AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
DATED AS OF DECEMBER 12, 1995
BETWEEN
UNITEL VIDEO, INC.,
AS BORROWER,
AND
R SQUARED, INC.,
AS CORPORATE GUARANTOR
AND
HELLER FINANCIAL, INC.,
AS AGENT AND AS LENDER
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is dated as of
December 12, 1995 and entered into among UNITEL VIDEO, INC., a Delaware
corporation ("Borrower"), with its principal place of business at 515 West 57
Street, New York, New York 10019, R SQUARED, INC., a California corporation ("R
Squared") with its principal place of business at 3330 Cahuenga Boulevard West,
Los Angeles, California 90068, the financial institutions listed on the
signature pages hereof and their respective successors and assigns (each
individually a "Lender" and collectively "Lenders") and HELLER FINANCIAL, INC.,
a Delaware corporation (in its individual capacity, "Heller"), with offices at
500 West Monroe, Chicago, Illinois 60661, for itself as a Lender and as Agent.
All capitalized terms used herein are defined in Section 1 of this Agreement.
WHEREAS, pursuant to an Assignment of Loans, Liens and Loan Documents
dated the date hereof (the "Assignment Agreement") among each Loan Party, The
Chase Manhattan Bank, N.A. ("Chase"), Chemical Bank ("Chemical") and Heller
(the "Assignment Agreement"), each of Chase and Chemical (each, a "Bank" and
collectively, "Banks") sold and assigned to Heller its rights and obligations
under an Amended and Restated Credit Agreement and Guaranty dated May 6, 1992
among Borrower, R Squared, each Bank, Chase as collateral agent for Banks and
Chemical as revolving credit agent for Banks, the Amended and Restated
Security Agreement dated May 6, 1992 made by Borrower to Banks (each as
previously amended and supplemented from time to time, the "Prior Credit
Agreements") and all other documents, instruments and agreements executed in
connection therewith and all rights appurtenant thereto (other than any
mortgage related indebtedness owed to each Bank under the Prior Credit
Agreements) (the "Assigned Documents"); and
WHEREAS, Chase shall retain mortgage related indebtedness under the Prior
Credit Agreement of Four Million Dollars ($4,000,000)(the "Chase Indebtedness");
and
WHEREAS, the Prior Credit Agreements shall be bifurcated on the Closing
Date such that the rights and obligations of the Loan Parties, Agent and Lenders
(each as defined herein) with respect to the Assigned Documents shall be
governed by the terms and provisions of this Agreement and the Chase
Indebtedness shall be governed by the terms and provisions of a Second Amended
and Restated Credit Agreement dated the date hereof between Borrower and Chase;
and
WHEREAS, Borrower desires that Lenders extend a credit facility to (i)
refinance Borrower's existing senior debt, (ii) provide working capital
financing and (iii) provide funds for other general corporate purposes; and
WHEREAS, Borrower desires to secure its obligations under the Loan
Documents by granting to Agent, for the benefit of Lenders, a security interest
in and lien upon certain of Borrower's property; and
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WHEREAS, R Squared (the "Corporate Guarantor") is willing to guaranty all
of the obligations of Borrower to Agent and Lenders under the Loan Documents and
to grant to Agent, for the benefit of Lenders, a security interest in certain of
its property to secure its guaranty;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Corporate Guarantor, Agent
and Lenders agree as follows:
SECTION 1. DEFINITIONS.
1.1 CERTAIN DEFINED TERMS. The following terms used in this Agreement
shall have the following meanings:
"Accounts" means, all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by the applicable Loan
Party arising or resulting from the sale of goods or the rendering of services.
"Affiliate" means any Person (other than Agent or Lender): (a) directly or
indirectly controlling, controlled by, or under common control with, Borrower;
(b) directly or indirectly owning or holding five percent (5%) or more of any
equity interest in Borrower; or (c) five percent (5%) or more of whose voting
stock or other equity interest is directly or indirectly owned or held by
Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with") means the possession directly or indirectly of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agent" means Heller in its capacity as agent for the Lenders under the
Loan Documents and any successor in such capacity appointed pursuant to
subsection 9.1.
"Agent's Account" means ABA No. 0710-0001-3, Account No. 55-35158 at First
National Bank of Chicago, One First National Plaza, Chicago, IL 60670,
Reference: Heller Business Credit for the benefit of Unitel Video, Inc.
"Agent's Depository Account" has the meaning assigned to that term in
subsection 5.6.
"Agreement" means this Loan and Security Agreement as it may be amended,
supplemented or otherwise modified from time to time.
"Amended and Restated Revolving Note" means the promissory note of
Borrower in substantially the form of Exhibit 2.1(E), issued pursuant to
subsection 2.1(E).
"Amended and Restated Term Note" or "Amended and Restated Term Notes" means
each promissory note of Borrower in substantially the form of Exhibits 2.1(A)(1)
and (A)(2), issued pursuant to subsection 2.1(A).
"Appraised Assets" means Borrower's fixed assets as identified in the Fixed
Asset Appraisal.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of Borrower or any of its Subsidiaries.
"Assignment Agreement" has the meaning assigned to that term in the
preamble to this Agreement.
"Assigned Documents" has the meaning assigned to that term in the Preamble
to this Agreement.
"Assigned Financing Statements" means the UCC-3 Assignments identified on
Schedule 1.1(D).
"Assigned Landlord Waivers" means the landlord waivers identified on
Schedule 1.1(E).
"Assigned Motor Vehicle Title Certificates" means the motor vehicle title
certificates identified on Schedule 1.1(F).
"Assigned Notes" means the Amended and Restated Revolving Credit Note
dated March 14, 1994 made by Borrower to Chemical in the original principal
amount of $5,000,000, the Amended and Restated Term Loan Note dated May 18,
1992 made by Borrower in favor of Chemical in the original principal amount
of $7,203,899.70, the Substitution and Replacement Note dated December 12,
1995 made by Borrower in favor of Chemical in the original principal amount of
$3,691,666.70, the Amended and Restated Revolving Credit Note dated March 14,
1994 made by Borrower in favor of Chase in the original principal amount of
$5,000,000 and the Amended and Restated Term Loan Note dated May 18, 1992
made by Borrower in favor of Chase in the original principal amount of
$8,307,648.27.
"Bank Letters of Credit" means letters of credit issued by a bank for the
account of Borrower and supported by a Risk Participation Agreement.
"Banks" has the meaning assigned to that term in the preamble to this
Agreement.
"Base Rate" means a variable rate of interest per annum equal to the higher
of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate. The
statistical release generally sets forth a Bank Prime Loan rate for each
Business Day. In the event the Board of Governors of the Federal Reserve
System ceases to publish a Bank Prime Loan rate or its equivalent, the term
"Base Rate" shall mean a variable rate of interest per annum equal to the
highest of the "prime rate", "reference rate", "base rate", or other similar
rate announced from time to time by any of Bankers Trust Company, The Chase
Manhattan Bank, National Association or Chemical Bank, or their successors
(with the understanding that any such rate may merely be a reference rate and
may not necessarily represent the lowest or best rate actually charged to any
customer by any such bank).
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate.
"Borrower" has the meaning assigned to that term in the preamble to this
Agreement.
"Borrowing Base" has the meaning assigned to that term in subsection
2.1(B).
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"Borrowing Base Certificate" means a certificate and assignment schedule
duly executed by an officer of Borrower appropriately completed and in
substantially the form of Exhibit 1.1(A).
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the States of Illinois, New York or
Pennsylvania or for the purposes of LIBOR Rate Loans only, London, England or is
a day on which banking institutions located in any such state or city are
closed.
"Capital Expenditures" means all expenditures (including deposits) for, or
contracts for expenditures (excluding contracts for expenditures under or with
respect to Capital Leases, but including cash down payments for assets acquired
under Capital Leases) with respect to any fixed assets or improvements, or for
replacements, substitutions or additions thereto, which have a useful life of
more than one year, including the direct or indirect acquisition of such assets
by way of increased product or service charges, offset items or otherwise.
"Capital Lease" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"Cash Equivalents" means: (a) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from Moody's Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within six (6) months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $250,000,000 and not subject to
setoff rights in favor of such bank.
"Change of Control" means any person or group of persons acting in concert
(in each case excluding officers or directors of Borrower on the Closing Date)
holds more than fifty percent (50%) of the outstanding common stock of Borrower.
"Chase" means The Chase Manhattan Bank, N.A. or its successor.
"Chase Mortgage Documentation" means the Mortgage Consolidation and
Modification Agreement dated the Closing Date between Borrower and Chase, the
Second Amended and Restated Credit Agreement dated the Closing Date between
Borrower and Chase, the Consolidated Term Loan Mortgage dated the Closing Date
between Borrower and Chase and the Note Consolidation and Modification Agreement
dated the Closing Date between Borrower and Chase.
"Chicago Lease" means the Indenture dated April 16, 1987 between La Salle
National Trust, N.A. (as successor trustee to La Salle National Bank), as
trustee under Trust No. 52082, as landlord and Borrower (as assignee of Scanline
Communications), as tenant, related to the premises
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located at 301 East Erie Street, Chicago, Illinois, as amended, modified,
restated or supplemented from time to time.
"Closing Certificate" means a certificate duly executed by the chief
executive officer or chief financial officer of Borrower appropriately completed
and in substantially the form of Exhibit 1.1(B).
"Closing Date" means December 12, 1995.
"Closing Date Fee Letter" means the letter agreement by and between
Borrower and Heller dated the Closing Date pursuant to which Borrower agrees to
pay to Heller certain fees on the Closing Date in connection with the
transactions contemplated by this Agreement.
"Collateral" has the meaning assigned to that term in subsection 2.7.
"Commitment" or "Commitments" means the commitment or commitments of
Lenders to make Loans as set forth in subsections 2.1(A) and/or 2.1(B) and to
provide Lender Letters of Credit as set forth in Subsection 2.1(G).
"Compliance Certificate" means a certificate duly executed by the chief
executive officer or chief financial officer of Borrower appropriately completed
and in substantially the form of Exhibit 1.1(C).
"Consulting Agreements" means (a) the Consulting Agreement dated as of
November 13, 1995 between Borrower and Joseph DiBuono, (b) the Employment and
Consulting Agreement dated September 1, 1998 between Borrower and Herbert Bass,
(c) the Employment and Consulting Agreement dated July 19, 1995 between Borrower
and John Hoffman and (d) the Employment and Consulting Agreement dated September
1, 1998 between Borrower and Alex Geisler, each as in effect on the Closing
Date.
"Corporate Guarantor" has the meaning assigned to that term in the preamble
to this Agreement.
"Corporate Guaranty" means the continuing guaranty made by the Corporate
Guarantor in favor of Agent in substantially the form of Exhibit 1.1(D), as such
agreement may hereafter be amended, restated, supplemented or otherwise modified
from time to time.
"Default" means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default if that condition or event were not
waived in writing, cured or removed within any applicable grace or cure period.
"Default Rate" has the meaning assigned to that term in
subsection 2.2(A)(iv).
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) net income determined in accordance with GAAP;
PLUS, to the extent included in the calculation of net
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income, (2) the sum of (a) income and franchise taxes paid or accrued; (b)
Interest Expenses, net of interest income, paid or accrued; (c) interest paid in
kind; (d) amortization (including, without limitation, amortization of fees and
costs with respect to transactions contemplated hereunder on the Closing Date
which have been capitalized as transaction costs) and depreciation and (e) other
non-cash charges (excluding accruals for cash expenses made in the ordinary
course of business); LESS, to the extent included in the calculation of net
income, (3) the sum of (a) the income of any Person (other than wholly-owned
Subsidiaries of Borrower) in which Borrower or a wholly owned Subsidiary of
Borrower has an ownership interest unless such income is received by Borrower or
such wholly owned Subsidiary in a cash distribution; (b) gains or losses from
sales or other dispositions of assets; and (c) extraordinary or non-recurring
gains, but not net of extraordinary or non-recurring "cash" losses; PROVIDED,
HOWEVER, for purposes of calculating Borrower's compliance with the financial
covenants set forth in Section 6 solely as respects Borrower's 1996 Fiscal Year,
the Impairment Add Back Amount shall be included as a positive addition in the
calculation of EBITDA.
"Eligible Accounts" has the meaning assigned to that term in subsection
2.1(C).
"Employee Benefit Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is maintained for employees of any Loan Party
or any ERISA Affiliate or (b) has at any time within the preceding six (6) years
been maintained for the employees of any Loan Party or any current or former
ERISA Affiliate.
"Environmental Claims" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"Environmental Laws" means any applicable present or future federal, state
or local law, rule, regulation or order relating to pollution, waste, disposal
or the protection of human health or safety, plant life or animal life, natural
resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC), including,
without limitation, all machinery, motor vehicles, trucks, trailers, vessels,
fixtures, aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
"Equipment Report" means a report duly certified by an officer of Borrower
appropriately completed and in substantially the form of Exhibit 1.1(E).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any Person who is a
member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"ESOP Agreements" means the Unitel Video, Inc. Employee Stock Ownership
Trust Agreement, dated as of May 8, 1987 between Borrower and the trustees named
therein, the ESOP
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Guaranty, the ESOP Loan Agreement, as amended, dated as of May 13, 1987 between
the trustees named therein and Chase, and the ESOP Mortgage.
"ESOP Guaranty" means the Guarantee and Contingent Purchase Agreement dated
as of May 13, 1987, as amended, between Borrower and Chase.
"ESOP Mortgage" means the Mortgage dated as of June 5, 1987 of the New York
City Industrial Development Agency and Borrower to Chase, as amended, relating
to the ESOP Obligations.
"ESOP Obligations" means any and all amounts payable to Chase pursuant to
the ESOP Agreements.
"Event of Default" means each of the events set forth in subsection 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Federal Funds Effective 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 on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
"Fiscal Year" means each twelve month period ending on the last day of
August in each year.
"Fixed Asset Appraisal" means the appraisal of Borrower's fixed assets
dated August 1995, prepared by Philip Pollack and Company, Inc.
"Fixed Charge Coverage" means, for any period, Operating Cash Flow divided
by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for such period
(without duplication), (a) Interest Expenses paid or accrued by Borrower and its
Subsidiaries; PLUS (b) scheduled payments of principal with respect to all
Indebtedness of Borrower and its Subsidiaries (other than scheduled principal
payments under Term Loan B); PLUS (c) any provision for (to the extent it is
greater than zero) income or franchise taxes included in the determination of
net income, excluding any provision for deferred taxes; PLUS (d) Restricted
Junior Payments made in cash to the extent permitted under subsection 7.5(b)
plus (e) payment of deferred taxes accrued in any prior period.
"Fixed Rate Loan" means at any time that portion of the Loans other than
LIBOR Rate Loans bearing interest at a fixed rate.
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"Funding Date" means the date of each funding of a Loan or issuance of a
Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"Good Faith Contest" means the contest of an item if: (1) the item is
contested in good faith and diligently pursued, including, if required, by
appropriate proceedings timely instituted and (2) adequate reserves against
availability are established under the Revolving Loan with respect to the
contested item.
"Hazardous Material" means all or any of the following: (a) substances that
are regulated or governed by or pursuant to any Environmental Laws or
regulations; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
"Heller" has the meaning assigned to that term in the preamble to this
Agreement.
"Impairment Add Back Amount" means an amount equal to the sum of (1) the
lesser of (a) $1,000,000 and (b) the actual cost incurred by Borrower in
connection with its buy-out of the Chicago Lease, (2) the lesser of (a) $200,000
and (b) the actual employee severance pay costs incurred by Borrower in
connection with its permanent cessation of its Editel-Chicago division and (3)
the lesser of (a) $500,000 and (b) the actual employee severance pay costs
incurred by Borrower in connection with its permanent cessation of its Editel
New York division.
"Indebtedness", as applied to any Person, means without duplication: (a)
all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; and (e) all indebtedness secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person.
"Intangible Assets" means all intangible assets (determined in conformity
with GAAP) including, without limitation, goodwill, trademarks, tradenames,
licenses, organizational costs, deferred amounts, covenants not to compete,
unearned income and restricted funds.
"Intellectual Property" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions,
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copyrights and all applications and registrations therefor, software or computer
programs, license rights, trade secrets, methods, processes, know-how, drawings,
specifications, descriptions, and all memoranda, notes and records with respect
to any research and development, whether now owned or hereafter acquired, all
goodwill associated with any of the foregoing, and proceeds of all of the
foregoing, including, without limitation, proceeds of insurance policies
thereon.
"Interest Expenses" means, without duplication, for any period, the
following, for Borrower and its Subsidiaries each calculated for such period:
interest expenses deducted in the determination of net income (excluding (i) the
amortization of fees and costs with respect to the transactions contemplated
hereunder on the Closing Date which have been capitalized as transaction costs;
and (ii) interest paid in kind).
"Interest Period" has the meaning assigned to that term in subsection
2.2(B).
"Interest Rate" has the meaning assigned to that term in subsection 2.2(A).
"Inventory" means all "inventory" (as defined in the UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person's business, and goods which
are returned or repossessed.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"Lender" or "Lenders" has the meaning assigned to that term in the preamble
to this Agreement.
"Lender Addition Agreement" means an agreement among Agent, a Lender and
such Lender's assignee regarding their respective rights and obligations with
respect to assignments of the Loans, the Commitments and other interests under
this Agreement and the other Loan Documents substantially in the form of Exhibit
1.1(F).
"Lender Letter of Credit" has the meaning assigned to that term in
subsection 2.1(G).
"Letter of Credit Liability" means, all reimbursement and other liabilities
of Borrower or any of its Subsidiaries with respect to each Lender Letter of
Credit, whether contingent or otherwise, including, without duplication (a) the
amount available to be drawn or which may become available to be drawn; (b) all
amounts which have been paid or made available by the issuing bank to the extent
not reimbursed; and (c) all unpaid interest, fees and expenses.
"Letter of Credit Reserve" means, at any time, an amount equal to (a) the
aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Loan Account pursuant to subsection 2.1(G)(2) or
otherwise reimbursed by Borrower.
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"Leverage Ratio" means for any period: the ratio of (a) Indebtedness for
borrowed money for Borrower and its Subsidiaries (exclusive of the then
outstanding Revolving Loan amount) to (b) EBITDA.
"Liabilities" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR Rate" means, for each Interest Period, a rate of interest equal to:
(a) the rate of interest determined by Agent at which deposits in Dollars
for the relevant Interest Period are offered based on information presented on
the Reuters Screen LIBOR Page as of 11:00 A.M. (London time) on the day which is
two (2) Business Days prior to the first day of such Interest Period; provided
that if at least two such offered rates appear on the Reuters Screen LIBOR Page
in respect of such Interest Period, the arithmetic mean of all such rates (as
determined by Agent) will be the rate used; provided further that if Reuters
ceases to provide LIBOR quotations, such rate shall be the average rate of
interest determined by Agent at which deposits in Dollars are offered for the
relevant Interest Period by Bankers Trust Company, Chase Manhattan Bank, N.A.
and Chemical Bank, or their successors, (or their respective successors) to
prime banks in the London interbank market as of 11:00 A.M. (London time) on the
applicable interest rate determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect on
the day which is two (2) Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System:
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR Rate Loan" means at any time that portion of the Loans bearing
interest at rates determined by reference to the LIBOR Rate.
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Term Loan
Commitment or the Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Notes, the Corporate Guaranty,
the Subordinated Notes and all other instruments, documents and agreements
executed by or on behalf
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of Borrower or any Loan Party and delivered concurrently herewith or at any time
hereafter to or for the benefit of Agent or any Lender in connection with the
Loans and other transactions contemplated by this Agreement, all as amended,
restated, supplemented or modified from time to time.
"Loan Party" means, collectively, Borrower and Corporate Guarantor.
"Loan Year" means each period of twelve (12) consecutive months commencing
on the Closing Date and on each anniversary thereof.
"Material Adverse Effect" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of Borrower and Corporate Guarantor taken as a whole or (b) the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party or of Agent or any Lender to enforce or collect any of the
Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to that term in
subsection 2.1(B).
"Mobile Units" means Borrower's mobile units described on Schedule 1.1(A).
"Net Worth" means, as of any date, the sum of the capital stock and
additional paid-in capital plus retained earnings (or minus accumulated deficit)
less unearned employee benefit expense and common stock held in treasury
calculated in conformity with GAAP.
"Notes" means the Amended and Restated Revolving Note and the Amended and
Restated Term Notes.
"Notice of Borrowing" has the meaning assigned to that term in subsection
2.1(D).
"Notice of Conversion/Continuation" has the meaning assigned to that term
in subsection 2.2(E).
"Obligations" means all obligations, liabilities and indebtedness of every
nature of each Loan Party from time to time owed to Agent or to any Lender under
the Loan Documents including the principal amount of all debts, claims and
indebtedness (whether incurred before or after the Termination Date), accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable.
"Operating Cash Flow" means, for any period, (a) EBITDA; LESS (b) Capital
Expenditures (exclusive of any portion of any Capital Expenditures (a) financed
by a Person other than Lenders as permitted hereby, (b) made from the cash
proceeds of an Asset Disposition not required herein to pay down any Term Loan
or (c) that consist of commitments or contracts to make Capital Expenditures
which have not created a cash obligation so long as such amount does not exceed
$500,000 in the aggregate at any time outstanding).
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"Orderly Liquidation Value" means the orderly liquidation value of the
Appraised Assets as set forth in the Fixed Asset Appraisal, or Borrower's cost
of any fixed asset of Borrower or any of its Subsidiaries acquired after the
Closing Date, as applicable.
"Permitted Encumbrances" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims) for taxes, assessments or
other governmental charges not yet due and payable, or, if due and payable,
which are the subject of a Good Faith Contest; (b) statutory Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other similar liens imposed
by law, which are incurred in the ordinary course of business for sums not more
than thirty (30) days delinquent or which are the subject of a Good Faith
Contest; (c) judgment and other similar Liens arising in connection with court
proceedings, provided the execution or enforcement of such Liens is effectively
stayed to the satisfaction of Agent and the claims secured thereby are the
subject of a Good Faith Contest; (d) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, statutory
obligations, surety and appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money); (e) easements,
rights-of-way, restrictions, and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business of
any Loan Party or any of its Subsidiaries; (f) Liens for purchase money
obligations or a Lien incurred in connection with any conditional sale or other
title retention agreement, PROVIDED that (i) the purchase of the asset subject
to any such Lien is permitted under subsection 6.2, (ii) the Indebtedness
secured by any such Lien is permitted under subsection 7.1, and (iii) such Lien
encumbers only the asset so purchased; (g) Liens in favor of Agent, on behalf of
Lenders, and (h) Liens set forth on Schedule 1.1(B).
"Permitted Term Loan B Repayment Source" means Specified Fixed Asset
Dispositions, PROVIDED, HOWEVER, the aggregate Orderly Liquidation Value of
Appraised Assets sold or otherwise disposed of in such Specified Fixed Asset
Dispositions may not exceed the Threshold Amount.
"Permitted Subsidiaries" means Corporate Guarantor.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of the Closing Date after giving
effect to the transactions contemplated by this Agreement. The Pro Forma is
annexed hereto as Schedule 1.1(C).
"Pro Rata Share" means (a) with respect to matters relating to a particular
Commitment of a Lender, the percentage obtained by dividing (i) such Commitment
of that Lender by (ii) all such Commitments of all Lenders and (b) with respect
to all other matters, the percentage obtained by dividing (i) the Total Loan
Commitment of a Lender by (ii) the Total Loan Commitments of all Lenders, in
either case as such percentage may be adjusted by assignments permitted pursuant
to subsection 9.1; provided, however, for the purpose hereof, the amount of the
Commitment shall
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be deemed to be the outstanding balance of the respective Loan after the
Commitment has been terminated.
"Projections" means Borrower's forecasted consolidated and consolidating:
(a) balance sheets; (b) profit and loss statements; (c) cash flow statements;
and (d) capitalization statements, all prepared on a division by division and
Subsidiary by Subsidiary basis and otherwise consistent with Borrower's
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
"Qualified Assets" means (a) until such time as Term Loan B shall have been
paid in full, Equipment used or usable in any of Borrower's divisions other than
the Specified Divisions, exclusive of costs which may be capitalized relative to
planning, installation, set up and similar costs, and (b) upon payment in full
of Term Loan B, Equipment used or usable in any of Borrower's divisions,
exclusive of costs which may be capitalized relative to planning, installation,
setup and similar costs, which such Qualified Assets in each case (i) have been
acquired by Borrower absent financing other than under this Agreement and (ii)
shall not be encumbered by any Liens other than those in favor of Agent.
"Requisite Lenders" means Lenders holding or being responsible for sixty
six and two thirds percent (66 2/3%) or more of the sum of (a) outstanding
Loans, (b) outstanding Letter of Credit Liability and (c) unutilized
Commitments.
"Restricted Junior Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any of its Subsidiaries now or hereafter outstanding, except a stock
dividend; (b) any payment or prepayment of principal of, premium, if any, or
interest on, or any redemption, conversion, exchange, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Subordinated Debt or any shares of any class of stock of
Borrower or any of its Subsidiaries now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Borrower or
any of its Subsidiaries now or hereafter outstanding; and (d) any payment by
Borrower or any of its Subsidiaries of any management fees or similar fees to
any Affiliate, whether pursuant to a management agreement or otherwise.
"Revolving Loan" means all advances made by Lenders pursuant to subsection
2.1(B) and any amounts added to the principal balance of the Revolving Loan
pursuant to this Agreement.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment of
such Lender to make a portion of the Revolving Loan and to purchase
participations in Lender Letters of Credit pursuant to subsection 2.1(G) as set
forth on the signature page of this Agreement opposite such Lender's signature
or in the most recent Lender Addition Agreement, if any, executed by such Lender
and (b) as to all Lenders, the aggregate commitment of all Lenders to make the
Revolving Loan and to purchase participations in Lender Letters of Credit
pursuant to subsection 2.1(G).
"Risk Participation Agreement" has the meaning assigned to that term in
subsection 2.1(G).
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"Scheduled Installment of Term Loan A" has the meaning assigned to that
term in subsection 2.1(A)(1).
"Scheduled Installment of Term Loan B" has the meaning assigned to that
term in subsection 2.1(A)(2).
"Settlement Date" has the meanings assigned to that term in subsection
9.6(A)(2).
"Specified Divisions" means each of Borrower's Editel-Chicago division,
Editel-New York division, Editel-Los Angeles division and Windsor Video
division.
"Specified Fixed Asset Disposition" means the disposition, whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise, of any or
all of the fixed assets of a Specified Division, excluding any assets included
in such disposition which were not assets of such Specified Division as of
September 1, 1995.
"Subordinated Debt" means all Indebtedness owing by Borrower under the
Subordinated Notes.
"Subordinated Notes" means (1) the Non-Negotiable Promissory Note dated May
6, 1992 in the original principal amount of $2,500,000 made by Borrower in favor
of Scanline Communications (2) the Promissory Note dated February 24, 1995 in
the original principal amount of $87,900 made by Borrower in favor of Edward J.
Greene (assignee of Jee See and Co., Inc.), (3) the Promissory Note dated
February 24, 1995 in the original principal amount of $11,625 made by Borrower
in favor of Dwight A. Hemion (assignee of Jee See and Co., Inc.), (4) the
Promissory Note dated February 24, 1995 in the original principal amount of
$87,900 made by Borrower in favor of Sam Lovollo and Grace Lovollo (assignee of
Jee See and Co., Inc.), (5) Promissory Note dated February 24, 1995 in the
original principal amount of $35,175 made by Borrower in favor of David Nash and
Gertrude Nash (assignee of Jee See and Co., Inc.), (6) the Promissory Note dated
February 24, 1995 in the original principal amount of $21,975 made by Borrower
in favor of Stan Porter and Yvonne Porter (assignee of Jee See and Co., Inc.),
(7) the Promissory Note dated February 24, 1995 in the original principal amount
of $96,675 made by Borrower in favor of Nicholas E. Vanoff (assignee of Jee See
and Co., Inc.), (8) the Promissory Note dated February 24, 1995 in the original
principal amount of $121,575 made by Borrower in favor of Phyllis C. Vanoff,
Trustee of the Felissa Vanoff Revocable Trust (assignee of Jee See and Co.,
Inc.), (9) the Promissory Note dated February 24, 1995 in the original principal
amount of $3,525 made by Borrower in favor of Phyllis C. Vanoff, Trustee of the
Felissa Vanoff Revocable Trust (assignee of Jee See and Co., Inc.), (10) the
Promissory Note dated February 24, 1995 in the original principal amount of
$118,200 made by Borrower in favor of Phyllis C. Vanoff, Trustee of Marital
Trust B under The Vanoff Family Trust (assignee of Jee See and Co., Inc.), (11)
the Promissory Note dated February 24, 1995 in the original principal amount of
$65,925 made by Borrower in favor of Phyllis C. Vanoff, Trustee of the Flavio
Vanoff Irrevocable Trust (assignee of Jee See and Co., Inc.), (12) the
Promissory Note dated February 24, 1995 in the original principal amount of
$87,900 made by Borrower in favor of Keith Winikoff (assignee of Jee See and
Co., Inc.) and (13) the Promissory Note dated February 24, 1995 in the original
principal amount of $11,625 made by Borrower in favor of Gary Smith (assignee of
Jee See and Co., Inc.).
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"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means an amount equal to: (a) Net Worth; LESS (b)
Intangible Assets (excluding deferred tax assets); LESS (c) prepaid expenses;
LESS (d) all obligations owed to such Person by any Affiliate of such Person or
any of its Subsidiaries; and LESS (e) all loans by such Person to its officers,
stockholders or employees.
"Term Loans" means the advances made pursuant to subsections 2.1(A)(1) and
(A)(2).
"Term Loan A" means the advance made pursuant to subsection 2.1(A)(1).
"Term Loan B" means the advance made pursuant to subsection 2.1(A)(2).
"Term Loan Commitment" means (a) as to any Lender, the commitment of such
Lender to make a portion of the Term Loans in the amount set forth on the
signature page of this Agreement opposite such Lender's signature or in the most
recent Lender Addition Agreement, if any, executed by such Lender and (b) as to
all Lenders, the aggregate commitment of all Lenders to make the Term Loans.
"Termination Date" means the date this Agreement is terminated as set forth
in subsection 2.5.
"Threshold Amount" means $10,300,000.
"Total Loan Commitment" means the aggregate commitments of any Lender with
respect to the Revolving Loan Commitment and the Term Loan Commitment.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the State of New York, as amended from time to time, and any successor statute.
"Undrawn Availability" means an amount equal to (a) the Maximum Revolving
Loan Amount MINUS (b) the outstanding Revolving Loans.
1.2 ACCOUNTING TERMS. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below)
shall occur and such changes affect financial covenants, standards or terms in
this Agreement, then Borrower and Lenders agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for
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evaluating the financial condition of Borrower shall be the same after such
Accounting Changes as if such Accounting Changes had not been made, and until
such time as such an amendment shall have been executed and delivered by
Borrower and Requisite Lenders, (A) all financial covenants, standards and terms
in this Agreement shall be calculated and/or construed as if such Accounting
Changes had not been made, and (B) Borrower shall prepare footnotes to each
Compliance Certificate and the financial statements required to be delivered
hereunder that show the differences between the financial statements delivered
(which reflect such Accounting Changes) and the basis for calculating financial
covenant compliance (without reflecting such Accounting Changes). "Accounting
Changes" means: (a) changes in accounting principles required by GAAP and
implemented by Borrower; (b) changes in accounting principles recommended by
Borrower's certified public accountants; and (c) changes in carrying value of
Borrower's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (A.P.B. 16
and/or 17 and EITF 88-16 and FASB 109) to the transactions contemplated by this
Agreement or (ii) any other adjustments that, in each case, were applicable to,
but not included in, the Pro Forma. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including, but not limited to,
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall be treated as expenses in the period the expenditures are made and
deducted as part of the calculation of EBITDA in such period.
1.3 OTHER DEFINITIONAL PROVISIONS. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, words importing any gender include the
other genders; the words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation"; references to agreements and
other contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL.
2.1 LOANS.
(A)(1) TERM LOAN A. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender, severally, agrees to lend to Borrower, on the
Closing Date, its Pro Rata Share of Term Loan A which is in the amount of
$7,500,000. Term Loan A shall be funded in one drawing. Amounts borrowed under
this subsection 2.1(A)(1) and repaid may not be reborrowed. Borrower shall make
principal payments in the amount of the applicable Scheduled Installment of Term
Loan A (or such lesser principal amount of Term Loan A as shall then be
outstanding) on the dates and in the amounts set forth below.
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"Scheduled Installment of Term Loan A" means each of the sixty (60)
consecutive monthly principal installments commencing on January 1, 1996 and
continuing on the first day of each month thereafter, the first fifty-nine (59)
of which shall, subject to the provisions of subsection 2.4(B), be in an amount
equal to $89,286 and the final installment due on December 12, 2000, or the
earlier to occur of (a) the Termination Date or (b) acceleration of the
Obligations in accordance with the provisions of subsection 8.3, in an amount
equal to the unpaid principal amount thereof plus accrued interest thereon.
(A)(2) TERM LOAN B. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender, severally, agrees to lend to Borrower on the
Closing Date its Pro Rata Share of Term Loan B which is in the amount of
$7,500,000. Term Loan B shall be funded in one drawing. Amounts borrowed under
this subsection 2.1(A)(2) and repaid may not be reborrowed. Borrower shall make
principal payments in the amounts of the applicable Scheduled Installments of
Term Loan B (or such lesser principal amount of Term Loan B as shall then be
outstanding) on the dates and in the amounts set forth below; PROVIDED, HOWEVER,
Borrower, unless Agent otherwise consents in writing, may only make principal
payments on Term Loan B from a Permitted Term Loan B Repayment Source.
"Scheduled Installment of Term Loan B" means each of the two (2) principal
installments each in an amount equal to $3,750,000, payable, subject to the
provisions of subsection 2.4(B), on or before August 31, 1996 and December 31,
1996, or the earlier to occur of (a) the Termination Date or (b) acceleration of
the Obligations in accordance with the provisions of subsection 8.3, in an
amount equal to the unpaid principal amount thereof plus accrued interest
thereon.
(B) REVOLVING LOAN. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, each Lender, severally, agrees to lend to Borrower from time
to time its Pro Rata Share of the Revolving Loan. The aggregate amount of all
Revolving Loan Commitments shall not exceed at any time $11,000,000. Amounts
borrowed under this subsection 2.1(B) may be repaid and reborrowed at any time
prior to the earlier of (i) the termination of the Revolving Loan Commitment
pursuant to subsection 8.3 or (ii) the Termination Date. Except as otherwise
provided herein, no Lender shall have any obligation to make advances under this
subsection 2.1(B) to the extent any requested advance would cause the balance of
the Revolving Loan then outstanding (after giving effect to any immediate
application of the proceeds thereof) to exceed the Maximum Revolving Loan
Amount.
(1) "Maximum Revolving Loan Amount" means, as of any date of
determination, the lesser of (a) the Revolving Loan Commitment minus the Letter
of Credit Reserve and (b) the Borrowing Base minus the Letter of Credit Reserve.
(2) "Borrowing Base" means, as of any date of determination, an
amount equal to (a) eighty-five percent (85%) of Eligible Accounts less (b) such
reserves as Agent in its reasonable discretion elects to establish.
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(C) ELIGIBLE ACCOUNTS.
"Eligible Accounts" means, as at any date of determination, the
aggregate of all of Borrower's Accounts that Agent, in its reasonable judgment,
deems to be eligible for borrowing purposes. Without limiting the generality of
the foregoing, unless otherwise agreed by Agent, the following Accounts of
Borrower are not Eligible Accounts:
(1) Accounts which, at the date of issuance of the respective
invoice therefor, were payable more than sixty (60) days after the date of
issuance of such invoice;
(2) Accounts which remain unpaid for more than sixty (60) days
after the due date specified in the original invoice or for more than
ninety (90) days after invoice date if no due date was specified;
(3) Accounts which are otherwise eligible with respect to which
the account debtor is owed a credit by Borrower, but only to the extent of such
credit;
(4) Accounts due from a customer whose principal place of
business is located outside the United States of America or Canada unless such
Account is backed by a letter of credit, in form and substance acceptable to
Agent and issued or confirmed by a bank that is organized under the laws of the
United States of America or a State thereof, that is acceptable to Agent;
provided that such letter of credit has been delivered to Agent as additional
collateral;
(5) Accounts due from a customer which Agent has notified
Borrower does not have a satisfactory credit standing;
(6) Accounts with respect to which the customer is the United
States of America, any state or any municipality, or any department, agency or
instrumentality thereof unless Borrower has, with respect to such Accounts,
complied with the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or
any applicable statute or municipal ordinance of similar purpose and effect;
(7) Accounts with respect to which the customer is an Affiliate
of Borrower or a director, officer, agent, stockholder or employee of Borrower
or any of its Affiliates;
(8) Accounts due from a customer if more than fifty percent
(50%) of the aggregate amount of Accounts of such customer have at the time
remained unpaid for more than sixty (60) days after due date or ninety (90) days
after the invoice date if no due date was specified;
(9) Accounts with respect to which there is any unresolved
dispute with the respective customer (but only to the extent of such dispute);
(10) Accounts evidenced by an "instrument" or "chattel paper" (as
defined in the UCC) not in the possession of Agent, on behalf of Lenders;
(11) Accounts with respect to which Agent, on behalf of Lenders,
does not have a valid, first priority and fully perfected security interest;
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(12) Accounts subject to any Lien except those in favor of Agent,
on behalf of Lenders;
(13) Accounts with respect to which the customer is the subject
of any bankruptcy or other insolvency proceeding;
(14) Accounts due from a customer to the extent that such
Accounts exceed in the aggregate an amount equal to twenty percent (20%) of the
aggregate of all Accounts at said date;
(15) Accounts with respect to which the customer's obligation to
pay is conditional or subject to a repurchase obligation or right to return or
with respect to which the goods or services giving rise to such Account have not
been delivered (or performed, as applicable) and accepted by such account
debtor, including progress billings, bill and hold sales, guarantied sales, sale
or return transactions, sales on approval or consignment sales;
(16) Accounts with respect to which the customer is located in
Indiana, New Jersey, Minnesota, or any other state denying creditors access to
its courts in the absence of a Notice of Business Activities Report or other
similar filing, unless Borrower has either qualified as a foreign corporation
authorized to transact business in such state or has filed a Notice of Business
Activities Report or similar filing with the applicable state agency for the
then current year; and
(17) Accounts with respect to which the customer is a creditor of
Borrower, PROVIDED, HOWEVER, that any such Account shall only be ineligible as
to that portion of such Account which is less than or equal to the amount owed
by Borrower to such Person.
(D) BORROWING MECHANICS. (1) LIBOR Rate Loans or Fixed Rate Loans
made on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of such amount. (2) On any day when
Borrower desires to borrow under this subsection 2.1, Borrower shall give Agent
telephonic notice of the proposed borrowing by 11:00 a.m. Central time on the
Funding Date of a Base Rate Loan and two (2) Business Days in advance of the
Funding Date of a LIBOR Rate Loan or a Fixed Rate Loan, which notice (a "Notice
of Borrowing") must also specify the proposed Funding Date (which shall be a
Business Day), whether such Loans shall consist of Base Rate Loans, LIBOR Rate
Loans or Fixed Rate Loans and for LIBOR Rate Loans or Fixed Rate Loans the
Interest Period applicable thereto. Any such telephonic notice shall be
confirmed in writing on the same day. Neither Agent nor any Lender shall incur
any liability to Borrower for acting upon any telephonic notice Agent believes
in good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Borrower or for otherwise acting in good faith
under this subsection 2.1(D). Neither Agent nor any Lender will make any
advance pursuant to any telephonic notice unless Agent has also received the
most recent Borrowing Base Certificate and all other documents required under
subsection 5.1(F) by 11:00 a.m. Central time. Each advance made to Borrower
under the Revolving Loan shall be deposited by wire transfer in immediately
available funds in such account as Borrower may from time to time designate to
Agent in writing. Unless payment is otherwise timely made by Borrower, the
becoming due of any amount required to be paid under this Agreement or any of
the other Loan
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Documents as principal, accrued interest and fees shall be deemed irrevocably to
be a request by Borrower for a Base Rate Revolving Loan on the due date of, and
in the amount required to pay, such principal, accrued interest and fees, and
the proceeds of each such Revolving Loan if made by Agent or any Lender shall be
disbursed by Agent or such Lender by way of direct payment of the relevant
obligation.
(E) NOTES. Borrower shall execute and deliver to each Lender (i) an
Amended and Restated Term Note A and Amended and Restated Term Note B to
evidence such Lender's portion of the Term Loans, such Amended and Restated Term
Notes to be in the principal amount of the respective Term Loan Commitments of
such Lender and with other appropriate insertions and (ii) an Amended and
Restated Revolving Note to evidence such Lender's portion of the Revolving Loan,
such Amended and Restated Revolving Note to be in the principal amount of the
Revolving Loan Commitment of such Lender and with other appropriate insertions.
In the event of an assignment under subsection 9.1, Borrower shall, upon
surrender of the assigning Lender's Notes, issue new Notes to reflect the new
Commitments of the assigning Lender and its assignee (or in the case of the
Amended and Restated Term Notes, the outstanding principal amount of the
assigning Lender's and its assignee's portions of the Term Loans).
(F) EVIDENCE OF REVOLVING LOAN OBLIGATIONS. The advances
constituting the Revolving Loan shall be evidenced by this Agreement, the
Amended and Restated Revolving Note, and notations made from time to time by
Agent in its books and records, including computer records. Agent shall record
in its books and records, including computer records, the principal amount of
the Revolving Loans owing to each Lender from time to time. Agent's books and
records shall constitute presumptive evidence, absent manifest error, of the
accuracy of the information contained therein. Failure by Agent to make any
such notation or record shall not affect the obligations of Borrower to Lenders
with respect to the Revolving Loans.
(G) LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, the Revolving Loan Commitments may, in addition to advances
under the Revolving Loan, be utilized, upon the request of Borrower, for (i) the
issuance of letters of credit by Agent; or with Agent's consent any Lender, or
(ii) the issuance by Agent of risk participations (a "Risk Participation
Agreement") to banks to induce such banks to issue letters of credit for the
account of Borrower (each of (i) and (ii) above a "Lender Letter of Credit").
Each Lender shall be deemed to have purchased a participation in each Lender
Letter of Credit issued on behalf of Borrower in an amount equal to its Pro Rata
Share thereof. In no event shall any Lender Letter of Credit be issued to the
extent that the issuance of such Lender Letter of Credit would cause the sum of
the Letter of Credit Reserve (after giving effect to such issuance) plus the
outstanding principal balance of the Revolving Loan to exceed the lesser of (x)
the Borrowing Base and (y) the Revolving Loan Commitment.
(1) MAXIMUM AMOUNT. The aggregate amount of Letter of Credit
Liability with respect to all Lender Letters of Credit outstanding at any time
shall not exceed $2,000,000.
(2) REIMBURSEMENT. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs
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and expenses paid to any bank that issues Bank Letters of Credit. Borrower
hereby authorizes and directs Agent, at Agent's option, to debit Borrower's
account (by increasing the principal balance of the Revolving Loan) in the
amount of any payment made with respect to any Lender Letter of Credit. All
amounts paid with respect to any Lender Letter of Credit that are not
immediately repaid by Borrower with the proceeds of a Revolving Loan or
otherwise shall bear interest at the Default Rate applicable to Revolving Loans.
In the event that Borrower shall fail to reimburse Agent on the date of any
payment under a Lender Letter of Credit in an amount equal to the amount of such
payment, Agent shall promptly notify each Lender of the unreimbursed amount of
such payment together with accrued interest thereon and each Lender, on the next
Business Day, shall deliver to Agent an amount equal to its respective
participation in same day funds. The obligation of each Lender to deliver to
Agent an amount equal to its respective participation pursuant to the foregoing
sentence shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3. In the event any
Lender fails to make available to Agent the amount of such Lender's
participation in such Lender Letter of Credit, Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Base Rate.
(3) CONDITIONS OF ISSUANCE. In addition to all other terms and
conditions set forth in this Agreement, the issuance of any Lender Letter of
Credit shall be subject to the conditions precedent that the letter of credit
which Borrower requests be in such form, be for such amount, contain such terms
and support such transactions as are reasonably satisfactory to Agent. The
expiration date of each Lender Letter of Credit shall be on a date which is at
least thirty (30) days prior to the Termination Date.
(4) REQUEST FOR LETTERS OF CREDIT. Borrower shall give Agent at
least three (3) Business Days prior notice specifying the date a Lender Letter
of Credit is to be issued, identifying the beneficiary and describing the nature
of the transactions proposed to be supported thereby. The notice shall be
accompanied by the form of the letter of credit being requested.
(H) OTHER LETTER OF CREDIT PROVISIONS.
(1) OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse
Agent or any Lender for payments made under any Lender Letter of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including the following
circumstances:
(a) any lack of validity or enforceability of any Lender Letter
of Credit or any other agreement;
(b) the existence of any claim, set-off, defense or other right
which Borrower, any of its Affiliates, Agent or any Lender, on the one hand, may
at any time have against any beneficiary or transferee of any Lender Letter of
Credit or Bank Letter of Credit (or any Persons for whom any such transferee may
be acting), Agent, any Lender or any other Person, on the other hand, whether in
connection with this Agreement, the transactions contemplated herein or any
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unrelated transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary of the letter of credit);
(c) any draft, demand, certificate or any other document
presented under any Lender Letter of Credit or Bank Letter of Credit which is
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(d) payment under any Lender Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such letter of credit; provided that, in the case of
any payment by Lender under any Lender Letter of Credit, Lender has not acted
with gross negligence or willful misconduct (as determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Lender Letter of Credit complies on its face with any applicable requirements
for a demand for payment under such Lender Letter of Credit;
(e) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
(2) NATURE OF LENDER'S DUTIES. As between Agent and Lenders, on the
one hand, and Borrower, on the other hand, Borrower assumes all risks of the
acts and omissions of, or misuse of any Lender Letter of Credit by the
beneficiary thereof. In furtherance and not in limitation of the foregoing,
neither Agent nor any Lender shall be responsible: (a) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document by any party
in connection with the application for and issuance of any Lender Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Lender Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (c) for failure of the beneficiary of any
Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment by Agent or
any Lender under any Lender Letter of Credit, Agent or Lender has not acted with
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any Lender Letter of Credit; and (h) for any consequences arising from causes
beyond the control of Agent or any Lender as the case may be. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any Lender's
rights or powers hereunder.
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(3) LIABILITY. In furtherance and extension of and not in limitation
of, the specific provisions herein above set forth, any action taken or omitted
by Agent or any Lender under or in connection with any Lender Letter of Credit,
if taken or omitted in good faith, shall not put Agent or any Lender under any
resulting liability to Borrower.
2.2 INTEREST.
(A) RATE OF INTEREST. (i) Subject to the provisions of subsections
(ii) and (iii) below, the Loans and all other Obligations shall bear interest
from the date such Loans are made or such other Obligations become due to the
date paid at a rate per annum equal to (x) in the case of Base Rate Loans, the
Base Rate plus (a) three-quarters of one percent (.75%) with respect to the
Revolving Loan, (b) one percent (1.00%) with respect to Term Loan A and (c) one
and one-quarter percent (1.25%) with respect to Term Loan B, (y) in the case of
LIBOR Rate Loans, the LIBOR Rate plus (a) two and one-half percent (2.50%) with
respect to the Revolving Loan, (b) two and three-quarters percent (2.75%) with
respect to Term Loan A and (c) three percent (3.00%) with respect to Term Loan B
and (z) a fixed rate determined in accordance with subsection (iii) below. (the
"Interest Rate"). The applicable basis for determining the rate of interest
shall be selected by Borrower initially at the time a notice of borrowing is
given pursuant to subsection 2.1(D). The basis for determining the interest
rate with respect to any Loan or a portion of any Loan may be changed from time
to time pursuant to subsection 2.2(E). If on any day a Loan or a portion of any
Loan is outstanding with respect to which notice has not been delivered to Agent
in accordance with the terms of this Agreement specifying the basis for
determining the rate of interest, then for that day that Loan or portion thereof
shall bear interest determined by reference to the Base Rate.
(ii) Notwithstanding the provisions of the foregoing subsection "(i)", so
long as no Default or Event of Default shall then be in existence, in the event
(a) Borrower's August 31, 1996 fiscal year-end audited financial statements (the
"1996 Year-End Financial Statements"), delivered to Agent in accordance with the
provisions of subsection 5.1(B) hereof, reflect an EBITDA of greater than
$16,000,000 and/or (b) Borrower's August 31, 1997 fiscal year-end audited
financial statements (the "1997 Year-End Financial Statements" and together with
the 1996 Year-End Financial Statements, collectively, the "Year-End Financial
Statements"), delivered to Agent in accordance with the provisions of subsection
5.1(B) hereof, reflect an EBITDA of greater than $20,000,000, then in each such
case, as applicable, Agent shall reduce the Interest Rates other than for any
Fixed Rate Loan by one-quarter of one percent (.25%) commencing on the fifth
(5th) Business Day following Agent's receipt of the applicable Year-End
Financial Statements (each, an "Adjustment Date"); PROVIDED, HOWEVER, in the
case of LIBOR Rate Loans, such adjusted rate shall only be effective for LIBOR
Rate Loans with Interest Periods commencing on or after the applicable
Adjustment Date.
(iii) So long as no Default or Event of Default shall then be in
existence, within ten (10) Business Days following Borrower's request therefor
to Agent, Agent on behalf of Lenders shall provide Borrower with a fixed rate of
interest quote in writing for, subject to the restrictions set forth in
Subsection 2.1(D), all or any part of the outstanding Loans (the "Quote"). The
Quote shall be determined by Lenders in good faith. In the event Borrower
elects to convert all or any portion of the Loans to a Fixed Rate Loan, it shall
provide Agent such election in writing by delivering to Agent a Notice of
Conversion/Continuation as defined in subsection 2.2(E) no later than 11:00 a.m.
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Central time on the Business Day following Borrower's receipt from Agent of the
Quote, which such written election shall be deemed Borrower's acceptance of the
Quote.
(iv) After the occurrence and during the continuance of an Event of Default
and notice thereof by Agent to Borrower (except that no notice shall be required
upon the occurrence of an Event of Default under subsection 8.1(G) or 8.1(H))
(i) the Loans and all other Obligations shall, at the option of Requisite
Lenders, bear interest at a rate per annum equal to two percent (2%) plus the
applicable Interest Rate (the "Default Rate"), (ii) each LIBOR Rate Loan shall
automatically convert to a Base Rate Loan at the end of any applicable Interest
Period and (iii) no Loans may be converted to LIBOR Rate Loans.
(B) INTEREST PERIODS. In connection with each LIBOR Rate Loan or
Fixed Rate Loan, Borrower shall elect an interest period (each an "Interest
Period") to be applicable to such Loan, which Interest Period for LIBOR Rate
Loans shall be either a one, two, three or six month period and for Fixed Rate
Loans shall be one month or any whole multiple thereof; provided that:
(1) the initial Interest Period for any Loan shall commence on
the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each successive
Interest Period shall commence on the day on which the immediately preceding
Interest Period expires;
(3) if an Interest Period expiration date is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided
that if any Interest Period expiration date is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;
(4) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall, subject to
part (5), below, end on the last Business Day of a calendar month;
(5) no Interest Period shall extend beyond the Termination Date;
(6) no Interest Period may extend beyond a scheduled principal
payout date unless the sum of (a) the aggregate principal amount of Loans that
are Base Rate Loans or that have Interest Periods expiring on or before such
date and (b) the available, unused Revolving Loan Commitment or Borrowing Base
equals or exceeds the principal amount required to be paid on the Loans on such
date; and
(7) there shall be no more than five (5) Interest Periods
relating to LIBOR Rate Loans or Fixed Rate Loans outstanding at any time.
(C) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loans and
all other Obligations shall be computed on the daily principal balance on the
basis of a 360 day year for the
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actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of funding of the Loan or the first
day of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a LIBOR Rate Loan or a Fixed Rate Loan, the date
of conversion of such LIBOR Rate Loan or such Fixed Rate Loan to such Base Rate
Loan, shall be included and the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan, or with respect to a Base
Rate Loan being converted to a LIBOR Rate Loan or a Fixed Rate Loan, the date of
conversion of such Base Rate Loan to such LIBOR Rate Loan or such Fixed Rate
Loan, shall be excluded; provided that if a Loan is repaid on the same day on
which it is made, one day's interest shall be paid on that Loan. Interest on
Base Rate Loans and all other Obligations other than LIBOR Rate Loans shall be
payable to Agent for the benefit of Lenders monthly in arrears on the first day
of each month, on the date of any prepayment of Loans and at maturity, whether
by acceleration or otherwise. Interest on LIBOR Rate Loans shall be payable to
Agent for the benefit of Lenders on the last day of the applicable Interest
Period for such Loan, on the date of any prepayment of the Loans, and at
maturity, whether by acceleration or otherwise. In addition, for each LIBOR
Rate Loan having an Interest Period longer than three (3) months, interest
accrued on such Loan shall also be payable on the last day of each three (3)
month interval during such Interest Period.
(D) INTEREST LAWS. Notwithstanding any provision to the contrary
contained in this Agreement or any other Loan Document, Borrower shall not be
required to pay, and neither Agent nor any Lender shall be permitted to collect,
any amount of interest in excess of the maximum amount of interest permitted by
law ("Excess Interest"). If any Excess Interest is provided for or determined
by a court of competent jurisdiction to have been provided for in this Agreement
or in any other Loan Document, then in such event: (1) the provisions of this
subsection shall govern and control; (2) neither Borrower nor any Loan Party
shall be obligated to pay any Excess Interest; (3) any Excess Interest that
Agent or any Lender may have received hereunder shall be, at such Lender's
option, (a) applied as a credit against the outstanding principal balance of the
Obligations or accrued and unpaid interest (not to exceed the maximum amount
permitted by law), (b) refunded to the payor thereof, or (c) any combination of
the foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to time under
applicable law (the "Maximum Rate"), and this Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and modified to
reflect such reduction; and (5) neither Borrower nor any Loan Party shall have
any action against Agent or any Lender for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the foregoing, if
for any period of time interest on any Obligations is calculated at the Maximum
Rate rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest payable
on such Obligations shall remain at the Maximum Rate until each Lender shall
have received the amount of interest which such Lender would have received
during such period on such Obligations had the rate of interest not been limited
to the Maximum Rate during such period.
CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.2(A) Borrower shall have the option to (1) convert at any time all
or any part of outstanding Loans equal to $500,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to LIBOR Rate Loans or
Fixed Rate Loans or (2) upon the expiration of any Interest Period applicable to
a LIBOR Rate Loan or a Fixed Rate Loan to (a) continue or convert all or any
portion of such
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Loan equal to $500,000 and integral multiplies of $100,000 in excess of that
amount as a LIBOR Rate Loan or a Fixed Rate Loan or (b) convert all or any
portion of such Loan to a Base Rate Loan. The succeeding Interest Period(s) of
such continued or converted Loan commence on the last day of the Interest Period
of the Loan to be continued or converted; provided that no outstanding Loan may
be continued as, or be converted into, a LIBOR Rate Loan or a Fixed Rate Loan,
when any Event of Default or Default has occurred and is continuing.
Borrower shall deliver a notice of conversion/continuation to Agent no
later than noon (Central time) at least two (2) Business Days in advance of the
proposed conversion/ continuation date ("Notice of Conversion/Continuation"). A
Notice of Conversion/Continuation shall certify: (1) the proposed
conversion/continuation date (which shall be a Business Day); (2) the amount of
the Loan to be converted/continued; (3) the nature of the proposed
conversion/continuation; (4) in the case of conversion to, or a continuation
of, a LIBOR Rate Loan or a Fixed Rate Loan the requested Interest Period; and
(5) that no Default or Event of Default has occurred and is continuing or would
result from the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation, Borrower
may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(E); provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of Borrower or for otherwise acting in good faith under this
subsection 2.2(E) and upon conversion/continuation by Lenders in accordance with
this Agreement pursuant to any telephonic notice, Borrower shall have effected
such conversion or continuation, as the case may be, hereunder.
2.3 FEES.
(A) UNUSED LINE FEE. Borrower shall pay to Agent, for the benefit of
Lenders, a fee in an amount equal to the Revolving Loan Commitment less the sum
of the average daily balance of the Revolving Loan plus the average daily face
amount of the Lender Letter of Credit Reserve during the preceding month
multiplied by one-half of one percent (.5%) per annum, such fee to be calculated
on the basis of a 360 day year for the actual number of days elapsed and to be
payable monthly in arrears on the first day of the first month following the
Closing Date and the first day of each month thereafter.
(B) LETTER OF CREDIT FEES. Borrower shall pay to Agent for the
account of Lenders, a fee with respect to the Lender Letters of Credit in the
amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by two and one half percent (2.5%) per annum. Such
fees will be calculated on the basis of a 360 day year for the actual number of
days elapsed and will be payable monthly in arrears on the first day of each
month. Borrower shall also reimburse Agent for any and all fees and expenses, if
any, paid by Agent or any Lender to the issuer of Bank Letters of Credit.
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(C) PREPAYMENT FEES. If Borrower voluntarily prepays (a) the
Obligations in full (other than voluntary prepayments of the Revolving Loan
which do not terminate the Revolving Loan Commitment) or (b) Term Loan A in
whole or in part, Borrower at the time of prepayment shall pay to Agent, for the
benefit of Lenders, as compensation for the costs of being prepared to make
funds available to Borrower under this Agreement, and not as a penalty, an
amount determined by multiplying the percentage set forth below by (1) in the
case of a prepayment in full of the Obligations, the amount of the Revolving
Loan Commitment plus the amount of the then outstanding Term Loans, or (2) in
the case of a prepayment of Term Loan A only, in whole or in part, the amount of
such prepayment: two percent (2%) upon a prepayment during the first Loan Year
and one percent (1%) upon a prepayment during the second Loan Year. No
prepayment fees shall be payable for any prepayments made (i) after the second
Loan Year (ii) in the event Borrower prepays the Obligations in full in cash at
any time during which Heller's Total Loan Commitment does not exceed fifty
percent (50%) of the aggregate Total Loan Commitments for all Lenders, (iii)
solely with the proceeds of Borrower's internally generated funds or (iv)
pursuant to a mandatory prepayment in accordance with the provisions of
subsection 2.4(B) or optional prepayment in accordance with the provisions of
subsection 2.11(B).
(D) COLLATERAL MONITORING FEE. On the Closing Date and on the first
day of each December (other than December 1, 1995), March, June and September
thereafter, Borrower shall pay to Agent, for its own account, a nonrefundable
collateral monitoring fee of $3,750.
(E) AUDIT FEES. Borrower shall pay to Agent for its own account an
audit fee for each inspection equal to $650 per auditor per day or any portion
thereof, together with out of pocket expenses.
(F) OTHER FEES AND EXPENSES. Borrower shall pay to Agent, for its
own account, all charges for returned items and all other bank charges incurred
by Agent, as well as Agent's standard wire transfer charges for each wire
transfer made under this Agreement.
2.4 PAYMENTS AND PREPAYMENTS.
(A) MANNER AND TIME OF PAYMENT. In its sole discretion, Agent may
charge interest and other amounts payable hereunder to the Revolving Loan, all
as set forth on Agent's books and records. If Agent elects to bill Borrower for
any amount due hereunder, such amount shall be immediately due and payable with
interest thereon as provided herein. All payments made by Borrower with respect
to the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Agent hereunder shall, unless otherwise directed
by Agent, be made to Agent's Account or in accordance with subsection 5.6.
Proceeds remitted to Agent's Depository Account in accordance with subsection
5.6 shall be credited to the Obligations on the first Business Day following the
day such proceeds were received; provided, however, for the purpose of
calculating interest on the Obligations, such funds shall be deemed received on
the first Business Day thereafter. Proceeds remitted to Agent's Account by wire
transfer shall be credited to the Obligations on the Business Day received.
(B) MANDATORY PREPAYMENTS.
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OVERADVANCE. At any time that the principal balance of the
Revolving Loan exceeds the Maximum Revolving Loan Amount, Borrower shall, upon
demand by Agent, immediately repay the Revolving Loan to the extent necessary to
reduce the principal balance to an amount that is equal to or less than the
Maximum Revolving Loan Amount.
(2) PROCEEDS OF ASSET DISPOSITIONS. (i) Immediately upon
receipt by Borrower or any of its Subsidiaries of the net proceeds of any Asset
Disposition, Borrower shall prepay the Obligations in an amount equal to such
proceeds. So long as no Default or Event of Default shall exist and Borrower
reasonably expects the proceeds of any Asset Disposition to be reinvested within
180 days to repair or replace such assets with like assets, Borrower shall
deliver the proceeds to Agent to be applied to the Revolving Loan, and Borrower
may, so long as no Default or Event of Default shall have occurred and be
continuing, reborrow such proceeds only for such repair or replacement. If
Borrower fails to reinvest such proceeds within 180 days, such proceeds shall be
applied as set forth below. Provided, however, proceeds from Specified Fixed
Asset Dispositions shall not be eligible for such reinvestment option.
Notwithstanding anything contained in this subsection 2.4(B)(2) to the contrary,
Borrower shall be permitted to retain the net proceeds of any Asset Disposition
so long as such net proceeds do not exceed $200,000 in the aggregate in any
Fiscal Year for all such Asset Dispositions. Should such proceeds exceed such
minimum, the entire amount and not just the portion above the minimum shall be
subject to this subsection 2.4(B)(2). Borrower shall remit, or cause its
Subsidiaries to remit, all such net proceeds to Agent's Account for application
to the Obligations in accordance with the provisions of this subsection
2.4(B)(2).
(ii) In the event any such net proceeds arise out of an Asset Disposition
which is not a Specified Fixed Asset Disposition, Agent shall apply such net
proceeds to repay Term Loan A (x) in the inverse order of maturity thereof, to
the extent such proceeds are less than or equal to $500,000 and (y) on a pro
rata basis to the extent such net proceeds are greater than $500,000, then to
Term Loan B in the inverse order of maturity thereof and then to the remaining
Obligations in such order as Agent shall elect.
(iii) Until such time as Term Loan B has been repaid in full in cash,
Agent shall apply the net proceeds of each Specified Fixed Asset Disposition to
repay the installments of Term Loan B in the order in which they mature.
(iv) In the event Term Loan B has been repaid in full in cash and the
Orderly Liquidation Value of the Appraised Assets sold or otherwise disposed of
in all Specified Fixed Asset Dispositions through such date is:
(a) less than the Threshold Amount, then, until such time as the
Orderly Liquidation Value of the Appraised Assets so disposed of exceeds
the Threshold Amount, all net proceeds of Specified Fixed Asset
Dispositions of Appraised Assets shall be applied by Agent to the Revolving
Loan and all net proceeds of Specified Fixed Asset Dispositions other than
those applicable to Appraised Assets shall be applied by Agent to repay
installments of Term Loan A, in the inverse order of maturity and then to
the remaining Obligations in such order as Agent shall elect; and
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(b) greater than the Threshold Amount, then all net proceeds arising
out of a Specified Fixed Asset Disposition occurring after reaching the
Threshold Amount, shall be applied by Agent to repay installments of Term
Loan A, in the inverse order of maturity to the extent such proceeds are
less than or equal to $500,000 and on a pro rata basis to the extent such
net proceeds are greater than $500,000 and then to the remaining
Obligations in such order as Agent shall elect.
(v) During the existence of a Default or an Event of Default, all net
proceeds of any Asset Disposition shall be applied by Agent first to all fees,
costs and expenses then owing to Agent and Lender under subsection 10.1, second
to repay Term Loan A in the inverse order of maturity thereof, third to repay
Term Loan B in the inverse order of maturity thereof and fourth to the remaining
Obligations.
(3) PREPAYMENTS OF TERM LOAN A. In the event any of Borrower's
Compliance Certificates delivered to Agent in accordance with the provisions of
subsection 5.1(E) with respect to any applicable four fiscal quarter period of
Borrower discloses that Borrower shall have failed to purchase Qualified Assets
("Qualified Asset Purchases") in an aggregate amount of at least $3,200,000 for
such applicable four fiscal quarter period, Borrower shall repay the remaining
installments of Term Loan A in the inverse order of maturity thereof on the
first Business Day after delivery of the appropriate Compliance Certificate as
required in accordance with the provisions of subsection 5.1(E) in an amount
equal to seventy-five percent (75%) of the difference between (i) $3,200,000 and
(ii) the aggregate amount of expenditures made by Borrower for Qualified Asset
Purchases during such applicable four fiscal quarter period.
(C) VOLUNTARY PREPAYMENTS AND REPAYMENTS. Except as provided in
subsections 2.1(B), 2.3(C) and 2.4(B), Borrower's Obligations may only be
prepaid or repaid in full and not in part. Borrower may, at any time upon not
less than three Business Days' prior notice to Agent, prepay Term Loan A or
terminate the Revolving Loan Commitment; provided Borrower pays to Agent for the
benefit of Lenders the applicable prepayment fees set forth in subsection
2.3(C); provided, further the Revolving Loan Commitment may not be terminated by
Borrower until the Term Loans are paid in full. Upon termination of the
Revolving Loan Commitment, Borrower shall cause Agent and each Lender to be
released from all liability under any Lender Letters of Credit or, at Agent's
option, Borrower will deposit cash collateral with Agent in an amount equal to
105% of the Letter of Credit Liability that will remain outstanding after
prepayment or repayment.
(D) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.5 TERM OF THIS AGREEMENT. This Agreement shall be effective until
December 12, 2000 (the "Termination Date"). The Commitments shall (unless
earlier terminated) terminate upon the earlier of (i) the occurrence of an event
specified in subsection 8.3 or (ii) the Termination Date. Upon termination in
accordance with subsection 8.3 or on the Termination Date, all Obligations shall
become immediately due and payable without notice or demand. Notwithstanding
any
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termination, until all Obligations have been fully paid and satisfied, Agent, on
behalf of Lenders, shall be entitled to retain security interests in and liens
upon all Collateral, and even after payment of all Obligations hereunder,
Borrower's obligation to indemnify Agent and each Lender in accordance with the
terms hereof shall continue. Notwithstanding the foregoing, Agent, on behalf of
Lenders, shall release the security interest in and liens upon all Collateral
upon payment in full of all Obligations hereunder and termination of the
Commitments.
2.6 STATEMENTS. Agent shall render a monthly statement of account to
Borrower within twenty (20) days after the end of each month. Such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto within sixty (60) days from the date such statement is mailed
to Borrower. Borrower promises to pay all of its Obligations as such amounts
become due or are declared due pursuant to the terms of this Agreement.
2.7 GRANT OF SECURITY INTEREST. To secure the payment and performance of
the Obligations, including all renewals, extensions, restructurings and
refinancings of any or all of the Obligations, each Loan Party hereby grants to
Agent, on behalf of Lenders, a continuing security interest and lien in and to
all right, title and interest of such Loan Party in the following property of
such Loan Party, whether now owned or existing or hereafter acquired or arising
and regardless of where located (all being collectively referred to as the
"Collateral"): (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the right of
stoppage in transit, replevin and reclamation; (B) Inventory; (C) general
intangibles (as defined in the UCC); (D) documents (as defined in the UCC) or
other receipts covering, evidencing or representing goods; (E) instruments (as
defined in the UCC); (F) chattel paper (as defined in the UCC); (G) Equipment;
(H) Intellectual Property; (I) all deposit accounts of such Loan Party
maintained with any bank or financial institution; (J) all cash and other monies
and property of such Loan Party in the possession or under the control of Agent,
any Lender or any participant; (K) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of the
property described above or are otherwise necessary or helpful in the collection
thereof or realization thereon; and (L) proceeds of all or any of the property
described above, including, without limitation, the proceeds of any insurance
policies covering any of the above described property; PROVIDED, HOWEVER,
Agent's security interest in Collateral owned by Borrower on the Closing Date
subject to a Permitted Encumbrance under subsections "(f)" and "(h)" of the
defined term "Permitted Encumbrances" (the "Excluded Collateral") shall not
arise with respect to the Excluded Collateral if and to the extent that (a) the
terms of the agreement or agreements creating or evidencing the Excluded
Collateral prohibit such grant and (b) the term prohibiting such grant is
effective as a matter of law and has not been waived or the consent of the
necessary party to the grant to Agent has not been obtained; PROVIDED, FURTHER,
if any such prohibition is subsequently lifted, terminated or is otherwise no
longer effective as a matter of law or is waived or consent of the necessary
party is obtained, a security interest therein shall automatically arise
hereunder without any further action on the part of Borrower or Agent.
2.8 CAPITAL ADEQUACY AND OTHER ADJUSTMENTS. In the event Agent or any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Agent or such Lender or any corporation controlling
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Agent or such Lender with any request or directive regarding capital adequacy,
reserve requirements or similar requirements (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) from any
central bank or governmental agency or body having jurisdiction does or shall
have the effect of increasing the amount of capital, reserves or other funds
required to be maintained by Agent or such Lender or any corporation controlling
Agent or such Lender and thereby reducing the rate of return on Agent's or such
Lender's or such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within fifteen (15) days after
notice and demand from such Lender (with a copy to Agent) or Agent (together
with the certificate referred to in the next sentence) pay to Agent or such
Lender additional amounts sufficient to compensate Agent or such Lender for such
reduction. A certificate as to the amount of such cost and showing the basis of
the computation of such cost submitted by Agent or any Lender to Borrower shall,
absent manifest error, be final, conclusive and binding for all purposes.
2.9 TAXES.
(A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder or under any Note shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the net income of any Lender or Agent and franchise
taxes to the extent based on net income imposed on any Lender or Agent by the
jurisdiction under the laws of which Agent or such Lender is organized or doing
business or any political subdivision thereof and taxes imposed on its net
income or franchise taxes to the extent based on net income by the jurisdiction
of Agent's or such Lender's applicable lending office or any political
subdivision thereof (all such taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto excluding such taxes
imposed on net income and franchise taxes to the extent based on net income,
herein "Tax Liabilities"). If Borrower shall be required by law to deduct any
such Tax Liabilities from or in respect of any sum payable hereunder to Agent or
any Lender, then the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, Agent or such Lender
receives an amount equal to the sum it would have received had no such
deductions been made.
(B) CHANGES IN TAX LAWS. In the event that, subsequent to the
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by Lender with any request or directive (whether or
not having the force of law) from any governmental authority, agency or
instrumentality:
(1) does or shall subject Agent or any Lender to any tax of any
kind whatsoever with respect to this Agreement, the other Loan Documents or any
Loans made or Lender Letters of Credit issued hereunder, or change the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Agent or such Lender); or
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(2) does or shall impose on Agent or any Lender any other
condition or increased cost in connection with the transactions contemplated
hereby or participations herein; and the result of any of the foregoing is to
increase the cost to Agent or such Lender of issuing any Lender Letter of Credit
or making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or any Lender becomes entitled to claim
any additional amounts pursuant to this subsection, it shall promptly notify
Borrower of the event by reason of which Agent or such Lender has become so
entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Agent or any Lender to Borrower shall, absent
manifest error, be final, conclusive and binding for all purposes.
(C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under any Note are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Agent (i) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement and
under the Note (a "Certificate of Exemption") or (ii) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender
under this Agreement and within fifteen (15) days after a reasonable written
request of Borrower or Agent from time to time thereafter, each Foreign Lender
that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Agent within the time periods set forth in the preceding paragraph, Borrower
shall withhold taxes from payments to such Foreign Lender at the applicable
statutory rates and Borrower shall not be required to pay any additional amounts
as a result of such withholding; PROVIDED, however, that all such withholding
shall cease upon delivery by such Foreign Lender of a Certificate of Exemption
to Borrower and Agent.
2.10 REQUIRED TERMINATION AND PREPAYMENT. If on any date any Lender shall
have reasonably determined (which determination shall be final and conclusive
and binding upon all parties) that the making or continuation of its LIBOR Rate
Loans has become unlawful or impossible by compliance by Lender in good faith
with any law, governmental rule, regulation or order (whether or not having the
force of law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, that Lender shall promptly give notice (by
telephone confirmed in writing) to Borrower and Agent of that determination.
Subject to prior withdrawal of a Notice of Borrowing or a Notice of
Conversion/Continuation or prepayment of the LIBOR
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Rate Loans as contemplated by subsection 2.11, the obligation of Lender to make
or maintain its LIBOR Rate Loans during any such period shall be terminated at
the earlier of the termination of the Interest Period then in effect or when
required by law and Borrower shall no later than the termination of the Interest
Period in effect at the time any such determination pursuant to this subsection
2.10 is made or, earlier, when required by law, repay or prepay the LIBOR Rate
Loans together with all interest accrued thereon or convert the LIBOR Rate Loans
to Base Rate Loans or Fixed Rate Loans.
2.11 OPTIONAL PREPAYMENT/REPLACEMENT OF AGENT OR LENDERS IN RESPECT OF
INCREASED COSTS. Within fifteen (15) days after receipt by Borrower of written
notice and demand from Agent or any Lender (an "Affected Lender") for payment of
additional costs as provided in subsections 2.8 and 2.9, Borrower may, at its
option, notify Agent and such Affected Lender of its intention to do one of the
following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender PROVIDED, that Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
(B) Borrower may, without penalty, prepay in full all outstanding
Obligations owed to such Affected Lender and terminate such Affected Lender's
Commitments. Borrower shall, within ninety (90) days following notice of its
intention to do so, prepay in full all outstanding Obligations owed to such
Affected Lender (including such Affected Lender's increased costs for which it
is entitled to reimbursement under this Agreement through the date of such
prepayment) and terminate such Affected Lender's Commitments.
2.12 COMPENSATION. Borrower shall compensate Lender, upon written request
by Lender (which request shall set forth in reasonable detail the basis for
requesting such amounts and which shall, absent manifest error, be conclusive
and binding upon all parties hereto), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss (including interest paid)
sustained by Lender in connection with the re-employment of such funds), Lender
may sustain: (i) if for any reason (other than a default by Lender) a borrowing
of any LIBOR Rate Loan or Fixed Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing, a Notice of Conversion/Continuation or a
telephonic request for borrowing or Conversion/Continuation; (ii) if any
prepayment of any of its LIBOR Rate Loans or Fixed Rate Loans occurs on a date
that is not the last day of an Interest Period applicable to that Loan; (iii) if
any prepayment of any of its LIBOR Rate Loans or Fixed Rate Loans is not made on
any date specified in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR Rate Loans or
Fixed Rate Loans when required by the terms of this Agreement; provided that
during the period while any such amounts have not been paid, Lender shall
reserve an equal amount from amounts otherwise available to be borrowed under
the Revolving Loan.
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2.13 BOOKING OF LIBOR RATE LOANS. Lender may make, carry or transfer LIBOR
Rate Loans or Fixed Rate Loans at, to, or for the account of, any of its branch
offices or the office of an Affiliate of Lender.
2.14 ASSUMPTIONS CONCERNING FUNDING OF LIBOR RATE LOANS OR FIXED RATE
LOANS. Calculation of all amounts payable to Lender under subsection 2.12 shall
be made as though Lender had actually match funded its relevant LIBOR Rate Loan
or Fixed Rate Loan; provided, however, that Lender may fund each of its LIBOR
Rate Loans or Fixed Rate Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
subsection 2.12.
SECTION 3. CONDITIONS TO LOANS
3.1 CONDITIONS TO LOANS. The obligations of Agent and each Lender to make
Loans and the obligation of Agent or any Lender to issue Lender Letters of
Credit on the Closing Date and on each Funding Date are subject to satisfaction
of all of the conditions set forth below.
(A) CLOSING DELIVERIES. On the Closing Date, Agent shall have
received, in form and substance satisfactory to Agent, all documents,
instruments and information identified on Schedule 3.1(A) and all other
agreements, notes, certificates, orders, authorizations, financing statements,
mortgages and other documents which Agent may at any time reasonably request.
(B) SECURITY INTERESTS. Agent shall have received satisfactory
evidence that all security interests and liens granted to Agent for the benefit
of Lenders pursuant to this Agreement or the other Loan Documents have been duly
perfected and constitute first priority liens on the Collateral, subject only to
Permitted Encumbrances.
(C) CLOSING DATE AVAILABILITY. On the Closing Date, after giving
effect to the consummation of the transactions contemplated hereunder on the
Closing Date and the payment by Borrower of all costs, fees and expenses
relating thereto, Undrawn Availability shall be no less than $7,000,000.
(D) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein and in the Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made by
Borrower to Agent after the Closing Date and approved by Agent.
(E) FEES. Borrower shall have paid the fees payable on the Closing
Date under subsection 2.3 and as referred to in the Closing Date Fee Letter.
(F) NO DEFAULT. No event shall have occurred and be continuing or
would result from the consummation of the requested borrowing or notice
requesting issuance of a Lender Letter of Credit that would constitute an Event
of Default or a Default.
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(G) PERFORMANCE OF AGREEMENTS. Each Loan Party shall have performed
in all material respects all agreements and satisfied all conditions which any
Loan Document provides shall be performed by it on or before that Funding Date.
(H) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.
(I) NO LITIGATION. On the Closing Date, except as set forth on
Schedule 3.1(I), there shall not be pending or, to the knowledge of Borrower,
threatened, any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration by, against or affecting any Loan
Party or any of its Subsidiaries or any property of any Loan Party or any of its
Subsidiaries that has not been disclosed by Borrower in writing, and there shall
have occurred no development in any such action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration that, in the
opinion of Agent, would reasonably be expected to have a Material Adverse
Effect. Nothing contained in this subsection 3.1(I) shall derogate in any
manner whatsoever from Borrower's obligation to Agent under subsection 5.1(O).
(J) AUDIT. On the Closing Date, Agent shall have completed the
updated audits of the business and assets of Borrower including, but not limited
to, audits of the billing and collection procedures and controls of each of
Borrower's divisions and Borrower's accrual and advance billing practices as the
same relate to the determination of Eligible Accounts, the results of which
shall be satisfactory to Agent in all respects.
(K) NO MATERIAL ADVERSE CHANGE. On the Closing Date, since August
31, 1995, there shall not have occurred and on each subsequent Funding Date
there shall not have occurred (x) any material adverse change in the business,
operations, prospects, properties, assets or condition (financial or otherwise)
of any Loan Party and (y) any material damage or destruction to any material
portion of the Collateral nor any material depreciation in the value thereof.
(L) SECURITY INTERESTS. Agent shall have received evidence
satisfactory to Agent in all respects that all UCC-1 financing statements
relating to each Loan Party shall have been duly filed and recorded with the
appropriate state and county offices.
(M) SUBORDINATED DEBT DOCUMENTS. Agent shall have received final
executed copies of the Subordinated Notes which shall contain subordination
provisions satisfactory to Lender in all respects.
(N) AUDITED FINANCIAL STATEMENTS. On the Closing Date, Agent shall
have received a draft of Borrower's audited financial statements for Borrower's
Fiscal Year ending August 31, 1995 (the "August 31 Financials"), which shall
reflect no material adverse change from Borrower's financial statements for the
period ending May 31, 1995 (other than the impairment charge set forth in the
August 31 Financials) previously delivered to Agent and Agent shall have
received the final audited financial statements of Borrower for such period
within five (5) business days of the Closing Date.
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(O) CHASE MORTGAGE DOCUMENTATION. On the Closing Date, Agent shall
have received final executed copies of the Chase Mortgage Documentation, which
shall be satisfactory to Agent in all respects.
(P) PROCEEDS OF CHASE FINANCING. On the Closing Date, Agent shall
have received evidence, satisfactory to Agent in all respects, of Borrower's
receipt of no less than $4,000,000 from The Chase Manhattan Bank, N.A. secured
solely by the Chase Mortgage Documentation.
(Q) CONSENTS. On the Closing Date, Agent shall have received any and
all consents necessary to permit the effectuation of the transactions
contemplated by this Agreement, including without limitation consents and
waivers of such third parties as might assert claims with respect to the
Collateral, all of which shall be satisfactory to Agent in all respects.
(R) FINANCIAL CONDITION CERTIFICATE. On the Closing Date, Agent
shall have received an executed financial condition certificate in the form of
Exhibit 3.1(R) hereto.
(S) LANDLORD AND MORTGAGEE AGREEMENTS. Agent shall have received
landlord and mortgagee agreements with respect to all premises leased by
Borrower (other than with respect to Borrower's leased premises located at 508-
51 West 57th Street, New York, New York and 301 East Erie Street, Chicago,
Illinois and all premises owned by Borrower which are subject to a mortgage
lien.
(T) CONTRACT REVIEW. On the Closing Date, Agent shall have reviewed
all material contracts of Borrower, including without limitation agreements
relating to Borrower's indebtedness to third parties, leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory to Agent in
all respects.
(U) CASH MANAGEMENT. Agent shall be satisfied in all material
respects with Borrower's cash management system and controls.
(V) TAX ASSUMPTIONS; STRUCTURE. On the Closing Date, Agent shall be
satisfied in all respects with (a) each Loan Party's tax assumptions and
capital, organizational, ownership and legal structure and (b) Agent's ability
to enforce its claims against the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce Agent and each Lender to enter into this Agreement, to make
Loans, and to issue Lender Letters of Credit, each Loan Party represents and
warrants to Agent and each Lender that the following statements are and will be
true, correct and complete:
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4.1 ORGANIZATION, POWERS, CAPITALIZATION.
(A) ORGANIZATION AND POWERS. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and qualified to do business in all states
where such qualification is required except where failure to be so qualified
could not be reasonably expected to have a Material Adverse Effect. Each of the
Loan Parties has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document.
(B) CAPITALIZATION. All issued and outstanding shares of capital
stock of each of the Loan Parties are duly authorized and validly issued, fully
paid, nonassessable, free and clear of all Liens and such shares were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. All of the issued and outstanding capital stock of Corporate
Guarantor is owned by Borrower. No shares of the capital stock of Corporate
Guarantor, other than those described above, are issued and outstanding. There
are no preemptive or other outstanding rights, options, warrants, conversion
rights or similar agreements or understandings for the purchase or acquisition
from Corporate Guarantor, of any shares of capital stock or other securities of
Corporate Guarantor.
4.2 AUTHORIZATION OF BORROWING, NO CONFLICT. Each Loan Party has the
corporate power and authority to incur the Obligations and to grant security
interests in the Collateral of such Loan Party. On the Closing Date, the
execution, delivery and performance of the Loan Documents by each Loan Party
signatory thereto will have been duly authorized by all necessary corporate
action. The execution, delivery and performance by each Loan Party of each Loan
Document to which it is a party and the consummation of the transactions
contemplated by this Agreement and the other Loan Documents by each Loan Party
do not contravene and will not be in contravention of any applicable law, the
corporate charter or bylaws of any Loan Party or any agreement or order by which
any Loan Party or any Loan Party's property is bound. This Agreement is, and
the other Loan Documents, when executed and delivered will be, the legally valid
and binding obligations of the applicable Loan Parties respectively, each
enforceable against the Loan Parties, as applicable, in accordance with their
respective terms.
4.3 FINANCIAL CONDITION. All financial statements concerning Borrower and
its Subsidiaries which have been or will hereafter be furnished by Borrower to
Agent or any Lender pursuant to this Agreement have been or will be prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as disclosed therein) and do or will present fairly the financial
condition of the corporations covered thereby as at the dates thereof and the
results of its operations for the periods then ended. The Pro Forma was
prepared by Borrower based on the draft of the audited consolidated balance
sheet of Borrower dated August 31, 1995 and the unaudited consolidated balance
sheet of Borrower dated October 31, 1995. The Projections delivered and to be
delivered have been and will be prepared by Borrower in light of the past
operations of the business of Borrower and its Subsidiaries, and such
Projections represent and will represent the good faith estimate of Borrower and
its senior management concerning the most probable course of its business for
the period covered thereby as of the date such Projections are prepared and
delivered.
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4.4 INDEBTEDNESS AND LIABILITIES. As of the Closing Date, neither
Borrower nor any of its Subsidiaries has (a) any Indebtedness except as
reflected on the Pro Forma; or (b) to the best of Borrower's knowledge any
Liabilities other than as reflected on the Pro Forma or as incurred in the
ordinary course of business following the date of the Pro Forma.
4.5 ACCOUNT WARRANTIES. Each Loan Party represents, warrants and
covenants as to each Account of such Loan Party that, at the time of its
creation, the Account is a valid, bona fide account, representing an undisputed
indebtedness incurred by the named account debtor for goods actually sold and
delivered or for services completely rendered; to the best of such Loan Party's
knowledge, there are no setoffs, offsets or counterclaims, genuine or otherwise,
against the Account; the Account does not represent a sale to an Affiliate or a
consignment, sale or return or a bill and hold transaction; no agreement exists
permitting any deduction or discount (other than the discount stated on the
invoice); such Loan Party is the lawful owner of the Account and has the right
to assign the same to Agent, for the benefit of Lenders; the Account is free of
all security interests, liens and encumbrances other than those in favor of
Agent, on behalf of Lenders, and the Account is due and payable in accordance
with its terms.
4.6 NAMES. Schedule 4.6 sets forth all names, trade names, fictitious
names and business names under which each Loan Party currently conducts business
or has at any time during the past five years conducted business.
4.7 LOCATIONS; FEIN. Schedule 4.7 sets forth the location of each Loan
Party's principal place of business, the location of each Loan Party's books and
records, the location of all other offices of each Loan Party and all Collateral
locations, and such locations are such Loan Party's sole locations for its
business and the Collateral. Each Loan Party's federal employer identification
number is set forth on the signature page hereof.
4.8 TITLE TO PROPERTIES; LIENS. Each Loan Party and each of its
Subsidiaries has good, and legal title to, or valid leasehold interests in,
subject to Permitted Encumbrances, all its respective material properties and
assets. Except for Permitted Encumbrances, all such properties and assets are
free and clear of Liens. To the best knowledge of each Loan Party after due
inquiry, there are no actual, threatened or alleged defaults with respect to any
leases of real property under which such Loan Party or any of its Subsidiaries
is lessee or lessor which would have a Material Adverse Effect.
4.9 LITIGATION; ADVERSE FACTS. Except as set forth on Schedule 4.9, there
are no judgments outstanding against any Loan Party or affecting any property of
any Loan Party nor is there any action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration now pending or, to the best
knowledge of Borrower after due inquiry, threatened against or affecting any
Loan Party or any property of any Loan Party which could reasonably be expected
to result in any Material Adverse Effect. No Loan Party has received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed to any liability which could reasonably be expected to result in any
Material Adverse Effect.
4.10 PAYMENT OF TAXES. All material tax returns and reports of each Loan
Party and each of its Subsidiaries required to be filed by any of them have been
timely filed, and all taxes,
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assessments, fees and other governmental charges upon such Persons and upon
their respective properties, assets, income and franchises which are shown on
such returns as due and payable have been paid when due and payable. As of the
Closing Date, none of the United States income tax returns of each Loan Party or
any of its Subsidiaries are under audit. Except as set forth on Schedule 4.10,
no tax liens have been filed and no claims (except as otherwise permitted by
Section 5.9) are being asserted with respect to any such taxes. The charges,
accruals and reserves on the books of each Loan Party and each of its
Subsidiaries in respect of any taxes or other governmental charges are in
accordance with GAAP.
4.11 PERFORMANCE OF AGREEMENTS. None of the Loan Parties and none of its
Subsidiaries is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any contractual
obligation of any such Person which could have a Material Adverse Effect and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default.
4.12 EMPLOYEE BENEFIT PLANS. Each Loan Party, each of its Subsidiaries and
each ERISA Affiliate is in compliance in all material respects with all
applicable provisions of ERISA, the IRC and all other applicable laws and the
regulations and interpretations thereof with respect to all Employee Benefit
Plans, except any Employee Benefit Plan set forth on Schedule 4.12. No material
liability has been incurred by any Loan Party, any of its Subsidiaries or any
ERISA Affiliate which remains unsatisfied for any funding obligation, taxes or
penalties with respect to any Employee Benefit Plan.
4.13 INTELLECTUAL PROPERTY. Except as set forth on Schedule 4.13, each
Loan Party and each of its Subsidiaries owns, is licensed to use or otherwise
has the right to use, all Intellectual Property used in or necessary for the
conduct of its business as currently conducted none of which, other than GC&Co.,
is a registered trademark.
4.14 BROKER'S FEES. No broker's or finder's fee or commission will be
payable with respect to any of the transactions contemplated hereby.
4.15 ENVIRONMENTAL COMPLIANCE. Each Loan Party has been and is currently
in compliance with all applicable Environmental Laws except to the extent that
any non compliance could result in a Liability or penalty of less than $100,000,
including obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws. There are no
Environmental Claims asserted or, to the best knowledge of the applicable Loan
Party, threatened against any Loan Party or relating to any real property
currently or, to the best knowledge of the applicable Loan Party, formerly
owned, leased or operated by any Loan Party.
4.16 SOLVENCY. As of and from and after the date of this Agreement, each
Loan Party: (a) owns and will own assets the fair salable value of which are (i)
greater than the total amount of its liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay the
probable liabilities of such Loan Party as they mature; (b) has capital that is
not unreasonably small in relation to its business as presently conducted or any
contemplated or undertaken transaction; and (c) does not intend to incur and
does not believe that it will incur debts beyond its ability to pay such debts
as they become due. There is no material fact known to any
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Loan Party that has or could have a Material Adverse Effect and that has not
been fully disclosed herein or in such other documents, certificates and
statements furnished to Agent or Lenders for use in connection with the
transactions contemplated hereby.
4.17 DISCLOSURE. No representation or warranty of Borrower, any of its
Subsidiaries or any other Loan Party contained in this Agreement, the financial
statements, the other Loan Documents, or any other document, certificate or
written statement furnished to Agent or any Lender by or on behalf of any such
Person for use in connection with the Loan Documents contains any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. The
Projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by Agent and Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no material fact known to Borrower that
has had or will have a Material Adverse Effect and that has not been disclosed
herein or in such other documents, certificates and statements furnished to
Agent or any Lender for use in connection with the transactions contemplated
hereby.
4.18 INSURANCE. Each Loan Party and each of its Subsidiaries maintains
adequate insurance policies for public liability, property damage for its
business and properties, product liability, and business interruption, no notice
of cancellation has been received with respect to such policies and each Loan
Party and each of its Subsidiaries is in compliance with all conditions
contained in such policies.
4.19 COMPLIANCE WITH LAWS. Neither Loan Party nor any of its Subsidiaries
is in violation of any law, ordinance, rule, regulation, order, policy,
guideline or other requirement of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of its
business or the ownership of its properties, including, without limitation, any
violation relating to any use, release, storage, transport or disposal of any
Hazardous Material, which violation would subject any Loan Party or any of its
Subsidiaries or any of their officers to criminal liability or could reasonably
be expected to have a Material Adverse Effect and no such violation has been
alleged.
4.20 BANK ACCOUNTS; LOCKBOXES. Schedule 4.20 sets forth the account
numbers and locations of all bank accounts, post office boxes and lockboxes of
each Loan Party and its Subsidiaries.
4.21 SUBSIDIARIES. Borrower has no Subsidiaries other than the Permitted
Subsidiaries. Corporate Guarantor has no Subsidiaries.
4.22 EMPLOYEE MATTERS. Except as set forth on Schedule 4.22, (a) no Loan
Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) to the best of such Loan Party's knowledge, no
petition for certification or union election is pending with respect to the
employees of any Loan Party and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
Loan Party and (c) there are
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no strikes, slowdowns, work stoppages or controversies pending or, to the best
knowledge of Borrower after due inquiry, threatened between any Loan Party and
its respective employees, other than employee grievances arising in the ordinary
course of business which could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect. There are no
employment contracts (other than collective bargaining agreements) which could
have a Material Adverse Effect.
4.23 GOVERNMENTAL REGULATION. None of the Loan Parties is, or after giving
effect to any loan will be, subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or the Investment Company Act
of 1940 or to any federal or state statute or regulation limiting its ability to
incur indebtedness for borrowed money.
Any Loan Party may, at any time and from time to time (and subject to
subsection 5.13), amend any one or more of the Schedules referred in this
Section 4 and any representation or warranty contained herein which refers to
any such Schedule shall from and after the date of any such amendment refer to
such Schedule as so amended, provided, however, that in no event may any Loan
Party amend any such Schedule if the existence of the information contained in
such amendment would reflect or evidence a Default or Event of Default.
SECTION 5. AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of all
Obligations and termination of all Lender Letters of Credit, unless Requisite
Lenders shall otherwise give their prior written consent, such Loan Party shall
perform all covenants in this Section 5 applicable to such Person.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Each Loan Party will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. Borrower
will deliver to Agent and each Lender (unless specified to be delivered solely
to Agent) the financial statements and other reports described below.
(A) MONTHLY FINANCIALS. As soon as available and in any event within
thirty (30) days after the end of each month, Borrower will deliver (1) the
consolidated and consolidating balance sheet of Borrower and its Subsidiaries on
a division by division basis as at the end of such month and the related
consolidated and consolidating statements of income on a division by division
basis and a statement of Capital Expenditures and an itemization of all non-cash
expenditures for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, and (2) a schedule of the
outstanding Indebtedness for borrowed money of Borrower and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount thereof with respect to each such debt issue or loan.
(B) YEAR-END FINANCIALS. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, Borrower will
deliver: (1) the consolidated balance sheet of Borrower and its Subsidiaries as
at the end of such year and the related consolidated statements of income,
stockholders' equity and cash flow for such Fiscal Year; (2) a schedule of
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the outstanding Indebtedness of Borrower and its Subsidiaries describing in
reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan; (3) a report with respect to the financial statements from Grant
Thornton or another firm of independent certified public accountants selected by
Borrower, and acceptable to Agent, which report shall be unqualified as to going
concern and scope of audit of Borrower and its Subsidiaries and shall state that
(a) such consolidated financial statements present fairly the consolidated
financial position of Borrower and its Subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and (b) the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards; and (4) copies of the consolidating financial statements of Borrower
and its Subsidiaries, including (a) consolidating balance sheets of Borrower and
its Subsidiaries as at the end of such Fiscal Year showing intercompany
eliminations and (b) related consolidating statements of earnings of Borrower
and its Subsidiaries showing intercompany eliminations.
(C) OTHER REPORTS. As soon as available, Borrower shall deliver to
Agent copies of all such financial statements, reports and returns as Borrower
shall deliver to its stockholders or the Securities and Exchange Commission, as
applicable.
(D) MANAGEMENT LETTERS. Promptly upon receipt thereof, Borrower will
deliver copies of all management letters submitted to Borrower by independent
public accountants in connection with each annual, interim or special audit of
the financial statements of Borrower made by such accountants.
(E) COMPLIANCE CERTIFICATE. Borrower will deliver a Compliance
Certificate quarterly, together with copies of the calculations and work-up
employed to determine Borrower's compliance or noncompliance with the financial
covenants set forth in Section 6 and subsection 7.1, for its first three (3)
fiscal quarters of each Fiscal Year together with Borrower's 10-Q report to the
Securities and Exchange Commission but not later than forty-five (45) days after
the end of such fiscal quarter and for Borrower's Fiscal Year not later than
ninety (90) days after the last day of such Fiscal Year.
(F) BORROWING BASE CERTIFICATES. Within fifteen (15) days after the
last day of each month, Borrower shall deliver to Agent a Borrowing Base
Certificate updated to reflect the most recent sales and collections of Borrower
and an assignment schedule of all Accounts created by Borrower for the prior
month. In the event (a) Undrawn Availability shall at any time be less than
$2,500,000 or (b) a Default or Event of Default shall then be in existence,
Agent in its sole discretion may require Borrower to deliver to Agent the
Borrowing Base Certificates on a more frequent basis.
(G) EQUIPMENT REPORTS AND LISTINGS AND AGINGS. On the Closing Date
and within fifteen (15) days after the last day of each month and from time to
time upon the request of Agent, Borrower will deliver to Agent an aged trial
balance of all then existing Accounts as of the last day of such period together
with a schedule detailing Borrower's calculation of the amount of Accounts which
are not Eligible Accounts. As soon as available and in any event within fifteen
(15) days
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after the last day of each fiscal quarter of Borrower, and from time to time
upon the request of Agent, Borrower shall deliver to Agent (1) a division by
division Equipment Report and (2) a division by division aged trial balance of
all then existing accounts payable for the immediately preceding fiscal quarter
of Borrower. All such reports shall be in form and substance satisfactory to
Agent.
(H) MANAGEMENT REPORT. Together with each delivery of financial
statements of Borrower and its Subsidiaries pursuant to subdivisions (A), (B)
and (C) of this subsection 5.1, Borrower will deliver a management report: (1)
describing the operations and financial condition of Borrower and its
Subsidiaries for the month then ended and the portion of the current Fiscal Year
then elapsed (or for the Fiscal Year then ended in the case of year-end
financials); (2) setting forth in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year and the corresponding
figures from the most recent Projections for the current Fiscal Year delivered
to Lenders pursuant to 5.1(P); and (3) discussing the reasons for any
significant variations. The information above shall be presented in reasonable
detail and shall be certified by the chief financial officer of Borrower to the
effect that such information fairly presents the results of operations and
financial condition of Borrower and its Subsidiaries as at the dates and for the
periods indicated.
(I) APPRAISALS. From time to time, Agent, at Borrower's expense,
shall employ an appraiser to determine the then current fair market and orderly
liquidation values of all or any portion of the Collateral; provided, however,
so long as no Event of Default is continuing, Agent shall not employ any such
appraiser (a) as respects all Collateral more than once every other Loan Year at
Borrower's expense, except for any appraisals required by Agent to monitor Asset
Dispositions and (b) as respects Specified Asset Dispositions on or before
December 31, 1996. Notwithstanding anything contained in this subsection 5.2(I)
to the contrary, Borrower shall pay to Agent on the Closing Date, all costs and
expenses incurred by Agent relating to the Fixed Asset Appraisal.
(J) GOVERNMENT NOTICES. Each Loan Party will deliver to Agent
promptly after receipt copies of all notices, requests, subpoenas, inquiries or
other writings received from any governmental agency concerning potential
liabilities under any Employee Benefit Plan, the violation or alleged violation
of any Environmental Laws, the violation or alleged violation of the Fair Labor
Standards Act or such Loan Party's payment or non-payment of any taxes including
any tax audit.
(K) EVENTS OF DEFAULT, ETC. Promptly upon any officer of any Loan
Party obtaining knowledge of any of the following events or conditions, such
Loan Party shall deliver a certificate of such Loan Party's chief financial
officer specifying the nature and period of existence of such condition or event
and what action such Loan Party has taken, is taking and proposes to take with
respect thereto: (1) any condition or event that constitutes an Event of Default
or Default; (2) any notice of default that any Person has given to such Loan
Party or any other action taken with respect to a claimed default; or (3) any
Material Adverse Effect.
(L) TRADE NAMES. Each Loan Party will give Agent at least thirty
(30) days advance written notice of any change of name or of any new trade name
or fictitious business
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name. Each Loan Party's use of any trade name or fictitious business name will
be in compliance with all laws regarding the use of such names.
(M) LOCATIONS. Each Loan Party will give Agent at least thirty (30)
days advance written notice of any change in any Loan Party's principal place of
business or any change in the location of its books and records or the
Collateral or of any new location for its books and records or the Collateral.
(N) BANK ACCOUNTS. Each Loan Party will give Agent prompt notice of
any new bank accounts, post office boxes or lockboxes such Loan Party or any of
its Subsidiaries intends to establish prior to its opening same.
(O) LITIGATION. Promptly upon any officer of any Loan Party
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan Party or
any property of any Loan Party not previously disclosed by such Loan Party to
Agent and which could reasonably be expected to have a Material Adverse Effect
or (2) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting any Loan
Party or any property of any Loan Party which is reasonably likely to have a
Material Adverse Effect, such Loan Party will promptly give notice thereof to
Agent and provide such other information as may be reasonably available to them
to enable Agent and its counsel to evaluate such matter.
(P) PROJECTIONS. As soon as available and in any event no later
than the end of each Fiscal Year of Borrower, Borrower will deliver consolidated
and consolidating Projections of Borrower and its Subsidiaries for the
forthcoming three (3) Fiscal Years, year by year, and for the forthcoming Fiscal
Year, month by month.
(Q) SUBORDINATED DEBT AND OTHER INDEBTEDNESS NOTICES. Borrower shall
promptly deliver copies of all notices given or received by Borrower and any of
its Subsidiaries with respect to noncompliance with any term or condition
related to any Subordinated Debt and shall promptly notify Lenders and Agent of
any event of default with respect to any Subordinated Debt or other
Indebtedness.
(R) OTHER INFORMATION. With reasonable promptness, each Loan Party
will deliver such other information and data with respect to any Loan Party, any
Subsidiary of any Loan Party or the Collateral as Agent or any Lender may
reasonably request from time to time.
5.2 ACCESS TO ACCOUNTANTS. Each Loan Party authorizes Agent and Lenders
to discuss the financial condition and financial statements of each Loan Party
and its Subsidiaries with such Loan Party's independent public accountants upon
reasonable notice to such Loan Party of its intention to do so, and authorizes
such accountants to respond to all of Agent's and Lenders' inquiries.
5.3 INSPECTION. Each Loan Party shall permit Agent and any authorized
representatives designated by Agent to visit and inspect any of the properties
of such Loan Party or any of its Subsidiaries, including their respective
financial and accounting records, and to make copies and
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take extracts therefrom, and to discuss their respective affairs, finances and
business with their respective senior officers and independent public
accountants, at such reasonable times during normal business hours and as often
as may be reasonably requested. Each Loan Party acknowledges that Agent intends
to make such inspections on at least a quarterly basis. Each Lender may with
the consent of Agent, which will not be unreasonably denied, accompany Agent on
any such visit or inspection.
5.4 COLLATERAL RECORDS. Each Loan Party shall keep full and accurate
books and records relating to the Collateral and shall mark such books and
records to indicate Agent's security interests in the Collateral, for the
benefit of Lenders.
5.5 ACCOUNT COVENANTS; VERIFICATION. Each Loan Party shall, at its own
expense: (a) to the extent the provisions of subsection 5.6 shall be applicable,
cause all invoices evidencing Accounts and all copies thereof to bear a notice
that such invoices are payable to the lockboxes established in accordance with
subsection 5.6 and (b) use its best efforts to assure prompt payment of all
amounts due or to become due under the Accounts. No discounts, credits or
allowances will be issued, granted or allowed by any Loan Party with respect to
Accounts and no returns will be accepted without Agent's prior written consent;
PROVIDED, that until Agent notifies such Loan Party to the contrary, such Loan
Party may presume consent. Each Loan Party will immediately notify Agent in the
event that a customer alleges any dispute or claim with respect to an Account or
of any other circumstances known to such Loan Party that may impair the validity
or collectibility of an Account. Agent shall have the right, at any time or
times hereafter, to verify the validity, amount or any other matter relating to
an Account, by mail, telephone or in person. After the occurrence of a Default
or an Event of Default, no Loan Party shall, without the prior consent of Agent,
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any customer or obligor thereof, or allow any credit or
discount thereon.
5.6 COLLECTION OF ACCOUNTS AND PAYMENTS. Upon and after the occurrence of
an Event of Default, at the direction of Agent, each Loan Party and Agent shall
establish lockboxes and depository accounts ("Agent's Depository Accounts") with
such banks as are acceptable to Agent to which all account debtors shall
directly remit all payments on Accounts and in which each Loan Party will
immediately deposit all payments made for Inventory, to the extent applicable,
or other payments constituting proceeds of Collateral in the identical form in
which such payment was made, whether by cash or check. Each Loan Party hereby
agrees that all payments received by Agent, whether by cash, check, wire
transfer or any other instrument, made to such Agent Depository Accounts or
otherwise received by Agent and whether on the Accounts or as proceeds of other
Collateral or otherwise will be the sole and exclusive property of Agent, for
the benefit of Lenders. Upon and after the occurrence of an Event of Default,
each Loan Party, and any of its Affiliates, employees, agents or other Persons
acting for or in concert with such Loan Party, shall, acting as trustee for
Agent, receive, as the sole and exclusive property of Agent, any monies, checks,
notes, drafts or any other payments relating to and/or proceeds of Accounts or
other Collateral which come into the possession or under the control of any Loan
Party or any of such Loan Party's Affiliates, employees, agents or other Persons
acting for or in concert with such Loan Party, and immediately upon receipt
thereof, such Loan Party or such Persons shall remit the same or cause the same
to be remitted, in kind, to the Agent Depository Account or to Agent at its
address set forth in subsection 10.4 below.
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5.7 ENDORSEMENT. Upon and after the occurrence of an Event of Default,
each Loan Party hereby constitutes and appoints Agent and all Persons designated
by Agent for that purpose as such Loan Party's true and lawful attorney-in-fact,
with power to endorse such Loan Party's name to any of the items of payment or
proceeds described in subsection 5.6 above and all proceeds of Collateral that
come into Agent's possession or under Agent's control. Both the appointment of
Agent as each Loan Party's attorney and Agent's rights and powers are coupled
with an interest and are irrevocable until payment in full and complete
performance of all of the Obligations.
5.8 CORPORATE EXISTENCE. Each Loan Party will, and will cause each of its
Subsidiaries to, at all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its business.
Each Loan Party will promptly notify Agent of any change in its or any of its
Subsidiaries' corporate structure. Corporate Guarantor and Borrower, with
respect to its Subsidiaries, will promptly notify Agent of any change in
Corporate Guarantor's or any such Subsidiary's ownership. Borrower shall
promptly notify Agent of any notices, filings or other information (each, a
"Filing") received by Borrower from the Securities and Exchange Commission (the
"SEC") or otherwise relating to any change in Borrower's ownership which would
require a Filing with the SEC.
5.9 PAYMENT OF TAXES. Each Loan Party will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or with respect to any of its
franchises, business, income or property before any penalty accrues thereon
PROVIDED that no such tax need be paid if such Loan Party or one of its
Subsidiaries is contesting same in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such Loan Party or such
Subsidiary has established appropriate reserves as shall be required in
conformity with GAAP.
5.10 MAINTENANCE OF PROPERTIES; INSURANCE. Each Loan Party will maintain
or cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all material properties used in the business of such
Loan Party and its Subsidiaries and will make or cause to be made all
appropriate repairs, renewals and replacements thereof. Each Loan Party will
maintain or cause to be maintained, with financially sound and reputable
insurers, public liability and property damage insurance with respect to its
business and properties and the business and properties of its Subsidiaries
against loss or damage of the kinds customarily carried or maintained by
corporations of established reputation engaged in similar businesses and in
amounts acceptable to Agent. Each Loan Party shall cause Agent, for the benefit
of Lenders, to be named as loss payee on all insurance policies relating to any
Collateral and as additional insured under all liability policies, in each case
pursuant to appropriate endorsements in form and substance satisfactory to Agent
and shall collaterally assign to Agent, for the benefit of Lenders, as security
for the payment of the Obligations all business interruption insurance of such
Loan Party. Each Loan Party shall apply any proceeds received from any policies
of insurance relating to any Collateral to the Obligations as set forth in
subsection 2.4(B). Notwithstanding anything contained herein to the contrary,
so long as no Event of Default shall be in existence (a) any proceeds of
business interruption insurance received by Agent hereunder shall be applied by
Agent to the Revolving Loan and (b) in the event there shall be no Revolving
Loans outstanding, Agent, upon Borrower's request therefor, shall remit such
business interruption proceeds to Borrower.
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5.11 COMPLIANCE WITH LAWS. Each Loan Party will, and will cause each of
its Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority as now in effect and which
may be imposed in the future in all jurisdictions in which such Loan Party or
any of its Subsidiaries is now doing business or may hereafter be doing
business, other than those laws the noncompliance with which would not have a
Material Adverse Effect.
5.12 FURTHER ASSURANCES. Each Loan Party shall, and shall cause each of
its Subsidiaries to, from time to time, execute such guaranties, financing or
continuation statements, documents, security agreements, reports and other
documents or deliver to Agent such instruments, certificates of title or other
documents as Agent at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment of the Obligations
provided for in the Loan Documents. At Agent's request, each Loan Party shall
cause any Subsidiaries of such Loan Party promptly to guaranty the Obligations
and to grant to Agent, on behalf of Lenders, security interests in the real,
personal and mixed property of such Subsidiary to secure the Obligations.
5.13 COLLATERAL LOCATIONS. Each Loan Party will keep the Collateral of
such Loan Party at the locations specified on Schedule 4.7 other than Mobile
Units and the Equipment installed therein which shall be based at such
locations. With respect to any new location (which in any event shall be within
the continental United States), the applicable Loan Party will execute such
documents and take such actions as Agent deems necessary to perfect and protect
the security interests of the Agent, on behalf of Lenders, in the Collateral
prior to the transfer or removal of any Collateral to such new location.
5.14 BAILEES. If any Collateral is at any time in the possession or control
of any warehouseman, bailee or any Loan Party's agents or processors, such Loan
Party shall, upon the request of Lenders, notify such warehouseman, bailee,
agent or processor of the security interests in favor of Agent, for the benefit
of Lenders, created hereby and shall instruct such Person to hold all such
Collateral for Agent's account subject to Agent's instructions.
5.15 USE OF PROCEEDS AND MARGIN SECURITY. Borrower shall use the proceeds
of all Loans for proper business purposes (as described in the recitals to this
Agreement consistent with all applicable laws, statutes, rules and regulations.
No portion of the proceeds of any Loan shall be used by Borrower or any of its
Subsidiaries for the purpose of purchasing or carrying margin stock within the
meaning of Regulation G or Regulation U, or in any manner that might cause the
borrowing or the application of such proceeds to violate Regulation T or
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act.
5.16 REQUIRED QUALIFIED ASSET EXPENDITURES. Borrower shall make purchases
of Qualified Assets in an aggregate amount of no less than $3,200,000 during
each Loan Year, which such Qualified Assets shall not be subject to any Liens
other than in favor of Agent for the benefit of Lenders.
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5.17 CONSENT OF CERTAIN PERMITTED LIENORS. Borrower shall use its good
faith efforts to obtain as promptly as possible after the Closing Date from each
holder (a "Holder") of a Lien on the Excluded Collateral consents ("Excluded
Collateral Consents") to a grant by Borrower to Agent subsequent to the Closing
Date of a subordinate lien on the Excluded Collateral; provided, however, so
long as Borrower shall have used its good faith efforts to promptly obtain the
Consents, no Default or Event of Default shall occur for failure of any Holder
to provide an Excluded Collateral Consent.
SECTION 6. FINANCIAL COVENANTS
Each Loan Party covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit, unless such Loan Party has received the prior
written consent of Requisite Lenders, each Loan Party shall comply with and
shall cause each of its Subsidiaries to comply with all covenants in this
Section 6 applicable to such Person.
6.1 TANGIBLE NET WORTH. Borrower shall at all times maintain Tangible Net
Worth plus Subordinated Debt of at least $22,500,000.
6.2 CAPITAL EXPENDITURE LIMITS. The aggregate amount of all Capital
Expenditures of Borrower and its Subsidiaries (excluding trade-ins, excluding
Capital Expenditures in respect of replacement assets to the extent funded with
casualty insurance proceeds and excluding Capital Expenditures that consist of
commitments or contracts to make Capital Expenditures which have not created a
cash obligation so long as such amount does not exceed $500,000 in the aggregate
at any time outstanding) will not exceed an amount equal to $10,000,000 in any
Fiscal Year of Borrower (the "Annual Amount"); PROVIDED, fifty percent (50%) of
the unused portion of any Annual Amount (the "Carryover Amount") may be used by
Borrower (in addition to the Annual Amount) in the calculation hereof in the
next succeeding Fiscal Year of Borrower and no subsequent Fiscal Years provided
no Default or Event of Default shall have occurred; and PROVIDED, FURTHER, any
Capital Expenditures in such succeeding Fiscal Year shall be allocated first to
the Annual Amount for such Fiscal Year and second, to the Carryover Amount from
such preceding Fiscal Year. In the event that Borrower or any of its
Subsidiaries enters into a Capital Lease or other contract with respect to fixed
assets, for purposes of calculating Capital Expenditures under this subsection
only, the amount of the Capital Lease or contract initially capitalized on
Borrower's or any Subsidiary's balance sheet prepared in accordance with GAAP
shall be considered expended in full on the date that Borrower or any of its
Subsidiaries enters into such Capital Lease or contract.
6.3 FIXED CHARGE COVERAGE. Borrower shall not permit its Fixed Charge
Coverage to be less than 1.00 to 1.00 (a) for the fiscal quarter ending February
29, 1996, (b) for the two fiscal quarters ending May 31, 1996, (c) for the three
fiscal quarters ending August 31, 1996, (d) for the four fiscal quarters ending
November 30, 1996 and (e) for each fiscal quarter thereafter, on a rolling four
quarter basis.
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6.4 LEVERAGE RATIO. Borrower shall not permit its Leverage Ratio at the
end of each fiscal quarter set forth below to be greater than the amount set
forth below for such fiscal quarter end.
RATIO FOR
FISCAL QUARTER FISCAL QUARTER ENDING
3.25 : 1.00 Closing Date and on
the last day of each fiscal quarter
thereafter through and including
November 30, 1996
2.75 : 1.00 February 28, 1997 and on the last day
of each fiscal quarter thereafter
SECTION 7. NEGATIVE COVENANTS
Each Loan Party covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit unless such Loan Party has received the prior
written consent of Requisite Lenders, no Loan Party as applicable to such Person
shall:
7.1 INDEBTEDNESS AND LIABILITIES. (a) Until such time as Term Loan B
shall have been paid in full in cash, directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except: (i)
Indebtedness existing on the Closing Date and identified on Schedule 7.1 and any
refinancing or renewal thereof, provided that the principal amount of such
Indebtedness is not increased thereby or the terms made more onerous to
Borrower, Agent or Lenders, (ii) the Obligations and (iii) guarantees expressly
permitted by subsection 7.2; and (b) After such time as Term Loan B shall have
been paid in full in cash, directly or indirectly create, incur, assume,
guaranty, or otherwise become or remain directly or indirectly liable, on a
fixed or contingent basis, with respect to any Indebtedness except: (i) the
Obligations; (ii) Indebtedness (excluding Capital Leases) secured by purchase
money Liens; (iii) Indebtedness under Capital Leases; (iv) Indebtedness existing
on the Closing Date and identified on Schedule 7.1 and any refinancing or
renewal thereof, provided that the principal amount of such Indebtedness is not
increased thereby, or the terms made more onerous to Borrower, Agent or Lenders;
and (v) guarantees expressly permitted by subsection 7.2; PROVIDED, HOWEVER, the
maximum amount of Indebtedness which may be incurred by any Loan Party in any
rolling four fiscal quarters of such Loan Party under the foregoing subsections
(b)(ii) and (b)(iii) (excluding items under subsection (b)(iv)) shall not exceed
$3,000,000 in the aggregate outstanding at any time for all Loan Parties.
Except for Indebtedness permitted in the preceding sentence, no Loan Party will,
nor will it permit any of its Subsidiaries to, incur any Liabilities except for
trade payables and normal accruals in the ordinary course of business not yet
due and payable or with respect to which any Loan Party or any of its
Subsidiaries is contesting in good faith the amount or validity thereof by
appropriate proceedings and then only
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to the extent that such Loan Party or any of its Subsidiaries has established
adequate reserves therefor, if appropriate under GAAP.
7.2 GUARANTIES. Except (1) for endorsements of instruments or items of
payment for collection in the ordinary course of business, (2) guarantees
included in the Loan Documents, (3) the ESOP Guaranty and (4) the guaranty dated
February 28, 1994 of a Lease Agreement between Dean Goodhill and Charter
Financial, guaranty, endorse, or otherwise in any way become or be responsible
for any obligations of any other Person, whether directly or indirectly by
agreement to purchase the indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any indebtedness or obligation of such other Person or otherwise.
7.3 TRANSFERS, LIENS AND RELATED MATTERS.
(A) TRANSFERS. Sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to any of the Collateral
or the assets of such Person, except that each Loan Party may (i) make Asset
Dispositions (other than Specified Fixed Asset Dispositions) if all of the
following conditions are met: (1) the market value of assets sold or otherwise
disposed of in any single transaction or series of related transactions does not
exceed $250,000 for all Loan Parties and the aggregate market value of assets
sold or otherwise disposed of does not exceed $500,000 for all Loan Parties; (2)
the consideration received is at least equal to the fair market value of such
assets; (3) the sole consideration received is cash; (4) the net proceeds of
such Asset Disposition are applied as required by subsection 2.4(B); (5) after
giving effect to the sale or other disposition of the assets included within the
Asset Disposition and application of the proceeds thereof as required by
subsection 2.4(B), each Loan Party is in compliance on a pro forma basis with
the covenants set forth in Section 6 recomputed for the most recently ended
month for which information is available and is in compliance with all other
terms and conditions contained in this Agreement; and (6) no Default or Event of
Default shall then be in existence or shall be in existence after giving effect
to such sale or other disposition; and (ii) make Specified Fixed Asset
Dispositions if all of the following conditions are met: (1) the net proceeds
of such Specified Fixed Asset Disposition are applied as required by subsection
2.4(B) and (2) no Default or Event of Default shall then be in existence or
shall exist after giving effect to such sale or other disposition.
(B) LIENS. Except for Permitted Encumbrances, directly or indirectly
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral or any proceeds, income or profits therefrom.
(C) NO NEGATIVE PLEDGES. Enter into or assume any agreement (other
than the Loan Documents) prohibiting the creation or assumption of any Lien
upon such Loan Party's properties or assets, whether now owned or hereafter
acquired (a "Negative Pledge"), other than (a) any agreement which Borrower is
permitted to enter into under the terms of this Agreement so long as such
agreement expressly excludes Borrower's Liens in favor of Agent from the
restrictions of the Negative Pledge and (b) any lease agreement containing a
Negative Pledge of such lease agreement or the leasehold interests referred to
therein.
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(D) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWER. Except
as provided herein, directly or indirectly create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary of any Loan Party to: (1) pay dividends or
make any other distribution on any of such Subsidiary's capital stock owned by
Borrower or any Subsidiary of Borrower; (2) subject to subordination provisions,
pay any indebtedness owed to Borrower or any other Subsidiary; (3) make loans or
advances to Borrower or any other Subsidiary; or (4) transfer any of its
property or assets to Borrower or any other Subsidiary.
7.4 INVESTMENTS AND LOANS. Make or permit to exist investments in or
loans to any other Person, except: (a) Cash Equivalents; (b) loans and advances
to employees for moving, entertainment, travel and other similar expenses in the
ordinary course of business in an aggregate outstanding amount not in excess of
$50,000 for all Loan Parties at any time and (c) loans outstanding on the date
hereof to Permitted Subsidiary and Emedge Works, a California partnership as set
forth in Schedule 7.4.
7.5 RESTRICTED JUNIOR PAYMENTS. Directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Junior Payment, except that:
(a) Subsidiaries of Borrower may make Restricted Junior Payments with respect to
their common stock, (b) Borrower may make payments on the Subordinated Debt in
accordance with the terms of the Subordinated Notes and may prepay the
Subordinated Notes (other than the Subordinated Note referenced in subsection
"(1)" of the defined term "Subordinated Notes") in full provided that (1) Term
Loan B has been paid in full, (2) at the time of and immediately after giving
effect to such prepayment, no Event of Default shall exist or would have existed
if such payment were, on a pro forma basis (x) included in the calculation of
the prior quarterly covenant measuring period or (y) included in management's
written best good faith calculation for the next quarterly covenant measuring
period, and (3) immediately after giving effect to such prepayment, Undrawn
Availability shall equal or exceed $3,000,000, (c) Borrower may purchase its
common stock in any Fiscal Year for an amount equal to or less than $200,000 to
fund current employee benefit plan obligations provided that after giving effect
to such funding, no Event of Default shall exist and (d) Borrower may make
payments under and in accordance with the provisions of the Consulting
Agreements.
7.6 RESTRICTION ON FUNDAMENTAL CHANGES. (a) Enter into any transaction of
merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets , or the capital stock of any of its
Subsidiaries, whether now owned or hereafter acquired; or (d) acquire by
purchase or otherwise all or any substantial part of the business or assets of,
or stock or other evidence of beneficial ownership of, any Person.
7.7 CHANGES RELATING TO SUBORDINATED DEBT. Change or amend the terms of
the Subordinated Debt if the effect of such amendment is to: (a) increase the
interest rate on such Indebtedness; (b) change the dates upon which payments of
principal or interest are due on such Indebtedness; (c) change any event of
default or add any covenant with respect to such Indebtedness; (d) change the
payment provisions of such Indebtedness; (e) change the subordination provisions
thereof; or (f) change or amend any other term if such change or amendment would
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materially increase the obligations of the obligor or confer additional material
rights on the holder of such Indebtedness in a manner adverse to any Loan Party,
any of its Subsidiaries, Agent or any Lender.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of and pursuant to the reasonable requirements of such Loan
Party's business and upon fair and reasonable terms which, to the extent any
individual transaction exceeds $50,000 in the aggregate at any time outstanding
are fully disclosed to Agent and Lenders and which are no less favorable to such
Loan Party than it would obtain in a comparable arm's length transaction with an
unaffiliated Person, transactions permitted under the ESOP Agreements as
presently in effect and advances to Borrower under the ESOP Agreements to enable
Borrower to satisfy ESOP Obligations and the transactions contemplated by the
Consulting Agreements.
7.9 ENVIRONMENTAL LIABILITIES. (a) Violate any applicable Environmental
Law except to the extent that any violation could not result in a Liability or
penalty of more than $100,000; (b) dispose of any Hazardous Materials (except in
accordance with applicable law) into or onto or from, any real property owned,
leased or operated by any Loan Party; or (c) permit any Lien imposed pursuant to
any Environmental Law to be imposed or to remain on any real property owned,
leased or operated by any Loan Party.
7.10 CONDUCT OF BUSINESS. From and after the Closing Date, engage in any
business other than businesses of the type engaged in by such Loan Party or such
Subsidiary on the Closing Date.
7.11 COMPLIANCE WITH ERISA. Establish any new Employee Benefit Plan or
amend any existing Employee Benefit Plan if the liability or increased liability
resulting from such establishment or amendment is material. No Loan Party nor
any of its Subsidiary shall fail to establish, maintain and operate each
Employee Benefit Plan in compliance in all material respects with the provisions
of ERISA, the IRC and all other applicable laws and the regulations and
interpretations thereof.
7.12 TAX CONSOLIDATIONS. File or consent to the filing of any consolidated
income tax return with any Person other than Borrower, Corporate Guarantor, or
any of their respective Subsidiaries; provided that in the event Borrower files
a return with Corporate Guarantor, Borrower's contribution with respect to taxes
as a result of the filing of such consolidated return shall not be greater, nor
the receipt of tax benefits less, than they would have been had Borrower not
filed a consolidated return with Corporate Guarantor.
7.13 SUBSIDIARIES. Establish, create or acquire any Subsidiaries, other
than Permitted Subsidiaries.
7.14 FISCAL YEAR. Change its Fiscal Year.
7.15 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Disclose the name of Agent
or any Lender in any press release or in any prospectus, proxy statement or
other materials filed with any
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governmental entity relating to a public offering of the capital stock of any
Loan Party except as may be required by law.
7.16 BANK ACCOUNTS. After the occurrence and during the continuance of an
Event of Default, establish any new bank accounts, or amend or terminate any
blocked account or lockbox agreement without Agent's prior written consent.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1 EVENT OF DEFAULT. "Event of Default" shall mean the occurrence or
existence of any one or more of the following provided that any requirement for
the giving of notice, the lapse of time, or both, has been satisfied:
(A) PAYMENT. Failure to make payment of any of the Obligations when
due and in the case of interest, such failure shall not be cured within five
(5) days of the applicable due date; or
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of any Loan Party or
any of its Subsidiaries to pay when due any principal or interest on any
Indebtedness (other than the Obligations) or (2) breach or default of any Loan
Party or any of its Subsidiaries with respect to any Indebtedness (other than
the Obligations); if such failure to pay, breach or default entitles the holder
to cause such Indebtedness having an individual principal amount in excess of
$250,000 or having an aggregate principal amount in excess of $500,000 to become
or be declared due prior to its stated maturity; or
(C) BREACH OF CERTAIN PROVISIONS. Failure of any Loan Party to
perform or comply with any term or condition contained in subsections 5.1 (A),
(B) or (C), 5.3, 5.5 or 5.6 or contained in Section 6 or Section 7; or
(D) BREACH OF WARRANTY. Any representation, warranty, certification
or other statement made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by such Person in writing pursuant or
in connection with any Loan Document is false in any material respect on the
date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Any Loan Party defaults in
the performance of or compliance with any term contained in this Agreement or
the other Loan Documents and such default is not remedied or waived within ten
(10) days after receipt by Borrower of notice from Agent, or Requisite Lenders
of such default (other than occurrences described in other provisions of this
subsection 8.1 for which a different grace or cure period is specified or which
constitute immediate Events of Default); or
(F) CHANGE IN CONTROL. A Change of Control shall occur; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) A
court enters a decree or order for relief with respect to any Loan Party or any
of its Subsidiaries in an
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involuntary case under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following events for
sixty (60) days unless dismissed, stayed during the period of such stay, bonded
or discharged: (a) an involuntary case is commenced against any Loan Party or
any of its Subsidiaries, under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or (b) a decree or order of a court for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over any Loan Party or any of its
Subsidiaries, or over all or a substantial part of their respective property, is
entered; or (c) an interim receiver, trustee or other custodian is appointed
without the consent of any Loan Party or any of its Subsidiaries, for all or a
substantial part of the property of any Loan Party or any such Subsidiary; or
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) An order
for relief is entered with respect to any Loan Party or any of its Subsidiaries
or any of its Subsidiaries commences a voluntary case under the Bankruptcy Code
or any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consents to the entry of an order for relief in an involuntary
case or to the conversion of an involuntary case to a voluntary case under any
such law or consents to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or (2)
any Loan Party or any of its Subsidiaries makes any assignment for the benefit
of creditors; or (3) the board of directors of any Loan Party or any of its
Subsidiaries adopts any resolution or otherwise authorizes action to approve any
of the actions referred to in this subsection 8.1(H); or
(I) LIENS. Any lien, levy or assessment is filed or recorded with
respect to or otherwise imposed upon all or any part of the Collateral or the
assets of any Loan Party or of its Subsidiaries by the United States or any
department or instrumentality thereof or by any state, county, municipality or
other governmental agency (other than Permitted Encumbrances) and such lien,
levy or assessment is not stayed, vacated, paid or discharged within ten (10)
days; or
(J) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or warrant of
attachment, or similar process involving (1) an amount in any individual case in
excess of $50,000 or (2) an amount in the aggregate at any time in excess of
$100,000 for all Loan Parties (in either case not adequately covered by
insurance as to which the insurance company has acknowledged coverage) is
entered or filed against any Loan Party or any of its Subsidiaries or any of
their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5)
days prior to the date of any proposed sale thereunder; or
(K) DISSOLUTION. Any order, judgment or decree is entered against
any Loan Party or any of its Subsidiaries decreeing the dissolution or split up
of any Loan Party or that Subsidiary and such order remains undischarged or
unstayed for a period in excess of twenty (20) days; or
(L) SOLVENCY. Any Loan Party ceases to be solvent (as represented by
such Loan Party in subsection 4.16) or admits in writing its present or
prospective inability to pay its debts as they become due; or
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(M) INJUNCTION. Any Loan Party or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or any material part of
its business and such order continues unstayed for more than thirty (30) days;
or
(N) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents for any
reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or any Loan Party denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(O) FAILURE OF SECURITY. Agent, on behalf of Lenders, does not have
or ceases to have a valid and perfected first priority security interest in the
Collateral (subject to Permitted Encumbrances), in each case, for any reason
other than the failure of Agent or any Lender to take any action within its
control; or
(P) DAMAGE, STRIKE, CASUALTY. Any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days beyond
the coverage period of any applicable business interruption insurance, the
cessation or substantial curtailment of revenue producing activities at any
facility of any Loan Party or any of its Subsidiaries (other than in connection
with Specified Fixed Asset Dispositions) if any such event or circumstance could
reasonably be expected to have a Material Adverse Effect; or
(Q) LICENSES AND PERMITS. The loss, suspension or revocation of, or
failure to renew, any license or permit not held or hereafter acquired by any
Loan Party or any of its Subsidiaries if such loss, suspension, revocation or
failure to renew could have a Material Adverse Effect; or
(R) FORFEITURE. There is filed against any Loan Party or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any federal
or state racketeering statute (including, without limitation, the Racketeer
Influenced and Corrupt Organization Act of 1970), which action, suit or
proceeding (1) is not dismissed within one hundred twenty (120) days; and (2)
could result in the confiscation or forfeiture of any material portion of the
Collateral; or
(S) CESSATION/SALE OF SPECIFIED DIVISIONS. Borrower fails to
permanently cease operations or sell substantially all the assets of at least
two of its Specified Divisions on or prior to December 31, 1996;
(T) REPAYMENTS OF TERM LOAN B. Failure of Borrower to repay Term
Loan B from a Permitted Term Loan B Repayment Source in accordance with the
provisions of subsections 2.1(A)(2) and 2.4(B)(2); or
(U) CHASE MORTGAGE DOCUMENTATION. A default shall occur under the
Chase Mortgage Documentation which is not cured within any applicable grace
period.
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8.2 SUSPENSION OF COMMITMENTS. Upon the occurrence of any Default or
Event of Default, notwithstanding any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments shall be suspended; PROVIDED
that, in the case of a Default, if the subject condition or event is waived or
cured within any applicable grace or cure period, the Commitments shall be
reinstated.
8.3 ACCELERATION. Upon the occurrence of any Event of Default described
in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Loan Party, and the Commitments shall thereupon terminate. Upon
the occurrence and during the continuance of any other Event of Default, Agent
may, and upon demand by Requisite Lenders shall, by written notice to Borrower,
(a) declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve to enable Lender to make payments under the Lender Letters of Credit
when required and such amount shall become immediately due and payable.
8.4 REMEDIES. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may and shall upon the
request of Requisite Lenders exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and may also (a)
notify any or all obligors on the Accounts to make all payments directly to
Agent; (b) require each Loan Party to, and each Loan Party hereby agrees that it
will, at its expense and upon request of Agent forthwith, assemble all or part
of the Collateral of such Loan Party as directed by Agent and make it available
to Agent at a place to be designated by Agent which is reasonably convenient to
both parties; (c) withdraw all cash in the Agent's Depository Account and apply
such monies in payment of the Obligations in the manner provided in subsection
8.7; (d) without notice or demand or legal process, enter upon any premises of
any or all Loan Parties and take possession of the Collateral; and (e) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of the Agent's offices or
elsewhere, at such time or times, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as Agent may deem
commercially reasonable. Each Loan Party agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days notice to Borrower on
behalf of all Loan Parties of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. At any sale of the Collateral, if permitted by law, Agent or any
Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of the Collateral or any portion
thereof for the account of Agent or such Lender. Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
Each Loan Party shall remain liable for any deficiency. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. To the extent permitted by law, each
Loan Party hereby specifically waives all rights of redemption, stay
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or appraisal which it has or may have under any law now existing or hereafter
enacted. Agent shall not be required to proceed against any Collateral but may
proceed against any or all Loan Parties directly.
8.5 APPOINTMENT OF ATTORNEY-IN-FACT. Each Loan Party hereby constitutes
and appoints Agent as such Loan Party's attorney-in-fact with full authority in
the place and stead of such Loan Party and in the name of such Loan Party, Agent
or otherwise, from time to time in Agent's discretion while an Event of Default
is continuing to take any action and to execute any instrument that Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including: (a) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (b) to adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any customer or obligor
thereunder or allow any credit or discount thereon; (c) to receive, endorse, and
collect any drafts or other instruments, documents and chattel paper, in
connection with clause (a) above; (d) to file any claims or take any action or
institute any proceedings that Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of Agent
and Lenders with respect to any of the Collateral; and (e) to sign and endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral. The appointment of Agent as each
Loan Party's attorney and Agent's rights and powers are coupled with an interest
and are irrevocable until payment in full and complete performance of all of the
Obligations.
8.6 LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL. Beyond the
safe custody thereof, Agent and each Lender shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee) or with respect to any income thereon or the preservation
of rights against prior parties or any other rights pertaining thereto. Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Agent accords its own property.
Neither Agent nor any Lender shall be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by Agent in good faith.
8.7 APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, (a) each Loan Party irrevocably waives the
right to direct the application of any and all payments at any time or times
thereafter received by Agent from or on behalf of such Loan Party, and each Loan
Party hereby irrevocably agrees that Agent shall have the continuing exclusive
right to apply and to reapply any and all payments received at any time or times
after the occurrence and during the continuance of an Event of Default against
the Obligations in such manner as Agent may deem advisable notwithstanding any
previous entry by Agent upon any books and records and (b) the proceeds of any
sale of, or other realization upon, all or any part of the Collateral shall be
applied: FIRST, to all fees, costs and expenses incurred by Agent or any Lender
with respect to this Agreement, the other Loan Documents or the Collateral;
SECOND, to all fees due and owing to Agent and Lenders; THIRD, to accrued and
unpaid interest on the Obligations; FOURTH, to the principal amounts of the
Obligations outstanding; FIFTH, to any other indebtedness or
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obligations of each Loan Party owing to Agent or any Lender and SIXTH to
Borrower, its successors or assigns, or as a court of competent jurisdiction may
direct.
8.8 LICENSE OF INTELLECTUAL PROPERTY. Each Loan Party hereby assigns,
transfers and conveys to Agent, for the benefit Lenders, effective upon the
occurrence of any Event of Default hereunder, the non-exclusive right and
license to use all Intellectual Property owned or used by such Loan Party
together with any goodwill associated therewith, but only to the extent
necessary to enable Agent to realize on the Collateral and any successor or
assign to enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license is granted free of charge, without
requirement that any monetary payment whatsoever be made to any Loan Party by
Agent.
8.9 WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the part of Agent or
any Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise by Agent
or any Lender of any right under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
(A) Each Lender may assign its rights and delegate its obligations
under this Agreement to another Person; PROVIDED, that (a) such Lender shall
first obtain the written consent of Agent, which shall not be unreasonably
withheld, (b) the amount of Commitments and Loans of the assigning Lender being
assigned shall in no event be less than the lesser of (i) $5,000,000 or (ii) the
entire amount of the Commitments and Loans of such assigning Lender and (c)(i)
each such assignment shall be of a pro rata portion of all such assigning
Lender's Loans and Commitments hereunder, and (ii) the parties to such
assignment shall execute and deliver to Agent for acceptance and recording a
Lender Addition Agreement together with (x) a processing and recording fee of
$2,500 payable to Agent and (y) the Notes originally delivered to the assigning
Lender. Upon receipt of all of the foregoing, Agent shall notify Borrower of
such assignment and Borrower shall comply with its obligations under the last
sentence of subsection 2.1(E). In the case of an assignment authorized under
this subsection 9.1, the assignee shall have, to the extent of such assignment,
the same rights, benefits and obligations as it would if it were a Lender
hereunder. The assigning Lender shall be relieved of its obligations hereunder
with respect to its Commitment or assigned portion thereof. Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". No Lender will directly assign its rights to a Foreign Lender
unless such Foreign Lender has provided such Lender with a current Certificate
of Exemption.
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(B) Each Lender may sell participations in all or any part of any
Loans made by it to another Person (provided that such Lender shall remain
responsible for the performance of its obligations hereunder); PROVIDED, that
any such participation shall be in a minimum amount of $5,000,000, and PROVIDED,
FURTHER, that all amounts payable by Borrower hereunder shall be determined as
if that Lender had not sold such participation and the holder of any such
participation shall not be entitled to require such Lender to take or omit to
take any action hereunder except action directly effecting (a) any reduction in
the principal amount, interest rate or fees payable with respect to any Loan in
which such holder participates; (b) any extension of the Termination Date or the
date fixed for any payment of principal, interest or fees payable with respect
to any Loan in which such holder participates; and (c) any release of
substantially all of the Collateral (other than in accordance with the terms of
this Agreement or the Loan Documents). Borrower hereby acknowledges and agrees
that any participation will give rise to a direct obligation of Borrower to the
participant, and the participant shall for purposes of subsection 2.8, 2.9,
2.10, 9.4 and 10.2 be considered to be a "Lender".
(C) Except as otherwise provided in this subsection 9.1 no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning any Loan Party and its Subsidiaries in the possession of that Lender
from time to time to assignees and participants (including prospective assignees
and participants) provided that the Persons obtaining such information agrees to
maintain the confidentiality of such information to the extent required by
subsection 10.21.
(D) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Loans owing
to it and the Note held by it in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System).
9.2 AGENT.
(A) APPOINTMENT. Each Lender hereby designates and appoints Heller
as its agent under this Agreement and the Loan Documents, and each Lender hereby
irrevocably authorizes Agent to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsection 9.3. Agent agrees to act as such on the express
conditions contained in this subsection 9.2. The provisions of this subsection
9.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as an administrative representative of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of
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agency or trust with or for Lenders, Borrower or any Loan Party. Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees.
(B) NATURE OF DUTIES. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrower in
connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by them hereunder or under any of the Loan Documents, or in
connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account, but Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
Loan Documents or the transactions contemplated thereby, or for the financial
condition of any Loan Party. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of any Loan Party, or the existence or possible existence of any
Default or Event of Default. Agent may at any time request instructions from
Lenders with respect to any actions or approvals which by the terms of this
Agreement or of any of the Loan Documents Agent is permitted or required to take
or to grant, and Agent shall be absolutely entitled to refrain from taking any
action or to withhold any approval and shall not be under any liability
whatsoever to any Person for refraining from any action or withholding any
approval under any of the Loan Documents until it shall have received such
instructions from the applicable percentage of the Lenders. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or refraining from acting under this Agreement or
any of the other Loan Documents in accordance with the instructions of the
applicable percentage of the Lenders and notwithstanding the instructions of
Lenders, Agent shall have no obligation to take any action if it, in good faith
believes that such action exposes Agent to any liability.
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(D) RELIANCE. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. Agent shall be
entitled to rely upon the advice of legal counsel, independent accountants, and
other experts selected by Agent in its sole discretion.
(E) INDEMNIFICATION. Each Lender, severally, agrees to reimburse and
indemnify Agent for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any of the Loan Documents or any action taken or omitted by Agent
under this Agreement for any of the Loan Documents, in proportion to each
Lender's Pro Rata Share; PROVIDED, HOWEVER, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances or disbursements resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this subsection 9.2(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) HELLER INDIVIDUALLY. With respect to its Commitments and the
Loans made by it, and the Notes issued to it, Heller shall have and may exercise
the same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include Heller in its individual capacity
as a Lender or one of the Requisite Lenders. Heller may lend money to, and
generally engage in any kind of banking, trust or other business with any Loan
Party as if it were not acting as Agent pursuant hereto.
(G) SUCCESSOR AGENT.
(1) RESIGNATION. Agent may resign from the performance of all
its functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) APPOINTMENT OF SUCCESSOR. Upon any such notice of
resignation pursuant to clause (G)(1) above, Requisite Lenders shall, upon
receipt of Borrower's prior consent which shall not unreasonably be withheld,
appoint a successor Agent. If a successor Agent shall not have been so
appointed within said thirty (30) Business Day period, the retiring Agent, upon
notice to Borrower, shall then appoint a successor Agent who shall serve as
Agent until such time, as Requisite Lenders, upon receipt of Borrower's prior
written consent which shall not be unreasonably withheld, appoint a successor
Agent as provided above.
(3) SUCCESSOR AGENT. Upon the acceptance of any appointment as
Agent under the Loan Documents by a successor Agent, such successor Agent shall
thereupon succeed
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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 under the Loan Documents. After any retiring Agent's resignation as
Agent under the Loan Documents, the provisions of this subsection 9.2 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under the Loan Documents.
(H) COLLATERAL MATTERS.
(1) RELEASE OF COLLATERAL. Lenders hereby irrevocably authorize
Agent, at its option and in its discretion, to release any Lien granted to or
held by Agent upon any property covered by this Agreement or the Loan Documents
(i) upon termination of the Commitments and payment and satisfaction of all
Obligations; (ii) constituting property being sold or disposed of if Borrower on
behalf of each Loan Party certifies to Agent that the sale or disposition is
made in compliance with the provisions of this Agreement (and Agent may rely in
good faith conclusively on any such certificate, without further inquiry); or
(iii) constituting property leased to any Loan Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement or is
about to expire and which has not been, and is not intended by such Loan Party
to be, renewed or extended. In addition during any Fiscal Year (x) Agent may
release Collateral having a book value of not more than 10% of the book value of
all Collateral, (y) Agent, with the consent of Requisite Lenders, may release
Collateral having a book value of not more than 25% of the book value of all
Collateral and (z) Agent, with the consent of Lenders having 90% of (i) the
Total Loan Commitments and (ii) Loans, may release all the Collateral.
(2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES. Without
in any manner limiting Agent's authority to act without any specific or further
authorization or consent by Lenders (as set forth in subsection 9.2(H)(1)), each
Lender agrees to confirm in writing, upon request by Borrower on behalf of each
Loan Party, the authority to release any property covered by this Agreement or
the Loan Documents conferred upon Agent under subsection 9.2(H)(1). So long as
no Event of Default is then continuing, upon receipt by Agent of confirmation
from the requisite percentage of Lenders, of its authority to release any
particular item or types of property covered by this Agreement or the Loan
Documents, and upon at least five (5) Business Days prior written request by
Borrower on behalf of each Loan Party, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent for the benefit of Lenders herein or
pursuant hereto upon such Collateral; PROVIDED, HOWEVER, that (i) Agent shall
not be required to execute any such document on terms which, in Agent's opinion,
would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of any Loan Party, in respect of),
all interests retained by any Loan Party, including, without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
property covered by this Agreement or the Loan Documents.
(3) ABSENCE OF DUTY. Agent shall have no obligation whatsoever
to any Lender or any other Person to assure that the property covered by this
Agreement or the Loan Documents exists or is owned by the applicable Loan Party
or is cared for, protected or insured or has been encumbered or that the Liens
granted to Agent on behalf of Lenders herein or pursuant
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hereto have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Agent in this subsection 9.2(H) or in any of the Loan
Documents, it being understood and agreed that in respect of the property
covered by this Agreement or the Loan Documents or any act, omission or event
related thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent's own interest in property covered by this Agreement or
the Loan Documents as one of the Lenders and that Agent shall have no duty or
liability whatsoever to any of the other Lenders; PROVIDED, that Agent shall
exercise the same care which it would in dealing with loans for its own account.
(I) AGENCY FOR PERFECTION. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting Lenders' security interest in
Collateral which, in accordance with ARTICLE 9 of the Uniform Commercial Code in
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such Collateral to Agent or in accordance with Agent's instructions.
(J) EXERCISE OF REMEDIES. Each Lender agrees that it will not have
any right individually to enforce or seek to enforce this Agreement or any Loan
Document or to realize upon any collateral security for the Loans, it being
understood and agreed that such rights and remedies may be exercised only by
Agent.
9.3 CONSENTS.
(A) In the event Agent requests the consent of a Lender and does not
receive a written denial thereof within five (5) Business Days after such
Lender's receipt of such request, then such Lender will be deemed to have given
such consent.
(B) In the event Agent requests the consent of a Lender and such
consent is denied, then Heller may, at its option, require such Lender to assign
its interest in the Loans to Heller for a price equal to the then outstanding
principal amount thereof PLUS accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrower. In
the event that Heller elects to require any Lender to assign its interest to
Heller, Heller will so notify such Lender in writing within forty-five (45) days
following such Lender's denial, and such Lender will assign its interest to
Heller no later than five (5) days following receipt of such notice.
9.4 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower on behalf of all Loan
Parties or to any other Person (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender or such holder at any of its offices for the
account of any Loan Party or any of its Subsidiaries (regardless of whether such
balances are then due to any Loan Party or its Subsi-
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diaries), and (B) other property at any time held or owing by such Lender or
such holder to or for the credit or for the account of any Loan Party or any of
its Subsidiaries, against and on account of any of the Obligations which are not
paid when due; except that no Lender or any such holder shall exercise any such
right without the prior written consent of Agent. Any Lender which has
exercised its right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Obligations, purchase for cash (and the
other Lenders or holders shall sell) participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share such excess with each other Lender or holder in accordance
with their respective Pro Rata Shares. Each Loan Party agrees, to the fullest
extent permitted by law, that (a) any Lender or holder may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such excess to other Lenders and
holders, and (b) any Lender or holder so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
Loans and other Obligations in the amount of such participation.
9.5 DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders, disburse
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrower. If Agent elects to require that funds be made
available prior to disbursement to Borrower, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata Share of
such requested Loan no later than (a) one (1) Business Day prior to the Funding
Date applicable thereto for LIBOR Rate Loans or Fixed Rate Loans and (b) by 1:00
p.m. Central time on the Funding Date for Base Rate Loans, and each such Lender
shall pay Agent such Lender's Pro Rata Share of such requested Loan, in same day
funds, by wire transfer to Agent's Account not later than 10:00 a.m. Central
time on such Funding Date for LIBOR Rate Loans or Fixed Rate Loans and 3:00 p.m.
Central time for Base Rate Loans. If any Lender fails to pay the amount of its
Pro Rata Share forthwith upon Agent's demand, Agent shall promptly notify
Borrower, and Borrower shall immediately repay such amount to Agent. Any
repayment required pursuant to this subsection 9.5 shall be without premium or
penalty. Nothing in this subsection 9.5 or elsewhere in this Agreement or the
other Loan Documents, including without limitation the provisions of subsection
9.6, shall be deemed to require Agent to advance funds on behalf of any Lender
or to relieve any Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Agent or Borrower may have against any
Lender as a result of any default by such Lender hereunder.
9.6 SETTLEMENTS, PAYMENTS AND INFORMATION.
(A) REVOLVING LOAN ADVANCES AND PAYMENTS; FEE PAYMENTS.
(1) The Revolving Loan balance may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from, Borrower.
In order to minimize the frequency of transfers of funds between Agent and each
Lender notwithstanding terms to the contrary set forth in Section 2 and
subsection 9.5, Revolving Loan advances and payments may be settled according to
the procedures described in subsection 9.6(A)(2) and 9.6(A)(3) of this
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Agreement. Payments of principal, interest and fees in respect of the Term
Loans will be settled on the Business Day received in accordance with the
provisions of Section 2. Notwithstanding these procedures, each Lender's
obligation to fund its portion of any advances made by Agent to Borrower will
commence on the date such advances are made by Agent. Such payments will be
made by such Lender without set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including daily), if
Agent so elects (each such day being a "Settlement Date"), Agent will advise
each Lender by 1 p.m. Central time by telephone, telex, or telecopy of the
amount of each such Lender's Pro Rata Share of the Revolving Loan balance. In
the event that payments are necessary to adjust the amount of such Lender's
share of the Revolving Loan balance to such Lender's Pro Rata Share of the
Revolving Loan, the party from which such payment is due will pay the other, in
same day funds, by wire transfer to the other's account not later than 3:00 p.m.
Central time on the Business Day following the Settlement Date.
(3) On the first Business Day of each month ("Interest
Settlement Date"), Agent will advise each Lender by telephone, telefax or
telecopy of the amount of interest and fees charged to and collected from
Borrower for the proceeding month. Provided that such Lender has made all
payments required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such Lender
on the signature page of this Agreement as amended by such Lender from time to
time after the date hereof pursuant to the notice provisions contained herein or
in the applicable Lender Addition Agreement) not later than 3 p.m. Central time
on the next Business Day following the Interest Settlement Date such Lender's
share of such interest and fees.
(B) AVAILABILITY OF LENDER'S PRO RATA SHARE.
(1) Unless Agent has been notified by a Lender prior to a
Funding Date of such Lender's intention not to fund its Pro Rata Share of the
Loan amount requested by Borrower, Agent may assume that such Lender will make
such amount available to Agent on the Funding Date or the Business Day following
the next Settlement Date, as applicable. If such amount is not, in fact, made
available to Agent by such Lender when due, Agent will be entitled to recover
such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind.
(2) Nothing contained in this subsection 9.6(B) will be deemed
to relieve a Lender of its obligation to fulfill its Commitments or to prejudice
any rights Agent or Borrower may have against such Lender as a result of any
default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing, each
Lender shall be obligated to fund its Pro Rata Share of any Revolving Loan made
with respect to any draw on a Lender Letter of Credit.
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(C) RETURN OF PAYMENTS
(1) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any solvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without set-off, counterclaim
or deduction of any kind.
9.7 DISSEMINATION OF INFORMATION. Agent will provide Lenders with any
information received by Agent from any Loan Party which is required to be
provided to a Lender hereunder; PROVIDED, HOWEVER, that Agent shall not be
liable to Lenders for any failure to do so, except to the extent that such
failure is attributable to Agent's gross negligence or willful misconduct.
9.8 DISCRETIONARY ADVANCES. Agent may, in its sole discretion, (i)
provided that no Event of Default exists, make Revolving Loans of up to 10% in
excess of the limitations set forth in subsection 2.1 (B)(1)(b) but not in
excess of the limitation set forth in subsection 2.1 (B)(1)(a) for a period of
not more than 30 consecutive days and (ii) during the continuance of an Event of
Default, make Revolving Loans in excess of the limitations set forth in
subsection 2.1 (B)(1) for the purpose of preserving or protecting the
Collateral.
SECTION 10. MISCELLANEOUS
10.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, each Loan Party jointly and severally
agrees to promptly pay all fees, costs and expenses incurred by Agent in
connection with any matters contemplated by or arising out of this Agreement or
the other Loan Documents including the following, and all such fees, costs and
expenses shall be part of the Obligations, payable on demand and secured by the
Collateral: (a) fees, costs and expenses (including reasonable attorneys' fees,
allocated costs of internal counsel and fees of environmental consultants,
accountants and other professionals retained by Agent) incurred in connection
with the examination, review, due diligence investigation, documentation and
closing of the financing arrangements evidenced by the Loan Documents; (b) fees,
costs and expenses (including reasonable attorneys' fees, allocated costs of
internal counsel and fees of environmental consultants, accountants and other
professionals retained by Agent) incurred in connection with the review,
negotiation, preparation, documentation, execution and administration of the
Loan Documents, the Loans, and any amendments, waivers, consents, forbearances
and other modifications relating thereto or any subordination or intercreditor
agreements; (c) fees, costs and expenses incurred by Agent in creating,
perfecting and maintaining perfection of Liens in favor of Agent, on behalf of
Lenders; (d) fees, costs and expenses incurred by Agent in connection with
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forwarding to Borrower the proceeds of Loans including Agent's or any Lenders'
standard wire transfer fee; (e) fees, costs, expenses and bank charges,
including bank charges for returned checks, incurred by Agent or any Lender in
establishing, maintaining and handling lock box accounts, blocked accounts or
other accounts for collection of the Collateral; (f) fees, costs, expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
of Agent or any Lender and costs of settlement incurred in collecting upon or
enforcing rights against the Collateral or incurred in any action to enforce
this Agreement or the other Loan Documents or to collect any payments due from
Borrower or any other Loan Party under this Agreement or any other Loan Document
or incurred in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement, whether in the nature of a "workout"
or in connection with any insolvency or bankruptcy proceedings or otherwise
PROVIDED, HOWEVER, that nothing in this Section 10.1 shall obligate any Loan
Party with expenses arising solely from the relationship between Lenders INTER
SE or among participants.
10.2 INDEMNITY. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby shall be
consummated, each Loan Party agrees to indemnify, pay and hold Agent and each
Lender and any holder of any of the Notes, and the officers, directors,
employees, agents, consultants, auditors, persons engaged by Agent or any Lender
and any holder of any of the Notes to evaluate or monitor the Collateral,
affiliates and attorneys of Agent, Lender and such holders (collectively called
the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or the
other Loan Documents, the consummation of the transactions contemplated by this
Agreement, the statements contained in the commitment letters, if any, delivered
by Agent or any Lender, Agent's and each Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under the other Loan Documents (the
"Indemnified Liabilities"); PROVIDED that no Loan Party shall have any
obligation to an Indemnitee hereunder with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction or arising solely out of the
relationship between Lenders INTER SE.
10.3 AMENDMENTS AND WAIVERS.
(A) Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Notes or any other
Loan Document, or consent to any departure by any Loan Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by
Requisite Lenders or Agent, as applicable; PROVIDED, that no amendment,
modification, termination or waiver shall, unless in writing and signed by all
Lenders, do any of the following: (i) increase the Commitment of any Lender;
(ii) reduce the principal of, rate of interest on or fees payable with respect
to any Loan; (iii) extend the scheduled due date of any installment of principal
of the Loans; (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans, or the percentage of
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Lenders which shall be required for Lenders or any of them to take any action
hereunder; (v) amend or waive this subsection 10.3 or the definitions of the
terms used in this subsection 10.3 insofar as the definitions affect the
substance of this subsection 10.3; (vi) consent to the assignment or other
transfer by any Loan Party of any of its rights and obligations under any Loan
Document; and (vii) increase the percentages contained in the definition of
Borrowing Base and PROVIDED, FURTHER, that no amendment, modification,
termination or waiver affecting the rights or duties of Agent under any Loan
Document shall in any event be effective, unless in writing and signed by Agent,
in addition to the Lenders required herein above to take such action.
(B) Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of any
Lender Letter of Credit shall be applicable without the written concurrence of
the issuer of such Lender Letter of Credit. No notice to or demand on Borrower
or any other Loan Party in any case shall entitle Borrower or any other Loan
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.3 shall be binding upon each
holder of the Notes at the time outstanding, each future holder of the Notes,
and, if signed by a Loan Party, on such Loan Party.
(D) In the event Agent waives (1) any Default arising under
subsection 8.1(E) as a result of the breach of any of the provisions of Section
5 of this Agreement (other than any such breach which constitutes an Event of
Default) or (2) any Default constituting a condition to the funding of any
Revolving Loan or issuance of any Lender Letter of Credit, such waiver shall
expire on the date upon which the Default which was the subject of such waiver
matures into an Event of Default pursuant to the terms of this Agreement.
10.4 NOTICES. Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered in person,
when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. Central time or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, two (2)
days after delivery to such courier properly addressed; or (d) if by U.S. Mail,
four (4) Business Days after depositing in the United States mail, with postage
prepaid in each case properly addressed to the applicable party at its address
set forth below or at such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this subsection 10.4.
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If to Borrower or
any other Loan Party: UNITEL VIDEO, INC.
515 West 57th Street
New York, New York 10019
Attn: Barry Knepper, Senior Vice
President Finance & Administration
Telecopy No.: (212) 581-7748
With a copy to: Karen Ceil Lapidus
General Counsel
Unitel Video, Inc.
515 West 57th Street
New York, New York 10019
Telecopy No.: (212) 581-7748
If to Agent or to Heller: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: HBC Portfolio Manager
Telecopy No.: (312) 441-7026
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: Legal Department
Telecopy No.: (312) 441-7652
If to any Lender: Its address indicated on the signature page hereto,
in a Lender Addition Agreement or in a notice to Agent and Borrower.
10.5 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of each Loan Party set forth in subsections 10.1 and 10.2 shall
survive the payment of the Loans and the termination of this Agreement.
10.6 INDULGENCE NOT WAIVER. No failure or delay on the part of Agent, any
Lender or any holder of any Notes in the exercise of any power, right or
privilege hereunder or under the Notes shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
10.7 MARSHALING; PAYMENTS SET ASIDE. Neither Agent nor any Lender shall be
under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests
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or exercise its rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
10.8 ENTIRE AGREEMENT. This Agreement, the Notes, and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
10.9 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10 SEVERABILITY. The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligation of each Lender hereunder is several and not joint and neither
Agent nor any Lender shall be responsible for the obligation or commitment of
any other Lender hereunder. In the event that any Lender at any time should
fail to make a Loan as herein provided, the Lenders, or any of them, at their
sole option, may make the Loan that was to have been made by the Lender so
failing to make such Loan. Nothing contained in any Loan Document and no action
taken by Agent or any Lender pursuant hereto or thereto shall be deemed to
constitute Lenders to be a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and, provided Agent fails or refuses
to exercise any remedies against any Loan Party after receiving the direction of
the Requisite Lenders, each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.12 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
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10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.14 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that no Loan Party may assign its rights or obligations hereunder
without the written consent of Lenders.
10.15 NO FIDUCIARY RELATIONSHIP; LIMITATION OF LIABILITIES.
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by Agent or any Lender to any Loan Party.
(B) Neither Agent nor any Lender, nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of Agent or any Lender shall
have any liability with respect to, and each Loan Party hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by any Loan Party in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Each Loan Party hereby waives,
releases, and agrees not to sue Agent or any Lender or any of Agent's or any
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.16 CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK
STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES
OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH LOAN PARTY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTES,
THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND EACH LENDER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS. EACH LOAN PARTY, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
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EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTES
AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. EACH LOAN PARTY, AGENT AND EACH LENDER
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
10.18 CONSTRUCTION. Each Loan Party, Agent and each Lender each
acknowledges that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by each Loan Party, Agent and
each Lender.
10.19 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments,
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
10.20 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to any Loan Party or any
shareholders of any Loan Party or any other Person.
10.21 CONFIDENTIALITY. Agent and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by any Loan Party in accordance with such Person's customary procedures for
handling confidential information of this nature and in accordance with safe and
sound business practices and in any event may make disclosure reasonably
required by a bona fide offeree or assignee (or participation), or as required
or requested by any Governmental Authority or representative thereof, or
pursuant to legal process, or to its accountants, lawyers and other advisors,
and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 10.21. In no event shall the Agent or any Lender be obligated or
required to return any materials furnished by any Loan Party; provided, however,
each offeree shall be required to agree that if it does not become a assignee
(or participant) it shall return all materials furnished to it by any Loan Party
in connection herewith.
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10.22 AMENDED AND RESTATED LOAN AGREEMENT. This Agreement and the Notes
amend, restate and supersede in their entirety the Prior Credit Agreements and
the Assigned Notes, for which this Agreement and the Notes are given in
substitution but not satisfaction. Nothing contained herein shall (a)
constitute or be deemed to constitute an amendment or restatement of or affect
the rights and benefits of Lenders as assignee of the Assigned Financing
Statements, the Assigned Landlord Waivers or the Assigned Motor Vehicle Title
Certificates nor (b) affect in any manner whatsoever the rights and benefits of
Lenders as assignees under the Subordinated Notes. Each Loan Party acknowledges
that notwithstanding anything contained in the Assignment Agreement to the
contrary, including without limitation the provisions of Section 7 thereof,
neither Agent or any Lender shall have any obligation to any Loan Party under
the terms of the Assigned Documents except as such Assigned Documents have been
amended, restated and superseded as aforesaid.
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
UNITEL VIDEO, INC.
By: /s/ Barry Knepper
-------------------------------
Title: SVP - Finance and Administration
----------------------------
FEIN: 23-1713238
R SQUARED, INC.
By: /s/ Barry Knepper
--------------------------------
Title: President
-----------------------------
FEIN: 95-4447505
HELLER FINANCIAL, INC., as Agent
and Lender
By: /s/ Jerome Sepich
-----------------------------
Title: Vice-President
----------------------------
Revolving Loan Commitment:
$11,000,000
Term Loan A Commitment:
$7,500,000
Term Loan B Commitment:
$7,500,000
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SCHEDULES
1.1(A) - Mobile Units
1.1(B) - Other Liens
1.1(C) - Pro Forma
1.1(D) - UCC-3 Assignments
1.1(E) - Assigned Landlord Waivers
1.1(F) - Assigned Motor Vehicle Title Certificates
3.1(A) - List of Closing Documents
3.1(I) - Litigation
4.6 - Trade Names (Present and Past Five Years)
4.7 - Location of Principal Place of Business, Books and Records
and Collateral
4.9 - Judgment Liens
4.10 - Tax Liens
4.12 - Employee Benefit Plans
4.13 - Intellectual Property
4.20 - Bank Accounts
4.22 - Employee Matters
7.1 - Indebtedness
7.4 - Investments and Loans
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EXHIBITS
1.1(A) - Form of Borrowing Base Certificate
1.1(B) - Form of Closing Certificate
1.1(C) - Form of Compliance Certificate
1.1(D) - Form of Corporate Guaranty
1.1(E) - Form Equipment Report
1.1(F) - Form of Lender Addition Agreement
2.1(A)(1) - Form of Amended and Restated Term Note A
2.1(A)(2) - Form of Amended and Restated Term Note B
2.1(E) - Form of Amended and Restated Revolving Note
3.1(S) - Form of Financial Condition Certificate
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Other Definitional Provisions. . . . . . . . . . . . . . . . 16
SECTION 2. LOANS AND COLLATERAL. . . . . . . . . . . . . . . . . . . . 16
2.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(A)(1) Term Loan A . . . . . . . . . . . . . . . . . . . . 16
(A)(2) Term Loan B . . . . . . . . . . . . . . . . . . . . 17
(B) Revolving Loan. . . . . . . . . . . . . . . . . . . 17
(C) Eligible Accounts . . . . . . . . . . . . . . . . . 18
(D) Borrowing Mechanics . . . . . . . . . . . . . . . . 19
(E) Notes . . . . . . . . . . . . . . . . . . . . . . . 20
(F) Evidence of Revolving Loan Obligations. . . . . . . 20
2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(A) Rate of Interest. . . . . . . . . . . . . . . . . . 23
(B) Interest Periods. . . . . . . . . . . . . . . . . . 24
(C) Computation and Payment of Interest . . . . . . . . 24
(D) Interest Laws . . . . . . . . . . . . . . . . . . . 25
(E) Conversion or Continuation. . . . . . . . . . . . . 25
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(A) Unused Line Fee . . . . . . . . . . . . . . . . . . 26
(B) Letter of Credit Fees . . . . . . . . . . . . . . . 26
(D) Collateral Monitoring Fee . . . . . . . . . . . . . 27
(E) Audit Fees. . . . . . . . . . . . . . . . . . . . . 27
(F) Other Fees and Expenses . . . . . . . . . . . . . . 27
2.4 Payments and Prepayments . . . . . . . . . . . . . . . . . . 27
(A) Manner and Time of Payment. . . . . . . . . . . . . 27
(B) Mandatory Prepayments . . . . . . . . . . . . . . . 27
(1) Overadvance. . . . . . . . . . . . . . . . . . 28
(2) Proceeds of Asset Dispositions . . . . . . . . 28
(3) Prepayments of Term Loan A . . . . . . . . . . 29
(C) Voluntary Prepayments and Repayments. . . . . . . . 29
(D) Payments on Business Days . . . . . . . . . . . . . 29
2.5 Term of this Agreement . . . . . . . . . . . . . . . . . . . 29
2.6 Statements . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.7 Grant of Security Interest . . . . . . . . . . . . . . . . . 30
2.8 Capital Adequacy and Other Adjustments . . . . . . . . . . . 30
2.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(A) No Deductions . . . . . . . . . . . . . . . . . . . 31
(B) Changes in Tax Laws . . . . . . . . . . . . . . . . 31
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(C) Foreign Lenders . . . . . . . . . . . . . . . . . . 32
2.10 Required Termination and Prepayment. . . . . . . . . . . . . 32
2.11 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs . . . . . . . . . . . . . . . . . 33
2.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 33
2.13 Booking of LIBOR Rate Loans. . . . . . . . . . . . . . . . . 34
2.14 Assumptions Concerning Funding of LIBOR Rate Loans or
Fixed Rate Loans . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3. CONDITIONS TO LOANS . . . . . . . . . . . . . . . . . . . . 34
3.1 Conditions to Loans. . . . . . . . . . . . . . . . . . . . . 34
(A) Closing Deliveries. . . . . . . . . . . . . . . . . 34
(B) Security Interests. . . . . . . . . . . . . . . . . 34
(C) Closing Date Availability . . . . . . . . . . . . . 34
(D) Representations and Warranties. . . . . . . . . . . 34
(E) Fees. . . . . . . . . . . . . . . . . . . . . . . . 34
(G) Performance of Agreements . . . . . . . . . . . . . 35
(H) No Prohibition. . . . . . . . . . . . . . . . . . . 35
(I) No Litigation . . . . . . . . . . . . . . . . . . . 35
(J) Audit . . . . . . . . . . . . . . . . . . . . . . . 35
(K) No Material Adverse Change. . . . . . . . . . . . . 35
(L) Security Interests. . . . . . . . . . . . . . . . . 35
(M) Subordinated Debt Documents . . . . . . . . . . . . 35
(N) Audited Financial Statements. . . . . . . . . . . . 35
(O) Chase Mortgage Documentation. . . . . . . . . . . . 36
(P) Proceeds of Chase Financing . . . . . . . . . . . . 36
(Q) Consents. . . . . . . . . . . . . . . . . . . . . . 36
(R) Financial Condition Certificate . . . . . . . . . . 36
(S) Landlord and Mortgagee Agreements . . . . . . . . . 36
(T) Contract Review . . . . . . . . . . . . . . . . . . 36
(U) Cash Management . . . . . . . . . . . . . . . . . . 36
(V) Tax Assumptions; Structure. . . . . . . . . . . . . 36
SECTION 4. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 36
4.1 Organization, Powers, Capitalization . . . . . . . . . . . . 37
(A) Organization and Powers . . . . . . . . . . . . . . 37
(B) Capitalization. . . . . . . . . . . . . . . . . . . 37
4.2 Authorization of Borrowing, No Conflict. . . . . . . . . . . 37
4.3 Financial Condition. . . . . . . . . . . . . . . . . . . . . 37
4.4 Indebtedness and Liabilities . . . . . . . . . . . . . . . . 38
4.5 Account Warranties . . . . . . . . . . . . . . . . . . . . . 38
4.6 Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.7 Locations; FEIN. . . . . . . . . . . . . . . . . . . . . . . 38
4.8 Title to Properties; Liens . . . . . . . . . . . . . . . . . 38
4.9 Litigation; Adverse Facts. . . . . . . . . . . . . . . . . . 38
4.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 38
4.11 Performance of Agreements. . . . . . . . . . . . . . . . . . 39
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4.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 39
4.13 Intellectual Property. . . . . . . . . . . . . . . . . . . . 39
4.14 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . 39
4.15 Environmental Compliance . . . . . . . . . . . . . . . . . . 39
4.16 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.18 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.19 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 40
4.20 Bank Accounts; Lockboxes . . . . . . . . . . . . . . . . . . 40
4.21 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 40
4.22 Employee Matters . . . . . . . . . . . . . . . . . . . . . . 40
4.23 Governmental Regulation. . . . . . . . . . . . . . . . . . . 41
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 41
5.1 Financial Statements and Other Reports . . . . . . . . . . . 41
(A) Monthly Financials. . . . . . . . . . . . . . . . . 41
(B) Year-End Financials . . . . . . . . . . . . . . . . 41
(D) Management Letters. . . . . . . . . . . . . . . . . 42
(E) Compliance Certificate. . . . . . . . . . . . . . . 42
(F) Borrowing Base Certificates. . . . . . . . . . . . 42
(G) Equipment Reports and Listings and Agings . . . . . 42
(H) Management Report . . . . . . . . . . . . . . . . . 43
(I) Appraisals. . . . . . . . . . . . . . . . . . . . . 43
(J) Government Notices. . . . . . . . . . . . . . . . . 43
(K) Events of Default, etc. . . . . . . . . . . . . . . 43
(L) Trade Names . . . . . . . . . . . . . . . . . . . . 43
(M) Locations . . . . . . . . . . . . . . . . . . . . . 44
(N) Bank Accounts . . . . . . . . . . . . . . . . . . . 44
(O) Litigation. . . . . . . . . . . . . . . . . . . . . 44
(P) Projections . . . . . . . . . . . . . . . . . . . . 44
(Q) Subordinated Debt and Other Indebtedness Notices. . 44
(R) Other Information . . . . . . . . . . . . . . . . . 44
5.2 Access to Accountants. . . . . . . . . . . . . . . . . . . . 44
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.4 Collateral Records . . . . . . . . . . . . . . . . . . . . . 45
5.5 Account Covenants; Verification. . . . . . . . . . . . . . . 45
5.6 Collection of Accounts and Payments. . . . . . . . . . . . . 45
5.7 Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . 46
5.8 Corporate Existence. . . . . . . . . . . . . . . . . . . . . 46
5.9 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 46
5.10 Maintenance of Properties; Insurance . . . . . . . . . . . . 46
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 47
5.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . 47
5.13 Collateral Locations . . . . . . . . . . . . . . . . . . . . 47
5.14 Bailees. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.15 Use of Proceeds and Margin Security. . . . . . . . . . . . . 47
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5.16 Required Qualified Asset Expenditures. . . . . . . . . . . . 47
SECTION 6. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . 48
6.1 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . 48
6.2 Capital Expenditure Limits . . . . . . . . . . . . . . . . . 48
6.3 Fixed Charge Coverage. . . . . . . . . . . . . . . . . . . . 48
6.4 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 49
7.1 Indebtedness and Liabilities . . . . . . . . . . . . . . . . 49
7.2 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.3 Transfers, Liens and Related Matters.. . . . . . . . . . . . 50
(A) Transfers . . . . . . . . . . . . . . . . . . . . . 50
(B) Liens . . . . . . . . . . . . . . . . . . . . . . . 50
(C) No Negative Pledges . . . . . . . . . . . . . . . . 50
7.4 Investments and Loans. . . . . . . . . . . . . . . . . . . . 51
7.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . 51
7.6 Restriction on Fundamental Changes . . . . . . . . . . . . . 51
7.7 Changes Relating to Subordinated Debt. . . . . . . . . . . . 51
7.8 Transactions with Affiliates . . . . . . . . . . . . . . . . 52
7.9 Environmental Liabilities. . . . . . . . . . . . . . . . . . 52
7.10 Conduct of Business. . . . . . . . . . . . . . . . . . . . . 52
7.11 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . 52
7.12 Tax Consolidations . . . . . . . . . . . . . . . . . . . . . 52
7.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 52
7.14 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 52
7.15 Press Release; Public Offering Materials . . . . . . . . . . 52
7.16 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8. DEFAULT, RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . 53
8.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . 53
(A) Payment . . . . . . . . . . . . . . . . . . . . . . 53
(B) Default in Other Agreements . . . . . . . . . . . . 53
(C) Breach of Certain Provisions. . . . . . . . . . . . 53
(D) Breach of Warranty. . . . . . . . . . . . . . . . . 53
(E) Other Defaults Under Loan Documents . . . . . . . . 53
(F) Change in Control . . . . . . . . . . . . . . . . . 53
(G) Involuntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . 53
(H) Voluntary Bankruptcy; Appointment of Receiver,
etc.. . . . . . . . . . . . . . . . . . . . . . . 54
(I) Liens.. . . . . . . . . . . . . . . . . . . . . . . 54
(J) Judgment and Attachments. . . . . . . . . . . . . . 54
(K) Dissolution . . . . . . . . . . . . . . . . . . . . 54
(L) Solvency. . . . . . . . . . . . . . . . . . . . . . 54
(M) Injunction. . . . . . . . . . . . . . . . . . . . . 55
(N) Invalidity of Loan Documents. . . . . . . . . . . . 55
(O) Failure of Security . . . . . . . . . . . . . . . . 55
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(P) Damage, Strike, Casualty. . . . . . . . . . . . . . 55
(Q) Licenses and Permits. . . . . . . . . . . . . . . . 55
(R) Forfeiture. . . . . . . . . . . . . . . . . . . . . 55
(S) Cessation/Sale of Specified Divisions . . . . . . . 55
8.2 Suspension of Commitments. . . . . . . . . . . . . . . . . . 56
8.3 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . 56
8.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.5 Appointment of Attorney-in-Fact. . . . . . . . . . . . . . . 57
8.6 Limitation on Duty of Agent with Respect to Collateral . . . 57
8.7 Application of Proceeds. . . . . . . . . . . . . . . . . . . 57
8.8 License of Intellectual Property . . . . . . . . . . . . . . 58
8.9 Waivers, Non-Exclusive Remedies. . . . . . . . . . . . . . . 58
SECTION 9. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . 58
9.1 Assignments and Participations in Loans. . . . . . . . . . . 58
9.2 Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(A) Appointment . . . . . . . . . . . . . . . . . . . . 59
(B) Nature of Duties. . . . . . . . . . . . . . . . . . 60
(C) Rights, Exculpation, Etc. . . . . . . . . . . . . . 60
(D) Reliance. . . . . . . . . . . . . . . . . . . . . . 61
(E) Indemnification . . . . . . . . . . . . . . . . . . 61
(F) Heller Individually . . . . . . . . . . . . . . . . 61
(G) Successor Agent . . . . . . . . . . . . . . . . . . 61
(1) Resignation. . . . . . . . . . . . . . . . . . 61
(2) Appointment of Successor . . . . . . . . . . . 61
(3) Successor Agent. . . . . . . . . . . . . . . . 61
(H) Collateral Matters. . . . . . . . . . . . . . . . . 62
(1) Release of Collateral. . . . . . . . . . . . . 62
(2) Confirmation of Authority; Execution of
Releases.. . . . . . . . . . . . . . . . . . . 62
(3) Absence of Duty. . . . . . . . . . . . . . . . 62
(I) Agency for Perfection . . . . . . . . . . . . . . . 63
(J) Exercise of Remedies. . . . . . . . . . . . . . . . 63
9.3 Consents.. . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.4 Set Off and Sharing of Payments. . . . . . . . . . . . . . . 63
9.5 Disbursement of Funds. . . . . . . . . . . . . . . . . . . . 64
9.6 Settlements, Payments and Information. . . . . . . . . . . . 64
(A) Revolving Loan Advances and Payments; Fee
Payments. . . . . . . . . . . . . . . . . . . . . 64
(B) Availability of Lender's Pro Rata Share . . . . . . 65
(C) Return of Payments. . . . . . . . . . . . . . . . . 66
9.7 Dissemination of Information . . . . . . . . . . . . . . . . 66
9.8 Discretionary Advances . . . . . . . . . . . . . . . . . . . 66
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 66
10.1 Expenses and Attorneys' Fees . . . . . . . . . . . . . . . . 66
10.2 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.3 Amendments and Waivers . . . . . . . . . . . . . . . . . . . 67
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10.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.5 Survival of Warranties and Certain Agreements. . . . . . . . 69
10.6 Indulgence Not Waiver. . . . . . . . . . . . . . . . . . . . 69
10.7 Marshaling; Payments Set Aside . . . . . . . . . . . . . . . 69
10.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 70
10.9 Independence of Covenants. . . . . . . . . . . . . . . . . . 70
10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . 70
10.11 Lenders' Obligations Several; Independent Nature of
Lenders' Rights. . . . . . . . . . . . . . . . . . . . . . 70
10.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.13 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . 71
10.14 Successors and Assigns . . . . . . . . . . . . . . . . . . . 71
10.15 No Fiduciary Relationship; Limitation of Liabilities . . . . 71
10.16 CONSENT TO JURISDICTION. . . . . . . . . . . . . . . . . . . 71
10.17 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . 71
10.18 Construction . . . . . . . . . . . . . . . . . . . . . . . . 72
10.19 Counterparts; Effectiveness. . . . . . . . . . . . . . . . . 72
10.20 No Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.21 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 72
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