1
Exhibit 99.8
SECOND
RESTATED AND AMENDED
LOAN AND SECURITY AGREEMENT
JACO ELECTRONICS, INC. ("Jaco"), a New York corporation and NEXUS
CUSTOM ELECTRONICS, INC. ("Nexus"), a New Jersey corporation (collectively
referred to as "Debtor"), each with a principal place of business at the
addresses listed on the signature pages hereof, The Bank of New York Commercial
Corporation in its capacity as a Lender, with its principal place of business
also as listed on the signature pages hereof ("BNYCC"), each other financial
institution from time to time a party to this Agreement (hereafter BNYCC and
such other financial institutions may be referred to individually as a "Lender"
or alternatively as a "Secured Party" and collectively, as the "Lenders" or
alternatively, the "Secured Parties"), and BNYCC as agent for the Lenders (in
such capacity and any successor appointed in accordance with the terms hereof,
the "Agent"), each hereby agree as follows:
Upon this Second Restated and Amended Loan and Security Agreement
("Agreement") becoming effective, in accordance with the terms and provisions
set forth below, this Agreement shall restate and amend in its entirety,
without any interruption or break in continuity, the Restated and Amended Loan
and Security Agreement between BNYCC and Debtor dated April 25, 1995 (which in
turn restated and amended in its entirety, also without any interruption or
break in continuity, the Loan and Security Agreement - Accounts Receivable and
Inventory between BNYCC and Jaco dated January 20, 1989) and the Security
Agreement between BNYCC and Nexus dated March 11, 1994.
1. As used herein, the following terms shall have the following
meanings:
"ABR Loan" means the Loan or any portion thereof bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Account or "Accounts" shall mean and include all accounts,
accounts receivable, contract rights, chattel paper, instruments, notes,
drafts, acceptances, and all other debts, obligations and liabilities in
whatever form owing to Debtor from any person, firm, corporation or other legal
entity whether now existing or hereafter arising or acquired.
"Account Debtor" shall mean any person, firm, corporation or
other legal entity who is obligated on any Account.
"Accounts Receivable Borrowing Base" shall mean 85% of the net
outstanding amount of Reported Accounts, exclusive of Slow Accounts, after
deducting therefrom all payments, adjustments and credits applicable thereto
less such reasonable reserves as Agent may deem reasonably necessary and
proper. The Accounts Receivable Borrowing Base may be changed by Agent from
time to time in its reasonable discretion subject to Paragraph 22 hereof as
among Lenders and Agent,, such change to be effective, upon thirty (30) days
written notice to Debtor. Whenever the Accounts Receivable Borrowing Base is
used as a measure of loans, it shall be computed as of, and the loans referred
to shall be those reflected in the Debtor's Loan Account at, the time in
question.
"Agent" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Agent ABR Loan" shall have the meaning set forth in Paragraph
4(c) of this Agreement.
"Aggregate Maximum Loan Amount" shall mean the total principal
Maximum Loan Amounts applicable to all of the Lenders hereunder on a cumulative
basis as the same may be reduced pursuant to paragraph 5(b)(v) hereof.
"Agreement" shall have the meaning set forth in the second
paragraph hereof.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate in effect on such day or (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
"Bank" means The Bank of New York.
"Business Day" means (a) any day other than a day on which
commercial banks in New York are authorized or required by law to close and (b)
relative to the making, continuing, prepaying or repaying of any LIBO Rate
Loans, any day on which dealings in dollars are carried on in the London
interbank eurodollar market.
"Closing Date" means the date on which all of the following
shall have occurred: (a) all of the parties hereto have executed this Agreement
and have delivered the same to the Agent and all other Conditions Precedent in
relation to the initial Loans have been completed to the Lenders' satisfaction;
and (b) NatWest Bank N.A. ("NatWest") BNYCC, the Agent and the Debtor have each
executed and delivered an Assignment and Acceptance Agreement substantially in
the form of Exhibit C hereto and NatWest has also fully funded, in immediately
available funds, its initial Pro Rata Share of the outstanding Obligations
hereunder as of said Closing Date.
"Collateral" shall have the meaning set forth in Paragraph 2
hereof.
"Conditions Precedent" shall mean with respect to the making
of Loans under this Agreement, those conditions precedent more fully described
in Paragraph 13 hereof.
"Continuation Notice" means a notice of continuation duly
executed by an authorized officer of the Debtor substantially in the form of
Exhibit A hereto.
"Contract Rate" means an interest rate per annum equal to (A)
in the case of LIBO Rate Loans, (i) the applicable LIBO Rate plus (ii) two and
one-half percent (2.5%) or (B) in the case of all other Loans, the Alternate
Base Rate.
2
1
"Credit Exposure" means an amount determined for each Lender,
equal to the aggregate principal amount of the Loans owing to such Lender plus
the aggregate unutilized amounts of such Lender's Maximum Loan Amount,
provided, however, that if any Lender shall have failed to pay its Pro Rata
Share of any Loans hereunder to the Agent when due and such Loans have been
advanced by the Agent to the Debtor, such Lender's Credit Exposure attributable
to the Pro Rata Share not so paid, shall be deemed to be held by the Agent for
purposes of this definition.
"Debtor's Loan Account" shall mean the account on the records
of the Agent in which shall be recorded the Loans and any other advances or
extension(s) of credit made by the Agent and/or any of the Lenders to or for
the benefit of the Debtor pursuant to this Agreement, including without
limitation in respect of any Letters of Credit and/or the Term Loans, any
payments made on such Loans, and other appropriate debits and credits all made
pursuant to, or as provided by, this Agreement or any other agreement made
between or concerning any of the Secured Parties, on the one hand and Debtor,
on the other hand.
"Deficiency Loan" shall have the meaning set forth in
Paragraph 4(d) of this Agreement.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States of
America.
"Eligible Equipment" shall mean Equipment purchased by Debtor
which Agent has determined at the time of such purchase in its sole and
reasonable discretion to be eligible. Equipment shall not be deemed eligible
unless such Equipment was purchased after January 1, 1995, is subject to a
first perfected security interest in favor of Agent, on behalf of the Secured
Parties and with respect to which Debtor has requested that Agent deem it
eligible.
"Eligible Assignee" means a commercial bank organized under
the laws of the United States, or any state thereof, having a combined capital
and surplus of at least One Hundred Million Dollars ($100,000,000), an entity
that is primarily engaged in the business of commercial lending, having a
combined capital surplus of at least One Hundred Million Dollars
($100,000,000), or an entity acceptable to the Agent, whose acceptance shall
not be unreasonably withheld.
"Eligible Inventory" shall mean Inventory; valued at the lower
of cost or market, consisting of current saleable finished goods, which
conforms to the representations and warranties contained herein and which at
all times continues to be acceptable to the Agent in its sole and reasonable
discretion, less work-in-process if any, supplies (other than raw materials),
goods not located in the United States of America, returned or rejected goods
of customers unless the same are undamaged and resalable in the normal course
of business, goods returned to the Debtor's suppliers, goods in transit to
third parties, and less any reserves required by the Agent, in its sole and
reasonable discretion, for special order goods, market value declines and ▇▇▇▇
and hold (deferred shipment) or consignment sales goods to the extent that such
consignment sales goods (A) do not comply with the provisions of Paragraph
3(c)(ii) hereof or (B) do comply but exceed $1,500,000 in the aggregate valued
at the lower of cost or market.
"Equipment" shall mean equipment, machinery, furniture,
fixtures, dies, tools and other tangible personal property of Debtor, wherever
located and whether now owned or hereafter acquired by the Debtor and all
accessions and attachments to and replacements of or relating to the foregoing.
"Equipment Borrowing Base" shall mean 80% of the invoice cost
of Eligible Equipment, provided that for purposes of calculating the Equipment
Borrowing Base, the invoice cost of each piece of Eligible Equipment shall be
deemed to be reduced by 2% for each month following its date of purchase. The
Equipment Borrowing Base may be changed by Agent from time to time in its
reasonable discretion, subject to Paragraph 22 hereof as among Lenders and
Agent, such change to be effective upon thirty (30) days written notice to
Debtor.
"Event of Default" shall have the meaning set forth in
Paragraph 19 hereof.
"Federal Funds Rate" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published
for any day which is a Business Day, the average of quotations for such day on
such transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
"General Intangibles" shall mean all general tangibles as
defined in Article 9 of the Uniform Commercial Code of the State of New York
now owned or hereafter acquired, whether now existing of hereafter arising,
including without limitation, all trademarks, patents, copyrights, service
marks, brand names, trade names, trade styles, together with the goodwill of
the business represented thereby, all claims for moneys due (including tax
refunds) from any federal, state or municipal government, agency or subdivision
thereof or taxing authority and all excess pension funds.
"Interest Period" means, relative to any Loan constituting a
LIBO Rate Loan, the period beginning on (and including) the date on which such
LIBO Rate Loan is made or continued as, or converted into, a LIBO Rate Loan
pursuant to Paragraph 4 and shall end on (but exclude) the day which
numerically corresponds to such date one, two, or three months thereafter (or,
if such month has no numerically corresponding day, on the last Business Day of
such month), in either case as the Debtor may select in its relevant notice
pursuant to Paragraph 4(c)(ii) hereof; provided, however, that
(a) the Debtor shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than five different dates;
(b) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day (unless such next following Business Day
is the first Business Day of a calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day); and
3
2
(c) no Interest Period may end later than the last day of
the Term.
"Inventory" shall mean all now owned hereafter acquired and
wherever located goods, merchandise and other personal property which are held
for sale or lease or to be furnished under contracts of service or held as raw
materials, work in process or finished goods and supplies or materials used or
consumed in Debtor's business or used in connection with the manufacture,
packing, shipping, advertising or furnishing of such goods.
"Inventory Borrowing Base" shall mean 60% of Debtor's Eligible
Inventory. The Inventory Borrowing Base may be changed by Agent from time to
time in its reasonable discretion subject to Paragraph 22 hereof as among Agent
and Lenders, such change to be effective upon thirty (30) days written notice
to Debtor.
"Letter of Credit Agreement" shall mean that certain Letter of
Credit and Security Agreement executed by Jaco in favor of BNYCC on January 20,
1989, as the same has been or may be amended, supplemented, extended, modified
or restated from time to time.
"Letters of Credit" shall mean all letters of credit issued
pursuant to the Letter of Credit Agreement.
"Letter of Credit Fee" shall mean the fee due the Agent on
behalf of the Lenders with respect to Letters of Credit issued pursuant to the
Letter of Credit Agreement.
"LIBO Rate" means, relative to the Interest Period for a LIBO
Rate Loan, the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/100th of 1%) per annum rate, determined by the
LIBOR Office (each such determination to be conclusive and binding absent
manifest error), at which Dollar deposits in immediately available funds are
being, have been, or would be offered to or quoted by the Agent to major banks,
through its LIBOR Office, in the London interbank market for eurodollar
deposits, as at or about 11:00 a.m. two Business Days immediately preceding the
first day of such Interest Period, for delivery on the first day of such
Interest Period, and in an amount approximately equal to the amount of the LIBO
Rate Loan and for a period approximately equal to such Interest Period.
"LIBO Rate Loan" means the Loan or any portion thereof bearing
interest, at all times during the Interest Period applicable to such Loan, at a
fixed rate of interest determined by reference to the LIBO Rate (Reserve
Adjusted).
The "LIBO Rate (Reserve Adjusted)" means, relative to the Loan
or any portion thereof to be made, continued or maintained as, or converted
into, a LIBO Rate Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) determined pursuant to the
following formula:
LIBO Rate = LIBO Rate
-----------------------------
(Reserve Adjusted) 1.00-LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for the Interest Period for a LIBO Rate Loan
will be determined by the Secured Party on the basis of the LIBOR Reserve
Percentage in effect two Business Days before the first day of such Interest
Period.
"LIBOR Office" means the office of the Agent at ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or such other office of the Agent as designated from
time to time by the Agent, whether or not outside the United States.
"LIBOR Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time, equal to the
maximum aggregate reserve requirements (including without limitation all basic,
emergency, supplemental, special, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
Federal Reserve Board and then applicable to assets or liabilities consisting
of and including "Eurocurrency Liabilities," as currently defined in Regulation
D of the Federal Reserve Board or any successor regulation (or against any
other category of liabilities that includes deposits by reference to which the
interest rate of LIBO Rate Loans is determined), having a term approximately
equal or comparable to such Interest Period and applicable to the Bank, whether
or not any Lender has any Eurocurrency Liabilities subject to such
requirements, without benefit of credits or pro-rations, exceptions or offsets
that may be available from time to time to the Agent.
"Loan" or "Loans" means any extensions of credit hereunder;
without limiting the foregoing, "Loans" shall additionally include the Term
Loans and the Letters of Credit unless the context herein otherwise requires.
"Maximum Loan Amount" shall mean for each Lender, the
principal amount set forth beneath the signature of each Lender hereunder set
forth on the signature page hereof, as the same may be reduced pursuant to
paragraph 5(b)(v) hereof.
"Mortgage" shall mean the Commercial Mortgage executed on
March 11, 1994 and delivered by Nexus to BNYCC with respect to the Real
Property, as the same has been or may be amended, supplemented, extended,
modified or restated from time to time including, without limitation the
Mortgage Modification and Assignment Agreement among Debtor and Lenders,
executed contemporaneously herewith.
"Obligations" shall mean any and all debts, liabilities and
obligations of Debtor to the Agent, whether in its capacity as Agent or on
behalf of any of the Lenders hereunder and/or to any of the Secured Parties
hereunder, including without limitation any and all Loans, (including, without
limitation, Letters of Credit and/or Term Loans), as well as any and all other
debts, liabilities and obligations of Debtor to the Agent, in its capacity as
Agent, or on behalf of any of the Lenders and/or to any of the Secured Parties
of every kind and description, however arising, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including
without limitation, the obligations and liabilities of Debtor under the Term
Loan Notes, under the Letter of Credit Agreement, under any guaranty(ies) or
indemnity(ies) given or to be given in favor of Agent and/or any Lender and
further including, without limitation, all interest, fees, reasonable charges
and reasonable expenses (including reasonable attorneys' fees and expenses).
4
3
"Overadvances" shall have the meaning set forth in paragraph
4(d) hereof.
"Permitted Liens" means (i) liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (ii) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms
of governmental insurance or benefits, relating to employees, securing sums (a)
not overdue or (b) being diligently contested in good faith provided that
adequate reserves with respect thereto are maintained on the books of Debtor in
conformity with GAAP; (iii) liens in favor of the Agent and/or the Secured
Parties; (iv) liens for taxes (a) not yet due or (b) being diligently contested
in good faith provided that adequate reserves with respect thereto are
maintained on the books of the Debtor in conformity with GAAP; (v) liens placed
upon Equipment acquired after April 25, 1995 and the proceeds thereof to secure
a portion of the purchase price thereof, provided that any such lien shall not
encumber any other property of Debtor (it being understood that Agent and/or
the Secured Parties will upon Debtor's request provide UCC-3 Financing
Statements releasing its lien on such Equipment and the proceeds thereof); and
(vi) liens specified on Schedule 1 hereto.
"Prime Rate" means the prime commercial lending rate of the
Bank as publicly announced in New York, New York to be in effect from time to
time, such rate to be adjusted automatically, without notice, on the effective
date of any change in such rate. This rate of interest is determined from time
to time and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged to any
particular class or category of customers.
"Pro Rata Share" means with respect to each Lender at any
time, such Lender's share of the total amount of all outstanding Loans, Letters
of Credit and Term Loans, and is expressed as a percentage equivalent to a
fraction where the numerator thereof is the Maximum Loan Amount of such Lender
and the denominator thereof is the Aggregate Maximum Loan Amount of all
Lenders, as the same may be adjusted pursuant to Paragraphs 4(c) and/or 4(d) of
this Agreement.
"Real Property" shall mean the property located at ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Reported Account" shall mean any Account arising out of the
sale of merchandise or rendition of services which Debtor has reported to Agent
in accordance with Paragraph 6.
"Required Lenders" shall mean at any time Lenders then
holding, in the aggregate, Pro Rata Shares totalling at least sixty-six and two
thirds percent (66 2/3%) of the aggregate Credit Exposure of all Lenders on
such date.
"Secured Party(ies)" shall have the meaning set forth in the
introductory paragraph of this Agreement.
"Settle" shall mean the provisions hereof in respect of the
Agent and the Lenders settling matters between or among each of them on a
particular Settlement Date.
"Settlement Date" shall mean the date, weekly and more
frequently, at the discretion of the Agent, that the Agent and the Lenders
shall settle the outstanding balance of all Loans (inclusive of all ABR Loans,
LIBO Rate Loans, Letters of Credit, and Term Loans) between or among themselves
in order that Agent shall not have any funds at risk (beyond BNYCC's Pro Rata
Share thereof in its capacity as a Lender hereunder, as contrasted with its
capacity as Agent hereunder) and so that on such Settlement Date the Lenders
will each have their respective Pro Rata Share of all Loans (including, without
limitation, ABR Loans, LIBO Rate Loans, Letters of Credit and Term Loans);
provided, however, in accordance with Paragraph 4(c)(ii), the "Settlement Date"
applicable to any LIBO Rate Loan requested by the Debtor (and which is not a
request for continuation of or conversion into a LIBO Rate Loan) shall be the
third Business Day following the date on which the Debtor requests the Agent to
incur such a Loan under this Agreement; and further provided however, that each
Settlement Date for a Lender shall be a Business Day on which such Lender is
open for business.
"Slow Account" shall mean any Reported Account with respect to
which any of the following has occurred:
(i) all or a substantial part of the property or services
giving rise to the Reported Account is returned, rejected or
repossessed, or lost or damaged;
(ii) any merchandise or other dispute has arisen (it being
understood that such Account shall be a Slow Account only to the
extent of the amount of such dispute);
(iii) the Account Debtor has become insolvent;
(iv) payment on such Reported Account is unpaid more than
90 days from invoice date;
(v) all Reported Accounts due from the same Account
Debtor if 50% or more of all unpaid invoices due from such Account
Debtor remain unpaid more than 90 days from invoice date; or
(vi) in Agent's reasonable discretion the Account may not
be used in computing the Accounts Receivable Borrowing Base.
In the event of any dispute as to whether a Reported Account has
become a Slow Account, the reasonable decision of Agent made in accordance with
this definition shall control.
"Subsidiary" shall mean any corporation of which more than 50%
of the outstanding shares of stock of each class having ordinary voting power
is at the time owned by Debtor and/or one or more of its subsidiaries.
"Term" shall have the meaning set forth in Paragraph 21 hereof.
5
4
"Term Loans" shall mean the Loans made by Secured Party to
Debtor as evidenced by the Term Loan Notes.
"Term Loan Notes" shall mean the six separate promissory notes
issued by Debtor to the order of the Agent on behalf of each Lender,
substantially in the forms attached hereto as Exhibits B-1 through and
including B-6 respectively, which evidence and which without any interruption
or break in continuity, amend and restate in their entirety, upon the terms and
conditions therein more fully described, those three certain promissory notes
initially issued by Debtor to the order of BNYCC (i) dated as of June 1, 1989
in the original principal amount of $3,000,000; (ii) dated as of March 31, 1990
in the original principal amount $5,000,000; and (iii) dated as of March 11,
1994 in the original principal amount of $1,500,000.
2. To secure the full and timely payment and performance of
Debtor's Obligations, Debtor hereby grants to the Agent, for itself and for the
ratable benefit of the Secured Parties (and wherever in this Agreement, the
terms "ratable", "ratably", "pro rata" or the like may be used, such terms
shall mean such portion as may be determined by reference to that particular
Lender's Pro Rata Share), a first priority security interest in all of the
following personal property (all herein referred to as the "Collateral"):
(a) all Accounts of Debtor whether now existing or
hereafter arising or acquired, including, without, limitation, Reported
Accounts, all guarantees, securities and liens for payment of any Account, all
right, title and interest of Debtor in the merchandise which gave rise to any
Account, including the rights of reclamation and stoppage in transit, all
rights of an unpaid seller of merchandise or service, and all rights of Debtor
earned or yet to be earned under contracts with any Account Debtor;
(b) all Inventory of Debtor now owned or hereafter
acquired, including without limitation all of Debtor's contract rights with
respect thereto and all documents representing the same;
(c) all General Intangibles of Debtor now existing or
hereafter arising or acquired;
(d) all returned, rejected or repossessed goods whether
now owned or hereafter acquired which were Inventory before sale;
(e) all sums at any time due from any Lender to Debtor;
(f) all instruments, documents, policies and certificates
of insurance, securities, goods, choses in action, cash or other property owned
by Debtor or in which Debtor has an interest, which now or hereafter are at any
time in possession or control of any Lender or in transit by mail or carrier to
or from any Lender in the possession of any third party acting in any Lender's
behalf, without regard to whether any Lender received the same in pledge, for
safekeeping, as agent for collection or transmission, or otherwise or whether
any Lender has conditionally released the same;
(g) all Equipment, excluding Equipment subject to liens
described in clause (v) of the definition of Permitted Liens and the proceeds
thereof;
(h) all proceeds of the foregoing, including, without
limitation, proceeds of policies of fire, credit or other insurance; and
(i) all books, records, ledger sheets, and other records relating
to the foregoing.
The Agent for itself and on behalf of the Lenders shall have the right
(y) at any time to apply any or all of the proceeds of the Accounts against any
and all Obligations, excluding the Term Loan which is evidenced by those notes
attached hereto as Exhibits B-5 and B-6, which notes in turn amend and restate
in their entirety, upon the terms and conditions therein more fully described,
that certain Term Loan Note to the order of BNYCC dated as of March 11, 1994 in
the original principal amount of $1,500,000 (such amended and restated notes
herein collectively, the "$1,500,000 Term Loan"), provided that any application
of the proceeds of Accounts which (i) is made prior to the occurrence of an
Event of Default and (ii) is not made at the direction of Borrower, and which
application results in the payment of a LIBO Rate Loan prior to the last day of
an Interest Period with respect thereto shall not result in the required
payment by Debtor to Lender of any penalty or premium or loss or expense
pursuant to Paragraph 5(g). hereof, and (z) upon an Event of Default, to apply
any or all of the proceeds of the Collateral against any and all Obligations
including the $1,500,000 Term Loan, whether or not, in either case, other
security held by the Agent and/or any of the Lenders is considered by any of
them to be adequate.
The Agent may, subject to Paragraph 22(b) hereof as among Lenders and
Agent, in its sole discretion, on behalf of itself and/or the other Lenders,
exchange, waive, or release any of the Collateral, without affecting the
Obligations or the Lenders' right to take any other action with respect to any
other Collateral. Debtor agrees to safeguard, protect and hold all Inventory
and Equipment for the Secured Parties' account and to make no disposition
thereof except in the regular course of business as herein provided. Until the
occurrence of an Event of Default any Inventory may be sold and shipped by the
Debtor to its customers in the ordinary course of business, on open account and
on terms currently being extended by the Debtor to their customers, provided
that the proceeds of all sales (including cash, Accounts, checks, notes,
instruments for the payment of money and similar proceeds) are forthwith
transferred, endorsed and turned over and delivered to the Agent. Upon the
occurrence of an Event of Default and until such time as such Event of Default
is waived or cured to the Required Lenders' reasonable satisfaction no further
disposition shall be made of the Inventory and/or Equipment without the Agent's
prior written approval. Upon and following the occurrence of an Event of
Default (i) cash sales or sales of Inventory in which a lien upon, or security
interest in, Inventory or Equipment is retained by the Debtor, shall be made by
the Debtor only with the approval of the Agent and the proceeds of such sales
shall not be commingled with the Debtor's other property, but shall be
segregated, held by the Debtor in trust for the Agent on behalf of the Lenders,
as the Agent's exclusive property, and shall be delivered immediately by the
Debtor to the Agent in the identical form received; (ii) upon the sale,
exchange, or other disposition of Inventory, as herein provided, the security
interest in the Debtor's Inventory provided for herein shall, without any break
in continuity or interruption and without further formality or act, continue in
and attach to all proceeds, of every type or nature and (iii) as to any such
sale, exchange or other disposition, the Agent, on behalf of the Lenders, shall
have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.
6
5
The rights and security interests granted herein to the Agent, on behalf of the
Lenders, shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that the account of the Debtor may
from time to time be temporarily in a credit position, until the final payment
in full to the Agent and the Lenders of all Obligations and the termination of
this Agreement. To the extent that the Obligations are now or hereafter
secured by any assets or property other than the Collateral, or by the
guarantee, endorsement, assets or property of any other person, then the Agent
shall have the right in its sole discretion, to determine which rights,
security interests, liens, or remedies the Agent shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action with
respect to, without in any way modifying or affecting any of them, or any of
the rights of the Agent or any Lender hereunder.
Any balances to the credit of Debtor and any other property or assets of Debtor
in the possession of the Agent and/or the Lenders may be held by the Agent or
the Lenders, as the case may be, as security for any Obligations and upon the
occurrence and during the continuance of an Event of Default, applied in whole
or partial satisfaction of such Obligations subject to Paragraph 23(b) hereof.
The liens and security interests granted herein and any other lien or security
interest the Agent or the Lenders may have in any other assets of the Debtor
shall secure payment and performance of all now existing and future
Obligations. The Agent may in its sole discretion charge any or all of the
Obligations to the account of the Debtor when due.
In addition to the foregoing, the Debtor authorizes the Lenders and each of the
Lenders shall have the right, without notice, upon the occurrence and during
the continuance of an Event of Default to set-off and apply against any and all
property held by, or in the possession of the Lenders, the Obligations due the
Lenders, subject to Paragraph 23(b) hereof.
3. For the purpose of inducing each of the Lenders to make Loans
to Debtor, Debtor hereby warrants, represents, covenants and guarantees to
Agent and each Lender, which warranties, representations, covenants and
guarantees shall survive the execution and delivery of this Agreement and shall
be deemed repeated and confirmed with respect to each of the Loans made by, and
with respect to each of the Letters of Credit issued, extended or confirmed
with the assistance of Agent or any of the Lenders hereunder:
(a) Debtor is duly organized and existing under the laws
of its state of incorporation and licensed or qualified to do business in all
other states in which the laws thereof require Debtor to be so qualified and/or
licensed, and the execution, delivery and performance of this agreement and any
security agreement, notes, guarantees or other agreements or instruments
delivered in connection herewith are within Debtor's corporate powers, have
been authorized, and are not in contravention of law or the terms of Debtor's
charter, bylaws, or other incorporation papers, or of any indenture, agreement
or undertaking to which Debtor is a party or by which it or its assets are
bound;
(b) to the extent that Debtor has knowledge or should
have knowledge, any Account reported by Debtor to Agent as a Reported Account
will be a good and valid Account representing an undisputed bona fide
indebtedness of an Account Debtor to Debtor; and no agreement under which any
deduction or discount may be claimed has been or will be made with the Account
Debtor on any Account except as shown on the statement or invoice furnished to
Agent with reference thereto;
(c) the Inventory is either (i) in the possession of
Debtor at the locations listed on Schedule 3(c) hereto or (ii) on the premises
of Account Debtors with respect to which Agent, on behalf of the Secured
Parties, has been given notice of such fact, has been given UCC-1 Financing
Statements executed by Debtor as, consignor and Account Debtor as consignee
with assignments of the UCC-1 financing statements to Agent for filing in such
locations, and the location thereof will not be changed without prior written
notice given by the Debtor to Agent, on behalf of the Secured Parties in each
and every instance provided, however, that the failure to comply with this
subsection 3(c)(ii) shall result in an Event of Default only to the extent that
it affects Inventory with an aggregate value, at lower of cost or market, of
$1,500,000;
(d) upon the occurrence and during the continuance of an
Event of Default, the Agent on behalf of the Secured Parties shall, at all
times, have the right to (i) take possession of any of the Collateral and to
maintain such possession on Debtor's premises, at the expense of the Debtor, by
use of a custodian or custodians in such a manner as the Agent on behalf of the
Secured Parties may elect and (ii) at the expense of the Debtor, to remove the
Collateral or any part thereof to such other place or places as the Agent on
behalf of the Secured Parties may from time to time select;
(e) Debtor is and will be the lawful owner of all
Collateral and has now and will in the future have the right to pledge, sell,
assign and transfer the same and grant a security interest in any of the
Collateral except for Permitted Liens;
(f) the Collateral is and will continue to be free and
clear of all liens, claims, security interests and encumbrances except for
Permitted Liens, and Debtor will warrant and defend all Collateral against the
claims and demands of all persons;
(g) all representations made by Debtor to Agent and/or
any of the Lenders with reference to the description, content or valuation of
any and all of the Collateral are and will continue to be true and correct in
all material respects; the sale of all Inventory which gives rise to an Account
shall, subject to the terms of Paragraph 3(c)(ii), be an absolute sale and not
on consignment or approval, and all such inventory shall have been the absolute
property of Debtor, free of liens and other encumbrances, and Debtor shall not
have received the same on consignment or approval; all service which gave rise
to an account shall have actually been performed; all invoices, records, notes,
documents of title, shipping and delivery receipts and any an all other
instruments, memoranda and documents presented or delivered to the Agent, on
behalf of the Secured Parties shall be valid and genuine; and
(h) Debtor will promptly notify Agent on behalf of the
Secured Parties of any material change from the date hereof in Debtor's own
financial status or a material adverse change which is known or should be known
to Debtor in the status of any Account Debtor, or in the condition of the
Inventory and/or Equipment, or in the collectability of any Account, including
all material claims, rejections, reductions, returns and adjustments by Account
Debtors. Debtor will comply with the terms and conditions of any leases
covering the premises where Inventory or Equipment is located and any other
order, ordinances, laws or statutes of any city,
7
6
state or governmental department having jurisdiction with respect to such
premises or the conduct of business thereon. If Inventory shipped on any
Account is returned, Debtor may sell said Inventory in the ordinary course of
business; however, upon an Event of Default and during the continuance thereof,
at the request of the Agent made on behalf of the Secured Parties, Debtor shall
hold the same segregated in trust for the Agent for the benefit of the Secured
Parties, subject to its exclusive disposition, and shall, at Debtor's expense,
deliver the same to the Agent on behalf of the Secured Parties, or to such
place or places as the Agent on behalf of the Secured Parties may designate.
4. (a) Subject to the terms of this Agreement and provided
that there does not exist, at the time of any request of Debtor to Agent, an
Event of Default or an event which with the giving of notice or the passage of
time or both would become an Event of Default, each Lender severally agrees,
upon any such request, to make Loans to Debtor hereunder, on a revolving basis
from time to time and which the Debtor may borrow, repay and reborrow during
the Term hereof, provided that the sum of all such Loans inclusive of all
Obligations under or in connection with Letters of Credit and the Term Loans,
shall not be in excess of such Lender's Pro Rata Share of the lesser of (i)
the Aggregate Maximum Loan Amount or (ii) the sum of (A) the Accounts
Receivable Borrowing Base plus (B) the lesser of (x) the Inventory Borrowing
Base or (y) $15,000,000; plus (C), the lesser of (x) the Equipment Borrowing
Base or (y) $500,000; plus (D) the amount outstanding under the $1,500,000 Term
Loan but only for so long as the Term Loan is secured by the Mortgage. The
aggregate unpaid principal amount advanced under the Inventory Borrowing Base
shall not at any time exceed 60% of the aggregate unpaid principal amount
advanced hereunder less, the unpaid principal amount at such time, of the
$1,500,000 Term Loan, provided that for the purpose of such calculation the
unpaid principal amount advanced hereunder (less the then outstanding balance
of $1,500,000 Term Loan) advanced hereunder shall be deemed to have been
advanced first against the maximum amount available at such time under the
Accounts Receivable Borrowing Base. Notwithstanding anything to the contrary
contained herein the indebtedness evidenced by the Term Loan Notes constitutes
term loans.
(b) The total amount of Loans outstanding shall include,
without limitation, the sum of the aggregate face amount of all drafts which
may then or thereafter be presented by beneficiaries under all Letters of
Credit then outstanding and also including the sum of the aggregate face amount
of all drafts theretofore presented under the Letters of Credit but not paid.
In no event, however, shall the aggregate face amount of all drafts which may
then or thereafter be presented by beneficiaries under all Letters of Credit
together with the aggregate amount of unpaid drafts pursuant to the Letters of
Credit exceed $2,000,000. The Agent shall have the right, without notice to
the Debtor, to charge the Debtor's accounts on the Agent's books with the
amount of any and all Obligations of any kind incurred by the Agent and/or
Lenders under or in connection with any Letters of Credit at the earlier of
payment by the Agent and/or Lenders therefor, or the occurrence of an Event of
Default. Any amount charged to the Debtor's loan account shall be included in
the Loans and shall incur interest at the rates provided for herein. In any
event no Letter of Credit shall have an expiration date that extends beyond the
end of the Term.
(c) (i) The Debtor may by telephonic notice received
by an officer of the Agent, request a borrowing prior to 1:00 P.M. New York
time in the form of an ABR Loan on the date on which it requests to incur such
a Loan, such request to specify the amount of the Loan requested. In any such
instance, the Agent may: (a) notify each of the Lenders, not later than 2:00
P.M. New York time, of the ABR Loan to be funded on such date, as well as the
amount of such Lender's Pro Rata Share of the requested ABR Loan, and each such
Lender shall make such amount available to the Agent on such date in same day
funds, to such account of the Agent as the Agent may designate, by not later
than 5:00 P.M. New York time; or (b) if the Agent shall elect to do so in its
sole and absolute discretion, subject to the terms and conditions hereof and in
its capacity as a Lender, make such ABR Loan available to the Debtor (each an
"Agent ABR Loan") on the date so requested, by transferring same day funds to
the operating account(s) of the Debtor maintained with the Agent. Each such
Agent ABR Loan shall constitute a Loan hereunder and shall be subject to all of
the terms and conditions applicable to other Loans, except that all payments
thereon shall be payable to the Agent in its capacity as Lender, solely for its
own account, until such time as each of the Lenders shall Settle with the Agent
as to such Agent ABR Loan on the Settlement Date next occurring. Until such
Settlement shall occur, the Agent shall correspondingly increase its Pro Rata
Share of the Aggregate Maximum Loan Amount and the Pro Rata Share of each such
other Lender shall be correspondingly decreased and upon such Settlement
occurring, appropriate adjustments shall be made to such Pro Rata Shares in
order to restore such Pro Rata Shares to their respective levels prior to the
relevant Agent ABR Loan.
(ii) Alternatively, the Debtor may by written
notice received by an officer of the Agent (and the Agent shall promptly notify
the Lenders) request a borrowing prior to 11:00 A.M. New York time in the form
of a LIBO Rate Loan on the day on which it requests Lenders to incur such Loans
and which date is three (3) Business Days prior to the Settlement Date in
relation thereto, such request to specify the amount of such Loans so
requested, as well as the requested Interest Period applicable thereto, shall
be in a minimum amount of $1,000,000 and an integral multiple of $100,000. On
each such Settlement Date in relation to any LIBO Rate Loan so requested by the
Debtor, each Lender shall make the amount of its Pro Rata Share of such LIBO
Rate Loan available to the Agent and to such account of the Agent as the Agent
may designate, in same day funds on such Settlement Date, by no later than 1:00
P.M New York time. Such amounts made available to the Agent shall be applied
against the amounts of the applicable LIBO Rate Loan so requested, and together
with the portion of such LIBO Rate Loan representing the other Pro Rata
Share(s) thereof made available by all other Lenders, shall constitute a LIBO
Rate Loan of the Lenders to the Debtor pursuant to this Agreement. In any
event, no LIBO Rate Loan shall be made which has an Interest Period that,
shall expire on a date that, extends beyond the end of the Term, and each LIBO
Rate Loan may, subject to the provisions of Paragraph 5(g) hereof, be repaid
only on the last day of the Interest Period with respect thereto.
(iii) Each such request for a borrowing hereunder
by the Borrower shall be deemed to include and restate to the Agent and to each
Lender each representation and warranty contained in this Agreement and to
constitute a certification by the Debtor to the Agent and to each Lender that
no event has occurred and is continuing on the date of such request, or would
result from any such Loan, which constitutes an Event of Default. Any such
request shall be irrevocable and the Debtor shall be bound to borrow the funds
requested therein in accordance therewith. The Agent shall not incur any
liability to the Debtor or Lenders as a result of acting upon any request or
notice which the Agent believes in good faith to have been given by an officer
duly authorized by the Debtor in relation to the Loans or for otherwise acting
in good faith in relation thereto and the crediting of Loans to the Debtor's
account, or transmittal to such person as the Debtor shall
8
7
direct, or other action called for hereunder shall conclusively establish the
obligation of the Debtor to repay such Loans as provided herein.
(iv) On each Settlement Date under this Agreement
the Agent shall be entitled to assume that each Lender has made its Pro Rata
Share of such Loan available to the Agent, unless a Lender shall have notified
the Agent to the contrary. The Agent, in its sole discretion, based upon such
assumption and in reliance thereon, may make available to the Debtor a
corresponding amount on such Settlement Date. If such corresponding amount not
in fact been made available to the Agent by any Lender, such Lender and the
Debtor severally agree to repay to the Agent forthwith, on demand, such
corresponding amount, together with interest thereon for each day during the
period commencing on the date such amount is made available to the Debtor and
ending on the date such amount is repaid to the Agent, at (A) in the case of
the Debtor, the interest rate applicable from time to time to such borrowing,
and (B) in the case of a Lender, the Federal Funds Rate for the first three
days following the date such amount was made available by the Agent and
thereafter, at the interest rate applicable to the Debtor from time to time
with respect to such Loans. If the Lender repays to the Agent such
corresponding amount, such amount so repaid shall constitute a Loan, and if
both such Lender and the Debtor shall have repaid such corresponding amount,
the Agent shall promptly return to the Debtor such corresponding amount in same
day funds. Nothing in this paragraph, however, shall or shall be deemed to: (a)
obligate Agent to make available to the Debtor any Loans or to issue or cause
to be opened any Letters of Credit, when the Agent has any notice that any
Lender will not advance its Pro Rata Share thereof; or (b) relieve any Lender
of its obligation, if any, to make a Loan on any Settlement Date.
(v) By delivering a Continuation Notice to the
Agent on or before 10:00 A.M., New York time, on a Business Day, the Debtor may
from time to time irrevocably elect, on not less than three nor more than five
Business Days' notice that all, or any portion (in an aggregate minimum amount
of $1,000,000 and an integral multiple of $100,000), of (A) a LIBO Rate Loan be
continued, immediately following last day of the Interest Period Applicable
thereto, as, or that an ABR Loan be converted into, a LIBO Rate Loan (and in
the absence of timely delivery of a Continuation Notice with respect to any
LIBO Rate Loan at least three Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Loan shall, on
such last day, automatically convert to an ABR Loan) or (B) a LIBO Rate Loan
may be converted into an ABR Loan; provided, however, that no portion of the
outstanding principal amount of a Loan may be continued, immediately following
the last day of the Interest Period Applicable thereto, as, or converted into,
a LIBO Rate Loan, and no LIBO Rate Loans may be requested by the Debtor, in any
instance when any Event of Default has occurred and is continuing. The Agent
shall give written notice to each Lender of any such Continuation Notice or
conversion prior to 3:00 P.M. on the day such notice is received. All such
continuation or conversions of Loans shall be effected based on the respective
Pro Rata Share of each Lender.
(vi) On the Settlement Date relevant to each Loan,
the Agent and the Lenders shall each remit to the other, in immediately
available funds, all amounts necessary so as to ensure that, as of the
Settlement Date, the Lenders shall have their Pro Rata Share of all outstanding
Obligations. All Loans made by the Agent hereunder shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Debtor to the Agent and/or to
the Lenders arising under or in connection with this Agreement, shall be
charged to the Debtor's account on Agent's books. The proceeds of each Loan
made by the Agent shall be made available to the Debtor by way of credit to the
Debtor's operating account(s) maintained with the Agent. Any and all
Obligations due and owing hereunder may be charged to Debtor's account and
shall constitute Loans hereunder.
(vii) INTENTIONALLY DELETED
(viii) The Agent shall forward to each Lender, at
the end of each month, a copy of the account statement rendered by the Agent to
the Debtor.
(ix) All Loans shall be made by the Lenders in
accordance with their Pro Rata Shares thereof. The Debtor hereby agrees that
each Lender is solely responsible for its Pro Rata Share of the Obligations,
including all Loans to be made and all Letters of Credit to be issued for the
Debtor's account, as well as such Lender's Pro Rata Share of the Term Loans,
and that neither the Agent nor any Lender shall be responsible for, nor assume
any obligations for the failure of any Lender to make any Loans hereunder or
otherwise to make available such Pro Rata Share. Furthermore, no such failure
by any Lender to perform its obligations hereunder shall excuse any other
Lender from its obligations hereunder, whether to make Loans or otherwise.
However, should any Lender refuse to make available its Pro Rata Share as
described above, then the Agent may proceed in accordance with subparagraph (d)
immediately below, or the other Lenders or any other Lender (including without
limitation, the Agent in its capacity as Lender) may, but without the
obligation to do so, increase, unilaterally, their or its Maximum Loan Amount,
in which event the Debtor shall be correspondingly obligated to such other
Lenders or Lender. Any such defaulting Lender, however, shall not thereafter be
entitled to receive from the Agent any payments of principal, interest, fees or
other amounts paid hereunder (whether by collection of the Collateral or
otherwise), and the Agent shall be entitled to retain such amounts, until all
amounts owing by such defaulting Lender to the Agent (together with any
interest therein as provided in this Agreement) shall have been paid in full.
(x) In the event that the Agent, the Lenders, or
any of them, is sued or threatened with suit by the Debtor or by a receiver,
trustee, creditor or any committee of creditors on account of any preference,
voidable transfer or lender liability issue, alleged to have occurred or been
received as a result of, or during the transactions contemplated in this
Agreement, then in such event any money paid in satisfaction or compromise of
such suit, action, claim or demand and any expenses, costs and attorneys' fees
paid or incurred in connection therewith, whether by the Agent, the Lenders, or
any of them, shall be the responsibility of the Lenders on a Pro Rata Share
basis. In addition, any costs, expenses, fees or disbursements reasonably
incurred by outside agencies or attorneys retained by the Agent to effect
collection or enforcement of any rights in the Collateral, including enforcing,
preserving or maintaining rights under this Agreement shall be also the
responsibility of the Lenders on a Pro Rata Share basis to the extent not
reimbursed by the Debtor or from the proceeds of Collateral.
(xi) INTENTIONALLY DELETED
(xii) The Agent may, in its sole discretion and at
any time for the Debtor's account and expense, pay any amount or do any act
required of the Debtor hereunder or reasonably requested by the Agent, to
preserve, protect, maintain or enforce the Obligations, the Collateral or the
security interests or liens
9
8
now or hereafter held by the Agent and/or any of the Lenders, and which the
Debtor fails to pay or do, including without limitation, payment of any
judgment against the Debtor, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord's claim, and any other security
interest, lien, charge and/or encumbrance upon or with respect to the
Collateral and which such failure to pay or do would impair the Agent's rights
hereunder or constitute an Event of Default. All payments that the Agent makes
or any action taken by the Agent under this paragraph shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
(d) Notwithstanding the foregoing, the Agent shall have
the right, in Agent's sole and absolute discretion, to make Loans hereunder:
(i) on behalf of the Lenders, on a Pro Rata Share basis, which are in excess of
the maximum amount of Loans which would otherwise be permitted hereunder
pursuant to Paragraph 4(a) above ("Overadvances") to the maximum amount of
$1,000,000 for no more than five (5) consecutive Business Days applicable to
all of such (voluntary) Overadvances, whether or not any such Overadvances are
in excess of the Accounts Receivable Borrowing Base, the Equipment Borrowing
Base and/or the Inventory Borrowing Base, or are in excess of any the above
percentages and/or dollar limitations or any other pertinent limitations herein
set forth. Notwithstanding the foregoing, however, such Overadvance limitation
shall not include, or be deemed to include, or be considered to have been
exceeded by reason of, any Loans which at any time or from time to time arise
in an involuntary manner, whether by reason of items charged to the Debtor's
account in accordance with this Agreement or otherwise, and such Overadvance
limitation shall only apply to any Overadvances which may be voluntarily
extended under this Agreement to the Debtor and which are made by Agent, in
Agent's sole and absolute discretion, on behalf of the Lenders, subject to any
additional terms the Agent may deem necessary; and (ii) in the event any Lender
shall fail to fund Loans to the Debtor as herein provided, by making such Loans
itself, in its capacity as a Lender, in whole or in part (each a "Deficiency
Loan"), but there shall be no obligation on its part to make any such
Deficiency Loan. Upon making any such Deficiency Loan, the Agent in its
capacity as Lender shall thereafter be entitled to payments of principal of and
interest thereon in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such Loan; in such
an instance, the Agent in its capacity as Lender shall correspondingly increase
its Pro Rata Share of the Aggregate Maximum Loan Amount (and decrease the Pro
Rata Share thereof held by the defaulting Lender) until such time, if any, as
full repayment of the Deficiency Loan may be made by such defaulting Lender, as
more fully described below. Should the defaulting Lender later pay to the
Agent, in its capacity as Lender, the entire outstanding amount of such
Deficiency Loan, together with accrued and unpaid interest thereon, from the
most recent date or dates interest was paid to the Agent by the Debtor on each
Loan comprising a Deficiency Loan, at the interest rate per annum for overnight
borrowing by the Bank from the Federal Reserve Bank, then such payment shall be
credited against the Deficiency Loan and in full payment thereof and the Debtor
shall be deemed to have borrowed the amount of such Deficiency Loan from such
other Lender as of the most recent date or dates, as the case may be, upon
which any payments of interest were made by the Debtor thereon.
Under no circumstances, however, shall the Agent or any Lender be
responsible for any default of any other Lender in respect to such Lender's
obligation to make any Loan hereunder, nor shall the Pro Rata Share of any
Lender hereunder in any Loans be increased as a result of such default of any
other Lender.
(e) Except as otherwise specifically provided in this
Agreement all payments under this Agreement and the Term Loan Notes shall be
made to the Agent for the ratable account of each Lender in immediately
available funds not later than 1:30 p.m. (New York time) on the date when due
and shall be made in immediately available funds and in lawful money of the
United States of America. Any payments under this Agreement or under the Term
Loan Notes which are made later than 1:30 p.m. (New York time) shall be deemed
to have been made on the next succeeding Business Day. If any payment of
principal, interest, premium, or any other sum to be made hereunder becomes due
and payable on a day other than a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day (except as set forth in
subsection (b) of the definition of "Interest Period" appearing herein) and
interest thereon shall be payable at the applicable rate during such extension.
(f) As between the Debtor and the Agent, the Agent shall
determine in its sole discretion the order and manner in which the proceeds of
Collateral and other payments that the Agent receives are applied to the Loans,
interest thereon and the other Obligations, and the Debtor hereby irrevocably
waives the right to direct the application of any payment or proceeds. As
between Debtor and Agent, the Agent shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the Obligations. As between the Agent and the Lenders, all
payments against and all proceeds of Accounts or other Collateral received by
the Agent, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any attorney costs, fees or other expense
reimbursements then due to the Agent from the Debtor; second, to pay any Loans
of the Agent made in its capacity as Lender, not as yet Settled as of the
applicable Settlement Date, together with all interest thereon; third, to pay
any fee or expense reimbursements then due to the Lenders from the Debtor;
fourth, to pay interest due in respect of all Loans; fifth, to pay principal of
the Loans (other than any Loans of the Agent made in its capacity as Lender,
covered by clause "second" above) and unpaid reimbursement Obligations in
respect of Letters of Credit; and sixth, to payment of any other Obligation due
to the Agent or any Lender by the Debtor.
(g) The Debtor shall indemnify, defend and hold harmless
upon demand, the Agent and the Lenders from and against any and all
liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind whatsoever,
which are at any time (including without limitation at any time following the
repayment of the Loans) imposed or asserted against the Agent or any Lender
arising out of: (i) the ownership, use, operation, maintenance, repair, leasing
or subleasing of the Collateral; (ii) the design, maintenance and construction
of the Collateral; (iii) the sale or other disposition of the Collateral or
proceeds; (iv) the issuance, sale or delivery of any notes hereunder, including
without limitation the Term Loan Notes; (v) breach of representations or
warranties made by the Debtor; or (vi) any agreement entered into by the Debtor
in connection with the Collateral; unless it is determined that such
liabilities, claims, obligations, damages, penalties, or judgments were the
result of acts or omissions on the part of the Agent or the Lenders
constituting gross negligence or willful misconduct, and then only to the
extent of such gross negligence or willful misconduct.
(h) Without limiting the foregoing, if after receipt of
any payment, or any proceeds of Collateral applied to the payment of, all or
any part of the Obligations, Agent or any Lender is for any reason compelled to
surrender such payment or proceeds to or for the benefit of the Debtor, because
such payment or proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference,
10
9
impermissible setoff, or a diversion of trust funds, (each a "Surrender Event")
then the Obligations or part thereof intended to be satisfied shall be revived
and continue, the Debtor hereby agrees to unconditionally and irrevocably
indemnify each Lender and the Agent with respect thereto and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by the Lender or the Agent, as the case may be; and the Debtor
shall be liable to pay to the Lender or the Agent, the amount of such payment
or proceeds surrendered. Notwithstanding the foregoing and not in limitation,
in any respect, of the indemnity by Debtor contained herein, in the event of
the occurrence of a Surrender Event the Lenders which have not so surrendered
shall pay to the Lender required to so surrender such sums as will cause each
Lender to have paid its Pro Rata Share of the amount so surrendered. The
provisions of this subparagraph (g) shall be and remain effective
notwithstanding any contrary action which may have been taken by any Lender or
the Agent in reliance upon such payment or proceeds, and any such contrary
action so taken shall be without prejudice to the rights of the Lenders and the
Agent under this Agreement and shall be deemed to have been conditioned upon
such payment or proceeds having become final and irrevocable. The provisions of
this subparagraph (g) shall survive the payment of all Obligations hereunder,
the termination of all outstanding Letters of Credit, the termination of this
Agreement and/or the resignation of the Agent.
5. (a) (i) Interest on Loans shall be payable in arrears
on the last day of each month except that interest with respect to LIBO Rate
Loans shall be payable on the last day of the Interest Period with respect
thereto. Interest payments hereunder may, at Agent's option be charged by
Agent to Debtor's account. Interest charges shall be computed on the unpaid
balance of the Loans (other than the Term Loans which shall bear interest at
the rates set forth in the respective Term Loan Notes) for each day they are
outstanding at a rate per annum equal to the Contract Rate.
(ii) Interest shall be computed on the basis of
actual days elapsed over a 360-day year.
(iii) Notwithstanding the foregoing, in no event
shall interest exceed the maximum rate permitted under any applicable law or
regulation, and if any provision of this Agreement is in contravention of any
such law or regulation, such provision shall be deemed amended to provide for
interest at said maximum rate and any excess amount shall either be applied, at
Agent's option, to the outstanding Loans in such order as Agent shall determine
or refunded by Agent or by the Lender, as the case may be, to Debtor.
(iv) Debtor shall pay principal, interest and all
other amounts payable hereunder, without any deduction whatsoever, including,
but not limited to, any deduction for any set-off or counterclaim.
(b) (i) In the event the average closing daily unpaid
balances of all Loans hereunder during any calendar month is less than the
Aggregate Maximum Loan Amount, Debtor shall pay to Agent for the ratable
benefit of the Lenders, a non-refundable fee at a rate per annum equal to 2/10
of one percent (.2%) on the amount by which the Aggregate Maximum Loan Amount
exceeds such average daily unpaid balance. Such fee shall be calculated on the
basis of a year of 360 days and actual days elapsed, and shall be charged to
Debtor's account on the first day of each month with respect to the prior
month.
(ii) The Debtor shall also pay to the Agent for
the ratable benefit of the Lenders, the Letter of Credit Fee, which shall be
payable on a monthly basis in accordance with the Letter of Credit Agreement.
(iii) Upon Agent's performance of any due diligence
- namely any field examination, collateral analysis or other business analysis,
the need for which is to be determined in the reasonable discretion of Agent
and which due diligence is undertaken by Agent or for the benefit of Agent and
the Lenders, an amount equal to Agent's reasonable out of pocket travel
expenses to locations other than the ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ office incurred in
connection therewith shall be charged to Debtor's account provided, however,
that only the Agent can conduct field examinations but any Lender may, without
charge to Debtor, participate in any such field examination.
(iv) With respect to any and all other fees and
charges at any time and from time to time paid or payable by the Debtor to the
Agent under or in connection with this Agreement, which fees and charges may be
set forth herein or in separate agreements between Agent and the Debtor, the
Agent alone shall be entitled to retain the same for its exclusive account.
Without limiting the foregoing, Debtor shall pay to Agent for the Agent's
account only (or Agent may charge Debtor's account(s) with), an annual
Collateral Monitoring Fee, in an amount equal to $20,000, which fee shall be
paid in equal monthly installments during each year that this Agreement is in
effect.
(v) Notwithstanding anything to the contrary
contained in this Agreement, in the event of a public offering by Jaco
("Public Offering") and provided that no Event of Default has occurred, Debtor
may reduce the Aggregate Maximum Loan Amount, in not more than two reductions,
to an amount of not less than $10,000,000, subject to the following conditions:
(A) notice of such reduction must be given to Agent no less than five Business
Days prior to the effective date of such reduction ("Effective Reduction Date")
and Debtor shall no later than the Effective Reduction Date, pay to Agent the
amount which will reduce the outstanding balance of the Loans (including
interest, costs, fees, amounts payable pursuant to Paragraph 5(g) and other
charges as specified in the Agreement) to an amount not greater than the
Aggregate Maximum Loan Amount as so reduced; (B) the aggregate of such
reductions shall not exceed the net proceeds received by Debtor from the Public
Offering (C) any such reduction must be for an amount no less than $1,000,000
and in integral multiples of $500,000; and (D) any such reduction shall be
irrevocable and shall permanently reduce the Aggregate Maximum Loan Amount and
Debtor shall thereafter have no right to increase the same. Any such
reduction shall equally decrease each Lender's Pro Rata Shares.
(c) In the event of any change in any applicable law,
treaty or governmental regulation, or in the interpretation or application
thereof, or compliance by any Lender (for purposes of this Paragraph 5(c), the
term "Lender" shall include Lender and any corporation or bank controlling
Lender) with any request or directive (whether or not having the force of law)
from any central bank or other financial, monetary or other authority, shall:
(i) subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or change the basis of taxation of
payments to any Lender of principal, fees, interest or any other amount payable
hereunder or (except for taxes on or changes in the rate of tax on the overall
net income of any Lender);
11
10
(ii) impose, modify or hold applicable any
reserve, special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or other credit
extended by, any office of any Lender, including (without limitation) pursuant
to Regulation D of the Board of Governors of the Federal Reserve System; or
(iii) impose on any Lender any other condition with
respect to this Agreement;
and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining its Loans commitments or other extensions of
credit hereunder or under the Term Notes by an amount that any Lender deems to
be material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Loans by an amount that any
Lender deems to be material, then, in any case Debtor shall promptly pay any
Lender, upon its demand, such additional amount as will compensate such Lender
for such additional cost or such reduction, as the case may be. Any such Lender
shall certify the amount of such additional cost or reduced amount to Debtor,
including all pertinent information regarding the calculation thereof, and such
certification shall be conclusive absent manifest error.
(d) (i) In the event of any change in any applicable
law, rule, regulation or guideline regarding capital adequacy, 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, or compliance by any Lender (for purposes of this
Paragraph 5(d), the term "Lender" shall include any Lender and any corporation
or bank controlling such Lender) 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, has or would have the effect of
reducing the rate of return on such Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then, from time to time, Debtor shall pay upon
demand to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. In determining such amount or amounts, any such
Lender may use any reasonable averaging or attribution methods. The protection
of this Paragraph shall be available to any Lender regardless of any possible
contention of invalidity or inapplicability with respect to the applicable law,
regulation or condition.
(ii) A certificate of any Lender setting forth
such amount or amounts as shall be necessary to compensate such Lender with
respect to Paragraph 5(d) hereof including all pertinent information regarding
the calculation thereof, when delivered to Debtor shall be conclusive absent
manifest error.
(e) If any Lender (for purposes of this Paragraph 5(e)
the term "Lender" shall include any Lender and any corporation or bank
controlling such Lender) shall determine (which determination shall, upon
notice thereof to Debtor, be conclusive and binding on Debtor) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for such Lender to make, continue or maintain the Loans or any
portion thereof as a LIBO Rate Loan, the obligations of such Lender to make,
continue, maintain or convert the Loans or any portion thereof as or into LIBO
Rate Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify Debtor that the circumstances causing such suspension no
longer exist, and all LIBO Rate Loans shall automatically convert into ABR
Loans at the end of the then current Interest Periods with respect thereto or
sooner, if required by such law or assertion.
(f) If any Lender (for the purposes of this Paragraph
5(f) the term "Lender" shall include any Lender and any corporation or bank
controlling such Lender) shall have determined that by reason of circumstances
affecting the London interbank market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO Rate Loans or the
LIBO Rate does not reflect such Lender's cost of funds, then, upon notice from
such Lender to Debtor, the obligations of such Lender under this Agreement to
make, continue, maintain or convert the Loans or any portion thereof as LIBO
Rate Loans shall forthwith be suspended until such Lender shall notify Debtor
that the circumstances causing such suspension no longer exist.
(g) Absent any gross negligence on the part of any
Lender, in the event any Lender (for purposes of this Paragraph 5(g) the term
"Lender" shall include any Lender and any corporation or bank controlling such
Lender) shall incur any loss or expense (including any loss of margin or any
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to make, continue, maintain or
convert any portion of the principal amount of the Loans or any portion thereof
as a LIBO Rate Loan) as a result of
(i) any conversion or repayment or prepayment of
the principal amount of any LIBO Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto;
(ii) the Loans not being made as LIBO Rate Loans
in accordance with the written request therefor (other than as a result of the
breach of such Lender's obligation to make such LIBO Rate Loan in accordance
with the terms hereof); or
(iii) the Loans or any portion thereof not being
continued as or converted to, LIBO Rate Loans in accordance with the
Continuation Notice therefor,
then, upon the written notice of such Lender to Debtor the Debtor shall, within
five days of receipt thereof, pay to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
Debtor.
5(A). Until Debtor's authority to do so is terminated by the Agent
on behalf of the Secured Parties, either as a result of notice by Agent which
it may give at any time, or automatically upon the occurrence of an Event of
Default, Debtor will for the benefit of and for the account of the Agent on
behalf of the Secured Parties, but at the Debtor's expense, enforce, collect
and receive as the property of the Secured Parties and hold in trust for the
Secured Parties, separate from the Debtor's own property and funds, all amounts
received on Accounts from Account Debtors and will turn over and/or mail and
deliver to the office of Agent on behalf of the Secured Parties, on the day of
receipt thereof, all cash, original checks, drafts, notes and other evidences
of payment received in full or part payment of any Accounts, with full right in
Agent on behalf of the Secured Parties to
12
11
endorse and deposit such original Account Debtor's checks and remittances to
its own account, whether said remittances are made payable to Agent, any of the
Secured Parties or Debtor, the proceeds thereof to be credited to Debtor's loan
account as provided in Paragraph 8 hereof. Debtor shall submit to Agent on
behalf of the Secured Parties, with all remittances, a report in such form as
Agent may require; and further, shall submit original remittance advice in the
form received by Debtor from Account Debtors. This privilege shall terminate
automatically upon the occurrence of an Event of Default pursuant to Paragraph
19 (f) of this Agreement, or at the election of the Agent or the Required
Lenders, upon the occurrence of any other Event of Default and until such Event
of Default is cured or waived to the satisfaction of the Agent.
6. Debtor shall make clear and suitable entries and notations on
Debtor's books and records, which shall reflect all facts giving rise to the
Account (and in such a case where the Account arises by reason of a sale or
delivery of merchandise, such notation shall clearly reflect the absolute sale
of such merchandise), all payments, credits and adjustments applicable to the
Account and the security interest of each of the Agent on behalf of the Secured
Parties. Upon the occurrence and continuance of an Event of Default, Debtor
shall deliver to and sign for Agent on behalf of Secured Parties as Agent shall
require, any bills, statements and letters to be directed to Account Debtors
and shall execute and deliver to Agent on behalf of the Secured Parties any and
all instruments (including, without limitation, ageing of Accounts), reasonably
determined by Agent to be necessary or convenient to carry into effect the
terms, provisions and conditions of this Agreement, to perfect the security
interest granted hereunder, and to facilitate collection of Accounts. Any
employee or agent of the Agent on behalf of the Secured Parties shall have the
right to call at Debtor's place of business from time to time during normal
business hours and, without hindrance or delay, inspect, examine, check and
make abstracts from all the books, records, receipts, correspondence, memoranda
and other papers or data of the Debtor. Debtor shall at all times maintain a
complete set of books and records, containing up-to-date posting of all
Debtor's cash and accrual transactions of any nature whatsoever.
6(A). Debtor shall deliver to Agent on behalf of the Secured
Parties daily, or at such other periods as Agent shall determine, a report in
form reasonably satisfactory to Agent on behalf of the Secured Parties
enumerating the Accounts arising out of the sale of merchandise or rendition of
service. Debtor shall deliver to Agent on behalf of the Secured Parties,
duplicate invoices, shipping receipts and such other evidence of shipment or
delivery of the merchandise or performance of the services or the performance
of such other act or acts giving rise to said Account as Agent may, from time
to time, reasonably require. Upon request, Debtor shall deliver to Agent on
behalf of the Secured Parties a report in form satisfactory to Agent
enumerating all Accounts. If Debtor shall at any time grant to any Account
Debtor a credit, or if Debtor shall, at any time, receive back any merchandise
which it had delivered to an Account Debtor, Debtor shall forthwith give notice
to Agent, in writing, of the issuance of such credit or the return of such
merchandise. The Debtor agrees to maintain such books and records regarding
Accounts as the Agent may reasonably require and agrees that the books and
records of the Debtor will reflect the Agent's interest in the Accounts for the
benefit of the Lenders. All of the books and records of the Debtor will be
available to the Agent at normal business hours, including any records handled
or maintained for Debtor by any other company or entity.
7. Agent on behalf of the Secured Parties may, upon the
occurrence and during the continuance of an Event of Default, without notice to
Debtor, notify Account Debtors that Accounts have been assigned to Agent on
behalf of the Secured Parties and shall be paid directly to Agent on behalf of
the Secured Parties. Upon the occurrence and during the continuance of an
Event of Default, upon the request of the Agent on behalf of the Secured
Parties, Debtor shall so notify Account Debtors and shall indicate on all
▇▇▇▇▇▇▇▇ to Account Debtors that all moneys due thereon are payable to Agent.
Agent shall further have the right upon the occurrence and during the
continuance of an Event of Default, directly or through its agents, on behalf
of the Secured Parties, to collect any or all of the Accounts, and in Agent's
own name, or in Debtor's name, to sell, transfer, set over, compromise,
discharge or extend the whole or any part of the Accounts, and for that purpose
to do all acts and things necessary or incidental thereto, including the right
of suit, Debtor hereby ratifying all that Agent shall do by virtue thereof.
Granting extensions to Account Debtors or to Debtor, suffering any delay, or
permitting any breach by Debtor or Account Debtors in connection with any
transactions between the parties hereto, shall in no way be construed as a
waiver of any subsequent breach or delay or of the rights of Agent and/or any
of the Secured Parties against Debtor, and Debtor's liability shall in no way
be restricted, limited, diminished or abated by virtue of any such extension or
privilege granted. Debtor shall not, except in the ordinary course of its
business, without the express written consent of Agent on behalf of the Secured
Parties, release, compromise or adjust any Account, or any guarantee, security
or lien therefor, accept any returns, or grant any discounts, allowances or
credits thereon, or bring any suit to enforce payment thereof; in any event,
after the occurrence of an Event of Default under Paragraph 19(f) hereof, or
after the Agent has notified the Debtor of the occurrence of any other Event of
Default which has occurred and is continuing, none of the foregoing shall be
deemed any longer to be in the ordinary course of business and thereafter, all
of the foregoing are only to occur after the Agent, in its sole discretion, may
have given its prior written approval. Upon the occurrence of an Event of
Default and until such time as such Event of Default is waived or cured to the
Agent's satisfaction and on notice from the Agent, the Debtor agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set aside by
the Debtor and held by the Debtor for the Agent's account as owner and
assignee. Agent and/or the Secured Parties shall not, under any circumstances,
or in any event whatsoever, have any liability for any error, omission or delay
of any kind occurring in the settlement, collection or payment of any Account
or of any instrument received in full or part payment thereof, or in dealing
with any lien, security or guarantee of any Account.
8. Agent shall credit to Debtor's Loan Account proceeds of
Accounts received by Agent on behalf of the Secured Parties, such credits to be
entered one Business Day after receipt of the proceeds; such credits, however
are conditional upon final payment to Agent on behalf of the Secured Parties,
at Agent's own office, in cash or solvent credits, of all items giving rise to
the credits, and if any item is not so paid, any credit given to Debtor for it
shall be reversed, whether or not the item is returned. At the end of each
month, the Agent shall send the Debtor a statement showing the accounting for
the charges, Loans, payments and other transactions occurring between the Agent
and the Lenders and the Debtors during that month, with a copy thereof to each
Lender. The monthly statements shall constitute an account stated between the
Debtor and the Lenders and shall fully bind the Debtor unless the Agent
receives a written statement of the exceptions within thirty (30) days of the
date on which the monthly statement is mailed or within thirty (30) days of the
mailing by Agent of any adjustment thereof.
9. All sales of Inventory by Debtor shall be reported to Agent on
behalf of the Secured Parties promptly on a Sales Summary Report. Agent on
behalf of the Secured Parties shall have the right upon the occurrence of an
Event of Default and during the continuance thereof, to the immediate
possession of all Inventory including without limitation, labels, stationery,
documents and packing materials and products and proceeds of the foregoing, and
Debtor shall make such Inventory and all its records pertaining thereto
available to Agent on behalf of the Secured Parties for inspection at any time
requested by Agent. Debtor shall, upon
13
12
request of Agent, promptly furnish Agent on behalf of the Secured Parties with
a report, in form and substance satisfactory to the Agent, describing and
detailing the Inventory including, but not limited to, the location of such
Inventory and the value thereof at cost or market value, whichever is lower.
Agent on behalf of the Secured Parties shall have the right to take or cause to
be taken a physical count of the Inventory upon the occurrence and during the
continuance of an Event of Default. Agent on behalf of the Secured Parties
shall have the right, in its discretion, to pay any liens or claims upon said
Inventory including, but not limited to, warehouse charges, dyeing, finishing
and processing charges, landlord's claims or any other liens or encumbrances
thereon, and the amount of any such payment by Agent shall be charged to
Debtor's Loan Account and be part of the Obligations. Neither Agent nor any of
the Secured Parties shall be liable for the safekeeping of any of the Inventory
or for any loss, damages or diminution in the value thereof, or for any act or
default of any warehouse or other person dealing in and with said Inventory,
whether by Agent or by or through any other agent for any of them, or
otherwise, or for the collection of any proceeds thereof, but the same shall at
all times be solely at Debtor's risk.
10. Debtor agrees at its own expense, to keep all Inventory and
Equipment insured to the full value thereof on a cost basis against such risks
and by policies of insurance issued by such companies as Agent on behalf of the
Secured Parties may reasonably designate or approve, and the policies
evidencing such insurance shall be issued with such loss payable rider as Agent
may reasonably designate and said policies shall be delivered to Agent on
behalf of the Secured Parties at Agent's request. Until such time as the Agent
requires otherwise, such loss payable rider shall provide that payment with
respect to any claim exceeding $150,000 shall be made directly to Agent on
behalf of the Secured Parties. Should Debtor fail for any reason to furnish
Agent with such insurance, Agent shall have the right to effect the same and
charge any costs in connection therewith to Debtor's Loan Account. Neither
Agent nor any of the Secured Parties shall have any risk, liability or
responsibility in connection with payment or non- payment of any loss, the sole
obligation of Agent on behalf of the Secured Parties being to credit Debtor's
Loan Account with the net proceeds of any insurance payments received on
account of any loss.
11. Debtor hereby authorizes Agent on behalf of the Secured
Parties, at Debtor's expense, to file one or more financing statements to
perfect the security interests granted herein without Debtor's signature
thereon, and Debtor agrees to do, file, record, make, execute and deliver all
such acts, deeds, things, notices, instruments and financing statements as
Agent may reasonably request in order to perfect and enforce the rights of the
Agent and/or the Secured Parties herein. Debtor hereby authorizes Agent to
complete any blank space therein according to the terms upon which the
Obligations hereunder are granted. At the request of Agent, Debtor will
execute and deliver to Agent on behalf of the Secured Parties such financing
statements or amendments thereof or supplements thereto, and such other
instruments, all in a form satisfactory to Agent, as Agent may from time to
time deem necessary or advisable, and will pay costs and expenses of filing or
recording same, in order to preserve, protect and maintain the security
interests hereby granted. Debtor further agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. Except for Collateral
subject to Permitted Liens, without the prior written consent of Agent, Debtor
will not grant any security interest in any of the Collateral and will not
permit or allow any adverse financing statement covering the Collateral to be
on file in any public office. Except for Collateral subject to Permitted
Liens, Debtor warrants and represents that as of the time of execution of this
Agreement, no other financing agreements covering any of the Collateral are in
force and that no claim of any security interest in any of the Collateral is on
file in any public office.
12. Debtor shall pay to Agent on demand, for itself and on behalf
of the Lenders any and all reasonable costs and expenses, including, but not
limited to, a collection charge on all Accounts collected, all reasonable
attorneys' fees and expenses, and all other reasonable expenses, of like or
unlike nature, which may be expended or incurred by Agent or by any Secured
Party to obtain or enforce payment of any Account, either as against the
Account Debtor, and upon the occurrence and during the continuance of an Event
of Default, Debtor or any guarantor or surety of Debtor, or in the prosecution
or defense of any action concerning any matter growing out of or connected with
the subject matter of this Agreement, any amendment hereto or modification or
waiver hereof, the Obligations or the Collateral or any of the rights or
interests therein or thereto of the Agent and/or any Lender, including, without
limitation, any reasonable counsel fees or expenses incurred in any bankruptcy
or insolvency proceeding or otherwise with respect hereto.
13 (a). The obligation of the Lenders to make any initial Loan to be
made hereunder on or after the Closing Date and the obligation of the Agent to
cause any initial Letter(s) of Credit to be issued hereunder on or after the
Closing Date, is subject to the conditions precedent that the Agent shall have
received on or before the Closing Date all of the following (except as waived
by the Agent), in form and substance satisfactory to the Agent and in
sufficient copies for each Lender: (i) the Agreement and all related
agreements, instruments and documentation, executed by the Debtor, the Agent
and where called for, each of the Lenders including Uniform Commercial Code - 1
financing statements (each a "UCC-1") and Uniform Commercial Code - 3 financing
statements (each a "UCC-3") and a guaranty by Jaco of the Obligations of Nexus
to Agent and Lenders; (ii) copies of the resolutions of the board of directors
of the Debtor approving and authorizing the execution, delivery and performance
by the Debtor of this Agreement, certified as of the Closing Date; (iii) good
standing certificates for the Debtor of their state of incorporation and from
each other jurisdiction in which it is doing business, verifying the good
standing of the Debtor; (iv) an officer's certificate dated as of the Closing
Date, stating that the representations and warranties herein are true and
correct on and as of such date, as though made on and as of such date and that
no Event of Default exists or would result immediately after the Closing Date;
(v) the Debtor shall have executed and delivered to the Agent the (revised)
Term Loan Notes, substantially in the forms attached hereto as Exhibits B-1
through and including B-6 respectively; (vi) a modification to Commercial
Mortgage shall have been executed and delivered to the Agent, in relation to
that certain Commercial Mortgage Deed from Nexus to BNYCC dated March 11, 1994,
recorded in Book 117 at Page 389 of the Town of ▇▇▇▇▇▇▇ (Vermont) Land Records
on March 17, 1994; (vii) in relation to the modification referenced in
immediately preceding subparagraph, an amendment to Lawyer's Title Insurance
Policy #▇▇▇-▇▇-▇▇▇▇▇▇ shall have been executed and delivered to the Agent;
(viii) the Debtor shall have executed and delivered an amendment to that
certain Trademark Collateral Security Agreement and to that certain Patent
Collateral Security Agreement heretofore executed in favor of BNYCC, as Secured
Party, together with an amendment to any related agreements and/or powers of
attorney; (ix) the Debtor shall have provided to the Agent certificates
executed by its insurance carriers with respect to each of Debtors relevant
insurance policies which shall be in form and substance acceptable to the
Agent, (provided that Debtor shall, upon request of the Agent, provide to the
Agent copies of its up to date insurance policies), as well as having executed
and delivered to Agent an amended loss payable endorsement accepted by its
insurance carriers, with respect to relevant insurance coverages, in form and
substance acceptable to the Agent; (xi) each guarantor of the Obligations of
Debtor to Agent and/or Lenders shall execute and deliver (A) such
reaffirmations of existing guarantees as may be required by Agent; (B) such
reaffirmations of existing security agreements as may be required by Agent; and
(C) such UCC-1 and UCC-3 financing statements as may be required by Agent;
(xii) NatWest, BNYCC, the Agent and the Debtor shall have
14
13
each executed and delivered an Assignment and Acceptance Agreement
substantially in the form of Exhibit C hereto; (xiii) NatWest shall have funded
its initial Pro Rata Share of the Obligations hereunder; and (xiv) Jaco shall
have executed and delivered to Agent its guaranty of the Obligations of Nexus
to Agent and/or Lenders.
(b) The obligation of the Lenders to make each Loan,
after the Closing Date and the obligation of the Agent to cause initial
Letter(s) of Credit to be issued hereunder after the Closing Date, is subject
to the further conditions precedent that on the date of any such extension of
credit: (i) the following statements shall be true and correct: (A) all
representations and warranties in this Agreement and all related agreements,
instruments and documentation are correct in all material respects on and as of
the date of such extension of credit as though made on and as of such date,
except to the extent the Agent and the Lenders have been notified by the Debtor
in writing that any representation or warranty is not correct and the Required
Lenders have explicitly waived in writing compliance with such representation
or warranty; and (B) no event or circumstance exists and is continuing, or
would result from any such extension of credit, which constitutes an Event of
Default hereunder, or which with the giving of notice, or the passage of time,
or both, would constitute an Event of Default hereunder; and (ii) the Agent
shall have received an appropriate notice of borrowing or a notice of
conversion/continuation, as applicable, and Agent shall have received all
reports, information and documents to be provided to it as of the date of such
relevant notice, in a timely manner; provided however, that the foregoing
conditions precedent are not conditions to each Lender Settling with the Agent
on the relevant Settlement Date, or for reimbursing its Pro Rata Share of any
Loans as provided in this Agreement.
14. Upon an Event of Default and during the continuance thereof,
in the event that Debtor shall become liable to, or any lien against Debtor
shall arise in favor of, any taxing authority, whether or not the amount of
such liability shall have been assessed against Debtor and whether or not
notice of such lien shall have been filed or recorded as may be required by
law, Agent on behalf Secured Parties shall have the right, but is not
obligated, to pay the amount of such liability (including interest and/or
penalties thereon) and also to pay any tax or liability by virtue of which such
lien shall have arisen, and any amount or amounts paid for the discharge of
such liability or lien shall be for Debtor's Loan Account, and any such amount
shall be paid by Debtor to Agent for the ratable benefit of the Secured Parties
with interest thereon upon demand, notwithstanding that the payments made may
also discharge a liability of the Agent and/or any of the Secured Parties.
15. Debtor does hereby make, constitute and appoint any officer of
Agent as Debtor's true and lawful attorney-in-fact, with power at all times to
receive and take and endorse the name of Debtor upon any notes, checks, drafts,
money orders or other instruments of payment or Collateral that may come into
possession of the Agent and/or any of the Secured Parties, if any, in full or
part payment or any amount owing to any Lender; to sign and endorse the name of
Debtor upon any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or
warehouse receipt, drafts against Account Debtors, assignments, verifications
and notices in connection with Accounts, and any instruments or documents
relating thereto, if any, or to Debtor's rights therein; to sign the Debtor's
name on any financing statements contemplated by this Agreement; to request
from customers indebted on Accounts at any time, in the name of the Agent or
the Agent's designees, or the Debtor, or any one of them, information
concerning the amounts owing on the Accounts; upon an Event of Default and
during the continuance thereof: (i) to give written notice to such office and
officials of the United States Post Office to effect such change or changes of
address so that all mail addressed to Debtor may be delivered directly to Agent
on behalf of the Secured Parties and to receive, open and dispose of all mail
of the Debtor; (ii) to transmit to customers indebted on Accounts notice of the
Agent's interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent for the benefit of the Lenders, on any of the
Debtor's Accounts; and (iii) to take or bring, in the name of the Agent or the
Debtor, or any one of them, all steps, actions, suits or proceedings deemed by
the Agent necessary or desirable to enforce or effect collection of the
Accounts. Debtor does hereby grant unto Debtor's said attorney full power to do
any and all things necessary to be done in and about the premises as fully and
effectually as Debtor might or could do and hereby ratifying all that said
attorney shall lawfully do or cause to be done by virtue herein. Neither the
Agent nor any Lender shall be liable for any acts or omissions or for any error
in judgment or mistake of fact or law except to the extent that such act or
omission constituted the gross negligence or willful misconduct of the Agent or
any Lender, as the case may be. This power of attorney shall be exercisable at
the Debtor's sole expense and being coupled with an interest, shall be
irrevocable for the Term of this Agreement and for all transactions hereunder
and thereafter as long as Debtor may be indebted to Agent and/or any of the
Secured Parties.
16. Debtor hereby certifies to Agent on behalf of the Secured
Parties that Debtor's address as set forth at the end of this Agreement is
Debtor's mailing address, Debtor's principal place of business and the office
at which Debtor's records relating to Accounts are kept. Debtor agrees not to
effect any change in its mailing address, or in its principal place of
business, or in the office in which its records relating to Accounts are kept
without first giving Agent at least thirty days prior written notice thereof.
17. Until the Agreement has been terminated and all Obligations
satisfied in full Debtor shall:
(a) Furnish to each of the Lenders, as soon as possible
but in no event more than 120 days after the close of each fiscal year of
Debtor, and 60 days after the end of each fiscal quarter following each fiscal
year of Debtor the following: consolidated financial statements of Debtor and
its subsidiaries all in reasonable detail and form satisfactory to Agent: (i) a
balance sheet as of the close of such period; and (ii) a statement of income
and changes in cash flow for such period; together with copies of the
management letters relating thereto furnished to Debtor by its independent
certified public accountants in connection with such financial statements. The
foregoing financial statements shall set forth in each case in comparative form
the corresponding figures for the respective date or period for the preceding
fiscal year. The foregoing financial statements with respect to fiscal years
shall be audited by such firm of certified public accountants as shall be
selected by Debtor and shall be reasonably satisfactory to Agent and shall be
certified by such accountants without qualification or limitation because of
the restricted or limited nature of the examination made by such accountants,
and with respect to quarterly statements shall be prepared internally, shall be
certified by an authorized financial officer of Debtor and shall be delivered
subject to year end adjustments. All of the foregoing statements shall be
prepared in accordance with generally accepted accounting principles
consistently applied by Debtor. Agent hereby acknowledges that ▇▇▇▇▇ ▇▇▇▇▇▇▇,
L.L.P. is a certified public accounting firm presently satisfactory to Agent.
(b) Furnish to Agent concurrently with each delivery of
financial statements set forth in Paragraph 17(a) hereof: (i) with respect to
annual financial statements, a certificate of Debtor's chief financial officer
stating whether in the course of the examination necessary for certifying the
financial statements Debtor obtained knowledge of any event which constitutes
an Event of Default or an event which with notice or lapse of time, or both,
would constitute such an Event of Default under the Agreement and if so,
stating the facts with
15
14
respect thereto and whether the same has been cured prior to the date of such
certificate; and (ii) with respect to any other financial statements, a
certificate of the chief financial officer of Debtor stating whether an Event
of Default occurred or an event which with the giving of notice or lapse of
time, or both, would constitute such an Event of Default under the Agreement
and if so, stating the facts with respect thereto and whether the same has been
cured prior to the date of such certificate.
(c) Permit officers of Agent, accompanied by officers of
the Secured Parties, at reasonable times, to visit and inspect any of the
offices of Debtor and its Subsidiaries, to examine their books and records, to
discuss the affairs and accounts of the Debtor and its Subsidiaries with their
officers and furnish to Agent and/or the Secured Parties such other information
as any of them may reasonably request.
(d) Maintain at all times a ratio of consolidated current
assets of Debtor and its Subsidiaries to consolidated currents liabilities of
Debtor and its Subsidiaries of not less than 1.2 to 1.0. "Current assets" shall
mean all assets treated as current assets in accordance with generally accepted
accounting principles consistently applied. "Current liabilities" shall mean
all liabilities treated as current liabilities in accordance with generally
accepted accounting principles consistently applied including without
limitation all obligations payable on demand or within one year after the date
on which the determination is made, together with Obligations under this
Agreement exclusive of any amounts outstanding under the Term Loan Notes.
(e) Maintain at all times consolidated tangible net worth
(common stock plus preferred stock plus retained earnings plus additional paid
in capital plus subordinated debt less intangible assets) in an amount not less
than $9,000,000.
(f) Maintain at all times a ratio of the sum of (1) cash
and cash equivalents plus (2) accounts receivable to current liabilities of not
less than 0.3 to 1.0 all on a consolidated basis.
(g) Maintain at all times an excess of current assets over
current liabilities each on a consolidated basis of not less than $13,500,000.
(h) Maintain at all times the insurance required by the
Agreement and cause each Subsidiary to maintain insurance with responsible
insurance companies on such of its properties in such amounts and against such
risks as is customarily maintained by similar businesses.
18. Until this Agreement has been terminated and all Obligations
satisfied in full, Debtor shall not:
(a) Contract for, purchase or make any expenditure or
commitments for, fixed or capital assets or securities or capital stock, in
any fiscal year of Debtor and corresponding fiscal year of every Subsidiary
which, for all such entities combined, exceeds $3,000,000 in the aggregate
without the consent of Agent, which consent will not be unreasonably withheld.
(b) With respect to Jaco, declare or pay any cash
dividends on any shares of any class of its capital stock, or apply any of its
property or assets to the purchase, redemption or retirement of, or set apart
any sum for the payment of dividends on, or for the purchase, redemption or
other retirement of, or make any other distribution by reduction of capital or
otherwise in respect of any shares of any class of its capital stock.
(c) Enter into any merger or consolidation or acquire all
or substantially all of the assets of any person, firm, joint venture or
corporation, or permit any Subsidiary so to do without Agent's prior written
consent which shall not be unreasonably withheld.
(d) Create, incur, assume or suffer to exist any
Indebtedness of Debtor and every Subsidiary which, for all such entities
combined, exceeds $2,500,000 in the aggregate at any one time, other than (i)
indebtedness to the Lenders under the Agreement, (ii) accounts payable and
other liabilities created in the ordinary course of business but not including
any liability or Indebtedness incurred in connection with the borrowing of
money, (iii) liability or indebtedness incurred by Debtor in a public offering
of debt securities by the Debtor, (iv) liability or indebtedness incurred by
the Debtor in a private offering of debt securities by the Debtor, (v)
indebtedness evidenced by liens described in clause (v) of the definition of
Permitted Liens or (vi) indebtedness owing by any Debtor or Subsidiary to any
other Debtor or Subsidiary. For purposes of this Paragraph 18(d),
"Indebtedness" shall mean (i) all indebtedness for borrowed money or for the
deferred purchase price of property, (ii) all obligations for the payment of
rent or hire of property of any kind whatsoever under leases or lease
arrangements which under generally accepted accounting principles are required
to be capitalized, (iii) all obligations under conditional sale or other title
retention agreement, and (iv) all indebtedness for borrowed money secured by
any lien upon property owned by the Debtor (whether or not the holder of such
indebtedness has recourse against the Debtor).
(e) Permit at any time the ratio of Indebtedness to
Tangible Net Worth to be more than 5.0 to 1.0 for purposes of this Paragraph
18(e), "Indebtedness" shall mean consolidated total liabilities of Debtor and
its Subsidiaries determined in accordance with generally accepted accounting
principles consistently applied. "Tangible Net Worth" shall mean the excess of
consolidated total assets of Debtor and its Subsidiaries over consolidated
total liabilities of Debtor and its Subsidiaries, each to be determined in
accordance with generally accepted accounting principles consistently applied,
excluding however, from the determination of consolidated total assets, all
assets which would be classified as intangible assets under generally accepted
accounting principles, including without limitation, goodwill, patents,
trademarks, trade names, copyrights and franchises.
(f) Permit the aggregate outstanding amount of Accounts
due from ▇▇▇▇▇▇, Inc., net of allowances or reserves, to exceed $1,500,000 at
any one time.
19. The occurrence of any of the following events shall constitute
a default ("Event of Default") by Debtor under this Agreement:
(a) Debtor fails to pay any of the Obligations, excluding
reasonable expenses, when due and payable or declared due and payable, and with
respect to expenses, Debtor fails to pay any reasonable expense within five (5)
days of when such expense is due and payable or declared due and payable; or
16
15
(b) Debtor fails or neglects to perform, keep or observe
any term, provision, condition, warranty, representation or covenant, other
than those contained in Paragraph ▇, ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ 17(c)
through 17(g) or in Paragraph 18 hereof, contained in this Agreement or in any
other instrument or document delivered pursuant hereto or in any other
agreement, instrument or document under which Debtor is obligated to Agent or
any of the Secured Parties, as the case may be, and such failure or neglect
continues for twenty (20) days after Agent and/or any of such Secured Parties
gives Debtor notice thereof; or
(c) Debtor fails or neglects to perform, keep or observe
any term, provision, condition, warranty, representation or covenant contained
in Paragraph ▇, ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ 17(c) through 17(g) or in
Paragraph 18 hereof.
(d) Debtor or any guarantor, surety or other party liable
upon any of the Obligations makes any false, untrue, incomplete or misleading
representation, warranty, schedule, report or other communication to Agent
and/or any of the Secured Parties in connection with this Agreement or any
transaction relating thereto which, in any such case, is material in the
reasonable judgment of Agent; or
(e) Debtor or any guarantor, surety or other party liable
upon any of the Obligations becomes insolvent or generally fails to pay, or
admits in writing its inability to pay, its debts as they mature; or
(f) Debtor or any guarantor, surety or other party liable
upon any of the Obligations makes an assignment for the benefit of creditors,
commences a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect or any successor legislation) or files a petition
thereunder; or petitions or applies to any tribunal for any receiver, custodian
or trustee of Debtor or any such guarantor, surety or other party or any
substantial part of its property; or commences any proceeding relating to
Debtor or any guarantor, surety or other party liable upon any of the
Obligations, under any reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction whether now or
hereafter in effect, or there is commenced against Debtor or any guarantor,
surety or party liable on any of the Obligations any such proceeding which
proceeding is not dismissed within 45 days; or Debtor or any guarantor, surety
or party liable on any of the Obligations by any act indicates its consent to,
approval of or acquiescence in any such proceeding or of the appointment of any
receiver, custodian or trustee for Debtor or any guarantor, surety or any party
liable upon any of the Obligations or any substantial part of its property; or
Debtor or any guarantor, surety or party liable on any of the Obligations
suffers any such custodianship, receivership or trusteeship; or
(g) any guarantor, surety or other party liable upon any
of the Obligations shall die or become incompetent; or
(h) Debtor, any guarantor, surety or other party liable
upon any of the Obligations shall deny or contest its liability with respect to
any of the Obligations or any liability of any guarantor, surety or other party
liable upon any of the Obligations with respect to any of Obligations shall be
declared to be null and void; or
(i) Debtor shall be dissolved or liquidated or be a party
to any merger or consolidation without the prior written consent of Agent.
(j) any guarantor, surety or party liable upon any of the
Obligations shall be dissolved or liquidated or be a party to any merger or
consolidation excepting only for a merger with or consolidation into Debtor or
any guarantor of all of the Obligations, without the prior written consent of
Agent; or
(k) the loss, theft, substantial damage or destruction of
any material portion of the Inventory or Equipment shall occur, which is not
insured as required by this Agreement; or
(l) any guarantor, surety or other party liable on any of
the Obligations shall fail or neglect to perform, keep or observe any material
term, provision, condition, covenant, warranty or representation contained in
any agreement, instrument or document under which it is obligated to Agent
and/or any of the Secured Parties or which it delivered to the Agent and/or any
of the Secured Parties in connection herewith; or
(m) any judgment against the Debtor in an amount
exceeding $250,000 or any and all attachments, executions, levies or
restraining notices against its property having an aggregate value in excess of
$250,000 remain unpaid or unstayed on appeal or undischarged, unbonded or
undismissed for a period of thirty days; or
(n) any obligation of the Debtor for the payment of
borrowed money in excess of $350,000 in the aggregate is not paid when due or
within any grace period for the payment thereof or there shall occur any
default in the performance or observance of any term, condition or agreement
contained in such obligation or in any agreement relating thereto if the effect
of such non payment or other default is to cause the holder or holders of such
obligation to cause such obligation to become due prior to its stated maturity;
or
(o) Debtor or any guarantor, surety or party liable upon
any of the Obligations contests the validity, perfection or priority of
Lender's first lien on the Collateral.
20. Upon the occurrence of any of the Events of Default specified
in paragraph 19 hereof, Agent on behalf of the Secured Parties shall have all
the rights and remedies of a secured party under the Uniform Commercial Code
and other applicable laws with respect to all Collateral in which Agent on
behalf of the Secured Parties has a security interest, such rights and remedies
being in addition to all of the other rights and remedies of Agent and/or the
Secured Parties provided for herein. Upon the occurrence of an Event of
Default specified in paragraph 19 (f) hereof, this Agreement shall
automatically be terminated, there shall no longer be any outstanding
commitments of the Agent and/or of any of the Lenders to make Loans hereunder,
the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice, demand or presentment and the Debtor shall also provide the
Agent with one or more supporting letters of credit or pay to the Agent in
immediately available funds an amount equal to the then aggregate undrawn face
amount of all outstanding Letters of Credit. Upon the occurrence of any other
Event of Default (other than an Event of Default described in paragraph 19 (f)
hereof) so long as the same shall be continuing , the Agent: (a) shall upon
the direction of the Required Lenders: (i) by written notice to the Debtor,
terminate this Agreement and/or declare all commitments of the Agent and the
Lenders terminated, whereupon such commitments will terminate immediately and
all unpaid fees hereunder will become due and payable without notice of any
kind; (ii) by written notice to the Debtor, declare all or any portion
17
16
of the then outstanding principal amount of the Loans and other Obligations to
be due and payable, whereupon the full unpaid amount of such Loans and other
Obligations which shall so be declared due and payable, shall be and become
immediately due and payable, without further notice, demand or presentment and
the Debtor shall also provide the Agent with one or more supporting letters of
credit or pay to the Agent in immediately available funds an amount equal to
the then aggregate undrawn face amount of all outstanding Letters of Credit;
and/or (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; and (b) shall, upon the direction of the Required
Lenders and may, in its sole and absolute discretion: (i) restrict the amount
of or refuse to make Loans; (ii) reduce the advance rates applicable against
Collateral (used in calculating the borrowing base(s) thereof) or otherwise
reduce Loans to be made in accordance with Paragraph 4 hereof; or (iii) decline
to permit the issuance or renewal of Letters of Credit or the extension of the
stated expiry date of any outstanding Letter of Credit. All Loans and Letters
of Credit provided for herein, notwithstanding anything to the contrary
contained in this Agreement, shall thereafter otherwise be in the Agent's sole
discretion and the obligation of the Agent to make any Loans on behalf of the
Lenders and/or to assist in establishing such Letters of Credit on behalf of
the Lenders shall cease, unless such Event of Default is waived or cured to the
Agent's satisfaction. Nothing contained herein, however, shall or shall be
deemed to change, limit or otherwise adversely affect the right of the Agent
after the occurrence of an Event of Default to pay any amount or do any act
required of the Debtor hereunder or reasonably requested by the Agent to
preserve, protect, maintain or enforce the Obligations, the Collateral or the
security interests or liens now or hereafter held by the Agent and/or any of
the Lenders, and which the Debtor fails to pay or do, all as more fully
described in subparagraph 4 (c) (xii) hereof. Agent may also require the
Debtor to assemble the Collateral at Debtor's expense at such place or places
as the Agent designates, and Agent on behalf of and for the ratable benefit of
the Secured Parties, shall have the right: (I) to remove from any premises
where the same may be located any and all documents, instruments, files and
records, and any receptacles or cabinets containing the same, relating to
Accounts, or the Agent may use, at the Debtor's expense, such of the Debtor's
personnel, supplies or space as the Debtor's places of business or otherwise,
as may be necessary to properly administer and control the Accounts or the
handling of collections and realizations thereon; (II) bring suit, in the name
of the Debtor or the Agent, and generally shall have all other rights
respecting said Accounts, including without limitation the right to accelerate
or extend the time of payment, settle, compromise, release in whole or in part
any amounts owing on any Accounts and issue credits in the name of the Debtor
or the Agent; (III) sell, assign and deliver the Collateral and any returned,
reclaimed or repossessed merchandise, with or without advertisement, at public
or private sale, for cash, on credit or otherwise, at the Agent's sole option
and discretion, and the Agent may bid or become a purchaser at any such sale,
free from any right of redemption, which right is expressly waived by Debtor;
(IV) foreclose the security interests created herein by any available a
judicial process, and to enter any premises where any inventory may be located
for the purpose of taking possession of any of all of Collateral without
judicial process; (V) with or without legal process and without prior notice or
demand, to keep possession of the Collateral or any part thereof and to enter
any premises for taking possession thereof or removing the same; and (VI)
exercise any other rights and remedies provided in law, in equity, by contract
or otherwise. Agent shall have the right, (x) without notice or advertisement,
if the collateral to be sold is perishable or subject to rapid diminution in
value or (y) upon five (5) day notice otherwise and may sell or lease or cause
to be sold, leased or otherwise disposed of, any or all of such Collateral,
whether in its then condition or after further preparation or processing, in
the name of the Debtor or the Agent, or in the name of such other party as the
Agent may designate, in one or more sales or parcels, at such price and upon
such terms as Agent on behalf of the Secured Parties may deem best, and for
cash or on credit, or for future delivery, without Agent and/or any of the
Secured Parties assuming any credit risk and at a public or private sale as
Agent may deem appropriate. Upon the occurrence of an Event of Default the
Debtor agrees at the request of the Agent, to assemble the Collateral and to
make it available to the Agent at the premises and facilities of the Debtor for
the purpose of the Agent's taking possession of, removing or putting the
Collateral in saleable form. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, Agent will give Debtor reasonable notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made. The requirements of reasonable
notice shall be met if any such notice is mailed, postage prepaid, to Debtor's
mailing address shown herein, at least ten (10) days before the time of the
sale or other disposition thereof. Agent may invoice any such sale in its name
or in Debtor's name, as Agent may elect, as the seller, and in such latter
event such invoice may be marked payable to Agent and/or the Secured Parties.
Agent and/or any of the Secured Parties may be the purchaser at any such public
sale and thereafter hold the property so sold at public sale, absolutely free
from any claim or right of whatsoever kind including any equity of redemption.
The proceeds of sale shall be applied first to all costs and expenses of and
incident to such sale, including reasonable attorneys' fees, and then to the
payment of all Obligations in accordance with paragraph 4(f) of this Agreement.
The Debtor agrees that the Agent has no obligation to preserve rights to the
Collateral or to marshal any Collateral for the benefit of any person. Agent
will return any excess proceeds to Debtor and Debtor shall remain liable for
any deficiency. In no event shall prior recourse to any Accounts or other
Collateral granted to or by Debtor be a prerequisite to the Agent and/or the
Lenders right to payment of any Obligations due in accordance with this
Agreement, including without limitation any such deficiency. All rights and
remedies of the Agent and of each of the Lenders under this Agreement are
cumulative and non- exclusive and shall be in addition to every other right,
power and remedy provided herein or in any related agreement, instrument or
document, or provided under applicable law.
The Debtor shall immediately notify the Agent in writing of any Event of
Default, with a copy thereof to each Lender.
21. This (Second Restated and Amended Loan and Security) Agreement
shall (subject to compliance with the Conditions Precedent) become effective on
the Closing Date hereof, without any interruption or break in continuity (as
more fully described in the second paragraph hereof) and shall continue until
the third anniversary of the Closing Date. Notwithstanding the foregoing: (a)
upon the occurrence of an Event of Default under paragraph 19(f), this
Agreement shall automatically terminate without notice and all Obligations
shall immediately become due and payable; and (b) upon the occurrence of any
other Event of Default, Agent may, at its option, or shall at the written
request of the Required Lenders, terminate this Agreement with notice. All
Obligations shall, unless and to the extent that Agent (with the consent of the
Required Lenders) otherwise elects, become immediately due and payable upon any
termination of this Agreement; the Debtor shall thereupon pay all Obligations
to the Agent for the ratable benefit of the Lenders and the Agent may withhold
any balances in the Debtor's account(s) (unless supplied with an indemnity
satisfactory to the Agent) to cover all of the Debtor's Obligations, whether
absolute or contingent. Until this Agreement has been terminated and all
Obligations shall have been fully paid and satisfied, and notwithstanding any
termination of this Agreement, Debtor shall continue to assign Accounts to
Agent on behalf of the Secured Parties and turn over collections to Agent on
behalf of the Secured Parties as herein provided and this Agreement shall
remain in full force and effect as to, and be binding upon, Debtor, Agent and
the Lenders and the Secured Parties shall retain all of their respective
rights, as well as their security interests in all Collateral. Debtor may
repay the facility at any time in whole or in part without premium or penalty
by giving Agent on behalf of the Secured Parties sixty (60) days'
18
17
written notice of such repayment provided that any such payment which results
in a payment of a LIBO Rate Loan before the last date of the Interest Period
with respect thereto shall be subject to the provisions of Paragraph 5(g)
hereof. The period commencing with the effective date of this Agreement,
through and including the effective termination date of this Agreement,
determined in accordance with the preceding provisions, shall be the "Term" of
this Agreement.
The $1,500,000 Term Loan (the balance of which is, as of the Closing
Date, $1,196,428.45), shall be payable, with respect to principal, as follows,
subject to acceleration upon the occurrence of an Event of Default and subject
to payment in full upon termination of this Agreement consecutive monthly
installments of $17,857.14 commencing on September 1, 1995 and on the first
day of each month thereafter with a final payment in an amount equal to the
unpaid principal amount plus all accrued interest thereon. Debtor may sell
such Real Property or refinance such Term Loan Notes so long as no Event of
Default has occurred and is continuing, provided that there is paid to Agent
for the ratable benefit of the Secured Parties the net proceeds thereof, but
not less than $1,012,500 and not more than the then remaining principal amount
of, plus all accrued interest on, such $1,500,000 Term Loan provided that a
release of the Mortgage for a payment of less than the then outstanding balance
of the $1,500,000 Term Loan shall be subject to the condition that after giving
effect to such payment and the release of the Mortgage the Debtor is in
compliance with the borrowing limitations set forth in Paragraph 4(a) hereof,
with such amount to be applied in reduction or discharge of such $1,500,000
Term Loan. Upon such sale of the Real Property or refinancing of such
$1,500,000 Term Loan, Agent on behalf of the Secured Parties shall release the
Mortgage; provided, however, Agent for the benefit of the Secured Parties shall
receive with respect to the Collateral, an executed mortgagee waiver on terms
and conditions satisfactory to Agent from the refinancing party, if any. Such
$1,500,000 Term Loan shall be subject to mandatory prepayments upon disposition
of the Real Property in an amount equal to the net proceeds realized from such
disposition. If the amount so paid is less than the then principal amount of
the $1,500,000 Term Loan, then the monthly installments remaining on the
$1,500,000 Term Loan shall be reduced, pro rata, based on the amount so paid.
22. (a) This Agreement is made and is to be performed under
the laws of the State of New York and shall be governed by and construed in
accordance with said laws. Debtor expressly submits and consents to the
jurisdiction of any federal, state or local court, located in the State of New
York, City of New York, with respect to any controversy arising out of or
relating to this Agreement or any amendment or supplement thereto or to any
transactions in connection therewith and Debtor hereby agrees that service of
any summons or complaint or other process in any action or proceeding involving
any such controversy may be made by registered or certified mail to it at the
address appearing herein and service so made shall be deemed to be completed
five business days after mailing; failure on the part of Debtor to appear or
answer within thirty days after such mailing of such summons, complaint or
process shall constitute a default entitling Agent on behalf of the Secured
Parties to enter a judgment or order as demanded or prayed for therein to the
extent that said court or duly authorized officer thereof may authorize or
permit. DEBTOR, THE AGENT AND THE LENDERS EACH HEREBY WAIVE ANY AND ALL RIGHTS
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR IN ANY MATTER
RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF AND ANY OBJECTION OF
FORUM NON CONVENIENCE OR VENUE IN ANY SUCH ACTION OR PROCEEDING. No failure or
delay by Agent of any of the Secured Parties in exercising any of its powers or
rights hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such power or right preclude other or future exercise
thereof or the exercise of any other right or power. All of the rights,
remedies and benefits of the Agent and/or of the Lenders hereunder are
cumulative and not exclusive of any other rights, remedies or benefits which
they may have. Every provision of this Agreement is intended to be severable;
if any term or provision of this Agreement shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. This Agreement shall inure to the benefit of and
shall bind the respective successors and assigns of Agent, the Secured Parties
and of Debtor. Any Lender including, without limitation, BNYCC in its capacity
as a Lender may at any time sell, assign or transfer its Pro Rata Share of the
Obligations (including without limitation Obligations arising under or with
respect to all or any portion of Loans, Letters of Credit and/or the Term
Loans) and its rights and duties with respect thereto, in accordance with
subparagraph (c) below.
(b) No waiver by Agent on behalf of the Secured Parties
will be effective unless in writing and shall be sent to the Debtor at the
address specified herein. Except as expressly otherwise provided herein, the
provisions of this Agreement may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented
to by the Agent, the Required Lenders, and the Debtor, unless such amendment,
modification or waiver does not adversely affect Debtor's rights hereunder,
provided that, and notwithstanding anything to the contrary contained in this
Agreement, without the prior written consent of all Lenders, (A) the Agreement
will not be amended to: (1) increase the Aggregate Maximum Loan Amount; (2)
reduce the interest rate; (3) reduce or waive any fees (other than fees to
which the Agent alone may be entitled) or the repayment of any Obligations due
the Lenders; (4) extend the maturity of any Obligations; (5) alter or amend
this paragraph or the definitions of Required Lenders, Slow Accounts, Eligible
Accounts, Eligible Inventory or the Agent's criteria for determining compliance
therewith; (6) release any Collateral in excess of $1,000,000 (valued at lower
of cost or market) during any fiscal year of Debtor provided, that in no event
shall any Collateral be released without the prior written consent of all
Lenders if the effect thereof is to cause Loans to exceed the borrowing
limitations set forth in this Agreement; (7) release any Guarantor; (8)
release the Mortgage (except as provided in section 21 hereof) or (9) increase
the advance percentages set forth in the definitions of each of the following
terms: Accounts Receivable Borrowing Base, Inventory Borrowing Base and
Equipment Borrowing Base; (B) the Agent shall not make intentional Overadvances
beyond the limitations set forth in Paragraph 4(d) of this Agreement and (C)
upon and following an Event of Default, Agent shall endeavor to consult with
Lenders with respect to any material decisions regarding the Loans, Obligations
or Collateral including the enforcement of Agents rights (on behalf of such
Lenders) with respect thereto.
(c) Any Lender may at any time assign and delegate to one
or more Eligible Assignees (provided that in no event shall there be more than
four entities comprising Lender at any one time) all, or any ratable part of
all, of the Loans, and the other rights and obligations of such Lender
hereunder, in a minimum amount of Five Million Dollars ($5,000,000); provided
however, that the Debtor and the Agent may continue to deal solely and directly
with such Lender in connection with the interest so assigned to an Eligible
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Eligible
Assignee, shall have been given to the Borrower, the Agent and the other
Lenders by such Lender and the Eligible Assignee; and (ii) such Lender and such
Eligible Assignee shall have delivered to the Borrower and the Agent an
Assignment and Acceptance Agreement in the form of Exhibit C hereto, together
with any note(s) subject to such assignment and the Agent shall have accepted
the same in its sole discretion, which shall not be unreasonably withheld;
(iii) the assignor Lender has paid to the Agent a processing fee in the amount
of $2,000; and (iv) the Eligible Assignee, in any instance in which it is a
foreign person (i.e., a person
19
18
other than a United States person for United States Federal income tax
purposes) shall have provided to the Agent and the Borrower the forms required
to demonstrate that the Lender is entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of United States
federal income tax. From and after the date that the Agent notifies the
assignor Lender that it has received and provided its consent with respect to
an executed Assignment and Acceptance Agreement and payment of the
above-referenced processing fee, the Eligible Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance Agreement, shall have
the rights and obligations of a Lender under the Agreement; the assignor Lender
shall, to the extent that rights and obligations hereunder have been assigned
pursuant to such Assignment and Acceptance Agreement, relinquish its rights and
be released from its obligations hereunder. Within three (3) Business Days
after its receipt of notice by the Agent that it has received an executed
Assignment and Acceptance Agreement and payment of the processing fee, the
Debtor shall execute and deliver to the Agent, a new note or notes, if any,
necessary to evidence such Eligible Assignee's assigned Loans and/or its
commitment hereunder and, if the assignor Lender has retained a portion of its
Loans, a replacement note or notes in the amount of its retained Loans and/or
commitment hereunder (with such notes to be in exchange for, but not in payment
of, the notes held by such assigning Lender). Immediately upon each Eligible
Assignee's paying its processing fee under the completed and accepted
Assignment and Acceptance Agreement, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the
addition of the Eligible Assignee and the resulting adjustment of the
commitments arising therefrom. The commitment allocated to each Eligible
Assignee shall reduce such commitment of the assigning Lender pro tanto.
Debtor shall not be responsible for payment or reimbursement for any fees or
charges incurred by Agent or Lender solely as a result of an assignment
pursuant to this Paragraph 22 unless such assignment is made at the request of
Debtor.
If at any time, a Lender ("Proposed Transferor") proposes to enter into any
agreement with a party ("Purchaser") pursuant to which the Proposed Transferor
would sell, assign or transfer any of its Pro Rata Share of Obligations under
this Agreement (other than to one or more concerns affiliated with such
Proposed Transferor which such Proposed Transferor may complete without regard
to this paragraph), with the result that following the completion of the
transaction(s) with Purchaser, the Proposed Transferor would retain a Pro Rata
Share of the Obligations under this Agreement which in the aggregate would be
less than the aggregate Pro Rata Share of any other Lender following such
completion, then at least ten (10) days prior to closing thereof by such
Proposed Transferor it, shall notify each other Lender in writing of such
proposed sale, assignment or transfer, the terms and conditions thereof
including the amount thereof (the "Assignment Amount") and the proposed closing
date thereof. Each of the Lenders shall have the right, and such Proposed
Transferor hereby grants such right to each of the Lenders, to participate in
such sale, transfer or assignment, by assigning to the Purchaser (or selling a
participation to Purchaser in) each of the other Lender's Pro Rata Share of the
Obligations and rights under this Agreement, in an amount equal to the electing
Lender's Pro Rata Share of the Assignment Amount. Each Lender shall have five
(5) days after receipt of any such notice of sale, transfer or assignment
within which to notify such Proposed Transferor in writing of its decision to
participate in any such transaction in the manner indicated above. If any
other Lender notifies Proposed Transferor that it will not participate in such
transaction, or if any Lender fails to respond within the time frame specified
in the preceding sentence, such Proposed Transferor shall be entitled to
consummate the sale, transfer or assignment with the Purchaser as contemplated
in its earlier notice.
Notwithstanding anything to the contrary contained herein, in the event that
Agent sells and assigns to an Eligible Assignee any or all of its Loans, Agent
shall use its best efforts to find an Eligible Lender to purchase and assume a
pro rata share of the Loans from the other Lenders.
(d) Debtor may not assign or transfer any of its rights
or delegate any of its duties under this Agreement without the prior written
consent of the Lenders.
23. (a) To the extent Debtor makes a payment, or Agent or any
of the Secured Parties receives any payment or proceeds of the Collateral for
Debtor's benefit, which is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or any other party under any bankruptcy law, common law or
equitable cause, then, to such extent, the Obligations, or part thereof
intended to be satisfied, shall be revived and continue as if such payment or
proceeds had not been so received.
(b) If any Lender shall obtain any payment, whether
voluntarily or involuntarily, by setoff or otherwise, on account of the Loans
made by it, or receive any collateral therefor, in an amount that exceeds that
portion of all payments or Collateral obtained by any other Lender on account
of the Loans, to which such other Lender would be entitled if all such payments
and Collateral were allocated among the Lenders in accordance with the
provisions of this Agreement, then such benefitted Lender shall purchase for
cash a participation from such other Lender(s) such portion of the Loans made
by them , or shall provide such other Lender(s) with the benefits of any such
Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each such other Lender in accordance with their Pro Rata
Shares; provided, that if all or any portion of such excess payment or benefits
thereafter is recovered from such benefitted Lender, such purchase shall be
rescinded and the purchase price and benefit returned by such other Lender(s)
to the extent of such recovery, but without interest. Each Lender so purchasing
a portion of another Lender's Loans may exercise all rights of payment
(including without limitation, rights of setoff) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
24. No termination of this Agreement or any guarantee of the
Obligations, shall affect or impair the powers, obligations, duties, rights,
warranties, representations or liabilities of the parties hereto which arose or
were made prior to such termination and are stated to survive such termination.
25. In all respects, except as expressly limited in this
Agreement, the Agent is authorized to take such actions or to fail to take such
actions that the Agent, in its reasonable discretion, deems to be advisable and
in the best interests of the Lenders, including making Overadvances within the
limitations set forth in Paragraph 4 (d) of this Agreement and upon the
occurrence of an Event of Default hereunder, the termination of this Agreement
and/or the exercise of any other rights or remedies hereunder, unless and until
the Agent may be specifically instructed to the contrary by the Required
Lenders.
26. (a) Each Lender hereby irrevocably appoints and
authorizes the Agent to act as its agent hereunder with such powers as are
specifically delegated to the Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement, and shall not by reason of this Agreement be a trustee for
20
19
any Lender. The Agent shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this
Agreement, or in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other document referred to or provided for herein or for any
failure by the Borrower to perform any of its obligations hereunder. The Agent
may employ agents and attorneys-in-fact and shall not be answerable, except as
to money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither the Agent nor any of its directors, officers,
employees, or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct.
(b) The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, 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 the Agent. As to any matters not
expressly provided for by this Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Lenders, and such instructions of the
Required Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders.
(c) The Agent shall not be deemed to have knowledge of
the occurrence of any Event of Default (other than the non-payment of principal
of or interest on Loans, Letters of Credit and/or Term Loans in accordance with
this Agreement), or the occurrence of any event or circumstance with which the
giving of notice, the passage of time or both would constitute and Event of
Default, unless the Agent has received notice from a Lender or the Debtor
specifying such Event of Default, event or circumstance and stating that such
notice is a "Notice of Default". In the event of any non-payment of principal
of or interest on Loans, Letters of Credit and/or Term Loans in accordance with
this Agreement, or in the event that the Agent receives any such Notice of
Default, the Agent shall give notice thereof to the Lenders . The Agent shall
(subject to subparagraph (g) below) take such action with respect to such
non-payment or other Event of Default as shall be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may take such action, or refrain from taking such action,
with respect thereto as Agent shall deem advisable in the best interests of the
Lenders.
(d) With respect to its Maximum Loan Amount, its Pro Rata
Share of the Obligations, including without limitation the Loans made by it,
BNYCC in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include BNYCC in its individual capacity. The
Agent and its affiliates may (without having to account therefor to any Lender)
also accept deposits from, lend money to and generally engage in any kind of
banking, trust or other business with the Debtor (and any Subsidiaries of
Debtor) as if it were not acting as the Agent, and the Agent may accept fees
and other consideration from the Debtor for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
(e) The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Debtor hereunder, but without limiting the
obligations of the Debtor hereunder), ratably, based upon their respective Pro
Rata Share hereunder, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other documents contemplated by or referred to herein or the
transactions contemplated hereby (including, without limitation, the costs and
expenses which the Debtor is obligated to pay hereunder) or the enforcement of
any of the terms hereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the Agent. Without limiting the
foregoing, each Lender shall reimburse the Agent upon demand for such Lender's
Pro Rata Share of any costs or out-of-pocket expenses(including reasonable
attorneys fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights, or responsibilities under, this Agreement or any
of the transactions contemplated hereby or referred to herein, to the extent
that the Agent is not reimbursed for such costs or expenses by or on behalf of
the Debtor and such expenses are properly chargeable to Debtor. The
Obligations of the Lenders under this subparagraph shall survive the payment of
all Obligations hereunder, the termination of all outstanding Letters of
Credit, the termination of this Agreement and/or the resignation of the Agent.
(f) Each Lender agrees that it has, independently and
without reliance on the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own credit analysis of
the Debtor and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement. The Agent shall not be required to keep itself
informed as to the performance or observance by the Debtor of this Agreement or
any other document referred to or provided for herein or to inspect the
properties or books of the Debtor. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Debtor (or any of Debtor's Subsidiaries)
which may come into the possession of the Agent or any of its affiliates.
(g) Except for action expressly required of the Agent
hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall have received the written consent of
the Required Lenders and unless it shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
(h) Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent provided, that if such
successor Agent will not be a Lender holding a share of the Loans at least
equal to the share held by any other Lender, the consent of the Debtor to such
appointment shall be required but shall not be unreasonably withheld. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a Lender having
combined capital and surplus of not less
21
20
than $100,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent (immediate written notice of which acceptance shall be
given to the Debtor), such successor Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation as Agent, the
provisions of this paragraph 26 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
(i) Each and all of the provisions hereunder contained
pertaining to this Paragraph 26 and any other provisions hereof pertaining to
the Agent acting or refraining from acting based upon the acquiescence of the
Required Lenders are matters strictly between and among the Agent, on the one
hand, and the Lenders on the other hand and neither the Debtor or any other
person or entity shall have or assert any rights or benefits, as a third party
beneficiary or otherwise, by reason of any of such provisions.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on this 13th day of September, 1995.
THE BANK OF NEW YORK JACO ELECTRONICS, INC.
COMMERCIAL CORPORATION
as Agent and a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------- -------------------------
Title: Vice President Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Maximum Loan Amount: $15,000,000
-----------
NATWEST BANK N.A. NEXUS CUSTOM ELECTRONICS, INC.
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------- -------------------------
Title: Vice President Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Address: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Maximum Loan Amount: $15,000,000
-----------
22
SCHEDULE I
PERMITTED LIENS
23
SCHEDULE 3(c)
INVENTORY LOCATIONS
Jaco Electronics, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
5206 Greens Diary Road ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_________________________________________________________________
Jaco Overseas, Inc. R.C. Components, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_________________________________________________________________
Micatron, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_________________________________________________________________
▇▇▇▇▇▇, Inc. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_________________________________________________________________
Nexus Custom Electronics, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_________________________________________________________________
Quality Components, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
24
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE AGREEMENT
25
EXHIBIT A
CONTINUANCE NOTICE
26
EXHIBIT B-1
$2,500,000 TERM LOAN NOTE
27
EXHIBIT B-2
$2,500,000 TERM LOAN NOTE
28
EXHIBIT B-3
$1,500,000 TERM LOAN NOTE
29
EXHIBIT B-4
$1,500,000 TERM LOAN NOTE
30
EXHIBIT B-5
$598,214.23 TERM LOAN NOTE
31
EXHIBIT B-6
$598,214.23 TERM LOAN NOTE
