EXHIBIT 10.60
LOAN AND SECURITY AGREEMENT
by and among
SED INTERNATIONAL HOLDINGS, INC.,
SED INTERNATIONAL, INC.
and
SED MAGNA (MIAMI), INC.
as Borrowers
THE LENDERS AND ISSUING BANK FROM TIME TO TIME PARTY HERETO
WACHOVIA BANK, NATIONAL ASSOCIATION
as Agent
Dated: September 21, 2005
TABLE OF CONTENTS
Section 1. DEFINITIONS ................................................... 1
Section 2. CREDIT FACILITIES ............................................. 26
2.1. Loans .......................................................... 26
2.2. Letters of Credit .............................................. 28
Section 3.INTEREST AND FEES .............................................. 31
3.1. Interest ....................................................... 31
3.2. Fees ........................................................... 32
3.3. Changes in Laws and Increased Costs of Loans ................... 33
Section 4. CONDITIONS PRECEDENT .......................................... 35
4.1. Conditions Precedent to Initial Loans and Letters of Credit .... 35
4.2. Conditions Precedent to All Loans and Letters of Credit ........ 37
Section 5. GRANT AND PERFECTION OF SECURITY INTEREST ..................... 38
5.1. Grant of Security Interest ..................................... 38
5.2. Exclusions from Collateral ..................................... 39
5.3. Perfection of Security Interests ............................... 40
Section 6. COLLECTION AND ADMINISTRATION ................................. 43
6.1. Borrowers' Loan Accounts ....................................... 43
6.2. Statements ..................................................... 44
6.3. Collection of Accounts ......................................... 44
6.4. Payments ....................................................... 45
6.5. Taxes .......................................................... 46
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6.6. Authorization to Make Loans .................................... 48
6.7. Use of Proceeds ................................................ 49
6.8. Appointment of Administrative Borrower as Agent for Requesting
Loans and Receipts of Loans and Statements ..................... 49
6.9. Pro Rata Treatment ............................................. 50
6.10. Sharing of Payments, Etc ....................................... 50
6.11. Settlement Procedures .......................................... 51
6.12. Obligations Several; Independent Nature of Lenders' Rights ..... 53
6.13. Nature and Extent of Each Borrower's Liability ................. 53
Section 7. COLLATERAL REPORTING AND COVENANTS ............................ 55
7.1. Collateral Reporting ........................................... 55
7.2. Accounts Covenants ............................................. 56
7.3. Inventory Covenants ............................................ 57
7.4. Reserved ....................................................... 58
7.5. Power of Attorney .............................................. 58
7.6. Right to Cure .................................................. 59
7.7. Access to Premises ............................................. 59
Section 8. REPRESENTATIONS AND WARRANTIES ................................ 60
8.1. Corporate Existence, Power and Authority ....................... 60
8.2. Name; State of Organization; Chief Executive Office;
Collateral Locations ........................................... 60
8.3. Financial Statements; No Material Adverse Change ............... 61
8.4. Priority of Liens; Title to Properties ......................... 61
8.5. Tax Returns .................................................... 61
8.6. Litigation ..................................................... 62
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8.7. Compliance with Other Agreements and Applicable Laws ........... 62
8.8. Environmental Compliance ....................................... 62
8.9. Employee Benefits .............................................. 63
8.10. Bank Accounts .................................................. 64
8.11. Intellectual Property .......................................... 64
8.12. Subsidiaries; Affiliates; Capitalization; Solvency ............. 64
8.13. Labor Disputes ................................................. 65
8.14. Restrictions on Subsidiaries ................................... 65
8.15. Material Contracts ............................................. 65
8.16. Payable Practices .............................................. 66
8.17. Accuracy and Completeness of Information ....................... 66
8.18. Survival of Warranties; Cumulative ............................. 66
Section 9. AFFIRMATIVE AND NEGATIVE COVENANTS ............................ 67
9.1. Maintenance of Existence ....................................... 67
9.2. New Collateral Locations ....................................... 67
9.3. Compliance with Laws, Regulations, Etc ......................... 68
9.4. Payment of Taxes and Claims .................................... 69
9.5. Insurance ...................................................... 69
9.6. Financial Statements and Other Information ..................... 69
9.7. Sale of Assets, Consolidation, Merger, Dissolution, Etc ........ 71
9.8. Encumbrances ................................................... 73
9.9. Indebtedness ................................................... 74
9.10. Loans, Investments, Etc ........................................ 76
9.11. Dividends and Redemptions ...................................... 79
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9.12. Transactions with Affiliates ................................... 79
9.13. Compliance with ERISA .......................................... 80
9.14. End of Fiscal Years; Fiscal Quarters ........................... 80
9.15. Change in Business ............................................. 80
9.16. Limitation of Restrictions Affecting Subsidiaries .............. 81
9.17. Fixed Charge Coverage Ratio .................................... 81
9.18. Excess Availability ............................................ 83
9.19. License Agreements ............................................. 83
9.20. Foreign Assets Control Regulations, Etc ........................ 84
9.21. After Acquired Real Property ................................... 84
9.22. Costs and Expenses ............................................. 85
9.23. Depository Relationships ....................................... 85
9.24. Further Assurances ............................................. 86
Section 10. EVENTS OF DEFAULT AND REMEDIES ............................... 86
10.1. Events of Default .............................................. 86
10.2. Remedies ....................................................... 88
Section 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING
LAW ............................................................ 92
11.1. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver ......................................................... 92
11.2. Waiver of Notices .............................................. 93
11.3. Amendments and Waivers ......................................... 93
11.4. Waiver of Counterclaims ........................................ 95
11.5. Indemnification ................................................ 96
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Section 12. THE AGENT .................................................... 96
12.1. Appointment, Powers and Immunities ............................. 96
12.2. Reliance by Agent .............................................. 97
12.3. Events of Default .............................................. 97
12.4. Wachovia in its Individual Capacity ............................ 98
12.5. Indemnification ................................................ 98
12.6. Non-Reliance on Agent and Other Lenders ........................ 98
12.7. Failure to Act ................................................. 99
12.8. Additional Loans ............................................... 99
12.9. Concerning the Collateral and the Related Financing
Agreements ..................................................... 100
12.10. Field Audit, Examination Reports and other Information;
Disclaimer by Lenders .......................................... 100
12.11. Collateral Matters ............................................. 100
12.12. Agency for Perfection .......................................... 102
12.13. Successor Agent ................................................ 103
12.14. Other Agent Designations ....................................... 103
Section 13. TERM OF AGREEMENT; MISCELLANEOUS ............................. 103
13.1. Term ........................................................... 103
13.2. Interpretative Provisions ...................................... 105
13.3. Notices ........................................................ 107
13.4. Partial Invalidity ............................................. 108
13.5. Confidentiality ................................................ 108
13.6. Successors ..................................................... 109
13.7. Assignments; Participations .................................... 109
13.8. Entire Agreement ............................................... 112
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13.9. USA Patriot Act ................................................ 112
13.10. Counterparts, Etc .............................................. 112
vii
INDEX
TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Schedule 1.51 Existing Lenders
Schedule 1.52 Existing Letters of Credit
Schedule 1.97 Permitted Holders
Schedule 8.15 Material Contracts
Schedule 9.12 Transactions with Affiliates
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated September 21, 2005, is entered into
by and among SED INTERNATIONAL HOLDINGS, INC., a Georgia corporation ("Parent"),
SED INTERNATIONAL, INC., a Georgia corporation ("SED"), SED MAGNA (MIAMI), INC.,
a Delaware corporation ("Magna") and together with Parent and SED, each
individually a "Borrower" and collectively, "Borrowers" as hereinafter further
defined), the parties hereto from time to time as lenders, whether by execution
of this Agreement or an Assignment and Acceptance (each individually, a "Lender"
and collectively, "Lenders" as hereinafter further defined) and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association, in its capacity as agent
for Lenders (in such capacity, "Agent" as hereinafter further defined).
RECITALS:
Each Borrower has requested that Lenders make available a revolving credit
and letter of credit facility to Borrowers, which shall be used by Borrowers to
finance their mutual and collective enterprise of selling and distributing
microcomputer products, computers, convergent technology, wireless products and
consumer electronics and accessories throughout the United States and Latin
America. In order to utilize the financial powers of each Borrower in the most
efficient and economical manner, and in order to facilitate the financing of
each Borrower's needs, Lenders agree (severally and not jointly), at the request
of any Borrower, to make loans to all Borrowers under the revolving credit
facility on a combined basis and in accordance with the provisions hereinafter
set forth. Borrowers' business is a mutual and collective enterprise and
Borrowers believe that the consolidation of all revolving credit loans under
this Agreement will enhance the aggregate borrowing powers of each Borrower and
ease the administration of their revolving credit loan relationship with
Lenders, all to the mutual advantage of Borrowers. Lenders' willingness to
extend credit to Borrowers and to administer each Borrower's collateral security
therefor, on a combined basis as more fully set forth in this Agreement, is done
solely as an accommodation to Borrowers and at Borrowers' request in furtherance
of Borrowers' mutual and collective enterprise.
Each Borrower has agreed to be jointly and severally liable for loans and
all outstanding other obligations under this Agreement and to guarantee the
obligations of each of the other Borrowers under this Agreement and each of the
other Financing Agreements.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1. "Accommodation Payment" shall have the meaning set forth in
Section 6.13(d) hereof.
1.2. "Accounts" shall mean, as to each Borrower, all present and
future rights of such Borrower to payment of a monetary obligation, whether
or not earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (b) for services rendered or
to be rendered, (c) for a secondary obligation incurred or to be incurred,
or (d) arising out of the use of a credit or charge card or information
contained on or for use with the card.
1.3. "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan comprising part of the same
borrowing (including conversions, extensions and renewals), the rate per
annum (rounded upwards to the nearest 1/100th of 1%) determined by dividing
(a) the London Interbank Offered Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean for any day, that
percentage (expressed as a decimal) which is in effect from time to time
under Regulation D of the Board of Governors of the Federal Reserve System
(or any successor), as such regulation may be amended from time to time or
any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest rate
of Eurodollar Rate Loans is determined), whether or not any Lender has any
Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Rate Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements
without benefits of credits for proration, exceptions or offsets that may
be available from time to time to a Lender. The Adjusted Eurodollar Rate
shall be adjusted automatically on and as of the effective date of any
change in the Reserve Percentage.
1.4. "Administrative Borrower" shall mean SED, in its capacity as
Administrative Borrower on behalf of itself and the other Borrowers
pursuant to Section 6.8 hereof and its successors and assigns in such
capacity.
1.5. "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control
with such Person, and without limiting the generality of the foregoing,
includes (a) any Person which beneficially owns or holds ten percent (10%)
or more of any class of Voting Stock of such Person or other equity
interests in such Person, (b) any Person of which such Person beneficially
owns or holds ten percent (10%) or more of any class of Voting Stock or in
which such Person beneficially owns or holds ten percent (10%) or more of
the equity interests and (c) any director or executive officer of such
Person. For the purposes of this definition, the term "control" (including
with correlative meanings, the terms "controlled by" and "under common
control with"),
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as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of Voting Stock,
by agreement or otherwise.
1.6. "Agent" shall mean Wachovia Bank, National Association, in its
capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.
1.7. "Agent Payment Account" shall mean account no. 2070482789126 of
Agent at Wachovia (ABA No. 000000000), or such other account of Agent as
Agent may from time to time designate to Administrative Borrower as the
Agent Payment Account for purposes of this Agreement and the other
Financing Agreements.
1.8. "Allocable Percentage" shall have the meaning set forth in
Section 6.13(d) hereof.
1.9. "Applicable Margin" shall mean a percentage equal to zero with
respect to Revolving Loans that are Prime Rate Loans and 2.00% with respect
to Revolving Loans that are Eurodollar Rate Loans, provided that the
Applicable Margin shall be increased or (if no Default or Event of Default
exists) decreased, on a monthly basis as of the first day of each fiscal
month (commencing with the first full fiscal quarter after the date
hereof), according to the performance of Borrowers as measured by Average
Excess Availability for the immediately preceding fiscal month of
Borrowers, as follows:
LEVEL AVERAGE EXCESS AVAILABILITY REVOLVING LOANS
----- --------------------------- ---------------------------------------------------
I > $10,000,000 Adjusted Eurodollar Rate + 1.75% Prime Rate + zero
II > $3,500,000 Adjusted Eurodollar Rate + 2.00% Prime Rate + zero
< or = $10,000,000
III < or = $3,500,000 Adjusted Eurodollar Rate + 2.25% Prime Rate + 0.25%
On the date of any adjustment, if the Fixed Charge Coverage Ratio (as
defined in Section 9.17 hereof) is greater than 2.0 to 1.0 based upon the
immediately preceding twelve month period, then the applicable percentage
referenced in the grid above shall be reduced by 0.25 until the next adjustment
date.
1.10. "Applicable Unused Line Fee Margin" shall mean a percentage
equal to 0.375%, provided that the Applicable Unused Line Fee Margin shall
be increased or (if no Default or Event of Default exists) decreased, on a
monthly basis as of the first day of
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each fiscal month (commencing with the first full fiscal quarter after the
date hereof), according to the Average Commitment Utilization for the
immediately preceding fiscal month of Borrowers, as follows:
LEVEL AVERAGE COMMITMENT UTILIZATION UNUSED LINE FEE
----- ------------------------------ ---------------
I <33% of Commitments .50%
II > or = 33% but < 66% .375%
III > or = 66% .25%
1.11. "Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of EXHIBIT A attached hereto (with
blanks appropriately completed) delivered to Agent in connection with an
assignment of a Lender's interest hereunder in accordance with the
provisions of Section 13.7 hereof.
1.12. "Average Commitment Utilization" shall mean, for any period, a
percentage obtained by dividing the Average Revolving Loan Balance for such
period by the sum of the Commitments during such period.
1.13. "Average Excess Availability" shall mean, for any period, an
amount equal to the sum of the actual amount of Excess Availability at the
end of each day during such period, as determined by Agent, divided by the
number of days in such period.
1.14. "Average Revolving Loan Balance" shall mean, for any period, the
amount obtained by adding the unpaid balance of Revolving Loans and Letter
of Credit Obligations at the end of each day during the period in question
and by dividing such sum by the number of days in such period.
1.15. "Bank Products" shall mean any one or more of the following
types of products, services or facilities extended to any Borrower by
Wachovia or any Affiliate of Wachovia: (i) commercial credit cards; (ii)
merchant card services; (iii) products or services under Cash Management
Agreements; (iv) Hedging Agreements; (v) interstate depository network
services; and (vi) such other banking products or services provided by
Wachovia or any Affiliate of Wachovia as may be requested by any Borrower,
other than Letters of Credit.
1.16. "Banking Relationship Debt shall mean Indebtedness or other
obligations of a Borrower to Wachovia (or any Affiliate of Wachovia)
arising out of or relating to Bank Products.
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1.17. "Blocked Accounts" shall have the meaning set forth in Section
6.3 hereof.
1.18. "Borrowers" shall mean, collectively, the following (together
with their respective successors and assigns): (a) Parent; (b) SED; (c)
Magna; and (d) any other Person that at any time after the date hereof
becomes a Borrower; each sometimes being referred to herein individually as
a "Borrower".
1.19. "Borrowing Base" shall mean, at any time, the amount equal to:
(a) the amount equal to: (i) eighty-five percent (85%) of the Eligible
Accounts, plus (ii) the lesser of (A) the Inventory Loan Limit or (B) the sum
of: (1) the lesser of (a) sixty percent (60%) multiplied by the Value of the
Eligible Inventory on hand 90 days or less or (b) eighty-five percent (85%) of
the Net Recovery Percentage of such Eligible Inventory, plus (2) the lesser of
(a) twenty-five percent (25%) multiplied by the Value of the Eligible Inventory
on hand more than 90 days but not more than 180 days or (b) eighty-five percent
(85%) of the Net Recovery Percentage of such Eligible Inventory, minus
(iii) Reserves.
For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letters of Credit for the purpose of purchasing
Eligible Inventory as Revolving Loans to the extent Agent is in effect basing
the issuance of the Letter of Credit on the Value of the Eligible Inventory
being purchased with such Letter of Credit. In determining the actual amounts of
such Letter of Credit to be so treated for purposes of the sublimit, the
outstanding Revolving Loans and Reserves shall be attributed first to any
components of the lending formulas set forth above that are not subject to such
sublimit, before being attributed to the components of the lending formulas
subject to such sublimit. The amounts of Eligible Inventory of any Borrower
shall, at Agent's option, be determined based on the lesser of the amount of
Inventory set forth in the general ledger of such Borrower or the perpetual
inventory record maintained by such Borrower.
1.20. "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close
under the laws of the State of Georgia or the State of North Carolina, and
a day on which Agent is open for the transaction of business, except that
if a determination of a Business Day shall relate to any Eurodollar Rate
Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or
other applicable Eurodollar Rate market.
1.21. "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether
real, personal or mixed) by such Person as lessee which in accordance with
GAAP, is required to be reflected as a liability on the balance sheet of
such Person.
5
1.22. "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however
designated) of such Person's capital stock or partnership, limited
liability company or other equity interests at any time outstanding, and
any and all rights, warrants or options exchangeable for or convertible
into such capital stock or other interests (but excluding any debt security
that is exchangeable for or convertible into such capital stock).
1.23. "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness (including marketable securities) with a maturity date of less
than twelve (12) months issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof;
provided, that, the full faith and credit of the United States of America
is pledged in support thereof; (b) certificates of deposit or bankers'
acceptances with a maturity of twelve (12) months or less and overnight
bank deposits of any financial institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of
not less than $500,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of twelve (12) months or less issued by a
corporation (except an Affiliate of any Borrower or Guarantor) organized
under the laws of any State of the United States of America or the District
of Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, Inc. or at least P-1 by Xxxxx'x
Investors Service, Inc.; (d) repurchase obligations with a term of not more
than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$500,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally
guaranteed by the United States of America or issued by any governmental
agency thereof and backed by the full faith and credit of the United States
of America, in each case maturing within ninety (90) days or less from the
date of acquisition; provided, that, the terms of such agreements comply
with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by
the Comptroller of the Currency on October 31, 1985; and (f) investments in
money market funds and mutual funds which invest substantially all (at
least 95%) of their assets in securities of the types described in clauses
(a) through (e) above.
1.24. "Cash Management Agreements" shall mean any agreement entered
into from time to time between any Borrower or any of its Subsidiaries, on
the one hand, and Wachovia or any of its Affiliates, on the other, in
connection with cash management services for operating, collections,
payroll and trust accounts of such Borrower or its Subsidiaries provided by
such banking or financial institution, including automatic clearinghouse
services, controlled disbursement services, electronic funds transfer
services, information reporting services, lockbox services, stop payment
services and wire transfer services.
1.25. "Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower or any Guarantor to any Person or group (as such
term is used in Section 13(d)(3) of the
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Exchange Act), other than as permitted in Section 9.7 hereof; (b) the
liquidation or dissolution of any Borrower or any Guarantor or the adoption
of a plan by the stockholders of any Borrower or any Guarantor relating to
the dissolution or liquidation of such Borrower or any Guarantor, other
than as permitted in Section 9.7 hereof; (c) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act),
except for one or more Permitted Holders or new directors appointed or
nominated by either the Permitted Holders or directors as of the date
hereof, of beneficial ownership, directly or indirectly, of a majority of
the voting power of the total outstanding Voting Stock of any Borrower or
any Guarantor or the Board of Directors of any Borrower or any Guarantor;
(d) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower
or any Guarantor (together with any new directors who have been appointed
by any Permitted Holder, or whose nomination for election by the
stockholders of such Borrower or any Guarantor, as the case may be, was
approved by a majority vote of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of any Borrower or
Guarantor then still in office (provided, however, that Xxxx Xxxxxxx shall
be excluded for purposes of determining whether there has been a Change of
Control); or (e) the failure of Parent to own directly or indirectly one
hundred (100%) percent of the voting power of the total outstanding Voting
Stock of any other Borrower or Guarantor.
1.26. "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.27. "Collateral" shall have the meaning set forth in Section 5
hereof.
1.28. "Collateral Access Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, from any lessor of
premises to any Borrower or Guarantor, or any other person to whom any
Collateral is consigned or who has custody, control or possession of any
such Collateral or is otherwise the owner or operator of any premises on
which any of such Collateral is located, in favor of Agent with respect to
the Collateral at such premises or otherwise in the custody, control or
possession of such lessor, consignee or other person.
1.29. "Commitment" shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender's signature on the signatures
pages hereto designated as the Commitment or on Schedule 1 to the
Assignment and Acceptance Agreement pursuant to which such Lender became a
Lender hereunder in accordance with the provisions of Section 13.7 hereof,
as the same may be adjusted from time to time in accordance with the terms
hereof; sometimes being collectively referred to herein as "Commitments".
7
1.30. "Contributing Borrower" shall have the meaning set forth in
Section 6.13(d) hereof.
1.31. "Credit Facility" shall mean the Loans and Letters of Credit
provided to or for the benefit of any Borrower pursuant to Sections 2.1 and
2.2 hereof.
1.32. "Credit Insurance Assignment shall mean the Collateral
Assignment of Rights Under Credit Insurance Policy to be executed by
Borrowers and Credit Insurer on or before the Closing Date in favor of
Agent, in form and substance satisfactory to Agent, as security for the
payment and performance of the Obligations.
1.33. "Credit Insurance Policy" shall mean Policy No. 699179, naming
SED, as the insured, and Credit Insurer, as the issuer, and all
endorsements thereto.
1.34. "Credit Insurer" shall mean Atradius Trade Credit Insurance,
Inc. with respect to Policy No. 699179.
1.35. "Default" shall mean an act, condition or event which with
notice or passage of time or both would constitute an Event of Default.
1.36. "Defaulting Lender" shall have the meaning set forth in Section
6.11(d) hereof.
1.37. "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent, a
Borrower or Guarantor with a deposit account at any bank and the bank at
which such deposit account is at any time maintained which provides that
such bank will comply with instructions originated by Agent directing
disposition of the funds in the deposit account without further consent by
such Borrower or Guarantor and has such other terms and conditions as Agent
may require.
1.38. "Domestic Subsidiary" shall mean a Subsidiary of a Borrower
(other than a Subsidiary that is a Borrower) that is incorporated under the
laws of a state of the United States or the District of Columbia.
1.39. "Eligible Accounts" shall mean Accounts created by a Borrower
that in each case satisfy the criteria set forth below as determined by
Agent. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in all
material respects in accordance with the terms and provisions contained in any
documents related thereto;
(b) such Accounts are not unpaid more than ninety (90) days after the
date of the original invoice for them;
8
(c) such Accounts are not unpaid more than sixty (60) days after the
original due date for them;
(d) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(e) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(f) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America (including Puerto Rico)
or Canada (provided, that, at any time promptly upon Agent's request, such
Borrower shall execute and deliver, or cause to be executed and delivered, such
other agreements, documents and instruments as may be required by Agent to
perfect the security interests of Agent in those Accounts of an account debtor
with its chief executive office or principal place of business in Puerto Rico or
Canada in accordance with the applicable laws of Puerto Rico or the Province of
Canada, as applicable, in which such chief executive office or principal place
of business is located and take or cause to be taken such other and further
actions as Agent may request to enable Agent as secured party with respect
thereto to collect such Accounts under the applicable laws of Puerto Rico or
Canada) or, at Agent's option, if the chief executive office and principal place
of business of the account debtor with respect to such Accounts is located other
than in the United States of America or Canada, then if either: (i) the account
debtor has delivered to such Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Agent and payable only in the United States
of America and in U.S. dollars, sufficient to cover such Account, in form and
substance satisfactory to Agent and if required by Agent, the original of such
letter of credit has been delivered to Agent or Agent's agent and the issuer
thereof, and such Borrower has complied with the terms of Section 5.3(f) hereof
with respect to the assignment of the proceeds of such letter of credit to Agent
or naming Agent as transferee beneficiary thereunder, as Agent may specify, or
(ii) such Account is subject to credit insurance payable to Agent issued by an
insurer and on terms and in an amount acceptable to Agent, or (iii) such Account
is otherwise acceptable in all respects to Agent (subject to such lending
formula with respect thereto as Agent may determine);
(g) such Accounts do not consist of progress xxxxxxxx (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's satisfactory completion of any further performance under
the agreement giving rise thereto), xxxx and hold invoices or retainage
invoices, except as to xxxx and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;
(h) the account debtor with respect to such Accounts has not asserted
a counterclaim, defense or dispute and is not owed or does not claim to be owed
any amounts that may give rise to any right of setoff or recoupment against such
Accounts (but the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed
9
by such Borrower to such account debtor or claimed owed by such account debtor
may be deemed Eligible Accounts);
(i) there are no facts, events or occurrences which would impair the
validity, enforceability or collectibility of such Accounts or reduce the amount
payable or delay payment thereunder;
(j) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement that are subject to an intercreditor agreement in
form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent;
(k) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Borrower or Guarantor;
(l) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Agent's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Agent;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);
(n) the aggregate amount of such Accounts owing by a single account
debtor do not constitute more than fifteen percent (15%) of the aggregate amount
of all otherwise Eligible Accounts (but the portion of the Accounts not in
excess of the applicable percentages may be deemed Eligible Accounts);
(o) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days after the original invoice date for them or
more than sixty (60) days after the original due date for them which constitute
more than fifty percent (50%) of the total Accounts of such account debtor;
(p) the account debtor is not located in a state requiring the filing
of a Notice of Business Activities Report or similar report in order to permit
such Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent report for the then
current year or such failure to file and inability to seek judicial enforcement
is capable of being remedied without any material delay or material cost;
10
(q) such Accounts are owed by account debtors whose total indebtedness
to such Borrower does not exceed the credit limit with respect to such account
debtors as determined by such Borrower from time to time, to the extent such
credit limit as to any account debtor is established consistent with the current
practices of such Borrower as of the date hereof and such credit limit is
acceptable to Agent (but the portion of the Accounts not in excess of such
credit limit may be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at
all times by Agent in good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from a Borrower prior to the date hereof, in either case under clause (i) or
(ii) which adversely affects or could reasonably be expected to adversely affect
the Accounts in the good faith determination of Agent. Any Accounts that are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.40. "Eligible Inventory" shall mean, as to each Borrower, Inventory
of such Borrower consisting of finished goods held for resale in the
ordinary course of the business of such Borrower, that satisfy the criteria
set forth below as determined by Agent. In general, Eligible Inventory
shall not include: (a) raw materials or work-in-process; (b) components
which are not part of finished goods; (c) spare parts for equipment; (d)
packaging and shipping materials; (e) supplies used or consumed in such
Borrower's business; (f) Inventory at premises other than those owned or
leased and controlled by any Borrower; (g) Inventory subject to a security
interest or lien in favor of any Person other than Agent except those
permitted in this Agreement that are subject to an intercreditor agreement
in form and substance satisfactory to Agent between the holder of such
security interest or lien and Agent; (h) xxxx and hold goods; (i)
unserviceable or obsolete Inventory or Inventory on hand more than 180 days
or that otherwise is slow moving; (j) Inventory that is not subject to the
first priority, valid and perfected security interest of Agent; (k) damaged
and/or defective Inventory; (l) Inventory purchased or sold on consignment
and (m) Inventory located outside the United States of America. The
criteria for Eligible Inventory set forth above may only be changed and any
new criteria for Eligible Inventory may only be established by Agent in
good faith based on either: (i) an event, condition or other circumstance
arising after the date hereof, or (ii) an event, condition or other
circumstance existing on the date hereof to the extent Agent has no written
notice thereof from a Borrower prior to the date hereof, in either case
under clause (i) or (ii) which adversely affects or could reasonably be
expected to adversely affect the Inventory in the good faith determination
of Agent. Any Inventory that is not Eligible Inventory shall nevertheless
be part of the Collateral.
1.41. "Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any
person (whether a corporation, partnership, trust or otherwise) that is
engaged in the business of making, purchasing,
11
holding or otherwise investing in bank loans and similar extensions of
credit in the ordinary course of its business and is administered or
managed by a Lender or with respect to any Lender that is a fund which
invests in bank loans and similar extensions of credit, any other fund that
invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such
investment advisor, and in each case is approved by Agent; and (d) any
other commercial bank, financial institution or "accredited investor" (as
defined in Regulation D under the Securities Act of 1933) approved by
Agent, provided, that, (e) neither any Borrower nor any Guarantor or any
Affiliate of any Borrower or Guarantor shall qualify as an Eligible
Transferee and (f) no Person to whom any Indebtedness which is in any way
subordinated in right of payment to any other Indebtedness of any Borrower
or Guarantor shall qualify as an Eligible Transferee, except as Agent may
otherwise specifically agree.
1.42. "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses,
permits (including any conditions imposed therein), authorizations,
judicial or administrative decisions, injunctions or agreements between any
Borrower or Guarantor and any Governmental Authority, (a) relating to
pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water,
drinking water, drinking water supply, surface land, subsurface land, plant
and animal life or any other natural resource), or to human health or
safety, (b) relating to the exposure to, or the use, storage, recycling,
treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws
with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Federal Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid
Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure
to any Hazardous Materials.
1.43. "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, wherever located,
including machinery, data processing and computer equipment (whether owned
or licensed and including embedded software), vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and replacements
thereof, wherever located.
1.44. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
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1.45. "ERISA Affiliate" shall mean any person required to be
aggregated with any Borrower, any Guarantor or any of its or their
respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of
the Code.
1.46. "ERISA Event" shall mean (a) any "reportable event", as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with
respect to a Pension Plan, other than events as to which the requirement of
notice has been waived in regulations by the Pension Benefit Guaranty
Corporation; (b) the adoption of any amendment to a Pension Plan that would
require the provision of security pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA; (c) a complete or partial withdrawal by any
Borrower, Guarantor or any ERISA Affiliate from a Multiemployer Plan or a
cessation of operations which is treated as such a withdrawal or
notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Pension Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Pension Plan; (e) an event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan;
(f) the imposition of any liability under Title IV of ERISA, other than the
Pension Benefit Guaranty Corporation premiums due but not delinquent under
Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate
in excess of $100,000 and (g) any other event or condition with respect to
a Plan including any Pension Plan subject to Title IV of ERISA maintained,
or contributed to, by any ERISA Affiliate that could reasonably be expected
to result in liability of any Borrower in excess of $50,000.
1.47. "Eurodollar Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.48. "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.49. "Excess Availability" shall mean, as to Borrowers, the amount,
as determined by Agent, calculated at any date, equal to: (a) the lesser
of: (i) the Borrowing Base and (ii) the Revolving Loan Limit (in each case
under (i) or (ii) after giving effect to any Reserves other than any
Reserves in respect of Letter of Credit Obligations), minus (b) the sum of:
(i) the amount of all then outstanding and unpaid Obligations (but not
including any outstanding Letter of Credit Obligations), plus (ii) the
amount of all Reserves then established in respect of Letter of Credit
Obligations, plus (iii) for purposes of calculating Excess Availability
under Section 4.1(f) hereof on the Closing Date, the aggregate amount of
all then outstanding and unpaid trade payables and other obligations of
Borrowers which are outstanding more than sixty (60) days past due as of
the end of the immediately preceding month or at Agent's option, as of a
more recent date based on such reports as Agent may from time to time
specify (other than trade payables or other obligations being contested or
disputed by Borrowers in good faith), plus (iv) for purposes of calculating
Excess Availability under Section 4.1(f) hereof on the Closing
13
Date, without duplication, the amount of checks issued by Borrowers to pay
trade payables and other obligations which are more than sixty (60) days
past due as of the end of the immediately preceding month or at Agent's
option, as of a more recent date based on such reports as Agent may from
time to time specify (other than trade payables or other obligations being
contested or disputed by Borrowers in good faith), but not yet sent.
1.50. "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or
related thereto.
1.51. "Existing Lenders" shall mean the lenders to Borrowers listed on
Schedule 1.52 hereto (and including Wachovia in its capacity as agent
acting for such lenders) and their respective predecessors, successors and
assigns.
1.52. "Existing Letters of Credit" shall mean, collectively, the
letters of credit issued for the account of a Borrower or Guarantor or for
which such Borrower or Guarantor is otherwise liable listed on Schedule
1.53 hereto, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.53. "Fee Letter" shall mean the letter agreement, dated of even date
herewith, by and among Borrowers and Agent, setting forth certain fees
payable by Borrowers to Agent for the benefit of itself and Lenders, as the
same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.54. "Financial Covenant Trigger Amount" shall mean, on any date of
determination, an amount equal to $5,000,000.
1.55. "Financing Agreements" shall mean, collectively, this Agreement
and all notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor
agreements and all other agreements, documents and instruments now or at
any time hereafter executed and/or delivered by any Borrower or Guarantor
in connection with this Agreement.
1.56. "Foreign Lender" shall mean any Lender that is organized under
the laws of a jurisdiction other than that in which a Borrower is resident
for tax purposes. For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.
1.57. "Foreign Subsidiary" shall mean a Subsidiary that is not a
Domestic Subsidiary.
1.58. "Foreign Subsidiary Advance" shall mean a loan or other advance
of money by a Borrower to or for the benefit of any Foreign Subsidiary,
including (i) all payments by Issuing Bank under any Letter of Credit
issued by Issuing Bank for the account of a Borrower or any Foreign
Subsidiary to support or secure Indebtedness of such Foreign Subsidiary or
to otherwise benefit such Foreign Subsidiary and (ii) all
14
amounts paid under guaranties from a Borrower with respect to Indebtedness
(including Indebtedness owing to trade creditors) of a Foreign Subsidiary.
1.59. "Foreign Subsidiary Advance Note" shall mean each promissory
note made by a Foreign Subsidiary to a Borrower evidencing the principal
amount of any Foreign Subsidiary Advance made by such Borrower to such
Foreign Subsidiary.
1.60. "Funding Bank" shall have the meaning given to such term in
Section 3.3 hereof.
1.61. "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination
consistently applied, except that, for purposes of Section 9.17 hereof,
GAAP shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the most
recent audited financial statements delivered to Agent prior to the date
hereof.
1.62. "Governmental Authority" shall mean any nation or government,
any state, province, or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof, and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.63. "Guarantors" shall mean, collectively, the following (together
with their respective successors and assigns): any Person that at any time
after the date hereof becomes party to a guarantee in favor of Agent or any
Lender or otherwise liable on or with respect to the Obligations or who is
the owner of any property which is security for the Obligations (other than
Borrowers); each sometimes being referred to herein individually as a
"Guarantor".
1.64. "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials,
or wastes and including any other substances, materials or wastes that are
or become regulated under any Environmental Law (including any that are or
become classified as hazardous or toxic under any Environmental Law).
1.65. "Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, forward contract, currency
swap agreement,
15
commodity price protection agreement or other interest or currency exchange
rate or commodity price hedging arrangement.
1.66. "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred
and unpaid of the purchase price of any property or services (other than an
account payable to a trade creditor (whether or not an Affiliate) incurred
in the ordinary course of business of such Person and payable in accordance
with customary trade practices); (c) all obligations as lessee under leases
which have been, or should be, in accordance with GAAP recorded as Capital
Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to
purchase, repurchase, or otherwise acquire such indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge thereof, or to maintain solvency, assets, level of income, or
other financial condition; (e) all obligations with respect to redeemable
stock and redemption or repurchase obligations under any Capital Stock or
other equity securities issued by such Person; (f) all reimbursement
obligations and other liabilities of such Person with respect to surety
bonds (whether bid, performance or otherwise), letters of credit, banker's
acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of
indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by
any consensual lien, security interest, collateral assignment, conditional
sale, mortgage, deed of trust, or other encumbrance on any asset of such
Person, whether or not such obligations, liabilities or indebtedness are
assumed by or are a personal liability of such Person, all as of such time;
(h) all obligations, liabilities and indebtedness of such Person (marked to
market) arising under swap agreements, cap agreements and collar agreements
and other agreements or arrangements designed to protect such person
against fluctuations in interest rates or currency or commodity values; (i)
all obligations owed by such Person under License Agreements with respect
to non-refundable, advance or minimum guarantee royalty payments; (j)
indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer to the extent such Person is liable
therefor as a result of such Person's ownership interest in such entity,
except to the extent that the terms of such indebtedness expressly provide
that such Person is not liable therefor or such Person has no liability
therefor as a matter of law and (k) the principal and interest portions of
all rental obligations of such Person under any synthetic lease or similar
off-balance sheet financing where such transaction is considered to be
borrowed money for tax purposes but is classified as an operating lease in
accordance with GAAP.
1.67. "Information Certificate" shall mean, collectively, the
Information Certificates of Borrowers constituting EXHIBIT B hereto
containing material information with respect to Borrowers, their respective
businesses and assets provided by or on behalf
16
of Borrowers to Agent in connection with the preparation of this Agreement
and the other Financing Agreements and the financing arrangements provided
for herein.
1.68. "Intellectual Property" shall mean, as to each Borrower, such
Borrower's now owned and hereafter arising or acquired: patents, patent
rights, patent applications, copyrights, works which are the subject matter
of copyrights, copyright applications, copyright registrations, trademarks,
servicemarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing and all
applications, registrations and recordings relating to any of the foregoing
as may be filed in the United States Copyright Office, the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof, any political subdivision thereof or in
any other country or jurisdiction, together with all rights and privileges
arising under applicable law with respect to any Borrower's use of any of
the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all
rights to xxx for past, present and future infringement of any of the
foregoing; inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating
standards; goodwill (including any goodwill associated with any trademark
or servicemark, or the license of any trademark or servicemark); customer
and other lists in whatever form maintained; trade secret rights, copyright
rights, rights in works of authorship, domain names and domain name
registration; software and contract rights relating to computer software
programs, in whatever form created or maintained.
1.69. "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
any Borrower (or Administrative Borrower on behalf of such Borrower) may
elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, such
Borrower (or Administrative Borrower on behalf of such Borrower) may not
elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.70. "Interest Rate" shall mean,
(a) Subject to clause (b) of this definition below:
(i) as to Prime Rate Loans, a rate per annum equal to the
Applicable Margin for Prime Rate Loans plus the Prime Rate in effect from time
to time,
(ii) as to Eurodollar Rate Loans, a rate per annum equal to the
Applicable Margin for Eurodollar Rate Loans plus the Adjusted Eurodollar Rate
(in each case, based on the London Interbank Offered Rate applicable for the
Interest Period selected by a Borrower, or by Administrative Borrower on behalf
of such Borrower, as in effect two (2) Business Days prior to the commencement
of the Interest Period, whether such rate is higher or lower than any rate
previously quoted to any Borrower or Guarantor).
17
(b) Notwithstanding anything to the contrary contained in clause (a)
of this definition, the Interest Rate shall mean the rate of two and one quarter
percent (2.25%) per annum in excess of the Prime Rate as to Prime Rate Loans and
the rate of four and one quarter percent (4.25%) per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at Agent's option, without
notice, (i) either (A) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations are indefeasibly paid and
satisfied in full in immediately available funds, or (B) for the period from and
after the date of the occurrence of any Event of Default, and for so long as
such Event of Default is continuing as determined by Agent and (ii) on the
Revolving Loans at any time outstanding in excess of the Borrowing Base of
Borrowers or the Revolving Loan Limit of Borrowers (whether or not such
excess(es) arise or are made with or without Agent's or any Lender's knowledge
or consent and whether made before or after an Event of Default).
1.71. "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired goods, wherever
located, which (a) are leased by such Borrower as lessor; (b) are held by
such Borrower for sale or lease or to be furnished under a contract of
service; (c) are furnished by such Borrower under a contract of service; or
(d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.72. "Inventory Loan Limit" shall mean, at any time, the amount equal
to $15,000,000 (to be increased to $17,500,000 upon Agent's receipt and
satisfactory review of Borrowers' audited financial statements for the
fiscal year of Borrowers ending on June 30, 2006, if at such time there
exists no Default or Event of Default) minus Letters of Credit to the
extent provided in the definition of the term Borrowing Base.
1.73. "Investment Property Control Agreement" shall mean an agreement
in writing, in form and substance satisfactory to Agent, by and among
Agent, any Borrower (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or
possession of any investment property of such Borrower acknowledging that
such securities intermediary, commodity intermediary or other person has
custody, control or possession of such investment property on behalf of
Agent, that it will comply with entitlement orders originated by Agent with
respect to such investment property, or other instructions of Agent, and
has such other terms and conditions as Agent may require.
1.74. "Issuing Bank" shall mean Wachovia or any Lender that is
approved by Agent that shall issue a Letter of Credit for the account of a
Borrower and has agreed in a manner satisfactory to Agent to be subject to
the terms hereof as an Issuing Bank.
1.75. "Lenders" shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this
Agreement as a Lender in accordance with Section 13.7 hereof, and their
respective successors and assigns; each sometimes being referred to herein
individually as a "Lender".
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1.76. "Letter of Credit Documents" shall mean, with respect to any
Letter of Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application therefor, and
any agreements, instruments, guarantees or other documents (whether general
in application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or at
risk or (b) any collateral security for such obligations.
1.77. "Letter of Credit Limit" shall mean $5,000,000.
1.78. "Letter of Credit Obligations" shall mean, at any time, the sum
of (a) the aggregate undrawn amount of all Letters of Credit outstanding at
such time, plus (b) the aggregate amount of all drawings under Letters of
Credit for which Issuing Bank has not at such time been reimbursed, plus
(c) without duplication, the aggregate amount of all payments made by each
Lender to Issuing Bank with respect to such Lender's participation in
Letters of Credit as provided in Section 2.2 for which Borrowers have not
at such time reimbursed the Lenders, whether by way of a Revolving Loan or
otherwise.
1.79. "Letters of Credit" shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory,
equipment or otherwise) issued by an Issuing Bank for the account of any
Borrower pursuant to this Agreement, and all amendments, renewals,
extensions or replacements thereof and including, but not limited to, the
Existing Letters of Credit.
1.80. "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.81. "Loan Limit" shall mean, at any time, the amount equal to the
Maximum Credit minus the then outstanding principal amount of the Loans and
the Letters of Credit provided to Borrowers.
1.82. "Loans" shall mean, collectively, the Revolving Loans and,
without duplication, any and all other loans or advances at any time made
by Agent or any Lender to Borrowers under or in connection with this
Agreement.
1.83. "London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Rate Loan for the Interest Period applicable thereto, the rate
of interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in U.S. Dollars at approximately
11:00 A.M. (London time) two (2) Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period;
provided, that, if more than one rate is specified on Telerate Page 3750,
the applicable rate shall be the arithmetic mean of all such rates. If, for
any reason, such rate is not available, the term "London Interbank Offered
Rate" shall mean, with respect to any Eurodollar Loan for the Interest
Period applicable thereto, the rate of interest per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately
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11:00 A.M. (London time) two (2) Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates.
1.84. "Magna" shall mean SED Magna (Miami), Inc., a Delaware
corporation, and its successors and assigns.
1.85. "Material Adverse Effect" shall mean a material adverse effect
on (a) the financial condition, business, performance or operations of
Borrowers and their Subsidiaries taken as a whole; (b) the legality,
validity or enforceability of this Agreement or any of the other Financing
Agreements; (c) the legality, validity, enforceability, perfection or
priority of the security interests and liens of Agent upon the Collateral;
(d) the Collateral or its value; (e) the ability of the Borrowers taken as
a whole to repay the Obligations or to perform their obligations under this
Agreement or any of the other Financing Agreements as and when to be
performed; or (f) the ability of Agent or any Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the
rights and remedies of Agent and Lenders under this Agreement or any of the
other Financing Agreements.
1.86. "Material Contract" shall mean (a) the agreements listed on
SCHEDULE 8.15, (b) any contract or other agreement (other than the
Financing Agreements), written or oral, of any Borrower involving monetary
liability of or to any Person in an amount in excess of $300,000 in any
fiscal year and (c) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which any Borrower is a
party as to which the breach, nonperformance, cancellation or failure to
renew by any party thereto would have a Material Adverse Effect.
1.87. "Maximum Credit" shall mean the amount of $35,000,000, or if
applicable after giving effect to the Revolving Loan Limit Increase, up to
$50,000,000.
1.88. "Minimum Reserve" shall mean a reserve in the amount of
$5,000,000; provided, however, that such reserve will be eliminated by
Agent after the Closing Date after completion of an additional field
examination of the Collateral and Borrowers' financial condition so long as
the results of such examination are acceptable to Agent in all respects in
its sole and absolute discretion and no Default or Event of Default exists.
1.89. "Multiemployer Plan" shall mean a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during
the current year or the immediately preceding six (6) years contributed to
by any Borrower or any ERISA Affiliate or with respect to which any
Borrower or any ERISA Affiliate may incur any liability.
1.90. "Note Pledge Agreement" shall mean each Pledge Agreement
executed and delivered by a Borrower, in form and substance satisfactory to
Agent, pursuant to which each such Borrower shall pledge to Agent, as
security for the Obligations, a
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Foreign Subsidiary Advance Note (or Foreign Subsidiary Advance Notes) as
required by Section 9.10(i) of this Agreement.
1.91. "Net Recovery Percentage" shall mean the fraction, expressed as
a percentage, (a) the numerator of which is the amount equal to the amount
of the recovery in respect of the Inventory at such time on a "net orderly
liquidation value" basis as set forth in the most recent acceptable
appraisal of Inventory received by Agent in accordance with Section 7.3,
net of operating expenses, liquidation expenses and commissions, and (b)
the denominator of which is the applicable original cost of the aggregate
amount of the Inventory subject to such appraisal.
1.92. "Obligations" shall mean any and all Loans, Letter of Credit
Obligations, Banking Relationship Debt and all other obligations,
liabilities and indebtedness of every kind, nature and description owing by
any or all of Borrowers to Agent or any Lender and/or any of their
Affiliates or any Issuing Bank, including principal, interest, charges,
fees, costs and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under this Agreement or any of
the other Financing Agreements or on account of any Letter of Credit and
all other Letter of Credit Obligations, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal
term of this Agreement or after the commencement of any case with respect
to such Borrower under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would
accrue and become due but for the commencement of such case, whether or not
such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, or secured or
unsecured.
1.93. "Other Taxes" shall have the meaning given to such term in
Section 6.5 hereof.
1.94. "Parent" shall mean SED International Holdings, Inc., a Georgia
corporation, and its successors and assigns.
1.95. "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans
and Letters of Credit in conformity with the provisions of Section 13.7 of
this Agreement governing participations.
1.96. "Paying Borrower" shall have the meaning set forth in Section
6.13(d) hereof.
1.97. "Permitted Holders" shall mean the persons listed on Schedule
1.97 hereto and their respective successors and assigns.
1.98. "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which
elects subchapter S status
21
under the Code), limited liability company, limited liability partnership,
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
1.99. "Pension Plan" shall mean a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which any Borrower sponsors,
maintains, or to which any Borrower or ERISA Affiliate makes, is making, or
is obligated to make contributions, other than a Multiemployer Plan.
1.100. "Plan" shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA) which any Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case
of a Multiemployer Plan has made contributions at any time during the
immediately preceding six (6) plan years or with respect to which any
Borrower may incur liability.
1.101. "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia, or its successors, as its prime rate, whether or not
such announced rate is the best rate available at such bank.
1.102. "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the
terms thereof.
1.103. "Pro Rata Share" shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender's
Commitment and the denominator of which is the aggregate amount of all of
the Commitments of Lenders, as adjusted from time to time in accordance
with the provisions of Section 13.7 hereof; provided, that, if the
Commitments have been terminated, the numerator shall be the unpaid amount
of such Lender's Loans and its interest in the Letters of Credit and the
denominator shall be the aggregate amount of all unpaid Loans and Letters
of Credit.
1.104. "Real Property" shall mean all now owned and hereafter acquired
real property of each Borrower, including leasehold interests (to the
extent that Agent determines that such leasehold interest is necessary to
the business of Borrowers or has value as determined by Agent), together
with all buildings, structures, and other improvements located thereon and
all licenses, easements and appurtenances relating thereto, wherever
located.
1.105. "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of each Borrower: (a) all Accounts;
(b) all interest, fees, late charges, penalties, collection fees and other
amounts due or to become due or otherwise payable in connection with any
Account; (c) all payment intangibles of such Borrower; (d) letters of
credit, indemnities, guarantees, security or other deposits and proceeds
thereof issued payable to any Borrower or otherwise in favor of or
delivered to any Borrower in connection with any Account; or (e) all other
accounts, contract rights, chattel paper, instruments, notes, general
intangibles and other forms of obligations owing to any Borrower, whether
from the sale and lease of goods or other property,
22
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any
Borrower or to or for the benefit of any third person (including loans or
advances to any Affiliates or Subsidiaries of any Borrower) or otherwise
associated with any Accounts, Inventory or general intangibles of any
Borrower (including, without limitation, choses in action, causes of
action, tax refunds, tax refund claims, any funds which may become payable
to any Borrower in connection with the termination of any Plan or other
employee benefit plan and any other amounts payable to any Borrower from
any Plan or other employee benefit plan, rights and claims against carriers
and shippers, rights to indemnification, business interruption insurance
and proceeds thereof, casualty or any similar types of insurance and any
proceeds thereof and proceeds of insurance covering the lives of employees
on which any Borrower is a beneficiary).
1.106. "Records" shall mean, as to each Borrower, all of such
Borrower's present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and
other shipping evidence, statements, correspondence, memoranda, credit
files and other data relating to the Collateral or any account debtor,
together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of any Borrower or Guarantor
with respect to the foregoing maintained with or by any other person).
1.107. "Renewal Date" shall have the meaning set forth in Section 13.1
hereof.
1.108. "Register" shall have the meaning set forth in Section 13.7
hereof.
1.109. "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate more than fifty percent (50%) or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall
have been terminated, Lenders to whom at least fifty percent (50%) of the
then outstanding Obligations are owing;
1.110. "Reserves" shall mean as of any date of determination, (i) the
Minimum Reserve; (ii) the aggregate amount of reserves established by Agent
in its sole discretion in respect of Banking Relationship Debt; (iii)
amounts owing pursuant to any merchant card services; and (iv) such other
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letters of Credit which would
otherwise be available to any Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or
risks which, as determined by Agent in good faith, adversely affect, or
would have a reasonable likelihood of adversely affecting, either (i) the
Collateral or any other property which is security for the Obligations, its
value or the amount that might be received by Agent from the sale or other
disposition or realization upon such Collateral, or (ii) the assets,
business or prospects of any Borrower or Guarantor or (iii) the security
interests and other rights of Agent or any Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Agent's good faith belief that any collateral report or financial
information furnished by or on behalf of any Borrower or Guarantor to Agent
is
23
or may have been incomplete, inaccurate or misleading in any material
respect or (c) to reflect outstanding Letters of Credit as provided in
Section 2.2 hereof or (d) in respect of any state of facts which Agent
determines in good faith constitutes a Default or an Event of Default.
Without limiting the generality of the foregoing, Reserves may, at Agent's
option, be established to reflect: dilution with respect to the Accounts
(based on the ratio of the aggregate amount of non-cash reductions in
Accounts for any period to the aggregate dollar amount of the sales of such
Borrower for such period) as calculated by Agent for any period is or is
reasonably anticipated to be greater than five percent (5.0%); returns,
discounts, claims, credits and allowances of any nature that are not paid
pursuant to the reduction of Accounts; sales, excise or similar taxes
included in the amount of any Accounts reported to Agent; a change in the
turnover, age or mix of the categories of Inventory that adversely affects
the aggregate value of all Inventory; amounts due or to become due to
owners and lessors of premises where any Collateral is located, other than
for those locations where Agent has received a Collateral Access Agreement
that Agent has accepted in writing. The amount of any Reserve established
by Agent shall have a reasonable relationship to the event, condition or
other matter which is the basis for such reserve as determined by Agent in
good faith and to the extent that such Reserve is in respect of amounts
that may be payable to third parties Agent may, at its option, deduct such
Reserve from the Revolving Loan Limit, at any time that such limit is less
than the amount of the Borrowing Base.
1.111. "Revolving Loan Limit" shall mean, at any time, the amount
equal to the $35,000,000 (subject to increase up to $50,000,000 in
connection with the Revolving Loan Limit Increase) minus the then
outstanding principal amount of the Revolving Loans and Letters of Credit.
1.112. "Revolving Loan Limit Increase" shall have the meaning set
forth in Section 2.1(d) hereof.
1.113. "Revolving Loans" shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.114. "Secured Parties" shall mean Agent, Issuing Bank, Lenders
(including Wachovia) and Wachovia (and any Affiliate of Wachovia) as the
provider of any Bank Products.
1.115. "SED" shall mean SED International, Inc., a Delaware
corporation, and its successors and assigns.
1.116. "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature
and has (and has a reasonable basis to believe it will continue to have)
sufficient capital (and not unreasonably small capital) to carry on its
business consistent with its practices as of the date hereof, and (b) the
assets and properties of such Person at a fair valuation (and including as
assets for this
24
purpose at a fair valuation all rights of subrogation, contribution or
indemnification arising pursuant to any guarantees given by such Person)
are greater than the Indebtedness of such Person, and including
subordinated and contingent liabilities computed at the amount which, such
person has a reasonable basis to believe, represents an amount which can
reasonably be expected to become an actual or matured liability (and
including as to contingent liabilities arising pursuant to any guarantee
the face amount of such liability as reduced to reflect the probability of
it becoming a matured liability).
1.117. "Special Agent Advances" shall have the meaning set forth in
Section 12.11 hereof.
1.118. "Stock Pledge Agreement" shall mean each Stock Pledge Agreement
executed and delivered by a Borrower on or before the Closing Date,
pursuant to which each such Borrower shall pledge to Agent, as security for
the Obligations, all of the Capital Stock of each of its Domestic
Subsidiaries and not more than 65% of the Capital Stock in each of its
Foreign Subsidiaries.
1.119. "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or
other business entity of which an aggregate of at least a majority of the
outstanding Capital Stock or other interests entitled to vote in the
election of the board of directors of such corporation (irrespective of
whether, at the time, Capital Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the
happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is,
at the time, directly or indirectly, owned by such Person and/or one or
more subsidiaries of such Person.
1.120. "UCC" shall mean the Uniform Commercial Code as in effect in
the State of Georgia, and any successor statute, as in effect from time to
time (except that terms used herein which are defined in the Uniform
Commercial Code as in effect in the State of Georgia on the date hereof
shall continue to have the same meaning notwithstanding any replacement or
amendment of such statute except as Agent may otherwise determine).
1.121. "Unused Line Fee" shall have the meaning set forth in Section
3.2(a) hereof.
1.122. "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in
first-out basis in accordance with GAAP or (b) market value, provided,
that, for purposes of the calculation of the Borrowing Base, (i) the Value
of the Inventory shall not include: (A) the portion of the value of
Inventory equal to the profit earned by any Affiliate on the sale thereof
to any Borrower or (B) write-ups or write-downs in value with respect to
currency exchange rates and (ii) notwithstanding anything to the contrary
contained herein, the cost of the
25
Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received and accepted by Agent prior to
the date hereof, if any.
1.123. "Voting Stock" shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting
powers to elect at least a majority of the board of directors, managers or
trustees of such Person, irrespective of whether at the time Capital Stock
of any other class or classes have or might have voting power by reason of
the happening of any contingency, and (b) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (a) of this
definition.
1.124. "Wachovia" shall mean Wachovia Bank, National Association, in
its individual capacity, and its successors and assigns.
SECTION 2. CREDIT FACILITIES
2.1. LOANS.
(a) Subject to and upon the terms and conditions contained herein,
each Lender severally (and not jointly) agrees to make its Pro Rata Share of
Revolving Loans to each Borrower from time to time in amounts requested by such
Borrower (or Administrative Borrower on behalf of such Borrower) up to the
aggregate amount outstanding for all Lenders at any time equal to the lesser of:
(i) the Borrowing Base at such time or (ii) the Revolving Loan Limit at such
time.
(b) Except in Agent's discretion, with the consent of all Lenders, or
as otherwise provided herein, (i) the aggregate amount of the Loans and the
Letter of Credit Obligations outstanding at any time shall not exceed the
Maximum Credit, (ii) the aggregate principal amount of the Revolving Loans and
Letter of Credit Obligations outstanding at any time shall not exceed the
Borrowing Base, (iii) the aggregate principal amount of the Loans and Letter of
Credit Obligations outstanding at any time shall not exceed the Loan Limit, and
(iv) the aggregate principal amount of the Revolving Loans outstanding based on
the Eligible Inventory shall not exceed the Inventory Loan Limit.
(c) In the event that (i) the aggregate amount of the Loans and the
Letter of Credit Obligations outstanding at any time exceed the Maximum Credit,
or (ii) except as otherwise provided herein, the aggregate principal amount of
the Revolving Loans and Letter of Credit Obligations outstanding exceed the
Borrowing Base or the Revolving Loan Limit, or (iii) the aggregate principal
amount of the Loans and Letter of Credit Obligations outstanding at any time
exceed the Loan Limit, or (iv) the aggregate principal amount of Revolving Loans
and Letters of Credit based on the Eligible Inventory of all Borrowers exceed
the Inventory Loan Limit, such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in such circumstances or on any future occasions
and Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.
26
(d) Borrowers shall have the right to request a permanent increase in
the amount of the Revolving Loan Limit and the Commitments in an aggregate
amount not to exceed $15,000,000 (the "Revolving Loan Limit Increase"), in
minimum increments of $5,000,000, at any time and from time to time upon written
notice to Agent of such requested Revolving Loan Limit Increase, subject to the
payment of any fees to Agent consistent with the applicable percentage of the
initial closing fee as set forth in the Fee Letter, as follows:
(i) Following such a request that would result in an increase of
the Revolving Loan Limit and Commitments in excess of $40,000,000, Agent
shall use reasonable efforts to find one or more additional financial
institutions ("New Lenders") to become parties to this Agreement with new
Commitments and to find existing Lenders other than Wachovia, if any
("Increasing Lenders"), to increase their Commitments, such that after
giving effect to such new and increased Commitments, the Revolving Loan
Limit and the sum of the Commitments shall be increased in $5,000,000
increments to an amount not in excess of $50,000,000. Any New Lenders shall
be selected by Agent, in consultation with Administrative Borrower.
Borrowers shall pay to Agent the reasonable out-of-pocket costs and
expenses incurred by Agent in connection with the preparation, negotiation,
execution, delivery and recording of all agreements, opinions,
certificates, financing statement amendments and other documents reasonably
requested by Agent in connection with Revolving Loan Limit Increase,
including any and all recording fees and indebtedness tax. Agent shall have
no liability to Borrowers or Lenders if Agent is unable to successfully
syndicate the Revolving Loan Limit Increase. If Agent is able to
successfully syndicate the Revolving Loan Limit Increase among New Lenders
and Increasing Lenders, the Revolving Loan Limit Increase (or so much
thereof as shall have been syndicated, as notified to Administrative
Borrower and the Lenders by Agent) shall become effective on the date
specified by Agent (the "Revolving Loan Limit Increase Effective Date");
provided, however, that (A) no Default or Event of Default shall exist on
such date, either before or after giving effect to the Revolving Loan Limit
Increase, (B) Borrowers are in compliance with the Fixed Charge Coverage
Ratio for the applicable period as set forth in SECTION 9.17 hereof, (C)
Borrowers shall have Excess Availability at the time of and after giving
effect to the Revolving Loan Limit Increase of not less than $5,000,000,
(D) each New Lender shall have entered into a joinder agreement, in form
and substance satisfactory to Agent, to become a Lender hereunder, (E) each
Increasing Lender shall have entered into an agreement, in form and
substance satisfactory to Agent, to increase its Commitment hereunder, (F)
Borrowers shall have paid all costs and expenses of Agent in connection
with the Revolving Loan Limit Increase, and (G) Borrowers shall have
delivered or caused to be delivered to Agent such legal agreements,
opinions, certificates, financing statement amendments and other documents
as Agent may reasonably request.
(ii) On the Revolving Loan Limit Increase Effective Date (A) each
New Lender shall become a Lender hereunder and under the other Financing
Agreements; (B) the Commitment of each Increasing Lender shall be increased
in accordance with the amount of its share of the Revolving Loan Limit
Increase; (C) Borrowers shall pay (which may be funded with Revolving Loans
made under the Revolving Loan Limit Increase) the principal amount of, and
accrued and unpaid interest
27
on, Revolving Loans of Lenders other than New Lenders in an amount
sufficient (as determined by Agent) to permit New Lenders and Increasing
Lenders to fund Revolving Loans in an amount equal to New Lenders' and
Increasing Lenders' respective Pro Rata Shares of the then outstanding
Revolving Loans, and in connection with such payment shall also pay all
amounts due under Section 3.3(d) in connection therewith; (D) each New
Lender shall fund Revolving Loans in an amount equal to its Pro Rata Share
of the then outstanding Revolving Loans; and (E) each Increasing Lender
shall fund Revolving Loans in an amount necessary such that, after giving
effect to such funding, it shall have funded its Pro Rata Share of the
entire amount of the then outstanding Revolving Loans. In no event shall
the Revolving Loan Limit or the sum of the Commitments exceed $50,000,000
without the consent of all Lenders.
2.2. LETTERS OF CREDIT.
(a) Subject to and upon the terms and conditions contained herein and
in the Letter of Credit Documents, at the request of a Borrower (or
Administrative Borrower on behalf of such Borrower), Agent agrees to cause
Issuing Bank to issue, and Issuing Bank agrees to issue, for the account of such
Borrower one or more Letters of Credit, for the ratable risk of each Lender
according to its Pro Rata Share, containing terms and conditions acceptable to
Agent and Issuing Bank.
(b) The Borrower requesting such Letter of Credit (or Administrative
Borrower on behalf of such Borrower) shall give Agent and Issuing Bank three (3)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit. Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit, whether such Letter of Credit may
be drawn in a single or in partial draws, the date on which such requested
Letter of Credit is to expire (which date shall be a Business Day and shall not
be more than one year from the date of issuance), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower requesting the Letter of Credit (or Administrative Borrower
on behalf of such Borrower) shall attach to such notice the proposed terms of
the Letter of Credit. The renewal or extension of any Letter of Credit shall,
for purposes hereof be treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(c) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit shall be available unless each
of the following conditions precedent have been satisfied in a manner
satisfactory to Agent: (i) the Borrower requesting such Letter of Credit (or
Administrative Borrower on behalf of such Borrower) shall have delivered to
Issuing Bank at such times and in such manner as Issuing Bank may require, an
application, in form and substance satisfactory to Issuing Bank and Agent, for
the issuance of the Letter of Credit and such other Letter of Credit Documents
as may be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit shall be satisfactory to Agent and Issuing Bank, (ii)
as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority
28
shall purport by its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation applicable to money center
banks generally and no request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that Issuing Bank refrain from, the
issuance of letters of credit generally or the issuance of such Letter of
Credit, (iii) after giving effect to the issuance of such Letter of Credit, the
Letter of Credit Obligations shall not exceed the Letter of Credit Limit, and
(iv) the Excess Availability of the Borrower requesting such Letter of Credit,
prior to giving effect to any Reserves with respect to such Letter of Credit, on
the date of the proposed issuance of any Letter of Credit shall be equal to or
greater than: (A) if the proposed Letter of Credit is for the purpose of
purchasing Eligible Inventory and the documents of title with respect thereto
are consigned to Issuing Bank, the sum of (1) the percentage equal to one
hundred (100%) percent minus the then applicable percentage with respect to
Eligible Inventory set forth in the definition of the term Borrowing Base
multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes,
duty and other amounts which Agent estimates must be paid in connection with
such Inventory upon arrival and for delivery to one of such Borrower's locations
for Eligible Inventory within the United States of America and (B) if the
proposed Letter of Credit is for any other purpose or the documents of title are
not consigned to Issuing Bank in connection with a Letter of Credit for the
purpose of purchasing Inventory, an amount equal to one hundred (100%) percent
of the Letter of Credit Obligations with respect thereto. Effective on the
issuance of each Letter of Credit, a Reserve shall be established in the
applicable amount set forth in Section 2.2(c)(iv)(A) or Section 2.2(c)(iv)(B).
(d) Except in Agent's discretion, with the consent of all Lenders, the
amount of all outstanding Letter of Credit Obligations shall not at any time
exceed the Letter of Credit Limit.
(e) Each Borrower shall reimburse immediately Issuing Bank for any
draw under any Letter of Credit issued for the account of such Borrower and pay
Issuing Bank the amount of all other charges and fees payable to Issuing Bank in
connection with any Letter of Credit issued for the account of such Borrower
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against Issuing Bank or any other
Person. Each drawing under any Letter of Credit or other amount payable in
connection therewith when due shall constitute a request by the Borrower for
whose account such Letter of Credit was issued to Agent for a Prime Rate Loan in
the amount of such drawing or other amount then due, and shall be made by Agent
on behalf of Lenders as a Revolving Loan (or Special Agent Advance, as the case
may be). The date of such Loan shall be the date of the drawing or as to other
amounts, the due date therefor. Any payments made by or on behalf of Agent or
any Lender to Issuing Bank and/or related parties in connection with any Letter
of Credit shall constitute additional Revolving Loans to such Borrower pursuant
to this Section 2 (or Special Agent Advances as the case may be).
(f) Borrowers shall indemnify and hold Agent and Lenders harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Agent or any Lender may suffer or incur in connection with any Letter of
Credit and any documents, drafts or acceptances relating thereto, including any
losses, claims, damages, liabilities, costs and
29
expenses due to any action taken by Issuing Bank or correspondent with respect
to any Letter of Credit, except for such losses, claims, damages, liabilities,
costs or expenses that are a direct result of the gross negligence or willful
misconduct of Agent or any Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Each Borrower assumes
all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit and for such purposes the drawer or
beneficiary shall be deemed such Borrower's agent. Each Borrower assumes all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit or any
documents, drafts or acceptances thereunder. Each Borrower hereby releases and
holds Agent and Lenders harmless from and against any acts, waivers, errors,
delays or omissions with respect to or relating to any Letter of Credit, except
for the gross negligence or willful misconduct of Agent or any Lender as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of
Obligations and the termination of this Agreement.
(g) In connection with Inventory purchased pursuant to any Letter of
Credit, Borrowers shall, at Agent's request, instruct all suppliers, carriers,
forwarders, customs brokers, warehouses or others receiving or holding cash,
checks, Inventory, documents or instruments in which Agent holds a security
interest that upon Agent's request, such items are to be delivered to Agent
and/or subject to Agent's order, and if they shall come into such Borrower's
possession, to deliver them, upon Agent's request, to Agent in their original
form. Except as otherwise provided herein, Agent shall not exercise such right
to request such items so long as no Default or Event of Default shall exist or
have occurred and be continuing. Except as Agent may otherwise specify,
Borrowers shall designate Issuing Bank as the consignee on all bills of lading
and other negotiable and non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and directs Issuing
Bank to name such Borrower as the account party therein and to deliver to Agent
all instruments, documents and other writings and property received by Issuing
Bank pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the Letter of Credit Documents with respect
thereto. Nothing contained herein shall be deemed or construed to grant any
Borrower any right or authority to pledge the credit of Agent or any Lender in
any manner. Borrowers shall be bound by any reasonable interpretation made in
good faith by Agent, or Issuing Bank under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of any Borrower.
(i) Immediately upon the issuance or amendment of any Letter of
Credit, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Share of the liability
with respect to such Letter of Credit and the obligations of Borrowers with
respect thereto (including all Letter of Credit Obligations with respect
thereto). Each Lender shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to Issuing Bank
therefor and discharge when due, its Pro Rata Share of all of such obligations
arising under such Letter of Credit. Without limiting the scope
30
and nature of each Lender's participation in any Letter of Credit, to the extent
that Issuing Bank has not been reimbursed or otherwise paid as required
hereunder or under any such Letter of Credit, each such Lender shall pay to
Issuing Bank its Pro Rata Share of such unreimbursed drawing or other amounts
then due to Issuing Bank in connection therewith.
(j) The obligations of Borrowers to pay each Letter of Credit
Obligations and the obligations of Lenders to make payments to Agent for the
account of Issuing Bank with respect to Letters of Credit shall be absolute,
unconditional and irrevocable and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances, whatsoever,
notwithstanding the occurrence or continuance of any Default, Event of Default,
the failure to satisfy any other condition set forth in Section 4 or any other
event or circumstance. If such amount is not made available by a Lender when
due, Agent shall be entitled to recover such amount on demand from such Lender
with interest thereon, for each day from the date such amount was due until the
date such amount is paid to Agent at the interest rate then payable by any
Borrower in respect of Loans that are Prime Rate Loans. Any such reimbursement
shall not relieve or otherwise impair the obligation of Borrowers to reimburse
Issuing Bank under any Letter of Credit or make any other payment in connection
therewith.
SECTION 3. INTEREST AND FEES
3.1. INTEREST.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable ON DEMAND. The Prime Rate on the date hereof
is 6.75% and therefore, the Interest Rate hereunder with respect to Prime Rate
Loans on the date hereof is 6.75%.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing
Eurodollar Rate Loans continue for an additional Interest Period. Such request
from a Borrower (or Administrative Borrower on behalf of such Borrower) shall
specify the amount of the Eurodollar Rate Loans or the amount of the Prime Rate
Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar
Rate Loans to be continued (subject to the limits set forth below) and the
Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the
terms and conditions contained herein, three (3) Business Days after receipt by
Agent of such a request from a Borrower (or Administrative Borrower on behalf of
such Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination of this Agreement, (iii) such Borrower (or
Administrative Borrower on behalf of such Borrower) shall have complied with
such customary procedures as are established by Agent and specified by Agent to
Administrative Borrower from time to time for requests by Borrowers for
Eurodollar Rate Loans, (iv) no more than six (6) Interest Periods may be in
effect at any one time, (v) the aggregate amount of the Eurodollar Rate Loans
must be in an amount not less than
31
$1,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) the
maximum amount of the Eurodollar Rate Loans in the aggregate at any time
requested by Borrowers shall not exceed the amount equal to eighty percent (80%)
of the lowest principal amount of the Revolving Loans which it is anticipated
will be outstanding during the applicable Interest Period, in each case as
determined by Agent in good faith (but with no obligation of Agent or Lenders to
make such Loans), and (vii) Agent and each Lender shall have determined that the
Interest Period or Adjusted Eurodollar Rate is available to Agent and such
Lender and can be readily determined as of the date of the request for such
Eurodollar Rate Loan by such Borrower. Any request by or on behalf of a Borrower
for Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate
Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Agent and Lenders
shall not be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Parent, be subsequently converted to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for
the benefit of Lenders, upon demand by Agent (or Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Agent, for the account
of Lenders, monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the date of any
change in such Prime Rate. In no event shall charges constituting interest
payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate
permitted under any applicable law or regulation, and if any such part or
provision of this Agreement is in contravention of any such law or regulation,
such part or provision shall be deemed amended to conform thereto.
3.2. FEES.
(a) Borrowers shall pay to Agent, for the account of Lenders, monthly
an unused line fee ("Unused Line Fee") at a rate per annum equal to the
Applicable Unused Line Fee Margin calculated upon the amount by which the
Revolving Loan Limit exceeds the average daily principal balance of the
outstanding Revolving Loans and Letters of Credit during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long
32
thereafter as any of the Obligations are outstanding, which Unused Line Fee
shall be payable on the first day of each month in arrears.
(b) In the case of standby letters of credit, Borrowers shall pay to
Agent, for the account of Lenders, a fee at a rate per annum equal to the
Applicable Margin for Revolving Loans that are Eurodollar Rate Loans and in the
case of trade letters of credit, Borrowers shall pay to Agent, for the account
of Lenders, a fee at a rate per annum equal to the Applicable Margin for
Revolving Loans that are Eurodollar Rate Loans on the average daily maximum
amount available to be drawn under all of such Letters of Credit for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, computed for each day from the date of
issuance to the date of expiration; except that Borrowers shall pay, at Agent's
option, without notice, such fee at a rate two (2%) percent greater than the
otherwise applicable rate on such average daily maximum amount for: (i) the
period from and after the date of termination or non-renewal hereof until
Lenders have received full and final payment of all Obligations (notwithstanding
entry of a judgment against any Borrower or Guarantor) and (ii) the period from
and after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Agent. Such letter of credit
fees shall be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed and the obligation of Borrowers to pay such fee shall
survive the termination or non-renewal of this Agreement. In addition to the
letter of credit fees provided above, Borrowers shall pay to Issuing Bank for
its own account (without sharing with Lenders) the letter of credit fronting and
negotiation fees agreed to by Borrowers and Issuing Bank from time to time and
the customary charges from time to time of Issuing Bank with respect to the
issuance, amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit.
(c) Borrowers shall pay to Agent the other fees and amounts set forth
in the Fee Letter in the amounts and at the times specified therein. To the
extent payment in full of the applicable fee is received by Agent from Borrowers
on or about the date hereof, Agent shall pay to each Lender its share of such
fees in accordance with the terms of the arrangements of Agent with such Lender.
3.3. CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) If after the date hereof, either (i) any change in, or in the
interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof has or would
have the effect described below, or a Funding Bank, any Lender or Issuing Bank
complies with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, and in the case of any event set forth in this clause (iii), such
adoption, change or compliance has or would have
33
the direct or indirect effect of reducing the rate of return on any Lender's or
Issuing Bank's capital as a consequence of its obligations hereunder to a level
below that which such Lender or Issuing Bank could have achieved but for such
adoption, change or compliance (taking into consideration the Funding Bank's or
Lender's or Issuing Bank's policies with respect to capital adequacy) by an
amount deemed by such Lender or Issuing Bank to be material, and the result of
any of the foregoing events described in clauses (i), (ii) or (iii) is or
results in an increase in the cost to any Lender or Issuing Bank of funding or
maintaining the Loans, the Letters of Credit or its Commitment, then Borrowers
and Guarantors shall from time to time upon demand by Agent pay to Agent
additional amounts sufficient to indemnify such Lender or Issuing Bank, as the
case may be, against such increased cost on an after-tax basis (after taking
into account applicable deductions and credits in respect of the amount
indemnified); provided, however, that Borrowers shall not be required to
compensate a Funding Bank, Lender or Issuing Bank pursuant to this Section for
any increased costs or reductions incurred more than 270 days prior to the date
that such Funding Bank, Lender or Issuing Bank, as the case may be, notifies
Borrowers of the Change in Law giving rise to such increased costs or reductions
and of such Lender's or the Issuing Bank's intention to claim compensation
therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.
A certificate as to the amount of such increased cost shall be submitted to
Administrative Borrower by Agent or the applicable Lender and shall be
conclusive, absent manifest error.
(b) If prior to the first day of any Interest Period, (i) Agent shall
have determined in good faith (which determination shall be conclusive and
binding upon Borrowers and Guarantors) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent
has received notice from the Required Lenders that the Adjusted Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate
Loans during such Interest Period, or (iii) Dollar deposits in the principal
amounts of the Eurodollar Rate Loans to which such Interest Period is to be
applicable are not generally available in the London interbank market, Agent
shall give telecopy or telephonic notice thereof to Administrative Borrower as
soon as practicable thereafter, and will also give prompt written notice to
Administrative Borrower when such conditions no longer exist. If such notice is
given (a) any Eurodollar Rate Loans requested to be made on the first day of
such Interest Period shall be made as Prime Rate Loans, (b) any Loans that were
to have been converted on the first day of such Interest Period to or continued
as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans
and (c) each outstanding Eurodollar Rate Loan shall be converted, on the last
day of the then-current Interest Period thereof, to Prime Rate Loans. Until such
notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be
made or continued as such, nor shall any Borrower (or Administrative Borrower on
behalf of any Borrower) have the right to convert Prime Rate Loans to Eurodollar
Rate Loans.
(c) Notwithstanding any other provision herein, if the adoption of or
any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the date hereof shall
make it unlawful for Agent or any Lender to make or
34
maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or
such Lender shall promptly give written notice of such circumstances to
Administrative Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of such Lender hereunder to
make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert
Prime Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Rate Loans, such Lender shall then have a commitment only to make a
Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender's
Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, Borrowers and Guarantors shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 3.3(d) below.
(d) Borrowers shall indemnify Agent and each Lender and to hold Agent
and each Lender harmless from any loss or expense which Agent or such Lender may
sustain or incur as a consequence of (i) default by any Borrower in making a
borrowing of, conversion into or extension of Eurodollar Rate Loans after such
Borrower (or Administrative Borrower on behalf of such Borrower) has given a
notice requesting the same in accordance with the provisions of this Agreement,
(ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan
after such Borrower has given a notice thereof in accordance with the provisions
of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans
on a day which is not the last day of an Interest Period with respect thereto.
With respect to Eurodollar Rate Loans, such indemnification may include an
amount equal to the excess, if any, of (a) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
extended, for the period from the date of such prepayment or of such failure to
borrow, convert or extend to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or extend, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Rate Loans provided for herein over (b) the
amount of interest (as determined by such Agent or such Lender) which would have
accrued to Agent or such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar market.
This covenant shall survive the termination or non-renewal of this Agreement and
the payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1. CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF CREDIT.
The obligation of Lenders to make the initial Loans or of Issuing Bank to
issue the initial Letters of Credit hereunder is subject to the satisfaction of,
or waiver of, immediately prior to or concurrently with the making of such Loan
or the issuance of such Letter of Credit of each of the following conditions
precedent:
(a) Agent shall have received, in form and substance satisfactory to
Agent, all releases, terminations and such other documents as Agent may request
to evidence and effectuate
35
the termination by the Existing Lenders of their respective financing
arrangements with Borrowers and the termination and release by it or them, as
the case may be, of any interest in and to any assets and properties of each
Borrower, duly authorized, executed and delivered by it or each of them,
including, but not limited to, (i) UCC termination statements for all UCC
financing statements previously filed by it or any of them or their
predecessors, as secured party and any Borrower, as debtor; and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by any Borrower in favor of it or any of them, in form acceptable for
recording with the appropriate Governmental Authority;
(b) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in form
and substance to Agent, and Agent shall have received all information and copies
of all documents, including records of requisite corporate action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by appropriate
corporate officers or Governmental Authority (and including a copy of the
certificate of incorporation of each Borrower certified by the Secretary of
State (or equivalent Governmental Authority) which shall set forth the same
complete corporate name of such Borrower as is set forth herein and such
document as shall set forth the organizational identification number of each
Borrower, if one is issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the assets,
business or prospects of Borrowers since the date of Agent's latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of any Borrower or Guarantor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;
(d) Agent shall have completed a field review of the Records and such
other information with respect to the Collateral as Agent may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof or such earlier date as Agent may agree;
(e) Agent shall have received, in form and substance satisfactory to
Agent, all consents, waivers, acknowledgments and other agreements from third
persons which Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, Collateral Access Agreements;
(f) the Excess Availability (without giving effect to the Minimum
Reserve) as determined by Agent, as of the date hereof, shall be not less than
$5,000,000 after giving effect
36
to the initial Loans made or to be made and Letters of Credit issued or to be
issued in connection with the initial transactions hereunder;
(g) Agent shall have received, in form and substance satisfactory to
Agent, Deposit Account Control Agreements by and among Agent, each Borrower, as
the case may be and each bank where such Borrower has a deposit account, in each
case, duly authorized, executed and delivered by such bank and Borrower, as the
case may be (or Agent shall be the bank's customer with respect to such deposit
account as Agent may specify);
(h) Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral;
(i) Agent shall have received and reviewed lien and judgment search
results for the jurisdiction of organization of each Borrower, the jurisdiction
of the chief executive office of each Borrower and all jurisdictions in which
assets of Borrowers are located, which search results shall be in form and
substance satisfactory to Agent;
(j) Agent shall have received originals of the shares of the stock
certificates representing all of the issued and outstanding shares of the
Capital Stock of each Borrower (other than Parent) and owned by any Borrower, in
each case together with stock powers duly executed in blank with respect
thereto;
(k) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent, and certificates of insurance policies
and/or endorsements naming Agent as loss payee;
(l) Agent shall have received, in form and substance satisfactory to
Agent, such opinion letters of counsel to Borrowers with respect to the
Financing Agreements and such other matters as Agent may request; and
(m) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent,
in form and substance satisfactory to Agent.
4.2. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT.
The obligation of Lenders to make the Loans, including the initial Loans,
or of Issuing Bank to issue any Letter of Credit, including the initial Letters
of Credit, is subject to the further satisfaction of, or waiver of, immediately
prior to or concurrently with the making of each such Loan or the issuance of
such Letter of Credit of each of the following conditions precedent:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct with the same effect as
though such representations and warranties had been made on and as of the date
of the making of each such Loan or providing each such Letter of Credit and
after giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case
37
such representations and warranties shall have been true and accurate on and as
of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans or providing the Letters of Credit,
or (B) the consummation of the transactions contemplated pursuant to the terms
hereof or the other Financing Agreements or (ii) has or has a reasonable
likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1. GRANT OF SECURITY INTEREST.
To secure payment and performance of all Obligations, each Borrower hereby
grants to Agent, for the benefit of the Secured Parties, a continuing security
interest in, a lien upon, and a right of set off against, and hereby assigns to
Agent, for itself and the benefit of the Secured Parties, as security, all
personal and real property and fixtures, and interests in property and fixtures,
of each Borrower, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Agent or any Lender,
collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures;
(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory
notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;
38
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of any Borrower now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of any Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records; and
(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
5.2. EXCLUSIONS FROM COLLATERAL.
(a) Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in such Section shall include
only 65% of the stock of any Foreign Subsidiary.
(b) Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in Section 5.1 shall not
include any rights or interests in any contract if under the terms of such
contract, or any applicable law with respect thereto, the valid grant of a
security interest or other Lien therein to Agent is prohibited and such
prohibition has not been or is not waived or the consent of the other party to
such contract has not been or is not otherwise obtained or under applicable law
such prohibition cannot be waived, provided that the foregoing exclusion shall
in no way be construed (i) to apply if any such prohibition is ineffective or
unenforceable under the UCC (including Sections 9-406, 9-407, 9-408 or 9-409) or
any other applicable law or (ii) so as to limit, impair or otherwise affect
Agent's unconditional continuing security interest in and Lien upon any rights
or interests of Borrowers in or to monies due or to become due under any such
contract (including any Accounts). Borrowers shall make
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a good faith and diligent effort to obtain the consent of any other party to a
contract for the creation of a security interest in favor of Agent in each
Borrower's rights under such contract.
5.3. PERFECTION OF SECURITY INTERESTS.
(a) Each Borrower irrevocably and unconditionally authorizes Agent (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Agent or its designee as the secured party
and such Borrower as debtor, as Agent may require, and including any other
information with respect to such Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Each Borrower hereby ratifies and approves all
financing statements naming Agent or its designee as secured party and such
Borrower, as the case may be, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to the date hereof and ratifies and confirms the authorization of
Agent to file such financing statements (and amendments, if any). Each Borrower
hereby authorizes Agent to adopt on behalf of such Borrower any symbol required
for authenticating any electronic filing. In the event that the description of
the collateral in any financing statement naming Agent or its designee as the
secured party and any Borrower as debtor includes assets and properties of such
Borrower that do not at any time constitute Collateral, whether hereunder, under
any of the other Financing Agreements or otherwise, the filing of such financing
statement shall nonetheless be deemed authorized by such Borrower to the extent
of the Collateral included in such description and it shall not render the
financing statement ineffective as to any of the Collateral or otherwise affect
the financing statement as it applies to any of the Collateral. In no event
shall any Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Agent or
its designee as secured party and such Borrower as debtor.
(b) Each Borrower does not have any chattel paper (whether tangible or
electronic) or instruments as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower shall be entitled to or
shall receive any chattel paper or instrument after the date hereof, Borrowers
shall promptly notify Agent thereof in writing. Promptly upon the receipt
thereof by or on behalf of any Borrower (including by any agent or
representative), such Borrower shall deliver, or cause to be delivered to Agent,
all tangible chattel paper and instruments that such Borrower has or may at any
time acquire, accompanied by such instruments of transfer or assignment duly
executed in blank as Agent may from time to time specify, in each case except as
Agent may otherwise agree. At Agent's option, each Borrower shall, or Agent may
at any time on behalf of any Borrower, cause the original of any such instrument
or chattel paper to be conspicuously marked in a form and manner acceptable to
Agent with the following legend referring to chattel paper or instruments as
applicable: "This [chattel paper][instrument] is subject to the security
interest of Wachovia Bank, National Association and any sale, transfer,
assignment or encumbrance of this [chattel paper][instrument] violates the
rights of such secured party."
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(c) In the event that any Borrower shall at any time hold or acquire
an interest in any electronic chattel paper or any "transferable record" (as
such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), such Borrower shall
promptly notify Agent thereof in writing. Promptly upon Agent's request, such
Borrower shall take, or cause to be taken, such actions as Agent may request to
give Agent control of such electronic chattel paper under Section 9-105 of the
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(d) Each Borrower does not have any deposit accounts as of the date
hereof, except as set forth in the Information Certificate. Borrowers shall not,
directly or indirectly, after the date hereof open, establish or maintain any
deposit account unless each of the following conditions is satisfied: (i) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of any Borrower to open or establish such account which notice
shall specify in reasonable detail and specificity acceptable to Agent the name
of the account, the owner of the account, the name and address of the bank at
which such account is to be opened or established, the individual at such bank
with whom such Borrower is dealing and the purpose of the account, (ii) the bank
where such account is opened or maintained shall be acceptable to Agent, and
(iii) on or before the opening of such deposit account, such Borrower shall as
Agent may specify either (a) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by such Borrower and the bank at which such deposit account is opened
and maintained or (b) arrange for Agent to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Agent. The
terms of this subsection (d) shall not apply to deposit accounts specifically
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of any Borrower's salaried employees.
(e) No Borrower owns or holds, directly or indirectly, beneficially or
as record owner or both, any investment property, as of the date hereof, or have
any investment account, securities account, commodity account or other similar
account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in the Information Certificate.
(i) In the event that any Borrower shall be entitled to or shall
at any time after the date hereof hold or acquire any certificated securities,
such Borrower shall promptly endorse, assign and deliver the same to Agent,
accompanied by such instruments of transfer or assignment duly executed in blank
as Agent may from time to time specify. If any securities, now or hereafter
acquired by any Borrower are uncertificated and are issued to such Borrower or
its nominee directly by the issuer thereof, such Borrower shall immediately
notify Agent thereof and shall as Agent may specify, either (a) cause the issuer
to agree to comply with instructions from Agent as to such securities, without
further consent of any Borrower or such nominee, or (b) arrange for Agent to
become the registered owner of the securities.
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(ii) Borrowers shall not, directly or indirectly, after the date
hereof open, establish or maintain any investment account, securities account,
commodity account or any other similar account (other than a deposit account)
with any securities intermediary or commodity intermediary unless each of the
following conditions is satisfied: (c) Agent shall have received not less than
five (5) Business Days prior written notice of the intention of such Borrower to
open or establish such account which notice shall specify in reasonable detail
and specificity acceptable to Agent the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Borrower is dealing and the
purpose of the account, (d) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (e) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Borrower shall as Agent
may specify either (i) execute and deliver, and cause to be executed and
delivered to Agent, an Investment Property Control Agreement with respect
thereto duly authorized, executed and delivered by such Borrower and such
securities intermediary or commodity intermediary or (ii) arrange for Agent to
become the entitlement holder with respect to such investment property on terms
and conditions acceptable to Agent.
(f) Borrowers are not the beneficiary or otherwise entitled to any
right to payment under any letter of credit, banker's acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that any Borrower shall be entitled to or shall
receive any right to payment under any letter of credit, banker's acceptance or
any similar instrument, whether as beneficiary thereof or otherwise after the
date hereof, such Borrower shall promptly notify Agent thereof in writing. Such
Borrower shall immediately, as Agent may specify, either (i) deliver, or cause
to be delivered to Agent, with respect to any such letter of credit, banker's
acceptance or similar instrument, the written agreement of the issuer and any
other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Agent, consenting to the assignment of the proceeds of the
letter of credit to Agent by such Borrower and agreeing to make all payments
thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent
to become, at Borrowers' expense, the transferee beneficiary of the letter of
credit, banker's acceptance or similar instrument (as the case may be).
(g) Borrowers do not have any commercial tort claims in the aggregate
in excess of $50,000 as of the date hereof, except as set forth in the
Information Certificate. In the event that any Borrower shall at any time after
the date hereof have any commercial tort claims, such Borrower shall promptly
notify Agent thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such commercial tort claim and (ii) include
the express grant by such Borrower to Agent of a security interest in such
commercial tort claim (and the proceeds thereof). In the event that such notice
does not include such grant of a security interest, the sending thereof by such
Borrower to Agent shall be deemed to constitute such grant to Agent. Upon the
sending of such notice, any commercial tort claim described therein shall
constitute part of the Collateral and shall be deemed included therein. Without
limiting the authorization of Agent provided in Section 5.2(a) hereof or
otherwise arising by the execution by such Borrower of this Agreement or any of
the other Financing Agreements, Agent is hereby
42
irrevocably authorized from time to time and at any time to file such financing
statements naming Agent or its designee as secured party and such Borrower as
debtor, or any amendments to any financing statements, covering any such
commercial tort claim as Collateral. In addition, each Borrower shall promptly
upon Agent's request, execute and deliver, or cause to be executed and
delivered, to Agent such other agreements, documents and instruments as Agent
may require in connection with such commercial tort claim.
(h) Borrowers do not have any goods, documents of title or other
Collateral in the custody, control or possession of a third party as of the date
hereof, except as set forth in the Information Certificate and except for goods
located in the United States in transit to a location of a Borrower permitted
herein in the ordinary course of business of such Borrower in the possession of
the carrier transporting such goods. In the event that any goods, documents of
title or other Collateral are at any time after the date hereof in the custody,
control or possession of any other person not referred to in the Information
Certificate or such carriers, Borrowers shall promptly notify Agent thereof in
writing. Promptly upon Agent's request, Borrowers shall deliver to Agent a
Collateral Access Agreement duly authorized, executed and delivered by such
person and the Borrower that is the owner of such Collateral.
(i) Borrowers shall take any other actions reasonably requested by
Agent from time to time to cause the attachment, perfection and first priority
of, and the ability of Agent to enforce, the security interest of Agent in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that any Borrower's signature thereon is required therefor, (ii) causing Agent's
name to be noted as secured party on any certificate of title for a titled good
if such notation is a condition to attachment, perfection or priority of, or
ability of Agent to enforce, the security interest of Agent in such Collateral,
(iii) complying with any provision of any statute, regulation or treaty of the
United States as to any Collateral if compliance with such provision is a
condition to attachment, perfection or priority of, or ability of Agent to
enforce, the security interest of Agent in such Collateral, (iv) obtaining the
consents and approvals of any Governmental Authority or third party, including,
without limitation, any consent of any licensor, lessor or other person
obligated on Collateral, and taking all actions required by any earlier versions
of the UCC or by other law, as applicable in any relevant jurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1. BORROWERS' LOAN ACCOUNTS.
Agent shall maintain one or more loan account(s) on its books in which
shall be recorded (a) all Loans, Letters of Credit and other Obligations and the
Collateral, (b) all payments made by or on behalf of any Borrower and (c) all
other appropriate debits and credits as provided in this Agreement, including
fees, charges, costs, expenses and interest. All entries in the loan account(s)
shall be made in accordance with Agent's customary practices as in effect from
time to time.
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6.2. STATEMENTS.
Agent shall render to Administrative Borrower each month a statement
setting forth the balance in the Borrowers' loan account(s) maintained by Agent
for Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Agent receives a
written notice from Administrative Borrower of any specific exceptions of
Administrative Borrower thereto within thirty (30) days after the date such
statement has been received by Administrative Borrower. Until such time as Agent
shall have rendered to Administrative Borrower a written statement as provided
above, the balance in any Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrowers.
6.3. COLLECTION OF ACCOUNTS.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrowers shall promptly deposit and direct their respective account
debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner; provided,
that so long as no Default or Event of Default exists, Borrowers shall cause all
Fax Checks (as defined below) to be delivered to the Blocked Accounts within
three (3) Business Days after Borrowers' receipt thereof and shall cause all
Hold Checks (as defined below) to be delivered to the Blocked Accounts within
thirty (30) calendar days after Borrowers' receipt thereof. If any Default or
Event of Default exists, Borrowers shall cause all Hold Checks and Fax Checks to
be immediately delivered to the Blocked Accounts. Borrowers shall deliver, or
cause to be delivered to Agent a Deposit Account Control Agreement duly
authorized, executed and delivered by each bank where a Blocked Account is
maintained as provided in Section 5.2 hereof or at any time and from time to
time Agent may become the bank's customer with respect to any of the Blocked
Accounts and promptly upon Agent's request, Borrowers shall execute and deliver
such agreements and documents as Agent may require in connection therewith. Each
Borrower agrees that all payments made to such Blocked Accounts or other funds
received and collected by Agent or any Lender, whether in respect of the
Receivables, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to Agent and Lenders in respect of the Obligations and
therefore shall constitute the property of Agent and Lenders to the extent of
the then outstanding Obligations. As used herein, "Fax Checks" shall mean
customer checks that are delivered by facsimile transmission and are converted
by software into bank drafts not requiring the account debtor's original
signature and "Hold Checks" are checks that are held by a Borrower for
subsequent deposit by a Borrower on a specific date according to the terms of
the invoice or sale, all of which are received in the ordinary course of
business.
(b) For purposes of calculating the amount of the Loans available to
each Borrower, such payments will be applied (conditional upon final collection)
to the Obligations on the Business Day of receipt by Agent of immediately
available funds in the Agent Payment
44
Account provided such payments and notice thereof are received in accordance
with Agent's usual and customary practices as in effect from time to time and
within sufficient time to credit such Borrower's loan account on such day, and
if not, then on the next Business Day. For the purposes of calculating interest
on the Obligations, such payments or other funds received will be applied
(conditional upon final collection) to the Obligations one (1) Business Day
following the date of receipt of immediately available funds by Agent in the
Agent Payment Account provided such payments or other funds and notice thereof
are received in accordance with Agent's usual and customary practices as in
effect from time to time and within sufficient time to credit such Borrower's
loan account on such day, and if not, then on the next Business Day. In the
event that at any time or from time to time there are no Revolving Loans
outstanding, Agent shall be entitled to an administrative fee in an amount
calculated based on the Interest Rate for Prime Rate Loans (on a per annum
basis) multiplied by the amount of the funds received in the Blocked Account for
such day as calculated by Agent in accordance with its customary practice. The
economic benefit of the timing in the application of payments (and the
administrative charge with respect thereto, if applicable) shall be for the sole
benefit of Agent.
(c) Each Borrower and their respective employees, agents and
Subsidiaries shall, acting as trustee for Agent, receive, as the property of
Agent, any monies, checks, notes, drafts or any other payment relating to and/or
proceeds of Accounts or other Collateral which come into their possession or
under their control and immediately upon receipt thereof, shall deposit or cause
the same to be deposited in the Blocked Accounts, or remit the same or cause the
same to be remitted, in kind, to Agent. In no event shall the same be commingled
with any Borrower's own funds. Borrowers agree to reimburse Agent on demand for
any amounts owed or paid to any bank or other financial institution at which a
Blocked Account or any other deposit account or investment account is
established or any other bank, financial institution or other person involved in
the transfer of funds to or from the Blocked Accounts arising out of Agent's
payments to or indemnification of such bank, financial institution or other
person. The obligations of Borrowers to reimburse Agent for such amounts
pursuant to this Section 6.3 shall survive the termination of this Agreement.
6.4. PAYMENTS.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time. Subject to the other terms and conditions contained herein, Agent shall
apply payments received or collected from any Borrower or for the account of any
Borrower (including the monetary proceeds of collections or of realization upon
any Collateral) as follows: first, to pay any fees, indemnities or expense
reimbursements then due to Agent, Lenders and Issuing Bank from any Borrower;
second, to pay interest due in respect of any Loans (and including any Special
Agent Advances) or Letter of Credit Obligations; third, to pay or prepay
principal in respect of Special Agent Advances; fourth, to pay principal due in
respect of the Loans; fifth, to pay or prepay any other Obligations whether or
not then due, in such order and manner as Agent determines and at any time an
Event of Default exists or has occurred and is continuing, to provide cash
collateral for any Letter of Credit Obligations. Notwithstanding anything to the
contrary contained in this Agreement, (i) unless so directed by Administrative
Borrower, or unless a Default or an Event of Default shall exist or have
occurred and be continuing, Agent shall not apply any payments
45
which it receives to any Eurodollar Rate Loans, except (A) on the expiration
date of the Interest Period applicable to any such Eurodollar Rate Loans or (B)
in the event that there are no outstanding Prime Rate Loans and (ii) to the
extent any Borrower uses any proceeds of the Loans or Letters of Credit to
acquire rights in or the use of any Collateral or to repay any Indebtedness used
to acquire rights in or the use of any Collateral, payments in respect of the
Obligations shall be deemed applied first to the Obligations arising from Loans
and Letters of Credit that were not used for such purposes and second to the
Obligations arising from Loans and Letters of Credit the proceeds of which were
used to acquire rights in or the use of any Collateral in the chronological
order in which such Borrower acquired such rights in or the use of such
Collateral.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower
maintained by Agent. If after receipt of any payment of, or proceeds of
Collateral applied to the payment of, any of the Obligations, Agent, any Lender
or Issuing Bank is required to surrender or return such payment or proceeds to
any Person for any reason, then the Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Agreement shall
continue in full force and effect as if such payment or proceeds had not been
received by Agent or such Lender. Borrowers shall be liable to pay to Agent, and
do hereby indemnify and hold Agent and Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4(b) shall remain
effective notwithstanding any contrary action which may be taken by Agent or any
Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive
the payment of the Obligations and the termination of this Agreement.
6.5. TAXES.
(a) Any and all payments by or on account of any of the Obligations
shall be made free and clear of and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, charges, withholdings, liabilities, restrictions or conditions
of any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent
(A) taxes measured by its net income, and franchise taxes imposed on it, by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Lender, Issuing Bank or Agent (as the case may be) is organized and (B) any
United States withholding taxes payable with respect to payments under the
Financing Agreements under laws (including any statute, treaty or regulation) in
effect on the date hereof (or, in the case of an Eligible Transferee, the date
of the Assignment and Acceptance) applicable to such Lender, Issuing Bank or
Agent, as the case may be, but not excluding any United States withholding taxes
payable as a result of any change in such laws occurring after the date hereof
(or the date of such Assignment and Acceptance), (ii) in the case of each
Lender, taxes measured by its net income, and franchise taxes imposed on it as a
result of a present or former connection between such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any taxing
authority thereof or therein and (iii) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in
which the Borrowers are located (all such non-excluded taxes, levies, imposts,
fees, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes").
46
(b) If any Taxes shall be required by law to be deducted from or in
respect of any sum payable in respect of the Obligations to any Lender, Issuing
Bank or Agent (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 6.5), such Lender, Issuing Bank or
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the relevant Borrower shall make
such deductions, (iii) the relevant Borrower shall pay the full amount deducted
to the relevant taxing authority or other authority in accordance with
applicable law and (iv) the relevant Borrower shall deliver to Agent evidence of
such payment.
(c) In addition, each Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction, and all liabilities with respect thereto, in
each case arising from any payment made hereunder or under any of the other
Financing Agreements or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the other Financing
Agreements (collectively, "Other Taxes").
(d) Each Borrower shall indemnify each Lender, Issuing Bank and Agent
for the full amount of Taxes and Other Taxes (including any Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section 6.5)
paid by such Lender, Issuing Bank or Agent (as the case may be) and any
liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date such Lender, Issuing Bank or Agent (as the case may be) makes
written demand therefor. A certificate as to the amount of such payment or
liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a
copy to Agent) or by Agent on its own behalf or on behalf of a Lender or Issuing
Bank, shall be conclusive absent manifest error.
(e) As soon as practicable after any payment of Taxes or Other Taxes
by any Borrower, such Borrower shall furnish to Agent, at its address referred
to herein, the original or a certified copy of a receipt evidencing payment
thereof.
(f) Without prejudice to the survival of any other agreements of any
Borrower hereunder or under any of the other Financing Agreements, the
agreements and obligations of such Borrower contained in this Section 6.5 shall
survive the termination of this Agreement and the payment in full of the
Obligations.
(g) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
applicable Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any of the
other Financing Agreements shall deliver to Administrative Borrower (with a copy
to Agent), at the time or times prescribed by applicable law or reasonably
requested by Administrative Borrower or Agent (in such number of copies as is
reasonably requested by the recipient), whichever of the following is applicable
(but only if such Foreign Lender is legally entitled to do so): (i) duly
completed copies of Internal Revenue Service Form
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W-8BEN claiming exemption from, or a reduction to, withholding tax under an
income tax treaty, or any successor form, (ii) duly completed copies of Internal
Revenue Service Form 8-8ECI claiming exemption from withholding because the
income is effectively connection with a U.S. trade or business or any successor
form, (iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Sections 871(h) or 881(c) of the Code,
(a) a certificate of the Lender to the effect that such Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent
shareholder" of a Borrower within the meaning of Section 881(c)(3)(B) of the
Code or a "controlled foreign corporation" described and Section 881(c)(3)(C) of
the Code and (b) duly completed copies of Internal Revenue Service Form W-8BEN
claiming exemption from withholding under the portfolio interest exemption or
any successor form or (iv) any other applicable form, certificate or document
prescribed by applicable law as a basis for claiming exemption from or a
reduction in United States withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit a
Borrower to determine the withholding or deduction required to be made. Unless
Administrative Borrower and Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any of the
other Financing Agreements to or for a Foreign Lender are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, Borrowers or Agent shall withhold amounts required to be
withheld by applicable requirements of law from such payments at the applicable
statutory rate.
(h) Any Lender claiming any additional amounts payable pursuant to
this Section 6.5 shall use its reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
applicable lending office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that would be payable
or may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
6.6. AUTHORIZATION TO MAKE LOANS.
Agent and Lenders are authorized to make the Loans based upon telephonic or
other instructions received from anyone purporting to be an officer of
Administrative Borrower or any Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letters of Credit hereunder shall specify the date on
which the requested advance is to be made (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after 11:00 a.m.,
Atlanta, Georgia time on any day shall be deemed to have been made as of the
opening of business on the immediately following Business Day. All Loans and
Letters of Credit under this Agreement shall be conclusively presumed to have
been made to, and at the request of and for the benefit of, any Borrower when
deposited to the credit of any Borrower or otherwise disbursed or established in
accordance with the instructions of any Borrower or in accordance with the terms
and conditions of this Agreement.
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6.7. USE OF PROCEEDS.
Borrowers shall use the initial proceeds of the Loans and Letters of Credit
hereunder only for: (a) payments to each of the persons listed in the
disbursement direction letter furnished by Borrowers to Agent on or about the
date hereof and (b) costs, expenses and fees in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Financing
Agreements. All other Loans made or Letters of Credit provided to or for the
benefit of any Borrower pursuant to the provisions hereof shall be used by such
Borrower only for general operating, working capital and other proper corporate
purposes of such Borrower not otherwise prohibited by the terms hereof. None of
the proceeds will be used, directly or indirectly, for the purpose of purchasing
or carrying any margin security or for the purposes of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, as amended.
6.8. APPOINTMENT OF ADMINISTRATIVE BORROWER AS AGENT FOR REQUESTING
LOANS AND RECEIPTS OF LOANS AND STATEMENTS.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent and attorney-in-fact to request and receive
Loans and Letters of Credit pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letters of Credit to a Borrower as Administrative Borrower may designate or
direct, without notice to any other Borrower or Guarantor. Notwithstanding
anything to the contrary contained herein, Agent may at any time and from time
to time require that Loans to or for the account of any Borrower be disbursed
directly to an operating account of such Borrower.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this
Section 6.8. Administrative Borrower shall ensure that the disbursement of any
Loans to each Borrower requested by or paid to or for the account of Parent, or
the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to
or for the account of such Borrower.
(c) Each Borrower and other Guarantor hereby irrevocably appoints and
constitutes Administrative Borrower as its agent to receive statements on
account and all other notices from Agent and Lenders with respect to the
Obligations or otherwise under or in connection with this Agreement and the
other Financing Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower or any Guarantor by
Administrative Borrower shall be deemed for all purposes to have been made by
such Borrower or Guarantor, as the case may be, and shall be binding upon and
enforceable against such Borrower or Guarantor to the same extent as if made
directly by such Borrower or Guarantor.
49
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.9. PRO RATA TREATMENT.
Except to the extent otherwise provided in this Agreement or as
otherwise agreed by Lenders: (a) the making and conversion of Loans shall be
made among the Lenders based on their respective Pro Rata Shares as to the Loans
and (b) each payment on account of any Obligations to or for the account of one
or more of Lenders in respect of any Obligations due on a particular day shall
be allocated among the Lenders entitled to such payments based on their
respective Pro Rata Shares and shall be distributed accordingly.
6.10. SHARING OF PAYMENTS, ETC.
(a) Each Borrower and Guarantor agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim Agent
or any Lender may otherwise have, each Lender shall be entitled, at its option
(but subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of such Borrower or
Guarantor at any of its offices, in dollars or in any other currency, against
any principal of or interest on any Loans owed to such Lender or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to such Borrower or Guarantor), in which
case it shall promptly notify Administrative Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower or
Guarantor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by any Borrower or Guarantor
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Agent, for the benefit of Lenders, the amount of such
excess and simultaneously purchase from such other Lenders a participation in
the Loans or such other amounts, respectively, owing to such other Lenders (or
such interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) Each Borrower and Guarantor agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise with
Agent's prior written consent, in a manner consistent with this Section, all
rights of setoff, banker's lien,
50
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
right of setoff, banker's lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower
or Guarantor. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.
6.11. SETTLEMENT PROCEDURES.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent may, at
its option, subject to the terms of this Section, make available, on behalf of
Lenders, the full amount of the Loans requested or charged to any Borrower's
loan account(s) or otherwise to be advanced by Lenders pursuant to the terms
hereof, without requirement of prior notice to Lenders of the proposed Loans.
(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section, the amount of each Lender's Pro Rata Share of the
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.,
Atlanta, Georgia time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute right at any
time or from time to time to make the above described adjustments at intervals
more frequent than weekly, but in no event more than twice in any week. Agent
shall deliver to each of the Lenders after the end of each week, or at such
lesser period or periods as Agent shall determine, a summary statement of the
amount of outstanding Loans for such period (such week or lesser period or
periods being hereinafter referred to as a "Settlement Period"). If the summary
statement is sent by Agent and received by a Lender prior to 12:00 p.m.,
Atlanta, Georgia time, then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m., Atlanta, Georgia time on
the same Business Day and if received by a Lender after 12:00 p.m., Atlanta,
Georgia time, then such Lender shall make the settlement transfer by not later
than 3:00 p.m., Atlanta, Georgia time on the next Business Day following the
date of receipt. If, as of the end of any Settlement Period, the amount of a
Lender's Pro Rata Share of the outstanding Loans is more than such Lender's Pro
Rata Share of the outstanding Loans as of the end of the previous Settlement
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Loans in any Settlement
Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available
51
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and without recourse to or warranty by Agent. Agent and each
Lender agrees to xxxx its books and records at the end of each Settlement Period
to show at all times the dollar amount of its Pro Rata Share of the outstanding
Loans and Letters of Credit. Each Lender shall only be entitled to receive
interest on its Pro Rata Share of the Loans to the extent such Loans have been
funded by such Lender. Because the Agent on behalf of Lenders may be advancing
and/or may be repaid Loans prior to the time when Lenders will actually advance
and/or be repaid such Loans, interest with respect to Loans shall be allocated
by Agent in accordance with the amount of Loans actually advanced by and repaid
to each Lender and the Agent and shall accrue from and including the date such
Loans are so advanced to but excluding the date such Loans are either repaid by
Borrowers or actually settled with the applicable Lender as described in this
Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by a Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section. In lieu of weekly or
more frequent settlements, Agent may, at its option, at any time require each
Lender to provide Agent with immediately available funds representing its Pro
Rata Share of each Loan, prior to Agent's disbursement of such Loan to Borrower.
In such event, all Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their Pro Rata Shares. No Lender shall be
responsible for any default by any other Lender in the other Lender's obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of the default by any other Lender in the
other Lender's obligation to make a Loan hereunder.
(d) If Agent is not funding a particular Loan to a Borrower (or
Administrative Borrower for the benefit of such Borrower) pursuant to Sections
6.11(a) and 6.11(b) above on any day, but is requiring each Lender to provide
Agent with immediately available funds on the date of such Loan as provided in
Section 6.11(c) above, Agent may assume that each Lender will make available to
Agent such Lender's Pro Rata Share of the Loan requested or otherwise made on
such day and Agent may, in its discretion, but shall not be obligated to, cause
a corresponding amount to be made available to or for the benefit of such
Borrower on such day. If Agent makes such corresponding amount available to a
Borrower and such corresponding amount is not in fact made available to Agent by
such Lender, Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon for each day from the
date such payment was due until the date such amount is paid to Agent at the
Federal Funds Rate for each day during such period (as published by the Federal
Reserve Bank of New York or at Agent's option based on the arithmetic mean
determined by Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that day by each of
the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Loan made by Agent for its own account. Upon any such
52
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Administrative Borrower of such failure and Borrowers shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Administrative Borrower's receipt of such notice. A Lender who fails to pay
Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender's behalf, or any Lender who fails to pay any other amount owing by it to
Agent, is a "Defaulting Lender". Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender's
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, relend to a Borrower the amount of all such
payments received or retained by it for the account of such Defaulting Lender.
For purposes of voting or consenting to matters with respect to this Agreement
and the other Financing Agreements and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero (0). This Section shall remain effective
with respect to a Defaulting Lender until such default is cured. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance by any Borrower
or Guarantor of their duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that any Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.
6.12. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligation of each Lender hereunder is several, and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. Nothing contained in this Agreement or any of the other Financing
Agreements and no action taken by the Lenders pursuant hereto or thereto shall
be deemed to constitute the Lenders to be a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and subject to Section
12.3 hereof, each Lender shall be entitled to protect and enforce its rights
arising out of this Agreement and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.
6.13. NATURE AND EXTENT OF EACH BORROWER'S LIABILITY.
(a) Each Borrower shall be liable for, on a joint and several basis,
and hereby guarantees the timely payment by all other Borrowers of, all of the
Loans and other Obligations, regardless of which Borrower actually may have
received the proceeds of any Loans or other extensions of credit hereunder or
the amount of such Loans received or the manner in which Agent or any Lender
accounts for such Loans or other extensions of credit on its books and records,
it being acknowledged and agreed that Loans to any Borrower inure to the mutual
benefit of all Borrowers and that Agent and Lenders are relying on the joint and
several liability of Borrowers in extending the Loans and other financial
accommodations hereunder. Each
53
Borrower hereby unconditionally and irrevocably agrees that upon default in the
payment when due (whether at stated maturity, by acceleration or otherwise) of
any principal of, or interest owed on, any of the Loans or other Obligations,
such Borrower shall forthwith pay the same, without notice or demand.
(b) Each Borrower's joint and several liability hereunder with respect
to, and guaranty of, the Loans and other Obligations shall, to the fullest
extent permitted by applicable law, be unconditional irrespective of (i) the
validity, enforceability, avoidance or subordination of any of the Obligations
or of any promissory note or other document evidencing all or any part of the
Obligations, (ii) the absence of any attempt to collect any of the Obligations
from any other Borrower or any Guarantor or any Collateral or other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance or granting of any indulgence by Agent
or any Lender with respect to any provision of any instrument evidencing or
securing the payment of any of the Obligations, or any other agreement now or
hereafter executed by any other Borrower and delivered to Agent or any Lender,
(iv) the failure by Agent to take any steps to perfect or maintain the perfected
status of its security interest in or lien upon, or to preserve its rights to,
any of the Collateral or other security for the payment or performance of any of
the Obligations or Agent's release of any Collateral or of its security
interests or liens upon any Collateral, (v) Agent's or Lenders' election, in any
proceeding instituted under the Bankruptcy Code, for the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by any other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the release or compromise, in whole or in part, of the
liability of any Borrower or Guarantor for the payment of any of the
Obligations, (viii) any amendment or modification of any of the Financing
Agreements or any waiver of a Default or Event of Default, (ix) any increase in
the amount of the Obligations beyond any limits imposed herein or in the amount
of any interest, fees or other charges payable in connection therewith, or any
decrease in the same, (x) the disallowance of all or any portion of Agent's or
any Lender's claims against any other Borrower or Guarantor for the repayment of
any of the Obligations under Section 502 of the Bankruptcy Code, or (xi) any
other circumstance that might constitute a legal or equitable discharge or
defense of any Borrower. After the occurrence and during the continuance of any
Event of Default, Agent may proceed directly and at once, without notice to any
Borrower or Guarantor, against any or all of Borrowers to collect and recover
all or any part of the Obligations, without first proceeding against any other
Borrower or Guarantor or against any Collateral or other security for the
payment or performance of any of the Obligations, and each Borrower waives any
provision under applicable law that might otherwise require Agent to pursue or
exhaust its remedies against any Collateral or Borrower or Guarantor before
pursuing another Borrower or Guarantor. Each Borrower consents and agrees that
Agent shall be under no obligation to marshal any assets in favor of any
Borrower or Guarantor or against or in payment of any or all of the Obligations.
(c) No payment or payments made by a Borrower or Guarantor or received
or collected by Agent from a Borrower or any other Person by virtue of any
action or proceeding or any setoff or appropriation or application at any time
or from time to time in reduction of or in payment of the Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Borrower under this Agreement, each of whom shall remain jointly and severally
54
liable for the payment and performance of all Loans and other Obligations until
full payment of the Obligations.
(d) Each Borrower is unconditionally obligated to repay the
Obligations as a joint and several obligor under this Agreement. If, as of any
date, the aggregate amount of payments made by a Borrower on account of the
Obligations and proceeds of such Borrower's Collateral that are applied to the
Obligations exceeds the aggregate amount of Loan proceeds actually used by such
Borrower in its business (such excess amount being referred to as an
"Accommodation Payment"), then each of the other Borrowers (each such Borrower
being referred to as a "Contributing Borrower") shall be obligated to make
contribution to such Borrower (the "Paying Borrower") in an amount equal to (A)
the product derived by multiplying the sum of each Accommodation Payment of each
Borrower by the Allocable Percentage of the Borrower from whom contribution is
sought less (B) the amount, if any, of the then outstanding Accommodation
Payment of such Contributing Borrower (such last mentioned amount which is to be
subtracted from the aforesaid product to be increased by any amounts theretofore
paid by such Contributing Borrower by way of contribution hereunder, and to be
decreased by any amounts theretofore received by such Contributing Borrower by
way of contribution hereunder); provided, however, that a Paying Borrower's
recovery of contribution hereunder from the other Borrowers shall be limited to
that amount paid by the Paying Borrower in excess of its Allocable Percentage of
all Accommodation Payments then outstanding of all Borrowers. As used herein,
the term "Allocable Percentage" shall mean, on any date of determination
thereof, a fraction the denominator of which shall be equal to the number of
Borrowers who are parties to this Agreement on such date and the numerator of
which shall be 1; provided, however, that such percentages shall be modified in
the event that contribution from a Borrower is not possible by reason of
insolvency, bankruptcy or otherwise by reducing such Borrower's Allocable
Percentage equitably and by adjusting the Allocable Percentage of the other
Borrowers proportionately so that the Allocable Percentages of all Borrowers at
all times equals 100%.
(e) Each Borrower hereby subordinates any claims, including any right
of payment, subrogation, contribution and indemnity, that it may have from or
against any other Borrower or any Guarantor, and any successor or assign of any
other Borrower or any Guarantor, including any trustee, receiver or
debtor-in-possession, howsoever arising, due or owing or whether heretofore, now
or hereafter existing, to the full payment of all of the Obligations.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1. COLLATERAL REPORTING.
(a) Borrowers shall provide Agent with the following documents in a
form satisfactory to Agent:
(i) on a weekly basis or more frequently if determined by Agent a
Borrowing Base certificate, in form and substance satisfactory to Agent in all
respects;
(ii) on a regular basis as required by Agent, schedules of sales
made, credits issued and cash received;
55
(iii) as soon as possible after the end of each month (but in any
event within ten (10) Business Days after the end thereof), on a monthly basis
or more frequently as Agent may request, (a) perpetual inventory reports, (b)
inventory reports by location and category (and including the amounts of
Inventory and the value thereof at any leased locations and at premises of
warehouses, processors or other third parties), (c) agings of accounts
receivable (together with a reconciliation to the previous month's aging and
general ledger) and (d) agings of accounts payable (and including information
indicating the amounts owing to owners and lessors of leased premises,
warehouses, processors and other third parties from time to time in possession
of any Collateral);
(iv) upon Agent's request, and in each form and substance
satisfactory to Agent in all respects, (e) copies of customer statements,
purchase orders, sales invoices, credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (f) copies of shipping and
delivery documents, and (g) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by any Borrower or Guarantor;
(v) upon the termination or expiration of any distribution
agreement or the execution of any new distribution agreement by a Borrower, a
written certificate from the chief executive officer, president or chief
financial officer of Borrowers that certifies the list of distribution
agreements that have expired, terminated or been entered into by a Borrower
since the date of the last certificate provided by Borrowers, and if requested
by Agent, such other information as Agent may require;
(vi) such other reports as to the Collateral as Agent shall
request from time to time.
(b) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
7.2. ACCOUNTS COVENANTS.
(a) Borrowers shall notify Agent promptly of: (i) with respect to any
Account with an amount in dispute in excess of $100,000, any material delay in
any Borrower's performance of any of its material obligations to any account
debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof in excess of
$100,000, (ii) all material adverse information known to any Borrower or
Guarantor relating to the financial condition of any account debtor whose
Accounts aggregate more than $200,000 at any time, and (iii) any event or
circumstance which, to the best of any Borrower's or Guarantor's knowledge,
would cause Agent to consider any then existing Accounts in an aggregate face
amount in excess of $200,000, as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account
56
debtor without Agent's consent, except in the ordinary course of a Borrower's or
Guarantor's business in accordance with historical practices and policies or
except as set forth in the schedules delivered to Agent pursuant to Section
7.1(a) above. So long as no Event of Default exists or has occurred and is
continuing, Borrowers shall settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor or dispute same in good faith.
At any time that an Event of Default exists or has occurred and is continuing,
Agent shall, at its option, have the exclusive right to dispute, settle, adjust
or compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of each Borrower's business in accordance with
historical practices and policies, (iv) there shall be no setoffs, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto except as reported to Agent in accordance with the terms of this
Agreement, (v) none of the transactions giving rise thereto will violate any
applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.
(c) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
7.3. INVENTORY COVENANTS.
With respect to the Inventory: (a) each Borrower and Guarantor shall at all
times maintain inventory records reasonably satisfactory to Agent, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, such Borrower's or Guarantor's cost therefor and
daily withdrawals therefrom and additions thereto; (b) Borrowers shall conduct a
physical count of the Inventory at least once each year but at any time or times
as Agent may request on or after an Event of Default, and promptly following
such physical inventory shall supply Agent with a report in the form and with
such specificity as may be satisfactory to Agent concerning such physical count;
(c) Borrowers shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of its business and except to move Inventory
directly from one location set forth or permitted herein to another such
location and except for Inventory shipped from the manufacturer thereof to such
Borrower or Guarantor which is in transit to the locations set forth or
permitted herein; (d) upon Agent's request, Borrowers shall, at their expense,
no more than four (4) times in any twelve (12) month period, but at any time or
times as Agent may request on or after an Event of Default, deliver or cause to
be delivered to Agent written appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent and Lenders
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and upon which Agent and Lenders are expressly permitted to rely; (e) Borrowers
shall produce, use, store and maintain the Inventory with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (f) none of the Inventory or other Collateral constitutes farm
products or the proceeds thereof; (g) each Borrower and Guarantor assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (h) Borrowers shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate any Borrower or Guarantor to repurchase such
Inventory; (i) Borrowers shall keep the Inventory in good and marketable
condition; and (j) Borrowers shall not, without prior written notice to Agent or
the specific identification of such Inventory in a report with respect thereto
provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof,
acquire or accept any Inventory on consignment or approval.
7.4. RESERVED.
7.5. POWER OF ATTORNEY.
Each Borrower and Guarantor hereby irrevocably designates and appoints
Agent (and all persons designated by Agent) as such Borrower's and Guarantor's
true and lawful attorney-in-fact, and authorizes Agent, in such Borrower's,
Guarantor's or Agent's name, to: (a) at any time an Event of Default exists or
has occurred and is continuing (b) demand payment on Receivables or other
Collateral, (c) enforce payment of Receivables by legal proceedings or
otherwise, (d) exercise all of such Borrower's or Guarantor's rights and
remedies to collect any Receivable or other Collateral, (e) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (f) settle, adjust, compromise, extend or renew an
Account, (g) discharge and release any Receivable, (h) prepare, file and sign
such Borrower's or Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (i) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
or Guarantor and handle and store all mail relating to the Collateral; and (j)
do all acts and things which are necessary, in Agent's determination, to fulfill
such Borrower's or Guarantor's obligations under this Agreement and the other
Financing Agreements and (k) at any time to (l) take control in any manner of
any item of payment in respect of Receivables or constituting Collateral or
otherwise received in or for deposit in the Blocked Accounts or otherwise
received by Agent or any Lender, (m) have access to any lockbox or postal box
into which remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral are sent or received, (n) endorse
such Borrower's or Guarantor's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent's account for application to the
Obligations, (o) endorse such Borrower's or Guarantor's name upon any chattel
paper, document, instrument, invoice, or similar document or agreement relating
to any Receivable or any goods pertaining thereto or any other Collateral,
including any warehouse or other receipts, or bills of lading and other
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negotiable or non-negotiable documents, (p) clear Inventory the purchase of
which was financed with a Letter of Credit through U.S. Customs or foreign
export control authorities in such Borrower's or Guarantor's name, Agent's name
or the name of Agent's designee, and to sign and deliver to customs officials
powers of attorney in such Borrower's or Guarantor's name for such purpose, and
to complete in such Borrower's or Guarantor's or Agent's name, any order, sale
or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, and (q) sign such Borrower's or Guarantor's name
on any verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof. Each Borrower and
Guarantor hereby releases Agent and Lenders and their respective officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent's or any Lender's own gross negligence
or willful misconduct as determined pursuant to a final non-appealable order of
a court of competent jurisdiction.
7.6. RIGHT TO CURE.
Agent may, at its option, upon notice to Administrative Borrower, (a) cure
any default by any Borrower or Guarantor under any material agreement with a
third party that affects the Collateral, its value or the ability of Agent to
collect, sell or otherwise dispose of the Collateral or the rights and remedies
of Agent or any Lender therein or the ability of any Borrower or Guarantor to
perform its obligations hereunder or under any of the other Financing
Agreements, (b) pay or bond on appeal any judgment entered against any Borrower
or Guarantor, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral
and (d) pay any amount, incur any expense or perform any act which, in Agent's
judgment, is necessary or appropriate to preserve, protect, insure or maintain
the Collateral and the rights of Agent and Lenders with respect thereto. Agent
may add any amounts so expended to the Obligations and charge any Borrower's
account therefor, such amounts to be repayable by Borrowers on demand. Agent and
Lenders shall be under no obligation to effect such cure, payment or bonding and
shall not, by doing so, be deemed to have assumed any obligation or liability of
any Borrower. Any payment made or other action taken by Agent or any Lender
under this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.7. ACCESS TO PREMISES.
From time to time as requested by Agent, at the cost and expense of
Borrowers, (a) Agent or its designee shall have complete access to all of each
Borrower's premises during normal business hours and after notice to
Administrative Borrower, or at any time and without notice to Administrative
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
each Borrower's books and records, including the Records, and (b) each Borrower
shall promptly furnish to Agent such copies of such books and records or
extracts therefrom as Agent may request, and Agent or any Lender or Agent's
designee may use during normal business hours such of any Borrower's personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred and is continuing
for the collection of Receivables and realization of other Collateral.
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SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Agent, Lenders and Issuing
Bank the following (which shall survive the execution and delivery of this
Agreement):
8.1. CORPORATE EXISTENCE, POWER AND AUTHORITY.
Each Borrower is a corporation duly organized and in good standing under
the laws of its jurisdiction of organization and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect on such
Borrower's financial condition, results of operation or business or the rights
of Agent in or to any of the Collateral. The execution, delivery and performance
of this Agreement, the other Financing Agreements and the transactions
contemplated hereunder and thereunder (a) are all within each Borrower's
corporate powers, (b) have been duly authorized, (c) are not in contravention of
law or the terms of any Borrower's certificate of incorporation, by laws, or
other organizational documentation, or any indenture, agreement or undertaking
to which any Borrower is a party or by which any Borrower or its property are
bound and (d) will not result in the creation or imposition of, or require or
give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of any Borrower. This Agreement and the
other Financing Agreements to which any Borrower is a party constitute legal,
valid and binding obligations of such Borrower enforceable in accordance with
their respective terms.
8.2. NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL
LOCATIONS.
(a) The exact legal name of each Borrower is as set forth on the
signature page of this Agreement and in the Information Certificate. No Borrower
has, during the five years prior to the date of this Agreement, been known by or
used any other corporate or fictitious name or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property or assets out of the ordinary course of
business, except as set forth in the Information Certificate.
(b) Each Borrower is an organization of the type and organized in the
jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
each Borrower or accurately states that such Borrower has none and accurately
sets forth the federal employer identification number of each Borrower.
(c) The chief executive office and mailing address of each Borrower
and each Borrower's Records concerning Accounts are located only at the address
identified as such in the Information Certificate and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in the Information Certificate, subject to the rights of any Borrower
to establish new locations in accordance with Section 9.2 below. The
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Information Certificate correctly identifies any of such locations which are not
owned by a Borrower and sets forth the owners and/or operators thereof.
8.3. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE.
All financial statements relating to any Borrower which have been or may
hereafter be delivered by any Borrower to Agent and Lenders have been prepared
in accordance with GAAP (except as to any interim financial statements, to the
extent such statements are subject to normal year-end adjustments and do not
include any notes) and fairly present in all material respects the financial
condition and the results of operation of such Borrower as at the dates and for
the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrowers to Agent prior to the date of this Agreement,
there has been no act, condition or event which has had or is reasonably likely
to have a Material Adverse Effect since the date of the most recent audited
financial statements of any Borrower furnished by any Borrower to Agent prior to
the date of this Agreement. The projections dated June 29, 2005 for the fiscal
year ending 2006 that has been delivered to Agent or any projections hereafter
delivered to Agent have been prepared in light of the past operations of the
businesses of Borrowers and are based upon estimates and assumptions stated
therein, all of which Borrowers have determined to be reasonable and fair in
light of the then current conditions and current facts and reflect the good
faith and reasonable estimates of Borrowers of the future financial performance
of Parent and its Subsidiaries and of the other information projected therein
for the periods set forth therein.
8.4. PRIORITY OF LIENS; TITLE TO PROPERTIES.
The security interests and liens granted to Agent under this Agreement and
the other Financing Agreements constitute valid and perfected first priority
liens and security interests in and upon the Collateral subject only to the
liens indicated in the Information Certificate and the other liens permitted
under Section 9.8 hereof. Each Borrower has good and marketable fee simple title
to or valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
in the Information Certificate or permitted under Section 9.8 hereof.
8.5. TAX RETURNS.
Each Borrower has filed, or caused to be filed, in a timely manner all tax
returns, reports and declarations which are required to be filed by it. All
information in such tax returns, reports and declarations is complete and
accurate in all material respects. Each Borrower has paid or caused to be paid
all taxes due and payable or claimed due and payable in any assessment received
by it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower and
with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet due
and payable and whether or not disputed.
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8.6. LITIGATION.
Except as set forth in the Information Certificate, (a) there is no
investigation by any Governmental Authority pending, or to the best of any
Borrower's knowledge threatened, against or affecting any Borrower, its or their
assets or business and (b) there is no action, suit, proceeding or claim by any
Person pending, or to the best of any Borrower's knowledge threatened, against
any Borrower or its or their assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, in each case, which if adversely
determined against such Borrower has or could reasonably be expected to have a
Material Adverse Effect.
8.7. COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
(a) Borrowers are not in default in any respect under, or in violation
in any respect of the terms of, any material agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound. Borrowers are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws.
(b) Borrowers have obtained all material permits, licenses, approvals,
consents, certificates, orders or authorizations of any Governmental Authority
required for the lawful conduct of its business (the "Permits"). All of the
Permits are valid and subsisting and in full force and effect. There are no
actions, claims or proceedings pending or to the best of any Borrower's
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits.
8.8. ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth in the Information Certificate, Borrowers and
any Subsidiary of any Borrower have not generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates in any material respect any applicable Environmental
Law or Permit, and the operations of Borrowers and any Subsidiary of any
Borrower complies in all material respects with all Environmental Laws and all
Permits.
(b) Except as set forth in the Information Certificate, there has been
no investigation by any Governmental Authority or any proceeding, complaint,
order, directive, claim, citation or notice by any Governmental Authority or any
other person nor is any pending or to the best of any Borrower's knowledge
threatened, with respect to any non compliance with or violation of the
requirements of any Environmental Law by any Borrower and any Subsidiary of any
Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which adversely affects or could
reasonably be expected to adversely affect in any
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material respect any Borrower or its or their business, operations or assets or
any properties at which such Borrower has transported, stored or disposed of any
Hazardous Materials.
(c) Except as set forth in the Information Certificate, Borrowers and
their Subsidiaries have no material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Borrowers and their Subsidiaries have all Permits required to be
obtained or filed in connection with the operations of Borrowers under any
Environmental Law and all of such licenses, certificates, approvals or similar
authorizations and other Permits are valid and in full force and effect.
8.9. EMPLOYEE BENEFITS.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the Internal Revenue Service and to the
best of any Borrower's knowledge, nothing has occurred which would cause the
loss of such qualification. Each Borrower and its ERISA Affiliates have made all
required contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending, or to the best of any Borrower's knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) based on the latest valuation of each Pension Plan and on the
actuarial methods and assumptions employed for such valuation (determined in
accordance with the assumptions used for funding such Pension Plan pursuant to
Section 412 of the Code), the aggregate current value of accumulated benefit
liabilities of such Pension Plan under Section 4001(a)(16) of ERISA does not
exceed the aggregate current value of the assets of such Pension Plan; (iii)
each Borrower and its ERISA Affiliates, have not incurred and do not reasonably
expect to incur, any liability under Title IV of ERISA with respect to any Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
each Borrower and its ERISA Affiliates, have not incurred and do not reasonably
expect to incur, any liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each
Borrower and their ERISA Affiliates, have not engaged in a transaction that
would be subject to Section 4069 or 4212(c) of ERISA.
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8.10. BANK ACCOUNTS.
All of the deposit accounts, investment accounts or other accounts in the
name of or used by any Borrower maintained at any bank or other financial
institution are set forth in the Information Certificate of SED, subject to the
right of each Borrower to establish new accounts in accordance with Section 5.2
hereof.
8.11. INTELLECTUAL PROPERTY.
Each Borrower owns or licenses or otherwise has the right to use all
Intellectual Property necessary for the operation of its business as presently
conducted or proposed to be conducted. As of the date hereof, Borrowers do not
have any Intellectual Property registered, or subject to pending applications,
in the United States Patent and Trademark Office or any similar office or agency
in the United States, any State thereof, any political subdivision thereof or in
any other country, other than those described in the Information Certificate and
has not granted any licenses with respect thereto other than as set forth in the
Information Certificate. No event has occurred which permits or would permit
after notice or passage of time or both, the revocation, suspension or
termination of such rights. To the best of any Borrower's knowledge, no slogan
or other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting any Borrower contesting
its right to sell or use any such Intellectual Property. The Information
Certificate sets forth all of the agreements or other arrangements of each
Borrower pursuant to which such Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of such Borrower as in
effect on the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by any Borrower after the date hereof,
collectively, the "License Agreements" and individually, a "License Agreement").
No trademark, servicemark, copyright or other Intellectual Property at any time
used by any Borrower which is owned by another person, or owned by such Borrower
subject to any security interest, lien, collateral assignment, pledge or other
encumbrance in favor of any person other than Agent, is affixed to any Eligible
Inventory, except (a) to the extent permitted under the term of the license
agreements listed in the Information Certificate and (b) to the extent the sale
of Inventory to which such Intellectual Property is affixed is permitted to be
sold by such Borrower under applicable law (including the United States
Copyright Act of 1976).
8.12. SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY.
(a) Each Borrower does not have any direct or indirect Subsidiaries or
Affiliates and is not engaged in any joint venture or partnership except as set
forth in the Information Certificate.
(b) Each Borrower is the record and beneficial owner of all of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed in the Information
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Certificate as being owned by such Borrower and there are no proxies,
irrevocable or otherwise, with respect to such shares and no equity securities
of any of the Subsidiaries are or may become required to be issued by reason of
any options, warrants, rights to subscribe to, calls or commitments of any kind
or nature and there are no contracts, commitments, understandings or
arrangements by which any Subsidiary is or may become bound to issue additional
shares of it Capital Stock or securities convertible into or exchangeable for
such shares.
(c) The issued and outstanding shares of Capital Stock of each
Borrower are directly and beneficially owned and held by the persons indicated
in the Information Certificate, and in each case all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Agent prior to the date hereof.
(d) Each Borrower is Solvent and will continue to be Solvent after the
creation of the Obligations, the security interests of Agent and the other
transaction contemplated hereunder.
8.13. LABOR DISPUTES.
(a) Set forth in the Information Certificate is a list (including
dates of termination) of all collective bargaining or similar agreements between
or applicable to each Borrower and any union, labor organization or other
bargaining agent in respect of the employees of any Borrower on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against any Borrower or, to the best of any Borrower's knowledge,
threatened against it, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
any Borrower or, to best of any Borrower's knowledge, threatened against it, and
(ii) no significant strike, labor dispute, slowdown or stoppage is pending
against any Borrower or, to the best of any Borrower's knowledge, threatened
against any Borrower.
8.14. RESTRICTIONS ON SUBSIDIARIES.
Except for restrictions contained in this Agreement or any other agreement
with respect to Indebtedness of any Borrower permitted hereunder as in effect on
the date hereof, there are no contractual or consensual restrictions on any
Borrower or any of its Subsidiaries which prohibit or otherwise restrict (a) the
transfer of cash or other assets (except for any governmentally imposed
restrictions upon Foreign Subsidiaries) (i) between any Borrower and any of its
Subsidiaries or (ii) between any Subsidiaries of any Borrower or (b) the ability
of any Borrower or any of its or their Subsidiaries to incur Indebtedness or
grant security interests to Agent or any Lender in the Collateral.
8.15. MATERIAL CONTRACTS.
Schedule 8.15 attached hereto and made a part hereof sets forth all
Material Contracts to which any Borrower is a party or is bound as of the date
hereof. Borrowers have delivered true,
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correct and complete copies of such Material Contracts to Agent on or before the
date hereof. Borrowers are not in breach or in default in any material respect
of or under any Material Contract and have not received any notice of the
intention of any other party thereto to terminate any Material Contract.
8.16. PAYABLE PRACTICES.
No Borrower has made any material change in the historical accounts payable
practices from those in effect immediately prior to the date hereof.
8.17. ACCURACY AND COMPLETENESS OF INFORMATION.
All information furnished by or on behalf of any Borrower in writing to
Agent or any Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct in
all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a Material Adverse Affect, which has not
been fully and accurately disclosed to Agent in writing prior to the date
hereof.
8.18. SURVIVAL OF WARRANTIES; CUMULATIVE.
All representations and warranties contained in this Agreement or any of
the other Financing Agreements shall survive the execution and delivery of this
Agreement and shall be deemed to have been made again to Agent and Lenders on
the date of each additional borrowing or other credit accommodation hereunder
and shall be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent or any
Lender. The representations and warranties set forth herein shall be cumulative
and in addition to any other representations or warranties which any Borrower
shall now or hereafter give, or cause to be given, to Agent or any Lender.
As used in this Section 8, references to "a Borrower's knowledge" and
similar terms means (i) the actual and current knowledge of the duly appointed
Chief Executive Officer, Chief Financial Officer, President, Vice Presidents,
Treasurer and Secretary of each of the respective Borrowers (each a "Senior
Officer") with respect to each of the respective Borrowers in which they hold
office or (ii) the knowledge that a Senior Officer would have obtained if he had
engaged in good faith and diligent performance of his duties, including the
making of such reasonably specific inquiries as may be necessary of the
employees or agents of Borrowers and a good faith attempt to ascertain the
existence or accuracy of the matter to which such phrase relates.
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1. MAINTENANCE OF EXISTENCE.
(a) Each Borrower and each of its Subsidiaries shall at all times
preserve, renew and keep in full force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all licenses, trademarks, tradenames, approvals, authorizations, leases,
contracts and Permits necessary to carry on the business as presently or
proposed to be conducted; provided, however, that (i) if at the time thereof and
immediately after giving effect thereto no Default or Event of Default shall
exist, any Borrower may merge with and into another Borrower and (ii) Magna and
E-Store, Inc. may liquidate or dissolve if (x) at the time of and after giving
effect thereto, no Default or Event of Default shall exist, (y) Borrowers
determine in good faith that such liquidation or dissolution is in the best
interests of Borrowers, and Lender determines that such liquidation or
dissolution is not materially disadvantageous to Lender and (z) Magna or E-Store
did not contribute more than 1% of the gross revenues of Borrowers for the
fiscal year immediately preceding the proposed liquidation or dissolution.
(b) No Borrower nor any of its Subsidiaries shall change its name
unless each of the following conditions is satisfied: (i) Agent shall have
received not less than thirty (30) days prior written notice from Administrative
Borrower of such proposed change in its corporate name, which notice shall
accurately set forth the new name; and (ii) Agent shall have received a copy of
the amendment to the Certificate of Incorporation of such Borrower or such
Subsidiary providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation or organization of such Borrower or such
Subsidiary as soon as it is available.
(c) No Borrower nor any of its Subsidiaries shall change its chief
executive office or its mailing address or organizational identification number
(or if it does not have one, shall not acquire one) unless Agent shall have
received not less than thirty (30) days' prior written notice from
Administrative Borrower of such proposed change, which notice shall set forth
such information with respect thereto as Agent may require and Agent shall have
received such agreements as Agent may reasonably require in connection
therewith. No Borrower nor any Subsidiary shall change its type of organization,
jurisdiction of organization or other legal structure except as provided in
Section 9.1(a) above.
9.2. NEW COLLATERAL LOCATIONS.
Each Borrower may only open any new location within the continental United
States provided such Borrower (a) gives Agent thirty (30) days prior written
notice of the intended opening of any such new location and (b) executes and
delivers, or causes to be executed and delivered, to Agent such agreements,
documents, and instruments as Agent may deem reasonably necessary or desirable
to protect its interests in the Collateral at such location.
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9.3. COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each Borrower shall, and shall cause any Subsidiary to, at all
times, comply in all respects with all laws, rules, regulations, licenses,
approvals, orders and other Permits applicable to it and duly observe all
requirements of any foreign, Federal, State or local Governmental Authority,
except to the extent that any such noncompliance could not reasonably be
expected to have a Material Adverse Effect.
(b) Borrowers shall give written notice to Agent immediately upon any
Borrower's receipt of any notice of, or any Borrower's otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material other than in the ordinary
course of business and other than as permitted under any applicable
Environmental Law. Copies of all environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by such Borrower to Agent. Each Borrower
shall take prompt action to respond to any material non-compliance with any of
the Environmental Laws and shall regularly report to Agent on such response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of any Borrower in order to avoid any non
compliance, with any Environmental Law, Borrowers shall, at Agent's request and
Borrowers' expense: (i) cause an independent environmental engineer reasonably
acceptable to Agent to conduct such tests of the site where non-compliance or
alleged non compliance with such Environmental Laws has occurred as to such
non-compliance and prepare and deliver to Agent a report as to such
non-compliance setting forth the results of such tests, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's response
thereto or the estimated costs thereof, shall change in any material respect.
(d) Each Borrower shall indemnify and hold harmless Agent and Lenders
and their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including reasonable
attorneys' fees and expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage,
release, threatened release, spill, discharge, disposal or presence of a
Hazardous Material, including the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of any Borrower and
the preparation and implementation of any closure, remedial or other required
plans. All representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the termination of
this Agreement.
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9.4. PAYMENT OF TAXES AND CLAIMS.
Each Borrower shall, and shall cause any Subsidiary to, duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or Subsidiary, as the case may be, and with
respect to which adequate reserves have been set aside on its books to the
extent required by GAAP.
9.5. INSURANCE.
Each Borrower shall, and shall cause any Subsidiary to, at all times,
maintain with financially sound and reputable insurers insurance with respect to
the Collateral against loss or damage and all other insurance of the kinds and
in the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be reasonably satisfactory to Agent
as to form, amount and insurer. Borrowers shall furnish certificates, policies
or endorsements to Agent as Agent shall reasonably require as proof of such
insurance, and, if any Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrowers. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
each Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrowers shall cause Agent to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrowers shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by any Borrower or any of its or their Affiliates.
Without limiting any other rights of Agent or Lenders, any insurance proceeds
received by Agent at any time may be applied to payment of the Obligations,
whether or not then due, in any order and in such manner as Agent may determine.
Upon application of such proceeds to the Revolving Loans, Revolving Loans may be
available subject and pursuant to the terms hereof to be used for the costs of
repair or replacement of the Collateral lost or damages resulting in the payment
of such insurance proceeds.
9.6. FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Each Borrower shall, and shall cause any Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
such Borrower and its Subsidiaries in accordance with GAAP. Borrowers shall
promptly furnish to Agent and Lenders all such financial and other information
as Agent shall reasonably request relating to the Collateral and the assets,
business and operations of Borrowers, and Borrower shall notify the auditors and
accountants of Borrowers that Agent is authorized to obtain such information
directly from them. Without limiting the foregoing, Borrowers shall furnish or
cause to be furnished to Agent, the following:
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(i) within thirty (30) days after the end of each fiscal month,
monthly unaudited consolidated financial statements and unaudited consolidating
financial statements (including in each case balance sheets, statements of
income and loss, statements of cash flow, and statements of shareholders'
equity), all in reasonable detail, fairly presenting in all material respects
the financial position and the results of the operations of Parent and its
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Parent, subject to normal year-end
adjustments and accompanied by a compliance certificate substantially in the
form of Exhibit C hereto, along with a schedule in form reasonably satisfactory
to Agent of the calculations used in determining, as of the end of such month,
whether Borrowers were in compliance with the covenants set forth in Sections
9.17 and 9.18 of this Agreement for such month (whether or not such financial
covenants are then currently tested), and
(ii) within ninety (90) days after the end of each fiscal year,
except one hundred (100) days after the end of fiscal year 2005, audited
consolidated financial statements and unaudited consolidating financial
statements of Parent and its Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Parent and its Subsidiaries as of the end of
and for such fiscal year, together with the unqualified opinion of independent
certified public accountants with respect to the audited consolidated financial
statements, which accountants shall be an independent accounting firm selected
by Administrative Borrower and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly in all material respects the results of operations and
financial condition of Parent and its Subsidiaries as of the end of and for the
fiscal year then ended, and
(iii) at such time as available, but in no event later than
thirty (30) days prior to the end of each fiscal year (commencing with the
fiscal year of Borrowers ending June 30, 2006), projected consolidated financial
statements (including in each case, forecasted balance sheets and statements of
income and loss, statements of cash flow, and statements of shareholders'
equity) of Parent and its Subsidiaries for the next fiscal year, all in
reasonable detail, and in a format consistent with the projections delivered by
Borrowers to Agent prior to the date hereof, together with such supporting
information as Agent may reasonably request. Such projected financial statements
shall be prepared on a monthly basis for the next succeeding year. Such
projections shall represent the reasonable best estimate by Borrowers of the
future financial performance of Parent and its Subsidiaries for the periods set
forth therein and shall have been prepared on the basis of the assumptions set
forth therein which Borrowers believe are fair and reasonable as of the date of
preparation in light of current and reasonably foreseeable business conditions
(it being understood that actual results may differ from those set forth in such
projected financial statements). Each year Borrowers shall provide to Agent a
semi-annual update with respect to such projections or at any time a Default or
Event of Default exists or has occurred and is continuing, more frequently as
Agent may require.
(b) Borrowers shall promptly notify Agent in writing of the details of
(i) any loss, damage, investigation, action, suit, proceeding or claim relating
to Collateral having a value
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of more than $300,000 or which if adversely determined would result in a
Material Adverse Effect, (ii) any Material Contract being terminated or amended
or any new Material Contract entered into (in which event Borrowers shall
provide Agent with a copy of such Material Contract), (iii) any order, judgment
or decree in excess of $300,000 shall have been entered against any Borrower or
Guarantor any of its or their properties or assets, (iv) any notification of a
material violation of laws or regulations received by any Borrower that would
likely have a Material Adverse Effect, (v) any ERISA Event, and (vi) the
occurrence of any Default or Event of Default.
(c) Promptly after the sending or filing thereof, Borrowers shall send
to Agent copies of (i) all reports which Parent or any of its Subsidiaries sends
to its security holders generally, (ii) all reports and registration statements
which Parent or any of its Subsidiaries files with the Securities Exchange
Commission, any national or foreign securities exchange or the National
Association of Securities Dealers, Inc., and such other reports as Agent may
hereafter specifically identify to Administrative Borrower that Agent will
require be provided to Agent, (iii) all press releases and (iv) all other
statements concerning material changes or developments in the business of a
Borrower or Guarantor made available by any Borrower to the public.
(d) Borrowers shall furnish or cause to be furnished to Agent such
budgets, forecasts, projections and other information respecting the Collateral
and the business of Borrowers, as Agent may, from time to time, reasonably
request. Subject to the confidentiality requirements hereof, Agent is hereby
authorized to deliver a copy of any financial statement or any other information
relating to the business of Borrowers to any court or other Governmental
Authority or to any Lender or Participant or prospective Lender or Participant
or any Affiliate of any Lender or Participant. Each Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Agent, at
Borrowers' expense, copies of the financial statements of any Borrower and any
reports or management letters prepared by such accountants or auditors on behalf
of any Borrower and to disclose to Agent and Lenders such information as they
may have regarding the business of any Borrower. Any documents, schedules,
invoices or other papers delivered to Agent or any Lender may be destroyed or
otherwise disposed of by Agent or such Lender one (1) year after the same are
delivered to Agent or such Lender, except as otherwise designated by
Administrative Borrower to Agent or such Lender in writing.
9.7. SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC.
Except as otherwise expressly permitted herein, each Borrower shall not,
and shall not permit any Subsidiary to, directly or indirectly,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it except (i) as
expressly permitted by SECTION 9.1(A) hereof and (ii) any Borrower may merge
with and into another Borrower;
(b) sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for
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(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of any Borrower) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market value in excess of $300,000
for all such Equipment disposed of in any fiscal year of Borrowers or as Agent
may otherwise agree, and
(iii) the issuance and sale by any Borrower of Capital Stock of
such Borrower after the date hereof; provided, that, other than with respect to
the issuance or sale of the Capital Stock of Parent on a public exchange (A)
Agent shall have received not less than ten (10) Business Days' prior written
notice of such issuance and sale by such Borrower, which notice shall specify
the parties to whom such shares are to be sold, the terms of such sale, the
total amount which it is anticipated will be realized from the issuance and sale
of such stock and the net cash proceeds which it is anticipated will be received
by such Borrower from such sale, (B) such Borrower or Guarantor shall not be
required to pay any cash dividends or repurchase or redeem such Capital Stock or
make any other payments in respect thereof, except as otherwise permitted in
Section 9.11 hereof, (C) the terms of such Capital Stock, and the terms and
conditions of the purchase and sale thereof, shall not include any terms that
include any limitation on the right of any Borrower to request or receive Loans
or Letters of Credit or the right of any Borrower to amend or modify any of the
terms and conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way relate to or affect the arrangements of Borrowers with
Agent and Lenders or are more restrictive or burdensome to any Borrower than the
terms of any Capital Stock in effect on the date hereof, (D) except as Agent may
otherwise agree in writing, all of the proceeds of the sale and issuance of such
Capital Stock shall be paid to Agent for application to the Obligations in such
order and manner as Agent may determine or at Agent's option, to be held as cash
collateral for the Obligations and (E) as of the date of such issuance and sale
and after giving effect thereto, no Default or Event of Default shall exist or
have occurred,
(iv) the issuance of Capital Stock of any Borrower consisting of
common stock pursuant to an employee stock option or grant or similar equity
plan or 401(k) plans of such Borrower for the benefit of its employees,
directors and consultants, provided, that, in no event shall such Borrower be
required to issue, or shall such Borrower issue, Capital Stock pursuant to such
stock plans or 401(k) plans which would result in a Change of Control or other
Event of Default,
(v) the transfer of Collateral or non-exclusive licenses of
technology and other Intellectual Property between or among Borrowers or from
any Subsidiary to a Borrower;
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
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9.8. ENCUMBRANCES.
Each Borrower shall not, and shall not permit any Subsidiary to, create,
incur, assume or suffer to exist any security interest, mortgage, pledge, lien,
charge or other encumbrance of any nature whatsoever on any of its assets or
properties, including the Collateral, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar notice of any
security interest or lien with respect to any such assets or properties, except:
(a) the security interests and liens of Agent for itself and the
benefit of Agent, Issuing Bank, Lenders and Wachovia (and any Affiliate of
Wachovia) as the provider of any Bank Products and other Secured Parties;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower or Subsidiary, as the case may be and with
respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes to the extent not permitted in subsection (b) above) arising in
the ordinary course of such Borrower's or Subsidiary's business to the extent:
(i) such liens secure Indebtedness which is not overdue or (ii) such liens
secure Indebtedness relating to claims or liabilities which are fully insured
and being defended at the sole cost and expense and at the sole risk of the
insurer or being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower or such Subsidiary, in each case prior to
the commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of such Borrower or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property which may be subject thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any Borrower or Guarantor after
the date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower as of the date hereof;
(g) pledges and deposits of cash by any Borrower after the date hereof
to secure the performance of tenders, bids, leases, trade contracts (other than
for the repayment of Indebtedness), statutory obligations and other similar
obligations in each case in the ordinary course of business consistent with the
current practices of such Borrower as of the date hereof;
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provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights in
or to, or other interest in, any of the Collateral in an agreement, in form and
substance satisfactory to Agent;
(h) liens arising from (i) operating leases and the precautionary UCC
financing statement filings in respect thereof and (ii) equipment or other
materials which are not owned by any Borrower located on the premises of such
Borrower or Guarantor (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and consistent
with current practices of such Borrower or Guarantor and the precautionary UCC
financing statement filings in respect thereof;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto;
(j) liens in existence immediately prior to the date hereof that are
to be satisfied in full and released as a result of the application of
Borrowers' cash per the Disbursement Letter or the proceeds of Revolving Loans
to be made hereunder and the security interests and liens set forth in the
Information Certificate;
(k) liens securing Indebtedness of a Subsidiary of any Borrower to
such Borrower;
(l) liens arising by virtue of the rendition, entry or issuance
against such Borrower or any of its Subsidiaries, or any property of such
Borrower or any of its Subsidiaries, of any judgment, writ, order, or decree for
so long as each such Lien (a) is in existence for less than 20 consecutive days
after it first arises or is being properly contested with adequate reserves
being made therefor and (b) is at all times junior in priority to any liens in
favor of Agent;
(m) normal and customary rights of setoff upon deposits of cash in
favor of banks and other depository institutions, but only to the extent
expressly permitted by a Deposit Account Control Agreement among Borrowers, such
bank and Agent.
9.9. INDEBTEDNESS.
Each Borrower shall not, and shall not permit any Subsidiary to, incur,
create, assume, become or be liable in any manner with respect to, or permit to
exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly), the Indebtedness, performance,
obligations or dividends of any other Person, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including
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Capital Leases) and purchase money mortgages on Real Property not to exceed
$250,000 in the aggregate at any time outstanding so long as such security
interests and mortgages do not apply to any property of such Borrower or
Subsidiary other than the Equipment or Real Property so acquired, and the
Indebtedness secured thereby does not exceed the cost of the Equipment or Real
Property so acquired, as the case may be;
(c) guarantees by any Borrower of the Obligations of the other
Borrowers in favor of Agent for the benefit of Lenders;
(d) the Indebtedness of any Borrower to any other Borrower arising
after the date hereof pursuant to loans by any Borrower permitted under Section
9.10(g) hereof;
(e) unsecured Indebtedness of any Borrower arising after the date
hereof to any third person (but not to any other Borrower), provided, that, each
of the following conditions is satisfied as determined by Agent: (i) such
Indebtedness shall be on terms and conditions acceptable to Agent and shall be
subject and subordinate in right of payment to the right of Agent and Lenders to
receive the prior indefeasible payment and satisfaction in full payment of all
of the Obligations pursuant to the terms of an intercreditor agreement between
Agent and such third party, in form and substance satisfactory to Agent, (ii)
Agent shall have received not less than ten (10) days prior written notice of
the intention of such Borrower to incur such Indebtedness, which notice shall
set forth in reasonable detail satisfactory to Agent the amount of such
Indebtedness, the person or persons to whom such Indebtedness will be owed, the
interest rate, the schedule of repayments and maturity date with respect thereto
and such other information as Agent may request with respect thereto, (iii)
Agent shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such Indebtedness,
(iv) except as Agent may otherwise agree in writing, all of the proceeds of the
loans or other accommodations giving rise to such Indebtedness shall be paid to
Agent for application to the Obligations in such order and manner as Agent may
determine or at Agent's option, to be held as cash collateral for the
Obligations, (v) in no event shall the aggregate principal amount of such
Indebtedness incurred during the term of this Agreement exceed $250,000
(excluding Indebtedness permitted in the other subsections of this Section 9.9
for purposes of this calculation), (vi) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (vii) such Borrower shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
any agreement, document or instrument related thereto, except, that, such
Borrower may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness (except pursuant to
regularly scheduled payments permitted herein), or set aside or otherwise
deposit or invest any sums for such purpose, and (viii) Borrowers shall furnish
to Agent all notices or demands in connection with such Indebtedness either
received by any Borrower or on its behalf promptly after the receipt thereof, or
sent by any Borrower or on its behalf concurrently with the sending thereof, as
the case may be;
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(f) the Indebtedness set forth in the Information Certificate;
provided, that, (i) Borrowers may only make regularly scheduled payments of
principal and interest in respect of such Indebtedness in accordance with the
terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrowers shall not, directly
or indirectly, (A) amend, modify, alter or change the terms of such Indebtedness
or any agreement, document or instrument related thereto as in effect on the
date hereof except, that, Borrowers may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, and (iii)
Borrowers shall furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Borrower or on its behalf, promptly after
the receipt thereof, or sent by any Borrower or on its behalf, concurrently with
the sending thereof, as the case may be;
(g) the Existing Letters of Credit;
(h) accounts payable by a Borrower or any of its Subsidiaries to trade
creditors that are not aged more than 30 days from the due date, in each case
incurred in the ordinary course of business of Borrowers and paid within such
time period; and
(i) investments expressly permitted under Section 9.10 to the extent
(but without duplication) constituting Indebtedness, including any unsecured
guaranty by a Borrower of Indebtedness of a Foreign Subsidiary, but only to the
extent the amount of all such guaranteed obligations incurred, together with all
Foreign Subsidiary Advances made, during the term of this Agreement does not
exceed, in aggregate, $500,000; and
(j) Indebtedness that is not included in any of the preceding
paragraphs of this Section 9.9, is not secured by a Lien and does not exceed at
any time, in the aggregate, the sum of $100,000 as to all Borrowers and all of
their Subsidiaries.
9.10. LOANS, INVESTMENTS, ETC.
Each Borrower shall not, and shall not permit any Subsidiary to, directly
or indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise) or purchase or
repurchase the Capital Stock or Indebtedness or all or a substantial part of the
assets or property of any person, or form or acquire any Subsidiaries, or agree
to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no
Loans are then outstanding and (ii) the terms and conditions of Section 5.2
hereof shall have been satisfied
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with respect to the deposit account, investment account or other account in
which such cash or Cash Equivalents are held;
(c) the existing equity investments of each Borrower as of the date
hereof in its Subsidiaries, provided, that, no Borrower shall have any further
obligations or liabilities to make any capital contributions or other additional
investments or other payments to or in or for the benefit of any of such
Subsidiaries;
(d) loans and advances by any Borrower to employees of such Borrower
not to exceed the principal amount of $100,000 in the aggregate at any time
outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for such Borrower, (ii) reasonable and necessary relocation expenses
of such employees (including home mortgage financing for relocated employees),
and (iii) advances against commissions, not to exceed at any time $100,000 in
the aggregate with respect to all such advances and so long as such advances are
in the ordinary course of Borrowers' business;
(e) stock or obligations issued to any Borrower by any Person (or the
representative of such Person) in respect of Indebtedness of such Person owing
to such Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent's
request, together with such stock power, assignment or endorsement by such
Borrower as Agent may request;
(f) obligations of account debtors to any Borrower or Guarantor
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower; provided, that, promptly upon the
receipt of the original of any such promissory note by such Borrower, such
promissory note shall be endorsed to the order of Agent by such Borrower and
promptly delivered to Agent as so endorsed;
(g) loans by a Borrower to another Borrower after the date hereof,
provided, that,
(i) as to all of such loans, (A) within thirty (30) days after
the end of each fiscal month, Borrowers shall provide to Agent a report in form
and substance satisfactory to Agent of the outstanding amount of such loans as
of the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Agent upon its request to hold as part
of the Collateral, with such endorsement and/or assignment by the payee of such
note or other instrument as Agent may require, (C) as of the date of any such
loan and after giving effect thereto, the Borrower making such loan shall be
Solvent, and (D) as of the date of any such loan and after giving effect
thereto, no Default or Event of Default shall exist or have occurred and be
continuing,
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(ii) as to loans by a Guarantor to a Borrower, (A) the
Indebtedness arising pursuant to such loan shall be subject to, and subordinate
in right of payment to, the right of Agent and Lenders to receive the prior
final payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent, (B) promptly upon Agent's request, Agent shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Borrower to the prior final payment and satisfaction in
full of all of the Obligations, duly authorized, executed and delivered by such
Guarantor and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness prior to the end of the then current term of this Agreement;
(h) the loans and advances set forth in the Information Certificate;
provided, that, as to such loans and advances, Borrowers shall not, directly or
indirectly, amend, modify, alter or change the terms of such loans and advances
or any agreement, document or instrument related thereto and Borrowers shall
furnish to Agent all notices or demands in connection with such loans and
advances either received by any Borrower or on its behalf, promptly after the
receipt thereof, or sent by any Borrower or on its behalf, concurrently with the
sending thereof, as the case may be;
(i) Foreign Subsidiary Advances provided that (a) the amount of
Foreign Subsidiary Advances during the term of this Agreement, together with any
indebtedness of a Foreign Subsidiary that is guaranteed or otherwise incurred by
a Borrower during the term of this Agreement pursuant to Section 9.9(i) hereof,
does not exceed, in aggregate, an amount of $500,000 in the aggregate, (b) at
the time of and immediately after the making of each such Foreign Subsidiary
Advance, Excess Availability is not less than $5,000,000, (c) there exists no
Default or Event of Default at the time of or after giving effect to any such
Foreign Subsidiary Advance, (d) such Foreign Subsidiary Advance is evidenced by
a Foreign Subsidiary Advance Note and (e) such Borrower pledges to Agent each
Foreign Subsidiary Advance Note evidencing the amount of any such Foreign
Subsidiary Advance pursuant to a Note Pledge Agreement and collaterally assigns
to Agent any security agreement or other instrument whereby any such Foreign
Subsidiary has granted to such Borrower a security interest or Lien upon any of
such Foreign Subsidiary's Property as security for any such Foreign Subsidiary
Advance. As a condition precedent to Borrowers' authorization to make any
Foreign Subsidiary Advance, Borrowers shall provide to Lender a certificate from
a "Senior Officer," i.e., chairman of the board of directors, President, Chief
Executive Officer, Chief Financial Officer or Treasurer, stating that all of the
conditions to the making of a Foreign Subsidiary Advance set forth in this
Section 9.10(i) will be satisfied on the date of, and after giving effect to,
such Foreign Subsidiary Advance, specifying the amount of such Foreign
Subsidiary Advance to be made and containing schedules showing the calculations
that support such Senior Officer's certification;
(j) unsecured loans by a Foreign Subsidiary to a Borrower so long as
(i) the Indebtedness arising pursuant to such loan is subject and subordinate in
right of payment to, the right of Agent and Lenders to receive the prior final
payment and satisfaction in full of all of the Obligations on terms and
conditions acceptable to Agent and promptly upon Agent's request, (ii) Agent
shall have received a subordination agreement, in form and substance
satisfactory to Agent, providing for the terms of the subordination in right of
payment of such Indebtedness of
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such Borrower to the prior final payment and satisfaction in full of the
Obligations, duly authorized, executed and delivered by such Borrower and such
Foreign Subsidiary, and (iii) such Borrower shall not, directly or indirectly
make, or be required to make, any payments in respect of such Indebtedness prior
to the end of the then current term of this Agreement; and
(k) extensions of trade credit to customers of Borrowers in the
ordinary course of Borrowers' business.
9.11. DIVIDENDS AND REDEMPTIONS.
Each Borrower shall not, directly or indirectly, declare or pay any
dividends on account of any shares of class of any Capital Stock of such
Borrower now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of Capital Stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration or
apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, except that:
(a) any Borrower may declare and pay such dividends or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
for consideration in the form of shares of common stock (so long as after giving
effect thereto no Change of Control or other Default or Event of Default shall
exist or occur);
(b) Borrowers may pay dividends not to exceed $500,000 in the
aggregate so long as Excess Availability is at least $5,000,000 at the time of
and after giving effect thereto, no Default or Event of Default exists or would
result therefrom and the aggregate amount of all such (i) distributions and
dividends and (ii) advances to Foreign Subsidiaries under Section 9.10(i), does
not exceed $500,000;
(c) any Subsidiary of a Borrower may pay dividends to a Borrower;
(d) Borrowers may repurchase Capital Stock consisting of common stock
held by employees pursuant to any employee stock ownership plan thereof upon the
termination, retirement or death of any such employee in accordance with the
provisions of such plan, provided, that, as to any such repurchase, each of the
following conditions is satisfied: (i) as of the date of the payment for such
repurchase and after giving effect thereto, no Default or Event of Default shall
exist or have occurred and be continuing, (ii) such repurchase shall be paid
with funds legally available therefor, (iii) such repurchase shall not violate
any law or regulation or the terms of any indenture, agreement or undertaking to
which such Borrower is a party or by which such Borrower or its or their
property are bound, and (iv) the aggregate amount of all payments for such
repurchases in any calendar year shall not exceed $25,000.
9.12. TRANSACTIONS WITH AFFILIATES.
Each Borrower shall not, directly or indirectly:
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(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, director or other Affiliate of such
Borrower, except (i) to the extent disclosed on Schedule 9.12 hereto and
existing on the Closing Date, and (ii) in the ordinary course of and pursuant to
the reasonable requirements of such Borrower's business (as the case may be) and
upon fair and reasonable terms no less favorable to such Borrower than such
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person; or
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Borrower other than (i) payment of customary director's
fees and indemnities, (ii) payment of reasonable compensation to officers and
employees for services rendered; and (iii) payments pursuant to the agreements
set forth on Schedule 9.12 as in effect on the date hereof, to the extent not in
violation of any subordination agreement relating thereto.
9.13. COMPLIANCE WITH ERISA.
Each Borrower shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal and State law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) not terminate any Pension Plan so as to incur any material
liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer
to exist any prohibited transaction involving any Plan or any trust created
thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate
to a material tax or other liability on prohibited transactions imposed under
Section 4975 of the Code or ERISA; (e) make all required contributions to any
Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such Pension
Plan; (g) not engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; or (h) not allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any Plan that is a
single employer plan, which termination could result in any material liability
to the Pension Benefit Guaranty Corporation.
9.14. END OF FISCAL YEARS; FISCAL QUARTERS.
Each Borrower shall, for financial reporting purposes, cause its, and each
of its Subsidiaries' (a) fiscal years to end on June 30 of each year and (b)
fiscal quarters to end on September 30, December 31, March 31, and June 30 of
each year.
9.15. CHANGE IN BUSINESS.
Each Borrower shall not engage in any business other than the business of
such Borrower on the date hereof and any business reasonably related, ancillary
or complimentary to the business in which such Borrower is engaged on the date
hereof.
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9.16. LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES.
Each Borrower shall not, directly, or indirectly, create or otherwise cause
or suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower to (a) pay dividends or make other
distributions or pay any Indebtedness owed to such Borrower or any Subsidiary of
such Borrower; (b) make loans or advances to such Borrower or any Subsidiary of
such Borrower, (c) transfer any of its properties or assets to such Borrower or
any Subsidiary of such Borrower; or (d) create, incur, assume or suffer to exist
any lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, other than encumbrances and restrictions arising under (i)
applicable law, (ii) this Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of such
Borrower or any Subsidiary of such Borrower, (iv) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of such Borrower or any Subsidiary of such Borrower, (v) any agreement relating
to permitted Indebtedness incurred by a Subsidiary of such Borrower prior to the
date on which such Subsidiary was acquired by such Borrower and outstanding on
such acquisition date, (vi) encumbrances permitted under Section 9.8 hereof, and
(vii) the extension or continuation of contractual obligations in existence on
the date hereof; provided, that, any such encumbrances or restrictions contained
in such extension or continuation are no less favorable to Agent and Lenders
than those encumbrances and restrictions under or pursuant to the contractual
obligations so extended or continued.
9.17. FIXED CHARGE COVERAGE RATIO.
(a) Subject to subsection (b) of this Section 9.17, as of the end of
each month, Borrowers shall maintain a Fixed Charge Coverage Ratio of not less
than the ratio set forth below for the period applicable thereto:
Period Ratio
------ -----
January 1, 2005 through 1.0 to 1.0
July 31, 2005
January 1, 2005 through 1.0 to 1.0
August 31, 2005
January 1, 2005 through 1.0 to 1.0
September 30, 2005
January 1, 2005 through 1.0 to 1.0
October 31, 2005
January 1, 2005 through 1.0 to 1.0
November 30, 2005
January 1, 2005 through 1.0 to 1.0
December 31, 2005
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Each month thereafter based upon the 1.0 to 1.0
immediately preceding twelve month
period
As used herein, "Fixed Charge Coverage Ratio" means:
(i)EBITDA, divided by
(ii)the sum, without any duplication, of the following: (A) all
payments made in respect of Unfinanced Capital Expenditures in the Applicable
Fiscal Period, (B) cash interest payments paid in the Applicable Fiscal Period
with respect to any Funded Debt (including any subordinated Funded Debt and the
Loans), (C) any dividends and distributions paid in the Applicable Fiscal Period
to a Person other than a Borrower, (D) cash taxes paid in the Applicable Fiscal
Period, (E) any payments made in the Applicable Fiscal Period with respect to
any subordinated debt (including any debt subject to any of the debt
subordination agreements), and (F) the current portion of scheduled principal
amortization on Funded Debt due during the Applicable Fiscal Period.
As used herein:
(i)"EBITDA" means the sum of (A) the aggregate net income of Borrowers
in the Applicable Fiscal Period (computed without regard to any extraordinary
items of gain or loss) plus (B) to the extent deducted from (or included in)
revenue in computing net income of Borrowers for such period, the sum of (1)
interest expense plus (2) income tax expense plus (3) depreciation and
amortization plus (4) extraordinary items (but excluding any items arising from
any foreign currency fluctuations or events) plus (5) non-cash losses plus (or
minus) (6) non-recurring items minus (7) non-cash gains minus (8) earnings from
any Foreign Subsidiary of any Borrower unless cash or Cash Equivalents are
received by Borrowers as distributions from such Foreign Subsidiary;
(ii)"Capital Expenditures" means for any period the aggregate cost of
all capital assets acquired by Borrowers and their Subsidiaries during such
period, as determined in accordance with GAAP;
(iii)"Applicable Fiscal Period" means the applicable period set forth
in the table above;
(iv)"Funded Debt" means (A) debt for borrowed funds, (B) debt for the
deferred payment by one (1) year or more of any purchase money obligation, and
(C) any subordinated debt; and
(v)"Unfinanced Capital Expenditures" means Capital Expenditures that
are funded with proceeds of purchase money Indebtedness permitted pursuant to
Section 9.9(b) and those represented by Capital Leases.
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(b) The financial covenants set forth in subsection (a) of this
Section 9.17 shall be effective only if Excess Availability is, at the close of
business on any Business Day, less than the Financial Covenant Trigger Amount
and, from and after such date, the provisions of subsection (a) of this Section
9.17 shall be effective at all times irrespective of whether Excess Availability
thereafter is equal to or exceeds the Financial Covenant Trigger Amount. Within
1 Business Day after the date on which Excess Availability is less than the
Financial Covenant Trigger Amount, Borrowers shall deliver to Agent a Compliance
Certificate which reflects Borrowers' compliance or non-compliance with the
provisions of Section 9.17. Notwithstanding the foregoing, for purposes of
computing Excess Availability for purposes of this Section 9.17 only, the
Minimum Reserve shall not be deducted as a Reserve.
9.18. EXCESS AVAILABILITY.
If the Minimum Reserve is released, Borrowers shall, at all times, maintain
Excess Availability of not less than $1,000,000.
9.19. LICENSE AGREEMENTS.
(a) Each Borrower shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that could reasonably be expected to result in a
default under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend, waive or release any material
License Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to occur
any of the foregoing; except, that, subject to Section 9.19(b) below, such
Borrower may cancel, surrender or release any material License Agreement in the
ordinary course of the business of such Borrower; provided, that, such Borrower
(as the case may be) shall give Agent not less than thirty (30) days prior
written notice of its intention to so cancel, surrender and release any such
material License Agreement, (iv) give Agent prompt written notice of any
material License Agreement entered into by such Borrower or Guarantor after the
date hereof, together with a true, correct and complete copy thereof and such
other information with respect thereto as Agent may request, (v) give Agent
prompt written notice of any material breach of any obligation, or any default,
by any party under any material License Agreement, and deliver to Agent
(promptly upon the receipt thereof by such Borrower or Guarantor in the case of
a notice to such Borrower or Guarantor and concurrently with the sending thereof
in the case of a notice from such Borrower or Guarantor) a copy of each notice
of default and every other notice and other communication received or delivered
by such Borrower in connection with any material License Agreement which relates
to the right of such Borrower to continue to use the property subject to such
License Agreement, and (vi) furnish to Agent, promptly upon the request of
Agent, such information and evidence as Agent may reasonably require from time
to time concerning the observance, performance and compliance by such Borrower
or the other party or parties thereto with the material terms, covenants or
provisions of any material License Agreement.
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(b) Each Borrower will either exercise any option to renew or extend
the term of each material License Agreement to which it is a party in such
manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
such Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of such Borrower to extend or renew any material
License Agreement to which it is a party, Agent shall have, and is hereby
granted, the irrevocable right and authority, at its option, to renew or extend
the term of such material License Agreement, whether in its own name and behalf,
or in the name and behalf of a designee or nominee of Agent or in the name and
behalf of such Borrower, as Agent shall determine at any time that an Event of
Default shall exist or have occurred and be continuing. Agent may, but shall not
be required to, perform any or all of such obligations of such Borrower under
any of the License Agreements, including, but not limited to, the payment of any
or all sums due from such Borrower thereunder. Any sums so paid by Agent shall
constitute part of the Obligations. As used herein, "Material License Agreement"
means a License Agreement that if terminated, would have a Material Adverse
Effect.
9.20. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
None of the requesting or borrowing of the Loans or the requesting or
issuance, extension or renewal of any Letter of Credit or the use of the
proceeds of any thereof will violate the Trading With the Enemy Act (50 USC
Section 1 et seq., as amended) (the "Trading With the Enemy Act") or any of the
foreign assets control regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) (the "Foreign Assets Control
Regulations") or any enabling legislation or executive order relating thereto
(including, but not limited to (a) Executive order 13224 of September 21, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the "Executive
Order") and (b) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56). None of Borrowers or any of their Subsidiaries or other Affiliates is
or will become a "blocked person" as described in the Executive Order, the
Trading with the Enemy Act or the Foreign Assets Control Regulations or engages
or will engage in any dealings or transactions, or be otherwise associated, with
any such "blocked person".
9.21. AFTER ACQUIRED REAL PROPERTY.
If any Borrower hereafter acquires any Real Property, fixtures or any other
property that is of the kind or nature described in the Mortgages and such Real
Property, fixtures or other property is adjacent to, contiguous with or
necessary or related to or used in connection with any Real Property then
subject to a Mortgage, or if such Real Property is not adjacent to, contiguous
with or related to or used in connection with such Real Property, then if such
Real Property, fixtures or other property at any location (or series of
adjacent, contiguous or related locations, and regardless of the number of
parcels) has a fair market value in an amount equal to or greater than $300,000
(or if a Default or Event of Default exists, then regardless of the fair market
value of such assets), without limiting any other rights of Agent or any Lender,
or duties or obligations
84
of any Borrower, promptly upon Agent's request, such Borrower shall execute and
deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent may
determine, in form and substance substantially similar to the Mortgages and as
to any provisions relating to specific state laws satisfactory to Agent and in
form appropriate for recording in the real estate records of the jurisdiction in
which such Real Property or other property is located granting to Agent a first
and only lien and mortgage on and security interest in such Real Property,
fixtures or other property (except as such Borrower would otherwise be permitted
to incur hereunder or under the Mortgages or as otherwise consented to in
writing by Agent) and such other agreements, documents and instruments as Agent
may require in connection therewith.
9.22. COSTS AND EXPENSES.
Borrowers shall pay to Agent on demand all costs, expenses, filing fees and
taxes paid or payable in connection with the preparation, negotiation,
execution, delivery, recording, syndication, administration, collection,
liquidation, enforcement and defense of the Obligations, Agent's rights in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, environmental audits, title insurance premiums,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees, background checks, costs and expenses of remitting loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
the Blocked Accounts, together with Agent's customary charges and fees with
respect thereto; (c) charges, fees or expenses charged by any Issuing Bank in
connection with any Letter of Credit; (d) costs and expenses of preserving and
protecting the Collateral; (e) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Agent, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent or any
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Agent during the course of periodic field examinations of the
Collateral and such Borrower's operations, plus a per diem charge at Agent's
then standard rate for Agent's examiners in the field and office (which rate as
of the date hereof is $850 per person per day); and (g) the fees and
disbursements of counsel (including legal assistants) to Agent in connection
with any of the foregoing.
9.23. DEPOSITORY RELATIONSHIPS.
Borrowers shall maintain their primary depository and disbursing accounts
at Wachovia on terms and conditions satisfactory to Wachovia in all respects.
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9.24. FURTHER ASSURANCES.
At the request of Agent at any time and from time to time, Borrowers shall,
at their expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or cause
to be done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Agent may at any time and
from time to time request a certificate from an officer of any Borrower
representing that all conditions precedent to the making of Loans and providing
Letters of Credit contained herein are satisfied. In the event of such request
by Agent, Agent and Lenders may, at Agent's option, cease to make any further
Loans or provide any further Letters of Credit until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1. EVENTS OF DEFAULT.
The occurrence or existence of any one or more of the following events are
referred to herein individually as an "Event of Default", and collectively as
"Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations when due or
(ii) any Borrower fails to perform any of the covenants contained in Sections
9.3, 9.4, 9.13, 9.15 and 9.16 of this Agreement and such failure shall continue
for fifteen (15) days; provided, that, such fifteen (15) day period shall not
apply in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such ten (10) day period or which has
been the subject of a prior failure within a six (6) month period or (B) an
intentional breach by any Borrower of any such covenant or (iii) any Borrower
fails to perform any of the terms, covenants, conditions or provisions contained
in this Agreement or any of the other Financing Agreements other than those
described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements
or any other written agreement, schedule, confirmatory assignment or otherwise
shall when made or deemed made be false or misleading in any material respect;
(c) any Guarantor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Guarantor in excess of $300,000 in any one case or in excess of
$300,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the
86
payment of money, or injunction, attachment, garnishment or execution is
rendered against any Borrower or Guarantor or any of the Collateral having a
value in excess of $300,000;
(e) any Guarantor (being a natural person or a general partner of an
Guarantor which is a partnership) dies or any Borrower or Guarantor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or Guarantor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Guarantor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or any Borrower or Guarantor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Guarantor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of any Borrower or
Guarantor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $200,000, which default continues for more than
the applicable cure period, if any, with respect thereto or any default by any
Borrower or Guarantor under any Material Contract, which default is reasonably
expected to have a Material Adverse Effect if adversely determined to a Borrower
or a Guarantor and continues for more than the applicable cure period, if any,
with respect thereto and/or is not waived in writing by the other parties
thereto;
(j) any material provision hereof or of any of the other Financing
Agreements shall for any reason cease to be valid, binding and enforceable with
respect to any party hereto or thereto (other than Agent) in accordance with its
terms, or any such party shall challenge the enforceability hereof or thereof,
or shall assert in writing, or take any action or fail to take any action based
on the assertion that any provision hereof or of any of the other Financing
Agreements has ceased to be or is otherwise not valid, binding or enforceable in
accordance with its terms, or any security interest provided for herein or in
any of the other Financing Agreements shall cease to be a valid and perfected
first priority security interest in any of the Collateral purported to be
subject thereto (except as otherwise permitted herein or therein);
87
(k) an ERISA Event shall occur which results in or could reasonably be
expected to result in liability of any Borrower in an aggregate amount in excess
of $200,000;
(l) any Change of Control (except to the extent expressly permitted
under SECTION 9.1(A) hereof);
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Borrower or Guarantor of which any Borrower,
Guarantor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against such Borrower
or Guarantor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $300,000 or (ii) any other property of any Borrower or
Guarantor which is necessary or material to the conduct of its business;
(n) there shall be a material adverse change in the business, assets
or prospects of any Borrower or Guarantor after the date hereof having a
Material Adverse Effect; or
(o) there shall be an event of default under any of the other
Financing Agreements.
10.2. REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Borrower or Guarantor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Borrower or Guarantor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Borrower or Guarantor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the generality of the foregoing, at any time an
Event of Default exists or has occurred and is continuing, Agent may, at its
option and shall upon the direction of the Required Lenders, (i) upon notice to
Administrative Borrower, accelerate the payment of all Obligations and demand
immediate payment thereof to Agent for itself and the benefit of Lenders
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and
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payable), and (ii) terminate the Commitments whereupon the obligation of each
Lender to make any Loan and Issuing Bank to issue any Letter of Credit shall
immediately terminate (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), the Commitments and any other
obligation of the Agent or a Lender hereunder shall automatically terminate).
(c) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion (i) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (ii) require any Borrower or Guarantor, at Borrowers'
expense, to assemble and make available to Agent any part or all of the
Collateral at any place and time designated by Agent, (iii) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (iv)
remove any or all of the Collateral from any premises on or in which the same
may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering into
contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Agent or elsewhere) at such prices or terms as
Agent may deem reasonable, for cash, upon credit or for future delivery, with
the Agent having the right to purchase the whole or any part of the Collateral
at any such public sale, all of the foregoing being free from any right or
equity of redemption of any Borrower or Guarantor, which right or equity of
redemption is hereby expressly waived and released by Borrowers and Guarantors
and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased
by Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent. If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Administrative Borrower designating the time and place
of any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrowers and Guarantors waive any other notice. In the event Agent
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, each Borrower and Guarantor waives the
posting of any bond which might otherwise be required. At any time an Event of
Default exists or has occurred and is continuing, upon Agent's request,
Borrowers will either, as Agent shall specify, furnish cash collateral to
Issuing Bank to be used to secure and fund the reimbursement obligations to
Issuing Bank in connection with any Letter of Credit Obligations or furnish cash
collateral to Agent for the Letter of Credit Obligations. Such cash collateral
shall be in the amount equal to one hundred five (105%) percent of the amount of
the Letter of Credit Obligations plus the amount of any fees and expenses
payable in connection therewith through the end of the latest expiration date of
the Letters of Credit giving rise to such Letter of Credit Obligations.
(d) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, enforce the rights of
any Borrower or Guarantor against any account debtor, secondary obligor or other
obligor in respect of any of the Accounts or other Receivables. Without limiting
the generality of the foregoing, Agent may, in its discretion, at such time or
times (i) notify any or all account debtors, secondary obligors or other
obligors in respect thereof that the Receivables have been assigned to Agent and
that Agent has a security
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interest therein and Agent may direct any or all account debtors, secondary
obligors and other obligors to make payment of Receivables directly to Agent,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any secondary obligors or
other obligors in respect thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Agent and Lenders shall not be
liable for any failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrowers and Guarantors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Borrowers shall, upon Agent's request, hold the
returned Inventory in trust for Agent, segregate all returned Inventory from all
of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(e) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Borrower acknowledges and agrees that it
is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Borrower or Guarantor, for
expressions of interest in acquiring all or any portion of the Collateral, (vii)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing Internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, (xi) to purchase insurance or credit enhancements to
insure Agent or Lenders against risks of loss, collection or disposition of
Collateral or to provide to Agent or Lenders a
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guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Agent in the
collection or disposition of any of the Collateral. Each Borrower and Guarantor
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Agent or any Lender would not be
commercially unreasonable in the exercise by Agent or any Lender of remedies
against the Collateral and that other actions or omissions by Agent or any
Lender shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section. Without limitation of the foregoing, nothing
contained in this Section shall be construed to grant any rights to any Borrower
or Guarantor or to impose any duties on Agent or Lenders that would not have
been granted or imposed by this Agreement or by applicable law in the absence of
this Section.
(f) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Borrower hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to any Borrower, to
use, assign, license or sublicense any of the trademarks, service-marks, trade
names, business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by any Borrower, wherever the same maybe located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof.
(g) At any time an Event of Default exists or has occurred and is
continuing, Agent may apply the cash proceeds of Collateral actually received by
Agent from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in accordance with the
terms hereof, whether or not then due or may hold such proceeds as cash
collateral for the Obligations. Borrowers and Guarantors shall remain liable to
Agent and Lenders for the payment of any deficiency with interest at the highest
rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and expenses.
(h) Without limiting the foregoing, upon the occurrence of a Default
or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon
the occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
Letters of Credit or reduce the lending formulas or amounts of Loans and Letters
of Credit available to Borrowers and/or (B) terminate any provision of this
Agreement providing for any future Loans to be made by Agent and Lenders or
Letters of Credit to be issued by Issuing Bank and (ii) Agent may, at its
option, establish such Reserves as Agent determines, without limitation or
restriction, notwithstanding anything to the contrary contained herein.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1. GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements (except as otherwise provided therein) and any
dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of Georgia but excluding any principles of conflicts of law or other
rule of law that would cause the application of the law of any jurisdiction
other than the laws of the State of Georgia.
(b) Borrowers, Agent, Lenders and Issuing Bank irrevocably consent and
submit to the non-exclusive jurisdiction of the Superior Court of Xxxx County,
Georgia and the United States District Court for the Northern District of
Georgia, whichever Agent may elect, and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Financing Agreements or in any way connected
with or related or incidental to the dealings of the parties hereto in respect
of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against any Borrower or Guarantor or its or their property
in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against any Borrower or Guarantor or its or their property).
(c) Personal service upon all Borrowers may be made by service of
process upon Administrative Borrower in accordance with applicable law and
Parent and Magna each consent that all additional service of process may be made
by certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent's option,
by service upon any Borrower (or Administrative Borrower on behalf of such
Borrower) in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, such Borrower shall appear in answer
to such process, failing which such Borrower shall be deemed in default and
judgment may be entered by Agent against such Borrower for the amount of the
claim and other relief requested.
(d) TO THE FULL EXTENT PERMITTED BY LAW, BORROWERS, AGENT, LENDERS AND
ISSUING BANK EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
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WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, AGENT, LENDERS AND
ISSUING BANK EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
BORROWER, AGENT, ANY LENDER OR ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF
A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent, Lenders and Issuing Bank shall not have any liability to
any Borrower (whether in tort, contract, equity or otherwise) for losses
suffered by such Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent, such Lender and Issuing Bank, that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such
litigation, Agent, Lenders and Issuing Bank shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement. Each
Borrower: (i) certifies that neither Agent, any Lender, Issuing Bank nor any
representative, agent or attorney acting for or on behalf of Agent, any Lender
or Issuing Bank has represented, expressly or otherwise, that Agent, Lenders and
Issuing Bank would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent, Lenders and Issuing Bank are relying upon, among
other things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.
11.2. WAIVER OF NOTICES.
Each Borrower hereby expressly waives demand, presentment, protest and
notice of protest and notice of dishonor with respect to any and all instruments
and chattel paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind or nature
whatsoever with respect to the Obligations, the Collateral and this Agreement,
except such as are expressly provided for herein. No notice to or demand on any
Borrower which Agent or any Lender may elect to give shall entitle such Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
11.3. AMENDMENTS AND WAIVERS.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders or at Agent's option, by Agent with the authorization
or consent of the Required Lenders, and as to amendments to any of the Financing
Agreements (other than with respect to any provision of Section 12 hereof), by
any Borrower and such amendment, waiver, discharger or termination shall be
effective and binding as to all Lenders and Issuing Bank only in the specific
instance and
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for the specific purpose for which given; except, that, no such amendment,
waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal amount of any
Loan or Letters of Credit, in each case without the consent of each Lender
directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof), without the consent of Agent
and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, without the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Borrower or
Guarantor of any of their rights and obligations under this Agreement, without
the consent of Agent and all of Lenders,
(vi) amend, modify or waive any terms of this Section 11.3
hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base or increase the Inventory Loan Limit or the Letter of Credit
Limit, without the consent of Agent and all of Lenders.
(b) Agent, Lenders and Issuing Bank shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
or their rights, powers and/or remedies unless such waiver shall be in writing
and signed as provided herein. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Agent, any Lender or Issuing
Bank of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Agent, any Lender or Issuing Bank would otherwise have on any future occasion,
whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a "Non-Consenting Lender"), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Wachovia shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Wachovia of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Wachovia or such Eligible Transferee as Wachovia may specify, the Commitment of
such Non-Consenting Lender and all rights and
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interests of such Non-Consenting Lender pursuant thereto. Wachovia shall provide
the Non-Consenting Lender with prior written notice of its intent to exercise
its right under this Section, which notice shall specify on date on which such
purchase and sale shall occur. Such purchase and sale shall be pursuant to the
terms of an Assignment and Acceptance (whether or not executed by the
Non-Consenting Lender), except that on the date of such purchase and sale,
Wachovia, or such Eligible Transferee specified by Wachovia, shall pay to the
Non-Consenting Lender (except as Wachovia and such Non-Consenting Lender may
otherwise agree) the amount equal to: (i) the principal balance of the Loans
held by the Non-Consenting Lender outstanding as of the close of business on the
business day immediately preceding the effective date of such purchase and sale,
plus (ii) amounts accrued and unpaid in respect of interest and fees payable to
the Non-Consenting Lender to the effective date of the purchase (but in no event
shall the Non-Consenting Lender be deemed entitled to any early termination
fee), minus (iii) the amount of the closing fee received by the Non-Consenting
Lender pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.
(d) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3. The consent of Issuing Bank shall be required for any amendment,
waiver or consent affecting the rights or duties of Issuing Bank hereunder or
under any of the other Financing Agreements, in addition to the consent of the
Lenders otherwise required by this Section, provided, that, the consent of
Issuing Bank shall not be required for any other amendments, waivers or
consents. Notwithstanding anything to the contrary contained in Section 11.3(a)
above, (i) in the event that Agent shall agree that any items otherwise required
to be delivered to Agent as a condition of the initial Loans and Letters of
Credit hereunder may be delivered after the date hereof, Agent may, in its
discretion, agree to extend the date for delivery of such items or take such
other action as Agent may deem appropriate as a result of the failure to receive
such items as Agent may determine or may waive any Event of Default as a result
of the failure to receive such items, in each case without the consent of any
Lender and (ii) Agent may consent to any change in the type of organization,
jurisdiction of organization or other legal structure of any Borrower, Guarantor
or any of their Subsidiaries and amend the terms hereof or of any of the other
Financing Agreements as may be necessary or desirable to reflect any such
change, in each case without the approval of any Lender.
11.4. WAIVER OF COUNTERCLAIMS.
Each Borrower waives all rights to interpose any claims, deductions,
setoffs or counterclaims of any nature (other than compulsory counterclaims) in
any action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.
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11.5. INDEMNIFICATION.
Each Borrower shall, jointly and severally, indemnify and hold Agent, each
Lender and Issuing Bank, and their respective officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an "Indemnitee"), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including attorneys' fees and
expenses) imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except that Borrowers shall not have any obligation under this Section
11.5 to indemnify an Indemnitee with respect to a matter covered hereby
resulting from the gross negligence or willful misconduct of such Indemnitee as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction (but without limiting the obligations of Borrowers or Guarantors as
to any other Indemnitee). To the extent that the undertaking to indemnify, pay
and hold harmless set forth in this Section may be unenforceable because it
violates any law or public policy, Borrowers shall pay the maximum portion which
it is permitted to pay under applicable law to Agent and Lenders in satisfaction
of indemnified matters under this Section. To the extent permitted by applicable
law, no Borrower or Guarantor shall assert, and each Borrower hereby waives, any
claim against any Indemnitee, on any theory of liability for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any of
the other Financing Agreements or any undertaking or transaction contemplated
hereby. No Indemnitee referred to above shall be liable for any damages arising
from the use by unintended recipients of any information or other materials
distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or any of the other
Financing Agreements or the transaction contemplated hereby or thereby. All
amounts due under this Section shall be payable upon demand. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1. APPOINTMENT, POWERS AND IMMUNITIES.
Each Lender and Issuing Bank irrevocably designates, appoints and
authorizes Wachovia to act as Agent hereunder and under the other Financing
Agreements with such powers as are specifically delegated to Agent by the terms
of this Agreement and of the other Financing Agreements, together with such
other powers as are reasonably incidental thereto. Agent (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Financing Agreements, and shall not by reason of this Agreement
or any other Financing Agreement be a trustee or fiduciary for any Lender; (b)
shall not be responsible to Lenders for any recitals, statements,
representations or warranties contained in this Agreement or in any of the other
Financing Agreements, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Financing
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Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing Agreement
or any other document referred to or provided for herein or therein or for any
failure by any Borrower or any Guarantor or any other Person to perform any of
its obligations hereunder or thereunder; and (c) shall not be responsible to
Lenders for any action taken or omitted to be taken by it hereunder or under any
other Financing Agreement or under any other document or instrument referred to
or provided for herein or therein or in connection herewith or therewith, except
for its own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Agent may employ
agents and attorneys in fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys in fact selected by it in good faith.
Agent may deem and treat the payee of any note as the holder thereof for all
purposes hereof unless and until the assignment thereof pursuant to an agreement
(if and to the extent permitted herein) in form and substance satisfactory to
Agent shall have been delivered to and acknowledged by Agent.
12.2. RELIANCE BY AGENT.
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telecopy, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel, independent accountants and other experts selected by Agent.
As to any matters not expressly provided for by this Agreement or any other
Financing Agreement, Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of Lenders as is required in
such circumstance, and such instructions of such Agents and any action taken or
failure to act pursuant thereto shall be binding on all Lenders.
12.3. EVENTS OF DEFAULT.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or an Event of Default or other failure of a condition
precedent to the Loans and Letters of Credit hereunder, unless and until Agent
has received written notice from a Lender, or Borrower specifying such Event of
Default or any unfulfilled condition precedent, and stating that such notice is
a "Notice of Default or Failure of Condition". In the event that Agent receives
such a Notice of Default or Failure of Condition, Agent shall give prompt notice
thereof to the Lenders. Agent shall (subject to Section 12.7) take such action
with respect to any such Event of Default or failure of condition precedent as
shall be directed by the Required Lenders to the extent provided for herein;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to or by reason of such Event of Default or
failure of condition precedent, as it shall deem advisable in the best interest
of Lenders. Without limiting the foregoing, and notwithstanding the existence or
occurrence and continuance of an Event of Default or any other failure to
satisfy any of the conditions precedent set forth in Section 4 of this Agreement
to the contrary, unless and until otherwise directed by the Required Lenders,
Agent may, but shall have no obligation to, continue to make Loans and Issuing
Bank may, but shall have no obligation to,
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issue or cause to be issued any Letter of Credit for the ratable account and
risk of Lenders from time to time if Agent believes making such Loans or issuing
or causing to be issued such Letter of Credit is in the best interests of
Lenders.
(b) Except with the prior written consent of Agent, no Lender or
Issuing Bank may assert or exercise any enforcement right or remedy in respect
of the Loans, Letter of Credit Obligations or other Obligations, as against any
Borrower or Guarantor or any of the Collateral or other property of any Borrower
or Guarantor.
12.4. WACHOVIA IN ITS INDIVIDUAL CAPACITY.
With respect to its Commitment and the Loans made and Letters of
Credit issued or caused to be issued by it (and any successor acting as Agent),
so long as Wachovia shall be a Lender hereunder, it shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting as Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include Wachovia in its individual capacity as
Lender hereunder. Wachovia (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business with Borrowers
(and any of its Subsidiaries or Affiliates) as if it were not acting as Agent,
and Wachovia and its Affiliates may accept fees and other consideration from any
Borrower or Guarantor and any of its Subsidiaries and Affiliates for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5. INDEMNIFICATION.
Lenders agree to indemnify Agent and Issuing Bank (to the extent not
reimbursed by Borrowers hereunder and without limiting any obligations of
Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any
and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, no Lender shall be
liable for any of the foregoing to the extent it arises from the gross
negligence or willful misconduct of the party to be indemnified as determined by
a final non-appealable judgment of a court of competent jurisdiction. The
foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
12.6. NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on Agent
or other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrowers and Guarantors and has
made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other Lender,
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and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements. Agent
shall not be required to keep itself informed as to the performance or
observance by any Borrower or Guarantor of any term or provision of this
Agreement or any of the other Financing Agreements or any other document
referred to or provided for herein or therein or to inspect the properties or
books of any Borrower or Guarantor. Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or Guarantor
which is required to be provided to Lenders or deemed to be requested by Lenders
hereunder and with a copy of any Notice of Default or Failure of Condition
received by Agent from any Borrower or any Lender; provided, that, Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Agent or deemed requested by
Lenders hereunder, Agent shall not have any duty or responsibility to provide
any Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Guarantor that may come into
the possession of Agent.
12.7. FAILURE TO ACT.
Except for action expressly required of Agent hereunder and under the other
Financing Agreements, Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from Lenders of their indemnification obligations
under Section 12.5 hereof against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.
12.8. ADDITIONAL LOANS.
Agent shall not make any Revolving Loans or Issuing Bank provide any Letter
of Credit to any Borrower on behalf of Lenders intentionally and with actual
knowledge that such Revolving Loans or Letter of Credit would cause the
aggregate amount of the total outstanding Revolving Loans and Letters of Credit
to such Borrower to exceed the Borrowing Base of such Borrower, without the
prior consent of all Lenders, except, that, Agent may make such additional
Revolving Loans or Issuing Bank may provide such additional Letter of Credit on
behalf of Lenders, intentionally and with actual knowledge that such Revolving
Loans or Letter of Credit will cause the total outstanding Revolving Loans and
Letters of Credit to such Borrower to exceed the Borrowing Base of such
Borrower, as Agent may deem necessary or advisable in its discretion, provided,
that: (a) the total principal amount of the additional Revolving Loans or
additional Letters of Credit to any Borrower which Agent may make or provide
after obtaining such actual knowledge that the aggregate principal amount of the
Revolving Loans equal or exceed the Borrowing Bases of Borrowers, plus the
amount of Special Agent Advances made pursuant to Section 12.11(a)(ii) hereof
then outstanding, shall not exceed the aggregate amount equal to $2,000,000 and
shall not cause the total principal amount of the Loans and Letters of Credit to
exceed the Maximum Credit and (b) no such additional Revolving Loan or Letter of
Credit shall be outstanding more than ninety (90) days after the date such
additional Revolving Loan or Letter of Credit is made or issued (as the case may
be), except as the Required Lenders
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may otherwise agree. Each Lender shall be obligated to pay Agent the amount of
its Pro Rata Share of any such additional Revolving Loans or Letters of Credit.
12.9. CONCERNING THE COLLATERAL AND THE RELATED FINANCING AGREEMENTS.
Each Lender authorizes and directs Agent to enter into this Agreement and
the other Financing Agreements. Each Lender agrees that any action taken by
Agent or Required Lenders in accordance with the terms of this Agreement or the
other Financing Agreements and the exercise by Agent or Required Lenders of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
12.10. FIELD AUDIT, EXAMINATION REPORTS AND OTHER INFORMATION; DISCLAIMER
BY LENDERS.
By signing 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 and report with respect to the Borrowing Base prepared or received by
Agent (each field audit or examination report and report with respect to the
Borrowing Base being referred to herein as a "Report" and collectively,
"Reports"), appraisals with respect to the Collateral and financial statements
with respect to Parent and its Subsidiaries received by Agent;
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, appraisal or
financial statement or (ii) shall not be liable for any information contained in
any Report, appraisal or financial statement;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding
Borrowers and Guarantors and will rely significantly upon Borrowers' and
Guarantors' books and records, as well as on representations of Borrowers' and
Guarantors' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.
12.11. COLLATERAL MATTERS.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letters of Credit
hereunder, make such disbursements and advances ("Special Agent Advances") which
Agent, in its sole discretion, (i) deems necessary or desirable either to
preserve or protect the Collateral or any portion thereof or (ii) to enhance the
likelihood or maximize the amount of repayment by Borrowers and Guarantors of
the Loans and
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other Obligations, provided, that, (A) the aggregate principal amount of the
Special Agent Advances pursuant to this clause (ii) outstanding at any time,
plus the then outstanding principal amount of the additional Loans and Letters
of Credit which Agent may make or provide as set forth in Section 12.8 hereof,
shall not exceed the amount equal to $2,000,000 and (B) the aggregate principal
amount of the Special Agent Advances pursuant to this clause (ii) outstanding at
any time, plus the then outstanding principal amount of the Loans, shall not
exceed the Maximum Credit, except at Agent's option, provided, that, to the
extent that the aggregate principal amount of Special Agent Advances plus the
then outstanding principal amount of the Loans exceed the Maximum Credit the
Special Agent Advances that are in excess of the Maximum Credit shall be for the
sole account and risk of Agent and notwithstanding anything to the contrary set
forth below, no Lender shall have any obligation to provide its share of such
Special Agent Advances in excess of the Maximum Credit, or (iii) to pay any
other amount chargeable to any Borrower or Guarantor pursuant to the terms of
this Agreement or any of the other Financing Agreements consisting of (A) costs,
fees and expenses and (B) payments to Issuing Bank in respect of any Letter of
Credit Obligations. The Special Agent Advances shall be repayable on demand and
together with all interest thereon shall constitute Obligations secured by the
Collateral. Special Agent Advances shall not constitute Loans but shall
otherwise constitute Obligations hereunder. Interest on Special Agent Advances
shall be payable at the Interest Rate then applicable to Prime Rate Loans and
shall be payable on demand. Without limitation of its obligations pursuant to
Section 6.11, each Lender agrees that it shall make available to Agent, upon
Agent's demand, in immediately available funds, the amount equal to such
Lender's Pro Rata Share of each such Special Agent Advance. If such funds are
not made available to Agent by such Lender, such Lender shall be deemed a
Defaulting Lender and Agent shall be entitled to recover such funds, on demand
from such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to Agent at the Federal Funds
Rate for each day during such period (as published by the Federal Reserve Bank
of New York or at Agent's option based on the arithmetic mean determined by
Agent of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of the three leading
brokers of Federal funds transactions in New York City selected by Agent) and if
such amounts are not paid within three (3) days of Agent's demand, at the
highest Interest Rate provided for in Section 3.1 hereof applicable to Prime
Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and delivery of cash collateral to the
extent required under Section 13.1 below, or (ii) constituting property being
sold or disposed of if Administrative Borrower or any Borrower or Guarantor
certifies to Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Agent may rely conclusively on any such certificate,
without further inquiry), or (iii) constituting property in which any Borrower
or Guarantor did not own an interest at the time the security interest, mortgage
or lien was granted or at any time thereafter, or (iv) having a value in the
aggregate in any twelve (12) month period of less than $250,000, and to the
extent Agent may release its security interest in and lien upon any such
Collateral pursuant to the sale or other disposition thereof, such sale or other
disposition shall be deemed consented to by Lenders, or
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(v) if required or permitted under the terms of any of the other Financing
Agreements, including any intercreditor agreement, or (vi) approved, authorized
or ratified in writing by all of Lenders. Except as provided above, Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders. Upon
request by Agent at any time, Lenders will promptly confirm in writing Agent's
authority to release particular types or items of Collateral pursuant to this
Section. In no event shall the consent or approval of Issuing Bank to any
release of Collateral be required.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Borrower or
Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.
(d) Agent shall have no obligation whatsoever to any Lender, Issuing
Bank or any other Person to investigate, confirm or assure that the Collateral
exists or is owned by any Borrower or Guarantor or is cared for, protected or
insured or has been encumbered, or that any particular items of Collateral meet
the eligibility criteria applicable in respect of the Loans or Letters of Credit
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise 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 in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the other terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
the Collateral as a Lender and that Agent shall have no duty or liability
whatsoever to any other Lender or Issuing Bank.
12.12. AGENCY FOR PERFECTION.
Each Lender and Issuing Bank hereby appoints Agent and each other Lender
and Issuing Bank as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender and
Issuing Bank hereby acknowledges that it holds possession of any such Collateral
for the benefit of Agent as secured party. Should any Lender or Issuing Bank
obtain possession of any such Collateral, such
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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.
12.13. SUCCESSOR AGENT.
Agent may resign as Agent upon thirty (30) days' notice to Lenders and
Parent. If Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for Lenders. If no successor
agent is appointed prior to the effective date of the resignation of Agent,
Agent may appoint, after consulting with Lenders and Parent, a successor agent
from among Lenders. Upon the acceptance by the Lender so selected of its
appointment as successor agent hereunder, such successor agent shall succeed to
all of the rights, powers and duties of the retiring Agent and the term "Agent"
as used herein and in the other Financing Agreements 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 12 shall inure to its benefit as to any actions taken
or omitted by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is thirty (30) days after
the date of a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nonetheless thereupon become effective and Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
12.14. OTHER AGENT DESIGNATIONS.
Agent may at any time and from time to time determine that a Lender may, in
addition, be a "Co-Agent", "Syndication Agent", "Documentation Agent" or similar
designation hereunder and enter into an agreement with such Lender to have it so
identified for purposes of this Agreement. Any such designation shall be
effective upon written notice by Agent to Administrative Borrower of any such
designation. Any Lender that is so designated as a Co-Agent, Syndication Agent,
Documentation Agent or such similar designation by Agent shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or any
of the other Financing Agreements other than those applicable to all Lenders as
such. Without limiting the foregoing, the Lenders so identified shall not have
or be deemed to have any fiduciary relationship with any Lender and no Lender
shall be deemed to have relied, nor shall any Lender rely, on a Lender so
identified as a Co-Agent, Syndication Agent, Documentation Agent or such similar
designation in deciding to enter into this Agreement or in taking or not taking
action hereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1. TERM.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Agent may, at its option (or
shall at the direction of any Lender in writing received by Agent at least
ninety (90)
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days prior to the Renewal Date or the anniversary of any Renewal Date, as the
case may be), terminate this Agreement and the other Financing Agreements, or
Administrative Borrower or any Borrower may terminate this Agreement and the
other Financing Agreements, each case, effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the other party at
least sixty (60) days prior written notice; provided, that, this Agreement and
all other Financing Agreements must be terminated simultaneously. In addition,
Borrowers may terminate this Agreement at any time upon ten (10) days prior
written notice to Agent (which notice shall be irrevocable) and Agent may, at
its option, and shall at the direction of Required Lenders, terminate this
Agreement at any time on or after an Event of Default. Upon the Renewal Date or
any other effective date of termination of the Financing Agreements, Borrowers
shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash
collateral to Agent (or at Agent's option, a letter of credit issued for the
account of Borrowers and at Borrowers' expense, in form and substance
satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as
beneficiary) in such amounts as Agent determines are reasonably necessary to
secure Agent, Lenders and Issuing Bank from loss, cost, damage or expense,
including attorneys' fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Obligations and
checks or other payments provisionally credited to the Obligations and/or as to
which Agent or any Lender has not yet received final and indefeasible payment
and any continuing obligations of Agent or any Lender pursuant to any Deposit
Account Control Agreement. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Obligations shall be
in the amount equal to one hundred five (105%) percent of the amount of the
Letter of Credit Obligations plus the amount of any fees and expenses payable in
connection therewith through the end of the latest expiration date of the
Letters of Credit giving rise to such Letter of Credit Obligations. Such
payments in respect of the Obligations and cash collateral shall be remitted by
wire transfer in Federal funds to the Agent Payment Account or such other bank
account of Agent, as Agent may, in its discretion, designate in writing to
Administrative Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
Agent Payment Account or other bank account designated by Agent are received in
such bank account later than 12:00 noon, Atlanta, Georgia time.
(b) No termination of the Commitments, this Agreement or any of the
other Financing Agreements shall relieve or discharge any Borrower or Guarantor
of its respective duties, obligations and covenants under this Agreement or any
of the other Financing Agreements until all Obligations have been fully and
finally discharged and paid, and Agent's continuing security interest in the
Collateral and the rights and remedies of Agent and Lenders hereunder, under the
other Financing Agreements and applicable law, shall remain in effect until all
such Obligations have been fully and finally discharged and paid. Accordingly,
each Borrower and Guarantor waives any rights it may have under the UCC to
demand the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to Borrowers or
Guarantors, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid and satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the
Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual
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agreement of the parties as to a reasonable calculation of Agent's and each
Lender's lost profits as a result thereof, Borrowers agree to pay to Agent, for
the benefit of Lenders, upon the effective date of such termination, an early
termination fee in the amount equal to
Amount Period
------ ------
(i) 1.0% of Maximum Credit From the date hereof to and including the first
anniversary of the date hereof
(ii) .50% of Maximum Credit From and after the first anniversary of the date
hereof to and including the second anniversary of
the date hereof
(iii) 0.00% ($-0-) After the second anniversary of the date hereof
Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers and Guarantors agree that it is reasonable under the circumstances
currently existing (including, but not limited to, the borrowings that are
reasonably expected by Borrowers hereunder and the interest, fees and other
charges that are reasonably expected to be received by Agent and Lenders
pursuant to the Credit Facility). In addition, Agent and Lenders shall be
entitled to such early termination fee upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h) hereof, even if Agent and
Lenders do not exercise the right to terminate this Agreement, but elect, at
their option, to provide financing to any Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 13.1 shall be deemed included in the Obligations.
In no event shall any termination fee be payable if (i) the effective date of
termination occurs at any time after the last day of the second loan year or
(ii) the termination of the Commitments occurs in connection with a refinancing
of the Obligations by Agent or by a syndicate of lenders in which Agent is the
agent and holder of the majority amount of the commitments.
13.2. INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to any Borrower, Guarantor, Agent and Lenders
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
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(e) The word "including" when used in this Agreement shall mean
"including, without limitation" and the word "will" when used in this Agreement
shall be construed to have the same meaning and effect as the word "shall".
(f) An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrowers and Guarantors shall have the burden of proving
any lack of good faith on the part of Agent or any Lender alleged by any
Borrower or Guarantor at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Parent most recently received
by Agent prior to the date hereof. Notwithstanding anything to the contrary
contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and also does not include
any explanation, supplemental comment or other comment concerning the ability of
the applicable person to continue as a going concern or the scope of the audit.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
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(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
13.3. NOTICES.
(a) All notices, requests and demands hereunder shall be in writing
and deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt if also sent on the same date by U.S.
certified mail, return receipt requested; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1)
Business Day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. Notices delivered through electronic communications
shall be effective to the extent set forth in Section 13.3(b) below. All
notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to any Borrower: SED International, Inc.
0000 Xxxxx Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attention: CEO and CFO
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to: Xxxxx Xxxxxxx Xxxxxx Xxxxxxx & Small,
P.C.
0000 Xxxxxxxxx Xxxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
If to Agent or Issuing Bank: Wachovia Bank, National Association
000 - 00xx Xxxxxx, X.X.
XX 4524
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) Notices and other communications to Lenders and Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Agent or as otherwise determined by Agent, provided, that, the foregoing shall
not apply to notices to any Lender or Issuing Bank pursuant to Section 2 hereof
if such Lender or Issuing Bank, as applicable, has notified Agent
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that it is incapable of receiving notices under such Section by electronic
communication. Unless Agent otherwise requires, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided, that, if such notice or other communication
is not given during the normal business hours of the recipient, such notice
shall be deemed to have been sent at the opening of business on the next
Business Day for the recipient, and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communications is available and
identifying the website address therefor.
13.4. PARTIAL INVALIDITY.
If any provision of this Agreement is held to be invalid or unenforceable,
such invalidity or unenforceability shall not invalidate this Agreement as a
whole, but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable and the rights and
obligations of the parties shall be construed and enforced only to such extent
as shall be permitted by applicable law.
13.5. CONFIDENTIALITY.
(a) Agent, each Lender and Issuing Bank shall use all reasonable
efforts to keep confidential, in accordance with its customary procedures for
handling confidential information and safe and sound lending practices, any
non-public information supplied to it by any Borrower pursuant to this Agreement
which is clearly and conspicuously marked as confidential at the time such
information is furnished by such Borrower to Agent, such Lender or Issuing Bank,
provided, that, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, in connection with any litigation to which Agent, such Lender or
Issuing Bank is a party, (iii) to any Lender or Participant (or prospective
Lender or Participant) or Issuing Bank or to any Affiliate of any Lender so long
as such Lender, Participant (or prospective Lender or Participant), Issuing Bank
or Affiliate shall have been instructed to treat such information as
confidential in accordance with this Section 13.5, or (iv) to counsel for Agent,
any Lender, Participant (or prospective Lender or Participant) or Issuing Bank.
(b) In the event that Agent, any Lender or Issuing Bank receives a
request or demand to disclose any confidential information pursuant to any
subpoena or court order, Agent or such Lender or Issuing Bank, as the case may
be, agrees (i) to the extent permitted by applicable law or if permitted by
applicable law, to the extent Agent or such Lender or Issuing Bank determines in
good faith that it will not create any risk of liability to Agent or such Lender
or Issuing Bank, Agent or such Lender or Issuing Bank will promptly notify
Administrative Borrower of such request so that Administrative Borrower may seek
a protective order or other appropriate relief or remedy and (ii) if disclosure
of such information is required, disclose such information and, subject to
reimbursement by Borrowers of Agent's or such Lender's or Issuing
108
Bank's expenses, cooperate with Administrative Borrower in the reasonable
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
Administrative Borrower so designates, to the extent permitted by applicable law
or if permitted by applicable law, to the extent Agent or such Lender or Issuing
Bank determines in good faith that it will not create any risk of liability to
Agent or such Lender or Issuing Bank.
(c) In no event shall this Section 13.5 or any other provision of this
Agreement, any of the other Financing Agreements or applicable law be deemed:
(i) to apply to or restrict disclosure of information that has been or is made
public by any Borrower, Guarantor or any third party or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent, any Lender (or any Affiliate of any Lender)
or Issuing Bank on a non-confidential basis from a person other than a Borrower
or Guarantor, (iii) to require Agent, any Lender or Issuing Bank to return any
materials furnished by a Borrower or Guarantor to Agent, a Lender or Issuing
Bank or prevent Agent, a Lender or Issuing Bank from responding to routine
informational requests in accordance with the Code of Ethics for the Exchange of
Credit Information promulgated by The Xxxxxx Xxxxxx Associates or other
applicable industry standards relating to the exchange of credit information.
The obligations of Agent, Lenders and Issuing Bank under this Section 13.5 shall
supersede and replace the obligations of Agent, Lenders and Issuing Bank under
any confidentiality letter signed prior to the date hereof or any other
arrangements concerning the confidentiality of information provided by any
Borrower or Guarantor to Agent or any Lender. In addition, Agent and Lenders may
disclose information relating to the Credit Facility to Gold Sheets and other
similar bank trade publications, with such information to consist of deal terms
and other information customarily found in such publications.
13.6. SUCCESSORS.
This Agreement, the other Financing Agreements and any other document
referred to herein or therein shall be binding upon and inure to the benefit of
and be enforceable by Agent, Lenders, Issuing Bank, Borrowers and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Borrowers, Guarantors, Agent, Lenders and Issuing Bank
with respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.
13.7. ASSIGNMENTS; PARTICIPATIONS.
(a) Each Lender may, with the prior written consent of Agent, assign
all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender, of
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such rights and obligations under this Agreement to one or more Eligible
Transferees (but not including for this purpose any assignments in the form of a
participation), each of which assignees shall become a party to this Agreement
as a Lender by execution of an Assignment and Acceptance; provided, that, (i)
such transfer or assignment will not be effective until recorded by Agent on the
Register and (ii) Agent shall have received for its sole account payment of a
processing fee from the assigning Lender or the assignee in the amount of
$5,000.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and any Borrowers,
Guarantors, Agent and Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Administrative Borrower or
Guarantor and any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Obligations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower, Guarantor or any of their Subsidiaries or the performance or
observance by any Borrower or Guarantor of any of the Obligations; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent 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 and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof
110
and thereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender. Agent and
Lenders may furnish any information concerning any Borrower or Guarantor in the
possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Obligations, without the consent of Agent or the other
Lenders); provided, that, (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantors, the other Lenders and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Financing
Agreements, and (iii) the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be
determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank; provided, that,
no such pledge shall release such Lender from any of its obligations hereunder
or substitute any such pledgee for such Lender as a party hereto.
(g) Borrowers shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrowers shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Borrowers and Guarantors and their affairs provided,
prepared or reviewed by any Borrower or Guarantor that are contained in any
selling materials and all other information provided by it and included in such
materials.
(h) Any Lender that is an Issuing Bank may at any time assign all of
its Commitments pursuant to this Section 13.7. If such Issuing Bank ceases to be
Lender, it may, at its option, resign as Issuing Bank and such Issuing Bank's
obligations to issue Letters of Credit shall terminate but it shall retain all
of the rights and obligations of Issuing Bank hereunder with respect to Letters
of Credit outstanding as of the effective date of its resignation and all Letter
of
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Credit Obligations with respect thereto (including the right to require Lenders
to make Revolving Loans or fund risk participations in outstanding Letter of
Credit Obligations), shall continue.
13.8. ENTIRE AGREEMENT.
This Agreement, the other Financing Agreements, any supplements hereto or
thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.9. USA PATRIOT ACT.
Each Lender subject to the USA PATRIOT Act (Title III of Pub.L. 107-56
(signed into law October 26, 2001) (the "Act") hereby notifies Borrowers that
pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies each person or corporation who opens an
account and/or enters into a business relationship with it, which information
includes the name and address of Borrowers and other information that will allow
such Lender to identify such person in accordance with the Act and any other
applicable law. Borrowers are hereby advised that any Loans or Letters of Credit
hereunder are subject to satisfactory results of such verification.
13.10. COUNTERPARTS, ETC.
This Agreement or any of the other Financing Agreements may be executed in
any number of counterparts, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Agreement or any of the other Financing Agreements
by telefacsimile or other electronic method of transmission shall have the same
force and effect as the delivery of an original executed counterpart of this
Agreement or any of such other Financing Agreements. Any party delivering an
executed counterpart of any such agreement by telefacsimile or other electronic
method of transmission shall also deliver an original executed counterpart, but
the failure to do so shall not affect the validity, enforceability or binding
effect of such agreement.
[Signatures on following page]
112
IN WITNESS WHEREOF, Agent, Lenders and Borrowers have caused these presents
to be duly executed as of the day and year first above written.
BORROWERS
SED INTERNATIONAL HOLDINGS, INC.
By:
------------------------------------
Title:
---------------------------------
Attest:
--------------------------------
Title:
---------------------------------
[CORPORATE SEAL]
SED INTERNATIONAL, INC.
By:
------------------------------------
Title:
---------------------------------
Attest:
--------------------------------
Title:
---------------------------------
[CORPORATE SEAL]
SED MAGNA (MIAMI), INC.
By:
------------------------------------
Title:
---------------------------------
Attest:
--------------------------------
Title:
---------------------------------
[CORPORATE SEAL]
AGENT
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent and Issuing Bank
By:
------------------------------------
Title:
---------------------------------
LENDER
WACHOVIA BANK, NATIONAL ASSOCIATION
By:
------------------------------------
Title:
---------------------------------
Commitment: $35,000,000
2
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of _____________, 200_ is made between ________________________ (the
"Assignor") and ____________________ (the "Assignee").
WITNESSETH:
WHEREAS, Wachovia Bank, National Association, in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, "Agent"), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a "Lender" and collectively, "Lenders")
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to SED International Holdings, Inc., SED International, Inc. and
SED Magna (Miami), Inc. (collectively, "Borrowers") as set forth in the Loan and
Security Agreement, dated September 21, 2005, by and among Borrowers, Agent and
Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the "Financing
Agreements");
WHEREAS, as provided under the Loan Agreement, Assignor committed to making
Loans (the "Committed Loans") to Borrowers in an aggregate amount not to exceed
$___________ (the "Commitment");
WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights
and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the "Assigned Commitment
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases,
A-1
assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Assignment and
Acceptance) an interest in (i) the Commitment and each of the Committed Loans of
Assignor and (ii) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Loan Agreement and
the other Financing Agreements, so that after giving effect thereto, the
Commitment of Assignee shall be as set forth below and the Pro Rata Share of
Assignee shall be _______ (__%) percent.
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), Assignee shall be a party to the Loan Agreement and succeed to all of
the rights and be obligated to perform all of the obligations of a Lender under
the Loan Agreement, including the requirements concerning confidentiality and
the payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan Agreement
are required to be performed by it as a Lender. It is the intent of the parties
hereto that the Commitment of Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Assigned Commitment Amount and Assignor shall
relinquish its rights and be released from its obligations under the Loan
Agreement to the extent such obligations have been assumed by Assignee;
provided, that, Assignor shall not relinquish its rights under Sections 2.2,
6.4, 6.9, 11.5 and 12.5 of the Loan Agreement to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignee's Commitment will be $_____________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date Assignor's Commitment will be $______________ (as
such amount may be further reduced by any other assignments by Assignor on or
after the date hereof).
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee's Pro Rata Share of the principal amount of all Committed
Loans.
(b) Assignee shall pay to Agent the processing fee in the amount
specified in Section 13.7(a) of the Loan Agreement.
1. Reallocation of Payments. Any interest, fees and other payments accrued
to the Effective Date with respect to the Commitment, Committed Loans and
outstanding Letters of Credit shall be for the account of Assignor. Any
interest, fees and other payments accrued on and after the Effective Date with
respect to the Assigned Commitment Amount shall be for the account of Assignee.
Each of Assignor and Assignee agrees that it will hold in trust for the other
party any interest, fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding sentence and pay to the other
party any such amounts which it may receive promptly upon receipt.
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2. Independent Credit Decision. Assignee acknowledges that it has received
a copy of the Loan Agreement and the Schedules and Exhibits thereto, together
with copies of the most recent financial statements of _____________ and its
Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.
3. Effective Date; Notices.
(a) As between Assignor and Assignee, the effective date for this
Assignment and Acceptance shall be _______________, 200_ (the "Effective Date");
provided, that, the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by Assignor and Assignee;
(ii) the consent of Agent as required for an effective assignment
of the Assigned Commitment Amount by Assignor to Assignee shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) written notice of such assignment, together with payment
instructions, addresses and related information with respect to Assignee, shall
have been given to Administrative Borrower and Agent;
(iv) Assignee shall pay to Assignor all amounts due to Assignor
under this Assignment and Acceptance; and
(v) the processing fee referred to in Section 2(b) hereof shall
have been paid to Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Administrative Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.
1. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]
(a) Assignee hereby appoints and authorizes Assignor in its capacity
as Agent to take such action as agent on its behalf to exercise such powers
under the Loan Agreement as are delegated to Agent by Lenders pursuant to the
terms of the Loan Agreement.
(b) Assignee shall assume no duties or obligations held by Assignor in
its capacity as Agent under the Loan Agreement.]
2. Withholding Tax. Assignee (a) represents and warrants to Assignor, Agent
and Borrowers that under applicable law and treaties no tax will be required to
be withheld by
A-3
Assignee, Agent or Borrowers with respect to any payments to be made to Assignee
hereunder or under any of the Financing Agreements, (b) agrees to furnish (if it
is organized under the laws of any jurisdiction other than the United States or
any State thereof) to Agent and Borrowers prior to the time that Agent or
Borrowers are required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of either U.S. Internal Revenue Service
Form W-8BEN or W-8ECI, as applicable (wherein Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new such forms upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by Assignee, and (c) agrees to
comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
3. Representations and Warranties.
(a) Assignor represents and warrants that (b) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any security interest, lien, encumbrance or other
adverse claim, (c) it is duly organized and existing and it has the full power
and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (d) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (e) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles.
(b) Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrowers, Guarantors or any of their
respective Affiliates, or the performance or observance by Borrowers, Guarantors
or any other Person, of any of its respective obligations under the Loan
Agreement or any other instrument or document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized and
existing and it has full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be
A-4
executed or delivered by it in connection with this Assignment and Acceptance,
and to fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; and (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights to general equitable principles.
1. Further Assurances. Assignor and Assignee each hereby agree to execute
and deliver such other instruments, and take such other action, as either party
may reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to Borrowers or Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
2. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other for further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA. Assignor and Assignee each
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in Xxxx County, Georgia over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such Georgia State or Federal court. Each party to this Assignment
and Acceptance hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding.
A-5
(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance to be executed and delivered by their duly authorized officers as of
the date first above written.
[ASSIGNOR]
By:
------------------------------------
Title:
---------------------------------
[ASSIGNEE]
By:
------------------------------------
Title:
---------------------------------
A-6
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_____________, 20__
_________________________________
_________________________________
_________________________________
Attn.: __________________________
Re: ___________________________________
Ladies and Gentlemen:
Wachovia Bank, National Association, in its capacity as agent pursuant to
the Loan Agreement (as hereinafter defined) acting for and on behalf of the
financial institutions which are parties thereto as lenders (in such capacity,
"Agent"), and the financial institutions which are parties to the Loan Agreement
as lenders (individually, each a "Lender" and collectively, "Lenders") have
entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to SED International Holdings, Inc., SED International, Inc. and
SED Magna (Miami), Inc. (collectively, "Borrowers") as set forth in the Loan and
Security Agreement, dated September 21, 2005, by and among Borrowers, Agent and
Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the "Financing
Agreements"). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the "Assignor") to
___________________________ (the "Assignee") such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Commitments pursuant to the Assignment and Acceptance Agreement
attached hereto (the "Assignment and Acceptance"). We understand that the
Assignor's Commitment shall be reduced by $_____________, as the same may be
further reduced by other assignments on or after the date hereof.
2. Assignee agrees that, upon receiving the consent of Agent to such
assignment, Assignee will be bound by the terms of the Loan Agreement as fully
and to the same extent as if the Assignee were the Lender originally holding
such interest under the Loan Agreement.
A-7
3. The following administrative details apply to Assignee:
(A) Notice address:
Assignee name: ____________________________
Address: ____________________________
Attention: ____________________________
Telephone: ____________________________
Telecopier: ____________________________
(B) Payment instructions:
Account No.: ____________________________
At: ____________________________
Reference: ____________________________
Attention: ____________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.
A-8
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
------------------------------------
Title:
---------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent
By:
---------------------------------
Title:
------------------------------
A-9
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
INFORMATION CERTIFICATES
SEE ATTACHED
B-1
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
COMPLIANCE CERTIFICATE
To: Wachovia Bank, National Association, as Agent
000 - 00xx Xx., X.X.
XX 4524
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
I hereby certify to you pursuant to Section 9.6 of the Loan Agreement (as
defined below) as follows:
1. I am the duly elected Chief Financial Officer of SED International
Holdings, Inc., a Georgia corporation, SED International, Inc., a Delaware
corporation and SED Magna (Miami), Inc., a Delaware corporation (collectively,
"Borrowers"). Capitalized terms used herein without definition shall have the
meanings given to such terms in the Loan and Security Agreement, dated September
21, 2005, by and among Wachovia Bank, National Association, as agent for the
financial institutions party thereto as lenders (in such capacity, "Agent") and
the financial institutions party thereto as lenders (collectively, "Lenders"),
and Borrowers (as such Loan and Security Agreement is amended, modified or
supplemented, from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrowers and Guarantors, during the
immediately preceding fiscal month.
3. The review described in Section 2 above did not disclose the existence
during or at the end of such fiscal month, and I have no knowledge of the
existence and continuance on the date hereof, of any condition or event which
constitutes a Default or an Event of Default, except as set forth on Schedule I
attached hereto. Described on Schedule I attached hereto are the exceptions, if
any, to this Section 3 listing, in detail, the nature of the condition or event,
the period during which it has existed and the action which any Borrower or
Guarantor has taken, is taking, or proposes to take with respect to such
condition or event.
4. I further certify that, based on the review described in Section 2
above, no Borrower or Guarantor has at any time during or at the end of such
fiscal month, except as specifically described on Schedule II attached hereto or
as permitted by the Loan Agreement, done any of the following:
C-1
(a) Changed its respective corporate name, or transacted business
under any trade name, style, or fictitious name, other than those previously
described to you and set forth in the Financing Agreements.
(b) Changed the location of its chief executive office, changed its
jurisdiction of incorporation, changed its type of organization or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.
(c) Materially changed the terms upon which it sells goods (including
sales on consignment) or provides services, nor has any vendor or trade supplier
to any Borrower or Guarantor during or at the end of such period materially
adversely changed the terms upon which it supplies goods to any Borrower or
Guarantor.
(d) Permitted or suffered to exist any security interest in or liens
on any of its properties, whether real or personal, other than as specifically
permitted in the Financing Agreements.
(e) Received any notice of, or obtained knowledge of any of the
following not previously disclosed to Agent: (i) the occurrence of any event
involving the release, spill or discharge of any Hazardous Material in violation
of applicable Environmental Law in a material respect or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any applicable Environmental Law
by any Borrower or Guarantor in any material respect or (B) the release, spill
or discharge of any Hazardous Material in violation of applicable Environmental
Law in a material respect or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials in violation of applicable Environmental Laws in a material respect or
(D) any other environmental, health or safety matter, which has a material
adverse effect on any Borrower or Guarantor or its business, operations or
assets or any properties at which such Borrower or Guarantor transported, stored
or disposed of any Hazardous Materials.
(f) Become aware of, obtained knowledge of, or received notification
of, any breach or violation of any material covenant contained in any instrument
or agreement in respect of Indebtedness for money borrowed by any Borrower or
Guarantor.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month whether Borrowers and Guarantors
are in compliance with the covenants set forth in Section 9.17 and Section 9.18
of the Loan Agreement for such fiscal month.
C-2
The foregoing certifications are made and delivered this day of
___________, 20__.
Very truly yours,
SED INTERNATIONAL HOLDINGS, INC.
SED INTERNATIONAL, INC.
SED MAGNA (MIAMI), INC.
By:
------------------------------------
Title:
---------------------------------
C-3
SCHEDULE 1.51
Existing Lenders
Wachovia Bank, National Association
Schedule 1.51-1
SCHEDULE 1.52
Existing Letters of Credit
SED INTERNATIONAL, INC.
LC Status as of 08/18/05
PROD TYPE BENEFICIARY INST NUM LIAB AMT (USD) EXPIRY DATE
--------- ------------------------- -------------- -------------- -----------
SLC GATEWAY, INC. 00000003014457 100,000.00 09/21/05
SLC HEWLETT-PACKARD COMPANY 00000003013447 450,000.00 09/21/05
SLC PIONEER ELECTRONICS, INC. 00000003014386 150,000.00 09/21/05
SLC TECH DATA CORPORATION 00000003011917 1,750,000.00 10/04/05
2,450,000.00
------------
Total: 2,450,000.00
============
Schedule 1.52-1
SCHEDULE 1.97
Permitted Holders
The following and if an individual, their respective heirs and trusts for the
benefit of family members:
SED Associates
SED International Holdings, Inc.
Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxx Xxxxx
Xxxxxx Xxxxx
Bi Keping
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxx
Xxxxx Xxxxxxx
Xxxxxx Xxxxxxx (Estate of)
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxx Xxxxxx
Xxxxxxxx Xxxxxx
Cede & Co.
Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxx TR US 12/15/94
Xxxxxxx X. Xxxx Rev. Trust
Xxxxxxx Xxx
Xxxxxxx Xxx
Xxxxxxx Xxx
Xxxxxxx Xxxxxxxxxx
Schedule 1.97-1
SCHEDULE 8.15
Material Contracts
PARTIES AGREEMENT DATE
------- -------------------------------- ----------
1 Abit & SED International, Inc. Distribution Purchase Agreement 5/25/2004
2 Acer America Corporation & Distributor Agreement 10/8/2004
SED International, Inc. (Brazil)
3 Acer America Corporation & Distributor Agreement 4/28/2004
SED International, Inc. (USA)
4 Alera Technologies, LLC & Distribution Purchase Agreement 4/12/2004
SED International, Inc.
5 Xxxxxx.xxx & Vendor Acknowledgement Letter 7/20/2004
SED International, Inc.
6 American Power Conversion Corp. Nondisclosure Agreement 12/14/2001
& SED International, Inc.
7 A-Open America, Inc. & Distribution Purchase Agreement 4/4/2003
SED International, Inc.
8 Archos Technology & Distribution Purchase Agreement 9/24/2004
SED International, Inc.
9 KXD Digital & Distribution Purchase Agreement 3/31/2005
SED International, Inc.
10 Althon Micro, Inc. & Distribution Purchase Agreement 8/15/2001
SED International, Inc.
11 Chenbro Micom, Inc. & Distribution Purchase Agreement 9/18/2003
SED International, Inc.
12 Cnet Technology, Inc. & Distribution Purchase Agreement 3/14/2003
SED International, Inc.
13 Creative Labs, Inc. & SED Distribution Agreement 9/3/1997
International, Inc.
14 Coby Electronics Corporation & Distribution Purchase Agreement 11/30/2004
SED International, Inc.
15 Cyber Acoustics & Distribution Purchase Agreement 10/4/2001
SED International, Inc.
16 DFI (San Xxxx) Inc. & Distribution Purchase Agreement 2/17/2003
SED International, Inc.
17 Envision Peripherals, Inc. & SED Distribution Purchase Agreement 12/13/2000
International, Inc.
18 Epson Latin America, Inc. & SED Distributor Agreement 6/24/1996
International, Inc.
19 Gateway Companies, Inc. & RTO Distribution Agreement 1/13/2005
SED International, Inc.
20 Giga-Byte Technology, Inc. & Distribution Purchase Agreement 1/5/2000
SED International, Inc.
21 H&B Premium Distribution Corp. & Distribution Purchase Agreement 5/5/2005
SED International, Inc.
22 Hansol Multitech, Inc. & Distribution Purchase Agreement 5/17/2001
SED International, Inc.
23 Hawking Technologies & Distribution Purchase Agreement 4/1/2003
SED International, Inc.
Schedule 8.15-1
24 Hewlett-Packard Company & Supplies Distribution Agreement 5/1/2002
SED International, Inc.
25 Intel Americas, Inc. & Intel Associate Distributor 6/29/2000
SED International, Inc. Program Participation Agreement
26 Iomega Latin America, Inc. & Authorized Distributor Agreement 7/2/2003
SED International, Inc.
27 Jabra Corporation & SED Distribution Purchase Agreement 10/25/2000
International, Inc.
28 KDS USA, Inc. & Distributor Purchase Agreement 1/1/1998
SED International, Inc.
29 Kingston Technology Company & Distribution Agreement 3/27/1997
SED International, Inc. Amendment to Distribution 2/28/2000
Agreement
30 Kobian USA, Inc. & SED Distribution Purchase Agreement 7/5/2005
International, Inc.
31 KXD Digital & Distribution Purchase Agreement 3/31/2005
SED International, Inc.
32 Kyocera Wireless Corp. & Supply Agreement 8/23/2000
SED International, Inc.
33 Lexmark International, Inc. & Authorized Distributor Agreement 9/18/2001
SED International, Inc.
34 LG Electronics MobileComm Indirect Market Development Fund 5/17/2005
U.S.A., Inc. Memorandum of Understanding
35 Maxtor Corporation & Distribution Agreement 8/17/1999
SED International, Inc.
36 Microsoft Licensing, Inc. & OEM Associate Distributor 7/29/2004
SED International, Inc. Agreement
37 Microsoft Licensing, Inc. & OEM Channel Supplier 9/11/2002
SED International, Inc. Agreement
38 Mitsumi Electronics Corp. & Distributor Purchaser Agreement 4/15/1996
SED International, Inc.
39 MSI Computer Corp. & Distribution Purchase Agreement
SED International, Inc.
40 Nikada, Inc. & SED Distribution Purchase Agreement 11/22/2004
International, Inc.
41 OGIO International & SED Distribution Purchase Agreement 3/24/2005
International, Inc.
42 Oki Data Americas, Inc. & Distributor Agreement
SED International Holdings, Inc.
43 Panasonic Broadcast & Television Authorized Distributor Agreement 8/17/2004
Systems Company & SED
International, Inc.
44 Peerless Industries, Inc. & Distribution Purchase Agreement 5/26/2004
SED International, Inc.
45 Philips Electronics North Distributor Agreement 11/15/2004
America Corporation
& SED International, Inc.
46 Phoenix Technologies Ltd. & Distributor Agreement 1/5/2005
SED International, Inc.
Schedule 8.15-2
47 Pioneer Electronics (USA) Inc. & 2005 Home Electronics Contract 1/13/2005
SED International, Inc. Program
48 Pioneer Electronics (USA) Inc. & Amendment to Exh. A 4/20/2005
SED International, Inc. Authorized Direct
Dealer Agreement
49 Pioneer Electronics (USA) Inc. & Distributor Agreement 4/1/2005
SED International, Inc.
00 Xxxxxxx Xxxxxxx Xxxxxxx (Zirex) Distribution Purchase Agreement 4/28/2005
51 Cardo Systems, Inc. & SED Product Purchase Agreement 4/27/2004
International, Inc.
52 Shuttle Computer & SED Distribution Purchase Agreement 3/2/1998
International, Inc.
53 SimpleTech, Inc. & SED Distribution Purchase Agreement 10/11/2004
International, Inc.
54 SmartDisk Corporation & SED Distribution Purchase Agreement 9/29/2004
International, Inc.
55 SMC Networks, Inc. & SED Distributor Purchase Agreement
International, Inc.
56 SVA Group (USA) Inc. & SED Distribution Agreement
International, Inc.
57 Teac America, Inc. & SED Industrial Distribution 6/8/1998
International, Inc. Agreement
58 Tech Data Corporation & SED Volume Purchase Agreement 1/16/2001
International, Inc.
00 Xxxxxxx Xxxxxxx Information Distributor Purchase Agreement 2/10/1997
Systems, Inc. & SED
International, Inc.
60 Trendware, Inc. & SED Distribution Purchase Agreement 10/11/2004
International, Inc.
61 Xxxxx Lite & SED International, Distribution Purchase Agreement 12/12/2000
Inc.
62 Ultra Products & SED Distribution Purchase Agreement 9/6/2004
International, Inc.
63 Xxxx X. Diamond Employment
Agreement
64 Xxxxxxxx Xxxxxx Employment
Agreement
65 Xxxxx Xxxxxxx Employment
Agreement
Schedule 8.15-3
SCHEDULE 9.12
Transactions with Affiliates
1. Employment Agreement, dated July 1, 1998, among SED International, Inc.,
SED International Holdings, Inc. and Xxxx X. Diamond, as amended.
2. Employment Agreement, dated July 6, 2005, among SED International, Inc.,
SED International Holdings, Inc. and Xxxxxxxx Xxxxxx, as amended.
3. Employment Agreement, dated November 22, 2002, among SED International,
Inc., SED International Holdings, Inc. and Xxxxx Xxxxxxx, as amended.
4. Lease between Diamond Chip Group, L.L.C. and SED International, Inc. dated
April 1, 1999, for premises commonly known as 0000 Xxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxx Xxxxxx, Xxxxxxx, as amended.
Schedule 9.12-1
