_________________________________________________________________
PAMECO CORPORATION,
as Borrower
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
LOAN AND SECURITY AGREEMENT
Dated: February 17, 2000
$130,000,000.00
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
THE FINANCIAL INSTITUTIONS
PARTY HERETO FROM TIME TO TIME, as Lenders, and
FLEET CAPITAL CORPORATION, as Agent
______________________________________________________________
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITIES............................................ 1
1.1. Revolver Commitments.............................................. 1
1.2. LC Facility....................................................... 3
SECTION 2. INTEREST, FEES AND CHARGES................................. 8
2.1. Interest.......................................................... 8
2.2. Fees.............................................................. 11
2.3. Computation of Interest and Fees.................................. 12
2.4. Reimbursement Obligations......................................... 12
2.5. Bank Charges...................................................... 13
2.6. Illegality........................................................ 13
2.7. Increased Costs................................................... 13
2.8. Capital Adequacy.................................................. 15
2.9. Funding Losses.................................................... 15
2.10. Maximum Interest.................................................. 16
SECTION 3. LOAN ADMINISTRATION........................................... 17
3.1. Manner of Borrowing and Funding Revolver Loans.................... 17
3.2. Defaulting Lender................................................. 21
3.3. Special Provisions Governing LIBOR Loans.......................... 22
3.4. All Revolver Loans to Constitute One Obligation................... 23
SECTION 4. PAYMENTS...................................................... 23
4.1. General Payment Provisions........................................ 23
4.2. Repayment of Revolver Loans....................................... 23
4.3. Payment of Other Obligations...................................... 25
4.4. Marshaling; Payments Set Aside.................................... 25
4.5. Agent's Allocation of Payments and Collections.................... 25
4.6. Application of Payments and Collateral Proceeds................... 26
4.7. Loan Account...................................................... 26
4.8. Gross Up for Taxes................................................ 27
4.9. Withholding Tax Exemption......................................... 27
SECTION 5. TERM AND TERMINATION.......................................... 28
5.1. Term of Revolver Commitments...................................... 28
5.2. Termination....................................................... 28
SECTION 6. COLLATERAL.................................................... 29
6.1. Grant of Security Interest........................................ 29
6.2. Lien on Deposit Accounts.......................................... 30
6.3. Other Collateral.................................................. 30
6.4. Lien Perfection; Further Assurances............................... 30
SECTION 7. COLLATERAL ADMINISTRATION..................................... 31
7.1. General Provisions................................................ 31
7.2. Administration of Accounts........................................ 32
7.3. Administration of Inventory....................................... 34
7.4. Administration of Equipment....................................... 34
7.5. Borrowing Base Certificates....................................... 35
SECTION 8. REPRESENTATIONS AND WARRANTIES................................ 35
8.1. General Representations and Warranties............................ 35
8.2. Reaffirmation of Representations and Warranties................... 41
8.3. Survival of Representations and Warranties........................ 41
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS........................... 41
9.1. Affirmative Covenants............................................. 41
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9.1.12. Dividends of Subsidiaries After Default......................... 45
9.2. Negative Covenants................................................ 45
9.3. Financial Covenants............................................... 50
SECTION 10. CONDITIONS PRECEDENT.......................................... 51
10.1. Conditions Precedent to Initial Credit Extensions................. 51
10.2. Conditions Precedent to All Credit Extensions..................... 54
10.2.5. Borrowing Base Certificate....................................... 54
10.4. Limited Waiver of Conditions Precedent............................ 54
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............. 55
11.1. Events of Default................................................. 55
11.2. Acceleration of Obligations; Termination of Revolver Commitments.. 57
11.3. Other Remedies.................................................... 58
11.4. Setoff............................................................ 59
11.5. Remedies Cumulative; No Waiver.................................... 60
SECTION 12. AGENT 61
12.1. Appointment, Authority and Duties of Agent........................ 61
12.2. Agreements Regarding Collateral................................... 63
12.3. Reliance By Agent................................................. 63
12.4. Action Upon Default............................................... 63
12.5. Ratable Sharing................................................... 64
12.6. Indemnification of Agent Indemnitees.............................. 64
12.7. Limitation on Responsibilities of Agent........................... 66
12.8. Successor Agent and Co-Agents..................................... 66
12.10. Due Diligence and Non-Reliance.................................... 69
12.11. Representations and Warranties of Lenders......................... 70
12.12. The Required Lenders.............................................. 70
12.13. Several Obligations............................................... 70
12.14. Agent in its Individual Capacity.................................. 70
12.15. No Third Party Beneficiaries...................................... 71
12.16. Notice of Transfer................................................ 71
12.17. Replacement of Certain Lenders.................................... 71
12.18. Remittance of Payments and Collections............................ 72
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS.......... 72
13.1. Successors and Assigns............................................ 72
13.2. Participations.................................................... 73
13.3. Assignments....................................................... 74
13.4. Tax Treatment..................................................... 75
SECTION 14. MISCELLANEOUS................................................. 75
14.1. Power of Attorney................................................. 75
14.2. General Indemnity................................................. 76
14.3. Survival of All Indemnities....................................... 76
14.4. Modification of Agreement......................................... 77
14.5. Severability...................................................... 77
14.6. Cumulative Effect; Conflict of Terms.............................. 77
14.7. Execution in Counterparts......................................... 77
14.8. Consent........................................................... 77
14.9. Notices........................................................... 78
14.10. Performance of Borrower's Obligations............................. 78
14.11. Credit Inquiries.................................................. 78
14.12. Time of Essence................................................... 78
14.13. Entire Agreement; Appendix A, Exhibits and Schedules.............. 78
14.14. Interpretation.................................................... 79
14.15. Obligations Several............................................... 79
14.16. Confidentiality................................................... 79
14.17. Governing Law; Consent to Forum................................... 80
14.18. Waivers by Borrower............................................... 80
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LIST OF EXHIBITS AND SCHEDULES
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Exhibit A Revolver Note
Exhibit A-1 Settlement Note
Exhibit B Notice of Conversion/Continuation
Exhibit C Notice of Borrowing
Exhibit D Compliance Certificate
Exhibit E Opinion Contents
Exhibit F Assignment and Acceptance
Exhibit G Notice
Exhibit H Credit Procurement Request
Exhibit I Subsidiary Guaranty
Exhibit J Littlejohn Guaranty
Exhibit K Debt Subordination Agreement
Exhibit L Lien Subordination Agreement
Schedule 7.1.1 Borrower's Business Locations
Schedule 8.1.1 Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Schedule 8.1.4C Capital Structure of Borrower
Schedule 8.1.5 Corporate Names
Schedule 8.1.12 Surety Obligations
Schedule 8.1.13 Tax Identification Numbers of Borrower and Subsidiaries
Schedule 8.1.14 Brokers
Schedule 8.1.15 Patents, Trademarks, Copyrights and Licenses
Schedule 8.1.18 Contracts Restricting Borrower's Right to Incur Debts; Surety
Obligations
Schedule 8.1.19 Litigation
Schedule 8.1.21 Capitalized and Operating Leases
Schedule 8.1.22 Pension Plans
iv
Schedule 8.1.23 Labor Contracts
Schedule 9.2.5 Permitted Liens
Schedule 9.2.8 Restrictions on Upstream Payments
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made on February 17, 2000, by and
among PAMECO CORPORATION, a Georgia corporation with its chief executive office
and principal place of business at 1000 Center Place, Norcross, Georgia 30093
("Borrower"); the various financial institutions listed on the signature pages
hereof and their respective successors and permitted assigns which become
"Lenders" as provided herein; and FLEET CAPITAL CORPORATION, a Rhode Island
corporation with an office at 300 Galleria Parkway, N.W., Suite 800, Atlanta,
Georgia 30339 ("Fleet"), in its capacity as collateral and administrative agent
for the Lenders pursuant to Section 12 hereof (together with its successors in
such capacity, "Agent"). Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A, General Definitions.
Recitals:
Borrower has requested that Fleet provide a revolving credit and letter of
credit facility to Borrower in an aggregate principal amount of $130,000,000.
Agent and Lenders are willing to provide the requested financial
accommodations to Borrower, subject to the terms and conditions contained
herein.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. CREDIT FACILITIES
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders severally agree to the extent and in the manner hereinafter
set forth to make their respective Pro Rata shares of the Revolver Commitments
available to Borrower, in an aggregate amount up to $130,000,000, as follows:
1.1. Revolver Commitments.
1.1.1. Revolver Loans. Each Lender agrees, severally to the extent
of its Revolver Commitment and not jointly with the other Lenders, upon the
terms and subject to the conditions set forth herein, to make Revolver Loans to
Borrower on any Business Day during the period from the date hereof through the
Business Day before the last day of the Term, not to exceed in aggregate
principal amount outstanding at any time such Lender's Revolver Commitment at
such time, which Revolver Loans may be repaid and reborrowed in accordance with
the provisions of this Agreement; provided, however, that Lenders shall have no
obligation
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to Borrower whatsoever to make any Revolver Loan on or after the Commitment
Termination Date or if at the time of the proposed funding thereof the aggregate
principal amount of all of the Revolver Loans and Pending Revolver Loans then
outstanding exceeds, or would exceed after the funding of such Revolver Loan,
the Borrowing Base. Each Borrowing of Revolver Loans shall be funded by Lenders
on a Pro Rata basis in accordance with their respective Revolver Commitments
(except for Fleet with respect to Settlement Loans). The Revolver Loans shall
bear interest as set forth in Section 2.1. hereof. Each Revolver Loan shall, at
the option of Borrower, be made or continued as, or converted into, part of one
or more Borrowings that, unless specifically provided herein, shall consist
entirely of Base Rate Loans or LIBOR Loans.
1.1.2. Out-of-Formula Loans. If the unpaid balance of Revolver
Loans outstanding at any time should exceed the Borrowing Base at such time (an
"Out-of-Formula Condition"), such Revolver Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to all of the
benefits of the Loan Documents. Lenders may, in their sole and absolute
discretion, make Out-of-Formula Loans to Borrower from time to time; provided,
however, that, if and so long as each of the following conditions (collectively,
the "Out-of-Formula Facility Conditions") is satisfied, Lenders shall be
obligated to honor Borrower's request for Revolver Loans notwithstanding the
existence or creation of an Out-of-Formula Condition: (i) the Littlejohn
Guaranty has been duly executed and delivered and is in full force and effect,
and Agent has not received from Littlejohn any notice of attempted revocation or
termination thereof; (ii) the Out-of-Formula Fix Date has not occurred; (iii)
Littlejohn is Solvent and, on the date of any request for such a Revolver Loan,
Littlejohn has the right (and, if so requested by Agent, confirms in writing
that it has the right) to make capital calls on its partners in an amount that
is $5,000,000 in excess of any existing capital calls on such date; (iv) both
prior to and after giving effect to any requested Revolver Loan, the Out-of-
Formula Condition is not and will not be greater than $5,000,000 (with the
understanding that Agent's determination of the existence and amount of any Out-
of-Formula Condition shall be conclusive and binding upon all parties) and the
aggregate amount of all Revolver Loans and LC Outstandings do not and would not
exceed the Revolver Commitments; and (v) no Default or Event of Default exists
or would result from the funding of such Revolver Loan and all of the other
conditions set forth in Section 10 are satisfied. All Out-of-Formula Loans
shall bear interest as provided in Section 2.1 hereof, shall be secured by all
of the Collateral and shall be repaid in accordance with Section 4.2.1(iii)
hereof.
1.1.3. Use of Proceeds. The proceeds of the Revolver Loans shall be
used by Borrower solely for one or more of the following purposes: (i) to
satisfy any Debt owing on the Closing Date to Prior Lenders; (ii) to pay the
fees and transaction expenses associated with the closing of the transactions
described herein; (iii) to pay any of the Obligations; and (iv) to make
expenditures for other general corporate purposes of Borrower to the extent such
expenditures are not prohibited by this Agreement or Applicable Law. In no
event may any Revolver Loan proceeds be used by Borrower to make a contribution
to the equity of any Subsidiary that is not a Subsidiary Guarantor or a Co-
Borrower, to purchase or to carry, or to reduce, retire or refinance any Debt
incurred to purchase or carry, any Margin Stock or for any related purpose that
violates the provisions of Regulations T, U or X of the Board of Governors.
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1.1.4. Revolver Notes. The Revolver Loans made by each Lender and
interest accruing thereon shall be evidenced by the records of Agent and such
Lender and by the Revolver Note payable to such Lender (or the assignee of such
Lender), which shall be executed by Borrower, completed in conformity with this
Agreement and delivered to such Lender. All outstanding principal amounts and
accrued interest under the Revolver Notes shall be due and payable as set forth
in Section 4.2 hereof.
1.1.5. Voluntary Reductions of Revolver Commitments. Borrower shall
have the right to reduce permanently the amount of the Revolver Commitments, on
a Pro Rata basis for each Lender, at any time and from time to time upon 3
Business Days prior written notice to Agent, which notice shall specify the
amount of such reduction (which shall be in a minimum amount of $200,000 and
increments of $50,000), shall be irrevocable once given, and shall be effective
only upon Agent's receipt thereof. Agent shall promptly transmit such notice to
each Lender. The effective date of any optional reduction of the Revolver
Commitments shall be the first day of a month following the month in which such
notice is received by Agent. If on the effective date of any such reduction in
the Revolver Commitments and after giving effect thereto an Out-of-Formula
Condition exists, then the provisions of Section 4.2.1(iii) hereof shall apply,
except that such repayment shall be due immediately upon such effective date
without further notice to or demand upon Borrower. If the Revolver Commitments
are reduced to zero, then such reduction shall be deemed a termination of the
Revolver Commitments by Borrower pursuant to Section 5.2.2 hereof. The Revolver
Commitments once reduced may not be reinstated without the written consent of
all Lenders.
1.2. LC Facility.
1.2.1. Procurement of Letters of Credit. During the period from the
date hereof to (but excluding) the 30th day prior to the last day of the Term,
and provided no Default or Event of Default exists, Fleet agrees to establish
the LC Facility pursuant to which Fleet shall procure from Bank one or more
Letters of Credit on Borrower's request therefor from time to time, subject to
the following terms and conditions:
(i) Borrower acknowledges that Bank's willingness to issue any
Letter of Credit is conditioned upon Bank's receipt of (A) the LC Support
duly executed and delivered to Bank by Fleet, (B) an LC Application with
respect to the requested Letter of Credit and (C) such other instruments
and agreements as Bank may customarily require for the issuance of a letter
of credit of equivalent type and amount as the requested Letter of Credit.
Fleet shall have no obligation to execute any LC Support or to join with
Borrower in executing an LC Application unless (x) Fleet receives an LC
Request from Borrower at least 5 Business Days prior to the date on which
Borrower desires to submit such LC Application to Bank and (y) each of the
LC Conditions is satisfied on the date of Fleet's receipt of the LC Request
and at the time of the requested execution of the LC Application. In no
event shall Fleet or any other Lender have any liability or obligation to
Borrower or any Subsidiary for any error of Bank in issuing any Letter of
Credit.
(ii) Letters of Credit may be requested by Borrower only if they
are to be used (a) to support obligations of Borrower (or obligations of a
Subsidiary of
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Borrower that is either a Subsidiary Guarantor or a Co-Borrower) that are
incurred in the Ordinary Course of Business of Borrower (or such
Subsidiary) or (b) for such other purposes as Agent and Lenders may approve
from time to time in writing.
(iii) Borrower shall comply with all of the terms and conditions
imposed on Borrower by Bank, whether such terms and conditions are
contained in an LC Application or in any agreement with respect thereto,
and subject to the rights of Bank, Fleet shall have the same rights and
remedies that Bank has under any agreements that Borrower may have with
Bank in addition to any rights and remedies contained in any of the Loan
Documents. Borrower agrees to reimburse Bank for any draw under any Letter
of Credit as hereinafter provided, and to pay Bank the amount of all other
liabilities and obligations payable to Bank under or in connection with any
Letter of Credit immediately when due, irrespective of any claim, setoff,
defense or other right that Borrower may have at any time against Bank or
any other Person. If Fleet shall pay any amount under a LC Support with
respect to any Letter of Credit, then Borrower shall pay to Fleet, in
Dollars on the first Business Day following the date on which payment was
made by Fleet under such LC Support (the "Reimbursement Date"), an amount
equal to the amount paid by Fleet under such LC Support together with
interest from and after the Reimbursement Date until payment in full is
made by Borrower at the Default Rate for Revolver Loans constituting Base
Rate Loans. Until Fleet has received payment from Borrower in accordance
with the foregoing provisions of this clause (iii), Fleet, in addition to
all of its other rights and remedies under this Agreement, shall be fully
subrogated to (A) the rights and remedies of Bank as issuer of the Letter
of Credit under any agreement with Borrower relating to the issuance of
such Letter of Credit, and (B) the rights and remedies of each beneficiary
under such Letter of Credit whose claims against Borrower has been
discharged with the proceeds of such Letter of Credit. Whether or not
Borrower submits any Notice of Borrowing to Agent, Borrower shall be deemed
to have requested from Lenders a Borrowing of Base Rate Loans in an amount
necessary to pay to Fleet all amounts due Fleet on any Reimbursement Date
and each Lender agrees to fund its Pro Rata share of such Borrowing whether
or not any Default or Event of Default has occurred or exists, the Revolver
Commitments have been terminated, the funding of the Borrowing deemed
requested by Borrower would result in, or increase the amount of, any Out-
of-Formula Condition, or any of the conditions set forth in Section 10
hereof are not satisfied.
(iv) Borrower assumes all risks of the acts, omissions or misuses
of any Letter of Credit by the beneficiary thereof. The obligation of
Borrower to reimburse Fleet for any payment made by Fleet under the LC
Support shall be absolute, unconditional and irrevocable and shall be paid
without regard to any lack of validity or enforceability of any Letter of
Credit, the existence of any claim, setoff, defense or other right which
Borrower may have at any time against a beneficiary of any Letter of
Credit, or improper honor by Bank of any draw request under a Letter of
Credit. If presentation of a demand, draft, certificate or other document
does not comply with the terms of a Letter of Credit and Borrower contends
that, as a consequence of such noncompliance it has no obligation to
reimburse Bank for any payment made with respect thereto, Borrower shall
nevertheless be obligated to reimburse Fleet for any payment made under
4
the LC Support with respect to such Letter of Credit, but without waiving
any claim Borrower may have against Bank in connection therewith. All
disputes regarding any Letter of Credit shall be resolved by Borrower
directly with Bank.
(v) No Letter of Credit shall be extended or amended in any
respect that is not solely ministerial, unless all of the LC Conditions are
met as though a new Letter of Credit were being requested and issued.
(vi) Borrower hereby authorizes and directs Bank to deliver to
Fleet all instruments, documents and other writings and Property received
by Bank pursuant to or in connection with any Letter of Credit and to
accept and rely upon Fleet's instructions and agreements with respect to
all matters arising in connection with such Letter of Credit and the
related LC Application.
1.2.2. Participations.
(i) Immediately upon the issuance by Bank of any Letter of
Credit, each Lender (other than Fleet) shall be deemed to have irrevocably
and unconditionally purchased and received from Fleet, without recourse or
warranty, an undivided interest and participation equal to the Pro Rata
share of such Lender (a "Participating Lender") in all LC Outstandings
arising in connection with such Letter of Credit and any security therefor
or guaranty pertaining thereto, but in no event greater than an amount
which, when added to such Lender's Pro Rata share of all Revolver Loans and
LC Outstandings then outstanding, exceeds such Lender's Revolver
Commitment.
(ii) If Fleet makes any payment under an LC Support and Borrower
does not repay or cause to be repaid the amount of such payment on the
Reimbursement Date, Fleet shall promptly notify Agent, which shall promptly
notify each Participating Lender, of such payment and each Participating
Lender shall promptly (and in any event within 1 Business Day after its
receipt of notice from Agent) and unconditionally pay to Agent, for the
account of Fleet, in immediately available funds, the amount of such
Participating Lender's Pro Rata share of such payment, and Agent shall
promptly pay such amounts to Fleet. If a Participating Lender does not
make its Pro Rata share of the amount of such payment available to Agent on
a timely basis as herein provided, such Participating Lender agrees to pay
to Agent for the account of Fleet, forthwith on demand, such amount
together with interest thereon at the Federal Funds Rate until paid. The
failure of any Participating Lender to make available to Agent for the
account of Fleet such Participating Lender's Pro Rata share of the LC
Outstandings shall not relieve any other Participating Lender of its
obligation hereunder to make available to Agent its Pro Rata share of the
LC Outstandings, but no Participating Lender shall be responsible for the
failure of any other Participating Lender to make available to Agent its
Pro Rata share of the LC Outstandings on the date such payment is to be
made.
(iii) Whenever Fleet receives a payment on account of the LC
Outstandings, including any interest thereon, as to which Agent has
previously received payments from any Lender for the account of Fleet,
Fleet shall promptly pay to each
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Participating Lender which has funded its participating interest therein,
in immediately available funds, an amount equal to such Participating
Lender's Pro Rata share thereof.
(iv) The obligation of each Participating Lender to make payments
to Agent for the account of Fleet in connection with Fleet's payment under
a LC Support shall be absolute, unconditional and irrevocable, not subject
to any counterclaim, setoff, qualification or exception whatsoever (other
than for Fleet's gross negligence or willful misconduct), and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances and irrespective of whether or not Borrower may assert or
have any claim for any lack of validity or unenforceability of this
Agreement or any of the other Loan Documents; the existence of any Default
or Event of Default; any draft, certificate or other document presented
under a Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; the existence of any setoff or defense
any Obligor may have with respect to any of the Obligations; or the
termination of the Revolver Commitments.
(v) Neither Fleet nor any of its officers, directors, employees
or agents shall be liable to any Participating Lender for any action taken
or omitted to be taken under or in connection with any of the LC Documents
except as a result of actual gross negligence or willful misconduct on the
part of Fleet. Fleet does not assume any responsibility for any failure or
delay in performance or breach by Borrower or any other Person of any of
its obligations under any of the LC Documents. Fleet does not make to
Participating Lenders any express or implied warranty, representation or
guaranty with respect to the Collateral, the LC Documents, or any Obligor.
Fleet shall not be responsible to any Participating Lender for any
recitals, statements, information, representations or warranties contained
in, or for the execution, validity, genuineness, effectiveness or
enforceability of or any of the LC Documents; the validity, genuineness,
enforceability, collectibility, value or sufficiency of any of the
Collateral or the perfection of any Lien therein; or the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of Borrower or any other Obligor or any
Account Debtor. In connection with its administration of and enforcement
of rights or remedies under any of the LC Documents, Fleet shall be
entitled to act, and shall be fully protected in acting upon, any
certification, notice or other communication in whatever form believed by
Fleet, in good faith, to be genuine and correct and to have been signed,
sent or made by a proper Person. Fleet may consult with and employ legal
counsel, accountants and other experts and to advise it concerning its
rights, powers and privileges under the LC Documents and shall be entitled
to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by such experts. Fleet may employ
agents and attorneys-in-fact in connection with any matter relating to the
LC Documents and shall not be liable for the negligence, default or
misconduct of any such agents or attorneys-in-fact selected by Fleet with
reasonable care. Fleet shall not have any liability to any Participating
Lender by reason of Fleet's refraining to take any action under any of the
LC Documents without having first received written instructions from the
Required Lenders to take such action.
6
(vi) Upon the request of any Participating Lender, Fleet shall
furnish to such Participating Lender copies (to the extent then available
to Fleet) of each outstanding Letter of Credit and related LC Application
and all other documentation pertaining to such Letter of Credit as may be
in the possession of Fleet and reasonably requested from time to time by
such Participating Lender.
1.2.3. Cash Collateral Account. If any LC Outstandings, whether or
not then due or payable, shall for any reason be outstanding (i) at any time
when an Event of Default has occurred and is continuing, (ii) on any date that
Availability is less than zero, or (iii) on or at any time after the Commitment
Termination Date, then Borrower shall, on Fleet's or Agent's request, forthwith
deposit with Agent, in cash, an amount equal to the aggregate amount of LC
Outstandings. If Borrower fails to make such deposit on the first Business Day
following Agent's or Fleet's demand therefor, Lenders may (and shall upon
direction of the Required Lenders) advance such amount as Revolver Loans
(whether or not an Out-of-Formula Condition is created thereby). Such cash
(together with any interest accrued thereon) shall be held by Agent in the Cash
Collateral Account and may be invested, in Agent's discretion, in Cash
Equivalents. Borrower hereby pledges to Agent and grants to Agent a security
interest in, for the benefit of Agent in such capacity and for the Pro Rata
benefit of Lenders, all Cash Collateral held in the Cash Collateral Account from
time to time and all proceeds thereof, as security for the payment of all
Obligations, whether or not then due or payable. From time to time after cash
is deposited in the Cash Collateral Account, Agent may apply Cash Collateral
then held in the Cash Collateral Account to the payment of any amounts, in such
order as Agent may elect, as shall be or shall become due and payable by
Borrower to Agent or any Lender with respect to the LC Outstandings that may be
then outstanding. Neither Borrower nor any other Person claiming by, through or
under or on behalf of Borrower shall have any right to withdraw any of the Cash
Collateral held in the Cash Collateral Account, including any accrued interest,
provided that upon termination or expiration of all Letters of Credit and the
payment and satisfaction of all of the LC Outstandings, any Cash Collateral
remaining in the Cash Collateral Account shall be returned to Borrower unless an
Event of Default then exists (in which event Agent may apply such Cash
Collateral to the payment of any other Obligations outstanding, with any surplus
to be turned over to Borrower).
1.2.4. Indemnifications.
(i) In addition to any other indemnity which Borrower may have to
Agent or any Lender under any of the other Loan Documents and without
limiting such other indemnification provisions, Borrower hereby agrees to
indemnify and defend each of the Agent Indemnitees and Lender Indemnitees
and to hold each of the Agent Indemnitees and Lender Indemnitees harmless
from and against any and all Claims which any of the Agent Indemnitees or
any of the Lender Indemnitees may (other than as the actual result of their
own gross negligence or willful misconduct) incur or be subject to as a
consequence, directly or indirectly, of (a) the issuance of, payment or
failure to pay or any performance or failure to perform under any Letter of
Credit or LC Support or (b) any suit, investigation or proceeding as to
which Agent or any Lender is or may become a party to as a consequence,
directly or indirectly, of the issuance of any Letter of Credit or any LC
Support or the payment or failure to pay thereunder.
7
(ii) Each Participating Lender agrees to indemnify and defend
each of the Fleet Indemnitees (to the extent the Fleet Indemnitees are not
reimbursed by Borrower or any other Obligor, but without limiting the
indemnification obligations of Borrower under this Agreement), on a Pro
Rata basis, from and against any and all Claims which may be imposed on,
incurred by or asserted against any of the Fleet Indemnitees in any way
related to or arising out of Fleet's administration or enforcement of
rights or remedies under any of the LC Documents or any of the transactions
contemplated thereby (including costs and expenses which Borrower is
obligated to pay under Section 14.2 hereof), provided that no Participating
Lender shall be liable to any of the Fleet Indemnitees for any of the
foregoing to the extent that they result solely from the willful misconduct
or gross negligence of such Fleet Indemnitees.
SECTION 2. INTEREST, FEES AND CHARGES
2.1. Interest.
2.1.1. Rates of Interest. Borrower agrees to pay interest in respect
of all unpaid principal amounts of the Revolver Loans from the respective dates
such principal amounts are advanced until paid (whether at stated maturity, on
acceleration or otherwise) at a rate per annum equal to the applicable rate
indicated below:
(i) for Revolver Loans made or outstanding as Base Rate Loans,
the Applicable Margin plus the Base Rate in effect from time to time; or
(ii) for Revolver Loans made or outstanding as LIBOR Loans, the
Applicable Margin plus the relevant Adjusted LIBOR Rate for the applicable
Interest Period selected by Borrower in conformity with this Agreement.
Upon determining the Adjusted LIBOR Rate for any Interest Period
requested by Borrower, Agent shall promptly notify Borrower thereof by telephone
and, if so requested by Borrower, confirm the same in writing (which shall be
deemed to include electronic mail or telecopier). Such determination shall,
absent manifest error, be final, conclusive and binding on all parties and for
all purposes. The applicable rate of interest for all Revolver Loans (or
portions thereof) bearing interest based upon the Base Rate shall be increased
or decreased, as the case may be, by an amount equal to any increase or decrease
in the Base Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes effective.
Interest on each Revolver Loan shall accrue from and including the date on which
such Revolver Loan is made, converted to a Revolver Loan of another Type or
continued as a LIBOR Loan to (but excluding) the date of any repayment thereof;
provided, however, that, if a Revolver Loan is repaid on the same day made, one
day's interest shall be paid on such Revolver Loan. The Base Rate on the date
hereof is 8.75% per annum and, therefore, the rate of interest in effect
hereunder on the date hereof, expressed in simple interest terms, is 9.50% per
annum with respect to any portion of the Revolver Loans bearing interest as a
Base Rate Loan.
2.1.2 Conversions and Continuations.
8
(i) Borrower may on any Business Day, subject to the giving of a
proper Notice of Conversion/Continuation as hereinafter described, elect
(A) to continue all or any part of a LIBOR Loan by selecting a new Interest
Period therefor, to commence on the last day of the immediately preceding
Interest Period, or (B) to convert all or any part of a Revolver Loan of
one Type into a Revolver Loan of another Type; provided, however, that no
outstanding Revolver Loans may be converted into or continued as LIBOR
Loans when any Default or Event of Default exists. Any conversion of a
LIBOR Loan into a Base Rate Loan shall be made on the last day of the
Interest Period for such LIBOR Loan. Any conversion or continuation made
with respect to less than the entire outstanding balance of the Revolver
Loans, must be allocated among Lenders on a Pro Rata basis, and the
Interest Period for Revolver Loans converted into or continued as LIBOR
Loans shall be coterminous for each Lender.
(ii) Whenever Borrower desires to convert or continue Revolver
Loans under Section 2.1.2(i), Borrower shall give Agent written notice (or
telephonic notice promptly confirmed in writing, which shall be deemed to
include electronic mail or telecopier) substantially in the form of Exhibit
B, signed by an authorized officer of Borrower, before 12:00 noon on the
requested conversion date, in the case of a conversion into Base Rate
Loans, and at least 3 Business Days before the requested conversion or
continuation date, in the case of a conversion into or continuation of
LIBOR Loans. Promptly after receipt of a Notice of
Conversion/Continuation, Agent shall notify each Lender in writing of the
proposed conversion or continuation. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify the
aggregate principal amount of the Revolver Loans to be converted or
continued, the date of such conversion or continuation (which shall be a
Business Day) and whether the Revolver Loans are being converted into or
continued as LIBOR Loans (and, if so, the duration of the Interest Period
to be applicable thereto) or Base Rate Loans. If, upon the expiration of
any Interest Period in respect of any LIBOR Loans, Borrower shall have
failed to deliver the Notice of Conversion/Continuation, Borrower shall be
deemed to have elected to convert such LIBOR Loans to Base Rate Loans.
2.1.3. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of LIBOR Loans, Borrower
shall select an interest period (each an "Interest Period") to be applicable to
such LIBOR Loan, which interest period shall commence on the date such LIBOR
Loan is made and shall end on a numerically corresponding day in the first,
second, third or sixth month thereafter; provided, however, that:
(i) the initial Interest Period for a LIBOR Loan shall commence
on the date of such Borrowing (including the date of any conversion from a
Revolver Loan of another Type) and each Interest Period occurring
thereafter in respect of such Revolver Loan shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect of
LIBOR Loans would otherwise expire
9
on a day which 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 next preceding Business Day;
(iii) any Interest Period that begins on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period shall expire on the last Business Day of such calendar
month; and
(iv) no Interest Period shall extend beyond the last day of the
Term.
2.1.4. Interest Rate Not Ascertainable. If Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Adjusted LIBOR
Rate for any Interest Period, by reason of any changes arising after the date of
this Agreement affecting the London interbank market or any Lender's or Bank's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Adjusted LIBOR Rate, then, and in any such event, Agent shall forthwith give
notice (by telephone confirmed in writing) to Borrower of such determination.
Until Agent notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the obligation of Lenders to make
LIBOR Loans shall be suspended, and such affected Revolver Loans then
outstanding shall, at the end of the then applicable Interest Period or at such
earlier time as may be required by Applicable Law, bear the same interest as
Base Rate Loans.
2.1.5. Default Rate of Interest. Borrower shall pay interest (before
as well as after entry of judgment thereon, to the extent permitted by
Applicable Law) at a rate per annum equal to the Default Rate (i) with respect
to the principal amount of any portion of the Obligations (and, to the extent
permitted by Applicable Law, all past due interest) that is not paid on the due
date thereof (whether due at stated maturity, on demand, upon acceleration or
otherwise) until paid in full; (ii) with respect to the principal amount of all
of the Obligations (and, to the extent permitted by Applicable Law, all past due
interest) upon the earlier to occur of (x) Borrower's receipt of notice from
Agent of the Required Lenders' election to charge the Default Rate based upon
the existence of any Event of Default (which notice Agent shall send only with
the consent or at the direction of the Required Lenders), whether or not
acceleration or demand for payment of the Obligations has been made, or (y) the
commencement by or against Borrower of an Insolvency Proceeding whether or not
under the circumstances described in clauses (i) or (ii) hereof Agent elects to
accelerate the maturity or demand payment of any of the Obligations; and (iii)
with respect to the principal amount of any Out-of-Formula Loans, whether or not
demand for payment thereof has been made by Agent. To the fullest extent
permitted by Applicable Law, the Default Rate shall apply and accrue on any
judgment entered with respect to any of the Obligations and to the unpaid
principal amount of the Obligations during any Insolvency Proceeding of
Borrower. Borrower acknowledges that the cost and expense to Agent and each
Lender attendant upon the occurrence of an Event of Default are difficult to
ascertain or estimate and that the Default Rate is a fair and reasonable
estimate to compensate Agent and Lenders for such added cost and expense.
10
2.2. Fees. In consideration of Lenders' establishment of the Revolver
Commitments in favor of Borrower and Agent's agreement to serve as collateral
and administrative agent hereunder, Borrower agrees to pay the following fees:
2.2.1. Closing Fee. Borrower shall pay to Initial Lender a closing
fee in the amount set forth in the Fee Letter, which fee shall be paid
concurrently with the initial Revolver Loan hereunder.
2.2.2. Unused Line Fee. Borrower shall pay to Agent for the Pro Rata
benefit of Lenders a fee (the "Unused Line Fee") equal to the Applicable Margin
for the Unused Line Fee multiplied by the amount by which the Average Revolver
Loan Balance for any Fiscal Quarter (or portion thereof that the Revolver
Commitments are in effect) is less than the aggregate amount of the Revolver
Commitments at the beginning of such Fiscal Quarter, such fee to be paid in
arrears on the first day of the following Fiscal Quarter; but if the Revolver
Commitments are terminated on a day other than the first day of a Fiscal Quarter
then any such fee payable for the Fiscal Quarter in which termination shall
occur, prorated for the portion of such Fiscal Quarter prior to such
termination, shall be paid on the effective date of such termination.
2.2.3 LC Facility Fees. Borrower shall pay (i) to Agent, through its
Treasury and International Services Group, for the ratable account of each
Lender for Letters of Credit, the Applicable Margin in effect for LIBOR Loans on
a per annum basis based on the average amount available to be drawn under all
Letters of Credit outstanding, payable monthly, in arrears, on the first
Business Day of the following month, and (ii) to Agent, through its Treasury and
International Services Group, for its own account a Letter of Credit processing
fee of 0.25% per annum based on the average amount available to be drawn under
all of such Letters of Credit outstanding, payable monthly, in arrears, on the
first Business Day of the following month, and (iii) to Bank for its own account
all normal and customary charges associated with the issuance, amending,
negotiating, processing and administration of Letters of Credit.
2.2.4. Audit and Appraisal Fees. Borrower shall reimburse Agent and
Lenders for all reasonable costs and expenses incurred by Agent and Lenders in
connection with audits and appraisals of any Obligor's books and records and
such other matters pertaining to any Obligor or any Collateral as Agent or the
Required Lenders shall deem appropriate and shall pay to Agent $650 per day for
each day that an employee or agent of Agent shall be engaged in an examination
or review of Borrower's books and records; provided, however, that so long as no
Event of Default exists, Borrower shall not be obligated to reimburse Agent and
Lenders for more than 2 audits per calender year. On the Closing Date, Borrower
shall pay to Fleet all out-of-pocket expenses incurred by Fleet in connection
with the audit and appraisal of Borrower's business and Properties prior to the
Closing Date.
2.2.5. Agency Fee. In consideration of Fleet's service as Agent
hereunder, Borrower shall pay to Fleet an agency fee in the amount and on the
dates specified in the Fee Letter.
2.2.6. General Provisions. All fees shall be fully earned by the
identified recipient thereof pursuant to the foregoing provisions of this
Agreement and the Fee Letter on
11
the due date thereof (and, in the case of Letters of Credit, upon each issuance,
renewal or extension of such Letter of Credit) and, except as otherwise set
forth herein or required by Applicable Law, shall not be subject to rebate,
refund or proration. All fees provided for in Section 2.2 are and shall be
deemed to be compensation for services and are not, and shall not be deemed to
be, interest or any other charge for the use, forbearance or detention of money.
2.3. Computation of Interest and Fees. All fees and other charges provided
for in this Agreement that are calculated as a per annum percentage of any
amount and all interest shall be calculated daily and shall be computed on the
actual number of days elapsed over a year of 360 days. For purposes of computing
interest and other charges hereunder, all Payment Items and other forms of
payment received by Agent shall be deemed applied by Agent on account of the
Obligations (subject to final payment of such items) on the Business Day that
Agent receives such items in immediately available funds in the Payment Account,
and Agent shall be deemed to have received such Payment Item on the date
specified in Section 4.7 hereof.
2.4. Reimbursement Obligations.
2.4.1. Borrower shall reimburse Agent and, during any period that an
Event of Default then exists, each Lender, for all reasonable legal fees
actually incurred and all accounting, appraisal and other reasonable fees and
expenses incurred by Agent or any Lender in connection with (i) the negotiation
and preparation of any of the Loan Documents, any amendment or modification
thereto, any waiver of any Default or Event of Default thereunder, or any
restructuring or forbearance with respect thereto; (ii) the administration of
the Loan Documents and the transactions contemplated thereby, to the extent that
such fees and expenses are expressly provided for in this Agreement or any of
the other Loan Documents; (iii) action taken to perfect or maintain the
perfection or priority of any of Agent's Liens with respect to any of the
Collateral; (iv) any inspection of or audits conducted with respect to any of
Borrower's books and records or any of the Collateral; (v) any effort to verify,
protect, preserve, or restore any of the Collateral or to collect, sell,
liquidate or otherwise dispose of or realize upon any of the Collateral; (vi)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by or against Agent, any Lender, any Obligor or any other Person) in any way
arising out of or relating to any of the Collateral (or the validity, perfection
or priority of any of Agent's Liens thereon), any of the Loan Documents or the
validity, allowance or amount of any of the Obligations; (vii) the protection or
enforcement or any rights or remedies of Agent or any Lender in any Insolvency
Proceeding; and (viii) any other action taken by Agent or any Lender to enforce
any of the rights or remedies of Agent or such Lender against any Obligor or any
Account Debtors to enforce collection of any of the Obligations or payments with
respect to any of the Collateral. All amounts chargeable to Borrower under this
Section 2.4 shall constitute Obligations that are secured by all of the
Collateral and shall be payable on demand to Agent. Borrower shall also
reimburse Agent for expenses incurred by Agent in its administration of any of
the Collateral to the extent and in the manner provided in Section 7 hereof or
in any of the other Loan Documents. The foregoing shall be in addition to, and
shall not be construed to limit, any other provision of any of the Loan
Documents regarding the reimbursement by Borrower of costs, expenses or
liabilities suffered or incurred by Agent or any Lender.
12
2.4.2. Any indemnity, guaranty or other assurance of payment or
performance provided by Agent or (with the consent of Agent) any Lender to Bank
or any other Person with respect to Cash Management Agreements, Interest Rate
Contracts or Letters of Credit, together with any payment made or liability
incurred by Agent or any Lender in connection therewith, shall constitute
Obligations that are secured by the Collateral and Borrower shall repay, on
demand, any amount so paid or any liability incurred by Agent or any Lender in
connection with any such indemnity, guaranty or assurance. Nothing herein shall
be construed to impose upon Agent or any Lender any obligation to provide any
such indemnity, guaranty or assurance.
2.5. Bank Charges. Borrower shall pay to Agent, on demand, any and
all fees, costs or expenses which Agent or any Lender pays to a bank or other
similar institution (including any fees paid by Agent or any Lender to any
Participant) arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower by Agent or any Lender of proceeds of
Revolver Loans made by Lenders to Borrower pursuant to this Agreement and (ii)
the depositing for collection by Agent or any Lender of any Payment Item
received or delivered to Agent or any Lender on account of the Obligations.
Borrower acknowledges and agrees that Agent may charge such costs, fees and
expenses to Borrower based upon Agent's good faith estimate of such costs, fees
and expenses as they are incurred by Agent or any Lender.
2.6. Illegality. Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (i) any change in any law or regulation or in
the interpretation thereof by any Governmental Authority charged with the
administration thereof shall make it unlawful for a Lender to make or maintain a
LIBOR Loan or to give effect to its obligations as contemplated hereby with
respect to a LIBOR Loan or (ii) at any time such Lender determines that the
making or continuance of any LIBOR Loan has become impracticable as a result of
a contingency occurring after the date hereof which adversely affects the London
interbank market or the position of such Lender in such market, then such Lender
shall give after such determination Agent and Borrower notice thereof and may
thereafter (1) declare that LIBOR Loans will not thereafter be made by such
Lender, whereupon any request by a Borrower for a LIBOR Loan shall be deemed a
request for a Base Rate Loan unless such Lender's declaration shall be
subsequently withdrawn (which declaration shall be withdrawn promptly after the
cessation of the circumstances described in clause (i) or (ii) above); and (2)
require that all outstanding LIBOR Loans made by such Lender be converted to
Base Rate Loans, under the circumstances of clause (i) or (ii) of this Section
2.6 insofar as such Lender determines the continuance of LIBOR Loans to be
impracticable, in which event all such LIBOR Loans shall be converted
automatically to Base Rate Loans as of the date of Borrower's receipt of the
aforesaid notice from such Lender.
2.7. Increased Costs. If, by reason of (a) the introduction after the
date hereof of or any change (including any change by way of imposition or
increase of Statutory Reserves or other reserve requirements) in or in the
interpretation of any law or regulation, or (b) the compliance with any
guideline or request from any central bank or other Governmental Authority or
quasi-Governmental Authority exercising control over banks or financial
institutions generally (whether or not having the force of law):
13
(i) any Lender shall be subject after the date hereof to any
Taxes, duty or other charge with respect to any LIBOR Loan or its
obligation to make LIBOR Loans, or a change shall result in the basis of
taxation of payment to any Lender of the principal of or interest on its
LIBOR Loans or its obligation to make LIBOR Loans (except for changes in
the rate of Tax on the overall net income of such Lender imposed by the
jurisdiction in which such Lender's principal executive office or
applicable lending office is located); or
(ii) any reserve (including any imposed by the Board of
Governors), special deposits or similar requirement against assets of,
deposits with or for the account of, or credit extended by, Lender shall be
imposed or deemed applicable or any other condition affecting its LIBOR
Loans or its obligation to make LIBOR Loans shall be imposed on such Lender
or the London interbank market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining LIBOR Loans (except to the
extent already included in the determination of the applicable Adjusted LIBOR
Rate for LIBOR Loans), or there shall be a reduction in the amount received or
receivable by such Lender, then such Lender shall, promptly after determining
the existence or amount of any such increased costs for which such Lender seeks
payment hereunder, give Borrower notice thereof and Borrower shall from time to
time, upon written notice from and demand by such Lender (with a copy of such
notice and demand to Agent), pay to Agent for the account of such Lender, within
5 Business Days after the date specified in such notice and demand, an
additional amount sufficient to indemnify such Lender against such increased
costs, to the extent that such increased costs arose, were incurred or
attributable to such Lender or such Lender received notice of such increased
costs during the 90-day period immediately preceding Borrower's receipt of such
notice. A certificate as to the amount of such increased cost, submitted to
Borrower by such Lender, shall be final, conclusive and binding for all
purposes, absent manifest error.
If any Lender shall advise Agent at any time that, because of the
circumstances described hereinabove in this Section 2.7 or any other
circumstances arising after the date of this Agreement affecting such Lender or
the London interbank market or such Lender's or Bank's position in such market,
the Adjusted LIBOR Rate, as determined by Agent, will not adequately and fairly
reflect the cost to such Lender of funding LIBOR Loans, then, and in any such
event:
(i) Agent shall forthwith give notice (by telephone confirmed in
writing) to Borrower and Lenders of such event;
(ii) Borrower's right to request and such Lender's obligation to
make LIBOR Loans shall be immediately suspended and Borrower's right to
continue a LIBOR Loan as such beyond the then applicable Interest Period
shall also be suspended, until each condition giving rise to such
suspension no longer exists; and
(iii) such Lender shall make a Base Rate Loan as part of the
requested Borrowing of LIBOR Loans, which Base Rate Loan shall, for all
purposes, be considered part of such Borrowing.
14
For purposes of this Section 2.7, all references to a Lender shall be
deemed to include any bank holding company or bank parent of such Lender.
2.8. Capital Adequacy. If any Lender determines that after the date
hereof (a) the adoption of any Applicable Law regarding capital requirements for
banks or bank holding companies or the subsidiaries thereof, (b) any change in
the interpretation or administration of any such Applicable Law by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or (c) compliance by such Lender or
its holding company with any request or directive of any such Governmental
Authority, central bank or comparable agency regarding capital adequacy (whether
or not having the force of law), has the effect of reducing the return on such
Lender's capital to a level below that which such Lender could have achieved
(taking into consideration such Lender's and its holding company's policies with
respect to capital adequacy immediately before such adoption, change or
compliance and assuming that such Lender's capital was fully utilized prior to
such adoption, change or compliance) but for such adoption, change or compliance
as a consequence of such Lender's commitment to make the Revolver Loans pursuant
hereto by any amount deemed by such Lender to be material:
(i) Agent shall promptly, after its receipt of a certificate from
such Lender setting forth such Lender's determination of such occurrence,
give notice thereof to Borrower and Lenders; and
(ii) Borrower shall pay to Agent, for the account of such Lender,
as an additional fee from time to time, on demand, such amount as such
Lender certifies to be the amount reasonably calculated to compensate such
Lender for such reduction, to the extent that such reduction occurred or
was attributable to such Lender, or such Lender received notice of, during
the 90-day period immediately preceding Borrower's receipt of such notice
from Agent.
A certificate of such Lender claiming entitlement to compensation as set
forth above will be conclusive in the absence of manifest error. Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to such Lender
(including the basis for such Lender's determination of such amount), and the
method by which such amounts were determined. In determining such amount, such
Lender may use any reasonable averaging and attribution method. For purposes of
this Section 2.8 all references to a Lender shall be deemed to include any bank
holding company or bank parent of such Lender.
2.9. Funding Losses. If for any reason (other than due to a default
by a Lender or as a result of a Lender's refusal to honor a LIBOR Loan request
due to circumstances described in Section 2.6 or 2.7 hereof) a Borrowing of, or
conversion to or continuation of, LIBOR Loans does not occur on the date
specified therefor in a Notice of Borrowing or Notice of Conversion/
Continuation (whether or not withdrawn), or if any repayment (including any
conversions pursuant to Section 2.1.2 hereof) of any of its LIBOR Loans occurs
on a date that is not the last day of an Interest Period applicable thereto, or
if for any reason Borrower defaults in its
15
obligation to repay LIBOR Loans when required by the terms of this Agreement,
then Borrower shall pay to Agent, for the ratable benefit of the affected
Lenders, within 10 days after Agent's or an affected Lender's demand therefor,
an amount (if a positive number) computed pursuant to the following formula:
L= [R-A]xPxD
---------
360
where
L= amount payable
R= interest rate applicable to the LIBOR Loan unborrowed
or prepaid
A= Adjusted LIBOR Rate for an Interest Period maturing on
or nearest the last day of the then applicable or
requested Interest Period for such LIBOR Loan and in
approximately the same amount as such LIBOR Loan
P= the amount of principal paid or the amount of the LIBOR
Loan requested or to have been continued or converted
D= the number of days remaining in the Interest Period as
of the date of such prepayment or the number of days in
the requested Interest Period
Borrower shall pay such amount upon presentation by Agent of a statement setting
forth the amount and Agent's calculation thereof pursuant hereto, which
statement shall be deemed true and correct absent manifest error. For purposes
of this Section 2.9, all references to a Lender shall be deemed to include any
bank holding company or bank parent of such Lender.
2.10. Maximum Interest. Regardless of any provision contained in any
of the Loan Documents, in no contingency or event whatsoever shall the aggregate
of all amounts that are contracted for, charged or received by Agent and Lenders
pursuant to the terms of this Agreement or any of the other Loan Documents and
that are deemed interest under Applicable Law exceed the highest rate
permissible under any Applicable Law. No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other Loan Documents or
the exercise by Agent of the right to accelerate the payment or the maturity of
all or any portion of the Obligations, or the exercise of any option whatsoever
contained in any of the Loan Documents, or the prepayment by Borrower of any of
the Obligations, or the occurrence of any contingency whatsoever, shall entitle
Agent or any Lender to charge or receive in any event, interest or any charges,
amounts, premiums or fees deemed interest by Applicable Law (such interest,
charges, amounts, premiums and fees referred to herein collectively as
"Interest") in excess of the Maximum Rate and in no event shall Borrower be
obligated to pay Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay Interest
exceeding the Maximum Rate shall be without binding force or effect, at law or
in equity, to the extent only of the excess of Interest over such Maximum Rate.
If any Interest is charged or received in excess of the Maximum Rate ("Excess"),
Borrower acknowledges and stipulates that any such charge or receipt shall be
the result of an accident and bona fide error,
16
and such Excess, to the extent received, shall be applied first to reduce the
principal Obligations and the balance, if any, returned to Borrower, it being
the intent of the parties hereto not to enter into a usurious or otherwise
illegal relationship. The right to accelerate the maturity of any of the
Obligations does not include the right to accelerate any Interest that has not
otherwise accrued on the date of such acceleration, and Agent and Lenders do not
intend to collect any unearned Interest in the event of any such acceleration.
Borrower recognizes that, with fluctuations in the rates of interest set forth
in Section 2.1.1 of this Agreement, and the Maximum Rate, such an unintentional
result could inadvertently occur. All monies paid to Agent or any Lender
hereunder or under any of the other Loan Documents, whether at maturity or by
prepayment, shall be subject to any rebate of unearned Interest as and to the
extent required by Applicable Law. By the execution of this Agreement, Borrower
covenants that (i) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Agent or any Lender, based
in whole or in part upon contracting for, charging or receiving any Interest in
excess of the Maximum Rate. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by Agent or any Lender, all
Interest at any time contracted for, charged or received from Borrower in
connection with any of the Loan Documents shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Obligations. Borrower, Agent and Lenders shall,
to the maximum extent permitted under Applicable Law, (i) characterize any non-
principal payment as an expense, fee or premium rather than as Interest and (ii)
exclude voluntary prepayments and the effects thereof. The provisions of this
Section 2.10 shall be deemed to be incorporated into every Loan Document
(whether or not any provision of this Section is referred to therein). All such
Loan Documents and communications relating to any Interest owed by Borrower and
all figures set forth therein shall, for the sole purpose of computing the
extent of Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section 2.10.
SECTION 3. LOAN ADMINISTRATION
3.1. Manner of Borrowing and Funding Revolver Loans. Borrowings under
the Revolver Commitments established pursuant to Section 1.1 hereof shall be
made and funded as follows:
3.1.1. Notice of Borrowing.
(i) Whenever Borrower desires to make a Borrowing under Section
1.1 of this Agreement (other than a Borrowing resulting from a conversion
or continuation pursuant to Section 2.1.2), Borrower shall give Agent prior
written notice (or telephonic notice promptly confirmed in writing) of such
Borrowing request (a "Notice of Borrowing"), which shall be in the form of
Exhibit C annexed hereto and signed by an authorized officer of Borrower.
Such Notice of Borrowing shall be given by Borrower no later than 12:00
noon at the office of Agent designated by Agent from time to time (a) by
12:00 noon on the Business Day of the requested funding date of such
Borrowing, in the case of Base Rate Loans, and (b) at least 3 Business Days
prior to the requested funding date of such Borrowing, in the case of LIBOR
Loans. Notices
17
received after 12:00 noon shall be deemed received on the next Business
Day. The Revolver Loans made by each Lender on the Closing Date shall be in
excess of $250,000 and shall be made as Base Rate Loans and thereafter may
be made or continued as or converted into Base Rate Loans or LIBOR Loans.
Each Notice of Borrowing (or telephonic notice thereof) shall be
irrevocable and shall specify (a) the principal amount of the Borrowing,
(b) the date of Borrowing (which shall be a Business Day), (c) whether the
Borrowing is to consist of Base Rate Loans or LIBOR Loans, (d) in the case
of LIBOR Loans, the duration of the Interest Period to be applicable
thereto, and (e) the account of Borrower to which the proceeds of such
Borrowing are to be disbursed. Borrower may not request any LIBOR Loans if
a Default or Event of Default exists. The requirement that a Notice of
Borrowing be in writing (or confirmed in writing) shall be deemed satisfied
if Borrower gives or confirms such Notice of Borrowing via electronic
transmission, which shall be deemed to include electronic mail or
telecopier.
(ii) 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 Documents with respect to the Obligations (whether as
principal, accrued interest, fees or other charges, including the repayment
of any LC Outstandings) shall be deemed irrevocably to be a request
(without any requirement for the submission of a Notice of Borrowing) for
Revolver Loans on the due date of, and in an aggregate amount required to
pay, such Obligations, and the proceeds of such Revolver Loans may be
disbursed by way of direct payment of the relevant Obligation and shall
bear interest as Base Rate Loans, and Agent shall use reasonable efforts to
give Borrower notice promptly after (and in any event not later than the
next monthly statement from Agent to Borrower) any Borrowing under this
clause (ii) that is used to pay any expenses due under this Agreement.
Neither Agent nor any Lender shall have any obligation to Borrower to honor
any deemed request for a Revolver Loan after the Commitment Termination
Date, when an Out-of-Formula Condition exists or would result therefrom, or
when any condition precedent set forth in Section 10 hereof is not
satisfied, but may do so in their discretion and without regard to the
existence of, and without being deemed to have waived, any Default or Event
of Default and regardless of whether such Revolver Loan is funded after the
Commitment Termination Date.
(iii) If Borrower elects to establish a Controlled Disbursement
Account with Bank or any Affiliate of Bank, then the presentation for
payment by Bank of any check or other item of payment drawn on the
Controlled Disbursement Account at a time when there are insufficient funds
in such account to cover such check shall be deemed irrevocably to be a
request (without any requirement for the submission of a Notice of
Borrowing) for Revolver Loans on the date of such presentation and in any
amount equal to the aggregate amount of the items presented for payment,
and the proceeds of such Revolver Loans may be disbursed to the Controlled
Disbursement Account and shall bear interest as Base Rate Loans. Neither
Agent nor any Lender shall have any obligation to honor any deemed request
for a Revolver Loan after the Commitment Termination Date or when an Out-
of-Formula Condition exists or would result therefrom or when any condition
precedent in Section 10 hereof is not satisfied, but may do so in its
discretion and without regard to the existence of, and without being deemed
to have waived, any
18
Default or Event of Default and regardless of whether such Revolver Loan is
funded after the Commitment Termination Date.
(iv) As an accommodation to Borrower, Agent and Lenders may
permit telephonic requests for Borrowings and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower;
provided, however, that Borrower shall confirm each such telephonic request
for a Borrowing of LIBOR Loans by delivery of the required Notice of
Borrowing to Agent by facsimile transmission promptly, but in no event
later than 5:00 p.m. on the same day. Neither Agent nor any Lender shall
have any liability to Borrower for any loss or damage suffered by Borrower
as a result of Agent's or any Lender's honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any
reports communicated to it telephonically or electronically and purporting
to have been sent to Agent or Lenders by Borrower and neither Agent nor any
Lender shall have any duty to verify the origin of any such communication
or the identity or authority of the Person sending it.
3.1.2. Fundings by Lenders. Subject to its receipt of notice from
Agent of a Notice of Borrowing as provided in Section 3.1.1(i) (except in the
case of a deemed request by Borrower for a Revolver Loan as provided in Sections
3.1.1(ii) or (iii) or 3.1.3(ii) hereof, in which event no Notice of Borrowing
need be submitted), each Lender shall timely honor its Revolver Commitment by
funding its Pro Rata share of each Borrowing of Revolver Loans that is properly
requested by Borrower and that Borrower is entitled to receive under the Loan
Agreement. Agent shall endeavor to notify Lenders of each Notice of Borrowing
(or deemed request for a Borrowing pursuant to Section 3.1.1(ii) or (iii)
hereof), by 12:00 noon on the proposed funding date (in the case of Base Rate
Loans) or by 3:00 p.m. at least 2 Business Days before the proposed funding date
(in the case of LIBOR Loans). Each Lender shall deposit with Agent an amount
equal to its Pro Rata share of the Borrowing requested or deemed requested by
Borrower at Agent's designated bank in immediately available funds not later
than 2:00 p.m. on the date of funding of such Borrowing, unless Agent's notice
to Lenders is received after 12:00 noon on the proposed funding date of a Base
Rate Loan, in which event Lenders shall deposit with Agent their respective Pro
Rata shares of the requested Borrowing on or before 11:00 a.m. of the next
Business Day. Subject to its receipt of such amounts from Lenders, Agent shall
make the proceeds of the Revolver Loans received by it available to Borrower by
disbursing such proceeds in accordance with Borrower's disbursement instructions
set forth in the applicable Notice of Borrowing. Unless Agent shall have been
notified in writing by a Lender prior to the proposed time of funding that such
Lender does not intend to deposit with Agent an amount equal such Lender's Pro
Rata share of the requested Borrowing (or deemed request for a Borrowing
pursuant to Section 3.1.1(ii) or (iii) hereof), Agent may assume that such
Lender has deposited or promptly will deposit its share with Agent and Agent may
in its discretion disburse a corresponding amount to Borrower on the applicable
funding date. If a Lender's Pro Rata share of such Borrowing is not in fact
deposited with Agent, then, if Agent has disbursed to Borrower an amount
corresponding to such share, then such Lender agrees to pay, and in addition
Borrower agrees to repay, to Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from the date such amount
is disbursed by Agent to or for the benefit of Borrower until the date such
amount is paid or repaid to Agent, (a) in the case of Borrower, at the interest
rate applicable to such Borrowing and (b) in the case of
19
such Lender, at the Federal Funds Rate. If such Lender repays to Agent such
corresponding amount, such amount so repaid shall constitute a Revolver Loan,
and if both such Lender and Borrower shall have repaid such corresponding
amount, Agent shall promptly return to Borrower such corresponding amount in
same day funds. A notice of Agent submitted to any Lender with respect to
amounts owing under this Section 3.1.2 shall be conclusive, absent manifest
error.
3.1.3. Settlement and Settlement Loans.
(i) In order to facilitate the administration of the Revolver
Loans under this Agreement, Lenders agree (which agreement shall not be for
the benefit of or enforceable by Borrower) that settlement among them with
respect to the Revolver Loans may take place on a periodic basis on dates
determined from time to time by Agent (each a "Settlement Date"), which may
occur before or after the occurrence or during the continuance of a Default
or Event of Default and whether or not all of the conditions set forth in
Section 10 of this Agreement have been met. On each Settlement Date,
payment shall be made by or to each Lender in the manner provided herein
and in accordance with the Settlement Report delivered by Agent to Lenders
with respect to such Settlement Date so that, as of each Settlement Date
and after giving effect to the transaction to take place on such Settlement
Date, each Lender shall hold its Pro Rata share of all Revolver Loans and
participations in LC Outstandings then outstanding. Agent shall request
settlement with the Lenders on a basis not less frequently than once every
5 Business Days.
(ii) Between Settlement Dates, Agent may request Fleet to
advance, and Fleet may, but shall in no event be obligated to, advance to
Borrower out of Fleet's own funds the entire principal amount of any
Borrowing of Revolver Loans that are Base Rate Loans requested or deemed
requested pursuant to this Agreement (any such Revolver Loan funded
exclusively by Fleet being referred to as a "Settlement Loan"). Each
Settlement Loan shall constitute a Revolver Loan hereunder and shall be
subject to all of the terms, conditions and security applicable to other
Revolver Loans, except that all payments thereon shall be payable to Fleet
solely for its own account. The obligation of Borrower to repay such
Settlement Loans to Fleet shall be evidenced by the Settlement Note. Agent
shall not request Fleet to make any Settlement Loan if (A) Agent shall have
received written notice from any Lender that one or more of the applicable
conditions precedent set forth in Section 10 hereof will not be satisfied
on the requested funding date for the applicable Borrowing or (B) the
requested Borrowing would exceed the amount of Availability on the funding
date or would cause the then outstanding principal balance of all
Settlement Loans to exceed $7,500,000. Fleet shall not be required to
determine whether the applicable conditions precedent set forth in Section
10 hereof have been satisfied or the requested Borrowing would exceed the
amount of Availability on the funding date applicable thereto prior to
making, in its sole discretion, any Settlement Loan. On each Settlement
Date, or, if earlier, upon demand by Agent for payment thereof, the then
outstanding Settlement Loans shall be immediately due and payable. As
provided in Section 3.1.1(ii), Borrower shall be deemed to have requested
(without the necessity of submitting any Notice of Borrowing) Revolver
Loans to be made on each Settlement Date in the amount of all outstanding
Settlement Loans and to have
20
Agent cause the proceeds of such Revolver Loans to be applied to the
repayment of such Settlement Loans and interest accrued thereon. Agent
shall notify the Lenders of the outstanding balance of Revolver Loans prior
to 12:00 noon on each Settlement Date and each Lender (other than Fleet)
shall deposit with Agent (without setoff, counterclaim or reduction of any
kind) an amount equal to its Pro Rata share of the amount of Revolver Loans
deemed requested in immediately available funds not later than 2:00 p.m. on
such Settlement Date, and without regard to whether any of the conditions
precedent set forth in Section 10 hereof are satisfied or the Commitment
Termination Date has occurred. If as the result of the commencement by or
against Borrower of any Insolvency Proceeding or otherwise any Settlement
Loan may not be repaid by the funding by Lenders of Revolver Loans, then
each Lender (other than Fleet) shall be deemed to have purchased a
participating interest in any unpaid Settlement Loan in an amount equal to
such Lender's Pro Rata share of such Settlement Loan and shall transfer to
Fleet, in immediately available funds not later than the 2nd Business Day
after Fleet's request therefor, the amount of such Lender's participation.
The proceeds of Settlement Loans may be used solely for purposes for which
Revolver Loans generally may be used in accordance with Section 1.1.3
hereof. If any amounts received by Fleet in respect of any Settlement Loans
are later required to be returned or repaid by Fleet to Borrower or any
other Obligor or their respective representatives or successors-in-
interest, whether by court order, settlement or otherwise, the other
Lenders shall, upon demand by Fleet with notice to Agent, pay to Agent for
the account of Fleet, an amount equal to each other Lender's Pro Rata share
of all such amounts required to be returned by Fleet.
3.1.4. Disbursement Authorization. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each Revolver Loan requested, or
deemed to be requested pursuant to Section 3.1.1 or Section 3.1.3(ii), as
follows: (i) the proceeds of each Revolver Loan requested under Section
3.1.1(i) shall be disbursed by Agent in accordance with the terms of the written
disbursement letter from Borrower in the case of the initial Borrowing, and, in
the case of each subsequent Borrowing, by wire transfer to such bank account as
may be agreed upon by Borrower and Agent from time to time or elsewhere if
pursuant to a written direction from Borrower; and (ii) the proceeds of each
Revolver Loan requested under Section 3.1.1(ii) or Section 3.1.3(ii) shall be
disbursed by Agent by way of direct payment of the relevant interest or other
Obligation.
3.2. Defaulting Lender. If any Lender shall, at any time, fail to make
any payment to Agent or Fleet that is required hereunder, Agent may, but shall
not be required to, retain payments that would otherwise be made to such
defaulting Lender hereunder and apply such payments to such defaulting Lender's
defaulted obligations hereunder, at such time, and in such order, as Agent may
elect in its sole discretion. With respect to the payment of any funds from
Agent to a Lender or from a Lender to Agent, the party failing to make the full
payment when due pursuant to the terms hereof shall, upon demand by the other
party, pay such amount together with interest on such amount at the Federal
Funds Rate. The failure of any Lender to fund its portion of any Revolver Loan
or payment in respect of an LC Obligation shall not relieve any other Lender of
its obligation, if any, to fund its portion of the Revolver Loan or payment in
respect of an LC Obligation on the date of Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make any Revolver Loan or
payment in respect
21
of an LC Obligation to be made by such Lender on the date of any Borrowing.
Solely as among the Lenders and solely for purposes of voting or consenting to
matters with respect to any of the Loan Documents, Collateral or any Obligations
and determining a defaulting Lender's Pro Rata share of payments and proceeds of
Collateral pending such defaulting Lender's cure of its defaults hereunder, a
defaulting Lender shall not be deemed to be a "Lender" and such Lender's
Revolver Commitment shall be deemed to be zero (0). The provisions of this
Section 3.2 shall be solely for the benefit of Agent and Lenders and may not be
enforced by Borrower.
3.3. Special Provisions Governing LIBOR Loans.
3.3.1. Number of LIBOR Loans. In no event may the number of
Borrowings of LIBOR Loans outstanding at any time to any Lender exceed 6.
3.3.2 Minimum Amounts. Each Borrowing of LIBOR Loans pursuant to
Section 3.1.1(i), and each continuation of or conversion to LIBOR Loans pursuant
to Section 2.1.2 hereof, shall be in a minimum amount of $1,000,000 and integral
multiples of $250,000 in excess of that amount.
3.3.3 LIBOR Lending Office. Each Lender's initial LIBOR Lending
Office is set forth opposite its name on the signature pages hereof. Each
Lender shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Loans to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of Borrower for increased costs or expenses resulting solely from such
designation or transfer. Increased costs for expenses resulting from a change
in Applicable Law occurring subsequent to any such designation or transfer shall
be deemed not to result solely from such designation or transfer. If any Lender
requests compensation under Section 2.7, or if Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 4.8, then such Lender shall use reasonable
efforts to designate a different LIBOR Lending Office for funding or booking its
Revolver Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or Affiliates if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.7 or 4.8, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
3.3.4 Funding of LIBOR Loans. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBOR Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such LIBOR Loans; provided,
however, that such LIBOR Loans shall nonetheless be deemed to have been made and
to be held by such Lender, and the obligation of Borrower to repay such LIBOR
Loans shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility. The calculation of all
amounts payable to Lender under Section 2.7 and 2.9 shall be made as if each
Lender had actually funded or committed to fund its LIBOR Loan through the
purchase of an underlying deposit in an amount
22
equal to the amount of such LIBOR Loan and having a maturity comparable to the
relevant Interest Period for such LIBOR Loans; provided, however, each Lender
may fund its LIBOR Loans in any manner it deems fit and the foregoing
presumption shall be utilized only for the calculation of amounts payable under
Section 2.7 and Section 2.9.
3.4. All Revolver Loans to Constitute One Obligation. The Revolver
Loans shall constitute one general Obligation of Borrower and (unless otherwise
expressly provided in the Security Documents) shall be secured by Agent's Lien
upon all of the Collateral; provided, however, that Agent and each Lender shall
be deemed to be a creditor of Borrower and the holder of a separate claim
against Borrower to the extent of any Obligations owed by Borrower to Agent or
such Lender.
SECTION 4. PAYMENTS
4.1. General Payment Provisions. All payments (including all prepayments)
of principal of and interest on the Revolver Loans, LC Outstandings and other
Obligations that are payable to Agent or any Lender shall be made to Agent in
Dollars without any offset or counterclaim and free and clear of (and without
deduction for, subject to the provisions of Section 4.8 and 4.9), any present or
future Taxes, and, with respect to payments made other than by application of
balances in the Payment Account, in immediately available funds not later than
12:00 noon on the due date (and payment made after such time on the due date to
be deemed to have been made on the next succeeding Business Day). All payments
received by Agent shall be distributed by Agent in accordance with Section 4.6
hereof, subject to the rights of offset that Agent may have as to amounts
otherwise to be remitted to a particular Lender by reason of amounts due Agent
from such Lender under any of the Loan Documents.
4.2. Repayment of Revolver Loans.
4.2.1. Payment of Principal. The outstanding principal amount of the
Revolver Loans shall be repaid as follows:
(i) Any portion of the Revolver Loans consisting of Base Rate
Loans shall be paid by Borrower to Agent, for the Pro Rata benefit of
Lenders (or, in the case of Settlement Loans, for the sole benefit of
Fleet) unless timely converted to a LIBOR Loan in accordance with this
Agreement, immediately upon (a) each receipt by Agent, any Lender or
Borrower of any proceeds of any of the Collateral, to the extent of such
proceeds, (b) the Commitment Termination Date, and (c) in the case of
Settlement Loans, the earlier of Fleet's demand for payment or on each
Settlement Date with respect to all Settlement Loans outstanding on such
date.
(ii) Any portion of the Revolver Loans consisting of LIBOR Loans
shall be paid by Borrower to Agent, for the Pro Rata benefit of Lenders,
unless converted to a Base Rate Loan or continued as a LIBOR Loan in
accordance with the terms of this Agreement, immediately upon (a) the last
day of the Interest Period applicable thereto and (b) the Commitment
Termination Date. In no event shall Borrower be authorized to make a
voluntary prepayment with respect to any Revolver Loan outstanding as a
LIBOR
23
Loan prior to the last day of the Interest Period applicable thereto
unless (x) otherwise agreed in writing by Agent or Borrower is otherwise
expressly authorized or required by any other provision of this Agreement
to pay any LIBOR Loan outstanding on a date other than the last day of the
Interest Period applicable thereto, and (y) Borrower pays to Agent, for the
Pro Rata benefit of Lenders, concurrently with any prepayment of a LIBOR
Loan, any amount due Agent and Lenders under Section 2.9 hereof as a
consequence of such prepayment.
(iii) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if an Out-of-Formula Condition shall exist,
Borrower shall, on the sooner to occur of Agent's demand or the first
Business Day after Borrower has obtained knowledge of such Out-of-Formula
Condition, repay the outstanding Revolver Loans that are Base Rate Loans in
an amount sufficient to reduce the aggregate unpaid principal amount of all
Revolver Loans by an amount equal to such excess; and, if such payment of
Base Rate Loans is not sufficient to eliminate the Out-of-Formula
Condition, then Borrower shall immediately either (a) deposit with Agent,
for the Pro Rata benefit of Lenders, for application to any outstanding
Revolver Loans bearing interest as LIBOR Loans as the same become due and
payable (whether at the end of the applicable Interest Periods or on the
Commitment Termination Date) cash in an amount sufficient to eliminate such
Out-of-Formula Condition, to be held by Agent pending disbursement of same
to Lenders, but subject to Agent's Lien thereon and rights of offset with
respect thereto, or (b) pay the Revolver Loans outstanding as LIBOR Loans
to the extent necessary to eliminate such Out-of-Formula Condition and also
pay to Agent for the Pro Rata benefit of Lenders any and all amounts
required by Section 2.9 hereof to be paid by reason of the prepayment of a
LIBOR Loan prior to the last day of the Interest Period applicable thereto.
Notwithstanding the foregoing, if and for so long as each of the Out-of-
Formula Facility Conditions is satisfied, Borrower shall not be required to
eliminate the Out-of-Formula Condition until the Out-of-Formula Fix Date.
4.2.2. Payment of Interest. Interest accrued on the Revolver Loans
shall be due and payable on (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, with respect to any Revolver Loan that constitutes a Base Rate
Loan and (ii) the last day of the applicable Interest Period in the case of a
LIBOR Loan and, with respect to LIBOR Loans that have an Interest Period of 3
months or more, on the 90th day after the beginning of such Interest Period and
at the end of such Interest Period. Accrued interest shall also be paid by
Borrower on the Commitment Termination Date. With respect to any Base Rate Loan
converted into a LIBOR Loan pursuant to Section 2.1.2 on a day when interest
would not otherwise have been payable with respect to such Base Rate Loan,
accrued interest to the date of such conversion on the amount of such Base Rate
Loan so converted shall be paid on the conversion date.
4.3. Payment of Other Obligations. The balance of the Obligations
requiring the payment of money, including the LC Outstandings and Extraordinary
Expenses incurred by Agent or any Lender, shall be repaid by Borrower to Agent
for allocation among Agent and Lenders as provided in the Loan Documents, or, if
no date of payment is otherwise specified in the Loan Documents, within 10 days
after Agent's demand therefor.
24
4.4. Marshaling; Payments Set Aside. None of Agent or any Lender shall
be under any obligation to marshall any assets in favor of Borrower or any other
Obligor or against or in payment of any or all of the Obligations. To the
extent that Borrower makes a payment or payments to Agent or Lenders or any of
such Persons receives payment from the proceeds of any Collateral or exercises
its right 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 or required to be repaid to a
trustee, receiver or any other Person, then, to the extent of any loss by Agent
or Lenders, 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 or proceeds had not been made or
received and any such enforcement or setoff had not occurred. The provisions of
the immediately preceding sentence of this Section 4.4 shall survive any
termination of the Revolver Commitments and payment in full of the Obligations.
4.5. Agent's Allocation of Payments and Collections.
4.5.1. Allocation of Payments. All monies to be applied to the
Obligations, whether such monies represent voluntary payments by one or more
Obligors or are received pursuant to demand for payment or realized from any
disposition of Collateral, shall be allocated among Agent and such of the
Lenders as are entitled thereto (and, with respect to monies allocated to
Lenders, on a Pro Rata basis unless otherwise provided herein): (i) first, to
Agent to pay principal and accrued interest on any portion of the Revolver Loans
which Agent may have advanced on behalf of any Lender and for which Agent has
not been reimbursed by such Lender or Borrower; (ii) second, to Fleet to pay the
principal and accrued interest on any portion of the Settlement Loans
outstanding, to be shared with Lenders that have acquired a participating
interest in such Settlement Loans; (iii) third, to the extent that Fleet has not
received from any Participating Lender a payment as required by Section 1.2.2
hereof, to Fleet to pay all amounts owing to Fleet pursuant to Section 1.2.2(ii)
hereof; (iv) fourth, to Agent to pay the amount of Extraordinary Expenses and
amounts owing to Agent pursuant to Section 14.10 hereof that have not been
reimbursed to Agent by Borrower or Lenders, together with interest accrued
thereon at the rate applicable to Revolver Loans that are Base Rate Loans; (v)
fifth, to Agent to pay any Indemnified Amount that has not been paid to Agent by
Obligors or Lenders, together with interest accrued thereon at the rate
applicable to Revolver Loans that are Base Rate Loans; (vi) sixth, to Agent to
pay any fees due and payable to Agent; (vii) seventh, to Lenders for any
Indemnified Amount that they have paid to Agent and any Extraordinary Expenses
that they have reimbursed to Agent or themselves incurred, to the extent that
Lenders have not been reimbursed by Obligors therefor; (viii) eighth, to Fleet
to pay principal and interest with respect to LC Outstandings (or to the extent
any of the LC Outstandings are contingent and an Event of Default then exists,
deposited in the Cash Collateral Account to provide security for the payment of
the LC Outstandings), which payment shall be shared with the Participating
Lenders in accordance with Section 1.2.2(iii) hereof; and (ix) ninth, to Lenders
in payment of the unpaid principal and accrued interest in respect of the
Revolver Loans and any other Obligations then outstanding to be shared among
Lenders on a Pro Rata basis, or on such other basis as may be agreed upon in
writing by Lenders (which agreement or agreements may be entered into without
notice to or the consent or approval of Borrower). The allocations set forth in
this Section 4.5
25
are solely to determine the rights and priorities of Agent and
Lenders as among themselves and may be changed by Agent and Lenders without
notice to or the consent or approval of Borrower or any other Person.
4.5.2. Erroneous Allocation. Agent shall not be liable for any
allocation or distribution of payments made by it in good faith and, if any such
allocation 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 the other Lenders any payment in excess of the amount
to which such other Lenders are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them).
4.6. Application of Payments and Collateral Proceeds. All Payment Items
received by Agent by 12:00 noon on any Business Day shall be deemed received on
that Business Day. All Payment Items received by Agent after 12:00 noon on any
Business Day shall be deemed received on the following Business Day. Borrower
irrevocably waives the right to direct the application of any and all payments
and Collateral proceeds at any time or times hereafter received by Agent or any
Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Agent shall have the continuing exclusive right to apply and reapply any
and all such payments and Collateral proceeds received at any time or times
hereafter by Agent or its agent against the Obligations, in such manner as Agent
may deem advisable, notwithstanding any entry by Agent upon any of its books and
records. If as the result of Agent's collection of proceeds of Accounts and
other Collateral as authorized by Section 7.2.6 a credit balance exists, such
credit balance shall not accrue interest in favor of Borrower, but shall be
available to Borrower at any time or times for so long as no Default or Event of
Default exists.
4.7. Loan Account; the Register; Account Stated.
4.7.1. Loan Accounts. Each Lender shall maintain in accordance with
its usual and customary practices an account or accounts (a "Loan Account")
evidencing the Debt of Borrower to such Lender resulting from each Revolver Loan
owing to such Lender from time to time, including the amount of principal and
interest payable to such Lender from time to time hereunder and under each Note
payable to such Lender. Any failure of a Lender to record in the Loan Account,
or any error in doing so, shall not limit or otherwise affect the obligation of
Borrower hereunder (or under any Note) to pay any amount owing hereunder to such
Lender.
4.7.2. The Register. Agent shall maintain a register (the
"Register") which shall include a master account and a subsidiary account for
each Lender and in which accounts (taken together) shall be recorded (i) the
date and amount of each Borrowing made hereunder, the Type of each Revolver Loan
comprising such Borrowing and any Interest Period applicable thereto, (ii) the
effective date and amount of each Assignment and Acceptance delivered to and
accepted by it and the parties thereto, (iii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder or under the Notes, and (iv) the amount of any sum received by
Agent from Borrower or any other Obligor and each Lender's share thereof. The
Register shall be available for inspection by Borrower or any Lender at the
offices of Agent at any reasonable time and from time to time upon reasonable
prior notice. Any
26
failure of Agent to record in the Register, or any error in doing so, shall not
limit or otherwise affect the obligation of Borrower hereunder (or under any
Note) to pay any amount owing with respect to the Revolver Loans or provide the
basis for any claim against Agent.
4.7.3. Entries Binding. The entries made in the Register and each
Loan Account shall constitute rebuttably presumptive evidence of the information
contained therein; provided, however, that if a copy of information contained in
the Register or any Loan Account is provided to any Person, or any Person
inspects the Register or any Loan Account, at any time or from time to time,
then the information contained in the Register or the Loan Account, as
applicable shall be conclusive and binding on such Person for all purposes
absent manifest error, unless such Person notifies Agent in writing within 30
days after such Person's receipt of such copy or such Person's inspection of the
Register or Loan Account of its intention to dispute the information contained
therein.
4.8. Gross Up for Taxes. If Borrower shall be required by Applicable
Law to withhold or deduct any Taxes from or in respect of any sum payable under
this Agreement or any of the other Loan Documents, (a) so long as any Lender to
which Section 4.9 is applicable has satisfied the terms of Section 4.9, the sum
payable to Agent or such Lender shall be increased as may be necessary so that,
after making all required withholding or deductions, Agent or such Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such withholding or deductions been made, (b) Borrower shall make such
withholding or deductions, and (c) Borrower shall pay the full amount withheld
or deducted to the relevant taxation authority or other authority in accordance
with Applicable Law.
4.9. Withholding Tax Exemption. At least 5 Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States or any state thereof agrees that it will deliver to Borrower and Agent 2
duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payment
under this Agreement and its Note without deduction or withholding of any United
States federal income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to Borrower and Agent 2 additional copies of such
form (or a successor form) on or before the date that such form expires
(currently, 3 successive calendar years for Form 1001 and one calendar year for
Form 4224) or becomes obsolete or after the occurrence of any event requiring a
change in the most form so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by Borrower or
Agent, in each case, certifying that such Lender is entitled to receive payments
under this Agreement and its Notes without deduction or withholding of any
United States federal income taxes, unless an event (including any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required that renders all such forms inapplicable or
that would prevent such Lender from duly completing and delivering any such form
with respect to it and such Lender advises Borrower and Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income taxes.
SECTION 5. TERM AND TERMINATION OF COMMITMENTS
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5.1. Term of Revolver Commitments. Subject to each Lender's right to
cease making Revolver Loans and other extensions of credit to Borrower when any
Default or Event of Default exists or upon termination of the Revolver
Commitments as provided in Section 5.2 hereof, the Revolver Commitments shall be
in effect for a period of 5 years from the date hereof, through the close of
business on February 17, 2005 (the "Term").
5.2. Termination.
5.2.1. Termination by Agent. Agent may (and upon the direction of
the Required Lenders, shall) terminate the Revolver Commitments without notice
if an Event of Default exists; provided, however, that the Revolver Commitments
shall automatically terminate as provided in Section 11.2 hereof.
5.2.2. Termination by Borrower. Upon at least 30 days prior written
notice to Agent, Borrower may, at its option, terminate the Revolver
Commitments; provided, however, no such termination by Borrower shall be
effective until Borrower has satisfied all of the Obligations and executed in
favor of and delivered to Agent and Lenders a general release of all Claims that
Borrower may have against Agent or any Lender. Any notice of termination given
by Borrower shall be irrevocable unless Agent otherwise agrees in writing.
Borrower may elect to terminate the Revolver Commitments in their entirety only,
but nothing contained herein shall affect Borrower's right to voluntarily reduce
the Revolver Commitments as provided in Section 1.1.5 of this Agreement. No
section of this Agreement, Type of Revolver Loan available hereunder or Revolver
Commitment may be terminated by Borrower singly.
5.2.3. Reserved.
5.2.4. Effect of Termination. On the effective date of termination
of the Revolver Commitments by Agent or by Borrower, all of the Obligations
shall be immediately due and payable and Lenders shall have no obligation to
make any Revolver Loans and Fleet shall have no obligation to procure any
Letters of Credit. All undertakings, agreements, covenants, warranties and
representations of Borrower contained in the Loan Documents shall survive any
such termination and Agent shall retain its Liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has satisfied the Obligations to Agent and Lenders,
in full. For purposes of this Agreement, the Obligations shall not be deemed to
have been satisfied until all Obligations for the payment of money have been
paid to Agent in same day funds and all Obligations that are at the time in
question contingent (including, all LC Outstandings that exist by virtue of an
outstanding Letter of Credit) have been fully cash collateralized in favor and
to the satisfaction of Agent or Agent has received as beneficiary a direct pay
letter of credit in form and from an issuing bank acceptable to Agent and
providing for direct payment to Agent of all such contingent Obligations at the
time they become fixed (including reimbursement of all sums paid by Agent under
any LC Support). Notwithstanding the payment in full of the Obligations, Agent
shall not be required to terminate its security interests in any of the
Collateral unless, with respect to any loss or damage Agent may incur as a
result of the dishonor or return of any Payment Items applied to the
Obligations, Agent shall have received either (i) a written agreement, executed
by Borrower and any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the
28
Obligations, indemnifying Agent and Lenders from any such loss or damage; or
(ii) such monetary reserves and Liens on the Collateral for such period of time
as Agent, in its reasonable discretion, may deem necessary to protect Agent from
any such loss or damage. The provisions of Sections 2.4, 2.7, 2.8, 2.9, 4.4, 4.9
and this Section 5.2.4 and all obligations of Borrower to indemnify Agent or any
Lender pursuant to this Agreement or any of the other Loan Documents, shall in
all events survive any termination of the Revolver Commitments.
SECTION 6. COLLATERAL
6.1. Grant of Security Interest. To secure the prompt payment and
performance of all of the Obligations, Borrower hereby grants to Agent, for the
benefit of itself as Agent and for the Pro Rata benefit of Lenders, a continuing
security interest in and Lien upon all of the following Property and interests
in Property of Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All Equipment;
(iv) All Instruments;
(v) All Chattel Paper;
(vi) All Documents;
(vii) All General Intangibles;
(viii) All Deposit Accounts;
(ix) All Investment Property (but excluding any portion thereof
that constitutes Margin Stock unless otherwise expressly provided in any
Security Documents);
(x) All monies now or at any time or times hereafter in the
possession or under the control of Agent or a Lender or a bailee or
Affiliate of Agent or a Lender, including any Cash Collateral in the Cash
Collateral Account;
(xi) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (x) above, including
proceeds of and unearned premiums with respect to insurance policies
insuring any of the Collateral and claims against any Person for loss of,
damage to or destruction of any of the Collateral; and
29
(xii) All books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (xi)
above;
6.2. Lien on Deposit Accounts. As additional security for the payment
and performance of the Obligations, Borrower hereby grants to Agent, for the
benefit of itself as Agent and for the Pro Rata benefit of Lenders, a continuing
security interest in and Lien upon, and hereby collaterally assigns to Agent,
all of Borrower's right, title and interest in and to each Deposit Account of
Borrower and in and to any deposits or other sums at any time credited to each
such Deposit Account, including any sums in any blocked account or any special
lockbox account and in the accounts in which sums are deposited. In connection
with the foregoing, Borrower hereby authorizes and directs each such bank or
other depository to pay or deliver to Agent upon its written demand therefor
made at any time upon the occurrence and during the continuation of an Event of
Default and without further notice to Borrower (such notice being hereby
expressly waived), all balances in each Deposit Account maintained by Borrower
with such depository for application to the Obligations then outstanding, and
the rights given Agent in this Section shall be cumulative with and in addition
to Agent's other rights and remedies in regard to the foregoing Property as
proceeds of Collateral. Borrower hereby irrevocably appoints Agent as
Borrower's attorney-in-fact to collect any and all such balances to the extent
any such payment is not made to Agent by such bank or other depository after
demand thereon is made by Agent pursuant hereto.
6.3. Other Collateral. In addition to the items of Property referred to
in Section 6.1 above, the Obligations shall also be secured by the Cash
Collateral to the extent provided herein and all of the other items of Property
from time to time described in any of the Security Documents as security for any
of the Obligations.
6.4. Lien Perfection; Further Assurances. Within 5 Business Days after
Agent's request therefor, Borrower shall execute or cause to be executed and
deliver to Agent such instruments, assignments, title certificates or other
documents as are necessary under the UCC or other Applicable Law (including any
motor vehicle certificates of title act) to perfect (or continue the perfection
of) Agent's Lien upon the Collateral, and shall take such other action as may be
requested by Agent to give effect to or carry out the intent and purposes of
this Agreement. Unless prohibited by Applicable Law, Borrower hereby authorizes
Agent to execute and file any such financing statement on Borrower's behalf.
Unless prohibited by Applicable Law, the parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
SECTION 7. COLLATERAL ADMINISTRATION
7.1. General Provisions.
7.1.1. Location of Collateral. All tangible items of Collateral,
other than Inventory in transit, shall at all times be kept by Borrower at one
or more of the business locations of Borrower set forth in Schedule 7.1.1 hereto
and shall not be moved therefrom,
30
without the prior written approval of Agent, except that in the absence of an
Event of Default and acceleration of the maturity of the Obligations in
consequence thereof, Borrower may (i) make sales or other dispositions of any
Collateral to the extent authorized by Section 9.2.10 hereof and (ii) move
Inventory or Equipment or any record relating to any Collateral to a location in
the United States other than those shown on Schedule 7.1.1 hereto so long as
Borrower has given Agent at least 15 Business Days prior written notice of such
new location and prior to moving any Inventory or Equipment to such location
Borrower has executed and delivered to Agent UCC-1 financing statements and any
other appropriate documentation to perfect or continue the perfection of Agent's
Liens with respect to such Inventory or Equipment. Notwithstanding anything to
the contrary contained in this Agreement, Borrower shall not be permitted to
keep, store or otherwise maintain any Collateral at any location (including any
location described in Section 7.1.1), unless (i) Borrower is the owner of such
location, (ii) Borrower leases such location and, if requested by Agent, the
landlord has executed in favor of Agent a Landlord Waiver, or (iii) the
Collateral consists of Inventory placed with a warehouseman, bailee or
processor, and if, requested by Agent, Agent has received from such
warehouseman, bailee or processor an acceptable Lien waiver agreement and an
appropriate UCC-1 financing statement has been filed with the appropriate
Governmental Authority in the jurisdiction where such warehouseman, bailee or
processor is located in order to perfect, or to maintain the uninterrupted
perfection of, Agent's security interest in such Inventory.
7.1.2. Insurance of Collateral; Condemnation Proceeds. Borrower
shall maintain and pay for insurance upon all Collateral, wherever located,
covering casualty, hazard, public liability, theft, malicious mischief, and such
other risks in such amounts and with such insurance companies as are reasonably
satisfactory to Agent. All proceeds payable under each such policy shall be
payable to Agent for application to the Obligations. Borrower shall deliver the
originals or certified copies of such policies to Agent with satisfactory
lender's loss payable endorsements reasonably satisfactory to Agent naming Agent
as sole loss payee, assignee or additional insured, as appropriate. Each policy
of insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever and a clause specifying that the
interest of Agent shall not be impaired or invalidated by any act or neglect of
Borrower or the owner of the Property or by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If Borrower fails to
provide and pay for such insurance, Agent may, at its option, but shall not be
required to, procure the same and charge Borrower therefor. Borrower agrees to
deliver to Agent, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies. For so long as no Event of Default
exists, Borrower shall have the right to settle, adjust and compromise any claim
with respect to any insurance maintained by Borrower provided that all proceeds
thereof are applied in the manner specified in this Agreement, and Agent agrees
promptly to provide any necessary endorsement to any checks or drafts issued in
payment of any such claim. At any time that an Event of Default exists, only
Agent shall be authorized to settle, adjust and compromise such claims, Agent
shall have all rights and remedies with respect to such policies of insurance as
are provided for in this Agreement and the other Loan Documents.
7.1.3. Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping any
Collateral, all Taxes imposed under any
31
Applicable Law on any of the Collateral or in respect of the sale thereof, and
all other payments required to be made by Agent to any Person to realize upon
any Collateral shall be borne and paid by Borrower. Agent shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Agent's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other Person whomsoever, but the same shall be at
Borrower's sole risk.
7.1.4. Defense of Title to Collateral. Borrower shall at all
times defend Borrower's title to the Collateral and Agent's Liens therein
against all Persons and all claims and demands whatsoever other than Permitted
Liens.
7.2. Administration of Accounts.
7.2.1. Records and Schedules of Accounts. Borrower shall keep
accurate and complete records of its Accounts and all payments and collections
thereon and shall submit to Agent on such periodic basis as Agent shall request
a sales and collections report for the preceding period, in form satisfactory to
Agent. Borrower shall also provide to Agent on or before the 25th day of each
month, a detailed aged trial balance of all Accounts existing as of the last day
of the preceding month, specifying the names, addresses, face value, dates of
invoices and due dates for each Account Debtor obligated on an Account so listed
("Schedule of Accounts"), and, upon Agent's request therefor, copies of proof of
delivery and a copy of all documents, including repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. At Agent's request, Borrower shall deliver to Agent copies
of invoices or invoice registers related to all of its Accounts.
7.2.2. Discounts, Disputes and Returns. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be to Agent as part of the next required Schedule of
Accounts. Upon and after the occurrence of an Event of Default, Agent shall
have the right to settle or adjust all disputes and claims directly with the
Account Debtor and to compromise the amount or extend the time for payment of
any Accounts comprising a part of the Collateral upon such terms and conditions
as Agent may deem advisable, and to charge the deficiencies, costs and expenses
thereof, including attorneys' fees, to Borrower.
7.2.3. Taxes. If an Account of Borrower includes a charge for any
Taxes payable to any governmental taxing authority, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper taxing authority for
the account of Borrower and to charge Borrower therefor; provided, however, that
neither Agent nor Lenders shall be liable for any Taxes that may be due by
Borrower.
7.2.4. Account Verification. Whether or not a Default or an Event
of Default exists, Agent shall have the right at any time, in the name of Agent,
any designee of Agent or Borrower to verify the validity, amount or any other
matter relating to any Accounts of Borrower
32
by mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Agent in an effort to facilitate and promptly conclude any such verification
process.
7.2.5. Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox or other arrangement acceptable to Agent
and, in the case of such Dominion Account and lockbox arrangement, with such
bank as may be selected by Borrower and be acceptable to Agent. Borrower shall
issue to each such lockbox bank an irrevocable letter of instruction directing
such bank to deposit all payments or other remittances received in the lockbox
to the Dominion Account. Borrower shall enter into agreements, in form
satisfactory to Agent, with each bank at which a Dominion Account is maintained
by which such bank shall immediately transfer to the Payment Account all monies
deposited to the Dominion Account. All funds deposited in each Dominion Account
shall be subject to Agent's Lien. Borrower shall obtain the agreement (in favor
of and in form and content satisfactory to Agent) by each bank at which a
Dominion Account is maintained to waive any offset rights against the funds
deposited into such Dominion Account, except offset rights in respect of charges
incurred in the administration of such Dominion Account. Neither Agent nor
Lenders assume any responsibility to Borrower for such lockbox arrangement or
Dominion Account, including any claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
7.2.6. Collection of Accounts and Proceeds of Collateral. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of Borrower's Accounts for Agent and Lenders. All Payment Items
received by Borrower in respect of its Accounts, together with the proceeds of
any other Collateral, shall be held by Borrower as trustee of an express trust
for Agent's benefit and Borrower shall immediately deposit same in kind in the
Dominion Account. Agent retains the right at all times when a Default or an
Event of Default exists to notify Account Debtors of Borrower that Accounts have
been assigned to Agent and to collect Accounts directly in its own name and to
charge to Borrower the collection costs and expenses, incurred by Agent or
Lenders, including reasonable attorneys' fees.
7.3. Administration of Inventory.
7.3.1. Records and Reports of Inventory. Borrower shall keep
accurate and complete records of its Inventory and shall furnish Agent and
Lenders inventory reports respecting such Inventory in form and detail
satisfactory to Agent and Lenders at such times as Agent and Lenders may
request, but so long as no Default or Event of Default exists, no more
frequently than once each week. Borrower shall conduct a physical inventory no
less frequently than annually and shall provide to Agent and Lenders a report
based on each such physical inventory promptly thereafter, together with such
supporting information as Agent shall request.
7.3.2. Returns of Inventory. Borrower shall not return any of its
Inventory to a supplier or vendor thereof, or any other Person, whether for
cash, credit against future purchases or then existing payables, or otherwise,
unless (i) such return is in the Ordinary Course of Business of Borrower and
such Person; (ii) no Default or Event of Default exists or would result
therefrom; (iii) the return of such Inventory will not result in an Out-of-
Formula Condition; and (iv) any payments received by Borrower in connection with
any such return are promptly turned over to Agent for application to the
Obligations.
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7.4. Administration of Equipment.
7.4.1. Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
cost of its Equipment and all dispositions made in accordance with Section 7.4.2
hereof.
7.4.2. Dispositions of Equipment. Borrower will not sell, lease
or otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Agent; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment expressly authorized by Section
9.2.10 of this Agreement; (ii) dispositions of Equipment which, in the aggregate
during any consecutive 12-month period, has a fair market value or book value,
whichever is more, of $1,000,000 or less, provided that all Net Proceeds thereof
are remitted to Agent for application to the Obligations; or (iii) any
replacement of Equipment that is substantially worn, damaged or obsolete with
Equipment of like kind, function and value, provided that the replacement
Equipment shall be acquired prior to or concurrently with any disposition of the
Equipment that is to be replaced, the replacement Equipment shall be free and
clear of Liens other than Permitted Liens that are not Purchase Money Liens, and
Borrower shall have given Agent at least 10 days prior written notice of such
disposition.
7.4.3. Condition of Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted.
7.5. Borrowing Base Certificates. On the Closing Date and on or before
the third Business Day of each week after the Closing Date, Borrower shall
deliver to Agent a Borrowing Base Certificate prepared as of the close of
business of the previous week, and at such other times as Agent may request;
provided, however, that if Consolidated EBITDA in any month is $25,000,000 or
more as determined pursuant to Section 9.3.2 of this Agreement, then, during the
next succeeding month, Borrower shall not be required to deliver more than one
Borrowing Base Certificate (which shall be delivered on or before the 15th day
of such next succeeding month) unless a Default or Event of Default exists or
Agent determines, in its sole discretion, that more frequent Borrowing Base
Certificates are necessary to protect Agent and Lenders against changes in the
composition or quality of the Collateral. All calculations of Availability in
connection with any Borrowing Base Certificate shall originally be made by
Borrower and certified by a Senior Officer to Agent, provided that Agent shall
have the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation (i) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein and (ii) to the
extent that such calculation is not in accordance with this Agreement or does
not accurately reflect the amount of the Availability Reserve.
SECTION 8. REPRESENTATIONS AND WARRANTIES
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8.1. General Representations and Warranties. To induce Agent and
Lenders to enter into this Agreement and to make available the Revolver
Commitments, Borrower warrants and represents to Agent and Lenders that:
8.1.1. Organization and Qualification. Each of Borrower and its
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization. Each of Borrower and
its Subsidiaries is duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each state or jurisdiction listed on
Schedule 8.1.1 hereto and in all other states and jurisdictions in which the
failure of Borrower or any of such Subsidiaries to be so qualified would have a
Material Adverse Effect.
8.1.2. Power and Authority. Each of Borrower and its Subsidiaries
is duly authorized and empowered to enter into, execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary action and do not and will
not (i) require any consent or approval of any of the holders of the Equity
Interests of Borrower or any Subsidiary; (ii) contravene Borrower's or any
Subsidiary's Organization Documents; (iii) violate, or cause Borrower or any
Subsidiary to be in default under, any provision of any Applicable Law, order,
writ, judgment, injunction, decree, determination or award in effect having
applicability to Borrower or any Subsidiary; (iv) result in a breach of or
constitute a default under any Material Contract; or (v) result in, or require,
the creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by Borrower or
any Subsidiary.
8.1.3. Legally Enforceable Agreement. This Agreement is, and each
of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
signatories thereto enforceable against them in accordance with the respective
terms of such Loan Documents, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws of general application
affecting the enforcement of creditors' rights.
8.1.4. Capital Structure. As of the date hereof, Schedule 8.1.4
hereto states (i) the correct name of each Subsidiary, its jurisdiction of
incorporation and the percentage of its Equity Interests having voting powers
owned by each Person, (ii) the name of each of Borrower's corporate Affiliates
and the nature of the affiliation and (iii) the number of authorized and issued
Equity Interests (and treasury shares) of Borrower that are owned by Affiliates,
directors or employees of Borrower and the number of authorized and issued
Equity Interests (including treasury shares) of each Subsidiary. Borrower has
good title to all of the shares it purports to own of the Equity Interests of
each of its Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such Equity Interests have been duly issued and are fully
paid and non-assessable. Except as disclosed on Schedule 8.1.4 hereto, since
the date of the financial statements of Borrower referred to in Section 8.1.9
hereof, Borrower has not made, or obligated itself to make, any Distribution
except those permitted under Section 9.2.7 of this Agreement. Except as set
forth on Schedule 8.1.4 hereto, there are no outstanding options to purchase, or
any rights or warrants to subscribe for, or any commitments or agreements to
issue or sell, or any Equity Interests or obligations convertible into, or any
powers of attorney relating to, shares of
35
the capital stock of Borrower or any of its Subsidiaries. Except as set forth on
Schedule 8.1.4 hereto, there are no outstanding agreements or instruments
binding upon the holders of any Borrower's Equity Interests relating to the
ownership of its Equity Interests.
8.1.5. Corporate Names. During the 5-year period preceding the
date of this Agreement, neither Borrower nor any Subsidiary has been known as or
used any corporate, fictitious or trade names except those listed on Schedule
8.1.5 hereto. Except as set forth on Schedule 8.1.5, neither Borrower nor any
Subsidiary has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
8.1.6. Business Locations; Consigned Inventory. As of the date
hereof, the chief executive office and other places of business of Borrower and
each Subsidiary are as listed on Schedule 7.1.1 hereto. Since July 1997,
neither Borrower nor any Subsidiary has had an office, place of business or
agent for service of process other than as listed on Schedule 7.1.1. Except as
shown on Schedule 7.1.1 on the date hereof, no Inventory of Borrower or any
Subsidiary is stored with a bailee, warehouseman or similar Person, nor is any
Inventory consigned to any Person other than consignments permitted under
Section 9.2.10 hereof. As of the date hereof, the Persons listed on Schedule
7.1.1 have consigned inventory to Borrower in the amounts referenced therein and
at Agent's request, Borrower shall certify to Agent from time to time on the
next Borrowing Base Certificate that is to be delivered to Agent by Borrower
under this Agreement after any such request, the amount, type and the name of
the owner of any consigned inventory.
8.1.7. Title to Properties; Priority of Liens. Borrower and each
Subsidiary has good and marketable title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of its personal Property, including all Property reflected in the
financial statements referred to in Section 8.1.9 or delivered pursuant to
Section 9.1.3, in each case free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged, and has caused each Subsidiary to pay and
discharge, all lawful claims which, if unpaid, might become a Lien against any
Properties of Borrower or such Subsidiary that is not a Permitted Lien. The
Liens granted to Agent pursuant to this Agreement and the other Security
Documents are first priority Liens, subject only to those Permitted Liens which
are expressly permitted by the terms of this Agreement to have priority over the
Liens of Agent.
8.1.8. Accounts. Agent may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by Borrower
with respect to any Account. Unless otherwise indicated in writing to Agent or
excluded by Borrower in its calculation of the Borrowing Base in any Borrowing
Base Certificate, with respect to each Account, Borrower warrants that:
(i) It is genuine and in all respects what it purports to be, and it
is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods by Borrower in the ordinary course of its business and substantially
in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the
contract between Borrower and the Account Debtor;
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(iii) It is for a sum certain maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which has
been furnished or is available to Agent on request;
(iv) Such Account, and Agent's security interest therein, is not, and
will not (by voluntary act or omission of Borrower) be in the future,
subject to any offset, Lien, deduction, defense, dispute, counterclaim or
any other adverse condition except for disputes resulting in returned goods
where the amount in controversy is immaterial, and each such Account is
absolutely owing to Borrower and is not contingent in any respect or for
any reason;
(v) The contract under which such Account arose does not condition or
restrict Borrower's right to assign to Agent the right to payment
thereunder unless Borrower has obtained the Account Debtor's consent to
such collateral assignment or complied with any conditions to such
assignment;
(vi) Borrower has not made any agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of any such
Account or any deduction therefrom, except discounts or allowances which are
granted by Borrower in the Ordinary Course of Business and which are reflected
in the calculation of the net amount of each respective invoice related thereto
and are reflected in the Schedules of Accounts submitted to Agent pursuant to
Section 7.2.1 hereof;
(vii) To the best of Borrower's knowledge, there are no facts,
events or occurrences which are reasonably likely to impair the validity or
enforceability of any of its Accounts or reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Agent with respect thereto;
(viii) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such Account
Debtor is Solvent; and
(ix) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor
thereunder and which are reasonably likely to result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
8.1.9. Financial Statements; Fiscal Year. The Consolidated
balance sheets of Borrower and such other Persons described therein (including
the accounts of all Subsidiaries of Borrower for the respective periods during
which a Subsidiary relationship existed) as of December 31, 1999, and the
related statements of income, changes in stockholder's equity, and changes in
financial position for the periods ended on such dates, have been prepared in
accordance with GAAP, and present fairly the financial positions of Borrower and
such Persons at such dates and the results of Borrower's operations for such
periods. Since December 31, 1999, there has been no material change in the
condition, financial or otherwise, of Borrower and
37
such other Persons as shown on the Consolidated balance sheet as of such date
and no material change in the aggregate value of Equipment and real Property
owned by Borrower or such other Persons.
8.1.10. Full Disclosure. The financial statements referred to in
Section 8.1.9 hereof do not contain any untrue statement of a material fact and
neither this Agreement nor any other written statement contains or omits any
material fact necessary to make the statements contained herein or therein not
materially misleading. There is no fact or circumstances in existence on the
date hereof which Borrower has failed to disclose to Agent in writing that may
reasonably be expected to have a Material Adverse Effect.
8.1.11. Solvent Financial Condition. Each of Borrower and its
Subsidiaries, after giving effect to the Revolver Loans to be made hereunder,
the Letters of Credit to be issued in connection herewith and the consummation
of the other transactions described in the Loan Documents, is Solvent.
8.1.12. Surety Obligations. Except as set forth on Schedule
8.1.12 hereto on the date hereof, neither Borrower nor any of its Subsidiaries
is obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
8.1.13. Taxes. The FEIN of each of Borrower and the Subsidiaries
is as shown on Schedule 8.1.13 hereto. Borrower and each Subsidiary has filed
all federal, state and local tax returns and other reports it is required by law
to file and has paid, or made provision for the payment of, all Taxes upon it,
its income and Properties as and when such Taxes are due and payable, except to
the extent being Properly Contested. The provision for Taxes on the books of
Borrower and each Subsidiary are adequate for all years not closed by applicable
statutes, and for its current Fiscal Year.
8.1.14. Brokers. Except as set forth on Schedule 8.1.14 hereto,
there are no claims against Borrower for brokerage commissions, finder's fees or
investment banking fees in connection with the transactions contemplated by this
Agreement or any of the other Loan Documents.
8.1.15. Intellectual Property. Borrower and its Subsidiaries each
owns or has the lawful right to use all Intellectual Property necessary for the
present and planned future conduct of its business without any conflict with the
rights of others; there is no objection to, or pending (or, to Borrower's
knowledge, threatened) Intellectual Property Claim with respect to, Borrower's
or any Subsidiary's right to use any such Intellectual Property which could
reasonably be expected to have a Material Adverse Effect, and Borrower is not
aware of any grounds for challenge or objection thereto; and, except as may be
disclosed on Schedule 8.1.15, neither Borrower nor any Subsidiary pays any
royalty or other compensation to any Person for the right to use any
Intellectual Property. All such patents, trademarks, service marks, tradenames,
copyrights, licenses (other than off-the-shelf software) and other similar
rights are listed on Schedule 8.1.15 hereto, to the extent they are registered
under any Applicable Law or are otherwise material to Borrower's or any
Subsidiary's business.
38
8.1.16. Governmental Approvals. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, Governmental Approval
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it if the failure to obtain such Governmental Approval could
reasonably be expected to have a Material Adverse Effect.
8.1.17. Compliance with Laws. Each of Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all Applicable Law (except to the extent that any such noncompliance with
Applicable Law could not reasonably be expected to have a Material Adverse
Effect) and there have been no citations, notices or orders of noncompliance
issued to Borrower or any of the Subsidiaries under any such law, rule or
regulation. No Inventory has been produced in violation of the Fair Labor
Standards Act (29 U.S.C. (S) 201 et seq.).
8.1.18. Restrictions. Neither Borrower nor any of the
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which has or could be reasonably expected to have a
Material Adverse Effect. Neither Borrower nor any of the Subsidiaries is a
party or subject to any Restrictive Agreements, except as set forth on Schedule
8.1.18 hereto, none of which prohibit the execution or delivery of any of the
Loan Documents by any Obligor or the performance by any Obligor of its
obligations under any of the Loan Documents to which it is a party, in
accordance with the terms of such Loan Documents.
8.1.19. Litigation. Except as set forth on Schedule 8.1.19
hereto, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Borrower, threatened on the date hereof against or affecting
Borrower or any of the Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Borrower or any of the Subsidiaries, (i)
which relate to any of the Loan Documents or any of the transactions
contemplated thereby or (ii) which, if determined adversely to Borrower or any
Subsidiary, would reasonably be expected to have a Material Adverse Effect. To
the knowledge of Borrower, neither Borrower nor any of its Subsidiaries is in
default on the date hereof with respect to any order, writ, injunction,
judgment, decree or rule of any court, Governmental Authority or arbitration
board or tribunal.
8.1.20. No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of the Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes or which with the
passage of time or the giving of notice or both would constitute a default,
under any Material Contract or in the payment of any Debt for Money Borrowed in
excess of $250,000 of Borrower or a Subsidiary to any Person.
8.1.21. Leases. Schedule 8.1.21 hereto is a complete listing of
all material capitalized and operating leases of Borrower and its Subsidiaries
on the date hereof. Each of Borrower and its Subsidiaries is in substantial
compliance with all of the terms of each of its
39
respective capitalized and operating leases and there is no basis upon which the
lessors under any such leases could terminate same or declare Borrower or any of
its Subsidiaries in default thereunder.
8.1.22. Pension Plans. Except as disclosed on Schedule 8.1.22
hereto, neither Borrower nor any of the Subsidiaries has any Plan on the date
hereof. Borrower and each of its Subsidiaries is in substantial compliance with
the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that is reasonably likely to result
in a material adverse change in the financial condition of Borrower or any of
the Subsidiaries exists in connection with any Plan. Except as disclosed on
Schedule 8.1.22, neither Borrower nor any of its Subsidiaries has any withdrawal
liability in connection with a Multi-employer Plan.
8.1.23. Labor Relations. Except as described on Schedule 8.1.23
hereto, neither Borrower nor any of the Subsidiaries is a party to any
collective bargaining agreement on the date hereof. On the date hereof, there
are no material grievances, disputes or controversies with any union or any
other organization of Borrower's or any Subsidiary's employees, or, to
Borrower's knowledge, any threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
8.1.24. Not a Regulated Entity. No Obligor is (i) an "investment
company" or a "person directly or indirectly controlled by or acting on behalf
of an investment company" within the meaning of the Investment Company Act of
1940; (ii) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935; or (iii) subject to regulation under the Federal Power Act, the
Interstate Commerce Act, any public utilities code or any other Applicable Law
regarding its authority to incur Debt.
8.1.25. Margin Stock. Neither Borrower nor any of the Subsidiaries
is engaged, principally or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any Margin Stock.
8.2. Reaffirmation of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be deemed to be reaffirmed by Borrower on each day that any
Obligations are outstanding or that Borrower requests or is deemed to have
requested an extension of credit hereunder, except for changes in the nature of
a Borrower's or, if applicable, any of its Subsidiaries' business or operations
that may occur after the date hereof in the Ordinary Course of Business so long
as Agent has consented to such changes or such changes are not violative of any
provision of this Agreement. Notwithstanding the foregoing, representations and
warranties which by their terms are applicable only to a specific date shall be
deemed made only at and as of such date.
8.3. Survival of Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent,
Lenders and the parties thereto and the closing of the transactions described
therein or related thereto.
40
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1. Affirmative Covenants. For so long as there are any Revolver
Commitments outstanding and thereafter until payment in full of the Obligations,
Borrower covenants that, unless the Required Lenders have otherwise consented in
writing, it shall and shall cause each Subsidiary to:
9.1.1. Visits and Inspections. Permit representatives of Agent,
from time to time, as often as may be reasonably requested, but only during
normal business hours and (except when a Default or Event of Default exists)
upon reasonable prior notice to Borrower, to visit and inspect the Properties of
Borrower and each Subsidiary, inspect, audit and make extracts from Borrower's
and each Subsidiary's books and records, and discuss with its officers, its
employees and its independent accountants, Borrower's and each Subsidiary's
business, financial condition, business prospects and results of operations.
Representatives of each Lender shall be authorized to accompany Agent on each
such visit and inspection and to participate with Agent therein, but at their
own expense, unless a Default or Event of Default exists. Neither Agent nor any
Lender shall have any duty to make any such inspection and shall not incur any
liability by reason of its failure to conduct or delay in conducting any such
inspection.
9.1.2. Notices.
(a) Notify Agent and Lenders in writing, promptly after Borrower's
obtaining knowledge thereof, (i) of the commencement of any litigation affecting
any Obligor or any of its Properties, whether or not the claims asserted in such
litigation are considered by Borrower to be covered by insurance, and of the
institution of any administrative proceeding, to the extent that such litigation
or proceeding, if determined adversely to such Obligor, would reasonably be
expected to have a Material Adverse Effect; (ii) of any material labor dispute
to which any Obligor may become a party, any strikes or walkouts relating to any
of its plants or other facilities, and the expiration of any labor contract to
which it is a party or by which it is bound; (iii) of any material default by
any Obligor under, or termination of, any Material Contract or any note,
indenture, loan agreement, mortgage, lease, deed, guaranty or other similar
agreement relating to any Debt of such Obligor exceeding $500,000; (iv) of the
existence of any Default or Event of Default; (v) of any default by any Person
under any note or other evidence of Debt payable to an Obligor in an amount
exceeding $500,000; (vi) of any judgment against any Obligor in an amount
exceeding $500,000; (vii) of the assertion by any Person of any Intellectual
Property Claim, the adverse resolution of which could reasonably be expected to
have a Material Adverse Effect; (viii) of any violation or asserted violation by
Borrower of any Applicable Law (including ERISA, OSHA, FLSA or any Environmental
Laws), the adverse resolution of which would reasonably be expected to have a
Material Adverse Effect; and (ix) of any Environmental Release by an Obligor or
on any Property owned or occupied by an Obligor.
(b) Notify Agent in writing at least 30 days prior to any Obligor's
opening of any new office or place of business.
41
(c) Notify Agent at least 30 days prior to any proposed change of
name of Borrower or any Subsidiary Guarantor and deliver or cause to be
delivered to Agent (i) at least 10 Business Days prior thereto all financing
statements, amendments to financing statements and other Lien Perfection
Documents required by Agent in response to such name change to insure the
uninterrupted perfection of Agent's Liens upon the Collateral and upon any
assets of a Subsidiary Guarantor; and (ii) within 5 Business Days after the
effective date of such name change, written notice of the effective date of such
name change and an identification of any state in which such name change is not
effective.
9.1.3. Financial and Other Information. Keep adequate records and
books of account with respect to its business activities in which proper entries
are made in accordance with GAAP reflecting all its financial transactions; and
cause to be prepared and to be furnished to Agent and Lenders the following (all
to be prepared in accordance with GAAP applied on a consistent basis, unless
Borrower's certified public accountants concur in any change therein, such
change is disclosed to Agent and is consistent with GAAP):
(i) as soon as available, and in any event within 90 days (or to the
extent that a filing extension is granted by the SEC, within 150 days)
after the close of each Fiscal Year, unqualified audited balance sheets of
Borrower and its Subsidiaries as of the end of such Fiscal Year and the
related statements of income, shareholders' equity and cash flow, on a
Consolidated basis, certified without material qualification by a firm of
independent certified public accountants of recognized national standing
selected by Borrower but reasonably acceptable to Agent (except for a
qualification for a change in accounting principles with which the
accountant concurs), and setting forth in each case in comparative form the
corresponding Consolidated figures for the preceding Fiscal Year;
(ii) as soon as available, and in any event within 30 days after the
end of each month hereafter (other than the last month of any Fiscal
Quarter or any Fiscal Year), unaudited balance sheets of Borrower and its
Subsidiaries as of the end of such month and the related unaudited
Consolidated statements of income and cash flow for such month and for the
portion of Borrower's financial year then elapsed, on a Consolidated basis,
setting forth in comparative form the corresponding figures for the
preceding Fiscal Year and certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not
contain notes;
(iii) as soon as available, and in any event within 50 days after
the end of each Fiscal Quarter hereafter, including the last Fiscal Quarter
of Borrower's Fiscal Year, unaudited balance sheets of Borrower and its
Subsidiaries as of the end of such Fiscal Quarter and the related unaudited
Consolidated statements of income and cash flow for such Fiscal Quarter and
for the portion of Borrower's financial year then elapsed, on a
Consolidated basis, setting forth in comparative form the corresponding
figures for the preceding Fiscal Year and certified by the principal
financial officer of Borrower as
42
prepared in accordance with GAAP and fairly presenting the Consolidated
financial position and results of operations of Borrower and its
Subsidiaries for such Fiscal Quarter and period subject only to changes
from audit and year-end adjustments and except that such statements need
not contain notes;
(iv) as soon as available, and in any event within 30 days after the
end of each Fiscal Quarter (except the last Fiscal Quarter of each Fiscal
Year), a financial highlight report that contains sales and gross margins
of Borrower and its Subsidiaries for the immediately preceding month, in
form and substance satisfactory to Agent, and that is certified by the
principal financial officer of Borrower;
(v) as soon as available, and in any event within 60 days after the
end of each Fiscal Year, drafts of the financial statements referenced in
Section 9.1.3(i) above;
(vi) not later than 25 days after each month, a listing of all of
Borrower's trade payables as of the last Business Day of such month,
specifying the name of and balance due each trade creditor, and, at Agent's
request, monthly detailed trade payable agings in form acceptable to Agent;
and
(vii) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which Borrower has made generally available to its shareholders and copies
of any regular, periodic and special reports or registration statements
which Borrower files with the SEC or any Governmental Authority which may
be substituted therefor, or any national securities exchange.
Concurrently with the delivery of the financial statements described in
clause (i) of this Section 9.1.3, Borrower shall deliver to Agent and Lenders a
copy of the accountants' letter to Borrower's management that is prepared in
connection with such financial statements and also shall cause to be prepared
and shall deliver to Agent and Lenders a certificate of the aforesaid certified
public accountants stating to Agent and Lenders that, based upon such
accountants' audit of the Consolidated financial statements of Borrower and its
Subsidiaries performed in connection with their examination of said financial
statements, nothing came to their attention that caused them to believe that
Borrower was not in compliance with Sections 9.2.16 or 9.3 hereof, or, if they
are aware of such noncompliance, specifying the nature thereof. Concurrently
with the delivery of the financial statements described in clauses (i) and (ii)
of this Section 9.1.3, or more frequently if requested by Agent or any Lender
during any period that a Default or Event of Default exists, Borrower shall
cause to be prepared and furnished to Agent and Lenders a Compliance Certificate
executed by the chief financial officer of Borrower.
Promptly after the sending or filing thereof, Borrower shall also provide
to Agent copies of any annual report to be filed in accordance with ERISA in
connection with each Plan (other than the annual report of any Multi-Employer
Plan) and such other data and information (financial and otherwise) as Agent,
from time to time, may reasonably request, bearing upon or related to the
Collateral or Borrower's and each of its Subsidiaries' financial condition or
results of operations.
43
9.1.4. Landlord and Storage Agreements. At Agent's request,
provide Agent with copies of all existing and future agreements between Borrower
and any landlord, warehouseman or bailee which owns any premises at which any
Collateral may, from time to time, be kept.
9.1.5. Projections. No later than 30 days prior to the end of
each Fiscal Year of Borrower, deliver to Agent and Lenders the Projections of
Borrower for the forthcoming 3 Fiscal Years, year by year, and for the
forthcoming Fiscal Year, month by month.
9.1.6. Taxes. Pay and discharge all Taxes prior to the date on
which such Taxes become delinquent or penalties attach thereto, except and to
the extent only that such Taxes are being Properly Contested.
9.1.7. Compliance with Laws. Comply with all Applicable Law,
including ERISA, all Environmental Laws, OSHA, FLSA and all laws, statutes,
regulations and ordinances regarding the collection, payment and deposit of
Taxes, and obtain and keep in force any and all Governmental Approvals necessary
to the ownership of its Properties or to the conduct of its business, to the
extent that any such failure to comply, obtain or keep in force could be
reasonably expected to have a Material Adverse Effect. Without limiting the
generality of the foregoing, if any Environmental Release shall occur at or on
any of the Properties of Borrower or any Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, act promptly and diligently to investigate
and report to Agent and all appropriate Governmental Authorities the extent of,
and to make appropriate remedial action to eliminate, such Environmental Release
all in accordance with applicable Environmental Laws.
9.1.8. Insurance. In addition to the insurance required herein
with respect to the Collateral, maintain with financially sound and reputable
insurers, (i) insurance with respect to its Properties and business against such
casualties and contingencies of such type (including product liability, workers'
compensation, larceny, embezzlement, or other criminal misappropriation
insurance) and in such amounts as is customary in the business of Borrower or
such Subsidiary and (ii) business interruption insurance in an amount not less
than $15,000,000.
9.1.9. Year 2000 Compatibility. Take all action necessary to
assure that Borrower's computer based systems are (and remain) able to operate
and effectively process data (including dates) after January 1, 2000.
9.1.10. Intellectual Property. Promptly after applying for or
otherwise acquiring any Intellectual Property, deliver to Lender, in form and
substance acceptable to Lender and in recordable form, all documents necessary
for Lender to perfect its Lien on such Intellectual Property.
9.1.11. License Agreements. Keep each License Agreement in full
force and effect for so long as Borrower has any Eligible Inventory, the
manufacture, sale or distribution of which is in any manner governed by or
subject to such License Agreement.
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9.1.12. Dividends of Subsidiaries After Default. Promptly (but
in no case more than 5 Business Days) after the occurrence of an Event of
Default, cause each Subsidiary to declare and pay cash Distributions on, or to
make payments or Distributions on account of, the shares of all classes of
Equity Interests of such Subsidiary in an amount equal to the maximum amount
permitted by Applicable Law at such time to such Subsidiary for the payment of
Distributions, and promptly turn over all such Distributions to Agent for
application to the Obligations.
9.1.13. Pledged Shares. Pledge to Agent, for the benefit itself and
Lenders, 100% of the Equity Interests of each of their respective Domestic
Subsidiaries and 65% of the Equity Interests of each of their respective Foreign
Subsidiaries pursuant to a Pledge Agreement.
9.2. Negative Covenants. For so long as there are any Revolver
Commitments outstanding and thereafter until payment in full of the Obligations,
Borrower covenants that, unless the Required Lenders have otherwise consented in
writing, it shall not and shall not permit any Subsidiary to:
9.2.1. Fundamental Changes. Merge, reorganize, consolidate or
amalgamate with any Person, or liquidate, wind up its affairs or dissolve
itself, except for mergers or consolidations of (i) any Subsidiary with another
Subsidiary or (ii) subject to 10 Business Days notice to Agent a Subsidiary into
Borrower if no Default or Event of Default exists at the time of or would result
from any such consolidation or merger; conduct business under any new fictitious
name except in the event a Subsidiary is acquired in connection with a Permitted
Acquisition and the name of such Subsidiary in use at the time of such Permitted
Acquisition is retained; or change Borrower's FEIN.
9.2.2. Revolver Loans. Make any loans or other advances of money
to any Person other than (i) to an officer or employee of Borrower or a
Subsidiary for salary, travel advances, advances against commissions and other
similar advances in the Ordinary Course of Business; (ii) to an officer or
employee of Borrower in the Ordinary Course of Business, provided that the total
of such loans to officers or employees of Borrower under this clause (ii) shall
not exceed $500,000 in the aggregate at any time; and (iii) for so long as no
Default or Event of Default exists, loans to a Subsidiary that is either a
Subsidiary Guarantor or a Co-Borrower.
9.2.3. Permitted Debt. Create, incur, assume, guarantee or suffer
to exist any Debt, except:
(i) the Obligations;
(ii) Subordinated Debt existing on the Closing Date, including Debt
evidenced by the Vendor Notes;
(iii) accounts payable by Borrower or a Subsidiary to trade
creditors in the Ordinary Course of Business;
45
(iv) Permitted Purchase Money Debt;
(v) Debt for accrued payroll, Taxes and other operating expenses
(other than for Money Borrowed) incurred in the Ordinary Course of Business
of Borrower or such Subsidiary, so long as payment thereof is not past due
and payable unless, in the case of Taxes only, such Taxes are being
Properly Contested;
(vi) Debt for Money Borrowed by Borrower (other than the
Obligations), but only to the extent that such Debt is outstanding on the
date of this Agreement and is not to be satisfied on or about the Closing
Date from the proceeds of the initial Revolver Loans;
(vii) Permitted Contingent Obligations;
(viii) Debt that is not included in any of the preceding clauses
of this Section 9.2.3, is not secured by a Lien (unless such Lien is a
Permitted Lien) and does not exceed at any time, in the aggregate, the sum
of $100,000 as to Borrower and all of its Subsidiaries;
(ix) Refinancing Debt so long as each of the Refinancing Conditions
is met; and
(x) Debt owing by a Subsidiary to Borrower for loans permitted
under Section 9.2.2(iii) of this Agreement.
9.2.4. Affiliate Transactions. Enter into, or be a party to any
transaction with any Affiliate, except: (i) the transactions contemplated by
the Loan Documents; (ii) payment of reasonable compensation to officers and
employees for services actually rendered to Borrower or its Subsidiaries; (iii)
payment of customary directors' fees and indemnities; (iv) transactions with
Affiliates that were consummated prior to the date hereof and have been
disclosed to Agent prior to the Closing Date; (v) transactions with Affiliates
in the Ordinary Course of Business and pursuant to the reasonable requirements
of Borrower's or such Subsidiary's business and upon fair and reasonable terms
that are fully disclosed to Agent and are no less favorable to Borrower or such
Subsidiary than Borrower or such Subsidiary would obtain in a comparable arm's
length transaction with a Person not an Affiliate of Borrower or such
Subsidiary; (vi) transactions contemplated by the Securities Purchase Agreement
and Shareholder Agreement; (vii) provided no Event of Default exists at the time
of or after giving effect thereto, payment of management fees to Littlejohn &
Co. LLC and Quilvest on such terms and conditions as are first disclosed in
writing to Agent; and (viii) Distributions to the extent permitted by Section
9.2.7 of this Agreement.
9.2.5. Limitation on Liens. Create or suffer to exist any Lien
upon any of its Property, income or profits, whether now owned or hereafter
acquired, except the following (collectively, "Permitted Liens"):
(i) Liens at any time granted in favor of Agent;
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(ii) Liens for Taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA) not yet due or being Properly Contested;
(iii) statutory Liens (excluding any Lien imposed pursuant to any
of the provisions of ERISA) arising in the Ordinary Course of Business of
Borrower or a Subsidiary, but only if and for so long as (x) payment in
respect of any such Lien is not at the time required or the Debt secured by
any such Liens is being Properly Contested and (y) such Liens do not
materially detract from the value of the Property of Borrower or such
Subsidiary and do not materially impair the use thereof in the operation of
Borrower's or such Subsidiary's business;
(iv) Purchase Money Liens securing Permitted Purchase Money Debt;
(v) Liens securing Debt of a Subsidiary of Borrower to Borrower or
to another such Subsidiary;
(vi) Liens arising by virtue of the rendition, entry or issuance
against Borrower or any Subsidiary, or any Property of Borrower or any
Subsidiary, of any judgment, writ, order, or decree for so long as each
such Lien (a) is in existence for less than 20 consecutive days after it
first arises or is being Properly Contested and (b) is at all times junior
in priority to any Liens in favor of Agent;
(vii) Liens incurred or deposits made in the Ordinary Course of
Business to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Money Borrowed), statutory obligations and
other similar obligations or arising as a result of progress payments under
government contracts, provided that, to the extent any such Liens attach to
any of the Collateral, such Liens are at all times subordinate and junior
to the Liens upon the Collateral in favor of Agent;
(viii) easements, rights-of-way, restrictions, covenants or other
agreements of record and other similar charges or encumbrances on real
Property of Borrower or a Subsidiary that do not interfere with the
ordinary conduct of the business of Borrower or such Subsidiary;
(ix) normal and customary rights of setoff upon deposits of cash in
favor of banks and other depository institutions and Liens of a collection
bank arising under the UCC on Payment Items in the course of collection;
(x) Liens in existence immediately prior to the Closing Date that
are satisfied in full and released on the Closing Date as a result of the
application of Borrower's cash on hand at the Closing Date or the proceeds
of Revolver Loans to be made on the Closing Date;
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(xi) Liens in favor of the Vendor Agent that are neither obtained
nor enforced in violation of the Vendor Lien Subordination or the Vendor
Debt Subordination;
(xii) such other Liens as appear on Schedule 9.2.5 hereto, to the
extent provided therein; and
(xiii) such other Liens as Agent in its sole discretion may
hereafter approve in writing.
9.2.6. Subordinated Debt. Make any payment of all or any part of
any Subordinated Debt or take any other action or omit to take any other action
in respect of any Subordinated Debt, except in accordance with the subordination
agreement relative thereto; or amend or modify the terms of any agreement
applicable to any Subordinated Debt, other than to extend the time of payment
thereof or to reduce the rate of interest payable in connection therewith. To
the extent that any payment is permitted to be made with respect to any
Subordinated Debt pursuant to the provisions of the subordination agreement
relative thereto, as a condition precedent to Borrower's authorization make any
such payment, Borrower shall provide to Agent at least 5 Business Days prior to
the scheduled payment, a certificate from a Senior Officer of Borrower stating
that no Default or Event of Default is in existence as of the date of the
certificate or will be in existence as of the date of such payment (both with
and without giving effect to the making of such payment), and specifying the
amount of principal and interest to be paid.
9.2.7. Distributions. Declare or make any Distributions, except
(i) for Upstream Payments, (ii) as otherwise provided in Section 9.1.13, (iii)
dividends paid by the issuance of (A) any Series A Preferred Shares (as defined
in the Securities Purchase Agreement as in effect on the date hereof) or
warrants to purchase Series A Preferred Shares in respect of the Series A
Preferred Shares issued pursuant to the Securities Purchase Agreement or the
Series A Designation (as defined in the Securities Purchase Agreement as in
effect on the date hereof) and (B) any Additional Preferred Shares (as defined
in the Securities Purchase Agreement as in effect on the date hereof) issued
pursuant to the Securities Purchase Agreement or an Additional Preferred Share
Designation (as defined in the Securities Purchase Agreement as in effect on the
date hereof) and (iv) after February 16, 2003, so long as no Default or Event of
Default exists or would result therefrom, cash dividends payable under Section
3(a)(ii) of either the Series A Designation or any Additional Preferred Share
Designation (as defined in the Securities Purchase Agreement as in effect on the
date hereof).
9.2.8. Upstream Payments. Create or suffer to exist any
encumbrance or restriction on the ability of a Subsidiary to make any Upstream
Payment, except for encumbrances or restrictions (i) pursuant to the Loan
Documents, (ii) existing under Applicable Law and (iii) identified and fully
disclosed in Schedule 9.2.8.
9.2.9. Capital Expenditures. Make Capital Expenditures (including
expenditures by way of capitalized leases) which in the aggregate, as to
Borrower and its Subsidiaries, exceed $6,000,000 during the period from the date
of this Agreement through February 28, 2001 or $8,000,000 during any Fiscal Year
after February 28, 2001.
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9.2.10. Disposition of Assets. Sell, assign, lease, consign or
otherwise dispose of any of its Properties or any interest therein, including
any disposition of Property as part of a sale and leaseback transaction, to or
in favor of any Person, except (i) sales of Inventory in the Ordinary Course of
Business; (ii) consignments of Inventory to the extent such consignments were
made on or before the Closing Date and are described on Schedule 7.1.1 hereto
(all of which consigned Inventory Borrower warrants does not exceed in Value
$900,000); (iii) dispositions of Equipment to the extent authorized by Section
7.4.2 hereof; (iv) a transfer of Property to Borrower by a Subsidiary; (v)
dispositions of Equipment, Inventory or leasehold interests in connection with
the closing of any business location of Borrower so long as (a) such
dispositions occur in the Ordinary Course of Business, (b) Borrower gives Agent
written notice of such closure in the next Compliance Certificate to be
delivered to Agent after such closure, and (c) all proceeds from such
disposition are promptly delivered to Agent for application to the Obligations;
and (vi) other dispositions expressly authorized by other provisions of the Loan
Documents.
9.2.11. Equity Interests of Subsidiaries. Form or acquire any
Subsidiary after the Closing Date (except in connection with a Permitted
Acquisition) or permit any existing Subsidiary to issue any additional Equity
Interests except director's qualifying shares.
9.2.12. Bill-and-Hold Sales, Etc. On or after the Closing Date,
make any sale to any customer on a bill-and-hold, guaranteed sale, sale and
return, sale on approval or consignment basis, or any sale on a repurchase or
return basis.
9.2.13. Restricted Investments. Make or have any Restricted
Investment.
9.2.14. Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
9.2.15. Accounting Changes. Make any significant change in
accounting treatment or reporting practices, except as may be required by GAAP,
or establish a fiscal year different from the Fiscal Year.
9.2.16. Organization Documents. Amend, modify or otherwise change
any of the terms or provisions in any of its Organization Documents as in effect
on the date hereof, except for changes that do not affect in any way Borrower's
or such Subsidiary's rights and obligations to enter into and perform the Loan
Documents to which it is a party and to pay all of the Obligations and that do
not otherwise have a Material Adverse Effect.
9.2.17. Restrictive Agreements. Enter into or become party to any
Restrictive Agreement other than those disclosed in Schedule 8.1.18 hereto,
provided that none of such disclosed agreements shall be amended without prior
notice to and the consent of Agent.
9.2.18. Conduct of Business. Engage in any business other than
the business engaged in by it on the Closing Date and any business or activities
which are substantially similar, related or incidental thereto.
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9.2.19. Vendor Subordinated Note Documents. Amend, restate,
modify or replace any of the Vendor Subordinated Note Documents.
9.3. Financial Covenants. For so long as there are any Revolver
Commitments outstanding and thereafter until payment in full of the Obligations,
Borrower covenants that, unless otherwise consented to by the Required Lenders
in writing, it shall:
9.3.1. Consolidated Net Worth. Maintain a Consolidated Net Worth of
at least $54,000,000, tested as of the last day of each month; provided,
however, that the foregoing amount shall be increased as of the last day of the
second month following the end of each Fiscal Quarter, commencing with the
Fiscal Quarter ending May 31, 2001, by an amount equal to 50% of Consolidated
Net Income during each such Fiscal Quarter, but no reduction in the foregoing
amount shall be made if Consolidated Net Income in any Fiscal Quarter is a
negative number.
9.3.2. Consolidated EBITDA. Achieve Consolidated EBITDA of at least
the amount shown below for the period corresponding thereto:
Period Amount
------ ------
February 29, 2000 through March 31, 2000 $(7,000,000)
February 29, 2000 through April 30, 2000 $(7,000,000)
February 29, 2000 through May 31, 2000 $(5,000,000)
February 29, 2000 through June 30, 2000 $ 0
February 29, 2000 through July 31, 2000 $ 4,500,000
February 29, 2000 through August 31, 2000 $ 8,000,000
February 29, 2000 through September 30, 2000 $10,000,000
February 29, 2000 through October 31, 2000 $11,500,000
February 29, 2000 through November 30, 2000 $11,500,000
February 29, 2000 through December 31, 2000 $11,500,000
February 29, 2000 through January 30, 2001 $11,500,000
February 29, 2000 through February 28, 2001 $12,000,000
Commencing on March 1, 2001, Borrower shall achieve Consolidated
EBITDA each month of at least the amount shown below for the period
corresponding thereto, based upon the immediately preceding 12-month
period:
Each month during the period from
March through April 2001 $12,000,000
Each month during the period from
May through July 2001 $16,000,000
Each month during the period from
August 2001 through January 2002 $18,000,000
The month ending February 28, 2002 $19,000,000
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9.3.3. Consolidated Fixed Charge Coverage Ratio. Achieve a
Consolidated Fixed Charge Coverage Ratio of at least the ratio shown below for
the period corresponding thereto:
Fiscal Quarter ended 5/31/02 1.30 to 1.00
Each Fiscal Quarter thereafter 1.40 to 1.00
SECTION 10. CONDITIONS PRECEDENT
10.1. Conditions Precedent to Initial Credit Extensions. Initial
Lenders shall not be required to fund any Revolver Loan requested by Borrower,
procure any Letter of Credit, or otherwise extend credit to Borrower, unless, on
or before February 29, 2000, each of the following conditions has been
satisfied:
10.1.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered to Agent by each of the signatories thereto (and,
with the exception of the Notes, in sufficient counterparts for each Lender) and
accepted by Agent and Initial Lenders and each Obligor shall be in compliance
with all of the terms thereof.
10.1.2. Availability. Agent shall have determined, and Initial
Lenders shall be satisfied that, immediately after Initial Lenders have made the
initial Revolver Loans to be made on the Closing Date, Bank has issued the
Letters of Credit to be issued on the Closing Date, and Borrower has paid (or
made provision for payment of) all closing costs incurred in connection with the
Revolver Commitments, and after giving effect to the other transactions to occur
on the Closing Date (including those described in Section 10.1.16 and 10.1.17),
Availability is not less than $10,000,000.
10.1.3. Evidence of Perfection and Priority of Liens. Agent shall
have received copies of all filing receipts or acknowledgments issued by any
Governmental Authority to evidence any filing or recordation necessary to
perfect the Liens of Agent in the Collateral and evidence in form satisfactory
to Agent and Initial Lenders that such Liens constitute valid and perfected
security interests and Liens, and that there are no other Liens upon any
Collateral except for Permitted Liens.
10.1.4. Organization Documents. Agent shall have received copies of
the Organization Documents of each Obligor, and all amendments thereto,
certified by the Secretary of State or other appropriate officials of the
jurisdiction of Borrower's and each Obligor's states of organization.
10.1.5. Good Standing Certificates. Agent shall have received good
standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor's jurisdiction of organization and
each jurisdiction where the conduct of such Obligor's business activities or
ownership of its Property necessitates qualification.
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10.1.6. Opinion Letters. Agent shall have received a favorable,
written opinion of Kilpatrick Stockton LP and the respective local counsel to
Borrower and Agent, covering, to Agent's satisfaction, the matters set forth on
Exhibit E attached hereto, and shall have received from Littlejohn's counsel a
favorable, written opinion regarding the due authorization, due execution,
validity and enforceability of the Littlejohn Guaranty.
10.1.7. Insurance. Agent shall have received certified copies of the
property and casualty insurance policies, insurance certificates regarding such
insurance with respect to the Collateral, together with loss payable
endorsements on Agent's standard form of loss payee endorsement naming Agent as
loss payee with respect to each such policy and certified copies of Borrower's
liability insurance policies, including product liability policies, together
with endorsements naming Agent as an additional insured, all as required by the
Loan Documents.
10.1.8. Lockbox and Dominion Accounts. Agent shall have received the
duly executed agreements establishing the Lockbox and each Dominion Account, in
each case with a financial institution acceptable to Agent for the collection or
servicing of the Accounts.
10.1.9. Solvency Certificates. Agent and Initial Lenders shall have
received certificates satisfactory to them from one or more knowledgeable Senior
Officers of Borrower that, after giving effect to the financing under this
Agreement and the issuance of the Letters of Credit, Borrower is Solvent.
10.1.10. No Labor Disputes. Agent shall have received assurances
satisfactory to it that there are no threats of strikes or work stoppages by any
employees, or organization of employees, of any Obligor which Agent reasonably
determines may have a Material Adverse Effect.
10.1.11. Compliance with Laws and Other Agreements. Agent shall have
determined that none of the Loan Documents or any of the transactions
contemplated thereby violate any Applicable Law, court order or agreement
binding upon any Obligor.
10.1.12. No Material Adverse Change. No material adverse change in
the financial condition of any Obligor or in the quality, quantity or value of
any Collateral shall have occurred since November 30, 1999.
10.1.13. Vendor Arrangements. Agent shall have reviewed and found
acceptable Borrower's accounts payable and vendor arrangements.
10.1.14. Payment of Fees. Borrower shall have paid, or made provision
for the payment on the Closing Date of, all fees and expenses to be paid
hereunder to Agent and Lenders on the Closing Date.
10.1.15. LC Conditions. With respect to the procurement of any
Letter of Credit on the Closing Date, each of the LC Conditions shall have been
satisfied.
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10.1.16. Capital Contributions. Agent shall have received evidence
satisfactory to it that (i) on or within 5 days prior to the Closing Date,
Borrower received capital contributions of not less than $35,000,000 in the
aggregate in cash, $28,000,000 of which shall have been contributed by
Littlejohn and $7,000,000 of which shall have been contributed by Quilvest; and
(ii) the Schedule 14(f)(1), in the form delivered to Agent prior to the Closing
Date, has been filed with the SEC and mailed to all shareholders of record of
Borrower and not less than 10 days has elapsed since the date of the filing of
such Schedule.
10.1.17. Vendor Subordinated Debt. Borrower shall have received from
Vendors at least $20,000,000 in proceeds from the issuance of the Vendor Notes,
the terms of which shall be acceptable in all respects to Agent and Lenders, and
the Vendor Lien Subordination and the Vendor Debt Subordination shall have been
duly executed and delivered by each of the signatories thereto.
10.1.18. Vendor Supply Agreements. Borrower and Vendors shall have
executed, and Borrower shall have delivered to Agent copies of, the Vendor
Supply Agreements.
10.2. Conditions Precedent to All Credit Extensions. Lenders shall not
be required to fund any Revolver Loans, procure any Letters of Credit, or
otherwise extend any credit to or for the benefit of Borrower, unless and until
each of the following conditions has been and continues to be satisfied:
10.2.1. No Defaults. No Default or Event of Default exists at the
time, or would result from the funding, of any Revolver Loan or other extension
of credit.
10.2.2. Satisfaction of Conditions in Other Loan Documents. Each of
the conditions precedent set forth in any other Loan Document shall have been
and shall remain satisfied.
10.2.3. No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of, this Agreement or any of the other Loan Documents or the consummation of
the transactions contemplated hereby or thereby.
10.2.4. No Material Adverse Effect. No event shall have occurred and
no condition shall exist which has or could be reasonably expected to have a
Material Adverse Effect.
10.2.5. Borrowing Base Certificate. Agent shall have received
each Borrowing Base Certificate required by the terms of this Agreement or
otherwise requested by Agent.
10.2.6. LC Conditions. With respect to the procurement of any Letter
of Credit after the Closing Date, each of the LC Conditions shall have been
satisfied.
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10.3. Inapplicability of Conditions. None of the conditions precedent set
forth in Sections 10.1 or 10.2 shall be conditions to the obligation of (i) each
Participating Lender to make payments to Fleet pursuant to Section 1.2.2, (ii)
each Lender to deposit with Agent such Lender's Pro Rata share of a Borrowing in
accordance with Section 3.1.2, (iii) each Lender to fund its Pro Rata share of a
Revolver Loan to repay outstanding Settlement Loans to Fleet as provided in
Section 3.1.3(ii), (iv) each Lender to pay any amount payable to Agent or any
other Lender pursuant to this Agreement or (v) Agent to pay any amount payable
to any Lender pursuant to this Agreement.
10.4. Limited Waiver of Conditions Precedent. If Lenders shall make
any Revolver Loan, procure any Letter of Credit, or otherwise extend any credit
to Borrower under this Agreement at a time when any of the foregoing conditions
precedent are not satisfied (regardless of whether the failure of satisfaction
of any such conditions precedent was known or unknown to Agent or Lenders), the
funding of such Revolver Loan shall not operate as a waiver of the right of
Agent and Lenders to insist upon the satisfaction of all conditions precedent
with respect to each subsequent Borrowing requested by Borrower or a waiver of
any Default or Event of Default as a consequence of the failure of any such
conditions to be satisfied, unless Agent, with the prior written consent of the
Required Lenders, in writing waives the satisfaction of any condition precedent,
in which event such waiver shall only be applicable for the specific instance
given and only to the extent and for the period of time expressly stated in such
written waiver.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. Events of Default. The occurrence or existence of any one or
more of the following events or conditions shall constitute an "Event of
Default" (each of which Events of Default shall be deemed to exist unless and
until waived by Agent and Lenders in accordance with the provisions of Section
12.9 hereof):
11.1.1. Payment of Obligations. Borrower shall fail to pay any of
the Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).
11.1.2. Misrepresentations. Any representation, warranty or other
written statement to Agent or any Lender by or on behalf of any Obligor, whether
made in or furnished in compliance with or in reference to any of the Loan
Documents, proves to have been false or misleading in any material respect when
made or furnished or when reaffirmed pursuant to Section 8.2 hereof.
11.1.3. Breach of Specific Covenants. Borrower shall fail or neglect
to perform, keep or observe (i) any covenant contained in Sections 6.4, 7.1.1,
7.2.5, 7.2.6, 9.1.1, 9.1.2(c), 9.2 or 9.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant, (ii) any covenant contained
in Section 7.5 hereof within 2 days after the date on which Borrower was
required to perform, keep or observe such covenant (provided that Borrower may
not avail itself of such 2-day cure period more than 6 times during any Fiscal
Year), or (iii) any covenant contained in Section 9.1.3 within 3 days after the
date on which
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Borrower was required to perform, keep or observe such covenant (provided that
Borrower may not avail itself of such 3-day cure period more than 3 times during
any Fiscal Year).
11.1.4. Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 11.1 hereof) and
the breach of such other covenant is not cured to Agent's and the Required
Lender's satisfaction within 15 days after the sooner to occur of any Senior
Officer's receipt of notice of such breach from Agent or the date on which such
failure or neglect first becomes known to any Senior Officer; provided, however,
that such notice and opportunity to cure shall not apply in the case of any
failure to perform, keep or observe any covenant which is not capable of being
cured at all or within such 15-day period or which is a willful and knowing
breach by Borrower.
11.1.5. Default Under Security Documents/Other Agreements. Borrower
or any other Obligor shall default in the due and punctual observance or
performance of any liability or obligation to be observed or performed by it
under any of the Other Agreements or Security Documents.
11.1.6. Other Defaults. There shall occur any default or event of
default on the part of Borrower or any Subsidiary under any agreement, document
or instrument to which Borrower or any Subsidiary is a party or by which
Borrower or any Subsidiary or any of their respective Properties is bound,
creating or relating to any Debt for Money Borrowed (other than the Obligations)
in excess of $250,000 if the payment or maturity of such Debt for Money Borrowed
may be accelerated in consequence of such event of default or demand for payment
of such Debt for Money Borrowed may be made.
11.1.7. Uninsured Losses. Any loss, theft, damage or destruction of
any of the Collateral not fully covered (subject to such deductibles as Agent
shall have permitted) by insurance if the amount not covered by insurance
exceeds $1,000,000.
11.1.8. Material Adverse Effect. There shall occur any event or
condition that has a Material Adverse Effect.
11.1.9. Solvency. Any Obligor shall cease to be Solvent.
11.1.10. Insolvency Proceedings. Any Insolvency Proceeding shall be
commenced by any Obligor; an Insolvency Proceeding is commenced against any
Obligor and any of the following events occur: such Obligor consents to the
institution of the Insolvency Proceeding against it, the petition commencing the
Insolvency Proceeding is not timely controverted by such Obligor, the petition
commencing the Insolvency Proceeding is not dismissed, discharged or bonded
within 60 days after the date of the filing thereof (provided that, in any
event, during the pendency of any such period, Lenders shall be relieved from
their obligation to make Revolver Loans or otherwise extend credit to or for the
benefit of Borrower hereunder), an interim trustee is appointed to take
possession all or a substantial portion of the Properties of such Obligor or to
operate all or any substantial portion of the business of such Obligor or an
order for relief shall have been issued or entered in connection
55
with such Insolvency Proceeding; or any Obligor shall make an offer of
settlement extension or composition to its unsecured creditors generally.
11.1.11. Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Obligor for a period
which may be reasonably expected to have a Material Adverse Effect; or any
Obligor shall suffer the loss or revocation of any license or permit now held or
hereafter acquired by such Obligor which is necessary to the continued or lawful
operation of its business; or any Obligor shall be enjoined, restrained or in
any way prevented by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any material lease or
agreement pursuant to which any Obligor leases or occupies any premises on which
any Collateral is located shall be canceled or terminated prior to the
expiration of its stated term and such cancellation or termination has a
Material Adverse Effect or results in an Out-of-Formula Condition; or any
material part of the Collateral shall be taken through condemnation or the value
of such Property shall be materially impaired through condemnation.
11.1.12. Change of Control. A Change of Control shall occur.
11.1.13. ERISA. A Reportable Event shall occur which could
reasonably be expected to constitute grounds for the termination by the Pension
Benefit Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any Plan, or if any
Plan shall be terminated or any such trustee shall be requested or appointed, or
if Borrower, any Subsidiary or any Obligor is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting from Borrower's, such Subsidiary's or such Obligor's complete or
partial withdrawal from such Plan.
11.1.14. Challenge to Loan Documents. Any Obligor or any of its
Affiliates shall challenge or contest in any action, suit or proceeding the
validity or enforceability of any of the Loan Documents, the legality or
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Agent, or any of the Loan Documents ceases to be in full force
or effect for any reason other than a full or partial waiver or release by Agent
and Lenders in accordance with the terms thereof.
11.1.15. Judgment. One or more judgments or orders for the payment
of money in an amount that exceeds, individually or in the aggregate, $250,000
shall be entered against Borrower or any other Obligor and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
11.1.16. Repudiation of or Default Under Guaranty. Any Guarantor
shall revoke or attempt to revoke the Guaranty signed by such Guarantor, shall
repudiate such Guarantor's liability thereunder, shall be in default under the
terms thereof, or shall fail to confirm in writing, promptly after receipt of
Agent's written request therefor, such Guarantor's ongoing liability under the
Guaranty in accordance with its terms.
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11.1.17. Criminal Forfeiture. Any Obligor shall be convicted under
any criminal law that could lead to a forfeiture of any material Property of
such Obligor.
11.1.18. Vendor Subordinated Note Documents. Any default or event of
default shall occur under any of the Vendor Subordinated Note Documents.
11.2. Acceleration of Obligations; Termination of Revolver Commitments.
Without in any way limiting the right of Agent to demand payment of any portion
of the Obligations payable on demand in accordance with this Agreement:
11.2.1. Upon or at any time after the occurrence of an Event of
Default (other than pursuant to Section 11.1.10 hereof) and for so long as such
Event of Default shall exist, Agent may in its discretion (and, upon receipt of
written instructions to do so from the Required Lenders, shall) (a) declare the
principal of and any accrued interest on the Revolver Loans and all other
Obligations owing under any of the Loan Documents to be, whereupon the same
shall become without further notice or demand (all of which notice and demand
Borrower expressly waives), forthwith due and payable and Borrower shall
forthwith pay to Agent the entire principal of and accrued and unpaid interest
on the Revolver Loans and other Obligations plus reasonable attorneys' fees and
expenses if such principal and interest are collected by or through an attorney-
at-law and (b) terminate the Revolver Commitments.
11.2.2. Upon the occurrence of an Event of Default specified in
Section 11.1.10 hereof, all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Agent to or upon Borrower
and the Revolver Commitments shall automatically terminate as if terminated by
Agent pursuant to Section 5.2.1 hereof and with the effects specified in Section
5.2.4 hereof; provided, however, that, if Agent or Lenders shall continue to
make Revolver Loans or otherwise extend credit to Borrower pursuant to this
Agreement after an automatic termination of the Revolver Commitments by reason
of the commencement of an Insolvency Proceeding by or against Borrower, such
Revolver Loans and other credit shall nevertheless be governed by this Agreement
and enforceable against and recoverable from each Obligor as if such Insolvency
Proceeding had never been instituted.
11.3. Other Remedies. Upon and after the occurrence of an Event of
Default and for so long as such Event of Default shall exist, Agent may in its
discretion (and, upon receipt of written direction of the Required Lenders,
shall) exercise from time to time the following rights and remedies (without
prejudice to the rights of Agent or any Lender to enforce its claim against any
or all Obligors):
11.3.1. All of the rights and remedies of a secured party under the
UCC or under other Applicable Law, and all other legal and equitable rights to
which Agent may be entitled under any of the Loan Documents, all of which rights
and remedies shall be cumulative and shall be in addition to any other rights or
remedies contained in this Agreement or any of the other Loan Documents, and
none of which shall be exclusive.
11.3.2. The right to collect all amounts at any time payable to
Borrower from any Account Debtor or other Person at any time indebted to
Borrower.
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11.3.3. The right to take immediate possession of any of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, then Borrower agrees not to charge Agent for storage thereof).
11.3.4. The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by Applicable Law, in lots or in bulk, for cash or on credit, all as
Agent, in its sole discretion, may deem advisable. Borrower agrees that any
requirement of notice to Borrower or any other Obligor of any proposed public or
private sale or other disposition of Collateral by Agent shall be deemed
reasonable notice thereof if given at least 10 days prior thereto, and such sale
may be at such locations as Agent may designate in said notice. Agent shall
have the right to conduct such sales on Borrower's or any other Obligor's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with Applicable Law. Agent shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Agent may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale or other
disposition of any Collateral may be applied, after allowing 2 Business Days for
collection, first to any Extraordinary Expenses incurred by Agent, second to
interest accrued with respect to any of the Obligations; and third, to the
principal balance of the Obligations. If any deficiency shall arise, Obligors
shall remain jointly and severally liable to Agent and Lenders therefor.
11.3.5 The right to the appointment of a receiver, without notice of
any kind whatsoever, to take possession of all or any portion of the Collateral
and to exercise such rights and powers as the court appointing such receiver
shall confer upon such receiver.
11.3.6. The right to require Borrower to deposit with Agent funds
equal to the LC Outstandings and, if Borrower fails promptly to make such
deposit, Lenders may (and shall upon the direction of the Required Lenders)
advance such amount as a Revolver Loan (whether or not an Out-of-Formula
Condition exists or is created thereby). Any such deposit or advance shall be
held by Agent as a reserve to fund future payments on any LC Support. At such
time as the LC Support has been paid or terminated and all Letters of Credit
have been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower. Agent is hereby irrevocably
granted a license or other right to use, without charge, any or all of
Borrower's Intellectual Property and all of Borrower's computer hardware and
software trade secrets, brochures, customer lists, promotional and advertising
materials, labels, and packaging materials, and any Property of a similar
nature, in advertising for sale, marketing, selling and collecting and in
completing the manufacturing of any Collateral, and Borrower's rights under all
licenses and all franchise agreements shall inure to Agent's benefit.
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11.4. Setoff. In addition to any Liens granted under any of the Loan
Documents and any rights now or hereafter available under Applicable Law, Agent
and each Lender (and each of their respective Affiliates) is hereby authorized
by Borrower at any time that an Event of Default exists, without notice to
Borrower or any other Person (any such notice being hereby expressly waived) to
set off and to appropriate and to apply any and all deposits, general or special
(including Debt evidenced by certificates of deposit whether matured or
unmatured (but not including trust accounts)) and any other Debt at any time
held or owing by Agent, such Lender or any of their Affiliates to or for the
credit or the account of Borrower against and on account of the Obligations of
Borrower arising under the Loan Documents to Agent, such Lender or any of their
Affiliates, including all Revolver Loans and LC Outstandings and all claims of
any nature or description arising out of or in connection with this Agreement,
irrespective of whether or not (i) Agent or such Lender shall have made any
demand hereunder, (ii) Agent, at the request or with the consent of the Required
Lenders, shall have declared the principal of and interest on the Revolver Loans
and other amounts due hereunder to be due and payable as permitted by this
Agreement and even though such Obligations may be contingent or unmatured or
(iii) the Collateral for the Obligations is adequate. Notwithstanding the
foregoing, each of Agent and Lenders agree with each other that it shall not,
without the express consent of the Required Lenders, and that it shall (to the
extent that it is lawfully entitled to do so) upon the request of the Required
Lenders, exercise its setoff rights hereunder against any accounts of Borrower
now or hereafter maintained with Agent, such Lender or any Affiliate of any of
them, but Borrower shall have no claim or cause of action against Agent or any
Lender for any setoff made without the consent of the Required Lenders and the
validity of any such setoff shall not be impaired by the absence of such
consent. If any party (or its Affiliate) exercises the right of setoff provided
for hereunder, such party shall be obligated to share any such setoff in the
manner and to the extent required by Section 12.5.
11.5. Remedies Cumulative; No Waiver.
11.5.1. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrower contained in this
Agreement and the other Loan Documents, or in any document referred to herein or
contained in any agreement supplementary hereto or in any schedule or in any
Guaranty given to Agent or any Lender or contained in any other agreement
between Agent or any Lender and Borrower, heretofore, concurrently, or hereafter
entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The rights and remedies of Agent and Lenders under
this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies that Agent or any Lender would otherwise
have.
11.5.2. The failure or delay of Agent or any Lender to require strict
performance by Borrower of any provision of any of the Loan Documents or to
exercise or enforce any rights, Liens, powers or remedies under any of the Loan
Documents or with respect to any Collateral shall not operate as a waiver of
such performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Revolver Loans and all other Obligations owing or to become owing from
Borrower to Agent and Lenders shall have been fully satisfied. None of the
undertakings, agreements,
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warranties, covenants and representations of Borrower contained in this
Agreement or any of the other Loan Documents and no Event of Default by Borrower
under this Agreement or any other Loan Documents shall be deemed to have been
suspended or waived by Agent or any Lender, unless such suspension or waiver is
by an instrument in writing specifying such suspension or waiver and is signed
by a duly authorized representative of Agent or such Lender and directed to
Borrower.
11.5.3. If Agent or any Lender shall accept performance by Borrower,
in whole or in part, of any obligation that Borrower is required by any of the
Loan Documents to perform only when a Default or Event of Default exists, or if
Agent or any Lender shall exercise any right or remedy under any of the Loan
Documents that may not be exercised other than when a Default or Event of
Default exists, Agent's or Lender's acceptance of such performance by Borrower
or Agent's or Lender's exercise of any such right or remedy shall not operate to
waive any such Event of Default or to preclude the exercise by Agent or any
Lender of any other right or remedy, unless otherwise expressly agreed in
writing by Agent or such Lender, as the case may be.
SECTION 12. AGENT
12.1. Appointment, Authority and Duties of Agent.
12.1.1. Each Lender hereby irrevocably appoints and designates Fleet
as Agent to act as herein specified. Agent may, and each Lender by its
acceptance of a Note shall be deemed irrevocably to have authorized Agent to,
enter into all Loan Documents to which Agent is or is intended to be a party and
all amendments hereto and all Security Documents at any time executed by
Borrower, for its benefit and the Pro Rata benefit of Lenders and, except as
otherwise provided in this Section 12, to exercise such rights and powers under
this Agreement and the other Loan Documents as are specifically delegated to
Agent by the terms hereof and thereof, together with such other rights and
powers as are reasonably incidental thereto. Each Lender agrees that any action
taken by Agent or the Required Lenders in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by Agent or the Required
Lenders of any of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Without limiting the generality of the foregoing,
Agent shall have the sole and exclusive right and authority to (a) act as the
disbursing and collecting agent for Lenders with respect to all payments and
collections arising in connection with this Agreement and the other Loan
Documents; (b) execute and deliver as Agent each Loan Document and accept
delivery of each such agreement delivered by Borrower or any other Obligor; (c)
act as collateral agent for Lenders for purposes of the perfection of all
security interests and Liens created by this Agreement or the Security Documents
with respect to all material items of the Collateral and, subject to the
direction of the Required Lenders, for all other purposes stated therein,
provided that Agent hereby appoints, authorizes and directs each Lender to act
as a collateral sub-agent for Agent and the other Lenders for purposes of the
perfection of all security interests and Liens with respect to Borrower's
Deposit Accounts maintained with, and all cash and Cash Equivalents held by,
such Lender; (d) subject to the direction of the Required Lenders, manage,
supervise or otherwise deal with the Collateral; and (e) except as may be
otherwise specifically
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restricted by the terms of this Agreement and subject to the direction of the
Required Lenders, exercise all remedies given to Agent with respect to any of
the Collateral under the Loan Documents relating thereto, Applicable Law or
otherwise. The duties of Agent shall be ministerial and administrative in
nature, and Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship with any Lender (or any Lender's
participants). Unless and until its authority to do so is revoked in writing by
Required Lenders, Agent alone shall be authorized to determine whether any
Accounts or Inventory constitute Eligible Accounts or Eligible Inventory (basing
such determination in each case upon the meanings given to such terms in
Appendix A), or whether to impose or release any reserve, and to exercise its
own credit judgment in connection therewith, which determinations and judgments,
if exercised in good faith, shall exonerate Agent from any liability to Lenders
or any other Person for any errors in judgment.
12.1.2. Agent (which term, as used in this sentence, shall include
reference to Agent's officers, directors, employees, attorneys, agents and
Affiliates and to the officers, directors, employees, attorneys and agents of
Agent's Affiliates) shall not: (a) have any duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents or (b)
be required to take, initiate or conduct any litigation, foreclosure or
collection proceedings hereunder or under any of the other Loan Documents except
to the extent directed to do so by the Required Lenders during the continuance
of any Event of Default. The conferral upon Agent any right hereunder shall not
imply a duty on Agent's part to exercise any such right unless instructed to do
so by the Required Lenders in accordance with this Agreement.
12.1.3. Agent may perform any of its duties by or through its agents
and employees and may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or attorneys-in-
fact selected by it with reasonable care. Borrower shall promptly (and in any
event, on demand) reimburse Agent for all reasonable expenses (including all
Extraordinary Expenses) incurred by Agent pursuant to any of the provisions
hereof or of any of the other Loan Documents or in the execution of any of
Agent's duties hereby or thereby created or in the exercise of any right or
power herein or therein imposed or conferred upon it or Lenders (excluding,
however, general overhead expenses), and each Lender agrees promptly to pay to
Agent, on demand, such Lender's Pro Rata share of any such reimbursement for
expenses (including Extraordinary Expenses) that is not timely made by Borrower
to Agent.
12.1.4. The rights, remedies, powers and privileges conferred upon
Agent hereunder and under the other Loan Documents may be exercised by Agent
without the necessity of the joinder of any other parties unless otherwise
required by Applicable Law. If Agent shall request instructions from the
Required Lenders with respect to any act or action (including the failure to
act) in connection with this Agreement or any of the other Loan Documents, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Lenders; and
Agent shall not incur liability to any Person by reason of so refraining.
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
hereunder or under any of the Loan Documents pursuant to or in accordance with
the instructions of the Required Lenders except for Agent's own gross negligence
or willful misconduct in connection with any action taken by it.
Notwithstanding anything to the contrary contained in
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this Agreement, Agent shall not be required to take any action that is in its
opinion contrary to Applicable Law or the terms of any of the Loan Documents or
that would in its reasonable opinion subject it or any of its officers,
employees or directors to personal liability; provided, however, that if Agent
shall fail or refuse to take action that is not contrary to Applicable Law or to
any of the terms of any of the Loan Documents even if such action in Agent's
opinion would subject it to potential liability, the Required Lenders may remove
Agent and appoint a successor Agent in the same manner and with the same effects
as is provided in this Agreement with respect to Agent's resignation.
12.1.5. Agent shall promptly, upon receipt thereof, forward to each
Lender (i) copies of any significant written notices, reports, certificates and
other information received by Agent from any Obligor (but only if and to the
extent such Obligor is not required by the terms of the Loan Documents to supply
such information directly to Lenders) and (ii) copies of the results of any
field audits by Agent with respect to Borrower. Agent shall have no liability
to any Lender for any errors in or omissions from any field audit or other
examination of Borrower or the Collateral, unless such error or omission was the
direct result of Agent's willful misconduct.
12.2. Agreements Regarding Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien upon
any Collateral (i) upon the termination of the Revolver Commitments and payment
or satisfaction of all of the Obligations, (ii) constituting Equipment sold or
disposed of in accordance with the terms of this Agreement if Borrower certifies
to Agent that the disposition is made in compliance with the terms of this
Agreement (and Agent may rely conclusively on any such certificate, without
further inquiry), or (iii) if approved or ratified by the Required Lenders.
Agent shall have no obligation whatsoever to any of the Lenders to assure that
any of the Collateral exists or is owned by Borrower or is cared for, protected
or insured or has been encumbered, or that Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected or enforced or entitled
to any particular priority or to exercise any duty of care with respect to any
of the Collateral.
12.3. Reliance By Agent. Agent shall be entitled to rely, and shall be
fully protected in so relying, upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram, telecopier
message or cable) believed by it to be genuine and correct and to have been
signed, sent or made by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly provided for by this
Agreement or any of the other Loan Documents, Agent shall in all cases be fully
protected in acting or refraining from acting hereunder and thereunder in
accordance with the instructions of the Required Lenders, and such instructions
of the Required Lenders and any action taken or failure to act pursuant thereto
shall be binding upon Lenders.
12.4. Action Upon Default. Agent shall not be deemed to have knowledge
of the occurrence of a Default or an Event of Default unless it has received
written notice from a Lender or Borrower specifying the occurrence and nature of
such Default or Event of Default. If Agent shall receive such a notice of a
Default or an Event of Default or shall otherwise acquire actual knowledge of
any Default or Event of Default, Agent shall promptly notify Lenders in
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writing and Agent shall take such action and assert such rights under this
Agreement and the other Loan Documents, or shall refrain from taking such action
and asserting such rights, as the Required Lenders shall direct from time to
time. If any Lender shall receive a notice of a Default or an Event of Default
or shall otherwise acquire actual knowledge of any Default or Event of Default,
such Lender shall promptly notify Agent and the other Lenders in writing. As
provided in Section 12.3 hereof, Agent shall not be subject to any liability by
reason of acting or refraining to act pursuant to any request of the Required
Lenders except for its own willful misconduct or gross negligence in connection
with any action taken by it. Before directing Agent to take or refrain from
taking any action or asserting any rights or remedies under this Agreement and
the other Loan Documents on account of any Event of Default, the Required
Lenders shall consult with and seek the advice of (but without having to obtain
the consent of) each other Lender, and promptly after directing Agent to take or
refrain from taking any such action or asserting any such rights, the Required
Lenders will so advise each other Lender of the action taken or refrained from
being taken and, upon request of any Lender, will supply information concerning
actions taken or not taken. In no event shall the Required Lenders, without the
prior written consent of each Lender, direct Agent to accelerate and demand
payment of the Revolver Loans held by one Lender without accelerating and
demanding payment of all other Revolver Loans or to terminate the Revolver
Commitments of one or more Lenders without terminating the Revolver Commitments
of all Lenders. Each Lender agrees that, except as otherwise provided in any of
the Loan Documents and without the prior written consent of the Required
Lenders, it will not take any legal action or institute any action or proceeding
against any Obligor with respect to any of the Obligations or Collateral or
accelerate or otherwise enforce its portion of the Obligations. Without limiting
the generality of the foregoing, none of Lenders may exercise any right that it
might otherwise have under Applicable Law to credit bid at foreclosure sales,
UCC sales or other similar sales or dispositions of any of the Collateral except
as authorized by the Required Lenders. Notwithstanding anything to the contrary
set forth in this Section 12.4 or elsewhere in this Agreement, each Lender shall
be authorized to take such action to preserve or enforce its rights against any
Obligor where a deadline or limitation period is otherwise applicable and would,
absent the taken of specified action, bar the enforcement of Obligations held by
such Lender against such Obligor, including the filing of proofs of claim in any
Insolvency Proceeding.
12.5. Ratable Sharing. If any Lender shall obtain any payment or
reduction (including any amounts received as adequate protection of a bank
account deposit treated as cash collateral under the Bankruptcy Code) of any
Obligation of Borrower hereunder (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) in excess of its Pro Rata share
of payments or reductions on account of such Obligations obtained by all of the
Lenders, such Lender shall forthwith (i) notify the other Lenders and Agent of
such receipt and (ii) purchase from the other Lenders such participations in the
affected Obligations as shall be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs incurred in connection
therewith, on a Pro Rata basis, provided that if all or any portion of such
excess payment or reduction is thereafter recovered from such purchasing Lender
or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but without interest. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 12.5 may, to the
fullest extent permitted by Applicable Law, exercise all of its rights of
payment (including the right of
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set-off) with respect to such participation as fully as if such Lender were the
direct creditor of Borrower in the amount of such participation.
12.6. Indemnification of Agent Indemnitees.
12.6.1. Each Lender agrees to indemnify and defend the Agent
Indemnitees (to the extent not reimbursed by Borrower under this Agreement, but
without limiting the indemnification obligation of Borrower under this
Agreement), on a Pro Rata basis, and to hold each of the Agent Indemnitees
harmless from and against, any and all Claims which may be imposed on, incurred
by or asserted against any of the Agent Indemnitees in any way related to or
arising out of this Agreement or any of the other Loan Documents or any other
document contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses which Borrower
is obligated to pay under Section 14.2 hereof or amounts Agent may be called
upon to pay in connection with any lockbox or Dominion Account arrangement
contemplated hereby, including any amounts arising from any automated
clearinghouse transfers) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
to any Agent Indemnitee for any of the foregoing to the extent that they result
solely from the willful misconduct or gross negligence of such Agent Indemnitee.
12.6.2. Without limiting the generality of the foregoing provisions
of this Section 12.6, if Agent should be sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person on account of any alleged
preference or fraudulent transfer received or alleged to have been received from
Borrower or any other Obligor as the result of any transaction under the Loan
Documents, then in such event any monies paid by Agent in settlement or
satisfaction of such suit, together with all Extraordinary Expenses incurred by
Agent in the defense of same, shall be promptly reimbursed to Agent by Lenders
to the extent of each Lender's Pro Rata share.
12.6.3. Without limiting the generality of the foregoing provisions
of this Section 12.6, if at any time (whether prior to or after the Commitment
Termination Date) any action or proceeding shall be brought against any of the
Agent Indemnitees by an Obligor or by any other Person claiming by, through or
under an Obligor, to recover damages for any act taken or omitted by Agent under
any of the Loan Documents or in the performance of any rights, powers or
remedies of Agent against any Obligor, any Account Debtor, the Collateral or
with respect to any Revolver Loans, or to obtain any other relief of any kind on
account of any transaction involving any Agent Indemnitees under or in relation
to any of the Loan Documents, each Lender agrees to indemnify, defend and hold
the Agent Indemnitees harmless with respect thereto and to pay to the Agent
Indemnitees such Lender's Pro Rata share of such amount as any of the Agent
Indemnitees shall be required to pay by reason of a judgment, decree, or other
order entered in such action or proceeding or by reason of any compromise or
settlement agreed to by the Agent Indemnitees, including all interest and costs
assessed against any of the Agent Indemnitees in defending or compromising such
action, together with attorneys' fees and other legal expenses paid or incurred
by the Agent Indemnitees in connection therewith; provided, however, that no
Lender shall be liable to any Agent Indemnitee for any of the foregoing to the
extent that they arise solely from the willful misconduct or gross negligence of
such Agent
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Indemnitee. In Agent's discretion, Agent may also reserve for or
satisfy any such judgment, decree or order from proceeds of Collateral prior to
any distributions therefrom to or for the account of Lenders.
12.7. Limitation on Responsibilities of Agent. Agent shall in all cases
be fully justified in failing or refusing to act hereunder unless it shall have
received further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.6 hereof against any and all Claims
which may be incurred by Agent by reason of taking or continuing to take any
such action. Neither Agent nor Arranger shall be liable to Lenders (or any
Lender's participants) for any action taken or omitted to be taken under or in
connection with this Agreement or the other Loan Documents except as a result of
actual gross negligence or willful misconduct on the part of Agent. Agent does
not assume any responsibility for any failure or delay in performance or breach
by any Obligor or any Lender of its obligations under this Agreement or any of
the other Loan Documents. Agent does not make to Lenders, and no Lender makes
to Agent or the other Lenders, any express or implied warranty, representation
or guarantee with respect to the Revolver Loans, the Collateral, the Loan
Documents or any Obligor. Neither Agent nor any of its officers, directors,
employees, attorneys or agents shall be responsible to Lenders, and no Lender
nor any of its agents, attorneys or employees shall be responsible to Agent or
the other Lenders, for: (i) any recitals, statements, information,
representations or warranties contained in any of the Loan Documents or in any
certificate or other document furnished pursuant to the terms hereof; (ii) the
execution, validity, genuineness, effectiveness or enforceability of any of the
Loan Documents; (iii) the validity, genuineness, enforceability, collectibility,
value, sufficiency or existence of any Collateral, or the perfection or priority
of any Lien therein; or (iv) the assets, liabilities, financial condition,
results of operations, business, creditworthiness or legal status of any Obligor
or any Account Debtor. Neither Agent nor any of its officers, directors,
employees, attorneys or agents shall have any obligation to any Lender to
ascertain or inquire into the existence of any Default or Event of Default, the
observance or performance by any Obligor of any of the duties or agreements of
such Obligor under any of the Loan Documents or the satisfaction of any
conditions precedent contained in any of the Loan Documents. Agent may consult
with and employ legal counsel, accountants and other experts and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by such experts.
12.8. Successor Agent and Co-Agents.
12.8.1. Subject to the appointment and acceptance of a successor
Agent as provided below, Agent may resign at any time by giving at least 30 days
written notice thereof to each Lender and Borrower. Upon receipt of any notice
of such resignation, the Required Lenders, after prior consultation with (but
without having to obtain consent of) each Lender, shall have the right to
appoint a successor Agent which shall be (i) a Lender, (ii) a United States
based affiliate of a Lender, or (iii) a commercial bank that is organized under
the laws of the United States or of any State thereof and has a combined capital
surplus of at least $100,000,000 and, provided no Default or Event of Default
then exists, is reasonably acceptable to Borrower (and for purposes hereof, any
successor to Fleet shall be deemed acceptable to Borrower). Upon the acceptance
by a successor Agent of an appointment to serve as an Agent hereunder, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers,
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privileges and duties of the retiring Agent without further act, deed or
conveyance, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 12 (including the provisions of Section
12.6 hereof) shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent. Notwithstanding
anything to the contrary contained in this Agreement, any successor by merger or
acquisition of the stock or assets of Fleet shall continue to be Agent hereunder
unless such successor shall resign in accordance with the provisions hereof.
12.8.2. It is the purpose of this Agreement that there shall be no
violation of any Applicable Law denying or restricting the right of financial
institutions to transact business as agent or otherwise in any jurisdiction. It
is recognized that, in case of litigation under any of the Loan Documents, or in
case Agent deems that by reason of present or future laws of any jurisdiction
Agent might be prohibited from exercising any of the powers, rights or remedies
granted to Agent or Lenders hereunder or under any of the Loan Documents or from
holding title to or a Lien upon any Collateral or from taking any other action
which may be necessary hereunder or under any of the Loan Documents, Agent may
appoint an additional Person as a separate collateral agent or co-collateral
agent which is not so prohibited from taking any of such actions or exercising
any of such powers, rights or remedies. If Agent shall appoint an additional
Person as a separate collateral agent or co-collateral agent as provided above,
each and every remedy, power, right, claim, demand or cause of action intended
by any of the Loan Documents to be exercised by or vested in or conveyed to
Agent with respect thereto shall be exercisable by and vested in such separate
collateral agent or co-collateral agent, but only to the extent necessary to
enable such separate collateral agent or co-collateral agent to exercise such
powers, rights and remedies, and every covenant and obligation necessary to the
exercise thereof by such separate collateral agent or co-collateral agent shall
run to and be enforceable by either of them. Should any instrument from Lenders
be required by the separate collateral agent or co-collateral agent so appointed
by Agent in order more fully and certainly to vest in and confirm to him or it
such rights, powers, duties and obligations, any and all of such instruments
shall, on request, be executed, acknowledged and delivered by Lenders whether or
not a Default or Event of Default then exists. In case any separate collateral
agent or co-collateral agent, or a successor to either, shall die, become
incapable of acting, resign or be removed, all the estates, properties, rights,
powers, duties and obligations of such separate collateral agent or co-
collateral agent, so far as permitted by Applicable Law, shall vest in and be
exercised by the Agent until the appointment of a new collateral agent or
successor to such separate collateral agent or co-collateral agent.
12.9. Consents, Amendments and Waivers; Out-of-Formula Loans.
12.9.1. To be effective against Agent and Lenders, any amendment or
modification of this Agreement and any waiver of any Default or Event of Default
must be in writing and must be signed by the Required Lenders; provided,
however, that (i) without the prior written consent of Agent, no amendment or
waiver shall be effective with respect to any provision in any of the Loan
Documents that affects Agent or relates to the rights, duties or immunities of
Agent (including Section 12 hereof); (ii) without the prior written consent of
Fleet, no amendment to the provisions of Sections 1.2 or 3.1.3 shall be
effective; (iii) without the prior consent of all Lenders, no waiver of any
Default or Event of Default shall be effective if the
66
Default or Event of Default relates to Borrower's failure to observe or perform
any covenant that may not be amended without the unanimous written consent of
Lenders (and, where so provided hereinafter, the written consent of Agent) as
hereinafter set forth in this Section 12.9.1; written agreement of all Lenders
(except a defaulting Lender as provided in Section 3.2 of this Agreement) shall
be required to effectuate any amendment, modification or waiver that would (a)
alter the provisions of Sections 2.2, 2.4, 2.6, 2.7, 2.8, 2.9, 4.5, 4.9, 5.1,
12, 13, 14.2, or 14.3 or 14.14, the definitions of "Availability Reserve,"
"Borrowing Base" and the other defined terms used in such definitions, "Pro
Rata," "Required Lenders" or any provision of this Agreement obligating Agent to
take certain actions at the direction of the Required Lenders, or any provision
of any of the Loan Documents regarding the Pro Rata treatment or obligations of
Lenders; (b) increase or otherwise modify any of the Revolver Commitments (other
than to reduce proportionately each Lender's Revolver Commitment in connection
with any overall reduction in the amount of the Revolver Commitments); (c) alter
or amend (other than to increase) the rate of interest payable in respect of the
Revolver Loans (except as may be expressly authorized by the Loan Documents or
as may be necessary, in Agent's judgement, to comply with Applicable Law); (d)
waive or agree to defer collection of any fee or other expense reimbursement
provided for under any of the Loan Documents (except to the extent that the
Required Lenders agree after and during the continuance of any Event of Default
to a waiver or deferral of any termination charge provided for in Section 5.2.3
hereof) or the unused line fee in Section 2.2.3 hereof; (e) subordinate the
payment of any of the Obligations to any other Debt or the priority of any Liens
granted to Agent under any of the Loan Documents to Liens granted to any other
Person, except as currently provided in or contemplated by the Loan Documents in
connection with Borrower's incurrence of Permitted Purchase Money Debt, and
except for Liens granted by an Obligor to financial institutions with respect to
amounts on deposit with such financial institutions to cover returned items,
processing and analysis charges and other charges in the Ordinary Course of
Business that relate to deposit accounts with such financial institutions; (f)
alter the time or amount of repayment of any of the Revolver Loans or waive any
Event of Default resulting from nonpayment of the Revolver Loans on the due date
thereof (or within any applicable period of grace); (g) forgive any of the
Obligations, except any portion of the Obligations held by a Lender who consents
in writing to such forgiveness; or (h) release any Obligor from liability for
any of the Obligations. No Lender shall be authorized to amend or modify any
Note held by it, unless such amendment or modification is consented to in
writing by all Lenders; providedn, however, that the foregoing shall not be
construed to prohibit an amendment or modification to any provision of this
Agreement that may be effected pursuant to this Section 12.9.1 by agreement of
Borrower and the Required Lenders even though such an amendment or modification
results in an amendment or modification of the Notes by virtue of the
incorporation by reference in each of the Notes of this Agreement. The making of
any Revolver Loans hereunder by any Lender during the existence of a Default or
Event of Default shall not be deemed to constitute a waiver of such Default or
Event of Default. Any waiver or consent granted by Lenders hereunder shall be
effective only if in writing and then only in the specific instance and for the
specific purpose for which it was given.
12.9.2. In connection with any proposed amendment to any of the Loan
Documents or waiver of any of the terms thereof or any Default or Event of
Default thereunder, Borrower shall not solicit, request or negotiate for or with
respect to any such proposed amendment or waiver of any of the provisions of
this Agreement or any of the other Loan
67
Documents unless each Lender shall be informed thereof by Borrower or Agent (to
the extent known by Agent) and shall be afforded an opportunity of considering
the same and supplied by Borrower with sufficient information to enable it to
make an informed decision with respect thereto. Borrower will not, directly or
indirectly, pay or cause to be paid any remuneration or other thing of value,
whether by way of supplemental or additional interest, fee or otherwise, to any
Lender (in its capacity as a Lender hereunder) as consideration for or as an
inducement to the consent to or agreement by such Lender with any waiver or
amendment of any of the terms and provisions of this Agreement or any of the
other Loan Documents unless such remuneration or thing of value is concurrently
paid, on the same terms, on a Pro Rata basis to all Lenders.
12.9.3. On any date that Lenders are not otherwise required to
provide Out-of-Formula Loans pursuant to Section 1.1.2 at Borrower's request,
Agent may (unless otherwise instructed in writing by the Required Lenders) call
upon Lenders to fund, and Lenders shall fund, their Pro Rata share of Out-of-
Formula Loans as hereinafter set forth, provided that, both prior to and after
the funding thereof, the aggregate amount of all of the Revolver Loans and LC
Outstandings does not exceed the Revolver Commitments. If no Event of Default
exists (or if an Event of Default exists, the existence thereof is not known by
Agent) at the time that Agent calls upon Lenders to make Out-of-Formula Loans
pursuant to this Section 12.9.3, then Lenders shall be required to fund Out-of-
Formula Loans only for periods that do not exceed 15 consecutive days, following
each of which periods the Out-of-Formula Condition may not exceed, for a period
of at least 15 consecutive days, the amount of the Out-of-Formula Condition at
the commencement of the preceding 15-consecutive day period during which Out-of-
Formula Loans were funded; and during each 15-day consecutive period during
which Out-of-Formula Loans are required to be funded, the Out-of-Formula
Condition is not increased by more than $3,000,000 above the amount in existence
at the commencement of such 15-day period. The amount of such Out-of-Formula
Condition shall be determined by Agent. If an Event of Default exists, Lenders
shall not be obligated to fund Out-of-Formula Loans for a period exceeding 5
Business Days and then only to the extend that the Out-of-Formula Condition is
not increased by more than $3,000,000 above the amount determined by Agent to
exist on the date that Agent calls upon Lenders pursuant to this Section 12.9.3
to fund Out-of-Formula Loans. In no event shall Borrower or any other Obligor
be deemed to be a beneficiary of this Section 12.9.3 or authorized to enforce
any of the provisions of this Section 12.9.3.
12.10. Due Diligence and Non-Reliance. Each Lender hereby acknowledges
and represents that it has, independently and without reliance upon Agent or the
other Lenders, and based upon such documents, information and analyses as it has
deemed appropriate, made its own credit analysis of each Obligor and its own
decision to enter into this Agreement and to fund the Revolver Loans to be made
by it hereunder and to purchase participations in the LC Outstandings pursuant
to Section 1.2.2 hereof, and each Lender has made such inquiries concerning the
Loan Documents, the Collateral and each Obligor as such Lender feels necessary
and appropriate, and has taken such care on its own behalf as would have been
the case had it entered into the other Loan Documents without the intervention
or participation of the other Lenders or Agent. Each Lender hereby further
acknowledges and represents that the other Lenders and Agent have not made any
representations or warranties to it concerning any Obligor, any of the
Collateral or the legality, validity, sufficiency or enforceability of any of
the Loan Documents. Each Lender also hereby acknowledges that it will,
independently and without
68
reliance upon the other Lenders or Agent, and based upon such financial
statements, documents and information as it deems appropriate at the time,
continue to make and rely upon its own credit decisions in making Revolver Loans
and in taking or refraining to take any other action under this Agreement or any
of the other Loan Documents. Except for notices, reports and other information
expressly required to be furnished to Lenders by Agent hereunder, Agent shall
not have any duty or responsibility to provide any Lender with any notices,
reports or certificates furnished to Agent by any Obligor or any credit or other
information concerning the affairs, financial condition, business or Properties
of any Obligor (or any of its Affiliates) which may come into possession of
Agent or any of Agent's Affiliates.
12.11. Representations and Warranties of Lenders. By its execution of
this Agreement, each Lender hereby represents and warrants to Borrower and the
other Lenders that it has the power to enter into and perform its obligations
under this Agreement and the other Loan Documents, and that it has taken all
necessary and appropriate action to authorize its execution and performance of
this Agreement and the other Loan Documents to which it is a party, each of
which will be binding upon it and the obligations imposed upon it herein or
therein will be enforceable against it in accordance with the respective terms
of such documents.
12.12. The Required Lenders. As to any provisions of this Agreement or
the other Loan Documents under which action may or is required to be taken upon
direction or approval of the Required Lenders, the direction or approval of the
Required Lenders shall be binding upon each Lender to the same extent and with
the same effect as if each Lender had joined therein. Notwithstanding anything
to the contrary contained in this Agreement, Borrower shall not be deemed to be
a beneficiary of, or be entitled to enforce, sue upon or assert as a defense to
any of the Obligations, any provisions of this Agreement that requires Agent or
any Lender to act, or conditions their authority to act, upon the direction or
consent of the Required Lenders; and any action taken by Agent or any Lender
that requires the consent or direction of the Required Lenders as a condition to
taking such action shall, insofar as Borrower is concerned, be presumed to have
been taken with the requisite consent or direction of the Required Lenders.
12.13. Several Obligations. The obligations and commitments of each
Lender under this Agreement and the other Loan Documents are several and neither
Agent nor any Lender shall be responsible for the performance by the other
Lenders of its obligations or commitments hereunder or thereunder.
Notwithstanding any liability of Lenders stated to be joint and several to third
Persons under any of the Loan Documents, such liability shall be shared, as
among Lenders, Pro Rata according to the respective Revolver Commitments of
Lenders.
12.14. Agent in its Individual Capacity. With respect to its obligation
to lend under this Agreement, the Revolver Loans made by it and each Note issued
to it, Agent shall have the same rights and powers hereunder and under the other
Loan Documents as any other Lender or holder of a Note and may exercise the same
as though it were not performing the duties specified herein; and the terms
"Lenders," "Required Lenders," or any similar term shall, unless the context
clearly otherwise indicates, include Agent in its capacity as a Lender. Agent
and its Affiliates may each accept deposits from, maintain deposits or credit
balances for, invest in, lend money to, act as trustee under indentures of,
serve as financial advisor to, and generally engage in any kind of business with
Borrower or any other Obligor, or any affiliate of Borrower or any
69
other Obligor, as if it were any other bank and without any duty to account
therefor (or for any fees or other consideration received in connection
therewith) to the other Lenders.
12.15. No Third Party Beneficiaries. This Section 12 is not intended
to confer any rights or benefits upon Borrower or any other Person except
Lenders and Agent, and no Person (including Borrower) other than Lenders and
Agent shall have any right to enforce any of the provisions of this Section 12
except as expressly provided in Section 12.17 hereof. As between Borrower and
Agent, any action that Agent may take or purport to take on behalf of Lenders
under any of the Loan Documents shall be conclusively presumed to have been
authorized and approved by Lenders as herein provided.
12.16. Notice of Transfer. Agent may deem and treat a Lender party to
this Agreement as the owner of such Lender's portion of the Revolver Loans for
all purposes, unless and until a written notice of the assignment or transfer
thereof executed by such Lender has been received by Agent.
12.17. Replacement of Certain Lenders. If a Lender ("Affected Lender")
shall have (i) failed to fund its Pro Rata share of any Revolver Loan requested
(or deemed requested) by Borrower which such Lender is obligated to fund under
the terms of this Agreement and which such failure has not been cured, (ii)
requested compensation from Borrower under Section 2.7 to recover increased
costs incurred by such Lender (or its parent or holding company) which are not
being incurred generally by the other Lenders (or their respective parents or
holding companies), or (iii) delivered a notice pursuant to Section 2.6 hereof
claiming that such Lender is unable to extend LIBOR Loans to Borrower for
reasons not generally applicable to the other Lenders, then, in any such case
and in addition to any other rights and remedies that Agent, any other Lender or
Borrower may have against such Affected Lender, Borrower or Agent may make
written demand on such Affected Lender (with a copy to Agent in the case of a
demand by Borrower and a copy to Borrower in the case of a demand by Agent) for
the Affected Lender to assign, and such Affected Lender shall assign pursuant to
one or more duly executed Assignment and Acceptances within 5 Business Days
after the date of such demand, to one or more Lenders willing to accept such
assignment or assignments, or to one or more Eligible Assignees designated by
Agent, all of such Affected Lender's rights and obligations under this Agreement
(including its Revolver Commitments and all Revolver Loans owing to it) in
accordance with Section 13 hereof. Agent is hereby irrevocably authorized to
execute one or more Assignment and Acceptances as attorney-in-fact for any
Affected Lender which fails or refuses to execute and deliver the same within 5
Business Days after the date of such demand. The Affected Lender shall be
entitled to receive, in cash and concurrently with execution and delivery of
each such Assignment and Acceptance, all amounts owed to the Affected Lender
hereunder or under any other Loan Document, including the aggregate outstanding
principal amount of the Revolver Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment. Upon the
replacement of any Affected Lender pursuant to this Section 12.17, such Affected
Lender shall cease to have any participation in, entitlement to, or other right
to share in the Liens of Agent in any Collateral and such Affected Lender shall
have no further liability to Agent, any Lender or any other Person under any of
the Loan Documents (except as provided in Section 12.6 hereof as to events or
transactions which occur prior to the replacement of such
70
Affected Lender), including any commitment to make Revolver Loans or purchase
participations in LC Outstandings.
12.18. Remittance of Payments and Collections.
12.18.1. All payments by any Lender to Agent shall be made not later
than the time set forth elsewhere in this Agreement on the Business Day such
payment is due; provided, however, that if such payment is due on demand by
Agent and such demand is made on the paying Lender after 11:00 a.m. on such
Business Day, then payment shall be made by 11:00 p.m. on the next Business Day.
Payment by Agent to any Lender shall be made by wire transfer, promptly
following Agent's receipt of funds for the account of such Lender and in the
type of funds received by Agent; provided, however, that if Agent receives such
funds at or prior to 1:00 p.m., Agent shall pay such funds to such Lender by
2:00 p.m. on such Business Day, but if Agent receives such funds after 1:00
p.m., Agent shall pay such funds to such Lender by 2:00 p.m. on the next
Business Day.
12.18.2. With respect to the payment of any funds from Agent to a
Lender or from a Lender to Agent, the party failing to make full payment when
due pursuant to the terms hereof shall, on demand by the other party, pay such
amount together with interest thereon at the Federal Funds Rate. In no event
shall Borrower be entitled to receive any credit for any interest paid by Agent
to any Lender, or by any Lender to Agent, at the Federal Funds Rate as provided
herein.
12.18.3. If Agent pays any amount to a Lender in the belief or
expectation that a related payment has been or will be received by Agent from an
Obligor and such related payment is not received by Agent, then Agent shall be
entitled to recover such amount from each Lender that receives such amount. If
Agent determines at any time that any amount received by it under this Agreement
or any of the other Loan Documents must be returned to an Obligor or paid to any
other Person pursuant to any Applicable Law, court order or otherwise, then,
notwithstanding any other term or condition of this Agreement or any of the
other Loan Documents, Agent shall not be required to distribute such amount to
any Lender.
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
13.1. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Borrower, Agent and Lenders and their respective
successors and assigns (which, in the case of Agent, shall include any successor
Agent appointed pursuant to Section 12.8 hereof), except that (i) Borrower shall
not have the right to assign its rights or delegate performance of any of its
obligations under any of the Loan Documents and (ii) any assignment by any
Lender must be made in compliance with Section 13.3 hereof. Agent may treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
such payee complies with Section 13.3 in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer is filed
with Agent. Any assignee or transferee of a Note agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or
71
consent is the holder of a Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
13.2. Participations.
13.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with Applicable Law, at any
time sell to one or more banks or other Persons (each a "Participant") a
participating interest in any of the Obligations owing to such Lender, any
Revolver Commitment of such Lender or any other interest of such Lender under
any of the Loan Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under the
Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
such Lender shall remain the holder of any Note for all purposes under the Loan
Documents, all amounts payable by Borrower under this Agreement and any of the
Notes shall be determined as if such Lender had not sold such participating
interests, and Borrower and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
the Loan Documents. If a Lender sells a participation to a Person other than an
Affiliate of such Lender, then such Lender shall give prompt written notice
thereof to Borrower and the other Lenders.
13.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than an amendment,
modification or waiver with respect to any Revolver Loans or Revolver Commitment
in which such Participant has an interest which forgives principal, interest or
fees or reduces the stated interest rate or the stated rates at which fees are
payable with respect to any such Revolver Loan or Revolver Commitment, postpones
the Commitment Termination Date, or any date fixed for any regularly scheduled
payment of interest or fees on such Revolver Loan or Revolver Commitment, or
releases from liability Borrower or any Guarantor or releases any substantial
portion of any of the Collateral.
13.2.3. Benefit of Set-Off. Borrower agrees that each Participant
shall be deemed to have the right of set-off provided in Section 11.4 hereof in
respect of its participating interest in amounts owing under the Loan Documents
to the same extent and subject to the same requirements under this Agreement
(including Section 12.5) as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of set-off provided in Section 11.4 hereof with
respect to the amount of participating interests sold to each Participant.
Lenders agree to share with each Participant, and each Participant by exercising
the right of set-off provided in Section 11.4 agrees to share with each Lender,
any amount received pursuant to the exercise of its right of set-off, such
amounts to be shared in accordance with Section 12.5 hereof as if each
Participant were a Lender.
13.2.4. Notices. Each Lender shall be solely responsible for
notifying its Participants of any matters relating to the Loan Documents to the
extent that any such notice may be required, and neither Agent nor any other
Lender shall have any obligation, duty or liability to any Participant of any
other Lender. Without limiting the generality of the foregoing, neither
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Agent nor any Lender shall have any obligation to give notices or to provide
documents or information to a Participant of another Lender.
13.3. Assignments.
13.3.1. Permitted Assignments. Subject to its giving at least 2
Business Days notice to Agent and Borrower, any Lender may, in accordance with
Applicable Law, at any time assign to any Eligible Assignee all or any part of
its rights and obligations under the Loan Documents, so long as (i) each
assignment is of a constant, and not a varying, ratable percentage of all of the
transferor Lender's rights and obligations under the Loan Documents with respect
to the Revolver Loans and the LC Outstandings and, in the case of a partial
assignment, is in a minimum principal amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount; (ii) except in the case of an
assignment in whole of a Lender's rights and obligations under the Loan
Documents or an assignment by one original signatory to this Agreement to
another such signatory, immediately after giving effect to any assignment, the
aggregate amount of the Revolver Commitments retained by the transferor Lender
shall in no event be less than $10,000,000; and (iii) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing contained herein shall limit in any way
the right of Lenders to assign (i) to any Eligible Assignee all of their rights
and obligations under the Loan Documents or (ii) all or any portion of the
Revolver Loans owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors and any Operating Circular issued by such Federal Reserve Bank,
provided that in the case of this clause (ii) any payment in respect of such
assigned Revolver Loans made by Borrower to the assigning Lender in accordance
with the terms of this Agreement shall satisfy Borrower's obligations hereunder
in respect of such assigned Revolver Loans to the extent of such payment, but no
such assignment shall release the assigning Lender from its obligations
hereunder.
13.3.2. Effect; Effective Date. Upon (i) delivery to Agent of a
notice of assignment substantially in the form attached as Exhibit G hereto,
together with any consents required by Section 13.3.1, and (ii) payment of a
$5,000 fee to the Agent for processing any assignment to an Eligible Assignee
that is not an Affiliate of the transferor Lender, such assignment shall become
effective on the effective date specified in such notice of assignment. On and
after the effective date of such assignment, such Eligible Assignee shall for
all purposes be a Lender party to the Agreement and any other Loan Document
executed by the Lenders and shall have all the rights and obligations of the
Lender under the Loan Documents to the same extent as if it were an original
party thereto, and no further consent or action by Borrower, Lenders or Agent
shall be required to release the transferor Lender with respect to the Revolver
Commitment (or portion thereof) of such Lender and Obligations assigned to such
Eligible Assignee. Upon the consummation of any assignment to an Eligible
Assignee pursuant to this Section 13.3, the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Eligible Assignee, in each case in principal amounts
reflecting their respective Revolver Commitments, as adjusted pursuant to such
assignment. If the transferor Lender shall have assigned all of its interests,
rights and obligations under this Agreement pursuant to Section 13.3.1 hereof,
such transferor Lender shall no longer have any
73
obligation to indemnify Agent with respect to any transactions, events or
occurrences that transpire after the effective date of such assignment, and each
Eligible Assignee to which such transferor shall make an assignment shall be
responsible to Agent to indemnify Agent in accordance with this Agreement with
respect to transactions, events and occurrences transpiring on and after the
effective date of such assignment to it.
13.3.3. Dissemination of Information. Each Lender and Agent may
disclose to any Participant, any Eligible Assignee or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee"), and
any prospective Transferee, any and all information in Agent's or such Lender's
possession concerning Borrower, the Subsidiaries or the Collateral so long as
prior to any such disclosure, each such Transferee or prospective Transferee
agrees with Borrower, Agent or such Lender to preserve the confidentiality of
any confidential information relating to Borrower and received from Borrower,
Agent or any Lender in the same manner and to the same extent that Agent and
Lenders are so required pursuant to Section 14.16.
13.4. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee that is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 4.10 hereof.
SECTION 14. MISCELLANEOUS
14.1. Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
designee, may, without notice to Borrower and in either Borrower's or Agent's
name, but at the cost and expense of Borrower:
14.1.1. At such time or times as Agent or said designee, in its sole
discretion, may determine, endorse Borrower's name on any Payment Item or
proceeds of the Collateral which come into the possession of Agent or under
Agent's control; and
14.1.2. At any time that an Event of Default exists: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Agent
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of Lien, assignment or satisfaction of Lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Agent may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Agent on
74
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to any Accounts or Inventory of any Obligor and
any other Collateral; (ix) use Borrower's stationery and sign the name of
Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment or any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Agent's determination, to fulfill Borrower's obligations under this Agreement.
14.2. General Indemnity. Borrower hereby agrees to indemnify and defend
the Indemnitees and to hold the Indemnitees harmless from and against any Claim
ever suffered or incurred by any of the Indemnitees arising out of or related to
this Agreement or any of the other Loan Documents, the performance by any
Indemnitee of its duties or the exercise of any of its rights or remedies under
this Agreement or any of the other Loan Documents, or as a result of Borrower's
failure to observe, perform or discharge any of Borrower's duties hereunder.
Borrower shall also indemnify and defend the Indemnitees against and save the
Indemnitees harmless from all Claims of any Person arising out of, related to,
or with respect to any transactions entered into pursuant to this Agreement or
Agent's Lien upon the Collateral. Without limiting the generality of the
foregoing, this indemnity shall extend to any Claims asserted against or
incurred by any of the Indemnitees by any Person under any Environmental Laws or
similar laws by reason of Borrower's or any other Person's failure to comply
with laws applicable to solid or hazardous waste materials or other toxic
substances. Additionally, if any Taxes (excluding Taxes imposed upon or
measured solely by the net income of Agent and Lenders, but including any
intangibles tax, stamp tax, recording tax or franchise tax) shall be payable by
Agent or any Obligor on account of the execution or delivery of this Agreement,
or the execution, delivery, issuance or recording of any of the other Loan
Documents, or the creation or repayment of any of the Obligations hereunder, by
reason of any Applicable Law now or hereafter in effect, Borrower will pay (or
will promptly reimburse Agent and Lenders for the payment of) all such Taxes,
including any interest and penalties thereon, and will indemnify and hold
Indemnitees harmless from and against all liability in connection therewith.
The foregoing indemnities shall not apply to Claims incurred by any of the
Indemnitees as a direct and proximate result of their own gross negligence or
willful misconduct or that arise out of any disputes arising solely out of the
relationship between Agent and any Lender.
14.3. Survival of All Indemnities. Notwithstanding anything to the
contrary in this Agreement or any of the other Loan Documents, the obligation of
Borrower and each Lender with respect to each indemnity given by it in this
Agreement, whether given by Borrower to Agent Indemnitees, Lender Indemnitees or
Fleet Indemnitees or by any Lender to any Agent Indemnitees or Fleet
Indemnitees, shall survive the payment in full of the Obligations and the
termination of any of the Revolver Commitments.
14.4. Modification of Agreement. This Agreement may not be modified,
altered or amended, except by an agreement in writing signed by Borrower and
Agent and Lenders (or, where otherwise expressly allowed by Section 12 hereof,
the Required Lenders in lieu of Agent and Lenders); provided, however, that no
consent, written or otherwise, of Borrower shall be
75
necessary or required in connection with any amendment of any of the provisions
of Section 12 (other than Section 12.17) or any other provision of this
Agreement that affects only the rights, duties and responsibilities of Lenders
and Agent as among themselves so long as no such amendment imposes any
additional obligations on Borrower.
14.5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
14.6. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Without limiting the generality of the foregoing,
the parties acknowledge that this Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters and that such limitations, tests and measures are cumulative and
each must be performed, except as may be expressly stated to the contrary in
this Agreement. Except as otherwise provided in any of the other Loan Documents
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
14.7. Execution in Counterparts. This Agreement and any amendments
hereto 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 to be an original and all of which counterparts taken together
shall constitute but one and the same instrument.
14.8. Consent. Whenever Agent's, Lenders' or Required Lenders' consent is
required to be obtained under this Agreement or any of the other Loan Documents
as a condition to any action, inaction, condition or event (including any waiver
or amendment), Agent and each Lender shall be authorized to give or withhold its
consent in its sole and absolute discretion and to condition its consent upon
the giving of additional collateral security for the Obligations, the payment of
money or any other matter.
14.9. Notices. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and shall be deemed to have been validly served,
given or delivered when delivered against receipt or, in the case of facsimile
transmission, when received (if on a Business Day and, if not received on a
Business Day, then on the next Business Day after receipt) at the office where
the noticed party's telecopier is located, in each case addressed to the noticed
party at the address shown for such party on the signature page hereof or, in
the case of a Person who becomes a Lender after the date hereof, at the address
shown on the Assignment and Acceptance by which such Person became a Lender.
Notwithstanding the foregoing, no notice to or upon Agent pursuant to Sections
1.2, 2.1, 3.1 or 5.2.2 shall be effective until after actually received by the
individual to whose attention at Agent such notice is required to be sent. Any
written notice, request or
76
demand that is not sent in conformity with the provisions hereof shall
nevertheless be effective on the date that such notice, request or demand is
actually received by the individual to whose attention at the noticed party such
notice, request or demand is required to be sent.
14.10. Performance of Borrower's Obligations. If Borrower shall fail to
discharge any covenant, duty or obligation hereunder or under any of the other
Loan Documents, Agent may, in its sole discretion at any time or from time to
time, for Borrower's account and at Borrower's expense, pay any amount or do any
act required of Borrower hereunder or under any of the Loan Documents or
otherwise lawfully requested by Agent to enforce any of the Loan Documents or
Obligations, preserve, protect, insure or maintain any of the Collateral, or
preserve, defend, protect or maintain the validity or priority of Agent's Liens
in any of the Collateral, including the payment of any judgement against
Borrower, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord claim, any other Lien upon or with respect to
any of the Collateral. All payments that Agent may make under this Section and
all out-of-pocket costs and expenses (including Extraordinary Expenses) that
Agent pays or incurs in connection with any action taken by it hereunder shall
be reimbursed to Agent by Borrower on demand with interest from the date such
payment is made or such costs or expenses are incurred to the date of payment
thereof at the Default Rate applicable for Revolver Loans that are Base Rate
Loans. Any payment made or other action taken by Agent under this Section shall
be without prejudice to any right to assert an Event of Default hereunder and to
proceed thereafter as provided herein or in any of the other Loan Documents.
14.11. Credit Inquiries. Borrower hereby authorizes and permits Agent
and Lenders (but Agent and Lenders shall have no obligation) to respond to usual
and customary credit inquiries from third parties concerning Borrower or any
Subsidiaries.
14.12. Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
14.13. Entire Agreement; Appendix A, Exhibits and Schedules. This
Agreement and the other Loan Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written. Appendix A, each of the Exhibits
and each of the Schedules attached hereto are incorporated into this Agreement
and by this reference made a part hereof.
14.14. Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having, or being deemed to have, structured,
drafted or dictated such provision.
14.15. Obligations Several. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Revolver
Commitment of any other Lender. Nothing contained in this Agreement and no
action taken by Lenders pursuant hereto shall be
77
deemed to constitute the Lenders to be a partnership, association, 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 each Lender shall be
entitled, to the extent not otherwise restricted hereunder, to protect and
enforce its rights arising out of this Agreement and any of the other Loan
Documents and it shall not be necessary for Agent or any other Lender to be
joined as an additional party in any proceeding for such purpose.
14.16. Confidentiality. Agent and Lenders each agrees to exercise
reasonable efforts (and, in any event, with at least the same degree of care as
it ordinarily exercises with respect to its other customers) to keep any
Confidential Information that is delivered or made available by Borrower to it,
including Confidential Information made available to Agent or any Lender in
connection with a visit or investigation by any Person contemplated in Section
9.1.1 hereof, confidential from any Person other than individuals employed or
retained by Agent or such Lender who are or are expected to become engaged in
evaluating, approving, structuring, administering or otherwise giving
professional advice with respect to any of the Revolver Loans or Collateral;
provided, however, that nothing herein shall prevent Agent or any Lender from
disclosing such Confidential Information (i) to any party to this Agreement from
time to time or any Participant, (ii) pursuant to the order of any court or
administrative agency, (iii) upon the request or demand of any regulatory agency
or authority having jurisdiction over Agent or such Lender, (iv) which has been
publicly disclosed other than by an act or omission of Agent or such Lender
except as permitted herein, (v) to the extent reasonably required in connection
with any litigation (with respect to any of the Loan Documents or any of the
transactions contemplated thereby) to which Agent, any Lender or their
respective Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any rights or remedies hereunder, (vii) to
Agent's or any Lender's legal counsel and independent auditors, (viii) to any
actual or proposed Participant, Assignee or other Transferee of all or part of a
Lender's rights hereunder so long as such Transferee has agreed in writing to be
bound by the provisions of this Section, and (ix) to the National Association of
Insurance Commissioners or any similar organization or to any nationally
recognized rating agency that requires access to information about a Lender's
portfolio in connection with ratings issued with respect to such Lender.
14.17. Governing Law; Consent to Forum. This Agreement has been
negotiated, executed and delivered at and shall be deemed to have been made in
Atlanta, Georgia. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia; provided, however, that if any
of the Collateral shall be located in any jurisdiction other than Georgia, the
laws of such jurisdiction shall govern the method, manner and procedure for
foreclosure of Agent's Lien upon such Collateral and the enforcement of Agent's
other remedies in respect of such Collateral to the extent that the laws of such
jurisdiction are different from or inconsistent with the laws of the State of
Georgia. As part of the consideration for new value received, and regardless of
any present or future domicile or principal place of business of Borrower, any
Lender or Agent, Borrower hereby consents and agrees that the Superior Court of
Cobb County, Georgia, or, at Agent's option, the United States District Court
for the Northern District of Georgia, Atlanta Division, shall have jurisdiction
to hear and determine any claims or disputes among Borrower, Agent and Lenders
pertaining to this Agreement or to any matter arising out of or related to this
Agreement. Borrower expressly submits and consents in advance
78
to such jurisdiction in any action or suit commenced in any such Court, and
Borrower hereby waives any objection which Borrower may have based upon lack of
personal jurisdiction, improper venue or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such Court. Borrower hereby waives personal service of the
summons, complaint and other process issued in any such action or suit and
agrees that service of such summons, complaint and other process may be made by
certified mail addressed to Borrower at the address set forth in this Agreement
and that service so made shall be deemed completed upon the earlier of
Borrower's actual receipt thereof or 3 days after deposit in the U.S. mails,
proper postage prepaid. Nothing in this Agreement shall be deemed or operate to
affect the right of Agent to serve legal process in any other manner permitted
by law, or to preclude the enforcement by Agent of any judgment or order
obtained in such forum or the taking of any action under this Agreement to
enforce same in any other appropriate forum or jurisdiction.
14.18. Waivers by Borrower. To the fullest extent permitted by
Applicable Law, Borrower waives (i) the right to trial by jury (which Agent and
each Lender hereby also waives) in any action, suit, proceeding or counterclaim
of any kind arising out of or related to any of the Loan Documents, the
Obligations or the Collateral; (ii) presentment, demand and protest and notice
of presentment, protest, default, non payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Agent on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Agent may do in this regard; (iii) notice prior
to taking possession or control of the Collateral or any bond or security which
might be required by any court prior to allowing Agent to exercise any of
Agent's remedies; (iv) the benefit of all valuation, appraisement and exemption
laws; and (v) notice of acceptance hereof. Borrower acknowledges that the
foregoing waivers are a material inducement to Agent's and Lender's entering
into this Agreement and that Agent and Lenders are relying upon the foregoing
waivers in its future dealings with Borrower. Borrower warrants and represents
that it has reviewed the foregoing waivers with its legal counsel and has
knowingly and voluntarily waived its jury trial rights following consultation
with legal counsel. In the event of litigation, this Agreement may be filed
as a written consent to a trial by the Court.
79
IN WITNESS WHEREOF, this Agreement has been duly executed in Atlanta,
Georgia, on the day and year specified at the beginning of this Agreement.
Borrower:
PAMECO CORPORATION
By: /s/ Mark S. Sellers
------------------------------------------
Mark S. Sellers, Chief Financial Officer
Attest: /s/ Richard S. Martin
--------------------------------------
Richard S. Martin, Vice-President of
Finance, Treasurer and Secretary
[CORPORATE SEAL]
Address:
1000 Center Place
Norcross, Georgia 30093
Attention: President
Telecopier No.: (770) 798-0636
Lender:
FLEET CAPITAL CORPORATION
Revolver Commitment:
$130,000,000.00 By: /s/ Dennis Losin
------------------------------------------
Title: Vice President
LIBOR Lending Office:
6100 Fairview Road
Suite 200
Charlotte, North Carolina 28210
Attention: Loan Administration Manager
Telecopier No.: (704) 553-6738
Agent:
80
FLEET CAPITAL CORPORATION,
as Agent
By: /s/ Dennis Losin
-----------------------------------------
Title: Vice President
Address:
300 Galleria Parkway, N.W.
Suite 800
Atlanta, Georgia 30339
Attention: Loan Administration Manager
Telecopier No.: (770) 859-2483
81
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated February 17, 2000 (as at
any time amended, the "Loan Agreement"), by and among Pameco Corporation, a
Georgia corporation ("Borrower"), the various financial institutions listed on
the signature pages attached thereto as lenders ("Lenders") and Fleet Capital
Corporation ("Agent"), in its capacity as collateral and administrative agent
for itself and the Lenders, the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
Accounts - all of Borrower's now owned and hereafter acquired accounts
and all other rights to payment for goods sold or leased or for services
rendered that are not evidenced by an Instrument or Chattel Paper, whether
or not they have been earned by performance.
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts Formula Amount - on any date of determination thereof, an
amount equal to 85% of the net amount of Eligible Accounts (other than
Eligible Guam Accounts) on such date.
Acquisition - any transaction, or any series of related transactions,
by which Borrower directly or indirectly (i) acquires any ongoing business
or all or substantially all of the assets of any Person, whether through
the purchase of assets, merger or otherwise, (ii) acquires (in one
transaction or as the most recent transaction in a series of transactions)
control of at least a majority of the Voting Stock of a corporation having
ordinary voting power for the election of directors, or (iii) acquires
control of 50% or more of the Equity Interests in any other Person.
Acquisition Subsidiary - a Subsidiary that is formed by Borrower to
purchase assets or stock of a Person in connection with a Permitted
Acquisition or an existing Subsidiary that purchases assets or stock of
another Person in connection with a Permitted Acquisition.
Adjusted LIBOR Rate - with respect to each Interest Period for a LIBOR
Loan, an interest rate per annum (rounded upwards, to the next 1/16th of
1%) equal to the quotient of (a) the LIBOR Rate in effect for such Interest
Period divided by (b) a percentage (expressed as a decimal) equal to 100%
minus Statutory Reserves.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, another
1
Person; (ii) which beneficially owns or holds 10% or more of any class of
the Equity Interests of a Person; or (iii) 10% or more of the Equity
Interests with power to vote of which is beneficially owned or held by
another Person or a Subsidiary of another Person. For purposes hereof,
"control" 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 any Equity Interest, by contract or
otherwise.
Agent Indemnitees - Agent in its capacity as agent for the Lenders
under the Loan Documents and all of Agent's present and future officers,
directors, agents and attorneys.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A.
Applicable Law - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant, Loan Document or Material Contract
in question, including all applicable common law and equitable principles;
all provisions of all applicable state, federal and foreign constitutions,
statutes, rules, regulations and orders of governmental bodies; and all
orders, judgments and decrees of all courts and arbitrators.
Applicable Margin - a percentage equal to 0.75% with respect to
Revolver Loans that are Base Rate Loans, 2.75% with respect to Revolver
Loans that are LIBOR Loans, and 0.375% with respect to the Unused Line Fee,
provided that, commencing August 1, 2000, the Applicable Margin shall be
increased or (if no Default or Event of Default exists) decreased, based
upon the Average Availability, as follows:
Applicable Margin
- -------------------------------------------------------------------------------------
Average Base Rate LIBOR Rate Unused Line Fee
Availability
- -------------------------------------------------------------------------------------
Less than $2,500,000 1.00% 3.00% 0.50%
- -------------------------------------------------------------------------------------
Less than $10,000,00 but 0.75% 2.75% 0.375%
greater than or equal to
$2,500,000
- -------------------------------------------------------------------------------------
Less than $20,000,000 but 0.50% 2.50% 0.375%
greater than or equal to
$10,000,000
- -------------------------------------------------------------------------------------
Less than $30,000,000 but 0.25% 2.25% 0.35%
greater than or equal to
$15,000,000
- -------------------------------------------------------------------------------------
Greater than or equal to 0.00% 2.00% 0.25%
$30,000,000
- -------------------------------------------------------------------------------------
The Applicable Margin shall be subject to reduction or increase, as
applicable and as set forth in the table above, on a quarterly basis, as
measured by Average Availability, (i) as of August 31, 2000, for the period
from the Closing Date through August 31, 2000, (ii) as
2
of November 30, 2000, for the period from the Closing Date through November
30, 2000, (iii) as of February 28, 2001, for the period from the Closing
Date through February 28, 2001, and (iv) as of the end of each Fiscal
Quarter thereafter, based upon the immediately preceding 4 Fiscal Quarters
of Borrower. Except as set forth in the last sentence hereof, any such
increase or reduction in the Applicable Margin provided for herein shall be
effective 3 Business Days after receipt by Agent of Borrower's quarterly
financial statements and Compliance Certificate; provided, however, that
any reduction in the Applicable Margin shall not apply to any LIBOR Loans
outstanding on the effective date of such reduction that have an Interest
Period commencing prior to the effective date of such reduction. If the
financial statements and the Compliance Certificate of Borrower setting
forth the Average Availability are not received by Agent by the date
required pursuant to Section 9.1.3 of the Agreement, the Applicable Margin
shall be determined as if the Average Availability was less than $2,500,000
until such time as such financial statements and Compliance Certificate are
received and any Event of Default resulting from a failure timely to
deliver such financial statements or Compliance Certificate is waived in
writing by Agent and Lenders; provided, however, that nothing herein shall
be deemed to prevent Agent and Lenders from charging interest at the
Default Rate at any time that an Event of Default exists.
Assignment and Acceptance - an assignment and acceptance entered into
by a Lender and an Eligible Assignee and accepted by Agent, in the form of
Exhibit F.
Availability - on any date, the amount that Borrower is entitled to
borrow from time to time as Revolver Loans on such date, such amount being
the difference derived when the sum of the principal amount of Revolver
Loans then outstanding (including any amounts that Agent or Lenders may
have paid for the account of Borrower pursuant to any of the Loan Documents
and that have not been reimbursed by Borrower and any outstanding
Settlement Loans) is subtracted from the Borrowing Base on such date. If
the amount outstanding is equal to or greater than the Borrowing Base,
Availability is zero.
Availability Reserve - on any date of determination thereof, an amount
equal to the sum of the following (without duplication): (i) the LC
Reserve, (ii) aggregate amount of reserves established by Agent in its
reasonable discretion in respect of obligations of Borrower under any
Interest Rate Contract or any indemnity or guaranty of Agent or Lender with
respect to such obligations, (iii) the Slow Period Reserve Amount or the
Normal Period Reserve Amount, as appropriate and (iv) such additional
reserves as Agent in its reasonable credit judgment may elect to impose
from time to time.
Average Availability - for any period, the Availability at the end of
each day for the period in question and by dividing such sum by the number
of days in such period.
Average Revolver Loan Balance - for any period, the amount obtained by
adding the aggregate of the unpaid balance of Revolver Loans and LC
Outstandings at the end of each day for the period in question and by
dividing such sum by the number of days in such period.
3
Bank - Fleet National Bank.
Bankruptcy Code - title 11 of the United States Code.
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its prime rate. The prime rate announced by Bank is a reference
rate and does not necessarily represent the lowest or best rate charged by
Bank. Bank may make loans or other extensions of credit at, above or below
its announced prime rate. If the prime rate is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loan - a Revolver Loan, or portion thereof, during any
period in which it bears interest at a rate based upon the Base Rate.
Board of Governors - the Board of Governors of the Federal Reserve
System.
Borrowing - a borrowing consisting of Revolver Loans of one Type made
on the same day by Lenders (or by Fleet in the case of a Borrowing funded
by Settlement Loans) or a conversion of a Revolver Loan or Revolver Loans
of one Type from Lenders on the same day.
Borrowing Base - on any date of determination thereof, an amount equal
to the lesser of: (a) the aggregate amount of the Revolver Commitments on
such date minus the LC Outstandings on such date, or (b) an amount equal to
(i) the sum of the Accounts Formula Amount, the Inventory Formula Amount
and the Guam Formula Amount on such date minus (ii) the Availability
Reserve on such date.
Borrowing Base Certificate - a certificate, in the form requested by
Agent, by which Borrower shall certify to Agent and Lenders, with such
frequency as Agent may request, the amount of the Borrowing Base as of the
date of the certificate (which date shall be not more than 3 Business Days
earlier than the date of submission of such certificate to Agent) and the
calculation of such amount.
Business Day - any day excluding Saturday, Sunday and any other day
that is a legal holiday under the laws of the State of Georgia or is a day
on which banking institutions located in such state are closed; provided,
however, that when used with reference to a LIBOR Loan (including the
making, continuing, prepaying or repaying of any LIBOR Loan), the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in Dollar deposits on the London interbank market.
Business Interruption Insurance Assignment - the Collateral Assignment
of Business Interruption Insurance to be executed by Borrower on or about
the Closing Date in favor of Agent, in form and substance satisfactory to
Agent, as security for the payment of the Obligations.
4
Capital Expenditures - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Debt represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Collateral - cash or Cash Equivalents, and any interest earned
thereon, that is deposited with Agent in accordance with the Agreement for
the Pro Rata benefit of Lenders as security for the Obligations to the
extent provided in the Agreement.
Cash Collateral Account - a demand deposit, money market or other
account established by Agent at such financial institution as Agent may
select in its discretion, which account shall be in Agent's name and
subject to Agent's Liens for the Pro Rata benefit of Lenders.
Cash Equivalents - (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government having maturities
of not more than 12 months from the date of acquisition; (ii) domestic
certificates of deposit and time deposits having maturities of not more
than 12 months from the date of acquisition, bankers' acceptances having
maturities of not more than 12 months from the date of acquisition and
overnight bank deposits, in each case issued by any commercial bank
organized under the laws of the United States, any state thereof or the
District of Columbia, which at the time of acquisition are rated A-1 (or
better) by S&P or P-1 (or better) by Moody's, and (unless issued by a
Lender) not subject to offset rights in favor of such bank arising from any
banking relationship with such bank; (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types
described in clauses (i) and (ii) entered into with any financial
institution meeting the qualifications specified in clause (ii) above; and
(iv) commercial paper having at the time of investment therein or a
contractual commitment to invest therein a rating of A-1 (or better) by S&P
or P-1 (or better) by Moody's, and having a maturity within 9 months after
the date of acquisition thereof.
Cash Management Agreements - any agreement entered into from time to
time between Borrower or any of its Subsidiaries, on the one hand, and Bank
or any of its Affiliates or any other banking or financial institution, on
the other, in connection with cash management services for operating,
collections, payroll and trust accounts of Borrower or its Subsidiaries
provided by such banking or financial institution, including automatic
clearinghouse services, controlled disbursement services, electronic funds
transfer services, information reporting services, lockbox services, stop
payment services and wire transfer services.
5
CERCLA - the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. (S) 9601 et seq. and its implementing regulations.
Change of Control - Littlejohn shall cease to beneficially own (as
determined under Rule 13d-3(a)(1) under the Exchange Act) 20% of the common
stock, par value $.01 per share of Borrower, or otherwise cease to have
pursuant to contractual rights, a controlling interest in Borrower.
Chattel Paper - shall have the meaning given to"chattel paper" in the
UCC.
Claims - any and all claims, demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, awards, remedial
response costs, expenses or disbursements of any kind or nature whatsoever
(including reasonable attorneys', accountants', consultants' or paralegals'
fees and expenses), whether arising under or in connection with the Loan
Documents, any Applicable Law (including any Environmental Laws) or
otherwise, that may now or hereafter be suffered or incurred by a Person
and whether suffered or incurred in or as a result of any investigation,
litigation, arbitration or other judicial or non-judicial proceeding or any
appeals related thereto.
Closing Date - the date on which all of the conditions precedent in
Section 10 of the Agreement are satisfied and the initial Revolver Loans
are made under the Agreement.
Co-Borrower - a Person which is a direct or indirect wholly-owned
Subsidiary of Borrower and which, with the consent of Agent and the
Required Lenders, joins in the Agreement (and the other Loan Documents
signed by Borrower) as a co-borrower of Revolver Loans and other extensions
of credit hereunder, and has joint and several liability with Borrower for
all of the Obligations, but subject in all events to the execution by such
Person, Borrower, Agent and Lenders of acceptable documentation (including
appropriate amendments to the Agreement) to evidence such Person's status
as a co-borrower.
Collateral - all of the Property and interests in Property described
in Section 6 of the Agreement; all Property described in any of the
Security Documents as security for the payment or performance of any of the
Obligations; and all other Property and interests in Property that now or
hereafter secure (or are intended to secure) the payment and performance of
any of the Obligations.
Commitment Termination Date - the date that is the soonest to occur of
(i) the last day of the Term; (ii) the date on which either Borrower or
Agent terminates the Revolver Commitments pursuant to Section 5.2 of the
Agreement; or (iii) the date on which the Revolver Commitments are
automatically terminated pursuant to Section 11.2 of the Agreement.
Compliance Certificate - a Compliance Certificate to be provided by
Borrower to Lender in accordance with, and in the form annexed as Exhibit D
to, the Agreement.
6
Confidential Information - information that is furnished to either
Agent or any Lender by or on behalf of any Borrower or any of its
Subsidiaries on a confidential basis in connection with the Loan Documents
or any of the transactions contemplated thereby, but does not include any
such information that (a) is or becomes generally available to the public
(other than as a result of a breach by any such Agent or any Lender of its
confidentiality obligations hereunder), (b) was available to any Agent or
any Lender on a nonconfidential basis prior to its disclosure to such Agent
or any Lender by any Borrower or any of its Subsidiaries, or (c) is or
becomes available to Agent or Lender on a nonconfidential basis from a
source that is not, to the best of such Agent's or such Lender's knowledge,
as the case may be, bound by a confidentiality arrangement with Borrower or
any of its Subsidiaries in respect of such information or otherwise
prohibited from disclosing such information.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Consolidated Adjusted Net Earnings - with respect to any fiscal
period, the net earnings (or loss) for such fiscal period of Borrower and
its Subsidiaries, all as reflected on the financial statements of Borrower
and its Subsidiaries supplied to Agent pursuant to Section 9.1.3 hereof,
but excluding: (i) any gain or loss arising from the sale of capital
assets; (ii) any gain or loss arising from any write-up (or write-down) of
assets during such period; (iii) earnings of any Subsidiary accrued prior
to the date it became a Subsidiary; (iv) earnings of any Person,
substantially all the assets of which have been acquired in any manner by
Borrower, realized by such Person prior to the date of such acquisition;
(v) net earnings of any entity (other than a Subsidiary of Borrower) in
which Borrower has an ownership interest unless such net earnings have
actually been received by Borrower in the form of cash Distributions; (vi)
any portion of the net earnings of any Subsidiary which for any reason is
unavailable for payment of Distributions to Borrower; (vii) the earnings of
any Person to which any assets of Borrower shall have been sold,
transferred or disposed of, or into which Borrower shall have merged, or
been a party to any consolidation or other form of reorganization, prior to
the date of such transaction; (viii) any gain arising from the acquisition
of any Securities of Borrower; and (ix) any gain or loss arising from
extraordinary or non-recurring items, all as determined on a Consolidated
basis in accordance with GAAP.
Consolidated Debt Service - for any period, the aggregate of all
scheduled payments of principal and interest on Debt for Money Borrowed of
Borrower and its Subsidiaries due during such period.
Consolidated EBITDA - for any fiscal period of Borrower, an amount
equal to the sum for such fiscal period of (i) Consolidated Adjusted Net
Earnings, plus (ii) provision for Taxes based on income, plus (iii)
Consolidated Interest Expense, plus (iv) depreciation, amortization and
other non-cash charges minus other non-cash gains of Borrower and its
Subsidiaries on a Consolidated basis.
7
Consolidated Fixed Charge Coverage Ratio - for any fiscal period, the
ratio of (i) Consolidated EBITDA minus cash Taxes and Unfinanced Capital
Expenditures in such period, to (ii) Consolidated Fixed Charges for such
period.
Consolidated Fixed Charges - for any fiscal period, the sum during
such period of Borrower's and its Subsidiaries, (a) Consolidated Interest
Expense plus (b) the aggregate of all scheduled principal payments of Debt
for Money Borrowed, plus (c) cash Distributions permitted by the Agreement.
Consolidated Interest Expense - for any period, total interest expense
(including that portion attributable to capitalized leases in accordance
with GAAP and capitalized interest) of Borrower and its Subsidiaries on a
Consolidated basis with respect to all outstanding Debts of Borrower and
its Subsidiaries, including all commissions, discounts, and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net cost under Interest Rate Contracts.
Consolidated Net Income - net income of Borrower and its Subsidiaries
on a Consolidated basis, as determined in accordance with GAAP.
Consolidated Net Worth - on any date of determination thereof, the sum
on such date of (i) the Consolidated net worth of Borrower and its
Subsidiaries after deducting therefrom the amount of all intangible items
reflected therein, including all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights,
unamortized excess cost of investment in Subsidiaries over equity at dates
of acquisition and all similar items that could properly be treated as
intangibles in accordance with GAAP, (ii) Subordinated Debt and (iii)
accrued but undeclared Distributions with respect to preferred stock as
reflected on a Consolidated balance sheet of Borrower and its Subsidiaries.
Consolidated Operating Cash Flow - for any period, an amount equal to
Consolidated EBITDA for such period, minus Taxes paid during such period
and Capital Expenditures of Borrower and its Subsidiaries.
Contingent Obligation - with respect to any Person, any obligation of
such Person arising from any guaranty, indemnity or other assurance of
payment or performance of any Debt, lease, dividend or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including (i) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the
Ordinary Course of Business), co-making, discounting with recourse or sale
with recourse by such Person of the obligation of a primary obligor, (ii)
the obligation to make take-or-pay or similar payments, if required,
regardless of nonperformance by any other party or parties to an agreement,
(iii) any obligation of such Person, whether or not contingent, (A) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (B) to advance or supply funds (1) for the
purchase or payment of any such primary obligations or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the
8
primary obligor, (C) to purchase Property, Securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (D) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation with respect to which such
Contingent Obligation is made (or, if less, the maximum amount of such
primary obligation for which such Person may be liable pursuant to the
terms of the instrument evidencing such Contingent Obligation) or, if not
stated or determinable, the maximum reasonably anticipated liability with
respect thereto (assuming such Person is required to perform thereunder),
as determined by such Person in good faith.
Controlled Disbursement Account - a demand deposit account maintained
by Borrower at Bank and to which proceeds of Revolver Loans will be wired
from time to time.
Current Assets - at any date, the amount at which all of the current
assets of a Person would be properly classified as current assets shown on
a balance sheet at such date in accordance with GAAP except that amounts
due from Affiliates and investments in Affiliates shall be excluded
therefrom.
Debt - as applied to a Person means, without duplication: (i) all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such
Person as of the date as of which Debt is to be determined, including
Capitalized Lease Obligations; (ii) all Contingent Obligations of such
Person; (iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such
Person; and (iv) in the case of Borrower (without duplication), the
Obligations. The Debt of a Person shall include any recourse Debt of any
partnership or joint venture in which such Person is a general partner or
joint venturer.
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - a fluctuating rate per annum which, on any date and for
each Revolver Loan oustanding, is equal to the rate otherwise in effect for
such Revolver Loan under Section 2.1, plus 2%.
Deposit Accounts - all of a Person's demand, time, savings, passbook,
money market or other depository accounts, and all certificates of deposit,
maintained by such Person with any bank, savings and loan association,
credit union or other depository institution.
Dilution Amount - 3% (or such greater or lesser percentage determined
by Agent in its reasonable credit judgment) of the gross amount of all
Accounts.
9
Distribution - in respect of any entity, (i) any payment of any
dividends or other distributions on Equity Interests of the entity (except
distributions in such Equity Interests) and (ii) any purchase, redemption
or other acquisition or retirement for value of any Equity Interests of the
entity or any Affiliate of the entity unless made contemporaneously from
the net proceeds of the sale of Equity Interests.
Document - shall have the meaning given to"document" in the UCC.
Dollars and the sign $ - lawful money of the United States of America.
Domestic Subsidiary - a Subsidiary of Borrower that is incorporated
under the laws of a state of the United States or the District of Columbia.
Dominion Account - a special account of Agent established by Borrower
at a bank selected by Borrower, but acceptable to Agent and Lenders in
their discretion, and over which Agent shall have sole and exclusive access
and control for withdrawal purposes.
Dupont - E.I. du Pont de Nemours and Company.
Eligible Account - an Account which arises in the Ordinary Course of
Business of Borrower from the sale of goods, is payable in Dollars, is
subject to Agent's duly perfected Lien, and is deemed by Agent, in its
reasonable credit judgment, to be an Eligible Account. Without limiting
the generality of the foregoing, no Account shall be an Eligible Account
if: (i) it arises out of a sale made by Borrower to a Subsidiary or an
Affiliate of Borrower or to a Person controlled by an Affiliate of
Borrower; (ii) it is unpaid for more than 60 days after the original due
date shown on the invoice, provided, that for the period from the Closing
Date through August 16, 2001, Accounts that are more than 60 days but less
than 75 days past due shall not be deemed ineligible solely because of this
clause (ii); (iii) 50% or more of the Accounts from the Account Debtor are
not deemed Eligible Accounts hereunder by virtue of clause (ii) above; (iv)
the total unpaid Accounts of the Account Debtor exceed a credit limit
established by Agent for such Account Debtor, to the extent of such excess;
(v) any covenant, representation or warranty contained in the Agreement
with respect to such Account has been breached; (vi) the Account Debtor is
also Borrower's creditor or supplier, or the Account Debtor has disputed
liability with respect to such Account, or the Account Debtor has made any
claim with respect to any other Account due from such Account Debtor to
Borrower, or the Account otherwise is or may become subject to any right of
setoff, counterclaim, reserve or chargeback, provided that, the Accounts of
such Account Debtor shall be ineligible only to the extent of such offset,
counterclaim, disputed amount, reserve or chargeback; (vii) an Insolvency
Proceeding has been commenced by or against the Account Debtor or the
Account Debtor has failed, suspended business or ceased to be Solvent;
(viii) it arises from a sale to an Account Debtor with its principal
office, assets or place of business outside the United States, unless the
sale is backed by an irrevocable letter of credit issued or confirmed by a
bank acceptable to Agent and that is in form and substance acceptable to
Agent and payable in the full amount of the Account in freely convertible
Dollars at a place of payment within the United States and, if requested by
10
Agent, such letter of credit, or amounts payable thereunder, is assigned to
Agent; (ix) it arises from a sale to the Account Debtor on a bill-and-hold,
guaranteed sale, sale-or-return, sale-on-approval, consignment or any other
repurchase or return basis; (x) the Account Debtor is located in any state
which imposes similar conditions on the right of a creditor to collect
accounts receivable unless Borrower has either qualified to transact
business in such state as a foreign entity or filed a Notice of Business
Activities Report or other required report with the appropriate officials
in those states for the then current year; (xi) the Account Debtor is
located in a state in which Borrower is deemed to be doing business under
the laws of such state and which denies creditors access to its courts in
the absence of qualification to transact business in such state or of the
filing of any reports with such state, unless Borrower has qualified as a
foreign entity authorized to transact business in such state or has filed
all required reports; (xii) the Account is subject to a Lien other than a
Permitted Lien; (xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a final sale;
(xiv) the Account is evidenced by Chattel Paper or an Instrument of any
kind, or has been reduced to judgment; (xv) the Account represents a
progress billing or a retainage; (xvi) Borrower has made any agreement with
the Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the Ordinary Course of Business for prompt
payment and which discounts or allowances are reflected in the calculation
of the face value of each invoice related to such Account; or (xvii)
Borrower has made an agreement with the Account Debtor to extend the time
of payment thereof; (xviii) a Payment Item has been received for such
Account but such Payment Item has been returned unpaid for non-sufficient
funds, to the extent of the amount of such Payment Item; (xix) payment in
respect of such Account has been received, but not applied, to the payment
of such Account; (xx) the Account represents, in whole or in part, a
billing for interest, fees or late charges, provided that such Account
shall be ineligible only to the extent of the amount of such billing. The
net amount of Eligible Accounts on any date shall be reduced by the
Dilution Amount.
Eligible Assignee - a Lender or a U.S. based Affiliate of a Lender; a
commercial bank organized under the laws of the United States or any state
and having total assets in excess of $15 billion; or any other Person
(except Borrower or a Guarantor, or an Affiliate of either) approved by
Agent and, unless a Default or an Event of Default exists, Borrower (such
approval by Borrower, when required, not to be unreasonably withheld or
delayed and to be deemed given by Borrower if no objection is received by
the assigning Lender and Agent from Borrower within 2 Business Days after
notice of such proposed assignment has been provided by the assigning
Lender as set forth in Section 13.3 of the Agreement).
Eligible Guam Account - an Account that would otherwise constitute an
Eligible Account but for the fact that the Account Debtor liable therefor
has its principal office, assets or place of business in Guam.
11
Eligible Guam Inventory - Inventory that would otherwise constitute
Eligible Inventory but for the fact that it is located in Guam.
Eligible Inventory - Inventory of Borrower consisting of Finished
Goods which Agent, in its reasonable credit judgment, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no Inventory
shall be Eligible Inventory unless: (i) it is owned by Borrower and not
held by it on consignment or other sale or return terms; (ii) it is in
good, new and saleable condition and is not damaged or defective; (iii) it
is not slow-moving, obsolete or unmerchantable and is not goods returned to
Borrower by or repossessed from an Account Debtor; (iv) it meets all
standards imposed by any Governmental Authority; (v) it conforms in all
respects to the warranties and representations set forth in the Agreement;
(vi) it is at all times subject to Agent's duly perfected, first priority
security interest and no other Lien except a Permitted Lien; (vii) it is in
Borrower's possession and control at a location in compliance with the
Agreement, is not in transit (other than in-transit between other locations
of Borrower or a Subsidiary Guarantor or Co-Borrower) or outside the United
States and is not consigned to any Person; (viii) it is not the subject of
a negotiable warehouse receipt or other negotiable Document; (ix) it is not
subject to any License Agreement or other agreement that limits, conditions
or restricts Borrower's or Agent's right to sell or otherwise dispose of
such Inventory unless the Licensor has entered into a Licensor/Lender
Agreement with Agent; and (x) it is not the subject of an Intellectual
Property Claim.
Emerson - Emerson Electric Co.
Environmental Laws - all federal, state and local laws, rules,
regulations, codes, ordinances, programs, permits, guidance documents
promulgated by regulatory agencies, orders and consent decrees, now or
hereafter in effect and relating to human health and safety or the
protection or pollution of the environment, including CERCLA.
Environmental Release - a release as defined in CERCLA or under any
applicable Environmental Laws.
Equipment - all of Borrower's machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description, whether now
owned or hereafter acquired by Borrower and wherever located, and all
parts, accessories and special tools therefor, all accessions thereto, and
all substitutions and replacements thereof.
Equity Interest - the interest of (i) a shareholder in a corporation,
(ii) a partner (whether general or limited) in a partnership (whether
general, limited or limited liability), (iii) a member in a limited
liability company, or (iv) any other Person having any other form of equity
security or ownership interest.
ERISA - the Employee Retirement Income Security Act of 1974 and all
rules and regulations from time to time promulgated thereunder.
12
Event of Default - as defined in Section 11 of the Agreement.
Exchange Act - Securities Exchange Act of 1934.
Extraordinary Expenses - all costs, expenses, fees or advances that
Agent or any Lender may suffer or incur, whether prior to or after the
occurrence of an Event of Default, and whether prior to, after or during
the pendency of an Insolvency Proceeding of any Obligor, on account of or
in connection with (i) the audit, inspection, repossession, storage,
repair, appraisal, insuring, completion of the manufacture of, preparing
for sale, advertising for sale, selling, collecting or otherwise preserving
or realizing upon any Collateral; (ii) the defense of Agent's Lien upon any
Collateral or the priority thereof or any adverse claim with respect to the
Revolver Loans, the Loan Documents or the Collateral asserted by any
Obligor, any receiver or trustee for any Obligor or any creditor or
representative of creditors of any Obligor; (iii) the settlement or
satisfaction of any Liens upon any Collateral (whether or not such Liens
are Permitted Liens); (iv) the collection or enforcement of any of the
Obligations; (v) the negotiation, documentation, and closing of any
restructuring or forbearance agreement with respect to the Loan Documents
or Obligations; (vi) amounts advanced by Agent pursuant to Section 7.1.3 of
the Agreement; (vii) the enforcement of any of the provisions of any of the
Loan Documents; or (viii) any payment under indemnity or other payment
agreement provided by Agent to Bank or any other financial institution in
connection with any Dominion Account or any lockbox arrangement. Such
costs, expenses and advances may include transfer fees, taxes, storage
fees, insurance costs, permit fees, utility reservation and standby fees,
legal fees, appraisal fees, brokers' fees and commissions, auctioneers'
fees and commissions, accountants' fees, environmental study fees, wages
and salaries paid to employees of Borrower or independent contractors in
completing the manufacturing of or liquidating any Collateral, travel
expenses, all other fees and expenses payable or reimbursable by Borrower
or any other Obligor under any of the Loan Documents, and all other fees
and expenses associated with the enforcement of rights or remedies under
any of the Loan Documents, but excluding compensation paid to employees
(including inside legal counsel who are employees) of Agent or any Lender.
Federal Funds Rate - for any period, a fluctuating interest rate per
annum equal for each date during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) in Atlanta, Georgia by the Federal Reserve Bank of Atlanta, or if such
rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by Agent from
3 federal funds brokers of recognized standing selected by Agent.
Fee Letter - the fee letter agreement between Agent and Borrower.
FEIN - with respect to any Person, the Federal Employer Identification
Number of such Person.
13
Finished Goods - Inventory of Borrower consisting of goods held for
sale in the Ordinary Course of Business including HVAC residential
equipment, HVAC installation supplies, HVAC parts and accessories, HVAC
motors, refrigeration equipment, refrigeration installation supplies,
refrigeration parts and accessories, refrigerant, copper, tools and
instruments, oils and chemicals, and food service equipment and parts.
Fiscal Quarter - each 3-month period ending May 31, August 31,
November 30 and the last day of February of each Fiscal Year.
Fiscal Year - the fiscal year of Borrower and its Subsidiaries for
accounting and tax purposes, which ends on February 28/29 of each year.
Fleet - shall have the meaning ascribed to it on the first page of the
Agreement.
Fleet Indemnitees - Fleet and all of its present and future officers,
directors and agents.
FLSA - the Fair Labor Standards Act of 1938.
Foreign Subsidiary - a Subsidiary of Borrower that is not incorporated
under the laws of a state of the United States or the District of Columbia.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
General Intangibles - all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including all choses in
action, causes of action, company or other business records, inventions,
blueprints, designs, patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, service marks, goodwill, brand
names, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, computer programs, operational manuals, all claims under
guaranties, security interests or other security held by or granted to
Borrower to secure payment of any of any of Borrower's Accounts by an
Account Debtor, all rights to indemnification and all other intangible
property of Borrower of every kind and nature (other than Accounts).
Governmental Approvals - all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to,
all Governmental Authorities.
Governmental Authority - any federal, state, municipal, national,
foreign or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court,
in each case whether associated with a state of the United States, the
District of Columbia or a foreign entity or government.
14
Guam Formula Amount - the lesser of (i) $500,000 or (ii) the sum of
85% of the net amount of Eligible Guam Accounts on such date plus 50% of
the Value of Eligible Guam Inventory on such date.
Guarantor Security Documents - (i) the Pameco Investment Security,
Agreement, (ii) each security agreement that is executed after the Closing
Date by a direct or indirect Subsidiary of Borrower in favor of Agent in
connection with a Permitted Acquisition and by which such Subsidiary shall
grant a security interest in favor of Agent, for its benefit and for the
ratable benefit of Lenders, in all of such Subsidiary's Properties as
security for the payment of the Obligations and such Guarantor's Guaranty,
and (iii) all Lien Perfection Documents requested by Agent from any
Guarantor.
Guarantors - Pameco Investment, Littlejohn and each other Person who
guarantees payment or performance of the whole or any part of the
Obligations.
Guaranty - each guaranty agreement now or hereafter executed by a
Guarantor in favor of Agent with respect to any of the Obligations,
including each Subsidiary Guaranty and the Littlejohn Guaranty.
Indemnified Amount - in the case of Agent Indemnitees, the amount of
any loss, cost, expenses or damages suffered or incurred by Agent
Indemnitees and against which Lenders or any Obligor have agreed to
indemnify Agent Indemnitees pursuant to the terms of the Agreement or any
of the other Loan Documents; in the case of Lender Indemnitees, the amount
of any loss, cost, expenses or damages suffered or incurred by Lender
Indemnitees and against which Lender or any Obligor have agreed to
indemnify Lender Indemnitees pursuant to the terms of the Agreement or any
of the other Loan Documents; and, in the case of Fleet Indemnitees, the
amount of any loss, cost, expenses or damages suffered or incurred by Fleet
Indemnitees and against which Lenders or any Obligor have agreed to
indemnify Fleet Indemnitees pursuant to the terms of the Agreement or any
of the other Loan Documents.
Indemnitees - the Agent Indemnitees, the Lender Indemnitees and the
Fleet Indemnitees.
Initial Lenders - Fleet, in its capacity as a Lender, and any other
Person that is a Lender on the Closing Date.
Insolvency Proceeding - any action, case or proceeding commenced by or
against a Person, or any agreement of such Person, for (i) the entry of an
order for relief under any chapter of the Bankruptcy Code or other
insolvency or debt adjustment law (whether state, federal or foreign), (ii)
the appointment of a receiver, trustee, liquidator or other custodian for
such Person or any part of its Property, (iii) an assignment or trust
mortgage for the benefit of creditors of such Person, or (iv) the
liquidation, dissolution or winding up of the affairs of such Person.
Instrument - shall have the meaning ascribed to the term "instrument"
in the UCC.
15
Intellectual Property - Property constituting under any Applicable Law
a patent, patent application, copyright, trademark, service mark,
tradename, mask work, trade secret or license or other right to use any of
the foregoing.
Intellectual Property Claim - the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise)
that Borrower's ownership, use, marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property or other Property is violative
of any ownership or right to use any Intellectual Property of such Person.
Interest Period - shall have the meaning ascribed to it in Section
2.1.3 of the Agreement.
Interest Rate Contract - any interest rate agreement, interest rate
collar agreement, interest rate swap agreement, or other agreement or
arrangement at any time entered into by a Borrower with Bank that is
designed to protect against fluctuations in interest rates.
International - International Comfort Products Corporation (USA), a
Delaware corporation.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired, including all goods intended for sale or lease by
Borrower, to be furnished by Borrower under contracts of service, or for
display or demonstration; all work in process; all raw materials and other
materials and supplies of every nature and description used or which might
be used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise used
or consumed in Borrower's business; and all Documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
Inventory Formula Amount - on any date of determination thereof, an
amount equal to 50% of the Value of Eligible Inventory (other than Eligible
Guam Inventory) on such date.
Investment Property - shall have the meaning given to "investment
property" under the UCC and shall include all Securities (whether
certificated or uncertificated), security entitlements, securities
accounts, commodity contracts and commodity accounts.
Landlord Waiver - an agreement duly executed in favor of Agent, in
form and content acceptable to Agent, by which an owner or mortgagee of
premises upon which any Property of an Obligor is located agrees to waive
or subordinate any Lien it may have with respect to such Property in favor
of Agent's Lien therein and to permit Agent to enter upon such premises and
to remove such Property or to use such premises to store or dispose of such
Property.
16
LC Application - an application by Borrower to Bank (on which Fleet
may be a co-applicant), pursuant to a form approved by Bank for the
issuance of a Letter of Credit, that is submitted to Bank at least 5
Business Days prior to the requested issuance of such Letter of Credit.
LC Conditions - the following conditions, the satisfaction of each of
which is required before Fleet shall be obligated to provide any LC Support
to Bank for the issuance of a Letter of Credit: (i) each of the conditions
set forth in Section 10 of the Agreement has been and continues to be
satisfied, including the absence of any Default or Event of Default; (ii)
after giving effect to the issuance of the requested Letter of Credit and
all other unissued Letters of Credit for which an LC Application has been
signed by Fleet, the LC Outstandings would not exceed $15,000,000 and no
Out-of-Formula Condition would exist, and, if no Revolver Loans are
outstanding, the LC Outstandings do not, and would not upon the issuance of
the requested Letter of Credit, exceed the Borrowing Base; (iii) the expiry
date of the Letter of Credit does not extend beyond the earlier to occur of
365 days from the date of issuance or the 10th Business Day prior to the
last Business Day of the Term; and (iv) the currency in which payment is to
be made under the Letter of Credit is Dollars.
LC Documents - any and all agreements, instruments and documents
(other than an LC Application or an LC Support) required by Bank to be
executed by Borrower or any other Person and delivered to Bank for the
issuance of a Letter of Credit.
LC Facility - a subfacility of the Revolver Facility established
pursuant to Section 1.2 of the Agreement.
LC Outstandings - on any date of determination thereof, an amount (in
Dollars) equal to the sum of (i) all amounts then due and payable by any
Obligor on such date by reason of any payment made on or before such date
by Fleet under any LC Support plus (ii) the aggregate undrawn amount of all
Letters of Credit then outstanding or to be issued by Bank under an LC
Application theretofore submitted to Bank.
LC Request - a Letter of Credit Procurement Request from Borrower to
Fleet in the form of Exhibit H annexed hereto.
LC Reserve - at any date, the aggregate of all LC Outstandings
outstanding on such date arising from the issuance of standby Letters of
Credit and 50% of the aggregate amount of all LC Outstandings on such date
arising from the issuance of documentary Letters of Credit, but excluding
LC Outstandings that are fully secured by Cash Collateral.
LC Support - a guaranty or other support agreement from Fleet in favor
of Bank pursuant to which Fleet shall guarantee or otherwise assure the
payment or performance by the parties (other than Fleet, if a party) to an
LC Application of such parties' obligations with respect to such Letter of
Credit, including the obligation of such parties to reimburse Bank for any
payment made by Bank under such Letter of Credit.
17
Lender Indemnitee - a Lender and its present and future officers,
directors, agents and attorneys.
Lenders - Fleet (whether in its capacity as a provider of Revolver
Loans under Section 1 of the Agreement, as the provider of Settlement Loans
under Section 3.1.3 of the Agreement, or as the procurer of Letters of
Credit under Section 1.2 of the Agreement) and each other Person who
becomes a "Lender" under the Agreement, and their respective successors and
permitted assigns.
Letter of Credit - any standby letter of credit or documentary letter
of credit issued by Bank for the account of Borrower.
LIBOR Lending Office - with respect to a Lender, the office designated
as a LIBOR Lending Office for such Lender on the signature page hereof (or
on any Assignment and Acceptance, in the case of an assignee) and such
other office of such Lender or any of its Affiliates that is hereafter
designated by written notice to Agent.
LIBOR Loan - a Revolver Loan, or portion thereof, during any period in
which it bears interest at a rate based upon the applicable Adjusted LIBOR
Rate.
LIBOR Rate - with respect to an Interest Period, the rate per annum
reported to Agent by Bank as the rate at which deposits of U.S. Dollars
approximately equal in principal amount to or comparable to the amount of
the LIBOR Loan to which such Interest Period relates and for a term
comparable to such Interest Period are offered to Bank by prime banks in
the London interbank foreign currency deposits market at approximately
11:00 a.m., London time, 2 Business Days prior to the commencement of such
Interest Period. Each determination by Agent of any LIBOR Rate shall, in
the absence of any manifest error, be conclusive.
License Agreement - any agreement between Borrower and a Licensor
pursuant to which Borrower is authorized to use any Intellectual Property
in connection with the manufacturing, marketing, sale or other distribution
of any Inventory of Borrower.
Licensor/Lender Agreement - an agreement between Agent and a Licensor
by which Agent is given the unqualified right, vis-a-vis such Licensor, to
enforce Agent's Liens with respect to and to dispose of Borrower's
Inventory with the benefit of any Intellectual Property applicable thereto,
irrespective of Borrower's default under any License Agreement with such
Licensor and which is otherwise in form and substance satisfactory to
Agent.
Licensor - any Person from whom Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property
in connection with Borrower's manufacture, marketing, sale or other
distribution of any Inventory.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions,
18
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purpose of the Agreement, a Person shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for
security purposes. The interest of a Person who delivers goods to another
Person (the "consignee") under a consignment which is not a security
interest, where the goods are not the Property of the consignee, shall not
be deemed to constitute a "Lien" for purposes of this Agreement.
Lien Perfection Documents - all instruments, agreements, filings and
recordings necessary or, in Agent's reasonable determination, necessary or
desirable to perfect, maintain or continue the perfection of, or achieve or
maintain the first priority status of any Lien granted to Agent pursuant to
any of the Loan Documents by Borrower or any Guarantor, including all UCC-1
financing statements, pledges, assignments, hypothecations, registrations
of pledge, notifications, bailment agreements, landlord or mortgagee
waivers, processor waivers, intercreditor agreements, subordination
agreements, chattel mortgage filings or similar instruments, agreements or
documents.
Littlejohn - Littlejohn Fund II, L.P., a Delaware limited partnership.
Littlejohn Guaranty - the Limited Guaranty Agreement dated on or about
the Closing Date from Littlejohn in favor of Agent and Lenders, in the form
of Exhibit J hereto.
Loan Account - the loan account established by each Lender on its
books pursuant to Section 4.7 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Margin Stock - shall have the meaning ascribed to it in Regulation U
and of the Board of Governors.
Material Adverse Effect - the effect of any event or condition which,
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (i) has a material adverse effect upon the
business, operations, Properties or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole; (ii) has or may be
reasonably expected to have any material adverse effect whatsoever upon the
validity or enforceability of the Agreement or any of the other Loan
Documents; (iii) has any material adverse effect upon the value of the
whole or any material part of the Collateral, the Liens of Agent with
respect to such Collateral or the priority of any such Liens; (iv)
materially impairs the ability of any other Obligor to perform its
obligations under the Agreement or any of the other Loan Documents,
including repayment of any of the Obligations when due; or (v) materially
impairs the ability of Agent or any Lender to
19
enforce or collect the Obligations or realize upon any of the Collateral in
accordance with the Loan Documents and Applicable Law.
Material Contract - an agreement to which an Obligor is a party (other
than the Loan Documents) (i) which is deemed to be a material contract as
provided in Regulation S-K promulgated by the SEC under the Securities Act
of 1933 or (ii) for which breach, termination, cancellation, nonperformance
or failure to renew would reasonably be expected to have a Material Adverse
Effect.
Maximum Rate - the maximum non-usurious rate of interest permitted by
Applicable Law that at any time, or from time to time, may be contracted
for, taken, reserved, charged or received on the Debt in question or, to
the extent that at any time Applicable Law may thereafter permit a higher
maximum non-usurious rate of interest, then such higher rate.
Notwithstanding any other provision hereof, the Maximum Rate shall be
calculated on a daily basis (computed on the actual number of days elapsed
over a year of 365 or 366 days, as the case may be).
Money Borrowed - as applied to any Person, (i) Debt arising from the
lending of money by any other Person to such Person; (ii) Debt, whether or
not in any such case arising from the lending of money by another Person to
such Person, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon
which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for Property;
(iii) Debt that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit; and (v) Debt of such Person under any guaranty of
obligations that would constitute Debt for Money Borrowed under clauses (i)
through (iii) hereof, if owed directly by such Person.
Moody's - Moody's Investors Services, a division of McGraw Hill, Inc.
Mueller - Mueller Industries, Inc.
Multi-Employer Plan - a Plan described in Section 4001(a)(3) of ERISA.
Net Proceeds - with respect to a disposition of any Collateral,
proceeds (including cash receivable (when received) by way of deferred
payment) received by Borrower in cash from the sale, lease, transfer or
other disposition of any Property, including insurance proceeds and awards
of compensation received with respect to the destruction or condemnation of
all or part of such Property, net of: (i) the reasonable and customary
costs of such sale, lease, transfer or other disposition (including legal
fees and sales commissions); (ii) amounts applied to repayment of Debt
(other than the Obligations) secured by a Permitted Lien on the Collateral
disposed of that is senior to Agent's Liens with respect to such
Collateral; and (iii) provided no Default or Event of Default exists,
amounts paid or retained for the payment of any tax liability incurred by
Borrower as a result of such disposition.
20
Normal Period Reserve Amount - for each month, or portion thereof,
that the Slow Period Reserve is not in effect, an amount equal to
$10,000,000; provided that, commencing April 1, 2000, and for each month
thereafter (other than a month, or portion thereof, that the Slow Period
Reserve Amount is in effect), the amount shall be $5,000,000 if the ratio
of Consolidated Operating Cash Flow to Consolidated Debt Service is equal
to or greater than 1.25 to 1. The foregoing ratio shall be calculated for a
period (not to exceed 12 consecutive months) ending on the month preceding
the month for which the reserve amount is to be determined, but the first
month of such period shall be February 2000 until March 2001 (at which time
a rolling 12-month period shall be utilized to calculate the ratio).
Note Agreement - the Note Agreement to be entered into on or before
the Closing Date among Borrower and Vendors pursuant to which the Vendor
Notes are issued.
Notes - each Revolver Note, the Settlement Note and any other
promissory note executed by Borrower at Agent's request to evidence any of
the Obligations.
Notice of Borrowing - as defined in Section 3.1.1(i) of the Agreement.
Notice of Conversion/Continuation - as defined in Section 2.1.2(ii) of
the Agreement.
Obligations - in each case, whether now in existence or hereafter
arising, (i) the principal of, and interest and premium, if any, on, the
Revolver Loans; (ii) all LC Outstandings and all other obligations of any
Obligor to Agent or Fleet arising in connection with the issuance of any
Letter of Credit; (iii) all Debt and other obligations of Borrower to Agent
or Fleet under any Interest Rate Contract, including any premature
termination or breakage costs; and (iv) all other Debts, covenants, duties
and obligations (including Contingent Obligations) now or at any time or
times hereafter owing by Borrower to Agent or any Lender under or pursuant
to the Agreement or any of the other Loan Documents, whether evidenced by
any note or other writing, whether arising from any extension of credit,
opening of a letter of credit, acceptance, loan, guaranty, indemnification
or otherwise, and whether direct or indirect, absolute or contingent, due
or to become due, primary or secondary, or joint or several, including all
interest, charges, expenses, fees or other sums (including Extraordinary
Expenses) chargeable to any or all Obligors hereunder or under any of the
other Loan Documents.
Obligor - Borrower, each Guarantor, and any other Person who is at any
time liable for the payment of the whole or any part of the Obligations or
that has granted in favor of Agent a Lien upon any of any of such Person's
assets to secure payment of any of the Obligations.
Ordinary Course of Business - with respect to any transaction
involving any Person, the ordinary course of such Person's business, as
conducted by such Person in accordance with past practices and undertaken
by such Person in good faith and not for the purpose of evading any
covenant or restriction in any Loan Document.
21
Organization Documents - with respect to any Person, its charter,
certificate or articles of incorporation, bylaws, articles of organization,
operating agreement, members agreement, partnership agreement, voting
trust, or similar agreement or instrument governing the formation or
operation of such Person.
OSHA - the Occupational Safety and Hazard Act of 1970.
Other Agreements - the Notes, each LC Support, the Fee Letter, the
Vendor Lien Subordination, the Vendor Debt Subordination, each Interest
Rate Contract with Bank and any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower, any Obligor or any other
Person and delivered to Agent or any Lender in respect of the transactions
contemplated by the Agreement.
Out-of-Formula Condition - as defined in Section 1.1.2 of the
Agreement.
Out-of-Formula Facility Conditions - shall have the meaning ascribed
to it in Section 1.1.2 of the Agreement.
Out-of-Formula Fix Date - as defined in the Littlejohn Guaranty.
Out-of-Formula Loan - a Revolver Loan made when an Out-of-Formula
Condition exists or the amount of any Revolver Loan which, when funded,
results in an Out-of-Formula Condition.
Pameco Investment - Pameco Investment Company, Inc., a Delaware
corporation.
Pameco Investment Security Agreement - the Security Agreement to be
executed by Pameco Investment on or before the Closing Date in favor of
Agent and by which Pameco Investment shall grant to Agent, for its benefit
as Agent and for the Pro Rata benefit of Lenders, a security interest in
all or substantially all of its assets as security for the payment and
performance of the Obligations.
Participant - as defined in Section 13.2.1.
Participating Lender - as defined in Section 1.3.2(i).
Payment Account - an account maintained by Agent to which all monies
from time to time deposited to a Dominion Account shall be transferred and
all other payments shall be sent in immediately available federal funds.
Payment Items - all checks, drafts, or other items of payment payable
to Borrower, including proceeds of any of the Collateral.
22
Pending Revolver Loans - at any date, the aggregate principal amount
of all Revolver Loans which have been requested in any Notice of Borrowing
received by Agent but which have not theretofore been advanced by Agent or
Lenders.
Permitted Acquisition - any Acquisition by Borrower (or by an
Acquisition Subsidiary) in which each of the following conditions is
satisfied: (i) the business to be acquired is related or substantially
similar to the business of Borrower; (ii) immediately before and after
giving effect to such Acquisition, no Default or Event of Default shall
exist or result therefrom; (iii) Availability is at least $10,000,000 at
the time of and after giving effect to such Acquisition; (iv) Borrower has
a Consolidated Fixed Charge Coverage Ratio of at least 1.25 to 1.0 at the
time of and after giving effect to such Acquisition; (v) Borrower shall
have given Agent not less than 20 days written notice prior to the proposed
consummation of the Acquisition and shall have provided to Agent and each
Lender complete and accurate copies of all term sheets, letters of intent,
commitment letters, proposals and drafts of Acquisition Documents, promptly
after Borrower's receipt thereof; (vi) any Debt incurred by Borrower or
Acquisition Subsidiary to the seller in any such Acquisition shall
constitute Subordinated Debt and such seller shall have executed in favor
of Agent a subordination agreement in form and substance satisfactory to
Agent; (vii) Borrower's consummation of the Acquisition shall be in
compliance with all Applicable Law and Borrower shall have obtained all
required Governmental Approvals; (viii) each direct or indirect Subsidiary
of Borrower (including any Acquisition Subsidiary) created in connection
with or resulting from the Acquisition shall be wholly-owned, directly or
indirectly, by Borrower, and such Subsidiary, shall execute a Subsidiary
Guaranty and Guarantor Security Documents or, with the consent of agent and
the Required Lenders, shall become a Co-Borrower; and (ix) the aggregate of
all Acquisitions during the period from (a) the Closing Date through
February 28, 2001, does not exceed $1,000,000, (b) March 1, 2001 through
February 28, 2002, does not exceed $5,000,000 and (c) during each 12-month
period thereafter, does not exceed $10,000,000.
Permitted Contingent Obligations - Contingent Obligations arising from
endorsements for collection or deposit in the Ordinary Course of Business;
Contingent Obligations arising from Interest Rate Contracts entered into in
the Ordinary Course of Business pursuant to the Agreement or with Agent's
prior written consent; Contingent Obligations of Borrower and its
Subsidiaries existing as of the Closing Date, including extensions and
renewals thereof that do not increase the amount of such Contingent
Obligations as of the date of such extension or renewal; Contingent
Obligations incurred in the Ordinary Course of Business with respect to
surety bonds, appeal bonds, performance bonds and other similar
obligations; Contingent Obligations arising under indemnity agreements to
title insurers to cause such title insurers to issue to Agent title
insurance policies; and Contingent Obligations with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted under Section 7.4.2 of the Agreement.
Permitted Lien - a Lien of a kind specified in Section 9.2.5 of the
Agreement.
23
Permitted Purchase Money Debt - Purchase Money Debt of Borrower and
its Subsidiaries which is incurred after the date of the Agreement and
which is secured by no Lien or only by a Purchase Money Lien, provided that
the aggregate amount of Purchase Money Debt outstanding at any time does
not exceed $3,000,000 and the incurrence of such Purchase Money Debt does
not violate any limitation in the Loan Documents regarding Capital
Expenditures. For the purposes of this definition, the principal amount of
any Purchase Money Debt consisting of capitalized leases shall be computed
as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, limited liability partnership, joint stock company, land trust,
business trust, or unincorporated organization, or a Governmental
Authority.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Pledge Agreement - each stock pledge agreement executed by Borrower in
favor of Agent, pursuant to which Borrower pledges to Agent, for its
benefit as Agent and for the Pro Rata benefit of Lenders, all of its Equity
Interests in a Subsidiary.
Prior Lenders - Quilvest, General Electric Capital Corporation,
Wachovia Bank, N.A., Bank of America, N.A. and SunTrust Bank.
Pro Rata - a share of or in all Revolver Loans, participations in LC
Outstandings (or, in the case of Fleet, the portion of the LC Outstandings
in which Fleet does not sell a participation interest pursuant to Section
1.2.2 of the Agreement), liabilities, payments, proceeds, collections,
Collateral and Extraordinary Expenses, which share for any Lender on any
date shall be a percentage (expressed as a decimal, rounded to the ninth
decimal place) arrived at by dividing the amount of the Revolver Commitment
of such Lender on such date by the aggregate amount of the Revolver
Commitments of all Lenders on such date.
Projections - Borrower's forecasted Consolidated (a) balance sheets,
(b) profit and loss statements, (c) cash flow statements, and (d)
capitalization statements, all prepared on a consistent basis with
Borrower's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions, a projection
of the Borrowing Base and Availability.
Properly Contested - in the case of any Debt of an Obligor (including
any Taxes) that is not paid as and when due or payable by reason of such
Obligor's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, (i) such Debt is being properly contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted; (ii) such Obligor has established appropriate reserves as shall
be required in conformity with GAAP; (iii) the non-payment of such Debt
will not have a Material Adverse Effect and will not result in a forfeiture
of any assets of such Obligor; (iv) no Lien is imposed upon any of such
Obligor's assets with respect to such Debt unless such Lien is at all times
junior and subordinate in priority to the Liens in favor of
24
Agent (except only with respect to property taxes that have priority as a
matter of applicable state law) and enforcement of such Lien is stayed
during the period prior to the final resolution or disposition of such
dispute; (v) if the Debt results from, or is determined by the entry,
rendition or issuance against an Obligor or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order
or decree is stayed pending a timely appeal or other judicial review; and
(vi) if such contest is abandoned, settled or determined adversely (in
whole or in part) to such Obligor, such Obligor forthwith pays such Debt
and all penalties, interest and other amounts due in connection therewith.
Property - any interest in any kind of property or asset, whether
real, personal or mixed and whether tangible or intangible.
Purchase Money Debt - means and includes (i) Debt (other than the
Obligations) for the payment of all or any part of the purchase price of
any fixed assets, (ii) any Debt (other than the Obligations) incurred at
the time of or within 10 days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings (but not
any increases in the principal amounts) thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Debt, but only if such Lien shall at all times be confined solely to
the fixed assets acquired through the incurrence of the Purchase Money Debt
secured by such Lien and such Lien constitutes a purchase money security
interest under the UCC.
Quilvest - Quilvest American Equity Ltd., a British Virgin Islands
international business company.
Refinancing Conditions - the following conditions, each of which must
be satisfied before Refinancing Debt shall be permitted under Section 9.2.3
of the Agreement: (i) the Refinancing Debt is in an aggregate principal
amount that does not exceed the aggregate principal amount of the Debt
being extended, renewed or refinanced plus any accrued interest, and
reasonable fees or expenses relating thereto, (ii) the Refinancing Debt has
a later or equal final maturity and a longer or equal weighted average life
than the Debt being extended, renewed or refinanced, (iii) the Refinancing
Debt does not bear a rate of interest that exceeds a market rate (as
determined in good faith by a Senior Officer) as of the date of such
extension, renewal or refinancing, (iv) if the Debt being extended, renewed
or refinanced is subordinate to the Obligations, the Refinancing Debt is
subordinated to the same extent, Borrower gives Agent at least 30 Business
Days prior written notice of any such refinancing and the aggregate
principal amount of the Refinancing Debt is not less than the principal
amount of the Debt being refinanced, (v) the covenants contained in any
instrument or agreement relating to the Refinancing Debt are no less
favorable to Borrower than those relating to the Debt being extended,
renewed or refinanced, and (vi) at the time of and after giving effect to
such extension, renewal or refinancing, no Default or Event of Default
shall exist.
25
Refinancing Debt - Debt for Money Borrowed that is permitted by
Section 9.2.3 and that is the subject or the result of an extension,
renewal or refinancing.
Regulation D - Regulation D of the Board of Governors.
Register - the register maintained by Agent in accordance with Section
4.8.2 of the Agreement.
Reimbursement Date - as defined in Section 1.2.1(iii) of the
Agreement.
Reportable Event - the occurrence, with respect to any Plan, of any of
the events set forth in Section 4043(b) of ERISA.
Required Lenders - at any date of determination thereof, Lenders
having Revolver Commitments representing at least 51% of the aggregate
Revolver Commitments at such time; provided, however, that if any Lender
shall be in breach of any of its obligations hereunder to Borrower or
Agent, including any breach resulting from its failure to honor its
Revolver Commitment in accordance with the terms of the Agreement, then,
for so long as such breach continues, the term "Required Lenders" shall
mean Lenders (excluding each Lender that is in breach of its obligations
under the Agreement) having Revolver Commitments representing at least 51%
of the aggregate Revolver Commitments at such time; provided further,
however, that if the Revolver Commitments have been terminated, the term
"Required Lenders" shall mean Lenders (excluding each Lender that is in
breach of its obligations hereunder) holding Revolver Loans (including
Settlement Loans) representing at least 51% of the aggregate principal
amount of Revolver Loans (including Settlement Loans) outstanding at such
time.
Restricted Investment - any acquisition of Property by Borrower or any
of its Subsidiaries in exchange for cash or other Property, whether in the
form of an acquisition of Equity Interests or Debt, or the purchase or
acquisition by Borrower or any Subsidiary of any other Property, or a loan,
advance, capital contribution or subscription, except acquisitions of the
following: (i) fixed assets to be used in the Ordinary Course of Business
of Borrower or any Subsidiary so long as the acquisition costs thereof
constitute Capital Expenditures permitted hereunder; (ii) goods held for
sale or lease or to be used in the manufacture of goods or the provision of
services by Borrower or any Subsidiary in the Ordinary Course of Business;
(iii) Current Assets arising from the sale or lease of goods or the
rendition of services in the Ordinary Course of Business of Borrower or any
Subsidiary; (iv) investments in Subsidiaries to the extent existing on the
Closing Date; and (v) Cash Equivalents to the extent they are not subject
to rights of offset in favor of any Person other than Agent or a Lender;
(vi) loans and other advances of money to the extent not prohibited by
Section 9.2.2; and (vii) Permitted Acquisitions.
Restrictive Agreement - an agreement (other than any of the Loan
Documents) that, if and for so long as an Obligor or any Subsidiary of such
Obligor is a party thereto, would prohibit, condition or restrict such
Obligor's or Subsidiary's right to incur or repay Debt for Money Borrowed
(including any of the Obligations); grant Liens upon any of
26
such Obligor's or Subsidiary's assets (including Liens granted in favor of
Agent pursuant to the Loan Documents); declare or make Distributions;
amend, modify, extend or renew any agreement evidencing Debt for Money
Borrowed (including any of the Loan Documents); or repay any Debt owed to
any Obligor.
Revolver Commitment - at any date for any Lender, the obligation of
such Lender to make Revolver Loans and to purchase participations in LC
Outstandings pursuant to the terms and conditions of the Agreement, which
shall not exceed the principal amount set forth opposite such Lender's name
under the heading "Revolver Commitment" on the signature pages of the
Agreement or the signature page of the Assignment and Acceptance by which
it became a Lender, as modified from time to time pursuant to the terms of
the Agreement or to give effect to any applicable Assignment and
Acceptance; and "Revolver Commitments" means the aggregate principal amount
of the Revolver Commitments of all Lenders, the maximum amount of which
shall be $130,000,000, as reduced from time to time pursuant to Section
1.1.5 of the Agreement.
Revolver Loan - a loan made by Lenders as provided in Section 1.1 of
the Agreement (including each Out-of-Formula Loan) or a Settlement Loan
funded solely by Fleet.
Revolver Note - a Revolver Note to be executed by Borrower in favor of
each Lender in the form of Exhibit A, which shall be in the face amount of
such Lender's Revolver Commitment and which shall evidence all Revolver
Loans made by such Lender to Borrower pursuant to the Agreement.
S&P - Standard & Poor's Corporation.
Schedule of Accounts - as defined in Section 7.2.1 of the Agreement.
SEC - Securities and Exchange Commission.
Securities Purchase Agreement - the Securities Purchase Agreement
dated the date of the Agreement among the Borrower, Littlejohn and
Quilvest, pursuant to which, among other things, Littlejohn and Quilvest
have agreed to purchase 140,000 shares of Series A Preferred Stock and
140,000 warrants to purchase additional shares of Series A Preferred Stock
of Borrower.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933.
Security Documents - each Guaranty, the Trademark Security Agreements,
the Guarantor Security Documents, each Pledge Agreement, the Business
Interruption Insurance Assignment, the Lien Perfection Documents and all
other instruments and agreements now or at any time hereafter securing the
whole or any part of the Obligations.
27
Senior Officer - the chief executive officer, chief operating officer,
the president, vice president of finance, treasurer or the chief financial
officer of, or in-house legal counsel to, Borrower.
Settlement Date - as defined in Section 3.1.3(i) of the Agreement.
Settlement Loan - as defined in Section 3.1.3(ii) of the Agreement.
Settlement Note - the Settlement Note to be executed by Borrower to
the order of Fleet on or before the Closing Date in the form of Exhibit
A-1, to evidence the outstanding Settlement Loans owing to Fleet from time
to time pursuant to Section 3.1.3 of the Agreement.
Settlement Report - a report delivered by Agent to Lenders summarizing
the amount of the outstanding Revolver Loans as of the Settlement Date and
the calculation of the Borrowing Base as of such Settlement Date.
Shareholders Agreement - the Shareholders Agreement dated the date of
the Agreement among Borrower, Littlejohn and Quilvest.
Slow Period Reserve Amount - for any interval of 90 consecutive days
selected by Borrower to be effective during the period from November 1 of
each year through the last day of February of the next year, an amount
equal to $5,000,000.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such
Person's Debts (including contingent Debts), (ii) is able to pay all of its
Debts as such Debts mature, (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is
about to engage, and (iv) is not "insolvent" within the meaning of Section
101(32) of the Bankruptcy Code.
Statutory Reserves - on any date, the percentage (expressed as a
decimal) established by the Board of Governors which is the then stated
maximum rate for all reserves (including any emergency, supplemental or
other marginal reserve requirements) applicable to any member bank of the
Federal Reserve System in respect to Eurocurrency Liabilities (or any
successor category of liabilities under Regulation D). Such reserve
percentage shall include those imposed pursuant to said Regulation D. The
Statutory Reserve shall be adjusted automatically on and as of the
effective date of any change in such percentage.
Subordinated Debt - Debt of Borrower that is fully and absolutely
subordinated in right of payment to the Obligations in a manner
satisfactory to Agent at the time of the incurrence of such Debt, including
Debt evidenced by the Vendor Notes.
Subsidiary - any Person in which more than 50% of its outstanding
Voting Securities or more than 50% of all Equity Interests is owned
directly or indirectly by
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Borrower, by one or more other Subsidiaries of Borrower or by Borrower and
one or more other Subsidiaries.
Subsidiary Guarantor - each Subsidiary of Borrower that is or
hereafter becomes a Guarantor.
Subsidiary Guaranty - a Subsidiary Guaranty that has been executed and
delivered by a Subsidiary Guarantor in favor of Agent in the form of
Exhibit I.
Taxes - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, receipts, excise, property, sales, use, transfer,
license, payroll, withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States or any other Governmental
Authority and all interest, penalties, additions to tax and similar
liabilities with respect thereto, but excluding, in the case of each
Lender, taxes imposed on or measured by the net income or overall gross
receipts of such Lender.
Term - as defined in Section 5.1 of the Agreement.
Trademark Security Agreements - (i) the Trademark Security Agreement
to be executed by Pameco Investment in favor of Agent on or before the
Closing Date and by which Pameco Investment shall assign to Agent, for its
benefit as Agent and for the Pro Rata benefit of Lenders, as security for
the Obligations, all of Pameco Investment's right, title and interest in
and to all of its trademarks and (ii) the Trademark Security Agreement to
be executed by Borrower in favor of Agent on or before the Closing Date and
by which Borrower shall assign to Agent, for its benefit as Agent and for
the Pro Rata benefit of Lenders, as security for the Obligations, all of
Borrower's right, title and interest in and to all of its trademarks.
Transferee - as defined in Section 13.3.3 of the Agreement.
Type - any type of a Revolver Loan determined with respect to the
interest option applicable thereto, which shall be either a LIBOR Loan or a
Base Rate Loan.
UCC - the Uniform Commercial Code (or any successor statute) as
adopted and in force in the State of Georgia or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or
any successor statute) of such state.
Unfinanced Capital Expenditures - for any Person, Capital Expenditures
of such Person that have not been financed by Debt for Money Borrowed of
such Person.
Upstream Payment - a payment or distribution of cash or other Property
by a Subsidiary to Borrower, whether in repayment of Debt owed by such
Subsidiary to Borrower, to pay dividends on account of Borrower's ownership
of Equity Interests or otherwise.
29
Value - with reference to the value of Inventory, value determined on
the basis of the lower of cost or market of such Inventory, with the cost
thereof calculated on a first-in, first-out basis determined in accordance
with GAAP.
Vendor Agency Agreement - the Collateral Agency Agreement to be
entered into on or about the Closing Date between Vendor Agent and Vendors.
Vendor Agent - International Comfort Products Corporation (USA), in
its capacity as agent for the Vendors.
Vendor Debt Subordination - the Debt Subordination Agreement to be
executed on or about the Closing Date among Vendor Agent, Vendors, Borrower
and Agent in the form of Exhibit K, and pursuant to which, among other
things, Vendor Agent and Vendors shall agree to subordinate all of the
"Subordinated Debt" (as defined therein), including all Debt evidenced by
the Vendor Notes, to the prior payment in full of the Obligations.
Vendor Lien Subordination - the Lien Subordination Agreement to be
executed on or about the Closing Date by Vendor Agent and Agent in the form
of Exhibit L, pursuant to which Vendor Agent shall agree, among other
things, to subordinate its Liens in the Collateral to the Liens therein of
Agent.
Vendor Notes - those subordinated secured notes issued by Borrower to
the Vendors pursuant to the terms of the Note Agreement, in the aggregate
principal amount of $20,000,000.
Vendor Subordinated Note Documents - the Note Agreement, the Vendor
Notes, Vendor Agency Agreement, and any and all other agreements,
instruments or documents executed in connection with the Debt evidenced by
the Vendor Notes.
Vendor Supply Agreements - collectively, (i) that certain Supply
Agreement to be dated on or about the Closing Date between Borrower and
Emerson, (ii) that certain Supply Agreement to be dated on or about the
Closing Date between Borrower and Mueller, (iii) that certain Supply
Agreement to be dated on or about the Closing Date between Borrower and
International, and (iv) that certain Supply Agreement to be dated on or
about the Closing Date between Borrower and Dupont.
Vendors - Emerson, Mueller, International and Dupont.
Voting Power - with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the Board
of Directors (or persons performing similar functions) of such Person.
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Voting Securities - Equity Interests of any class or classes of a
corporation or other entity the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the corporate
directors or Persons performing similar functions.
Accounting Terms. Unless otherwise specified herein, all terms of an
accounting character used in the Agreement shall be interpreted, all accounting
determinations under the Agreement shall be made, and all financial statements
required to be delivered under the Agreement shall be prepared in accordance
with GAAP, applied on a basis consistent with the most recent audited
Consolidated financial statements of Borrower and its Subsidiaries heretofore
delivered to Agent and Lenders and using the same method for inventory valuation
as used in such audited financial statements, except for any change required by
GAAP.
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.
Certain Matters of Construction. The terms "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations; to any of the Loan
Documents shall include any and all modifications thereto and any and all
restatements, extensions or renewals thereof; to any Person shall mean and
include the successors and permitted assigns of such Person; to "including" and
"include" shall be understood to mean "including, without limitation" (and, for
purposes of the Agreement and each other Loan Document, the parties agree that
the rule of ejusdem generis shall not be applicable to limit a general
statement, which is followed by or referable to an enumeration of specific
matters to matters similar to the matters specifically mentioned); or to the
time of day shall mean the time of day on the day in question in Atlanta,
Georgia, unless otherwise expressly provided in the Agreement. A Default or an
Event of Default shall be deemed to exist at all times during the period
commencing on the date that such Default or Event of Default occurs to the date
on which such Default or Event of Default is waived in writing by Agent pursuant
to the Agreement or, in the case of a Default, is cured within any period of
cure expressly provided in the Agreement; and an Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Lender. Whenever the phrase "to the best of Borrower's knowledge" or
words of similar import relating to the knowledge or the awareness of Borrower
are used herein, such phrase shall mean and refer to (i) the actual knowledge of
a Senior Officer of any Borrower or (ii) the knowledge that a Senior Officer
would have obtained if they had engaged in good faith and diligent performance
of his duties, including the making of such reasonably specific inquiries as may
be necessary of the employees or agents of Borrower and a good faith attempt to
ascertain the existence or accuracy of the matter to which such phrase relates.
31
IN WITNESS WHEREOF, this Appendix has been duly executed in Atlanta,
Georgia, on February 17, 2000.
Borrower:
PAMECO CORPORATION
By: /s/ Mark S. Sellers
-------------------------------------------
Mark S. Sellers, Chief Financial Officer
Attest: /s/ Richard S. Martin
---------------------------------------
Richard S. Martin, Vice-President of
Finance, Treasurer and Secretary
[CORPORATE SEAL]
Lender:
FLEET CAPITAL CORPORATION
By: /s/ Dennis Losin
-------------------------------------------
Title: Vice President
Agent:
FLEET CAPITAL CORPORATION,
as Agent
By: /s/ Dennis Losin
-------------------------------------------
Title: Vice President
32