be held by the
ACFC Lenders ratably in accordance with their Pro Rata Shares (as such term is
defined in the ACFC Loan Agreement).
WHEREAS, concurrent herewith, ACFC, the lenders a party
thereto (collectively the "ACFC LENDERS"), and Foothill Capital Corporation, a
California corporation (in its individual capacity, "FOOTHILL"), as
administrative agent for the ACFC Lenders (in such capacity, together with its
successors and assigns in such capacity, the "ACFC AGENT"; and together with the
ACFC Lenders, the "ACFC LENDER GROUP") are entering into that certain Fifth
Amended and Restated Loan and Security Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the "ACFC LOAN
AGREEMENT").
WHEREAS, it is hereby understood that no repayment of the
obligations under the Existing Credit Agreement is being effected hereby, but
merely an amendment and restatement in accordance with the terms hereof.
In consideration of the premises and the covenants and
agreements contained herein, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"ACCOUNTS" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"ACFC" has the meaning set forth in the recitals hereto.
"ACFC AGENT" has the meaning set forth in the recitals hereto.
"ACFC CONDITIONS" means, collectively, each of the conditions
precedent to the obligations of the ACFC Lender Group to make the initial
Advance (as such term is defined in the ACFC Loan Agreement) or otherwise extend
credit under the ACFC Loan Agreement.
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"ACFC LENDER GROUP" has the meaning set forth in the recitals
hereto.
"ACFC LENDERS" has the meaning set forth in the recitals
hereto.
"ACFC LOAN AGREEMENT" has the meaning set forth in the
recitals hereto.
"ACFC SECURITY AGREEMENT" means an amended and restated
security agreement executed and delivered by ACFC and Agent, the form and
substance of which is satisfactory to Agent.
"ACFC SPIN-OFF" means the sale by Borrower of all of the
shares of Stock of ACFC owned by Borrower or by ACFC of all or substantially all
of its assets, so long as (i) no Default or Event of Default shall have occurred
and be continuing or would result from the consummation of the proposed
transaction, (ii) Borrower or ACFC receives fair market value for such Stock or
assets, and (iii) all Indebtedness owed by ACFC to Borrower is repaid in full in
cash at the time of the sale.
"ACH TRANSACTIONS" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product Provider for the account of Borrower or its Subsidiaries.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION
4.4.
"ADVANCES" has the meaning set forth in SECTION 2.1.
"AFFILIATE" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; PROVIDED, HOWEVER, that, for purposes of the definitions of Eligible
Receivables and SECTION 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person, (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"AFTER ACQUIRED PROPERTY" has the meaning set forth in SECTION
6.17.
"AGENT" means Foothill, solely in its capacity as agent for
the Lenders hereunder, and any successor thereto.
"AGENT'S ACCOUNT" means the account identified on SCHEDULE
A-1.
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"AGENT ADVANCES" has the meaning set forth in SECTION
2.3(e)(i).
"AGENT'S LIENS" means the Liens granted by Borrower to Agent
for the benefit of the Lender Group and any Bank Product Provider under this
Agreement or the other Loan Documents.
"AGENT-RELATED PERSONS" means Agent together with its
Affiliates, officers, directors, employees, and agents.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ALLOCATION AGREEMENT" has the meaning set forth in the
recitals hereto.
"APPLICABLE BASE RATE MARGIN" means, as of any date of
determination, the following margin based upon Borrower's most recent Debt to
Worth Ratio calculation (determined as set forth in the following paragraph);
PROVIDED, HOWEVER, that for the period from the Closing Date through the date
Agent receives the certified calculation of the Debt to Worth Ratio in respect
of the testing period ending June 30, 2002 delivered by Borrower pursuant to
SECTION 6.3(a)(iii)(B), the Applicable Base Rate Margin shall be calculated
based upon Borrower's Debt to Worth Ratio as of March 31, 2002 (calculated on a
pro forma basis as if the transactions contemplated hereby had been consummated
as of such date):
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Level Debt to Worth Ratio Base Rate Margin
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I less than 6.5:1.0 0.50 percentage points
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II equal to or greater than 6.5:1.0 and 0.75 percentage points
less than 7.0:1.0
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III equal to or greater than 7.0:1.0 1.00 percentage points
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The Applicable Base Rate Margin shall be based upon Borrower's
most recent Debt to Worth Ratio calculation, which will be calculated each
fiscal quarter of Borrower as at the end of such fiscal quarter based upon the
fiscal quarter then ended. The Applicable Base Rate Margin shall be redetermined
each fiscal quarter of Borrower on the date Agent receives the certified
calculation of the Debt to Worth Ratio pursuant to SECTION 6.3(a)(iii)(B)
hereof; PROVIDED, HOWEVER, that if Borrower fails to provide such certification
when such certification is due, the Applicable Base Rate Margin shall be set at
the margin in the row styled "Level III" as of the date on which the
certification was required to be delivered until the date on which such
certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable Base Rate Margin
shall be set at the margin based upon the Debt to Worth Ratio calculation
disclosed by such certification).
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"APPLICABLE LIBOR RATE MARGIN" means, as of any date of
determination, the following margin based upon Borrower's most recent Debt to
Worth Ratio calculation (determined as set forth in the following paragraph);
PROVIDED, HOWEVER, that for the period from the Closing Date through the date
Agent receives the certified calculation of the Debt to Worth Ratio in respect
of the testing period ending June 30, 2002 delivered by Borrower pursuant to
SECTION 6.3(a)(iii)(B), the Applicable LIBOR Rate Margin shall be calculated
based upon Borrower's Debt to Worth Ratio as of March 31, 2002 (calculated on a
pro forma basis as if the transactions contemplated hereby had been consummated
as of such date):
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Level Debt to Worth Ratio LIBOR Rate Margin
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I less than 6.5:1.0 2.50 percentage points
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II equal to or greater than 6.5:1.0 and 2.75 percentage points
less than 7.0:1.0
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III equal to or greater than 7.0:1.0 3.00 percentage points
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The Applicable LIBOR Rate Margin shall be based upon
Borrower's most recent Debt to Worth Ratio calculation, which will be calculated
each fiscal quarter of Borrower as at the end of such fiscal quarter based upon
the fiscal quarter then ended. The Applicable LIBOR Rate Margin shall be
redetermined each fiscal quarter of Borrower on the date Agent receives the
certified calculation of the Debt to Worth Ratio pursuant to SECTION
6.3(a)(iii)(B) hereof; PROVIDED, HOWEVER, that if Borrower fails to provide such
certification when such certification is due, the Applicable LIBOR Rate Margin
shall be set at the margin in the row styled "Level III" as of the date on which
the certification was required to be delivered until the date on which such
certification is delivered (on which date (but not retroactively), without
constituting a waiver of any Default or Event of Default occasioned by the
failure to timely deliver such certification, the Applicable LIBOR Rate Margin
shall be set at the margin based upon the Debt to Worth Ratio calculation
disclosed by such certification).
"APPLICABLE PREPAYMENT PREMIUM" means, as of any date of
determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, 3% TIMES the Maximum Revolver Amount,
(b) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 2% TIMES the Maximum Revolver Amount, and (c) during the
period of time from and including the date that is the second anniversary of the
Closing Date up to the Maturity Date, 1% TIMES the Maximum Revolver Amount.
"ASSIGNEE" has the meaning set forth in SECTION 14.1.
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"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
in the form of EXHIBIT A-1.
"AUTHORIZED PERSON" means any officer or other employee of
Borrower.
"AVAILABILITY" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
SECTION 2.1 (after giving effect to all then outstanding Obligations (other than
Bank Products Obligations) and all sublimits and reserves applicable hereunder).
"BANKNORTH" means Banknorth, N.A.
"BANK PRODUCT AGREEMENTS" means those certain agreements
entered into from time to time by Borrower or its Subsidiaries in connection
with any of the Bank Products.
"BANK PRODUCT OBLIGATIONS" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower is
obligated to reimburse to Agent or any member of the Lender Group as a result of
Agent or such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Borrower or its Subsidiaries pursuant to the Bank Product
Agreements.
"BANK PRODUCT PROVIDER" means (a) Xxxxx Fargo or any of its
Affiliates, or (b) a Lender or any Affiliate of a Lender.
"BANK PRODUCTS" means any service or facility extended to
Borrower or its Subsidiaries by any Bank Product Provider including: (a) credit
cards, (b) credit card processing services, (c) debit cards, (d) purchase cards,
(e) ACH Transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedge Agreements.
"BANK PRODUCT RESERVES" means, as of any date of
determination, the amount of reserves that Agent has established (based upon the
relevant Bank Product Providers' reasonable determination of the credit exposure
in respect of then extant Bank Products) for Bank Products then provided or
outstanding.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as
in effect from time to time.
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"BASE LIBOR RATE" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
11:00 a.m. (California time) 2 Business Days prior to the commencement of the
applicable Interest Period, for a term and in amounts comparable to the Interest
Period and amount of the LIBOR Rate Loan requested by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.
"BASE RATE" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"BASE RATE LOAN" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"BENEFIT PLAN" means a "defined benefit plan" (as defined in
SECTION 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"BOARD OF DIRECTORS" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"BOOKS" means Borrower's now owned or hereafter acquired books
and records (including all of its Records indicating, summarizing, or evidencing
its assets (including the Collateral) or liabilities, all of Borrower's Records
relating to its business operations or financial condition, and all of its goods
or General Intangibles related to such information).
"BORROWER" has the meaning set forth in the preamble to this
Agreement.
"BORROWING" means a borrowing hereunder consisting of Advances
made on the same day by the Lenders (or Agent on behalf thereof), or by Swing
Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance.
"BORROWING BASE" has the meaning set forth in SECTION 2.1.
"BORROWING BASE CERTIFICATE" means a certificate in the form
of EXHIBIT B-1.
"BRAVO" means HPSC Bravo Funding, LLC, a Delaware corporation.
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"BRAVO CREDIT AGREEMENT" means the lease receivables-backed
credit agreement, dated as of January 31, 1995, as amended, restated,
supplemented or otherwise modified from time to time, by and among Bravo,
Triple-A One Funding Corporation, a Delaware corporation and Capital Markets
Assurance Corporation, a New York stock insurance company.
"BRAVO EVENT OF TERMINATION" means any event or condition
identified as an "Event of Termination" under the Bravo Purchase Agreement.
"BRAVO LEASE RECEIVABLES PURCHASE AGREEMENT" means that
certain Second Amended and Restated Lease Receivables Purchase Agreement dated
contemporaneously herewith, as amended, restated, supplemented or otherwise
modified from time to time, by and among Borrower, Bravo, Triple-A One Funding
Corporation, a Delaware corporation, and Capital Markets Assurance Corporation,
a New York stock insurance company, which is in form and substance satisfactory
to Agent.
"BRAVO PURCHASE AGREEMENT" means that certain Amended and
Restated Purchase and Contribution Agreement dated as of March 31, 2000, as
amended, restated, supplemented or otherwise modified from time to time, by and
between Bravo and the Borrower.
"BRAVO WIND-DOWN EVENT" means any event or condition
identified as a "Wind-Down Event" under the Bravo Credit Agreement or under the
Bravo Lease Receivables Purchase Agreement.
"BRIDGE DEMAND NOTE" means a promissory note issued by a Maker
to Borrower that is fully due and payable on the date of demand by the holder
thereof, that has been outstanding for no more than 24 months, and that is
secured by a security interest in substantially all of the assets of the Maker.
"BUSINESS DAY" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"CAPITAL LEASE" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means any Indebtedness
represented by obligations under a Capital Lease.
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed
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by the full faith and credit of the United States, in each case maturing within
1 year from the date of acquisition thereof, (b) marketable direct obligations
issued by any state of the United States or any political subdivision of any
such state or any public instrumentality thereof maturing within 1 year from the
date of acquisition thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Xxxxx'x, (c) commercial paper maturing no
more than 270 days from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-1 or P-1, or better, from S&P or Xxxxx'x, and
(d) certificates of deposit or bankers' acceptances maturing within 1 year from
the date of acquisition thereof that are either (i) issued by any bank organized
under the laws of the United States or any state thereof which bank has a rating
of A or A2, or better, from S&P or Xxxxx'x, or (ii) in an amount less than or
equal to $100,000 in the aggregate issued by any other bank insured by the
Federal Deposit Insurance Corporation.
"CASH MANAGEMENT BANK" has the meaning set forth in SECTION
2.7(a).
"CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION
2.7(a).
"CASH MANAGEMENT AGREEMENTS" means those certain cash
management service agreements, in form and substance satisfactory to Agent, each
of which is among Borrower, Agent, and the Cash Management Bank.
"CHANGE OF CONTROL" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than a
Permitted Holder, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 30%, or more, of the Stock of
Borrower having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, (c) any of Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxx Xxxxxxxx, Xxxxxxx Xxxx or Xxxxxxx Xxxxxx are no longer employed as an
officer of Borrower, (d) except as a result of a Permitted Disposition, Borrower
ceases to directly own and control 100% of the outstanding capital Stock of each
of its Subsidiaries extant as of the Closing Date, or (e) a "Change of Control"
occurs under and as defined in the Indenture.
"CLOSING DATE" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"CLOSING DATE BUSINESS PLAN" means the set of Projections of
Borrower for the 3 year period following the Closing Date (on a year by year
basis, and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.
"CODE" means the California Uniform Commercial Code, as in
effect from time to time.
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"COLLATERAL" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) money or other assets of Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(i) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
Notwithstanding the foregoing, the term "Collateral" shall not
include the Excluded Assets.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor or other Person in possession
of, having a Lien upon, or having rights or interests in the Equipment or
Inventory, in each case, in form and substance satisfactory to Agent.
"COLLATERAL ACCOUNT" means a Securities Account or a deposit
account in the name of Agent at the securities intermediary or bank which is
satisfactory to Agent in its Permitted Discretion, which contains a portion of
the Collections (in the form of cash or Cash Equivalents) pursuant to the
provisions of SECTIONS 2.4(b)(i)(K) AND 2.13(c).
"COLLECTIONS" means ALL cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
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"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of EXHIBIT C-1 delivered by the chief financial officer of Borrower to
Agent.
"CONTINUING DIRECTOR" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Borrower (as such terms are used in Rule 14a-11 under
the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
"CONTROL AGREEMENT" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by Borrower, Agent, and
the applicable securities intermediary with respect to a Securities Account or
bank with respect to a deposit account.
"COST OF CAPITAL" means, as of any date of determination, (a)
if as of such date of determination, Borrower has exercised the LIBOR Option
with respect to all outstanding Advances, the result of (i) the Base LIBOR Rate
for an Interest Period of 3 months, PLUS (ii) then extant Applicable LIBOR Rate
Margin, or (b) otherwise, the result of (i) the Base Rate, PLUS (ii) then extant
Applicable Base Rate Margin.
"CUMULATIVE STATIC LOSSES" means total losses with respect to
Receivables originated in a particular fiscal year of Borrower.
"CURRENT VALUE" has the meaning set forth in SECTION 6.17.
"DAILY BALANCE" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"DEBT TO WORTH RATIO" means a ratio of (a) the outstanding
amount of Indebtedness (excluding Subordinated Debt) of Borrower and its
Subsidiaries on a consolidated basis, to (b) the sum of (i) Tangible Net Worth,
PLUS (ii) the outstanding amount of the Subordinated Debt.
"DEFAULT" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
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"DEFAULTING LENDER" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"DEFAULTING LENDER RATE" means (a) the Base Rate for the first
3 days from and after the date the relevant payment is due, and (b) thereafter,
at the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"DELINQUENT RECEIVABLE" means a Receivable as to which the
Account Debtor or Maker, as applicable, is more than 90 days past due from the
payment date or 120 days past due from the invoice date.
"DESIGNATED ACCOUNT" means that certain DDA of Borrower
identified on SCHEDULE D-1.
"DESIGNATED ACCOUNT BANK" has the meaning set forth on
SCHEDULE D-1.
"DISBURSEMENT LETTER" means an instructional letter executed
and delivered by Borrower to Agent regarding the extensions of credit to be made
on the Closing Date, the form and substance of which is satisfactory to Agent.
"DOLLARS" or "$" means United States dollars.
"DUE DILIGENCE LETTER" means the due diligence letter sent by
Agent's counsel to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"ELIGIBLE RECEIVABLES" means those Receivables, created by
Borrower in the ordinary course of business, that comply with each of the
representations and warranties respecting Eligible Receivables made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; PROVIDED, HOWEVER, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion. In
determining the amount of the Receivables arising from commercial leases to be
included, Eligible Receivables with respect to such Receivables shall be
calculated net of advance payments, security deposits, residuals, and fair
market purchase options (as opposed to contractual obligations to purchase the
equipment at the end of the term of the lease). Eligible Receivables shall not
include the following, as determined by Agent in its sole credit judgment:
(a) Receivables with respect to which the applicable
commercial loan or lease:
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(i) In the case of a commercial loan or
lease, has or had an original term which is greater than eighty-four
(84) months,
(ii) Constitutes a Modified Receivable and
has been modified by Borrower more than once during the term of the
Receivable or has been modified at any time in a manner which is not in
compliance with Borrower's written policies with regard to
modifications,
(iii) Constitutes a Modified Receivable and
has or had a term which is greater than eighty-four (84) months
(measured from the effective date of such modification), to the extent
of any payments required to be made on account of such Modified
Receivable during the period which is in excess of such eighty-four
(84) month period, or
(iv) Is not in compliance with Borrower's
written underwriting policies,
(b) Receivables that are not in conformance with
Borrower's documentation guidelines (which documentation and guidelines must be
satisfactory to Agent, including that (i) there is only one original promissory
note or lease, as applicable, (ii) each lease constitutes tangible chattel paper
and no Receivable constitutes electronic chattel paper, and (iii) each lease is
a triple-net, non-cancelable lease containing a so-called "hell-or-high water"
clause, (iv) each promissory note or lease, as applicable, constitutes chattel
paper under the Code and is fully assignable by Borrower without any condition
or required consent or notice),
(c) Modified Receivables, if such Receivables
constitute more than 15% of the aggregate amount of all Eligible Receivables
(calculated without regard to the exclusion under this clause), to the extent of
the indebtedness owing with respect to such Receivables is in excess of such
percentage,
(d) Receivables that are not payable in Dollars,
(e) Receivables with respect to Account Debtors or
Makers (i) other than Account Debtors or Makers that are dental, ophthalmic,
medical, veterinary, or other licensed medical professionals, whose total
indebtedness owing to Borrower exceeds 15% of all Eligible Receivables
(calculated without regard to the exclusion under this clause), to the extent of
the Indebtedness owing by such Account Debtors or Makers in excess of such
percentage, or (ii) unless consented to in writing by Agent, are in professional
industry segments different than those financed by Borrower as of the Closing
Date,
(f) Receivables with respect to Bridge Demand Notes
to the extent that (i) the Indebtedness evidenced by all such Bridge Demand
Notes is in excess of $8,000,000, provided, that Agent shall review such limit
quarterly and shall determine, in its
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sole and absolute discretion based on Borrower's financial performance, whether
to increase such limit to an amount which does not exceed $10,000,000, or (ii)
more than 50% of the total commitment to the Account Debtor was advanced for the
purpose of financing equipment deposits or leasehold build-outs,
(g) Receivables having an unpaid balance in excess of
$1,000,000, to the extent of the Indebtedness owing by the applicable Account
Debtor or Maker in excess of such amount,
(h) Receivables in excess of $75,000 in aggregate
amount owed to Borrower, to the extent necessary to result in all Eligible
Receivables having an average aggregate amount owed to Borrower of not greater
than $75,000,
(i) Receivables with respect to an Account Debtor (or
its Affiliates) or Maker (or its Affiliates) whose total obligations owing to
Borrower exceed 4.00% of all Eligible Receivables, to the extent of the
obligations owing by such Account Debtor (or its Affiliates) or Maker (or its
Affiliates) in excess of such percentage.
(j) Receivables that are Delinquent Receivables,
(k) Receivables with respect to which the Account
Debtor or Maker is an employee, Affiliate, or agent of Borrower,
(l) Receivables with respect to which the Account
Debtor or Maker, as applicable, either (i) does not maintain its chief executive
office in the United States of America or any of its dependencies or possessions
that have adopted the Uniform Commercial Code, (ii) is not organized under the
laws of the United States or any state thereof, or (iii) is a government or any
political subdivision thereof or of any department, agency, public corporation,
or other instrumentality thereof,
(m) Receivables with respect to which the equipment
that is collateral (in the case of a loan) or that is the subject of the lease
(in the case of a lease) is not located within the United States of America or
any of its dependencies or possessions that have adopted the Uniform Commercial
Code,
(n) Receivables with respect to which the Account
Debtor or Maker, as applicable, is a creditor of Borrower, has or has asserted a
right of setoff or a counterclaim, has disputed its liability, or has made any
claim with respect to its obligation to pay the Receivable, to the extent of
such claim, right of setoff, or dispute,
(o) Receivables with respect to which the Account
Debtor or Maker, as applicable, is subject to an Insolvency Proceeding, has gone
out of business, or as to which Borrower has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial condition of
such Account Debtor or Maker,
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(p) Receivables, to the extent that participating
interests in such Receivables have been sold to any Person,
(q) Receivables, the collection of which, Agent, in
its Permitted Discretion, believes to be doubtful,
(r) Receivables that are (i) Modified Receivables, or
(ii) with respect to Account Debtors or Makers other than Account Debtors or
Makers that are dental, ophthalmic, medical, veterinary, or other licensed
medical professionals, in excess of 25% of all Eligible Receivables (calculated
without regard to the exclusion under this clause), to the extent of the
Indebtedness owing by such Account Debtors or Makers in excess of such
percentage, or
(s) Receivables that are not subject to a valid and
perfected first priority Agent's Lien.
"ELIGIBLE TRANSFEREE" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender that was party hereto as of the Closing Date, (e) so long as no Event
of Default has occurred and is continuing, any other Person approved by Agent
and Borrower (which approval shall of Borrower shall not be unreasonably
withheld, delayed, or conditioned), and (f) during the continuation of an Event
of Default, any other Person approved by Agent.
"ENVIRONMENTAL ACTIONS" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower, its Subsidiaries or predecessors in interest to the
Borrower or to any of the Borrower's Subsidiaries, (b) from adjoining properties
or businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Borrower, its Subsidiaries or predecessors in interest to
the Borrower or to any of the Borrower's Subsidiaries.
"ENVIRONMENTAL LAW" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and
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in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, to the extent binding on Borrower or its Subsidiaries, relating to the
environment, employee health and safety, or Hazardous Materials, including
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section 1251 ET
SEQ; the Toxic Substances Control Act, 15 USC Section 2601 ET SEQ; the Clean Air
Act, 42 USC Section 7401 ET SEQ.; the Safe Drinking Water Act, 42 USC Section
3803 ET SEQ.; the Oil Pollution Act of 1990, 33 USC Section 2701 ET SEQ.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC Section
11001 ET SEQ.; the Hazardous Material Transportation Act, 49 USC Section 1801 ET
SEQ.; and the Occupational Safety and Health Act, 29 USC Section 651 ET SEQ. (to
the extent it regulates occupational exposure to Hazardous Materials); any state
and local or foreign counterparts or equivalents, in each case as amended from
time to time.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"EQUIPMENT" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA AFFILIATE" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries are a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).
-16-
"EVENT OF DEFAULT" has the meaning set forth in SECTION 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
in effect from time to time.
"EXCLUDED ASSETS" means those assets identified on SCHEDULE
E-1 hereto for so long as (but not after) such assets serve as collateral for
the Existing Indebtedness.
"EXISTING AGENT" has the meaning set forth in the recitals
hereto.
"EXISTING CREDIT AGREEMENT" has the meaning set forth in the
recitals hereto.
"EXISTING INDEBTEDNESS" means Indebtedness of Borrower owing
to Banknorth and Cambridge Savings Bank as of the Closing Date in an outstanding
principal amount of not more than $11,000,000.
"EXISTING LENDER GROUP" has the meaning set forth in the
recitals hereto.
"EXISTING LENDERS" means Fleet National Bank, KeyBank National
Association, PNC Bank, National Association, Banknorth, and Citizens Bank of
Massachusetts.
"EXISTING LOAN DOCUMENTS" means the "Loan Documents" as such
term is defined in the Existing Credit Agreement.
"FEE LETTER" means that certain fee letter, dated as of even
date herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"FOOTHILL" means Foothill Capital Corporation, a California
corporation.
"FUNDING DATE" means the date on which a Borrowing occurs.
"FUNDING LOSSES" has the meaning set forth in SECTION
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"GENERAL INTANGIBLES" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
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royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"GROSS ELIGIBLE OBLIGATIONS" means, as of any date of
determination, (a) the total contractual amount of Eligible Receivables (other
than Bridge Demand Notes) as of such date (including unearned interest), MINUS
(b) the sum of (i) the aggregate amount of all advance payments made as of such
date with respect to such Eligible Receivables, (ii) the aggregate amount of all
security deposits made as of such date with respect to such Eligible
Receivables, (iii) the aggregate amount of all direct and indirect costs that
have been included above in clause (a) of this definition as Eligible
Receivables, (iv) the aggregate amount of all fair market value purchase options
with respect to such Eligible Receivables that do not represent contractual
obligations of the applicable Account Debtor, and (v) the aggregate amount of
cash received by Borrower which has not yet been allocated between the
Receivables and the accounts receivable owned by a Securitization Subsidiary as
of such date, as determined by Agent in its sole and absolute discretion;
PROVIDED, HOWEVER that if, upon receipt of such information as Agent shall
require in its sole and absolute discretion, Agent may (but in no event shall be
required to) reduce the amount deducted from the calculation of Gross Eligible
Obligations pursuant to this clause (b)(v) by such amount as Agent shall
determine in its sole and absolute discretion.
"GUARANTY" means an amended and restated general continuing
guaranty executed and delivered by ACFC in favor of Agent, for the benefit of
the Lender Group (and Xxxxx Fargo and its Affiliates), in form and substance
satisfactory to Agent.
"HAZARDOUS MATERIALS" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in
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any form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
"HEDGE AGREEMENT" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and a Bank Product Provider, which provide for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging Borrower's or its Subsidiaries' exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"INDEBTEDNESS" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of Borrower or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION
11.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION
11.3.
"INDENTURE" means the Indenture dated as of March 20, 1997
among Borrower and State Street Bank & Trust Company, as trustee.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"INTANGIBLE ASSETS" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"INTERCREDITOR AGREEMENTS" means the intercreditor agreements
executed and delivered by Agent, Borrower, Banknorth and Cambridge Savings Bank,
which are in form and substance satisfactory to Agent.
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"INTEREST PERIOD" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; PROVIDED, HOWEVER, that (a) if any Interest Period
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business 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), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrower may not elect an Interest Period which will end after the Maturity
Date.
"INVENTORY" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by Borrower as lessor, goods that are furnished by Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in Borrower's business.
"INVESTMENT" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) BONA FIDE Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock or all or substantially
all of the assets of a Person, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"INVESTMENT PROPERTY" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"ISSUING LENDER" means Foothill or any other Lender that, at
the request of Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or
L/C Undertakings pursuant to SECTION 2.12.
"L/C" has the meaning set forth in SECTION 2.12(a).
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"L/C DISBURSEMENT" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C UNDERTAKING" has the meaning set forth in SECTION
2.12(a).
"LENDER" and "LENDERS" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of SECTION 14.1.
"LENDER GROUP" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"LENDER GROUP EXPENSES" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower or its
Subsidiaries under any of the Loan Documents that are paid or incurred by the
Lender Group, (b) fees or charges paid or incurred by Agent in connection with
the Lender Group's transactions with Borrower including fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, or the
department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement), real estate surveys, real estate title policies and
endorsements, and environmental audits, (c) costs and expenses incurred by Agent
in the disbursement of funds to Borrower (by wire transfer or otherwise), (d)
charges paid or incurred by Agent resulting from the dishonor of checks, (e)
reasonable costs and expenses paid or incurred by the Lender Group to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Collateral or any portion
thereof, irrespective of whether a sale is consummated, (f) audit fees and
expenses of Agent related to audit examinations of the Books to the extent of
the fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any other
suit paid or incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group's relationship with Borrower or any guarantor of
the Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, syndicating, or amending the Loan Documents, and (i)
Agent's and each Lender's reasonable fees and expenses (including attorneys
fees) incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning Borrower or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether suit
is brought, or in taking any Remedial Action concerning the Collateral.
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"LENDER-RELATED PERSON" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"LETTER OF CREDIT" means an L/C or an L/C Undertaking, as the
context requires.
"LETTER OF CREDIT USAGE" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of Credit
PLUS 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.
"LIBOR DEADLINE" has the meaning set forth in SECTION
2.13(b)(i).
"LIBOR NOTICE" means a written notice in the form of EXHIBIT
L-1.
"LIBOR RATE" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/16%) by DIVIDING (a) the Base LIBOR Rate for such
Interest Period, BY (b) 100% MINUS the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR RATE LOAN" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIEN" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"LOAN ACCOUNT" has the meaning set forth in SECTION 2.10.
"LOAN DOCUMENTS" means this Agreement, the ACFC Security
Agreement, the Allocation Agreement, the Bank Product Agreements, the Cash
Management Agreements, the Control Agreements, the Disbursement Letter, the Due
Diligence Letter, the Fee Letter, the Guaranty, the Intercreditor Agreements,
the Letters of Credit, any Mortgages, the Officers' Certificate, the Purchase
Agreement, the Servicing Agreement, the Stock Pledge Agreement, the
Subordination Agreement, the Trademark Security Agreement, the Validity
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Agreements, any note or notes executed by Borrower in connection with this
Agreement and payable to a member of the Lender Group, and any other agreement
entered into, now or in the future, by Borrower and the Lender Group in
connection with this Agreement.
"MAKER" has the meaning set forth in Section 3-103(a)(5) of
the Code.
"MASTER AMENDMENT AND WAIVER" means that certain Master
Amendment and Waiver, dated contemporaneously herewith, by and among Borrower,
Bravo, Triple-A One Funding Corporation, a Delaware corporation, and Capital
Markets Assurance Corporation, a New York stock insurance company, which is in
form and substance satisfactory to Agent.
"MATERIAL ADVERSE CHANGE" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, (b) a material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of Borrower.
"MATURITY DATE" has the meaning set forth in SECTION 3.4.
"MAXIMUM REVOLVER AMOUNT" means $50,000,000.
"MODIFIED RECEIVABLE" means a Receivable with respect to which
Borrower has amended the terms thereof in any way, including an extension of the
original term thereof or a modification of the dates of the scheduled payments
thereunder.
"MORTGAGES" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, in form and substance satisfactory to Agent, that
encumber Real Property owned by Borrower and the related improvements thereto.
"NEGOTIABLE COLLATERAL" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"NET INCOME" means, for any period, the net income (exclusive
of minority interests and extraordinary items) for such period of Borrower and
its Subsidiaries on a consolidated basis, determined in accordance with GAAP.
"NEW SECURITIZATION SUBSIDIARY" means a special purpose
Subsidiary of Borrower created after the Closing Date for the purpose of
acquiring Receivables from
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Borrower, so long as the terms and conditions of the Governing Documents of such
Subsidiary and the purchase and sale agreement between Borrower and such
Subsidiary are satisfactory to Agent.
"NOTES" means, individually and collectively, the secured
promissory notes of the Borrower made payable to the order of each Lender,
evidencing the Obligations, as each such secured promissory note may be amended,
supplemented, restated, modified or extended from time to time, and any
promissory note or notes issued in exchange or replacement therefor.
"NPV" means the present value of a stream of payments
discounted at the Cost of Capital plus one percentage point.
"OBLIGATIONS" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations with respect to
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrower's Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrower to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all Lender Group Expenses that Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise, and (b) all Bank Product
Obligations. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"OFFICERS' CERTIFICATE" means the representations and
warranties of officers form submitted by Agent to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"ORIGINATING LENDER" has the meaning set forth in SECTION
14.1(e).
"OVERADVANCE" has the meaning set forth in SECTION 2.5.
"PARTICIPANT" has the meaning set forth in SECTION 14.1(e).
"PERMITTED DISCRETION" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
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"PERMITTED DISPOSITIONS" means (a) sales or other dispositions
by Borrower or its Subsidiaries of equipment that is substantially worn,
damaged, or obsolete in the ordinary course of business, (b) the use or transfer
of money or Cash Equivalents by Borrower or its Subsidiaries in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents, (c)
sales by Borrower of Inventory repossessed from the lessees under chattel paper
("REPOSSESSED INVENTORY") in the ordinary course of its business, so long as (i)
no Default or Event of Default has occurred and is continuing or would result
therefrom, (ii) each such item of Repossessed Inventory is sold for an amount
which is equal to or greater than the fair market value thereof, (d) so long as
no Default or Event of Default has occurred and is continuing or would result
therefrom, settlement by Borrower of the amount owed by an Account Debtor or a
Maker with respect to Receivables, to the extent that the difference between (i)
the sum of the par value of each Receivable which is the subject of such a
settlement, including the proposed settlement, and (ii) the aggregate amount
received by Borrower or its Subsidiaries in connection with all such
settlements, including the proposed settlement, in each case relating to
settlements which have taken place or which are proposed to take place during
any fiscal year of the Borrower, does not exceed the aggregate amount of the
losses projected to be incurred by the Borrower during such fiscal year in
connection with such settlements, (e) the ACFC Spin-Off, (f) the sale or other
disposition of the Excluded Assets, so long as the Existing Indebtedness is
repaid with the net proceeds of such sale or other disposition, and (g) the sale
of Receivables by Borrower in the ordinary course of business to Bravo or a New
Securitization Subsidiary so long as (i) no Event of Default has occurred and is
continuing or would result therefrom, and (ii) either (A) (I) Borrower receives
not less than 76.6% of the total contractual amount of the subject Eligible
Receivables (including unearned interest), (II) the aging of the Receivables
that remain in the Borrowing Base immediately after giving effect to the
proposed sale are not aged more than the Receivables in the Borrowing Base as
they existed immediately prior to the sale, and (III) the proceeds of the sale
are paid to the Agent and applied to the outstanding Obligations in accordance
with the provisions hereof, or (B) Borrower has submitted a written request to
Agent relative to the Receivables that it proposes to sell and the Required
Lenders, in their sole discretion, have approved in writing the sale of the
subject Receivables free and clear of the Liens of Agent.
"PERMITTED HOLDERS" means Xxxx X. Xxxxxxx, Dimensional Fund
Advisors, Inc., Harder Management Company, Inc., Xxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx as Trustees of the HPSC, Inc. Employee Stock Ownership Plan, FMR Corp.
and Xxxxxxx X. Xxxxxxx.
"PERMITTED INVESTMENTS" means (a) Investments in Cash
Equivalents; PROVIDED, that no such Investments may be made with a holder of the
Existing Indebtedness without Agent's prior written consent, (b) Investments in
negotiable instruments for collection, (c) advances made in connection with
purchases of goods or services in the ordinary course of business, (d)
Investments by Borrower in ACFC, provided that the aggregate amount of such
Investments by Borrower in ACFC shall not at any one time
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exceed the difference between (i) the aggregate amount of such Investments
existing as of the Closing Date, and (ii) the aggregate amount of all payments
by ACFC to Borrower on account of the Investments described in clause (d)(i) of
this definition, and (e) equity Investments in New Securitization Subsidiaries
in connection with the formation thereof in an aggregate amount not to exceed
$100,000.
"PERMITTED LIENS" means (a) Liens held by Agent for the
benefit of Agent, the Lenders, and any Bank Product Provider, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on SCHEDULE P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of business and not in connection
with the borrowing of money, and which Liens either (i) are for sums not yet
delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising
from deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids,
tenders, or leases incurred in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens granted as security for surety
or appeal bonds in connection with obtaining such bonds in the ordinary course
of business, (j) Liens resulting from any judgment or award that is not an Event
of Default hereunder, and (k) easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof.
"PERMITTED PROTEST" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate principal amount outstanding at any one time not in excess of
$500,000.
"PERMITTED RESTRICTED PAYMENT" means any dividend, redemption,
or other distribution on account of Borrower's Stock, so long as in each case
each of the following is applicable (i) no Default or Event of Default shall
have occurred and be continuing or would result from the consummation of the
proposed transaction, (ii) after giving effect to the proposed transaction,
Borrower has Availability and Qualified Cash of not less than
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$3,000,000, and (iii) the aggregate Dollar amount of all such transactions in
any 12 month period does not exceed $1,000,000.
"PERSON" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"PROJECTIONS" means Borrower's forecasted (a) balance sheets,
and (b) profit and loss statements, on a monthly basis for the first year and
quarterly thereafter, all prepared on a basis consistent with Borrower's
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
"PRO RATA SHARE" means:
(a) with respect to a Lender's obligation to make
Advances and receive payments of principal, interest, fees, costs, and expenses
with respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and to
receive payments of fees with respect thereto, the percentage obtained by
dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver
Commitments of all Lenders, and
(c) with respect to all other matters (including the
indemnification obligations arising under SECTION 16.7), the percentage obtained
by dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate amount
of the Revolver Commitments of all Lenders; PROVIDED, HOWEVER, that, in each
case in this definition, in the event the Revolver Commitments have been
terminated, Pro Rata Share shall be determined according to the Revolver
Commitments in effect immediately prior to such termination.
"PURCHASE AGREEMENT" has the meaning set forth in the recitals
hereto.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"QUALIFIED CASH" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Borrower that is on deposit
with banks, or in securities accounts with securities intermediaries, or any
combination thereof, and which such deposit account or securities account is the
subject of a Control Agreement and is maintained by a branch office located
within the United States.
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"REAL PROPERTY" means any estates or interests in real
property now owned or hereafter acquired by Borrower and the improvements
thereto.
"RECEIVABLES" means all of Borrower's now owned or hereafter
acquired right, title, and interest in receivables of any kind, and all
supporting obligations in respect thereof, that arise from full pay-out, triple
net, non-cancelable, freely transferable equipment loans, equipment leases and
commercial notes (including without limitation Bridge Demand Notes) owed to
Borrower by commercial obligors.
"RECEIVABLES INTEREST PURCHASE AGREEMENT" means that certain
Receivables Interest Purchase Agreement dated contemporaneously herewith, by and
among Borrower, Bravo, Triple-A One Funding Corporation, BNY Asset Solutions,
LLC, ING Capital Markets, LLC, and Capital Markets Assurance Corporation, which
is in form and substance satisfactory to Agent.
"RECORD" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"REMEDIAL ACTION" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"REPORT" has the meaning set forth in SECTION 16.17.
"REQUIRED AVAILABILITY" means Availability and Qualified Cash
in an amount of not less than $4,000,000.
"REQUIRED LENDERS" means, at any time, any two Lenders whose
Pro Rata Shares aggregate 50.1% of the Total Commitments, or if the Commitments
have been terminated irrevocably, 50.1% of the Obligations (other than Bank
Product Obligations) then outstanding; PROVIDED, HOWEVER, that solely for the
purpose of this definition, any Lender, such Lender's successors and assigns,
and such Lender's Affiliates shall constitute one Lender.
"RESERVE PERCENTAGE" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that
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Lender, but so long as such Lender is not required or directed under applicable
regulations to maintain such reserves, the Reserve Percentage shall be zero.
"REVOLVER COMMITMENT" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on SCHEDULE C-1 or on the signature
page of the Assignment and Acceptance pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of SECTION 14.1.
"REVOLVER USAGE" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, PLUS (b) the then
extant amount of the Letter of Credit Usage.
"RISK PARTICIPATION LIABILITY" means, as to each Letter of
Credit, all reimbursement obligations of Borrower to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"SECURITIES ACCOUNT" means a "securities account" as that term
is defined in the Code.
"SECURITIZATION SUBSIDIARIES" means (a) Bravo, (b) HPSC
Equipment Receivables 2000-1 LLC I, a Delaware limited liability company, (c)
HPSC Equipment Receivables 2000-1 LLC II, a Delaware limited liability company,
and (d) any New Securitization Subsidiary, so long as no Indebtedness of any of
the foregoing Persons is recourse to Borrower or any of its Subsidiaries.
"SERVICING AGREEMENT" means a servicing agreement executed and
delivered by Borrower and Agent, the form and substance of which is satisfactory
to Agent.
"SETTLEMENT" has the meaning set forth in SECTION 2.3(f)(i).
"SETTLEMENT DATE" has the meaning set forth in SECTION
2.3(f)(i).
"SOLVENT" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"STOCK" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting,
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including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means an amended and restated stock
pledge agreement, in form and substance satisfactory to Agent, executed and
delivered by Borrower to Agent with respect to the pledge of the Stock owned by
Borrower.
"SUBORDINATED DEBT" means (a) the 11% Senior Subordinated
Notes due 2007 issued by Borrower in the original aggregate principal amount of
$19,985,000 pursuant to the Indenture, and (b) subordinated Indebtedness the
terms and conditions of which, including provisions subordinating such
Indebtedness to the Obligations, are satisfactory to the Required Lenders.
"SUBORDINATION AGREEMENT" means a subordination agreement
executed and delivered by the Lender Group, the ACFC Lender Group, Borrower and
ACFC, which is in form and substance satisfactory to the Lender Group.
"SUBSIDIARY" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity; PROVIDED, HOWEVER, that for purposes of this Agreement and the other
Loan Documents, the Securitization Subsidiaries shall not constitute or be
deemed to be Subsidiaries of Borrower or ACFC.
"SWING LENDER" means Foothill or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"SWING LOAN" has the meaning set forth in SECTION 2.3(d)(i).
"TANGIBLE NET WORTH" means, as of any date of determination,
the result of (a) Borrower's total stockholder's equity, MINUS (b) the sum of
(i) all Intangible Assets of Borrower, (ii) all of Borrower's prepaid expenses,
and (iii) all amounts due to Borrower from Affiliates, calculated on a
consolidated basis in accordance with GAAP (except that such calculation of
Tangible Net Worth shall be made without regard to the accounting adjustments
required by Financial Accounting Standard No. 133).
"TAXES" has the meaning set forth in SECTION 16.11.
"TRADEMARK SECURITY AGREEMENT" means a trademark security
agreement executed and delivered by Borrower and Agent, the form and substance
of which is satisfactory to Agent.
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"UNDERLYING ISSUER" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrower.
"UNDERLYING LETTER OF CREDIT" means a letter of credit that
has been issued by an Underlying Issuer.
"VALIDITY GUARANTORS" means Xxxx X. Xxxxxxx, Xxxxxxx Xxxxxxx,
and Xxxx Xxxxxxxx, and "VALIDITY GUARANTOR" means any one of them.
"VALIDITY AGREEMENTS" means the agreements, in form and
substance satisfactory to Agent, from each Validity Guarantor relative to, among
other things, the BONA FIDE nature of the Receivables.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 17.7.
"XXXXX FARGO" means Xxxxx Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any
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reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("ADVANCES")
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to THE LESSER OF (i) the Maximum Revolver
Amount LESS the Letter of Credit Usage, or (ii) the Borrowing Base LESS the
Letter of Credit Usage. For purposes of this Agreement, "BORROWING BASE," as of
any date of determination, shall mean the result of:
(w) THE LESSER OF
(i) 80% of Gross Eligible
Obligations, or
(ii) 92% of the NPV of Gross
Eligible Obligations, PLUS
(x) 80% of the outstanding principal balance of
Eligible Receivables that are comprised of Bridge
Demand Notes, MINUS
(y) the difference between $3,000,000 and the then
extant Qualified Cash, MINUS
(z) the sum of (i) the Bank Products Reserve, and
(ii) the aggregate amount of reserves, if any,
established by Agent under SECTION 2.1(b).
(b) Anything to the contrary in this SECTION 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that Borrower is required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased assets, rents
or other amounts payable under such leases) and has failed to pay under any
Section of this Agreement or any other Loan Document, and (ii) amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any of
the Collateral (other than any Permitted Lien set forth on SCHEDULE P-1 which is
specifically identified thereon as entitled
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to have priority over the Agent's Liens), which Lien or trust, in the Permitted
Discretion of Agent likely would have a priority superior to the Agent's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for AD
VALOREM, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 [INTENTIONALLY OMITTED].
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day; PROVIDED,
HOWEVER, that in the case of a request for Swing Loan in an amount of
$5,750,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and (ii)
the requested Funding Date, which shall be a Business Day. At Agent's election,
in lieu of delivering the above-described written request, any Authorized Person
may give Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) AGENT'S ELECTION. Promptly after receipt of a request for
a Borrowing pursuant to SECTION 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of SECTION 2.3(c) apply to such requested Borrowing, or
(ii) to request Swing Lender to make a Swing Loan pursuant to the terms of
SECTION 2.3(d) in the amount of the requested Borrowing; PROVIDED, HOWEVER, that
if Swing Lender declines in its sole discretion to make a Swing Loan pursuant to
SECTION 2.3(d), Agent shall elect to have the terms of SECTION 2.3(c) apply to
such requested Borrowing.
(c) MAKING OF ADVANCES.
(i) In the event that Agent shall elect to have the
terms of this SECTION 2.3(c) apply to a requested Borrowing as
described in SECTION 2.3(b),
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then promptly after receipt of a request for a Borrowing
pursuant to SECTION 2.3(a), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of
the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing
available to Agent in immediately available funds, to Agent's
Account, not later than 10:00 a.m. (California time) on the
Funding Date applicable thereto. After Agent's receipt of the
proceeds of such Advances, upon satisfaction of the applicable
conditions precedent set forth in SECTION 3 hereof, Agent
shall make the proceeds thereof available to Borrower on the
applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to Borrower's
Designated Account; PROVIDED, HOWEVER, that, subject to the
provisions of SECTION 2.3(i), Agent shall not request any
Lender to make, and no Lender shall have the obligation to
make, any Advance if Agent shall have actual knowledge that
(1) one or more of the applicable conditions precedent set
forth in SECTION 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such
condition has been waived in accordance with the terms of this
Agreement, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the
date of such Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the
account of Borrower the amount of that Lender's Pro Rata Share
of the Borrowing, Agent may assume that each Lender has made
or will make such amount available to Agent in immediately
available funds on the Funding Date and Agent may (but shall
not be so required), in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If
and to the extent any Lender shall not have made its full
amount available to Agent in immediately available funds and
Agent in such circumstances has made available to Borrower
such amount, that Lender shall on the Business Day following
such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each
day during such period. A notice submitted by Agent to any
Lender with respect to amounts owing under this subsection
shall be conclusive, absent manifest error. If such amount is
so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to Agent
on the Business Day following the Funding Date, Agent will
notify Borrower of such failure to fund and, upon demand by
Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed
since the date of
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such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make any Advance on
any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date,
but no Lender shall be responsible for the failure of any
other Lender to make the Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for
the Defaulting Lender's benefit, and, in the absence of such
transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments
(but only to the extent that such Defaulting Lender's Advance
was funded by the other members of the Lender Group) or, if so
directed by Borrower and if no Default or Event of Default had
occurred and is continuing (and to the extent such Defaulting
Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrower as if such Defaulting
Lender had made Advances to Borrower. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion,
re-lend to Borrower for the account of such Defaulting Lender
the amount of all such payments received and retained by it
for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to
the Loan Documents, such Defaulting Lender shall be deemed not
to be a "Lender" and such Lender's Commitment shall be deemed
to be zero. This Section shall remain effective with respect
to such Lender until (x) the Obligations under this Agreement
shall have been declared or shall have become immediately due
and payable, (y) the non-Defaulting Lenders, Agent, and
Borrower shall have waived such Defaulting Lender's default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share
of the applicable Advance and pays to Agent all amounts owing
by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of
its duties and obligations hereunder, or to relieve or excuse
the performance by Borrower of its duties and obligations
hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting
Lender of this Agreement and shall entitle Borrower at its
option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting
Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender,
the Defaulting Lender shall have no right to refuse to be
replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance Agreement in favor
of the substitute Lender (and agrees that it shall be deemed
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to have executed and delivered such document if it fails to do
so) subject only to being repaid its share of the outstanding
Obligations (other than Bank Product Obligations) (including
an assumption of its Pro Rata Share of the Risk Participation
Liability) without any premium or penalty of any kind
whatsoever; PROVIDED FURTHER, HOWEVER, that any such
assumption of the Commitment of such Defaulting Lender shall
not be deemed to constitute a waiver of any of the Lender
Groups' or Borrower's rights or remedies against any such
Defaulting Lender arising out of or in relation to such
failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the consent
of Swing Lender, as a Lender, to have the terms of this
SECTION 2.3(d) apply to a requested Borrowing as described in
SECTION 2.3(b), Swing Lender as a Lender shall make such
Advance in the amount of such Borrowing (any such Advance made
solely by Swing Lender as a Lender pursuant to this SECTION
2.3(d) being referred to as a "SWING LOAN" and such Advances
being referred to collectively as "SWING LOANS") available to
Borrower on the Funding Date applicable thereto by
transferring immediately available funds to Borrower's
Designated Account. Each Swing Loan is an Advance hereunder
and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any
Swing Loan shall be payable to Swing Lender as a Lender solely
for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan).
Subject to the provisions of SECTION 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as
a Lender shall not make, any Swing Loan if Agent has actual
knowledge that (i) one or more of the applicable conditions
precedent set forth in SECTION 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date.
Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set
forth in SECTION 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion,
any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrower and the
Lenders, from time to time in Agent's sole discretion, (1)
after the occurrence and during the
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continuance of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set
forth in SECTION 3 have not been satisfied, to make Advances
to Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A) to
preserve or protect the Collateral, or any portion thereof,
(B) to enhance the likelihood of repayment of the Obligations
(other than the Bank Product Obligations), or (C) to pay any
other amount chargeable to Borrower pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs,
fees, and expenses described in SECTION 10 (any of the
Advances described in this SECTION 2.3(e) shall be referred to
as "AGENT ADVANCES"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Agent
Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to Agent solely for its own
account (and for the account of the holder of any
participation interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand
and secured by the Agent's Liens granted to Agent under the
Loan Documents, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from
time to time to Advances that are Base Rate Loans.
(f) SETTLEMENT. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement ("SETTLEMENT")
with the Lenders on a weekly basis, or on a more frequent
basis if so determined by Agent, (1) on behalf of Swing
Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with
respect to Collections received, as to each by notifying the
Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior
to the date of such requested Settlement (the date of such
requested Settlement being the "SETTLEMENT DATE"). Such notice
of a Settlement Date shall include a summary statement of the
amount of outstanding Advances, Swing Loans, and Agent
Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein
(including SECTION 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such
Lender's Pro Rata Share of the Advances,
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Swing Loans, and Agent Advances as of a Settlement Date, then
Agent shall, by no later than 12:00 p.m. (California time) on
the Settlement Date, transfer in immediately available funds
to the account of such Lender as such Lender may designate, an
amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of
the Advances, Swing Loans, and Agent Advances, and (z) if a
Lender's balance of the Advances, Swing Loans, and Agent
Advances is less than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, such Lender shall no later than 12:00 p.m. (California
time) on the Settlement Date transfer in immediately available
funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances. Such amounts made available to
Agent under clause (z) of the immediately preceding sentence
shall be applied against the amounts of the applicable Swing
Loan or Agent Advance and, together with the portion of such
Swing Loan or Agent Advance representing Swing Lender's Pro
Rata Share thereof, shall constitute Advances of such Lenders.
If any such amount is not made available to Agent by any
Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal
to, or greater than such Lender's Pro Rata Share of the
Advances, Swing Loans, and Agent Advances as of a Settlement
Date, Agent shall, as part of the relevant Settlement, apply
to such balance the portion of payments actually received in
good funds by Agent with respect to principal, interest, fees
payable by Borrower and allocable to the Lenders hereunder,
and proceeds of collateral. To the extent that a net amount is
owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of
such next Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in
accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing
Lender's Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to
Swing Lender's Pro Rata Share of the Advances other than to
Swing Loans, as provided for in the previous sentence, Swing
Lender shall pay to Agent for the accounts of the Lenders, and
Agent shall pay
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to the Lenders, to be applied to the outstanding Advances of
such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its
Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Agent Advances, and each Lender (subject
to the effect of letter agreements between Agent and
individual Lenders) with respect to the Advances other than
Swing Loans and Agent Advances, shall be entitled to interest
at the applicable rate or rates payable under this Agreement
on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
(g) NOTATION. Agent shall record on its books the
principal amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Agent Advances owing to Agent, and the interests
therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records, such books and records constituting conclusive
evidence, absent manifest error, of the accuracy of the information contained
therein.
(h) LENDERS' FAILURE TO PERFORM. All Advances (other
than Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary provision of
this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing
Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances (including
a Swing Loan), the outstanding Revolver Usage does not exceed the Borrowing Base
by more than $3,000,000, (ii) after giving effect to such Advances (including a
Swing Loan), the outstanding Revolver Usage (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) does
not exceed the Maximum Revolver Amount, and (iii) at the time of the making of
any such Advance (including any Swing Loan), Agent does not believe, in good
faith, that the Overadvance created by such Advance will be outstanding for more
than 30 days. The foregoing provisions are for the exclusive benefit of Agent,
Swing Lender, and the Lenders and are not intended to benefit Borrower in any
way. The Advances and Swing Loans, as applicable, that are made pursuant to this
SECTION 2.3(i) shall be subject to the same
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terms and conditions as any other Advance or Swing Loan, as applicable, except
that they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under SECTION 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(i) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or reason
for, such excess, Agent shall notify Lenders as soon as
practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice
would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall,
together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower intended
to reduce, within a reasonable time, the outstanding principal
amount of the Advances to Borrower to an amount permitted by
the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required
Lenders.
(ii) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in SECTION 2.3(f)
for the amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender,
any intentional Overadvances made as permitted under this
SECTION 2.3(i), and any Overadvances resulting from the
charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided herein,
all payments by Borrower shall be made to Agent's Account for
the account of the Lender Group and shall be made in
immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time)
shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior
to the date on which any payment is due to the Lenders that
Borrower will not make such payment in full as and when
required, Agent may assume that Borrower has made (or will
make) such payment in full to Agent on such date in
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immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to
each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent Borrower does not
make such payment in full to Agent on the date when due, each
Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at
the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the
Loan Documents (including letter agreements between Agent and
individual Lenders), aggregate principal and interest payments
shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and payments of fees and
expenses (other than fees or expenses that are for Agent's
separate account, after giving effect to any letter agreements
between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type
of Commitment or Obligation to which a particular fee relates.
All payments shall be remitted to Agent and all such payments
(other than payments received while no Event of Default has
occurred and is continuing and which relate to the payment of
principal or interest of specific Obligations or which relate
to the payment of specific fees), and all proceeds of Accounts
or other Collateral received by Agent, shall be applied as
follows:
(A) FIRST, to pay any Lender Group Expenses
then due to Agent under the Loan Documents, until
paid in full,
(B) SECOND, to pay any Lender Group Expenses
then due to the Lenders under the Loan Documents, on
a ratable basis, until paid in full,
(C) THIRD, to pay any fees then due to Agent
(for its separate accounts, after giving effect to
any letter agreements between Agent and individual
Lenders) under the Loan Documents until paid in full,
(D) FOURTH, to pay any fees then due to any
or all of the Lenders (after giving effect to any
letter agreements between Agent and individual
Lenders) under the Loan Documents, on a ratable
basis, until paid in full,
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'
(E) FIFTH, to pay interest due in respect of
all Agent Advances, until paid in full,
(F) SIXTH, ratably to pay interest due in
respect of the Advances (other than Agent Advances)
and the Swing Loans until paid in full,
(G) SEVENTH, to pay the principal of all
Agent Advances until paid in full,
(H) EIGHTH, to pay the principal of all
Swing Loans until paid in full,
(I) NINTH, so long as no Event of Default
has occurred and is continuing, and at Agent's
election (which election Agent agrees will not be
made if an Overadvance would be created thereby), to
pay amounts then due and owing by Borrower or its
Subsidiaries in respect of Bank Products, until paid
in full,
(J) TENTH, so long as an Event of Default
has not occurred and is not continuing, to pay the
principal of all Advances that are Base Rate Loans
until paid in full,
(K) ELEVENTH, so long as an Event of Default
has not occurred and is not continuing, to pay the
principal of all Advances that are LIBOR Rate Loans
until paid in full, PROVIDED, HOWEVER that if
Borrower provides Agent with prior written notice of
Borrower's election not to apply such proceeds to the
principal amount of any such LIBOR Rate Loan prior to
the last date of the Interest Period with respect to
such LIBOR Rate Loan, the amount that would otherwise
be applied against such LIBOR Rate Loans pursuant to
this subparagraph shall instead be wired to the
Collateral Account described by Borrower in such
notice, pending its application by Agent pursuant to
the provisions of SECTION 2.13(c),
(L) TWELFTH, so long as no Event of Default
has occurred and is continuing, to pay the principal
of all Advances until paid in full,
(M) THIRTEENTH, if an Event of Default has
occurred and is continuing, ratably (i) to pay the
principal of all Advances until paid in full, and
(ii) to Agent, to be held by Agent, for the benefit
of the applicable Bank Product Providers, as cash
collateral in an amount up to the amount of the Bank
Products Reserve established prior to the occurrence
of, and not in contemplation of, the subject Event of
Default until Borrower's and its Subsidiaries'
obligations in respect of the then
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extant Bank Products have been paid in full or the
cash collateral amount has been exhausted,
(N) FOURTEENTH, if an Event of Default has
occurred and is continuing, to Agent, to be held by
Agent, for the ratable benefit of Issuing Lender and
those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant
Letter of Credit Usage until paid in full,
(O) FIFTEENTH, to pay any other Obligations
(including Bank Product Obligations) until paid in
full, and
(P) SIXTEENTH, to Borrower (to be wired to
the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from
each Lender in writing, such funds as it may be entitled to
receive, subject to a Settlement delay as provided in SECTION
2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, SECTION 2.4(b) shall
not be deemed to apply to any payment by Borrower specified by
Borrower to be for the payment of specific Obligations then
due and payable (or prepayable) under any provision of this
Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this SECTION 2.4 and other provisions
contained in any other Loan Document, it is the intention of
the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this
SECTION 2.4 shall control and govern.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to the Lender
Group pursuant to SECTIONS
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2.1 AND 2.12 is greater than either the Dollar or percentage limitations set
forth in SECTIONS 2.1 OR 2.12, (an "OVERADVANCE"), or if an optional Overadvance
provided for in SECTION 2.3(i) is outstanding for more than 30 consecutive days,
Borrower immediately shall pay to Agent, in cash, the amount of such excess or
of such optional Overadvance (as the case may be), which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
SECTION 2.4(b). In addition, Borrower hereby promises to pay the Obligations
(including principal, interest, fees, costs, and expenses) in Dollars in full to
the Lender Group as and when due and payable under the terms of this Agreement
and the other Loan Documents.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations not charged to the Loan Account) that have been charged to
the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows (i) if the relevant Obligation is an Advance that is
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the
Applicable LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal to
the Base Rate plus the Applicable Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrower shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
2.12(e)) which shall accrue at a rate equal to 1.325% per annum TIMES the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate
equal to 4 percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 4 percentage points above the per annum
rate otherwise applicable hereunder.
(d) PAYMENT. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Commitments are outstanding. Borrower
hereby authorizes Agent, from time to time without prior notice to Borrower, to
charge such interest and fees, all Lender Group
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Expenses (as and when incurred), the charges, commissions, fees, and costs
provided for in SECTION 2.12(e) (as and when accrued or incurred), the fees and
costs provided for in SECTION 2.11 (as and when accrued or incurred), and all
other payments as and when due and payable under any Loan Document (including
any amounts due and payable to any Bank Product Provider in respect of Bank
Products up to the amount of the then extant Bank Products Reserve) to
Borrower's Loan Account, which amounts thereafter shall constitute Advances
hereunder and shall accrue interest at the rate then applicable to Base Rate
Loans hereunder. Any interest not paid when due shall be compounded by being
charged to Borrower's Loan Account and shall thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances that
are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and the Lender Group, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; PROVIDED, HOWEVER, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, IPSO FACTO, as of the date of this Agreement, Borrower is and shall
be liable only for the payment of such maximum as allowed by law, and payment
received from Borrower in excess of such legal maximum, whenever received, shall
be applied to reduce the principal balance of the Obligations to the extent of
such excess.
2.7 CASH MANAGEMENT.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at Fleet National Bank,
N.A. or such other bank which is satisfactory to Agent in its Permitted
Discretion (the "CASH MANAGEMENT BANK"), and (ii) deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all Collections into a bank account in Agent's name
(a "CASH MANAGEMENT ACCOUNT") at the Cash Management Bank. Upon the request of
Agent after the occurrence of an Event of Default, Borrower shall request in
writing and otherwise take such reasonable steps to ensure that all of its
Account Debtors and Makers forward payment of the amounts owed by them to
Borrower directly to such Cash Management Bank.
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(b) The Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrower, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all available amounts in the applicable Cash Management Account to the
Agent's Account.
(c) The Cash Management Account shall be a cash collateral
account, with all cash, checks and similar items of payment in such account
securing payment of the Obligations, and in which Borrower is hereby deemed to
have granted a Lien to Agent.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Bank pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
SECTION 2.6(d). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance, or
Swing Loan requested by Borrower and made by Agent or the Lenders hereunder
shall be made to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
shall maintain an account on its books in the name of Borrower (the "LOAN
ACCOUNT") on which Borrower will be charged with all Advances (including Agent
Advances and Swing Loans)
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made by Agent, Swing Lender, or the Lenders to Borrower or for Borrower's
account, the Letters of Credit issued by Issuing Lender for Borrower's account,
and with all other payment Obligations hereunder or under the other Loan
Documents (except for Bank Product Obligations), including, accrued interest,
fees and expenses, and Lender Group Expenses. In accordance with SECTION 2.8,
the Loan Account will be credited with all payments received by Agent from
Borrower or for Borrower's account, including all amounts received in the
Agent's Account from the Cash Management Bank. Agent shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrower and the Lender
Group unless, within 30 days after receipt thereof by Borrower, Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11 FEES. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.25% per annum
TIMES the result of (a) the Maximum Revolver Amount, LESS (b) the sum of (i) the
average Daily Balance of Advances that were outstanding during the immediately
preceding month, PLUS (ii) the average Daily Balance of the Letter of Credit
Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable under the
terms of the Fee Letter, Borrower shall pay to Agent the fees set forth in the
Fee Letter, and
(c) AUDIT, APPRAISAL, AND VALUATION CHARGES. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, and
(iii) the actual charges paid or incurred by Agent if it elects to employ the
services of one or more third Persons to perform financial audits of Borrower,
to appraise the Collateral, or any portion thereof, or to assess Borrower's
business valuation. The foregoing notwithstanding, so long as no Event of
Default is continuing, Borrower shall not be required to pay the fees and
charges of more than 4 audits per fiscal year of Borrower.
2.12 LETTERS OF CREDIT
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to
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purchase participations or execute indemnities or reimbursement obligations
(each such undertaking, an "L/C UNDERTAKING") with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, the prospective
Underlying Issuer is to be Xxxxx Fargo) for the account of Borrower. To request
the issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or
extension of an outstanding L/C or L/C Undertaking), Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Lender) to the Issuing Lender and Agent
(reasonably in advance of the requested date of issuance, amendment, renewal, or
extension) a notice requesting the issuance of an L/C or L/C Undertaking, or
identifying the L/C or L/C Undertaking to be amended, renewed, or extended, the
date of issuance, amendment, renewal, or extension, the date on which such L/C
or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the
name and address of the beneficiary thereof (or the beneficiary of the
Underlying Letter of Credit, as applicable), and such other information as shall
be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If
requested by the Issuing Lender, Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be the
subject of an L/C Undertaking. The Issuing Lender shall have no obligation to
issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base LESS the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$3,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount LESS the then extant amount of
outstanding Advances.
Borrower and the Lender Group acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Borrower shall have received written or telephonic notice of such L/C
Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate
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Loans under SECTION 2.6. To the extent an L/C Disbursement is deemed to be an
Advance hereunder, Borrower's obligation to reimburse such L/C Disbursement
shall be discharged and replaced by the resulting Advance. Promptly following
receipt by Agent of any payment from Borrower pursuant to this paragraph, Agent
shall distribute such payment to the Issuing Lender or, to the extent that
Lenders have made payments pursuant to SECTION 2.12(c) to reimburse the Issuing
Lender, then to such Lenders and the Issuing Lender as their interest may
appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to SECTION 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this SECTION 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in SECTION 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower agrees to be bound by
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the Underlying Issuer's regulations and interpretations of any Underlying Letter
of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing
Lender to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that the
Lender Group shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrower's instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrower against such Underlying Issuer.
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
harmless with respect to any loss, cost, expense (including reasonable attorneys
fees), or liability incurred by the Lender Group under any L/C Undertaking as a
result of the Lender Group's indemnification of any Underlying Issuer; PROVIDED,
HOWEVER, that Borrower shall not be obligated hereunder to indemnify for any
loss, cost, expense, or liability that is caused by the gross negligence or
willful misconduct of the Issuing Lender or any other member of the Lender
Group.
(d) Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is $300 for each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto,
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and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR OPTION") to have interest on all or a portion of the Advances
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or (iii)
termination of this Agreement pursuant to the terms hereof. On the last day of
each applicable Interest Period, unless Borrower properly has exercised the
LIBOR Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then applicable to
Base Rate Loans of the same type hereunder; PROVIDED, HOWEVER, that Borrower may
not exercise the LIBOR Option with respect to an existing LIBOR Rate Loan if
there are any assets remaining in any Collateral Account. At any time that an
Event of Default has occurred and is continuing, Borrower no longer shall have
the option to request that Advances bear interest at the LIBOR Rate and Agent
shall have the right to convert the interest rate on all outstanding LIBOR Rate
Loans to the rate then applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long
as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m.
(California time) at least 3 Business Days prior to the commencement of
the proposed Interest Period (the "LIBOR DEADLINE"). Notice of
Borrower's election of the LIBOR Option for a permitted portion of the
Advances and an Interest Period pursuant to this Section shall be made
by delivery to Agent of a LIBOR Notice received by Agent before the
LIBOR Deadline, or by telephonic notice received by Agent
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before the LIBOR Deadline (to be confirmed by delivery to Agent of a
LIBOR Notice received by Agent prior to 5:00 p.m. (California time) on
the same day. Promptly upon its receipt of each such LIBOR Notice,
Agent shall provide a copy thereof to each of the Lenders having a
Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrower. In connection with each LIBOR Rate Loan, Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any
loss, cost, or expense incurred by Agent or any Lender as a result of
(a) the payment of any principal of any LIBOR Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any LIBOR Rate
Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any
LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, and expenses, collectively,
"FUNDING LOSSES"). Funding Losses shall, with respect to Agent or any
Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that
would have accrued on the principal amount of such LIBOR Rate Loan had
such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case
of a failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), MINUS (ii) the amount of
interest that would accrue on such principal amount for such period at
the interest rate which Agent or such Lender would be offered were it
to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Borrower setting forth
any amount or amounts that Agent or such Lender is entitled to receive
pursuant to this Section shall be conclusive absent manifest error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrower only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any
time; PROVIDED, HOWEVER, that in the event that LIBOR Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with SECTION
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Agent and the
Lenders and their
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Participants harmless against any and all Funding Losses in accordance with
clause (b)(ii) above. In the event that Borrower elects to have a portion of the
Collections invested or deposited in a Collateral Account pursuant to the
provisions of SECTION 2.4(b)(i)(K), such Collections shall be applied by Agent
against the Obligations pursuant to the provisions of SECTION 2.4(b) upon the
receipt by Agent of a written request from Borrower for such application to the
extent set forth in such written request; PROVIDED, HOWEVER that Borrower hereby
authorizes Agent, in its sole and absolute discretion, to apply any amounts in a
Collateral Account against the Obligations pursuant to the provisions of SECTION
2.4(b), so long as Agent or the Lenders do not incur a Funding Loss as a result
thereof.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable
Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the
reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding
loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from
the affected Lender, Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any
amounts due under clause (b)(ii) above).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date
hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain LIBOR Advances or to
continue such funding or maintaining, or to determine or charge
interest rates at the LIBOR Rate, such Lender shall give notice of such
changed circumstances to Agent and Borrower and Agent promptly shall
transmit the notice to each other Lender and (y) in the case of any
LIBOR Rate Loans of such Lender that are outstanding, the date
specified in such Lender's notice shall be deemed to be the last day of
the Interest Period of such LIBOR Rate Loans, and interest upon the
LIBOR Rate Loans of such Lender thereafter shall accrue interest at
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the rate then applicable to Base Rate Loans, and (z) Borrower shall not
be entitled to elect the LIBOR Option until such Lender determines that
it would no longer be unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBOR Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent and the Lenders, of each of the
conditions precedent set forth below:
(a) the Closing Date shall occur on or before August 5, 2002;
(b) Agent shall have received all financing statements
required by Agent, duly authorized by Borrower, and Agent shall have received
searches reflecting the filing of all such financing statements;
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(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the ACFC Security Agreement,
(ii) the Allocation Agreement,
(iii) the Cash Management Agreements,
(iv) the Control Agreements,
(v) the Disbursement Letter,
(vi) the Due Diligence Letter,
(vii) the Fee Letter,
(viii) the Guaranty,
(ix) the Intercreditor Agreements,
(x) the Notes,
(xi) the Officers' Certificate,
(xii) the Purchase Agreement,
(xiii) the Servicing Agreement,
(xiv) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank,
(xv) the Subordination Agreement,
(xvi) the Trademark Security Agreement, and
(xvii) the Validity Agreements;
(d) Agent shall have received a certificate from the Secretary
of Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party and authorizing specific
officers of Borrower to execute the same;
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(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(f) Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of Borrower) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary
of ACFC attesting to the resolutions of ACFC's Board of Directors authorizing
its execution, delivery, and performance of the Loan Documents to which ACFC is
a party and authorizing specific officers of ACFC to execute the same;
(i) Agent shall have received copies of ACFC's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of ACFC;
(j) Agent shall have received a certificate of status with
respect to ACFC, dated within 10 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of
ACFC, which certificate shall indicate that ACFC is in good standing in such
jurisdiction;
(k) Agent shall have received certificates of status with
respect to ACFC, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of ACFC) in which its failure to be duly
qualified or licensed would have a material adverse effect on ACFC, which
certificates shall indicate that ACFC is in good standing in such jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by SECTION 6.8, the form
and substance of which shall be satisfactory to Agent;
(m) Agent shall have received an opinion of Borrower's counsel
in form and substance satisfactory to Agent and the Lenders;
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(n) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of Borrower) that all tax returns
required to be filed by Borrower have been timely filed and all taxes upon
Borrower or its properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;
(o) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
(p) Agent shall have completed its business, legal, and
collateral due diligence, including a collateral audit and review of Borrower's
books and records and verification of Borrower's representations and warranties
to the Lender Group, the results of which shall be satisfactory to Agent;
(q) Agent shall have received completed reference checks with
respect to Borrower's senior management, the results of which are satisfactory
to Agent in its sole discretion;
(r) Agent shall have received Borrower's Closing Date Business
Plan;
(s) Agent has been able to syndicate (on terms and conditions
satisfactory to Agent in its sole discretion) not less than $20,000,000 of the
Total Commitments hereunder to one or more financial institutions acceptable to
Agent in its sole discretion;
(t) Xxxxx Fargo's credit committee has approved the terms and
conditions set forth in this Agreement;
(u) Borrower shall have paid all Lender Group Expenses
incurred in connection with the transactions evidenced by this Agreement;
(v) The ACFC Loan Agreement shall have been executed and
delivered by each party thereto, and each of the ACFC Conditions shall have been
satisfied or waived;
(w) Agent shall have received such evidence as it shall
require in its discretion to evidence the fact that all financing statements
filed by HPSC Capital Funding, Inc. with respect to Borrower have been
terminated;
(x) Agent shall have received copies of (i) the Indenture,
(ii) the Master Amendment and Waiver and all other documents executed in
connection therewith, (iii) the Bravo Lease Receivables Purchase Agreement and
all other documents executed in connection therewith, (iv) the Receivables
Interest Purchase Agreement and all other documents executed in connection
therewith, and (v) each of the agreements evidencing or
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securing the Existing Indebtedness, together with a certificate of the Secretary
of Borrower certifying each such document as being a true, correct, and complete
copy thereof;
(y) Agent shall have received a certificate of the Secretary
of Borrower identifying each agreement to which Borrower or ACFC, on the one
hand, and a Securitization Subsidiary on the other hand, is a party, or which
otherwise involves a securitization transaction by Borrower or ACFC;
(z) Borrower shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery of this Agreement or any other Loan Document to
which it is a party or with the consummation of the transactions contemplated
hereby and thereby; and
(aa) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, Agent shall have
received Collateral Access Agreements with respect to the following locations:
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and 000 Xxxxx Xxxx Xxxxxx, Xxxx
Xxxxxxxx, Xxxxxxxxxxx;
(b) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by SECTION 6.8, the form and substance of which shall
be satisfactory to Agent and its counsel; and
(c) as soon as practicable after the date of Borrower's
receipt of a written request therefor from Agent, but in any event within 45
days of Borrower's receipt of such request, and so long as such product is
available on a commercially reasonable basis, deliver to Agent evidence
satisfactory to Agent that Borrower has secured an interest rate Hedge Agreement
on terms and conditions satisfactory (including notional amount) to Agent.
3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the
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date of such extension of credit, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an
earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof,
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of their Affiliates,
(d) no Material Adverse Change shall have occurred, and
(e) Agent shall have received a Borrowing Base Certificate
which includes (i) a detailed calculation of the Borrowing Base as of the date
of the requested Advance, and (ii) detail regarding Receivables that are not
Eligible Receivables.
3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on August 5, 2005 (the "MATURITY DATE"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrower with respect to outstanding Letters of Credit and including all Bank
Products Obligations) immediately shall become due and payable without notice or
demand (including (a) either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of the Bank Product Providers
with respect to the then extant Bank Products Obligations). No termination of
this Agreement, however, shall relieve or discharge Borrower of its duties,
Obligations, or covenants hereunder and the Agent's Liens in the Collateral
shall remain in effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
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3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of the Bank Product Providers
with respect to the then extant Bank Products Obligations), in full, together
with the Applicable Prepayment Premium (to be allocated based upon letter
agreements between Agent and individual Lenders). If Borrower has sent a notice
of termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrower shall be obligated to repay the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of the Bank Product Providers
with respect to the then extant Bank Products Obligations), in full, together
with the Applicable Prepayment Premium, on the date set forth as the date of
termination of this Agreement in such notice. In the event of the termination of
this Agreement and repayment of the Obligations at any time prior to the
Maturity Date, for any other reason, including (a) termination upon the election
of the Required Lenders to terminate after the occurrence of an Event of
Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in
any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise of
the Obligations by the confirmation of a plan of reorganization or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Agent, for
the benefit of the Lender Group (and any Bank Product Provider to the extent
that it has provided Bank Products to Borrower or its Subsidiaries), a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of any and all of the Obligations in accordance with the
terms and conditions of the Loan Documents and in order to secure prompt
performance by Borrower of each of its covenants and duties under the Loan
Documents. The Agent's Liens in and to the Collateral shall attach to all
Collateral without further act on the part of Agent or Borrower. Anything
contained in this Agreement or any other Loan Document to the
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contrary notwithstanding, except for Permitted Dispositions, Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, Borrower, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Agent, Borrower shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (including, upon
the occurrence and during the continuance of an Event of Default, assignments in
favor of Agent of each of the financing statements or mortgages filed by
Borrower or any of its Subsidiaries with respect to any Account Debtor, Maker or
other similar Persons) (the "ADDITIONAL DOCUMENTS") that Agent may request in
its Permitted Discretion, in form and substance satisfactory to Agent, to
perfect and continue perfected or better perfect the Agent's Liens in the
Collateral (whether now owned or hereafter arising or acquired), to create and
perfect Liens in favor of Agent in any Real Property acquired after the Closing
Date, and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, Borrower authorizes Agent to execute any such Additional
Documents in Borrower's name and authorizes Agent to file such executed
Additional Documents in any appropriate filing office. In addition, on such
periodic basis as Agent shall require, Borrower shall (a) provide Agent with a
report of all new patentable, copyrightable, or trademarkable materials acquired
or generated by Borrower or its Subsidiaries during the prior period, (b) cause
all patents, copyrights, and trademarks acquired or generated by Borrower or its
Subsidiaries that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's or the applicable Subsidiary's
ownership thereof, and (c) cause to be prepared, executed, and delivered to
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Agent supplemental schedules to the applicable Loan Documents to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in SECTION 4.4, sign the name of Borrower on any of the documents
described in SECTION 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or xxxx of lading
relating to the Collateral, drafts against Account Debtors or Makers, or notices
to Account Debtors or Makers, (c) send requests for verification of Accounts,
(d) endorse Borrower's name on any Collection item that may come into the Lender
Group's possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper, or General Intangibles directly with Account Debtors or
Makers, for amounts and upon terms that Agent determines to be reasonable, and
Agent may cause to be executed and delivered any documents and releases that
Agent determines to be necessary. The appointment of Agent as Borrower's
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group's obligations to extend credit
hereunder are terminated.
4.6 RIGHT TO INSPECT. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books, to conduct audits, and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7 CONTROL AGREEMENTS. Borrower agrees that it will not transfer
assets out of any Securities Accounts other than as permitted under SECTION 7.19
and, if to another securities intermediary, unless each of Borrower, Agent, and
the substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Agent. Upon the occurrence and during the
continuance of a Default or Event of Default, Agent may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Borrower makes the following representations and warranties to the
Lender Group which shall be true,
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correct, and complete, in all material respects, as of the date hereof, and
shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE RECEIVABLES. The Eligible Receivables are BONA FIDE
existing payment obligations of Account Debtors or Makers created by the lending
of money or leasing of goods in the ordinary course of Borrower's business,
unconditionally owed to Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. Borrower has not received
notice of actual or imminent bankruptcy, insolvency, or material impairment of
the financial condition of any Account Debtor or Maker regarding any Eligible
Receivable. Borrower has not received notice of any actual or threatened
litigation regarding the validity or enforceability of any Eligible Receivable
or any lien on collateral securing any Eligible Receivable. With regard to each
Eligible Receivable, Borrower has duly filed financing statements against the
applicable Account Debtor or Maker in all applicable jurisdictions.
5.3 [INTENTIONALLY OMITTED].
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.5 LOCATION OF EQUIPMENT. The Equipment is not stored with a bailee,
warehouseman, or similar party and are located only at the locations identified
on SCHEDULE 5.5.
5.6 [INTENTIONALLY OMITTED].
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of each of Borrower and ACFC is located at the respective addresses
indicated in SCHEDULE 5.7 and Borrower's and ACFC's respective XXXXx are
identified in SCHEDULE 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
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(b) [intentionally omitted].
(c) Set forth on SCHEDULE 5.8(c), is a complete and accurate
list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Borrower. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of Borrower, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any properties or assets of Borrower,
other than Permitted Liens, or (iv) require any approval of Borrower's
interestholders or any approval or consent of any Person under any material
contractual obligation of Borrower.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower,
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enforceable against Borrower in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on SCHEDULE 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that,
if decided adversely to Borrower, or any of its Subsidiaries, as applicable,
reasonably could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower that have been delivered by Borrower to the Lender Group have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrower's financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrower
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date.
5.12 FRAUDULENT TRANSFER.
(a) Borrower and its Subsidiaries are Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
5.13 EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries, or
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 5.14, (a)
to Borrower's knowledge, none of Borrower's or its Subsidiaries' assets has ever
been used by Borrower, its Subsidiaries or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrower's knowledge, none of Borrower's or its
Subsidiaries' properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) neither Borrower nor its Subsidiaries have received notice
that a Lien arising under any
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Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrower or its Subsidiaries, and (d) neither Borrower nor its
Subsidiaries have received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower or its Subsidiaries
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15 BROKERAGE FEES. Borrower has not utilized the services of any
broker or finder in connection with Borrower's obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrower in connection herewith.
5.16 INTELLECTUAL PROPERTY. Borrower and its Subsidiaries own, or hold
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted. Attached hereto as SCHEDULE 5.16 is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which Borrower or
its Subsidiaries are the owner or is an exclusive licensee.
5.17 LEASES. Borrower and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to the business of Borrower and
its Subsidiaries and to which any such Person is a party or under which such
Person is operating. All of such leases are valid and subsisting and no material
default by Borrower or any of its Subsidiaries exists under any of them.
5.18 DDAs. Set forth on SCHEDULE 5.18 are all of Borrower's or its
Subsidiaries' DDAs, including, with respect to each depository (i) the name and
address of such depository, and (ii) the account numbers of the accounts
maintained with such depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents, or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower or its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Closing Date Projections
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent Borrower's good faith best estimate
of its future performance for the periods covered thereby.
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5.20 INDEBTEDNESS. Set forth on SCHEDULE 5.20 is a true and complete
list of all Indebtedness of Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower shall and shall cause each of its Subsidiaries to do all
of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent.
6.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
================================================================================
Monthly (not (a) a Borrowing Base Certificate which includes (i) a
later than the detailed calculation of the Borrowing Base, and (ii)
10th Business detail regarding Receivables that are not Eligible
Day of each Receivables,
month)
(b) a detailed aging, by total, of the Receivables,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided to
Agent,
(c) a report which identifies each Receivable that is
delinquent, or that has been identified by Borrower as a
problem loan or lease,
(d) a report which identifies all Modified Receivables,
and
(e) a detailed calculation of Borrower's and its
Subsidiaries' obligations with respect to Bank Product
Agreements.
--------------------------------------------------------------------------------
Upon request by (f) such other reports as to the Collateral or the
Agent financial condition of Borrower and its Subsidiaries, as
Agent may request.
================================================================================
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender:
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(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Borrower's
fiscal years,
(i) a company prepared consolidated income statement (and in
the case of a month that is the end of a fiscal quarter, a consolidated
balance sheet and statement of cash flows) covering Borrower's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Borrower, substantially in the form of EXHIBIT F-1 hereto.
(iii) for each month that is the date on which a financial
covenant in SECTION 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail (A) compliance at the end of such
period with the applicable financial covenants contained in SECTION
7.20, and (B) setting forth Borrower's most recent Debt to Worth Ratio
(calculated based upon the fiscal quarter then ended), and
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance
with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared,
such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under SECTION 7.20 as of
the last day of Borrower's fiscal year,
(c) as soon as available, but in any event within 30 days
prior to the start of each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 years, year by
year, and for the forthcoming fiscal year, month by month, certified by
the chief financial officer of Borrower as being such officer's good
faith best estimate of the financial performance of Borrower during the
period covered thereby,
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(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) if and when filed by Borrower or its Subsidiaries and as
requested by Agent, satisfactory evidence of payment of applicable excise taxes
in each jurisdictions in which (i) Borrower or its Subsidiaries conducts
business or is required to pay any such excise tax, (ii) where Borrower's or its
Subsidiaries' failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of Borrower or its Subsidiaries, or (iii) where
Borrower's or its Subsidiaries' failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,
(f) as soon as Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Borrower proposes to take with respect
thereto, and
(g) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrower.
In addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on both a consolidated
and consolidating basis and agrees that no Subsidiary of Borrower will have a
fiscal year different from that of Borrower. Borrower agrees that its
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning Borrower
Agent reasonably may request. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.
6.4 [INTENTIONALLY OMITTED].
6.5 RECORDS. Borrower and its Subsidiaries shall maintain accurate and
complete records regarding all Receivables, including without limitation all
Receivables which have been guaranteed by the principals of the respective
Account Debtors or Makers.
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6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee
so as to prevent any loss or forfeiture thereof or thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower,
its Subsidiaries or any of their respective assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower will make timely payment or deposit of all tax
payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Agent with proof
satisfactory to Agent indicating that Borrower has made such payments or
deposits. Borrower shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which Borrower or its Subsidiaries are
required to pay any such excise tax.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting its
assets wherever located (other than Inventory of Borrower that is leased to
Account Debtors which have secured insurance with respect thereto), covering
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Borrower also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss
covered by such insurance. Agent shall have the exclusive right to adjust any
losses payable under any such insurance policies in excess of $50,000, without
any liability to Borrower whatsoever in respect of such adjustments. Any monies
received as payment for any loss under any insurance policy mentioned above
(other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or
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restorations. Any such repairs, replacements, or restorations shall be effected
with reasonable promptness and shall be of a value at least equal to the value
of the items of property destroyed prior to such damage or destruction.
(c) Borrower will not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this SECTION 6.8, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
(d) Borrower shall cause each Account Debtor or Maker to
maintain insurance in accordance with Borrower's standard underwriting practices
and policies with respect to each tangible asset financed by Borrower.
6.9 LOCATION OF EQUIPMENT. Keep the Equipment only at the locations
identified on SCHEDULE 5.5; PROVIDED, HOWEVER, that Borrower may amend SCHEDULE
5.5 so long as such amendment occurs by written notice to Agent not less than 30
days prior to the date on which Inventory or Equipment is moved to such new
location, so long as such new location is within the continental United States,
and so long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due all rents and other amounts payable under any
leases to which Borrower or its Subsidiaries are a party or by which Borrower's
or its Subsidiaries' properties and assets are bound, unless such payments are
the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
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6.13 EXISTENCE. At all times preserve and keep in full force and effect
Borrower's and its Subsidiaries' valid existence and good standing and any
rights and franchises material to Borrower's or its Subsidiaries' businesses.
6.14 ENVIRONMENTAL. (a) Keep any property either owned or operated by
Borrower or its Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower or its Subsidiaries and take any Remedial Actions required
to xxxxx said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly provide Agent with written notice within 10
days of the receipt of any of the following: (i) notice that an Environmental
Lien has been filed against any of the real or personal property of Borrower or
its Subsidiaries, (ii) commencement of any Environmental Action or notice that
an Environmental Action will be filed against Borrower or its Subsidiaries, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 PROMISSORY NOTES AND LEASES.
(a) Concurrent with the execution thereof, print a legend,
which describes the security interests which have been granted by Borrower to
Agent pursuant to the Loan Documents, on the file that contains each promissory
note which has been issued by a Maker in favor of Borrower and on each file that
contains a commercial lease which forms the basis of a Receivable, in form and
substance satisfactory to Agent in its sole and absolute discretion; PROVIDED,
HOWEVER, that if any such promissory note or commercial lease has been in
existence for more than 90 days, Borrower shall print the legend on the original
document, and
(b) Store in a fireproof vault all promissory notes and
commercial leases.
6.17 AFTER ACQUIRED REAL PROPERTY. Upon the acquisition by it or any of
its Subsidiaries after the date hereof of any fee interest in any real property
(wherever located, (each such interest being an "AFTER ACQUIRED PROPERTY"), with
a Current Value (as defined
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below) in excess of $100,000, immediately so notify Agent, setting forth with
specificity a description of the interest acquired, the location of the real
property, any structures or improvements thereon and either an appraisal of
Borrower's good-faith estimate of the current value of such real property (for
purposes of this Section, the "CURRENT VALUE"). The Agent shall notify Borrower
whether it intends to require a Mortgage and the other documents referred to
below. Upon receipt of such notice requesting a Mortgage, the Person which has
acquired such After Acquired Property shall immediately furnish to Agent the
following, each in form and substance satisfactory to Agent: (i) a Mortgage with
respect to such real property and related assets located at the After Acquired
Property, each duly executed by such Person and in recordable form; (ii)
evidence of the recording of the mortgage referred to in clause (i) above in
such office or offices as may be necessary or, in the opinion of Agent,
desirable to create and perfect a valid and enforceable lien on the property
purported to be covered thereby or to otherwise protect the rights of Agent and
the Lenders thereunder, and (iii) such other documents or instruments (including
opinions of counsel) as Agent may reasonably require. Borrower shall pay all
fees and expenses, including reasonable attorneys fees and expenses in
connection with the performance of the obligations under this Section.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to do
any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness set forth on SCHEDULE 5.20,
(c) any Subordinated Debt issued after the Closing Date,
(d) Permitted Purchase Money Indebtedness, and
(e) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b), (c), and (d) of this SECTION 7.1 (and continuance
or renewal of any Permitted Liens associated therewith) so long as: (i) the
terms and conditions of such refinancings, renewals, or extensions do not, in
Agent's judgment, materially impair the prospects of repayment of the
Obligations by Borrower or materially impair Borrower's creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced,
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renewed, or extended, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions that,
taken as a whole, are materially more burdensome or restrictive to Borrower, and
(iv) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Lender
Group as those that were applicable to the refinanced, renewed, or extended
Indebtedness; and
(f) Indebtedness composing Permitted Investments.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under SECTION 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Except for the consummation of the ACFC Spin-Off, convey,
sell, lease, license, assign, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's assets.
7.5 CHANGE NAME. Change Borrower's or any Subsidiairies' name, FEIN,
corporate structure, or identity, or add any new fictitious name; PROVIDED,
HOWEVER, that Borrower or any of its Subsidiaries may change its name upon at
least 30 days prior written notice to Agent of such change and so long as, at
the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens in and to the Collateral.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.
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7.7 NATURE OF BUSINESS. Make any change in the principal nature of its
business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
SECTION 7.1(e), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than the Obligations in
accordance with this Agreement, and
(b) Except in connection with a refinancing permitted by
SECTION 7.1(e), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under SECTIONS 7.1(b), (c), or (d).
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 UNDERWRITING GUIDELINES. Modify or change Borrower's or its
Subsidiaries' documented underwriting standards or modification policies without
Agent's prior written consent.
7.11 DISTRIBUTIONS. Other than Permitted Restricted Payments, make any
distribution or declare or pay any dividends (in cash or other property, other
than common Stock) on, or purchase, acquire, redeem, or retire any of Borrower's
Stock, of any class, whether now or hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's or its Subsidiaries' accounting records without said
accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Borrower's financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; PROVIDED,
HOWEVER, that Borrower and its Subsidiaries shall not have Permitted Investments
(other than in the Cash Management Accounts) in deposit accounts or Securities
Accounts in excess of $250,000 in the aggregate outstanding at any one time for
more than 3 consecutive Business Days unless Borrower or its Subsidiary, as
applicable, and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments, as Agent shall
determine in its Permitted Discretion, to perfect (and further establish) the
Agent's Liens in such Permitted Investments.
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7.14 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction with
a non-Affiliate.
7.15 SUSPENSION. Except for the ACFC Spin-Off, suspend or go out of a
substantial portion of its business.
7.16 [INTENTIONALLY OMITTED].
7.17 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to the Existing
Lenders, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Agent and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens and also provides to Agent a Collateral Access
Agreement with respect to such new location. The Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Agent's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrower shall not transfer assets out of any Securities
Account; PROVIDED, HOWEVER, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrower may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
(i) MINIMUM NET INCOME. Net Income, measured on a fiscal
quarter-end basis as of each date set forth below, of at least the
amount set forth opposite such date:
-----------------------------------------------------------------------
Applicable Amount Applicable Date
-----------------------------------------------------------------------
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-----------------------------------------------------------------------
$750,000 September 30, 2002
-----------------------------------------------------------------------
$800,000 December 31, 2002
-----------------------------------------------------------------------
$850,000 March 31, 2003
-----------------------------------------------------------------------
$900,000 June 30, 2003
-----------------------------------------------------------------------
$950,000 September 30, 2003
-----------------------------------------------------------------------
$1,000,000 December 31, 2003
-----------------------------------------------------------------------
$1,050,000 March 31, 2004
-----------------------------------------------------------------------
$1,100,000 June 30, 2004
-----------------------------------------------------------------------
$1,150,000 September 30, 2004
-----------------------------------------------------------------------
$1,200,000 December 31, 2004
-----------------------------------------------------------------------
$1,250,000 March 31, 2005
-----------------------------------------------------------------------
$1,300,000 June 30, 2005
-----------------------------------------------------------------------
(ii) DEBT TO WORTH RATIO. A Debt to Worth Ratio, measured on a
fiscal quarter-end basis as of each date set forth below, which is less
than or equal to the ratio set forth opposite such date:
-----------------------------------------------------------------------
Applicable Ratio Applicable Period
-----------------------------------------------------------------------
7.5:1.0 September 30, 2002
-----------------------------------------------------------------------
7.5:1.0 December 31, 2002
-----------------------------------------------------------------------
7.5:1.0 March 31, 2003
-----------------------------------------------------------------------
7.5:1.0 June 30, 2003
-----------------------------------------------------------------------
7.5:1.0 September 30, 2003
-----------------------------------------------------------------------
7.5:1.0 December 31, 2003
-----------------------------------------------------------------------
7.5:1.0 March 31, 2004
-----------------------------------------------------------------------
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-----------------------------------------------------------------------
7.5:1.0 June 30, 2004
-----------------------------------------------------------------------
7.5:1.0 September 30, 2004
-----------------------------------------------------------------------
7.5:1.0 December 31, 2004
-----------------------------------------------------------------------
7.5:1.0 March 31, 2005
-----------------------------------------------------------------------
7.5:1.0 June 30, 2005
-----------------------------------------------------------------------
(iii) TANGIBLE NET WORTH. Tangible Net Worth, measured on a
fiscal quarter-end basis as of each date set forth below, of at least
the amount set forth opposite such date:
-----------------------------------------------------------------------
Applicable Amount Applicable Period
-----------------------------------------------------------------------
$33,750,000 September 30, 2002
-----------------------------------------------------------------------
$34,550,000 December 31, 2002
-----------------------------------------------------------------------
$35,400,000 March 31, 2003
-----------------------------------------------------------------------
$36,300,000 June 30, 2003
-----------------------------------------------------------------------
$37,250,000 September 30, 2003
-----------------------------------------------------------------------
$38,250,000 December 31, 2003
-----------------------------------------------------------------------
$39,300,000 March 31, 2004
-----------------------------------------------------------------------
$40,400,000 June 30, 2004
-----------------------------------------------------------------------
$41,550,000 September 30, 2004
-----------------------------------------------------------------------
$42,750,000 December 31, 2004
-----------------------------------------------------------------------
$44,000,000 March 31, 2005
-----------------------------------------------------------------------
$45,300,000 June 30, 2005
-----------------------------------------------------------------------
(b) Make:
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(i) CAPITAL EXPENDITURES. Capital expenditures in any fiscal
year in excess of the amount set forth in the following table for the
applicable period:
--------------------------------------------------------------------------------
Fiscal Year 2002 Fiscal Year 2003 Fiscal Year 2004 Fiscal Year 2005
--------------------------------------------------------------------------------
$750,000 $750,000 $750,000 $750,000
--------------------------------------------------------------------------------
(c) Suffer:
(i) CUMULATIVE STATIC LOSSES. Cumulative Static Losses, as a
percentage of all Receivables originated in any given fiscal year of
Borrower (commencing with Borrower's 2000 fiscal year), in excess of
4.5% during any fiscal year of Borrower.
(ii) DELINQUENCIES. Delinquent Receivables, as of any date,
greater than 5.5% of all Receivables.
(iii) COLLECTIONS. Cash Collections, as of the end of any
month and calculated for the immediately preceding 6 month period, from
Receivables of less than 95% of the amounts billed with respect to
Receivables for such 6 month period.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "EVENT OF DEFAULT") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations); PROVIDED, HOWEVER, that in the case of Overadvances that are
caused by the charging of interest, fees, or Lender Expenses to the Loan
Account, such event shall not constitute an Event of Default if, within 3
Business Days of Borrower's receipt of telephonic or other notice of such
Overadvance, Borrower eliminates such Overadvance;
8.2 If Borrower or any of its Subsidiaries fails or neglects to (a)
perform, keep, or observe any covenant or other provision contained in SECTIONS
6.2, 6.3, 6.7, 6.9, 6.10, OR 6.11 hereof and such failure or neglect continues
for a period of 5 days after the date on which such failure or neglect first
occurs, or (b) perform, keep, or observe any covenant or other provision
contained in any Section of this Agreement (other than a Section that is
expressly
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dealt with elsewhere in this SECTION 8), including failure to satisfy a
condition subsequent set forth in SECTION 3.2 within the time period stated, or
the other Loan Documents (other than a Section of such other Loan Documents
dealt with elsewhere in this SECTION 8) and such failure or neglect is not cured
within 15 days after the date on which such failure or neglect first occurs, or
(c) perform, keep, or observe any covenant or other provision contained in
SECTION 6 (other than a subsection of SECTION 6 that is dealt with elsewhere in
this SECTION 8), or SECTION 7 of this Agreement or any comparable provision
contained in any of the other Loan Documents;
8.3 If any portion of Borrower's or any of its Subsidiaries' (other
than ACFC) property or assets with a value greater than $250,000 individually or
in the aggregate, is attached, seized, subjected to a writ or distress warrant,
or is levied upon, or comes into the possession of any third Person and the same
is not discharged before the earlier of 30 days after the date it first arises
or 5 days prior to the date on which such property or asset is subject to
forfeiture by Borrower or the applicable Subsidiary (other than ACFC);
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries (other than ACFC);
8.5 If an Insolvency Proceeding is commenced against Borrower, or any
of its Subsidiaries (other than ACFC), and any of the following events occur:
(a) Borrower or the Subsidiary (other than ACFC) consents to the institution of
such Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition commencing
the Insolvency Proceeding is not dismissed within 45 calendar days of the date
of the filing thereof; PROVIDED, HOWEVER, that, during the pendency of such
period, Agent (including any successor agent) and each other member of the
Lender Group shall be relieved of their obligations to extend credit hereunder,
(d) an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower or any of its Subsidiaries (other than
ACFC), or (e) an order for relief shall have been entered therein;
8.6 If Borrower or any of its Subsidiaries (other than ACFC) is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;
8.7 If (a) a notice of Lien, levy, or assessment is filed of record
with respect to the properties or assets or Borrower or any of its Subsidiaries
(other than ACFC) by the United States Government, or any department, agency, or
instrumentality thereof, or if any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a Lien, whether xxxxxx or otherwise,
upon any properties or assets of Borrower or any of its Subsidiaries and the
same is not paid on the payment date thereof, or (b) notices of Lien, levy, or
assessment in an aggregate amount in excess of $250,000 are filed of record with
respect to the properties or assets of Borrower or any of its Subsidiaries
(other than ACFC) by any state, county, municipal, or governmental agency, or if
any taxes or debts owing at
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any time hereafter to any one or more of such entities becomes a Lien exceeding
the foregoing aggregate limitation, whether xxxxxx or otherwise, upon the
properties or assets of Borrower or any of its Subsidiaries (other than ACFC)
and the same is not paid on the payment date thereof;
8.8 If one or more judgments or other claims involving an aggregate
amount of $250,000, or more, in excess of the amount covered by insurance,
becomes a Lien or encumbrance upon any material portion of the properties or
assets of Borrower or any of its Subsidiaries (other than ACFC) and the same is
not released, discharged, bonded against, or stayed pending appeal before the
earlier of 30 days after the date it first arises or 5 days prior to the date on
which such asset is subject to being forfeited by Borrower or the applicable
Subsidiary (other than ACFC);
8.9 If there is a default in respect of the Subordinated Debt or under
the Indenture or any other material agreement (other than the ACFC Loan
Agreement and the related agreements) to which Borrower or any of its
Subsidiaries is a party and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by the other party thereto,
irrespective of whether exercised, to accelerate the maturity of Borrower's or
its Subsidiaries' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein;
8.10 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by Borrower, its Subsidiaries, or any officer, employee, agent, or
director of Borrower or any of its Subsidiaries;
8.12 If the obligation of ACFC under the Guaranty is limited or
terminated by operation of law or by ACFC thereunder;
8.13 If the obligation of any Validity Guarantor under the Validity
Agreement is limited or terminated by operation of law or by the Validity
Guarantor thereunder;
8.14 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby;
8.15 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by
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Borrower or its Subsidiaries, or a proceeding shall be commenced by Borrower or
its Subsidiaries, or by any Governmental Authority having jurisdiction over
Borrower or its Subsidiaries, seeking to establish the invalidity or
unenforceability thereof, or Borrower or its Subsidiaries shall deny that
Borrower or its Subsidiaries has any liability or obligation purported to be
created under any Loan Document; or
8.16 If a Bravo Event of Termination or a Bravo Wind-Down Event occurs
and is continuing and any applicable cure period applicable thereto expires.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors or Makers for amounts and upon terms which Agent considers advisable,
and in such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after deducting
all Lender Group Expenses incurred or expended in connection therewith;
(e) Without notice to or demand upon Borrower or ACFC, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Borrower agrees to assemble
the Collateral if Agent so requires, and to make the Collateral available to
Agent at a place that Agent may designate which is reasonably convenient to both
parties. Borrower authorizes Agent to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Agent's
determination appears to conflict with the Agent's Liens and to pay all expenses
incurred in connection therewith and to charge Borrower's Loan Account therefor.
With respect to any of
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Borrower's owned or leased premises, Borrower hereby grants Agent a license to
enter into possession of such premises and to occupy the same, without charge,
in order to exercise any of the Lender Group's rights or remedies provided
herein, at law, in equity, or otherwise;
(f) Without notice to Borrower or ACFC (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of Borrower held by the Lender Group;
(g) Hold, as cash collateral, any and all balances and
deposits of Borrower held by the Lender Group, and any amounts received in the
Cash Management Accounts, to secure the full and final repayment of all of the
Obligations;
(h) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Borrower hereby grants to Agent a license or other right
to use, without charge, Borrower's labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and Borrower's rights under
all licenses and all franchise agreements shall inure to the Lender Group's
benefit;
(i) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Agent
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;
(j) Agent shall give notice of the disposition of the
Collateral as follows:
(i) Agent shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Borrower as provided in SECTION 12, at least 10
days before the earliest time of disposition set forth in the notice;
no notice needs to be given prior to the disposition of any portion of
the Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized market;
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(k) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale; and
(l) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(m) Exercise or assign any and all rights to collect, manage,
and service the Receivables, including, (i) the receipt, processing and
accounting for all payments on account of the Receivables, (ii) periodically
sending demand notices and statements to the Account Debtors or Makers, (iii)
enforcing legal rights with respect to the Receivables, including hiring
attorneys to do so to the extent Agent or such assignee deems such engagement
necessary, and (iv) taking all lawful actions and procedures which Agent or such
assignee deems necessary to collect the Receivables, and all such amounts shall
be Lender Group Expenses;
(n) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases), other than DE MINIMIS sums of
money, due to third Persons, or fails to make any deposits or furnish any
required proof of payment or deposit, all as required under the terms of this
Agreement, then, Agent, in its sole discretion and without prior notice to
Borrower, may do any or all of the following: (a) make payment of the same or
any part thereof, (b) set up such reserves in Borrower's Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with SECTION 6.8 hereof,
obtain and maintain insurance policies of the type described in SECTION 6.8 and
take any action with respect to such policies as Agent deems prudent.
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Any such amounts paid by Agent shall constitute Lender Group Expenses and any
such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "INDEMNIFIED PERSON")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this SECTION
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any
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payment to any other Indemnified Person with respect to an Indemnified Liability
as to which Borrower was required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON (BUT
NOT WITH RESPECT TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS PROVIDED ABOVE).
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Borrower or Agent, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Agent, as
the case may be, at its address set forth below:
If to Borrower: HPSC, INC.
00 Xxxxx Xxxxxx,
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Chief Financial Officer
Fax No. 000.000.0000
with copies to: HILL & XXXXXX
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax No. 000.000.0000
If to Agent: FOOTHILL CAPITAL CORPORATION
00000 Xxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Loan Portfolio Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
-00-
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
Agent and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this SECTION 12,
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE
LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
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(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "ASSIGNEE") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; PROVIDED, HOWEVER, that Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Borrower and Agent an
Assignment and Acceptance in form and substance satisfactory to Agent, and (iii)
the assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) 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 and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to
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SECTION 11.3 hereof) and be released from its obligations under this Agreement
(and in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement and
the other Loan Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall affect a novation between Borrower and the
Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (5)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "PARTICIPANT") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "ORIGINATING LENDER") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); PROVIDED, HOWEVER, that (i) the Originating Lender shall remain a
"Lender" for
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all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrower, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment
of, or reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrower, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any manner permitted under
applicable law.
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14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void AB INITIO. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to SECTION 14.1 hereof and, except as expressly required pursuant to
SECTION 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower, do any of the following:
(a) waive any of the conditions precedent specified in
SECTIONS 3.1 OR 3.3, provided, that the execution and delivery of this Agreement
by each party hereto shall constitute a writing signed by all of the Lenders
consenting to the waiver of each condition precedent specified in SECTION 3.1
that has not been satisfied (if any),
(b) increase or extend any Commitment of any Lender or subject
such Lender to any additional obligations,
(c) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(d) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(e) change the percentage of the Commitments that is required
to take any action hereunder,
(f) amend, modify or waive this Section or any provision of
the Agreement providing for consent or other action by all Lenders,
(g) release Collateral other than as permitted by SECTION
16.12,
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(h) change the definition of "Required Lenders",
(i) contractually subordinate any of the Agent's Liens,
(j) release Borrower or ACFC (other than in connection with
the ACFC Spin-Off) from any obligation for the payment of money, or
(k) change the definition of Borrowing Base or the definitions
of Eligible Receivables, Maximum Revolver Amount, or change SECTION 2.1(b), or
(l) amend any of the provisions of SECTION 16.
and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
15.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such Assignment and Acceptance Agreement. The replacement
of any Holdout Lender shall be made in accordance with the terms of SECTION
14.1. Until such time as the Replacement Lenders shall have acquired all of the
Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and
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under the other Loan Documents, the Holdout Lender shall remain obligated to
make the Holdout Lender's Pro Rata Share of Advances and to purchase a
participation in each Letter of Credit, in an amount equal to its Pro Rata Share
of the Risk Participation Liability of such Letter of Credit.
15.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints Foothill as its agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to execute
and deliver each of the other Loan Documents on its behalf and to take such
other action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this SECTION 16.
The provisions of this SECTION 16 are solely for the benefit of Agent, and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the
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Collections, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral, and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall 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 Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement 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 counsel to
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Borrower or counsel to any Lender), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable. If Agent so requests, it shall first be
indemnified to its reasonable satisfaction by Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
16.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to SECTION 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with SECTION 9; PROVIDED, HOWEVER, that
unless and until Agent has received any such request, Agent may (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.
16.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
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 not taking
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action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender's ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 AGENT IN INDIVIDUAL CAPACITY. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other
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business with Borrower and its Subsidiaries and Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents as though Foothill
were not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, Foothill or its Affiliates may
receive information regarding Borrower or its Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include Foothill in its
individual capacity.
16.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this SECTION 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such
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confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 WITHHOLDING TAXES.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a
controlled foreign corporation described in Section 881(c)(3)(C) of the
IRC, and (B) a properly completed IRS Form W-8BEN, before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the first payment of any interest
under this Agreement and at any other time reasonably requested by
Agent or Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of
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Borrower to such Lender, such Lender agrees to notify Agent of the percentage
amount in which it is no longer the beneficial owner of Obligations of Borrower
to such Lender. To the extent of such percentage amount, Agent will treat such
Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrower hereunder or under any note
will be made without setoff, counterclaim, or other defense, except as required
by applicable law other than for Taxes (as defined below). All such payments
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction (other
than the United States) or by any political subdivision or taxing authority
thereof or therein (other than of the United States) with respect to such
payments (but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein (i) measured by or based on
the net income or net profits of a Lender, or (ii) to the extent that such tax
results from a change in the circumstances of the Lender, including a change in
the residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"TAXES"). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this SECTION 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the
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amount provided for herein; PROVIDED, HOWEVER, that Borrower shall not be
required to increase any such amounts payable to Agent or any Lender (i) that is
not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this SECTION 16.11, or (ii) if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrower will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrower.
16.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrower of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under SECTION 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower owned no interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Borrower at any time, the Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items of
Collateral pursuant to this SECTION 16.12; PROVIDED, HOWEVER, that (1) Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower or is cared
for, protected, or insured or has been encumbered, or that the Agent's Liens
have been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the
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Lenders and that Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing, except as otherwise provided herein.
16.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any deposit accounts of Borrower
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by Agent, take or
cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by
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written notice to Agent. Concurrently with each such payment, Agent shall
identify whether such payment (or any portion thereof) represents principal,
premium, or interest of the Obligations.
16.16 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member
of the Lender Group authorizes and directs Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
16.17 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "REPORT" and collectively, "REPORTS") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrower that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any BONA FIDE potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; PROVIDED,
HOWEVER, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrower of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of
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any such non-public material information concurrent with, or where practicable,
prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or
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any other Person for any failure by any other Lender to fulfill its obligations
to make credit available hereunder, nor to advance for it or on its behalf in
connection with its Commitment, nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.
16.19 LEGAL REPRESENTATION OF AGENT. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP ("Xxxxxxx") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Xxxxxxx does not represent it in connection with any
such matters.
17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Agent (on behalf of the requisite Lenders) and Borrower.
17.6 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
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counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.
17.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer to the Lender Group of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "VOIDABLE TRANSFER"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof, including without
limitation the Existing Loan Documents and any other agreement or other document
executed prior to the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
HPSC, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Title: Chairman & Chief Executive Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a
Lender
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Title: Senior Vice President
BANKNORTH, N.A.,
a national association, as a Lender
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS,
as a Lender
By: /s/ Xxxxx Xxxxxxx
------------------------------------------
Title: Vice President
S-1
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.............................................................................2
1.1 Definitions.....................................................................................2
1.2 Accounting Terms...............................................................................31
1.3 Code...........................................................................................31
1.4 Construction...................................................................................31
1.5 Schedules and Exhibits.........................................................................32
2. LOAN AND TERMS OF PAYMENT...............................................................................32
2.1 Revolver Advances..............................................................................32
2.2 Term Loan......................................................................................33
2.3 Borrowing Procedures and Settlements...........................................................33
2.4 Payments.......................................................................................40
2.5 Overadvances...................................................................................43
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.....................44
2.7 Cash Management................................................................................45
2.8 Crediting Payments; Float Charge...............................................................46
2.9 Designated Account.............................................................................46
2.10 Maintenance of Loan Account; Statements of Obligations.........................................46
2.11 Fees...........................................................................................47
2.12 Letters of Credit..............................................................................47
2.13 LIBOR Option...................................................................................51
2.14 Capital Requirements...........................................................................54
3. CONDITIONS; TERM OF AGREEMENT...........................................................................54
3.1 Conditions Precedent to the Initial Extension of Credit........................................54
3.2 Conditions Subsequent to the Initial Extension of Credit.......................................58
3.3 Conditions Precedent to all Extensions of Credit...............................................58
3.4 Term...........................................................................................59
3.5 Effect of Termination..........................................................................59
3.6 Early Termination by Borrower..................................................................60
4. CREATION OF SECURITY INTEREST...........................................................................60
4.1 Grant of Security Interest.....................................................................60
4.2 Negotiable Collateral..........................................................................61
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.........................61
4.4 Delivery of Additional Documentation Required..................................................61
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4.5 Power of Attorney..............................................................................62
4.6 Right to Inspect...............................................................................62
4.7 Control Agreements.............................................................................62
5. REPRESENTATIONS AND WARRANTIES..........................................................................62
5.1 No Encumbrances................................................................................63
5.2 Eligible Accounts..............................................................................63
5.3 Eligible Inventory.............................................................................63
5.4 Equipment......................................................................................63
5.5 Location of Inventory and Equipment............................................................63
5.6 Inventory Records..............................................................................63
5.7 Location of Chief Executive Office; FEIN.......................................................63
5.8 Due Organization and Qualification; Subsidiaries...............................................63
5.9 Due Authorization; No Conflict.................................................................64
5.10 Litigation.....................................................................................65
5.11 No Material Adverse Change.....................................................................65
5.12 Fraudulent Transfer............................................................................65
5.13 Employee Benefits..............................................................................65
5.14 Environmental Condition........................................................................65
5.15 Brokerage Fees.................................................................................66
5.16 Intellectual Property..........................................................................66
5.17 Leases.........................................................................................66
5.18 DDAs...........................................................................................66
5.19 Complete Disclosure............................................................................66
5.20 Indebtedness...................................................................................67
6. AFFIRMATIVE COVENANTS...................................................................................67
6.1 Accounting System..............................................................................67
6.2 Collateral Reporting...........................................................................67
6.3 Financial Statements, Reports, Certificates....................................................67
6.5 Return.........................................................................................69
6.6 Maintenance of Properties......................................................................70
6.7 Taxes..........................................................................................70
6.8 Insurance......................................................................................70
6.9 Location of Inventory and Equipment............................................................71
6.10 Compliance with Laws...........................................................................71
6.11 Leases.........................................................................................71
6.12 Brokerage Commissions..........................................................................71
6.13 Existence, etc.................................................................................72
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6.14 Environmental..................................................................................72
6.15 Disclosure Updates.............................................................................72
7. NEGATIVE COVENANTS......................................................................................73
7.1 Indebtedness...................................................................................73
7.2 Liens..........................................................................................74
7.3 Restrictions on Fundamental Changes............................................................74
7.4 Disposal of Assets.............................................................................74
7.5 Change Name....................................................................................74
7.6 Guarantee......................................................................................74
7.7 Nature of Business.............................................................................75
7.8 Prepayments and Amendments.....................................................................75
7.9 Change of Control..............................................................................75
7.10 Consignments...................................................................................75
7.11 Distributions..................................................................................75
7.12 Accounting Methods.............................................................................75
7.13 Investments....................................................................................75
7.14 Transactions with Affiliates...................................................................76
7.15 Suspension.....................................................................................76
7.16 Compensation...................................................................................76
7.17 Use of Proceeds................................................................................76
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees.............76
7.19 Securities Accounts............................................................................76
7.20 Financial Covenants............................................................................76
8. EVENTS OF DEFAULT.......................................................................................78
9. THE LENDER GROUP'S RIGHTS AND REMEDIES..................................................................82
9.1 Rights and Remedies............................................................................82
9.2 Remedies Cumulative............................................................................84
10. TAXES AND EXPENSES......................................................................................84
11. WAIVERS; INDEMNIFICATION................................................................................85
11.1 Demand; Protest; etc...........................................................................85
11.2 The Lender Group's Liability for Collateral....................................................85
11.3 Indemnification................................................................................85
12. NOTICES.................................................................................................86
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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................................................87
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................................................88
14.1 Assignments and Participations.................................................................88
14.2 Successors.....................................................................................91
15. AMENDMENTS; WAIVERS.....................................................................................91
15.1 Amendments and Waivers.........................................................................91
15.2 No Waivers; Cumulative Remedies................................................................93
16. AGENT; THE LENDER GROUP.................................................................................93
16.1 Appointment and Authorization of Agent.........................................................93
16.2 Delegation of Duties...........................................................................94
16.3 Liability of Agent.............................................................................94
16.4 Reliance by Agent..............................................................................94
16.5 Notice of Default or Event of Default..........................................................95
16.6 Credit Decision................................................................................95
16.7 Costs and Expenses; Indemnification............................................................96
16.8 Agent in Individual Capacity...................................................................96
16.9 Successor Agent................................................................................97
16.10 Lender in Individual Capacity..................................................................97
16.11 Withholding Taxes..............................................................................98
16.12 Collateral Matters............................................................................100
16.13 Restrictions on Actions by Lenders; Sharing of Payments.......................................101
16.14 Agency for Perfection.........................................................................101
16.15 Payments by Agent to the Lenders..............................................................101
16.16 Concerning the Collateral and Related Loan Documents..........................................102
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information.................................................................102
16.18 Several Obligations; No Liability.............................................................103
16.19 Legal Representation of Agent.................................................................104
17. GENERAL PROVISIONS.....................................................................................104
17.1 Effectiveness.................................................................................104
17.2 Section Headings..............................................................................104
17.3 Interpretation................................................................................104
17.4 Severability of Provisions....................................................................104
17.5 Amendments in Writing.........................................................................104
17.6 Counterparts; Telefacsimile Execution.........................................................104
17.7 Revival and Reinstatement of Obligations......................................................105
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17.8 Integration...................................................................................105
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit F-1 Form of Financial Report Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Excluded Assets
Schedule P-1 Permitted Liens
Schedule 5.5 Locations of Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(c) Capitalization of Borrower's
Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
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SCHEDULE A-1
AGENT'S ACCOUNT
An account at a bank designated by Agent from time to time as
the account into which Borrower shall make all payments to Agent for the benefit
of the Lender Group and into which the Lender Group shall make all payments to
Agent under this Agreement and the other Loan Documents; unless and until Agent
notifies Borrower and the Lender Group to the contrary, Agent's Account shall be
that certain deposit account bearing account number 323-266193 and maintained by
Agent with JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, ABA #000000000.
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SCHEDULE C-1
COMMITMENTS
================================================================================
LENDER REVOLVER COMMITMENT TOTAL COMMITMENT
================================================================================
Foothill Capital Corporation $30,000,000 $30,000,000
================================================================================
Banknorth, N.A. $10,000,000 $10,000,000
================================================================================
Citizens Bank of Massachusetts $10,000,000 $10,000,000
================================================================================
================================================================================
================================================================================
All Lenders $50,000,000 $50,000,000
================================================================================
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SCHEDULE D-1
DESIGNATED ACCOUNT
Account number 538-99592 of Borrower maintained with
Borrower's Designated Account Bank, or such other deposit account of Borrower
(located within the United States) that has been designed as such, in writing,
by Borrower to Agent.
"DESIGNATED ACCOUNT BANK" means Fleet National Bank, whose
office is located at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and whose ABA
number is 000-000-000.
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