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Exhibit 10.4
FINANCING AGREEMENT
dated as of
June 27, 2000
among
CANNONDALE CORPORATION,
as Borrower,
the LENDERS party hereto
and
ABLECO FINANCE LLC
as Agent
$15 MILLION
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms 1
SECTION 1.02. Terms Generally 15
SECTION 1.03. Accounting Terms; GAAP 15
ARTICLE II
Conditions Precedent
SECTION 2.01. Conditions to Closing 16
ARTICLE III
The Term Loan
SECTION 3.01. The Term Loan; Amortization 21
SECTION 3.02. Notes 21
SECTION 3.04. Voluntary Prepayments 22
SECTION 3.05. Application of Payments; Interest 23
SECTION 3.06. Securitization 23
ARTICLE IV
Collateral
SECTION 4.01. Grant of Security Interest. 23
SECTION 4.02. Security Interest Generally 24
SECTION 4.03. Collection of Trade Accounts Receivable 24
SECTION 4.04. Delivery of Information Concerning Trade Accounts
Receivable and Inventory. 24
SECTION 4.05. Representations and Covenants With Respect to Trade
Accounts Receivable and Inventory 25
SECTION 4.06. Additional Representations and Covenants With Respect to
Trade Accounts Receivable and Inventory 25
SECTION 4.07. Representations and Covenants With Respect to Equipment 26
SECTION 4.08. Representations and Covenants with Respect to General
Intangibles 27
SECTION 4.09. Continuing Security Interest 27
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SECTION 4.10. No Marshalling 27
SECTION 4.11. Credit Balances 28
ARTICLE V
Representations and Warranties
SECTION 5.01. Organization; Powers. 28
SECTION 5.02. Authorization; Enforceability 28
SECTION 5.03. Governmental Approvals; No Conflicts 28
SECTION 5.04. Financial Condition; No Material Adverse Change 29
SECTION 5.05. Properties 29
SECTION 5.06. Litigation and Environmental Matters 29
SECTION 5.07. Compliance with Laws and Agreements 29
SECTION 5.08. Investment and Holding Company Status 30
SECTION 5.09. Taxes 30
SECTION 5.10. ERISA 30
SECTION 5.11. Disclosure 30
SECTION 5.12. Security Interest 31
SECTION 5.13. Use of Proceeds 31
SECTION 5.14. Subsidiaries 31
SECTION 5.15 Solvency 32
SECTION 5.16. Permits, Etc. 32
ARTICLE VI
Affirmative Covenants
SECTION 6.01. Financial Statements, Projections, Borrowing Base
Certificates and Other Information 32
SECTION 6.02. Notices of Material Events 34
SECTION 6.03. Existence; Conduct of Business 35
SECTION 6.04. Payment of Obligations 35
SECTION 6.05. Maintenance of Properties; Insurance 35
SECTION 6.06. Books and Records; Inspection Rights 36
SECTION 6.07. Compliance with Laws 36
SECTION 6.08. Notarial Deed of Pledge; Foreign Counsel Opinions 36
SECTION 6.09. Further Assurances 36
SECTION 6.10. Change in Collateral; Collateral Records 37
SECTION 6.11. Landlord Waivers; Collateral Access Agreements 37
SECTION 6.12. End of Fiscal Year; End of Fiscal Quarter 37
SECTION 6.13. New Subsidiaries 37
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ARTICLE VII
Negative Covenants and Financial Covenants
SECTION 7.01. Indebtedness 38
SECTION 7.02. Liens 39
SECTION 7.03. Fundamental Changes 40
SECTION 7.04. Investments, Loans, Advances, Guarantees and
Acquisitions 41
SECTION 7.05. Restricted Payments 42
SECTION 7.06. Transactions with Subsidiaries and Affiliates 42
SECTION 7.07. Restrictive Agreements 42
SECTION 7.08. Capital Expenditures 43
SECTION 7.10. Fixed Charge Coverage Ratio 44
SECTION 7.11 Consolidated Fixed Charge Coverage Ratio 45
SECTION 7.12. EBITDA 46
SECTION 7.13. Adjusted EBITDA 46
SECTION 7.14. Senior Leverage Ratio 47
SECTION 7.15. Availability 48
SECTION 7.16. Environmental 48
SECTION 7.17. ERISA 48
ARTICLE VIII
Interest, Fees and Expenses
SECTION 8.01. Interest 48
SECTION 8.02. Reimbursement of Out-of-Pocket Expenses; Documentation
Fees 49
SECTION 8.03. Closing Fee 49
SECTION 8.04. Commitment Fee 49
SECTION 8.05. Anniversary Fee 49
SECTION 8.06. Field Examination Fees 49
ARTICLE IX
Powers
ARTICLE X
Events of Default and Remedies
SECTION 10.01 Events of Default 50
SECTION 10.02 Termination of Commitments; Acceleration 52
SECTION 10.03 Exercise of Remedies 53
ARTICLE XI
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The Agent
SECTION 11.01. Appointment. 54
SECTION 11.02. Agent as a Lender. 54
SECTION 11.03. Scope of Duties. 54
SECTION 11.04. Reliance 55
SECTION 11.05. Sub-Agents. 55
SECTION 11.06. Successors. 55
SECTION 11.07. Independent Credit Analysis of Lenders. 56
ARTICLE XII
Miscellaneous
SECTION 12.01. Notices. 56
SECTION 12.02. Waivers; Amendments. 57
SECTION 12.03. Expenses; Indemnity; Damage Waiver. 58
SECTION 12.04. Assignments and Participations. 59
SECTION 12.05. Survival. 61
SECTION 12.06. Counterparts; Integration; Effectiveness. 61
SECTION 12.07. Severability. 62
SECTION 12.08. Right of Setoff. 62
SECTION 12.09. Governing Law; Jurisdiction; Consent to Service of
Process 62
SECTION 12.10. WAIVER OF JURY TRIAL 63
SECTION 12.11. Headings 63
SECTION 12.12. Confidentiality. 63
SECTION 12.13. Interest Rate Limitation. 64
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EXHIBITS
Exhibit A - Form of Term Note
Exhibit B - Form of Assignment and Acceptance
SCHEDULES
Schedule 7.01 - existing Indebtedness
Schedule 7.02 - existing Liens
Schedule 7.04 - existing investments
Schedule 7.07 - restrictive agreements
ANNEXES
Annex I - Commitments
Annex II - Lien Perfection Information
Annex III - Closing Document Checklist
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FINANCING AGREEMENT dated as of June 27, 2000 among CANNONDALE CORPORATION, a
Delaware corporation, as Borrower (the "Borrower"), the LENDERS party hereto
(each a "Lender" and collectively the "Lenders") and ABLECO FINANCE LLC
("ABLECO"), in its capacity as agent for the Lenders (in such capacity, the
"Agent").
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Financing Agreement, the
following terms shall have the following meanings:
"Accounts" shall mean all of the Borrower's now existing and future:
(a) accounts (as defined in the UCC), and any and all other receivables (whether
or not specifically listed on schedules furnished to the Agent), including,
without limitation, all accounts created by, or arising from, all of the
Borrower's sales, leases, rentals of goods or renditions of services to its
customers, including but not limited to, those accounts arising under any of the
Borrower's trade names or styles, or through any of the Borrower's divisions;
(b) any and all instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the UCC); (c) unpaid seller's or lessor's
rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom; (d) rights to any
goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (e) reserves and credit balances arising in
connection with or pursuant hereto; (f) guarantees, supporting obligations,
payment intangibles and letter of credit rights (all as defined in the UCC); (g)
insurance policies or rights relating to any of the foregoing; (h) general
intangibles pertaining to any and all of the foregoing (including all rights to
payment, including those arising in connection with bank and non-bank credit
cards), and including books and records and any electronic media and software
thereto; (i) notes, deposits or property of account debtors securing the
obligations of any such account debtors to the Borrower; and (j) cash and
non-cash proceeds (as defined in the UCC) of any and all of the foregoing.
"Adjusted EBITDA" shall mean, for any period, EBITDA of the Borrower
for such period, calculated without giving effect to the financial performance
or the results of operations of the Borrower's motorcycle division, in a manner
consistent with the set of forecasts, prepared by the Borrower and dated May 10,
2000, of the Borrower's projected financial performance and results of
operations, which forecasts exclude the financial performance and the results of
operations of such motorcycle division.
"Affiliate" shall mean, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Anniversary Fee" shall have the meaning given that term in Section
8.05.
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"Assignment and Acceptance" shall mean the assignment and acceptance
entered into by an assigning Lender and an assignee, and accepted by the Agent,
in accordance with Section 12.04 and substantially in the form of Exhibit B.
"Authorized Officer" shall mean the Chief Executive Officer or Chief
Financial Officer of the Borrower, or any other officer of the Borrower duly
authorized by its Board of Directors to discharge some or all of the
responsibilities of the Chief Financial Officer.
"Base Rate" shall mean the greater of (a) 9.5% and (b) the rate of
interest per annum announced by The Chase Manhattan Bank, or its successors,
from time to time as its prime rate in effect at its principal office in New
York City. (The prime rate is not intended to be the lowest rate of interest
charged by The Chase Manhattan Bank to its borrowers).
"Business Day" shall mean any day on which both the Agent and The Chase
Manhattan Bank are open for business in New York City.
"Capital Expenditures" shall mean, with respect to any Person for any
period, the aggregate expenditures of such Person during such period on account
of, property, plant, equipment or similar fixed assets that, in conformity with
GAAP, are required to be reflected in the balance sheet of such Person,
including without limitation the portion of each Capital Lease that is or should
be capitalized in accordance with GAAP.
"Capital Lease" shall mean any lease of property (whether real,
personal or mixed) which, in conformity with GAAP, is accounted for as a capital
lease or a Capital Expenditure on the balance sheet of the Borrower.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Closing Date" shall mean the date that this Financing Agreement has
been duly executed by the parties hereto and delivered to the Agent.
"Closing Fee" shall have the meaning given that term in Section 8.03.
"Collateral" shall mean all present and future Accounts, Documents of
Title, Equipment, General Intangibles, Intellectual Property, Inventory, Pledged
Stock, Real Estate, Diamond M Ranch Collateral and Other Collateral.
"Collateral Assignment of Shareholder Mortgage" shall mean the
Collateral Assignment of Deed of Trust and Financing Statements, dated the
Closing Date, made by the Borrower to the Agent, in recordable form
substantially in the form of Exhibit B to the Collateral Assignment of
Shareholder Note, that collaterally assigns the Shareholder Mortgage to the
Agent for the benefit of the Lenders.
"Collateral Assignment of Shareholder Note" shall mean the Collateral
Assignment of Shareholder Note dated the Closing Date, made by the Borrower to
the Agent,
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that collaterally assigns the Shareholder Note, together with all agreements
related thereto and all security therefor (including without limitation the
Shareholder Pledge Agreement and the Shareholder Mortgage), to the Agent for the
benefit of the Lenders.
"Collateral Assignments" shall mean the Collateral Assignment of
Shareholder Mortgage and the Collateral Assignment of Shareholder Note.
"Commitment" shall mean each Lender's commitment in accordance with
this Financing Agreement to make available to the Borrower on the Closing Date
such Lender's pro rata share of the Term Loan, as set forth in Annex I to this
Financing Agreement.
"Commitment Fee" shall have the meaning given that term in Section
8.04.
"consolidated" shall mean, with respect to any financial statement of
the Borrower, the preparation of such financial statement on a consolidated
basis for the Borrower and its consolidated subsidiaries, eliminating all
inter-company transactions and prepared in accordance with GAAP.
"consolidating" shall mean, with respect to any financial statement of
the Borrower, the preparation of such financial statement on a consolidated
basis plus individual balance sheets for the Borrower and its consolidated
subsidiaries, showing all eliminations of inter-company transactions, including
a balance sheet for the Borrower exclusively, all prepared in accordance with
GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Copyrights" shall mean all present and hereafter acquired copyrights,
copyright registrations, recordings, applications, designs, styles, licenses,
marks, prints and labels bearing any of the foregoing, goodwill, any and all
general intangibles, intellectual property and rights pertaining thereto, and
all cash and non-cash proceeds thereof.
"Default" shall mean any event specified in Article X, or which, with
the giving of notice, the lapse of time, or both, or any other condition, event
or act, would become an Event of Default.
"Default Rate" shall mean a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Financing Agreement plus 2%, or, if a rate of interest is not otherwise in
effect, the Base Rate plus 2%.
"Diamond M. Ranch" shall mean the real estate, and the improvements
thereon, located in Rio Blanco County, Colorado and more particularly described
in the Diamond M Ranch Deed of Trust.
"Diamond M Ranch Collateral" shall mean (i) the Mortgaged Property (as
defined in the Diamond M Ranch Deed of Trust), (ii) the Collateral (as defined
in the Diamond M, LLC
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Pledge Agreement), (iii) the Assigned Collateral (as defined in the Collateral
Assignment of Shareholder Note), (iv) the Assigned Collateral (as defined in the
Collateral Assignment of Shareholder Mortgage), and (v) all right, title and
interest of the Borrower, Joseph S. Montgomery and Diamond M, LLC in and to the
property and all interests in property relating to the Diamond M Ranch and the
financing and refinancing of the purchase thereof as described in the foregoing
documents.
"Diamond M Ranch Deed of Trust" shall mean the Deed of Trust and
Security Agreement, dated the Closing Date, made by Diamond M, LLC, as trustor,
to the Public Trustee of Rio Blanco County, Colorado, as trustee for the benefit
of the Agent.
"Diamond M Ranch Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated the Closing Date, among the Borrower, the Public Trustee of Rio
Blanco County, Colorado, Diamond M, LLC, Joseph S. Montgomery and the Agent.
"Diamond M Ranch Loan Documents" shall mean the Collateral Assignments,
the Montgomery Guaranty, the Diamond M, LLC Pledge Agreement, the Diamond M, LLC
Guaranty, the Diamond M Ranch Deed of Trust and the Diamond M Ranch
Intercreditor Agreement.
"Diamond M, LLC Guaranty" shall mean the Guaranty, dated the Closing
Date, made by Diamond M, LLC in favor of the Lenders and the Agent.
"Diamond M, LLC Pledge Agreement" shall mean the Pledge and Security
Agreement, dated the Closing Date, made by Joseph S. Montgomery and Celia
Congdon Montgomery in favor of the Agent.
"Documentation Fee" shall mean the Agent's standard fees relating to
any and all modifications, waivers, releases or amendments with respect to this
Financing Agreement, the Collateral and/or the Obligations, or the perfection of
the Agent's security interest in additional collateral, in each case after the
Closing Date.
"Documents of Title" shall mean all present and future documents (as
defined in the UCC), and any and all warehouse receipts, bills of lading,
shipping documents, chattel paper, instruments and similar documents, all
whether negotiable or not and all goods and Inventory relating thereto and all
cash and non-cash proceeds of the foregoing.
"EBITDA" shall mean, for any period, Net Income for such period plus,
to the extent deducted in determining Net Income for such period, the aggregate
amount of Interest Expense and income tax expense for such period, and all
depreciation, amortization and other non-cash charges for such period, minus, to
the extent included in determining Net Income for such period, the aggregate
amount of interest income for such period that has been deferred or has not been
paid in cash, all determined in accordance with GAAP on a consistent basis, but
excluding (i) the effect of extraordinary or non-reoccurring gains or losses for
such period, and (ii) all amounts paid in cash to the Borrower during such
period resulting from the unwinding of any Hedging Obligation of the Borrower.
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"Environmental Law" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions or binding agreements
issued, promulgated or entered into by any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural resources,
the management, release or threatened release of any Hazardous Material.
"Environmental Liability" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release of any Hazardous Materials into the environment or
(e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed by or imposed upon, the Borrower with respect to any of the
foregoing.
"Equipment" shall mean all present and hereafter acquired equipment (as
defined in the UCC) including, without limitation, all machinery, equipment,
furnishings and fixtures, and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and all proceeds
thereof of whatever sort.
"ERISA" shall mean the Employee Retirement Income Security Act or 1974,
as amended from time to time and the rules and regulations promulgated
thereunder from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Internal Revenue Code of 1986 (the "Code") as
amended from time to time or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the failure of the Borrower or any of its ERISA
Affiliates to make a required installment (as defined in Section 412(n) of the
Code) to any Plan by its due date; (e) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (f) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the incurrence by the Borrower or any of its ERISA Affiliates of
any material liability with respect to the withdrawal or partial withdrawal from
any Plan or Multiemployer Plan; or (h) the receipt by the Borrower or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal
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Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Event(s) of Default" shall have the meaning provided for in Article X.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" shall mean, with respect to the Borrower, each three
(3) month period ending on the Saturday closest to September 30, December 31,
March 31, and June 30 of each Fiscal Year.
"Fiscal Year" shall mean, with respect to the Borrower, the period of
four consecutive Fiscal Quarters commencing on the Sunday closest to July 1 of
each year and ending on the Saturday closest to June 30 of the following year,
determined in a manner consistent with the Borrower's past practices.
"Fixed Charge Coverage Ratio" shall mean, for the relevant period, the
ratio determined by dividing (a) EBITDA for such period by (b) the sum of (i)
Interest Expense paid or due, in cash, during such period plus (ii) the amount
of principal of the Term Loan and of any other Indebtedness (other than the
Revolving Loans and obligations under Letters of Credit, in each case as defined
in the Working Capital Agreement) repaid or scheduled to be repaid during such
period (including the portion of payments made during such period under
Capitalized Leases that are allocable to the repayment of principal), plus (iii)
Capital Expenditures made by the Borrower during such period which were not
financed, plus (iv) all dividends and other distributions of a similar nature
made in cash by the Borrower during such period, plus (v) all federal, state and
local income tax expenses due and payable by the Borrower during such period.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time and for the period as to
which such accounting principles are to apply.
"General Intangibles" shall mean all present and hereafter acquired
general intangibles (as defined in the UCC), and shall include, without
limitation, all present and future right, title and interest in and to: (a) all
Trademarks, tradenames, corporate names, business names, logos and any other
designs or sources of business identities, (b) Patents, together with any
improvements on said Patents, utility models, industrial models, and designs,
(c) Copyrights, (d) trade secrets, (e) licenses, permits and franchises, (f) all
applications with respect to the foregoing, (g) all right, title and interest in
and to any and all extensions and renewals, (h) goodwill with respect to any of
the foregoing, (i) any other forms of similar intellectual property, (j) all
customer lists, distribution agreements, supply agreements, blueprints,
indemnification
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rights and tax refunds, together with all monies and claims for monies now or
hereafter due and payable in connection with any of the foregoing or otherwise,
and all cash and non-cash proceeds thereof, including, without limitation, the
proceeds or royalties of any licensing agreements between the Borrower and any
licensee of any of the Borrower's General Intangibles.
"Governmental Authority" shall mean the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls or radon gas and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Hedging Obligations" shall mean any obligation or liability arising
under or relating to an interest rate protection agreement, foreign currency
exchange agreement, commodity price protection agreement or other interest or
currency exchange rate or commodity price hedging arrangement, or any
arrangement which is derivative thereof.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of business
and excluding installments of premiums payable with respect to policies of
insurance contracted for in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all guarantees by such Person of
Indebtedness of others, (h) all obligations under Capital Leases of such Person
attributable to the payment of principal, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Insurance Proceeds" shall mean proceeds or payments from an insurance
carrier with respect to any loss, casualty or damage to Collateral.
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"Intellectual Property" shall mean all property and all interests in
property described in the Intellectual Property Agreements in which the Borrower
has granted security interests to the Agent for the benefit of the Lenders.
"Intellectual Property Agreements" shall mean the Trademark Security
Agreement and the Patent Security Agreement, in each case, dated the Closing
Date and executed by the Borrower in favor of the Agent, pursuant to which the
Borrower shall have granted to the Agent for the benefit of the Lenders a Lien
on and security interest in the property, and interests in property, described
in each such Agreement as security for the payment and performance of the
Obligations.
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated
the Closing Date and entered into by the Working Capital Loan Agent, the Working
Capital Loan Lenders, the Agent and the Lenders.
"Interest Expense" shall mean the total interest obligations (paid or
accrued) of the Borrower, determined on a non-consolidated basis in accordance
with GAAP.
"Inventory" shall mean all of the Borrower's present and hereafter
acquired inventory (as defined in the UCC) and including, without limitation,
all merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production-from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
"Liabilities" shall have the meaning given that term in Section 3.06.
"Lien" shall mean with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" shall mean this Financing Agreement, the Term Notes,
the Intellectual Property Agreements, the Stock Pledge Agreement, the Mortgages,
the Warrant, the Intercreditor Agreement, the Diamond M Ranch Loan Documents,
the Registration Rights Agreement, the other closing documents and any other
ancillary documents, instruments and agreements executed from time to time in
connection with this Financing Agreement, all as may be renewed, amended,
extended, increased or supplemented from time to time.
"Material Adverse Change" shall mean a material adverse change in the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower, or of the Borrower and the Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower, or of
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the Borrower and the Subsidiaries, taken as a whole, (b) the ability of the
Borrower to perform any of its material obligations under this Financing
Agreement or any of the other Loan Documents or (c) the rights of or benefits
available to the Lenders under this Financing Agreement or any of the other Loan
Documents.
"Material Indebtedness" shall mean any Indebtedness (other than the
Obligations) of any one or more of the Borrower and its Subsidiaries in a
principal amount, as of any date of determination, exceeding $5,000,000.
"Maturity Date" shall mean June 30, 2003.
"Montgomery Debt" shall mean the Indebtedness owing by Joseph
Montgomery, an individual, to the Borrower, evidenced by the Shareholder Note.
"Montgomery Guaranty" shall mean the Limited Recourse Guaranty, dated
the Closing Date, made by Joseph S. Montgomery in favor of the Agent.
"Moody's" shall mean Moody's Investors Service, Inc. and any successor
thereto.
"Mortgages" shall mean those mortgages, each dated as of the Closing
Date, executed by the Borrower, as mortgagor, in favor of the Agent, as
mortgagee, to secure the Borrower's payment and performance of the Obligations
and encumbering those certain parcels of land, and the improvements thereon,
owned by the Borrower and located in Bethel, Connecticut and Bedford,
Pennsylvania.
"Net Cash Proceeds" shall mean, with respect to any property, the
aggregate amount of all proceeds, payable in cash (including any cash received
by way of deferred payment pursuant to a promissory note, receivable or
otherwise), arising from the sale, transfer or other disposition of such
property, minus the usual and customary out-of-pocket costs and expenses payable
by the seller of such property, the principal amount of Indebtedness that is
mandatorily payable by such seller upon the disposition of such property (other
than Indebtedness incurred under this Financing Agreement), and the amount of
taxes paid (or reasonably estimated to be payable) by such seller in connection
with such disposition.
"Net Income" shall mean, for any period, the net after tax income (or
loss) of the Borrower for such period, determined on a non-consolidated basis in
accordance with GAAP.
"Net Worth" shall mean, at any date of determination, an amount equal
to (a) Total Assets of the Borrower minus (b) Total Liabilities of the Borrower.
"Obligations" shall mean all loans, advances and extensions of credit
made or to be made by the Agent and/or the Lenders to the Borrower, or to others
for the Borrower's account, pursuant to this Financing Agreement (including,
without limitation, the Term Loan); and any and all indebtedness, liabilities
and obligations which may at any time be owing by the Borrower to the Agent
and/or the Lenders arising under or relating to this Financing Agreement,
whether now in existence or incurred by the Borrower from time to time
hereafter; whether principal, interest, fees, costs, expenses (including
reasonable attorney's fees and disbursements) or otherwise; whether secured by
Lien upon any of the Borrower's Collateral, assets or property
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or the assets or property of any other Person; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Borrower is liable to the Agent and/or the Lenders for
such indebtedness as principal, surety, endorser, guarantor or otherwise.
Obligations shall also include indebtedness, obligations and liabilities owing
to the Agent and/or the Lenders by the Borrower under any Loan Document or under
any other agreement or arrangement now or hereafter entered into between the
Borrower and the Agent and/or the Lenders pursuant to or in connection with the
transactions contemplated to occur under or in respect of this Financing
Agreement; and all Out-of-Pocket Expenses.
"Old Credit Agreement" shall mean the Amended and Restated Credit
Agreement, dated as of January 22, 1999 by and among the Borrower, certain
Subsidiaries, the Banks signatory thereto and Nationsbank, N.A. as
Administrative Agent, Documentation Agent, Fronting Bank and Swingline Bank, and
Fleet National Bank, as Syndication Agent, as amended through the date hereof.
"Other Collateral" shall mean all now owned and hereafter acquired
lockbox, blocked account and any other deposit accounts maintained with any bank
or financial institutions into which the proceeds of Collateral are or may be
deposited; all cash and other monies and property in the possession or control
of the Agent and/or any of the Lenders; all books, records, ledger cards, disks
and related data processing software at any time evidencing or containing
information relating to any of the Collateral described herein or otherwise
necessary or helpful in the collection thereof or realization thereon; and all
cash and non-cash proceeds of the foregoing.
"Out-of-Pocket Expenses" shall mean all of the out-of-pocket costs and
expenses incurred pursuant to this Financing Agreement or any other Loan
Documents by the Agent, and, at any time after the occurrence of an Event of
Default which has occurred and is continuing, the Lenders, whether incurred
heretofore or hereafter, which expenses shall include, without being limited to:
the cost of record searches, travel, lodging and similar expenses of the Agent's
personnel in connection with inspecting and monitoring the Collateral from time
to time hereunder, any applicable reasonable counsel fees and disbursements,
fees and taxes relative to the filing of financing statements, all expenses,
costs and fees set forth in Section 10.03, and title insurance premiums, real
estate survey costs, costs of preparing and recording the Mortgages.
"Participant Register" shall have the meaning given that term in
Section 12.04(b)(v).
"Patents" shall mean all of the Borrower's present and hereafter
acquired patents, patent applications, registrations, any reissues or renewals
thereof, licenses, any inventions and improvements claimed thereunder, and all
general intangible, intellectual property and patent rights with respect thereto
of the Borrower, and all income, royalties, cash and non-cash proceeds thereof.
"Permits" shall have the meaning given to such term in Section 5.16.
"Permitted Encumbrances" shall mean: (a) liens of local or state
authorities for franchise or other like Taxes, provided that the aggregate
amounts of such liens shall not exceed
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$500,000 in the aggregate at any one time; (b) statutory liens of landlords and
liens of carriers, warehousemen, bailees, mechanics, materialmen and other like
liens imposed by law, created in the ordinary course of business and for amounts
not yet due (or which are being contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent
imminent foreclosure of such liens) and with respect to which adequate reserves
or other appropriate provisions are being maintained by the Borrower in
accordance with GAAP; (c) pledges or deposits made (and the liens thereon) in
the ordinary course of business of the Borrower (including, without limitation,
security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other similar
obligations; (d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate, if applicable,
and which in the aggregate (i) do not materially interfere with the occupation,
use or enjoyment by the Borrower of its business or property so encumbered and
(ii) in the reasonable business judgment of the Agent do not materially and
adversely affect the value of such Real Estate; (e) tax liens which are not yet
due and payable or which are being diligently contested in good faith by the
Borrower by appropriate proceedings and for which adequate reserves have been
set aside in accordance with GAAP for the payment thereof; (f) liens created in
favor of a bank at which a deposit account, other than a Blocked Account (as
defined in the Working Capital Loan Agreement), is maintained, including set off
rights in favor of such bank; and (g) the items identified in Schedules A, B and
C of each of the Mortgages.
"Permitted Investments" shall mean (a) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof; (b) investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from Moody's; (c)
investments in certificates of deposit, banker's acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; and (d)
fully collateralized repurchase agreements with a term of not more than 30 days
for securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above.
"Person" shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, or other
entity.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were
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terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Pledged Stock" shall mean the securities pledged pursuant to the Stock
Pledge Agreement by the Borrower to the Agent, for the benefit of the Lenders,
as security for the payment and performance of all Obligations.
"Proportionate Share" shall mean a fraction, the denominator of which
shall equal, as of any date of determination, the sum of the aggregate unpaid
principal balance of the Term Loan and the Term Loan (as defined in the Working
Capital Loan Agreement), and the numerator of which shall equal as of such date,
in the case of the Lenders, the aggregate unpaid principal balance of the Term
Loan, and in the case of the Working Capital Loan Lenders, the unpaid principal
balance of the Term Loan (as defined in the Working Capital Loan Agreement).
"pro rata share" shall mean, with respect to each Lender, the
percentage of the total Commitments represented by such Lender's Commitment.
"Rating Agencies" shall have the meaning given that term in Section
3.06.
"Real Estate" shall mean the Borrower's fee and/or leasehold interests
in the real property described in the Mortgages.
"Register" shall have the meaning given that term in Section
12.04(b)(ii).
"Registered Loan" shall have the meaning given that term in Section
3.02(b).
"Registered Note" shall have the meaning given that term in Section
3.02(b).
"Required Lenders" shall mean the Lenders holding aggregate Commitments
under this Financing Agreement in an amount of 66 2/3% or more of the total
Commitments.
"Restricted Payment" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of Capital Stock of the Borrower or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of Capital Stock of
the Borrower or any option, warrant or other right to acquire any such shares of
Capital Stock of the Borrower.
"S & P" shall mean Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. and any successor thereto.
"Securitization" shall have the meaning given that term in Section
3.06.
"Securitization Parties" shall have the meaning given that term in
Section 3.06.
"Senior Leverage Ratio" shall mean, for the relevant period, the ratio
determined by dividing (i) the aggregate outstanding principal balance of the
Term Loan, the Term Loan (as
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defined in the Working Capital Loan Agreement) and the Revolving Loans (as
defined in the Working Capital Loan Agreement), and the aggregate undrawn stated
amount of outstanding Letters of Credit (as defined in the Working Capital Loan
Agreement), in each as of the last day of such period, by (ii) EBITDA for such
period.
"Shareholder Mortgage" shall mean the Collateral Assignment of Note and
Deed of Trust, dated as of September 15, 1998, by and between Joseph Montgomery
and the Borrower, and the Deed of Trust and Security Agreement dated September
15, 1998 from Diamond M, LLC to the Public Trustee of Rio Blanco County, as
Trustee f/b/o Joseph S. Montgomery assigned thereby.
"Shareholder Note" shall mean the amended and restated promissory note,
originally dated September 15, 1998, in the original principal amount of
$12,000,000, made by Joseph Montgomery to the order of the Borrower evidencing
loans made by the Borrower to Joseph Montgomery.
"Shareholder Pledge Agreement" shall mean the Amended and Restated
Pledge Agreement dated September 15, 1998 entered into by Joseph Montgomery and
the Borrower.
"Solvent" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is not less
than the total amount of its liabilities of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its existing debts
as they become absolute and matured, (c) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Stock Pledge Agreement" shall mean the Stock Pledge Agreement, dated
the Closing Date and executed by the Borrower in favor of the Agent, pursuant to
which the Borrower shall have pledged and collaterally assigned the Pledged
Stock as security for the payment and performance of the Obligations.
"subsidiary" shall mean with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
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"Subsidiary" shall mean any subsidiary of the Borrower.
"Surplus Cash" shall mean, for any Fiscal Year, (a) EBITDA for such
Fiscal Year less (b) the sum of (i) all cash Interest Expense for such Fiscal
Year, (ii) the aggregate scheduled amount of principal of the Term Loan and the
Term Loan (as defined in the Working Capital Loan Agreement) repaid during such
Fiscal Year, (iii) Capital Expenditures actually made or incurred by the
Borrower during such Fiscal Year and not financed (iv) cash expenditures made in
respect of Hedging Obligations (to the extent not reflected in such EBITDA or
Interest Expense) of the Borrower and (v) all income tax expense of the Borrower
for such Fiscal Year.
"Taxes" shall mean all federal, state, municipal and other governmental
taxes, levies, charges, claims and assessments which are or may be due by the
Borrower with respect to its business, operations, Collateral or otherwise.
"Term Loan" shall mean the term loan in the original principal amount
of $15,000,000 made to the Borrower pursuant to, and repayable in accordance
with, the provisions of Sections 3.01 and 3.02.
"Term Note" shall mean a promissory note of the Borrower, substantially
in the form of Exhibit A, made payable to the order of a Lender, evidencing the
Indebtedness resulting from the making by such Lender to the Borrower of such
Lender's pro rata share of the Term Loan and delivered to the Lender pursuant to
Article III and any promissory note or notes issued in exchange or replacement
therefor. The term "Term Note" shall include any Registered Note evidencing any
portion of the Term Loan and delivered pursuant to Section 3.02(b).
"Total Assets" shall mean the total assets of the Borrower determined
on a non-consolidated basis in accordance with GAAP.
"Total Liabilities" shall mean the total liabilities of the Borrower
determined on a non-consolidated basis in accordance with GAAP.
"Trade Accounts Receivable" shall mean the accounts (as defined in the
UCC) of the Borrower which arise from the sale of Inventory or the rendition of
services in the ordinary course of the Borrower's business.
"Trademarks" shall mean all present and hereafter acquired trademarks,
trademark registrations, recordings, applications, tradenames, trade styles,
service marks, prints and labels (on which any of the foregoing may appear),
licenses, reissues, renewals, and any other intellectual property and trademark
rights pertaining to any of the foregoing, together with the goodwill associated
therewith, and all cash and non-cash proceeds thereof.
"UCC" shall mean the Uniform Commercial Code as the same may be amended
and in effect from time to time in the state of New York.
"Warrant" shall mean the common stock purchase warrant, dated as of
June 30, 2000, issued by the Borrower to the Agent, as the holder.
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"Working Capital Loan Agent" shall mean the Agent (as defined in the
Working Capital Loan Agreement).
"Working Capital Loan Agreement" shall mean the Financing Agreement
dated as of June 27, 2000 among the Borrower, the lenders party thereto and the
Working Capital Loan Agent.
"Working Capital Loan Documents" shall mean the Loan Documents (as
defined in the Working Capital Loan Agreement).
"Working Capital Loan Lenders" shall mean the Lenders (as defined in
the Working Capital Loan Agreement).
"Working Capital Loan Obligations" shall mean the Obligations (as
defined in the Working Capital Loan Agreement).
SECTION 1.02. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Financing Agreement in its entirety
and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Financing
Agreement and (e) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
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ARTICLE II
Conditions Precedent
SECTION 2.01. Conditions to Closing. The Commitment of each Lender to
fund its pro rata share of the Term Loan, is subject to the satisfaction,
extension or waiver (in writing), on or prior to the Closing Date, of each of
the following conditions precedent:
(a) Lien Searches - The Agent shall have received and reviewed
to its satisfaction, as of a recent date, tax, judgment and Uniform Commercial
Code searches for all locations presently occupied or used by the Borrower.
(b) Casualty Insurance - The Borrower shall have delivered to
the Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as additional insured, loss payee or mortgagee, as the case
may be, are in full force and effect, provided that any certificate that
evidences such insurance shall be in the form of "Accord 27".
(c) UCC Filings - All financing statements required to be
filed in order to perfect, in favor of the Agent, on behalf of the Lenders, a
first priority security interest in the Collateral, subject only to the
Permitted Encumbrances, shall have been properly filed in each such office in
each jurisdiction. The Agent shall have received acknowledgment copies of all
such filings (or, in lieu thereof, the Agent shall have received other evidence
satisfactory to the Agent that all such filings have been made) and the Agent
shall have received evidence that all necessary filing fees and all taxes or
other expenses related to such filings have been paid in full.
(d) Board Resolutions - The Agent shall have received a copy
of the resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Financing Agreement, and all other
Loan Documents to which the Borrower is a party, and the consummation of the
transactions contemplated to occur hereunder and thereunder, in each case
certified by the Secretary or Assistant Secretary of the Borrower as of the date
hereof, together with a certificate of the Secretary or Assistant Secretary of
the Borrower as to the incumbency and validity of the signature of the officers
of the Borrower executing this Financing Agreement and such other Loan Documents
and any certificate or other documents to be delivered by them pursuant hereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(e) Corporate Organization, Good Standing and Qualification -
The Agent shall have received (i) a copy of the Certificate of Incorporation of
the Borrower certified by the Secretary of State of the state of its
incorporation, (ii) a copy of the By-Laws of the Borrower certified by the
Secretary or Assistant Secretary thereof, all as amended through the date
hereof, (iii) a Certificate of Good Standing from the Secretary of State of the
state of the Borrower's incorporation and (iv) a Certificate of Qualification
from the Secretary of State of each other state in which the Borrower is doing
business, except where the failure to be so qualified would not have a Material
Adverse Effect.
(f) Solvency Certificate and Officer's Certificate - The Agent
shall have received (x) an executed Solvency Certificate of the Borrower,
satisfactory in form and
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substance to the Agent, certifying the Borrower's Solvency as of the Closing
Date and such related matters as the Agent shall deem necessary and (y) an
executed Officer's Certificate of the Borrower, satisfactory in form and
substance to the Agent, certifying that (i) the representations and warranties
contained herein are true and correct in all material respects on and as of the
Closing Date; (ii) the Borrower is in compliance with all of the terms and
provisions set forth herein; and (iii) no Default or Event of Default has
occurred.
(g) Opinions - the Agent on behalf of the Lenders shall have
received and reviewed to its satisfaction legal opinions from (i) the law firm
of Kelley Drye & Warren LLP, as general counsel to the Borrower and special
counsel to Diamond M, LLC and Joseph S. Montgomery, (ii) the law firm of Koontz
& Crabtree, as special Pennsylvania counsel to the Borrower, (iii) the law firm
of Krabacher Law Offices, as special Colorado counsel to the Borrower; Diamond
M, LLC and Joseph S. Montgomery, and (iv) the law firm of Levett Rockwood P.C.,
as special counsel to Diamond M, LLC and Joseph S. Montgomery.
(h) Absence of Default; No Material Adverse Change - No
Default or Event of Default shall have occurred and no Material Adverse Change
shall have occurred since April 1, 2000.
(i) Legal Restraints/Litigation - As of the Closing Date,
there shall be no: (x) litigation, investigation or proceeding (judicial or
administrative) pending or threatened against the Borrower or its assets, by any
agency, division or department of any county, city, state or federal government
arising out of this Financing Agreement; (y) injunction, writ or restraining
order restraining or prohibiting the financing arrangements contemplated under
this Financing Agreement; or (z) suit, action, investigation or proceeding
(judicial or administrative) pending against the Borrower or the or its assets,
which, in the opinion of the Agent, if adversely determined, would be reasonably
likely to have a Material Adverse Effect.
(j) Cannondale Europe - Cannondale Europe B.V., a Subsidiary
organized under the laws of Netherlands, shall have consummated its financing
arrangements, the terms and conditions of which shall be satisfactory to the
Agent.
(k) Guarantees of Subsidiary Debt. - The Agent and its legal
counsel shall have received and reviewed to their satisfaction all documents and
agreements pursuant to which the Borrower shall have guaranteed or in any manner
agreed to be liable or responsible for the payment of the indebtedness of any
Subsidiary.
(l) Floor Planning - The Agent and its legal counsel shall
have received and reviewed to their satisfaction any document or agreement
between a customer of the Borrower and the bank or other financial institution
which provides inventory or floor planning financing to such customer, to the
extent the Borrower is a party to any such document or agreement.
(m) Cash Budget Projections - The Agent shall have received
and reviewed to its satisfaction a twelve (12) month cash budget projection
prepared by the Borrower on the form provided by the Agent, which projection
shall indicate that the Borrower will have a
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level of Availability (as defined in the Working Capital Loan Agreement) at all
times during such twelve (12) month period of not less than $3,000,000.
(n) Financing Agreement and Additional Documents - The
Borrower shall have executed and delivered to the Agent this Financing Agreement
and all other Loan Documents to which it is a party.
(o) Pledged Stock - The Borrower shall have delivered to the
Working Capital Loan Agent (as collateral agent for itself, the Agent, the
Lenders and the Working Capital Loan Lenders), possession of the stock
certificates evidencing all of the certificated shares of Pledged Stock required
to be pledged and collaterally assigned to the Working Capital Loan Agent (as
collateral agent for itself, the Agent, the Working Capital Loan Lenders and the
Lenders) pursuant to the Stock Pledge Agreement, together with duly executed
stock powers (undated and in-blank) with respect thereto, all in form and
substance satisfactory to the Agent.
(p) Diamond M Ranch Loan Documents - The Agent shall have
received a counterpart of each Diamond M Loan Document, duly executed by each
party thereto, together with such additional agreements, instruments and other
documents as the Agent may reasonably request in connection therewith.
(q) Blocked Accounts and Blocked Account Agreements - The
Borrower shall have established a system of lockboxes and Blocked Accounts (as
defined in the Working Capital Loan Agreement) with respect to the collection of
Trade Accounts Receivable and the deposit of proceeds of Collateral, and the
Working Capital Loan Agent, the Borrower and each bank at which a Blocked
Account (as defined in the Working Capital Loan Agreement) is maintained shall
have entered into a Blocked Account Agreement (as defined in the Working Capital
Loan Agreement) in form and substance satisfactory to the Agent.
(r) Disbursement Authorization - The Borrower shall have
delivered to the Agent all information necessary for the Agent and the Lenders
to issue wire transfer instructions on behalf of the Borrower for the Term Loan
to be made under this Financing Agreement including, but not limited to,
disbursement authorizations in form acceptable to the Agent.
(s) Examination and Verification; Opening Availability - The
Agent and each of the Lenders shall have completed, to their respective
satisfaction, an examination and verification of the Trade Accounts Receivable,
Inventory, financial statements, and books and records of the Borrower, which
examination shall indicate that, after giving effect to all Revolving Loans (as
defined in the Working Capital Loan Agreement), advances and extensions of
credit to be made at closing under this Financing Agreement and the Working
Capital Loan Agreement and after giving effect to the payment of all fees and
expenses related to the transactions contemplated by this Agreement and by the
Working Capital Loan Agreement, the Borrower shall have an opening additional
Availability (as defined in the Working Capital Loan Agreement) of at least
$10,000,000, as evidenced by a Borrowing Base Certificate (as defined in the
Working Capital Loan Agreement) delivered by the Borrower to the Working Capital
Loan Agent as of the Closing Date. It is understood that such requirement
contemplates that all debts and obligations are current, and that all payables
are being handled in the normal course of the
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Borrower's business and consistent with the practice in the Borrower's industry
and in a manner reasonably satisfactory to the Agent.
(t) Old Credit Arrangements - The Old Credit Agreement shall
have been terminated, all loans and obligations of the Borrower thereunder shall
have been paid or satisfied in full, including through utilization of the
proceeds of the Term Loan to be made under this Financing Agreement and all
liens or security interests in favor of the lenders thereunder (or the agent on
their behalf) and otherwise in connection therewith shall have been terminated
and/or released upon such payment.
(u) Payment of Fees - The Agent and the Lenders shall have
received payment in full, in cash, of all fees for which the Borrower is
obligated to make payment on or before the Closing Date.
(v) Mortgages and Intercreditor Agreements - The Borrower
shall have executed and delivered to the Agent, an agent of the Agent or to a
title insurance company acceptable to the Agent, all of the Mortgages. In
addition, the Borrower shall have caused the Working Capital Loan Agent and each
other Person named as mortgagee in each mortgage of record, as of the Closing
Date, that encumbers Real Estate to execute an intercreditor agreement with the
Agent, the terms and conditions of which shall be substantially similar to the
intercreditor agreements between such Persons and the lenders party to the Old
Credit Agreement, or the agent on behalf of such lenders.
(w) Title Insurance Policies - The Agent shall have received,
in respect of each Mortgage, a mortgagee's title policy or marked-up
unconditional binder for such insurance. Each such policy shall (i) be in an
amount satisfactory to the Agent; (ii) insure that the Mortgage insured thereby
creates a valid lien on the Real Estate covered by such Mortgage, subject only
to those mortgages held by the parties identified in the intercreditor
agreements described in Section 2.01 (v), free and clear of all defects and
encumbrances except those acceptable to the Agent; (iii) name the Agent on
behalf of the Lenders as the insured thereunder; and (iv) contain such
endorsements and effective coverage as the Agent may reasonably request. The
Agent shall also have received evidence that all premiums in respect of such
policies have been paid and that all charges for mortgage recording taxes, if
any, shall have been paid.
(x) Surveys - The Agent and the title insurance company
issuing each policy referred to in the immediately preceding paragraph (each, a
"Title Insurance Company") shall have received maps or plats of a perimeter or
boundary of the site of each of the properties covered by the Mortgages, dated a
date satisfactory to the Agent and the relevant Title Insurance Company,
prepared by an independent professional licensed land surveyor satisfactory to
the Agent and the relevant Title Insurance Company, which maps or plats and the
surveys on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping. Without limiting the generality of the foregoing, there
shall be surveyed and shown on the maps or plats or surveys the following: (i)
the locations on such sites of all the buildings, structures and other
improvements and the established building setback lines insofar as the foregoing
affect the perimeter or boundary of such property; (ii) the lines of streets
abutting the sites and width thereof; (iii) all access and
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other easements appurtenant to the sites or necessary or desirable to use the
sites; (iv) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the sites, whether
recorded, apparent from a physical inspection of the sites or otherwise known to
the surveyor; (v) any encroachments on any adjoining property by the building,
structures and improvements on the sites; and (vi) if the site is designated as
being on a filed map, a legend relating the survey to said map. Further, each
survey shall (x) be certified to the Agent and the Title Insurance Company and
(y) contain a legend reciting as to whether or not the site is located in a
flood zone.
(y) Appraisals - The Agent shall have received satisfactory
appraisals of the Borrower's Equipment and Real Estate, which appraisals: (i)
shall be conducted by an appraiser acceptable to the Agent, and (ii) shall
indicate an orderly liquidation value of not less than $10,000,000 with respect
to Equipment and a fair market value of not less than $12,000,000 with respect
to Real Estate.
(z) Environmental Report - The Agent shall have received
environmental audit reports on (i) all of the Real Estate and (ii) the
Borrower's waste disposal practices. The reports must (x) be satisfactory to the
Agent and (y) not disclose or indicate any material liability (real or
potential) stemming from the Borrower's premises, its operations, its waste
disposal practices or waste disposal sites used by Borrower.
(aa) Feasibility Study - The Agent shall have received and
reviewed to its satisfaction a report, prepared at the Borrower's expense by an
independent third party acceptable to the Agent, of the viability and
feasibility of the Borrower's motorcycle division.
(bb) Working Capital Loan Documents; Intercreditor Agreement
with Working Capital Loan Agent - The Agent shall have received and reviewed to
its satisfaction all of the Working Capital Loan Documents, the transactions
contemplated to occur thereunder shall have been consummated and all conditions
precedent to the effectiveness of the Working Capital Loan Documents shall have
occurred; the Borrower shall have received in cash the proceeds of the term loan
and initial revolving loans to be made pursuant to the Working Capital Loan
Documents, and the Agent and the Lenders and the Working Capital Loan Agent and
the Working Capital Loan Lenders shall have entered into the Intercreditor
Agreement.
(cc) Closing Document Checklist - The Borrower shall have
delivered to the Agent all documents listed on the Closing Document Checklist
attached to this Financing Agreement as Annex III for which the Borrower is
responsible.
(dd) Lien Waivers - The Agent shall have received such waivers
of lien rights, in form and substance satisfactory to the Agent, from such
landlords, warehouseman and processors of Inventory as the Agent shall have
required, in its reasonable discretion.
(ee) Due Diligence - Each of the Lenders shall have completed
its due diligence with respect to the Borrower and the results thereof shall be
acceptable to each Lender in its sole and absolute discretion. The due diligence
will include, among other things, (i) a review of the results of the due
diligence with respect to the Collateral and the Borrower's
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financial condition conducted by the Working Capital Loan Agent, (ii) a report
or reports, prepared at the Borrower's expense by an independent third party
acceptable to the Agent, of (x) the value of the Borrower's trade names, which
shall indicate that such value is not less than $25 million, and (y) the overall
business value of the Borrower's enterprise, which shall indicate a value of an
amount acceptable to the Agent, and (iii) a review of the reasonableness of
projections of the Borrower previously delivered to the Agent.
(ff) Representations and Warranties - Each of the
representations and warranties made by the Borrower in or pursuant to this
Financing Agreement shall be true and correct in all material respects on and as
of such date as if made on and as of the Closing Date, except for any such
representation or warranty which by its terms speaks only as of an earlier date
and which shall be true and correct in all material respects on such earlier
date.
(gg) No Default - No Default or Event of Default shall have
occurred and be continuing on the Closing Date, after giving effect to the
making of the Term Loan and the making of the loans under the Working Capital
Loan Agreement on the Closing Date.
Upon the execution of this Financing Agreement and the disbursement of
the Term Loan hereunder, all of the above Conditions Precedent shall have been
deemed satisfied except as otherwise set forth hereinabove or as the Borrower,
the Required Lenders and the Agent shall otherwise agree in writing.
ARTICLE III
THE TERM LOAN
SECTION 3.01. The Term Loan; Amortization. Upon the satisfaction of the
conditions contained in Section 2.01 and its receipt of a Term Note in an amount
equal to such Lender's Commitment, each Lender hereby agrees to fund its pro
rata share of the Term Loan. The principal amount of the Term Loan shall be
repaid by the Borrower in (a) eleven consecutive quarterly installments (each a
"quarterly installment") consisting of (i) four (4) installments each in the
amount of $337,750, followed by (ii) seven (7) installments each in the amount
of $500,000, followed by (b) a final installment in the amount necessary to
repay in full the unpaid amount of the Term Loan (the "Balloon Installment").
The first Quarterly Installment shall be due and payable on the first Business
Day in October, 2000, the subsequent Quarterly Installments shall be due and
payable on the first Business Day in each of the months of January, April, July
and October thereafter, and the Balloon Installment shall be due and payable on
the Maturity Date. Any principal amount of the Term Loan which is repaid or
prepaid by the Borrower may not be reborrowed.
SECTION 3.02. Notes. (a) Each portion of the Term Loan made by a Lender
shall be evidenced by a single Term Note, duly executed on behalf of the
Borrower, dated the Closing Date, and delivered to and made payable to such
Lender, and its registered assigns, in a principal amount equal to the amount of
such Lender's Commitment.
(b) Each portion of the Term Loan recorded on the Register
(the "Registered Loan") may not be evidenced by a promissory note other than a
Registered Note
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(as defined below). Upon the registration of any portion of the Term Loan, any
promissory note (other than a Registered Note) evidencing the same shall be null
and void and shall be returned to the Borrower. The Borrower agrees, at the
request of any Lender, to execute and deliver to such Lender a Term Note in
registered form to evidence such Registered Loan and registered as provided in
Section 12.04(b) (a "Registered Note"), payable to such Lender and otherwise
duly completed. Once recorded on the Register, the portion of the Term Loan
evidenced by such Note may not be removed from the Register so long as it
remains outstanding, and a Registered Note may not be exchanged for a promissory
note that is not a Registered Note.
SECTION 3.03. Mandatory Prepayments. (a) Subject to the terms of
Section 7.03, if the Borrower sells any Equipment or other tangible personal
property (other than Inventory in the ordinary course of business), or if any
Equipment or such other property is lost, destroyed, or taken by condemnation,
the Borrower shall pay to the Agent, for the ratable benefit of the Lenders, as
and when received by the Borrower and as a mandatory prepayment of the Term
Loan, a sum equal to the Net Cash Proceeds (including Insurance Proceeds)
received by the Borrower from such sale, loss, destruction or condemnation to
the extent such Net Cash Proceeds were not applied by the Borrower in accordance
with Section 4.02(a) of the Working Capital Loan Agreement as in effect on the
date hereof.
(b) Upon its receipt of each payment or prepayment of
principal of the Montgomery Debt, the Borrower shall pay to the Agent, as and
when received by the Borrower, an amount equal to such payment or prepayment.
Upon its receipt of any Net Cash Proceeds from the sale or other disposition of
any Diamond M Ranch Collateral, the Borrower shall promptly pay to the Agent, as
and when received by the Borrower, all such Net Cash Proceeds. All amounts
received by the Agent pursuant to this Section 3.03(b) shall be applied by the
Agent in accordance with Section 2.9(ii)(B) of the Intercreditor Agreement.
(c) Beginning with the Fiscal Year ending in June 2001, the
Borrower shall make a mandatory prepayment of the unpaid principal balance of
the Term Loan no later than ninety days after the end of each Fiscal Year, in an
aggregate amount equal to fifty percent (50%) of Surplus Cash for the Fiscal
Year then ended (such amount, the "referenced amount"), as calculated in
accordance with and as set forth in the audited financial statements of the
Borrower for the Fiscal Year then ended, which calculation shall be certified by
an Authorized Officer; provided, however, that if at the time any such mandatory
prepayment shall be made, any portion of the principal of the Term Loan (as
defined in the Working Capital Loan Agreement) shall be outstanding and unpaid,
then the Borrower shall instead pay to the Agent, as a mandatory prepayment of
the unpaid principal balance of the Term Loan, the Lenders' Proportionate Share
of the referenced amount, and the Borrower shall concurrently make a prepayment
of the unpaid principal balance of the Term Loan (as defined in the Working
Capital Loan Agreement) in an amount equal to the Working Capital Lenders'
Proportionate Share of such referenced amount.
SECTION 3.04. Voluntary Prepayments. Upon at least one Business Day's
prior notice, the Borrower may make voluntary prepayments, in whole or in part,
without premium or penalty, of the Term Loan, provided that each partial
prepayment shall be in an amount equal to the lesser of (i) $250,000 or an
integral multiple of $50,000 in excess thereof or (ii) the amount necessary to
prepay in full the unpaid principal balance of the Term Loan.
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SECTION 3.05. Application of Payments; Interest. All prepayments of the
Term Loan shall be applied first to the Balloon Installment, until paid in full,
and then pro rata against the remaining Quarterly Installments. All prepayments
pursuant to Section 3.03 or 3.04 shall be accompanied by the payment of all
accrued and unpaid interest (including interest previously capitalized) on the
principal prepaid.
SECTION 3.06. Securitization. The Borrower hereby acknowledges that the
Lenders and any of their Affiliates may sell or securitize the Term Loan (a
"Securitization") through the pledge of the Term Loan as collateral security for
loans to the Lenders or their Affiliates or through the sale of the Term Loan or
the issuance of direct or indirect interests in the Term Loan, which loans to
the Lenders or their Affiliates or direct or indirect interests may be rated by
Moody's, S & P or one or more other rating agencies (the "Rating Agencies"). The
Borrower shall cooperate with the Lenders and their Affiliates to effect the
Securitization including, without limitation, by (a) amending this Financing
Agreement and the other Loan Documents, and executing such additional documents,
as reasonably requested by the Lenders in connection with the Securitization,
provided that (i) any such amendment or additional documentation does not impose
material additional costs on the Borrower and (ii) any such amendment or
additional documentation does not materially adversely affect the rights, or
materially increase the obligations, of the Borrower under the Loan Documents or
change or affect in a manner adverse to the Borrower the financial terms of the
Term Loan, (b) providing such information as may be reasonably requested by the
Lenders in connection with the rating of the Term Loan or the Securitization,
and (c) providing in connection with any rating of the Term Loan a certificate
(i) agreeing to indemnify the Lenders and any of their Affiliates, any of the
Rating Agencies, or any party providing credit support or otherwise
participating in the Securitization (collectively, the "Securitization Parties")
for any losses, claims, damages or liabilities (the "Liabilities") to which the
Lenders, their Affiliates or such Securitization Parties may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Loan Document
or in any writing delivered by or on behalf of the Borrower and its Affiliates
to the Lenders in connection with any Loan Document or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and such
indemnity shall survive any transfer by the Lenders or their successors or
assigns of the Term Loan and (ii) agreeing to reimburse the Lenders and any of
their Affiliates for any legal or other expenses reasonably incurred by such
Persons in connection with defending the Liabilities.
ARTICLE IV
Collateral
SECTION 4.01. Grant of Security Interest. As security for the prompt
payment in full of all Obligations, the Borrower hereby pledges and grants to
the Agent, on behalf of the Lenders, a continuing general lien upon, and
security interest in, all of its:
(a) Accounts;
(b) Documents of Title;
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(c) Equipment;
(d) General Intangibles;
(e) Inventory; and
(f) Other Collateral.
SECTION 4.02. Security Interest Generally.
The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is owned by the Borrower or in which
the Borrower has any interest, whether held by the Borrower or others for its
account, and, if any Collateral is Equipment, whether the Borrower's interest in
such Equipment is as owner, finance lessee or conditional vendee;
(b) All Equipment, whether the same constitutes personal
property or fixtures, including, but without limiting the generality of the
foregoing, all dies, jigs, tools, benches, molds, tables, accretions, component
parts thereof and additions thereto, as well as all accessories, motors, engines
and auxiliary parts used in connection with, or attached to, the Equipment; and
(c) All Inventory and any portion thereof which may be
returned, rejected, reclaimed or repossessed by either the Agent or the Borrower
from the Borrower's customers, as well as to all supplies, goods, incidentals,
packaging materials, labels and any other items which contribute to the finished
goods or products manufactured or processed by the Borrower, or to the sale,
promotion or shipment thereof.
SECTION 4.03. Collection of Trade Accounts Receivable. The Borrower
shall establish and maintain, in its name and at its expense, a cash management
system as contemplated by the Working Capital Loan Agreement, satisfactory to
the Agent in its sole discretion.
SECTION 4.04. Delivery of Information Concerning Trade Accounts
Receivable and Inventory. In furtherance of the continuing assignment and
security interest in the Borrower's Accounts and Inventory, the Borrower will,
upon the creation of Accounts and purchase or acquisition of Inventory, execute
and deliver to the Agent (i) copies of any and all reports, schedules and other
written information with respect to such Collateral as the Borrower provides to
the Working Capital Loan Agent or the Working Capital Loan Lenders, in each case
concurrently with the delivery of such information to such Person or Persons,
and, promptly upon request therefor by the Agent, such other information as the
Agent may reasonably request with respect to such Collateral, all in form and
substance satisfactory to the Agent. The Borrower hereby authorizes the Agent to
regard the Borrower's printed name or rubber stamp signature on assignment
schedules or invoices as the equivalent of a manual signature by one of the
Borrower's Authorized Officers or agents.
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SECTION 4.05. Representations and Covenants With Respect to Trade
Accounts Receivable and Inventory. The Borrower hereby represents and warrants
that: each Trade Account Receivable is based on an actual and bona fide sale and
delivery of Inventory or rendition of services to its customers, made by the
Borrower in the ordinary course of its business; the Inventory being sold, and
the Trade Accounts Receivable created, are the exclusive property of the
Borrower and are not and shall not be subject to any Lien whatsoever, other than
Liens in favor of the Agent, Liens which secure the Working Capital Loan
Obligations and the Permitted Encumbrances; the invoices evidencing such Trade
Accounts Receivable are in the name of the Borrower; and the customers of the
Borrower have accepted the Inventory or services, owe and are obligated to pay
the full amounts stated in the invoices according to their terms, without
dispute, offset, defense, counterclaim or contra, except for disputes and other
matters arising in the ordinary course of business with respect to which the
Borrower has complied with the following notification requirements. The Borrower
agrees to notify the Agent promptly of: (a) any matters affecting the
enforceability or collectibility of any Trade Account Receivable; (b) with
respect to any Trade Account Receivable in the face amount of $200,000 or
greater, all customer disputes, offsets, defenses, counterclaims, returns,
rejections, (c) all reclaimed or repossessed merchandise or goods, (d) any
adverse effect in the value of Inventory or of any matter which materially and
adversely affects the Borrower's weekly and monthly collateral reports (as
applicable) provided to the Agent hereunder, in such detail and format as the
Agent may reasonably require from time to time and (e) any such matters which
are material, as a whole, to the Trade Accounts Receivables and/or the
Inventory. The Borrower agrees to issue credit memoranda promptly (with
duplicates to the Agent upon request after the occurrence of an Event of
Default) upon accepting returns or granting allowances. Upon the occurrence of
an Event of Default (which is not waived in writing by the Required Lenders) and
on notice from the Agent, the Borrower agrees that all returned, reclaimed or
repossessed merchandise or goods shall be set aside by the Borrower, marked with
the Agent's name (as secured party) and held by the Borrower for the Agent's
account, subject to the rights therein in favor of the Working Capital Loan
Agent under the Working Capital Loan Documents. The Borrower confirms to the
Agent that any and all Taxes or fees relating to its business, its sales, the
Accounts or Inventory relating thereto, are its sole responsibility and that
same will be paid by the Borrower when due, and that none of said Taxes or fees
represent a Lien on the Accounts. The Borrower hereby further represents and
warrants that (i) any Inventory it may acquire on a consignment basis shall be
segregated and set apart from all other Inventory, shall under no circumstances
be included in any Borrowing Base Certificate as Eligible Inventory or otherwise
be deemed to be Eligible Inventory, and is not subject to any Lien in favor of
the consignor of such Inventory, (ii) it shall not co-mingle its Inventory with
the inventory of any of its customers or the inventory of any other Person,
including pursuant to any bill and hold sale or otherwise, and (iii) its
Inventory is marketable to its customers in the ordinary course of business of
the Borrower, except as it may otherwise report in writing to the Agent pursuant
to this Section from time to time. The Borrower agrees to maintain such books
and records regarding Accounts and Inventory as the Working Capital Loan Agent
may reasonably require and agrees that the books and records of the Borrower
will reflect the Agent's interest in the Accounts and Inventory.
SECTION 4.06. Additional Representations and Covenants With Respect to
Trade Accounts Receivable and Inventory. The Borrower agrees to safeguard,
protect and hold all Inventory for the Agent's account, subject to the rights
therein in favor of the Working Capital
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Loan Agent under the Working Capital Loan Documents, and make no disposition
thereof except in the ordinary course of its business of the Borrower, as herein
provided. The Borrower represents and warrants that Inventory will be sold and
shipped by the Borrower to its customers only in the ordinary course of the
Borrower's business, and then only on open account and on terms currently being
extended by the Borrower to its customers, and, absent the prior written consent
of the Agent, the Borrower shall not sell Inventory on a consignment basis. Upon
the sale, exchange, or other disposition of Inventory, as herein provided, the
security interest in the Inventory provided for herein shall, without break in
continuity and without further formality or act, continue in, and attach to, all
proceeds, including any instruments for the payment of money, Trade Accounts
Receivable, documents of title, shipping documents, chattel paper and all other
cash and non-cash proceeds of such sale, exchange or disposition. As to any such
sale, exchange or other disposition, the Agent shall have all of the rights of
an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. The Borrower hereby agrees to immediately forward any and all
proceeds of Collateral to a Blocked Account (as defined in the Working Capital
Loan Agreement), and to hold any such proceeds (including any notes and
instruments), in trust for the Agent, on behalf of the Lenders, subject to the
rights therein in favor of the Working Capital Loan Agent under the Working
Capital Loan Documents, pending delivery to the Working Capital Loan Agent.
Irrespective of the Agent's perfection status in any and all of the General
Intangibles, including, without limitation, any Patents, Trademarks, Copyrights
or licenses with respect thereto, the Borrower hereby irrevocably grants the
Agent a royalty free license to sell, or otherwise dispose or transfer, in
accordance with Section 10.03, and the applicable terms hereof, any of the
Inventory upon the occurrence of an Event of Default which has not been waived
in writing by the Agent.
SECTION 4.07. Representations and Covenants With Respect to Equipment.
The Borrower agrees at its own cost and expense to keep the Equipment in
satisfactory operating condition, reasonable wear and tear excepted, making any
and all repairs and replacements when and where necessary. The Borrower also
agrees to safeguard, protect and hold all Equipment in accordance with the terms
hereof and subject to the Agent's security interest.
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SECTION 4.08. Representations and Covenants with Respect to General
Intangibles. The Borrower possess all General Intangibles and rights thereto
necessary to conduct its business as conducted as of the Closing Date and the
Borrower shall maintain its rights in, and the value of, the foregoing in the
ordinary course of its business, including, without limitation, by making timely
payment with respect to any applicable licensed rights. The Borrower shall
deliver to the Agent, and/or shall cause the appropriate party to deliver to the
Agent, from time to time such pledge or security agreements with respect to
General Intangibles (now or hereafter acquired) of the Borrower as the Agent
shall require to obtain valid second Liens thereon, subject only to the Lien
thereon created in favor of the Working Capital Loan Agent pursuant to the
Working Capital Loan Documents. In furtherance of the foregoing, the Borrower
shall provide timely notice to the Agent of any additional Patents, Trademarks,
tradenames, service marks, Copyrights, brand names, trade names, logos and other
trade designations acquired or applied for subsequent to the Closing Date and
the Borrower shall execute such documentation as the Agent may reasonably
require to obtain and perfect its lien thereon. The Borrower hereby confirms
that it shall deliver, or cause to be delivered, any Pledged Stock issued
subsequent to the Closing Date to the Working Capital Loan Agent, as agent for
the Working Capital Loan Lenders and the Lenders in accordance with the
applicable terms of the Stock Pledge Agreement and prior to such delivery, shall
hold any such stock in trust for the Working Capital Loan Agent, as agent for
the Working Capital Loan Lenders and the Lenders. The Borrower hereby
irrevocably grants to the Agent a royalty-free, non-exclusive license in the
General Intangibles, including tradenames, Trademarks, Copyrights, Patents,
licenses, and any other proprietary and intellectual property rights and any and
all right, title and interest in any of the foregoing, for the sole purpose,
upon the occurrence of an Event of Default, of the right to: (i) advertise for
sale and sell or transfer any Inventory bearing any of the General Intangibles,
and (ii) make, assemble, prepare for sale or complete, or cause others to do so,
any applicable raw materials or Inventory bearing any of the General
Intangibles, including use of the Equipment and Real Estate for the purpose of
completing the manufacture of unfinished goods, raw materials or work-in-process
comprising Inventory, and apply the proceeds thereof to the Obligations
hereunder, all as further set forth in this Financing Agreement and irrespective
of the Agent's lien and perfection in any General Intangibles.
SECTION 4.09. Continuing Security Interest. The rights and security
interests granted to the Agent and the Lenders hereunder are to continue in full
force and effect until the final payment in full to the Lenders and the Agent of
all Obligations. Any delay, or omission by the Agent or any of the Lenders to
exercise any right hereunder or under any of the other Loan Documents shall not
be deemed a waiver thereof, or be deemed a waiver of any other right, unless
such waiver shall be in writing and signed by the Agent. A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion.
SECTION 4.10. No Marshalling. Notwithstanding the Agent's security
interest in the Collateral and to the extent that the Obligations are now or
hereafter secured by any assets or property other than the Collateral or by the
guarantee, endorsement, assets or property of any other person, the Agent shall
have the right in its sole discretion to determine which rights, liens, security
interests or remedies the Agent shall at any time pursue, foreclose upon,
relinquish, subordinate, modify or take any other action with respect to,
without in any way modifying or
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affecting any of them, or any of the Agent's and/or the Lenders' rights
hereunder or under any of the other Loan Documents.
SECTION 4.11. Credit Balances. Any balances to the credit of the
Borrower and any other property or assets of the Borrower in the possession or
control of the Agent and/or the Lenders may be held by the Agent as security for
any Obligations and applied in whole or partial satisfaction of such Obligations
when due. The security interests granted herein, and any other Lien the Agent
and/or the Lenders may have in any other assets of the Borrower, shall secure
payment and performance of all now existing and future Obligations.
ARTICLE V
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 5.01. Organization; Powers. The Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as
now conducted. Except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, the Borrower is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required, or where the failure to
so qualify would have a material adverse effect on the ability of the Borrower
to enforce collection of Trade Accounts Receivable due from customers residing
in that jurisdiction.
SECTION 5.02. Authorization; Enforceability. This Financing Agreement,
the other Loan Documents to which the Borrower is a party, and the transactions
contemplated to occur hereunder and thereunder are within the Borrower's
corporate powers and have been duly authorized by all necessary corporate and,
if required, stockholder action. This Financing Agreement and each such Loan
Document has been duly executed and delivered by the Borrower and constitutes a
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 5.03. Governmental Approvals; No Conflicts. The transactions
contemplated to occur under this Financing Agreement and under the other Loan
Documents to which the Borrower is a party (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Borrower or
its assets, or give rise to a right thereunder to require any payment to be made
by the Borrower, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower other than Liens in favor of the Agent.
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SECTION 5.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Agent its consolidated balance sheet
and statements of income, stockholders equity and cash flows as of and for the
fiscal year ended July 3, 1999, reported on by Ernst & Young, independent public
accountants, the fiscal quarter ended October 2, 1999, the fiscal quarter ended
January 1, 2000, and the fiscal quarter ended April 1, 2000, as filed on Forms
10-K and 10-Q, respectively with the Securities and Exchange Commission, and
certified by an Authorized Officer. Such financial statements present fairly, in
all material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of quarterly statements.
(b) Since April 1, 2000, there has been no Material Adverse
Change.
SECTION 5.05. Properties. (a) The Borrower has good title to, or valid
leasehold interests in, all its real and personal property material to its
business, except for the Permitted Encumbrances and minor defects or
encumbrances in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes.
(b) The Borrower owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Borrower does not infringe upon the rights
of any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) As of the Closing Date, the information contained in Annex
II to this Financing Agreement is true and correct in all respects.
SECTION 5.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve this Financing
Agreement or the transactions contemplated to occur hereunder.
(b) Except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, the Borrower (i) has not failed to comply with any
Environmental Law or to obtain, maintain or comply with any material and
necessary permit, license or other approval required under any Environmental
Law, (ii) has not become subject to any Environmental Liability, (iii) has not
received notice of any claim with respect to any Environmental Liability or (iv)
does not know of any basis for any Environmental Liability.
SECTION 5.07. Compliance with Laws and Agreements. The Borrower is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it
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or its property and all indentures, agreements and other instruments binding
upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION 5.08. Investment and Holding Company Status. The Borrower is
not (a) an "investment company" as defined in, or subject to regulation under,
the Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 5.09. Taxes. The Borrower has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
the Borrower has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount which could reasonably be
expected to result in a Material Adverse Effect, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount which could reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.11. Disclosure. The Borrower has disclosed to the Agent and
the Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject, and all other matters known to
it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Agent or any Lender in connection with the negotiation of this Agreement or
delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.
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SECTION 5.12. Security Interest. (a) Each Loan Document that
purports to create or grant in favor of the Agent a security interest in or
other Lien on any property creates and grants to the Agent, for the benefit of
the Lenders, a legal and valid security interest in or other Lien on the
collateral identified therein. Such security interest or Lien will be a
perfected and, except as permitted hereby or by such Loan Document, first
priority security interest in or Lien on the collateral identified in such Loan
Document upon the filing of the financing statements in the filing offices, the
recording of such agreement or another instrument in the recording offices, or
the delivery of possession of a certificate or other writing to the Agent or its
designees, in each case as provided herein or in such Loan Document. Such
collateral or property is not subject to any other Liens whatsoever, except as
permitted by Section 7.02.
(b) Each of the Collateral Assignment of Shareholder Note and
the Collateral Assignment of Shareholder Mortgage is effective to create in
favor of the Agent, for the benefit of the Lenders, a legal and valid assignment
of and security interest in, all right, title and interest of the Borrower in
the promissory notes and other agreements assigned thereby, and when (i)
financing statements in appropriate form are filed in the appropriate offices,
(ii) all Collateral thereunder, the possession of which is required to lawfully
perfect a security interest therein, is in the possession of the Agent, and
(iii) the Collateral Assignment of Shareholder Mortgage is recorded in the
Office of the Clerk of Rio Blanco County, State of Colorado, the Collateral
Assignment of Shareholder Note and the Collateral Assignment of Shareholder
Mortgage shall constitute fully perfected Liens on, and security interest in,
all right, title and interest of the Borrower in such promissory notes and other
agreements assigned thereby, in each case prior and superior in right to any
other Person.
SECTION 5.13. Use of Proceeds. All proceeds of the Term Loan shall be
used to refinance existing Indebtedness under the Old Credit Agreement. No part
of the proceeds of the Term Loan will be used, whether directly or indirectly,
for any purpose that entails a violation of any of the Regulations of the
Federal Reserve Board, including Regulations U and X.
SECTION 5.14. Subsidiaries. As of the Closing Date, the following are
the exact names and respective countries of incorporation of each Subsidiary:
Cannondale Europe B.V. - Netherlands; Cannondale Japan K.K. - Japan; Cannondale
Australia Pty Limited - Australia; and Cannondale FSC, Inc. - Barbados. As of
the Closing Date, all of the outstanding shares of Capital Stock and each
Subsidiary are owned beneficially and of record directly by the Borrower free
and clear of all Liens. All of the issued and outstanding shares of Capital
Stock of such Subsidiaries have been validly issued and are fully paid and
nonassessable. There are no outstanding debt or equity securities of the
Borrower or any of its Subsidiaries and no outstanding obligations of the
Borrower or any of its Subsidiaries convertible into or exchangeable for, or
warrants, options or other rights for the purchase or acquisition from the
Borrower or any of its Subsidiaries, or other obligations of any Subsidiary to
issue, directly or indirectly, any shares of Capital Stock of any Subsidiary of
the Borrower other than the Warrants, the Rights Agreement dated December 22,
1997 between the Borrower and BankBoston, N.A. as Rights Agent and the Borrowers
employee stock option plans in existence as of the date hereof.
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SECTION 5.15 Solvency. After giving effect to the transactions
contemplated by this Financing Agreement and the Working Capital Loan Agreement
and before and after giving effect to the Term Loan and each Loan (as defined in
the Working Capital Loan Agreement), the Borrower is, and the Borrower and its
Subsidiaries taken as a whole are, Solvent.
SECTION 5.16. Permits, Etc. The Borrower possesses all material
licenses, permits, approvals and consents, including, without limitation, all
environmental, health and safety licenses, permits, approvals and consents
(collectively, "Permits") of all Federal, state and local governmental
authorities as required to conduct properly its business, each such Permit is
and will be in full force and effect, and the Borrower is in compliance in all
material respects with all such Permits, and no event (including, without
limitation, any violation of any law, rule or regulation) has occurred which
allows the revocation or termination of any such Permit or any restriction
thereon, except where non-compliance or such revocation or termination,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
ARTICLE VI
Affirmative Covenants
Until the Commitments have expired or been terminated, the principal of
and interest on the Term Loan and all other Obligations shall have been paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Financial Statements, Projections, Borrowing Base
Certificates and Other Information. The Borrower will furnish to the Agent:
(a) as soon as available but in any event within 90 days after
the end of each fiscal year of the Borrower, its audited consolidated balance
sheet, consolidating balance sheet and related audited consolidated and
consolidating statements of operations, stockholders' equity and cash flows as
of the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst & Young or
other independent public accountants of recognized national standing (without a
"going concern" or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) as soon as available but in any event within 45 days after
the end of the first, second and third Fiscal Quarters and within 90 days after
the fourth Fiscal Quarter, the Borrower's consolidated balance sheet,
consolidating balance sheet and consolidated and consolidating related
statements of operations, stockholders' equity and cash flows as of the end of
and for such Fiscal Quarter, and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous Fiscal Year, all certified by an Authorized Officer as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in
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accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;
(c) as soon as available but in any event within 30 days after
the end of each of the first eleven fiscal months of the Borrower (except for
the third fiscal month of each of the first three Fiscal Quarters, which shall
be within 45 days after the end of each such fiscal month) and within 90 days
after the end of the last fiscal month of the Borrower, its consolidated balance
sheet, consolidating balance sheet and related consolidated and consolidating
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal month, and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or in the case of the balance sheet, as of the end of) the
previous Fiscal Year, all certified by an Authorized Officer as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements
under clause (a), (b) or (c) above, a certificate of an Authorized Officer of
the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations (A) in the case of quarterly financial statements, of the
Fixed Charge Coverage Ratio for the period of four Fiscal Quarters then ended
and (B) demonstrating compliance with Sections 7.09 through and including 7.15
and (iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in
clause (a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(e) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines), together with a copy of such accounting firm's "management letter",
if any;
(f) promptly after the same become publicly available, copies
of all periodic and other reports, financial statements, proxy statements and
other materials filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be,
and copies of all material notices or other information sent by the Borrower to,
or received by the Borrower from, the holder of any Material Indebtedness of the
Borrower;
(g) no later than ten (10) days prior to the end of each
Fiscal Year, the Borrower's forecasted consolidated balance sheet, consolidating
balance sheet and related consolidated statements of operations, stockholders'
equity and cash flows (all prepared on a consistent basis with the Borrower's
historical consolidated financial statements) together with appropriate
supporting details and a statement of underlying assumptions for the forthcoming
Fiscal Year, prepared on a month-by-month basis;
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(h) (i) on Monday of each week (or on the next Business Day,
if such Monday is not a Business Day) (x) a report of the Borrower's sales,
collections, debit and credit adjustments for the preceding week, such report to
contain such level of detail and to otherwise be in such scope, form and
substance as the Agent may reasonably require, (y) a Borrowing Base Certificate
(as defined in the Working Capital Loan Agreement) as of the last day of the
preceding week, which Borrowing Base Certificate shall reflect the Borrower's
total Eligible Inventory (as defined in the Working Capital Loan Agreement) as
of the last day of such preceding week and (z) a reconciliation to the Trade
Accounts Receivable outstanding as of the prior Monday (or the next Business Day
of the prior week, if such prior Monday is not a Business Day), and (ii) within
fifteen (15) days after the end of each month, a Borrowing Base Certificate (as
defined in the Working Capital Loan Agreement) as of the last day of such month,
together with a report, in form and substance, and in such detail, as shall be
satisfactory to the Agent, of (w) the amount and value, by location, of the
Inventory as of the end of such month, (x) an aging of the Trade Accounts
Receivable as of the end of such month, (y) an aging of the Borrower's accounts
payable as of the end of such month, and (z) a work-up of Trade Accounts
Receivable deemed ineligible under the Working Capital Loan Agreement and
Inventory deemed ineligible under the Working Capital Loan Agreement as of the
end of such month;
(i) no later than five (5) days after the giving or receipt
thereof, a copy of each notice or other communication sent or received by the
Borrower pursuant to any of the Diamond M Ranch Loan Documents; and
(j) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of this
Financing Agreement, as the Agent or any Lender may reasonably request.
SECTION 6.02. Notices of Material Events. The Borrower will furnish to
the Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Borrower or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect;
(d) the receipt of any material notice or other communication
from the Securities Exchange Commission;
(e) the occurrence of any event which constitutes or, with the
lapse of time or the giving of notice or both, would constitute a default or
event of default under, or a
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breach of any of its obligations thereunder by any party (other than the Agent
and the Working Capital Loan Agent) to, any of the Diamond M Ranch Loan
Documents; and
(f) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of an Authorized Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 6.03. Existence; Conduct of Business. The Borrower will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, Permits, privileges and
franchises material to the conduct of its business.
SECTION 6.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 6.05. Maintenance of Properties; Insurance. The Borrower will
maintain insurance with responsible and reputable insurance companies or
associations (including, without limitation, comprehensive general liability,
hazard, rent and business interruption insurance) with respect to their
properties (including all real properties leased or owned by them) and business,
in such amounts and covering such risks as is required by any Governmental
Authority having jurisdiction with respect thereto or as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Agent. All policies covering the Collateral other than the
Diamond M Ranch Collateral are to be made payable to the Working Capital Loan
Agent for the benefit of the Working Capital Loan Lenders and the Lenders, as
their respective interests may appear, in case of loss, under a standard
non-contributory "lender" or "secured party" clause and are to contain such
other provisions as the Agent may require to fully protect the Lenders' interest
in such Collateral and to any payments to be made under such policies. All
certificates of insurance are to be delivered to the Working Capital Loan Agent,
with the loss payable and additional insured endorsement in favor of the Working
Capital Loan Agent and the Agent, and shall provide for not less than 30 days'
prior written notice to the Working Capital Loan Agent and the Agent of the
exercise of any right of cancellation. If the Borrower fails to maintain such
insurance, the Agent may, if the Working Capital Loan Agent has not done so,
arrange for such insurance, but at the Borrower's expense and without any
responsibility on the Agent's part for obtaining the insurance, the solvency of
the insurance companies, the adequacy of the coverage, or the collection of
claims. Upon the occurrence of an Event of Default, the Agent shall have the
right, in the name of the Lenders, the Borrower and its Subsidiaries, to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments,
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reassignments or other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance policies.
SECTION 6.06. Books and Records; Inspection Rights. The Borrower will
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. The Borrower will permit any representatives designated by the Agent
or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
If the Borrower reasonably believes that any material interests of the Borrower
or any of its Subsidiaries relating to any non-public, confidential or
proprietary information which could become available to the Agent or any Lender
during the course of such inspections or such discussions are not adequately
protected by any then existing confidentiality agreements entered into by the
Agent and such Lender with respect to the Borrower and its Subsidiaries, then
any such visit and examination or discussions shall be performed in compliance
with reasonable and customary security procedures mutually agreeable to the
Agent and the Lenders, as applicable, and the Borrower.
SECTION 6.07. Compliance with Laws. The Borrower will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and orders
(including, without limitation, all Environmental Laws), such compliance to
include, without limitation, (i) paying before the same become delinquent all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or upon any of its properties, and (ii) paying all lawful
claims which if unpaid might become a Lien or charge upon any of its properties,
except to the extent contested in good faith by proper proceedings which stay
the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof, except where any single failure to do so, or any series of
failures to do so, could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 6.08. Notarial Deed of Pledge; Foreign Counsel Opinions.
(a) As soon as possible, and in any event no later than thirty
(30) days from the Closing Date, the Borrower shall execute and deliver and
cause to be recorded with the appropriate recording office under the laws of the
Netherlands a notarial Deed of Pledge by the Borrower in favor of the Agent
pledging to the Agent for the benefit of the Lenders certain Pledged Stock
issued by Cannondale Europe B.V., and shall take all such other steps within
such period as shall be necessary or requested by the Agent to, grant, perfect
and establish the first priority of a legal and enforceable security interest in
favor of the Agent in such Pledged Stock.
(b) As soon as possible, and in any event no later than thirty
(30) days after the Closing Date, the Borrower shall deliver to the Agent, or
cause to be delivered to the Agent, opinions from the legal counsel to each of
Cannondale Europe B.V. and Cannondale Japan K.K., in form and substance
satisfactory to the Agent.
SECTION 6.09. Further Assurances. The Borrower will take such action
and execute, acknowledge and deliver, at its sole cost and expense, such
agreements, instruments or other documents as the Agent may require from time to
time in order (i) to carry out more
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effectively the purposes of this Financing Agreement and the other Loan
Documents, (ii) to subject to valid and perfected Liens any of the Collateral or
any other property of the Borrower and its Subsidiaries, (iii) to establish and
maintain the validity and effectiveness of any of the Loan Documents and the
validity, perfection and priority of the Liens intended to be created thereby,
and (iv) to better assure, convey, grant, assign, transfer and confirm unto the
Agent the rights now or hereafter intended to be granted to the Agent and the
Lenders under this Financing Agreement or any other Loan Document.
SECTION 6.10. Change in Collateral; Collateral Records. The Borrower
will (i) give the Agent not less than 30 days' prior written notice of any
change in the location of any Collateral, other than to locations set forth on
Annex II and with respect to which the Agent has filed financing statements and
otherwise fully perfected its Liens thereon, (ii) advise the Agent promptly, in
sufficient detail, of any material adverse change relating to the type, quantity
or quality of the Collateral or the Lien granted thereon and (iii) execute and
deliver to the Agent for the benefit of the Lenders from time to time, solely
for the Agent's convenience in maintaining a record of Collateral, such written
statements and schedules as the Agent may reasonably require, designating,
identifying or describing the Collateral.
SECTION 6.11. Landlord Waivers; Collateral Access Agreements. The
Borrower will obtain at the time the Borrower enters into a lease for real
property not occupied on the Closing Date or delivers possession of Collateral
to Persons that did not have possession of Collateral on the Closing Date a
landlord's waiver from the landlord of such real property (which waiver may be
contained in such lease) or a collateral access agreement from the Person that
has possession of such Collateral, in form and substance reasonably satisfactory
to the Agent.
SECTION 6.12. End of Fiscal Year; End of Fiscal Quarter. The Borrower
will cause each of its: (a) fiscal years and fourth fiscal quarter to end on the
same day on or within seven calendar days of June 30, and (b) first three fiscal
quarters to end on the same day on or within seven calendar days of September
30, December 31 and March 31, determined in a manner consistent with past
practices of the Borrower.
SECTION 6.13. New Subsidiaries. The Borrower shall give the Agent and
the Lenders not less than thirty (30) days prior written notice of the
Borrower's intention, to create or acquire a Subsidiary. In connection with any
establishment, creation or acquisition of any Subsidiary, it is understood that
the Required Lenders may require that (a) any such new Subsidiary execute and
deliver to the Agent promptly, and in any event within three (3) days after such
establishment, creation or acquisition thereof a guaranty, in form and substance
satisfactory to the Agent, a security agreement in form and substance
satisfactory to the Agent and such other agreements, instruments and other
documents reasonably requested by the Agent; (b) each owner of the Capital Stock
or other equity interests of any such Subsidiary execute and deliver promptly,
and in any event within three (3) days after such establishment, creation or
acquisition thereof, (i) a pledge agreement in form and substance satisfactory
to the Agent, (ii) certificates evidencing such capital stock or other equity
interests of such Subsidiary, (iii) undated stock powers or other appropriate
instruments of assignment executed in blank with signature guaranteed and (iv)
such other agreements, instruments and other documents reasonably requested by
the Agent; and (c) the Borrower and the Subsidiaries to execute and
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deliver such other agreements, instruments or other documents (including,
without limitation, an amendment to this Agreement modifying the provisions of
Articles VI, VII, IX and X), and to take such other action, as the Agent or the
Required Lenders may request. This Section 6.13 shall not be deemed to modify
any provision of Article IX or to permit the acquisition of any Subsidiary or
any other action not permitted hereunder.
ARTICLE VII
Negative Covenants and Financial Covenants
Until the Commitments have expired or terminated, the principal of and
interest on the Term Loan and all fees payable hereunder have been paid in full
and all other Obligations paid in full, the Borrower covenants and agrees with
the Lenders that:
SECTION 7.01. Indebtedness. The Borrower will not create, incur, assume
or permit to exist any Indebtedness, except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 7.01, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Subsidiary, provided
that such Indebtedness is (i) unsecured, (ii) subordinated in right of payment
to the prior payment and satisfaction in full in cash of the Obligations and
(iii) incurred on terms and conditions satisfactory to the Agent;
(d) Indebtedness of the Borrower arising under (i) that
certain Letter of Comfort dated February 17, 2000 executed by the Borrower in
favor of ABN AMRO Bank N.V. in respect of the Indebtedness owing to such bank by
Cannondale Europe B.V., a Subsidiary organized under the laws of Netherlands,
and (ii) that certain Guarantee Agreement dated August 7, 1992 executed by the
Borrower in favor of The Dai-Ichi Kangyo Bank, Ltd. in respect of the
Indebtedness owing to such bank by Cannondale Japan K.K., a Subsidiary organized
under the laws of Japan, and any extension, renewal or replacement of such
Letter of Comfort or Guarantee Agreement, provided that the terms of any such
extension, renewal or replacement do not materially differ from the terms
contained in the original Letter of Comfort or Guarantee Agreement, and provided
further that the principal amount of the revolving Indebtedness of the relevant
Subsidiary is not increased beyond the maximum amount originally incurred by it,
and the principal amount of the term Indebtedness of the relevant Subsidiary is
not increased beyond the unpaid principal balance thereof outstanding on the
date of such extension, renewal or replacement;
(e) Indebtedness of the Borrower arising under that certain
Vendor Agreement dated as of February 11, 1999 between the Borrower and Deutsche
Financial Services Corporation, and any extension or renewal of such Vender
Agreement, provided that
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the terms of such extension or renewal do not materially differ from the terms
contained in the original Vender Agreement;
(f) Indebtedness of the Borrower incurred to finance the
acquisition, construction or improvement of any real property or fixed or
capital assets, including pursuant to Capital Leases, and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (i) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (f) shall not exceed $3,000,000 at any
time outstanding;
(g) Indebtedness consisting of Hedging Obligations which are
incurred to protect the Borrower against fluctuations in currency values and
which are for bona fide business purposes and are not speculative, provided
that, the aggregate notional amount of such Indebtedness shall not exceed
$8,000,000 at any time;
(h) Indebtedness outstanding under the Term Loan made under
the Working Capital Loan Agent, reduced by scheduled payments and prepayments of
principal as set forth in the Working Capital Loan Agreement as in effect on the
date hereof;
(i) Indebtedness outstanding under the Revolving Loans made
under the Working Capital Loan Agreement, in an amount not to exceed the lesser
of $45,000,000 and the maximum amount available under the Revolving Line of
Credit thereunder, provided, that an unintentional borrowing by the Borrower of
Revolving Loans under the Working Capital Loan Agreement in excess of the then
existing Availability thereunder shall not constitute a violation of this
Section 7.01 if such excess is repaid within three (3) days after the Borrower
obtains knowledge or receives notice thereof and such non-compliance by the
Borrower with the Working Capital Loan Agreement does not then constitute a
Default or Event of Default thereunder; and
(j) unsecured Indebtedness, the payment of which is
subordinated to the prior payment and satisfaction in full, in cash, of all
Obligations, provided that the terms and conditions governing such Indebtedness
(including, without limitation, the amortization terms, if any) are satisfactory
to the Agent and the holder of such Indebtedness and the Agent, on behalf of the
Lenders, shall have entered into a subordination agreement containing terms and
conditions satisfactory to the Agent.
SECTION 7.02. Liens. The Borrower will not create, incur, assume or
permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
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(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 7.02; provided
that (i) such Lien shall not apply to any other property or asset of the
Borrower and (ii) such Lien shall secure only those obligations which it secures
on the date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(c) Liens on fixed or capital assets acquired, leased,
constructed or improved by the Borrower; provided that (i) such Liens secure
Indebtedness permitted by clause (f) of Section 7.01, (ii) such Liens and the
Indebtedness secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed ninety percent (90%) of the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
Liens shall not apply to any other property or assets of the Borrower;
(d) Liens in favor of the Working Capital Loan Agent to secure
Indebtedness permitted pursuant to Section 7.01(h) and Section 7.01(i); and
(e) Liens in favor of the Agent.
SECTION 7.03. Fundamental Changes. (a) The Borrower will not merge into
or consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) any of its property or assets,
including any of the stock of any of its Subsidiaries (in each case, whether now
owned or hereafter acquired), or liquidate or dissolve; provided, however, that
the Borrower may (i) sell Inventory in the ordinary course of its business
consistent with past practice; and (ii) sell or otherwise dispose of, for cash
at the fair market value thereof, Equipment no longer used or useful in the
conduct of its business and other Equipment, so long as the fair market value of
all such Equipment does not exceed, in the aggregate, $100,000 during any such
Fiscal Year and the Net Cash Proceeds received in connection with any such sale
or other disposition of Equipment are applied as provided in Section 3.03(a).
(b) The Borrower will not engage to any material extent in any
business other than businesses of the type conducted by the Borrower on the date
of execution of this Agreement and businesses reasonably related thereto.
(c) Without the prior written consent of the Agent, the
Borrower will not consent to any amendment or other modification of any of the
Working Capital Loan Agreement and the other Working Capital Loan Documents
resulting in (i) an increase in the principal amount of the Term Loan (as
defined in the Working Capital Loan Agreement), (ii) an increase in the amount
of the Revolving Line of Credit (as defined in the Working Capital Loan
Agreement), (iii) an increase in the amount of the Letter of Credit Sub-Line (as
defined in the Working Capital Loan Agreement), (iv) a change in any scheduled
payment or prepayment of the Term Loan (as defined in the Working Capital Loan
Agreement), (v) an increase in any interest rate applicable to the Working
Capital Loan Obligations, or (vi) the addition of new financial covenants or the
change of existing financial covenants so that such financial covenants are less
favorable to the Borrower.
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(d) Without the prior written consent of the Agent, the
Borrower will not (i) consent to any amendment or other modification of any of
the provisions of any Indebtedness (other than the Working Capital Loan
Obligations) of the Borrower or of any instrument or agreement (including,
without limitation, any purchase agreement, indenture, loan agreement or
security agreement) relating to any such Indebtedness if such amendment or
modification would shorten the final maturity or average life to maturity of, or
require any payment to be made earlier than the date originally scheduled on,
such Indebtedness, would increase the interest rate applicable to such
Indebtedness, or would change the subordination provision, if any, of such
Indebtedness, or would otherwise be adverse to the issuer of such Indebtedness
in any respect, (ii) make any voluntary or optional payment, prepayment,
redemption or other acquisition for value of any Indebtedness (other than the
Working Capital Loan Obligations), or, except to the extent permitted by Section
7.01, refund, refinance, replace or exchange any other Indebtedness for any such
Indebtedness, or make any prepayment, redemption or repurchase of any
outstanding Indebtedness as a result of any asset sale, change of control,
issuance and sale of debt or equity securities or similar event, or give any
notice with respect to any of the foregoing, or (iii) amend or otherwise modify
its certificate of incorporation or bylaws, including, without limitation, by
the filing or modification of any certificate of designation, or any agreement
or arrangement entered into by it, with respect to any of its Capital Stock
(including any shareholders' agreement), or enter into any new agreement with
respect to any of its Capital Stock.
(e) Without the prior written consent of the Agent, the
Borrower will not permit any Subsidiaries of the Borrower to issue or sell or
enter into any agreement or arrangement for the issuance and sale of any shares
of its Capital Stock, any securities convertible into or exchangeable for its
Capital Stock or any warrants.
SECTION 7.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not purchase, hold or acquire (including
pursuant to any merger with any Person) any Capital Stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) endorsements of instruments for collection or deposit, in
the ordinary course of the Borrower's business;
(c) loans and advances in existence on the Closing Date in the
aggregate principal amount of $13,250,000 made by the Borrower to employees of
the Borrower or to employees of its Subsidiaries, but not any refinancing or
refunding of any such loans or advances; provided, however, that the agreement
to defer the payment in cash of, and the addition instead to the principal
amount of the Montgomery Debt of, an amount equal to the sum of (i) the
aggregate amount of interest on the principal amount of the Montgomery Debt
which is past due and owing as of the Closing Date plus (ii) the amount of
interest scheduled to be paid on August 1, 2000 on such principal amount, shall
not be a violation of this clause (c);
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(d) loans and advances made by the Borrower to employees of
the Borrower or to employees of its Subsidiaries (other than loans and advances
described in clause (c) above), provided that (i) each such loan or advance is
made in the ordinary course of the Borrower's business and (ii) the principal
amount of all such loans and advances outstanding at any one time shall not
exceed (x) $500,000 at any time during the period from the Closing Date through
the second anniversary thereof or (y) $750,000 at any time thereafter;
(e) guarantees constituting Indebtedness permitted by Section
7.01; and
(f) investments by the Borrower existing on the date hereof
and identified on Schedule 7.04.
SECTION 7.05. Restricted Payments. The Borrower will not declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except that the Borrower may (i) issue the Warrant and comply with the terms
thereof and (ii) declare and pay dividends with respect to its Capital Stock
payable solely in additional shares of its common stock.
SECTION 7.06. Transactions with Subsidiaries and Affiliates. The
Borrower will not sell, lease or otherwise transfer any property or assets to,
or purchase, lease or otherwise acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Subsidiaries and
Affiliates, except (i) as otherwise permitted under Section 7.04 and (ii) in the
ordinary course of business at prices and on terms and conditions not less
favorable to the Borrower than could be obtained on an arm's-length basis from
unrelated third parties, provided, however, that the Borrower may sell Inventory
from time to time to its Subsidiaries at prices less than prices charged to the
Borrower's regular customers, so long as such prices to such Subsidiaries are
(x) consistent with past practices and (y) not less than the net book value of
the Inventory sold.
SECTION 7.07. Restrictive Agreements. The Borrower will not directly or
indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower to create, incur or permit to exist any Lien upon any of
its property or assets, or (b) the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its Capital Stock or to make
or repay loans or advances to the Borrower or any other Subsidiary or to
guarantee Indebtedness of the Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by or in connection with this Agreement or the Working Capital Loan
Documents, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 7.07 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition), (iii) clause (a) of the foregoing shall
not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(iv) clause (a) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.
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SECTION 7.08. Capital Expenditures. The Borrower will not make Capital
Expenditures during any Fiscal Year in an aggregate amount in excess of (i)
$6,000,000 during the Fiscal Year ending in June, 2001, (ii) $6,000,000 during
the Fiscal Year ending in June, 2002 or (iii) $8,000,000 during any Fiscal Year
thereafter.
SECTION 7.09. Net Worth. The Borrower shall maintain at all times
during and as of the end of each fiscal month set forth in subsections (a)
through (o) below, and during and as of the end of each Fiscal Quarter set forth
in subsections (p) through (x) below a Net Worth of not less than the amount set
forth below opposite such fiscal month or Fiscal Quarter. For purposes of
calculating the Borrower's compliance with this covenant, Net Worth shall
exclude the unpaid principal balance of, and all accrued and unpaid interest on,
the Montgomery Debt:
Fiscal Month or Fiscal Quarter Minimum Net Worth
(a) June 2000 $27,400,000
(b) July 2000 25,200,000
(c) August 2000 23,465,000
(d) September 2000 23,900,000
(e) October 2000 24,125,000
(f) November 2000 24,135,000
(g) December 2000 25,250,000
(h) January 2001 25,230,000
(i) February 2001 25,425,000
(j) March 2001 26,435,000
(k) April 2001 26,955,000
(l) May 2001 27,900,000
(m) June 2001 29,265,000
(n) July 2001 29,265,000
(o) August 2001 29,265,000
(p) Fiscal Quarter ending in September 2001 33,450,000
(q) Fiscal Quarter ending in December 2001 36,085,000
(r) Fiscal Quarter ending in March 2002 38,850,000
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(s) Fiscal Quarter ending in June 2002 42,145,000
(t) Fiscal Quarter ending in September 2002 44,865,000
(u) Fiscal Quarter ending in December 2002 49,165,000
(v) Fiscal Quarter ending in March 2003 53,750,000
(w) Fiscal Quarter ending in June 2003 59,035,000
(x) Fiscal Quarter ending in September 2003, and
each Fiscal Quarter thereafter, a Net Worth in
an amount equal to $59,035,000 plus fifty per
cent (50%) of Net Income for each Fiscal
Quarter (to the extent Net Income for such
Fiscal Quarter is positive), commencing with
the Fiscal Quarter ending in June 2003
SECTION 7.10. Fixed Charge Coverage Ratio. The Borrower shall have a
Fixed Charge Coverage Ratio, as of the end of each period of twelve consecutive
fiscal months ending on the last day of the fiscal month set forth below, of not
less than the ratio set forth below opposite such fiscal month:
Minimum Fixed Charge
Twelve Fiscal Months Ending Coverage Ratio
(a) July 2000 .20 to 1.00
(b) August 2000 .20 to 1.00
(c) September 2000 .35 to 1.00
(d) October 2000 .35 to 1.00
(e) November 2000 .35 to 1.00
(f) December 2000 .55 to 1.00
(g) January 2001 .55 to 1.00
(h) February 2001 .55 to 1.00
(i) March 2001 .80 to 1.00
(j) April 2001 .80 to 1.00
(k) May 2001 .80 to 1.00
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(l) June 2001 1.00 to 1.00
(m) September 2001 1.00 to 1.00
(n) December 2001 1.10 to 1.00
(o) March 2002 1.15 to 1.00
(p) June 2002 1.20 to 1.00
(q) September 2002 1.25 to 1.00
(r) December 2002 1.25 to 1.00
(s) March 2003 1.30 to 1.00
(t) June 2003, and each fiscal month 1.30 to 1.00
thereafter, in each case together
with the 11 preceding fiscal months
SECTION 7.11 Consolidated Fixed Charge Coverage Ratio. The Borrower
shall have, on a consolidated basis with its consolidated Subsidiaries, a Fixed
Charge Coverage Ratio, as of the end of each period of twelve consecutive fiscal
months ending on the last day of the fiscal month set forth below, of not less
than the ratio set forth below opposite such period:
Minimum Consolidated Fixed
Twelve Fiscal Months Ending In Charge Coverage Ratio
(a) June 2000 .60 to 1.00
(b) July 2000 .60 to 1.00
(c) August 2000 .60 to 1.00
(d) September 2000 .65 to 1.00
(e) October 2000 .65 to 1.00
(f) November 2000 .65 to 1.00
(g) December 2000 .75 to 1.00
(h) January 2001 .75 to 1.00
(i) February 2001 .75 to 1.00
(j) March 2001 .90 to 1.00
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(k) April 2001 .90 to 1.00
(l) May 2001 .90 to 1.00
(m) June 2001, and each fiscal month 1.00 to 1.00
thereafter, in each case together
with the 11 preceding fiscal
months
SECTION 7.12. EBITDA. The Borrower shall have EBITDA as of the end of
each period of four consecutive Fiscal Quarters set forth below of not less than
the amount set forth below opposite such period:
Four Fiscal Quarters Ending In Minimum EBITDA
(a) September 2000 $ 4,750,000
(b) December 2000 7,250,000
(c) March 2001 11,250,000
(d) June 2001 17,000,000
(e) September 2001 18,000,000
(f) December 2001 21,500,000
(g) March 2002 23,500,000
(h) June 2002, and each Fiscal 25,000,000
Quarter thereafter, in each case
together with the three preceding
Fiscal Quarters
SECTION 7.13. Adjusted EBITDA. The Borrower shall have Adjusted EBITDA,
as of the end of each period of four consecutive Fiscal Quarters set forth
below, of not less than the amount set forth below opposite such period:
Four Fiscal Quarters Ending In Minimum Adjusted EBITDA
(a) September 2000 $11,580,000
(b) December 2000 12,000,000
(c) March 2001 11,915,000
(d) June 2001 13,380,000
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(e) September 2001 13,370,000
(f) December 2001 12,290,000
(g) March 2002 12,100,000
(h) June 2002 11,325,000
(i) September 2002 11,400,000
(j) December 2002 11,515,000
(k) March 2003 11,675,000
(l) June 2003, and each Fiscal Quarter 12,065,000
thereafter, in each case together
with the three preceding Fiscal
Quarters
SECTION 7.14. Senior Leverage Ratio. The Borrower shall have a Senior
Leverage Ratio, as of the end of each period of four consecutive Fiscal Quarters
set forth below, of not greater than the ratio set forth below opposite such
period:
Four Fiscal Quarters Ending In Maximum Senior Leverage Ratio
(a) September 2000 12.50 to 1.00
(b) December 2000 8.50 to 1.00
(c) March 2001 6.50 to 1.00
(d) June 2001 3.00 to 1.00
(e) September 2001 2.50 to 1.00
(f) December 2001 2.25 to 1.00
(g) March 2002 2.00 to 1.00
(h) June 2002 1.75 to 1.00
(i) September 2002 1.50 to 1.00
(j) December 2002 1.25 to 1.00
(k) March 2003 1.00 to 1.00
(l) June 2003, and each Fiscal Quarter .75 to 1.00
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thereafter, in each case together
with the three preceding Fiscal
Quarters
SECTION 7.15. Availability. The Borrower's average Availability (as
defined in the Working Capital Loan Agreement) for the 30 or 31 day period (or
28 day period, in the case of the month of February) ending at the end of each
month shall not be less than $1,500,000.
SECTION 7.16. Environmental. The Borrower will not permit the use,
handling, generation, storage, treatment, release or disposal of Hazardous
Materials at any property owned or leased by the Borrower or any of its
Subsidiaries except in compliance with Environmental Laws and so long as such
use, handling, generation, storage, treatment, release or disposal of Hazardous
Materials does not result in a Material Adverse Effect.
SECTION 7.17. ERISA. The Borrower will not permit to occur an ERISA
Event that, alone or together with any other ERISA Events that have occurred,
would have a Material Adverse Effect.
ARTICLE VIII
INTEREST, FEES AND EXPENSES
SECTION 8.01. Interest.
(a) Loans. The Term Loan shall bear interest on the principal
amount thereof from time to time outstanding, from the date of the Term Loan
until such principal amount becomes due, at a rate per annum equal to the Base
Rate plus 6%. Interest on the Term Loan shall be payable monthly, in arrears, on
the first day of each month, commencing on the first day of the month following
the month in which the Term Loan is made and at maturity (whether upon demand,
by acceleration or otherwise) as follows: the amount of such interest consisting
of interest at the Base Rate plus 3% shall be payable in cash and the amount of
such interest consisting of interest at 3% shall be payable by capitalizing such
interest and adding it to the outstanding principal of the Term Loan. Such
capitalized interest shall bear interest in accordance with this paragraph (a)
as though such capitalized interest constituted a part of the Term Loan made by
such Lender to the Borrower.
(b) Default Interest. To the extent permitted by law, upon the
occurrence and during the continuance of an Event of Default, the principal of,
and all accrued and unpaid interest on, the Term Loan, and all fees, indemnities
or any other Obligations of the Borrower under this Agreement, the Term Notes,
and the other Loan Documents shall bear interest, from the date such Event of
Default occurs until such Event of Default is cured or waived in writing, at a
rate per annum equal at all times to the Default Rate. Interest at the Default
Rate shall be payable on demand.
(c) General. All interest shall be computed on the basis of a
year of 360 days for the actual number of days, including the first day but
excluding the last day, elapsed.
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SECTION 8.02. Reimbursement of Out-of-Pocket Expenses; Fees. The
Borrower shall reimburse or pay the Agent, as the case may be, for: (a) all
Out-of-Pocket Expenses and (b) any applicable Documentation Fee.
SECTION 8.03. Closing Fee. On the Closing Date, the Borrower shall pay
to the Agent for the account of the Lenders a nonrefundable closing fee (the
"Closing Fee") equal to $225,000 which shall be deemed fully earned when paid.
SECTION 8.04. Commitment Fee. On or prior to the Closing Date, the
Borrower shall pay to the Agent for the account of the Lenders a nonrefundable
commitment fee (the "Commitment Fee") equal to $150,000 which shall be deemed
fully earned when paid.
SECTION 8.05. Anniversary Fee. The Borrower shall pay to the Agent for
the account of the Lenders an anniversary fee (the "Anniversary Fee") equal to
$150,000 payable on each anniversary of the Closing Date, which shall be deemed
fully earned when paid.
SECTION 8.06. Field Examination Fees. The Borrower shall pay the
Agent's standard charges and fees for any personnel engaged or employed by the
Agent for reviewing the books and records of the Borrower and for verifying,
testing, protecting, safeguarding, preserving or disposing of all or any part of
the Collateral (which fees shall be in addition to any Out-of-Pocket Expenses).
ARTICLE IX
POWERS
The Borrower hereby constitutes the Agent, or any Person the Agent may
designate, as its attorney-in-fact, at the Borrower's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all Obligations have been paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all
in the name of the Agent or the Borrower, any and all checks, notes, drafts, and
other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate;
(c) To request from customers indebted on Accounts at any time
in the name of the Agent information concerning the amounts owing on the
Accounts;
(d) To request from customers indebted on Accounts at any
time, in the name of the Borrower, in the name of certified public accountant
designated by the Agent or in the name of the Agent's designee, information
concerning the amounts owing on the Accounts;
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(e) To transmit to customers indebted on Accounts notice of
the Agent's interest therein and to notify customers indebted on Accounts to
make payment directly to the Agent for the Borrower's account; and
(f) To take or bring, in the name of the Agent or the
Borrower, all steps, actions, suits or proceedings deemed by the Agent necessary
or desirable to enforce or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers set
forth in (b), (c), (e) and (f) above may only be exercised after the occurrence
and during the continuance of an Event of Default, or until such time as such
Event of Default is waived in writing by the Agent.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01 Events of Default. Each of the following shall be an
Event of Default:
(a) the Borrower shall fail to pay any principal of the Term
Loan when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on the Term
Loan or any fee, other amount or other Obligation (other than an amount or
Obligation referred to in clause (a) of this Section) payable under this
Financing Agreement, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three days;
(c) any representation or warranty made or deemed made by or
on behalf of the Borrower in or in connection with this Financing Agreement or
any amendment or other modification hereof or waiver hereunder, or by or on
behalf of the Borrower in any other Loan Document, or under any report,
certificate, financial statement or other document furnished pursuant to or in
connection therewith or any amendment or other modification thereof or waiver
thereunder, shall prove to have been incorrect in any material respect when made
or deemed made;
(d) (i) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.13, Article VI or
Article VII, (ii) Diamond M, LLC shall fail to observe or perform any covenant
or agreement set forth in Section 8(a), 8(c) or 8(e) of the Diamond M, LLC
Guaranty or Section 1.9 of the Diamond M Ranch Deed of Trust or (iii) Joseph S.
Montgomery shall fail to observe or perform any covenant or agreement set forth
in Section 8(a), 8(c) or 8(e) of the Montgomery Guaranty or Section 5(f), 5(g)
or 5(h) of the Diamond M, LLC Pledge Agreement;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Section), or the Borrower, Diamond
M, LLC or Joseph S. Montgomery shall fail to observe or perform any covenant,
condition or agreement contained in any other Loan
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Document, and such failure shall continue unremedied for a period of 30 days
after the earlier of (i) the first date on which a Responsible Officer of the
Borrower becomes aware of such failure and (ii) the date on which the Borrower
receives notice thereof from the Agent;
(f) any event or condition occurs that results in (i) the
Working Capital Loan Obligations, (ii) the Indebtedness secured by the CDA
Mortgage, as defined in the Mortgages described in clause (i) of the defined
term Mortgages, (iii) the Indebtedness secured by the Prior Mortgage, as defined
in the Mortgage described in clause (ii) of the defined term Mortgages, (iv)
Indebtedness owing by the Borrower to any Subsidiary, or (v) any Material
Indebtedness, in each case becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of Indebtedness described in clauses (i) through
(v), or any trustee or agent on its or their behalf to cause such Indebtedness
to become due, or to require the prepayment, repurchase, redemption or
defeasance thereof prior to its scheduled maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Borrower, Diamond M, LLC, Joseph S. Montgomery or
any Subsidiary or the debts of such Person, or of a substantial part of the
assets of such Person, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestration, conservator or
similar official for the Borrower, Diamond M, LLC, Joseph S. Montgomery or any
Subsidiary or for a substantial part of the assets of such Person, and, in any
such case, such proceeding or petition shall continue undismissed for 60 days or
an order or decree approving or ordering any of the foregoing shall be entered;
(h) the Borrower, Diamond M, LLC, Joseph S. Montgomery or any
Subsidiary shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (g) of this
Section, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestration, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part of the assets of such Person, (iv) file
an answer admitting the material allegations of a petition filed against such
Person in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(i) the Borrower or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the Borrower,
any Subsidiary or any combination thereof or against Diamond M, LLC or Joseph S.
Montgomery and the same shall remain undischarged or unsatisfied for a period of
30 consecutive days during which execution shall not be effectively stayed or
bonded pending appeal, or for which such judgment is not covered by insurance to
an extent deemed adequate by the Agent, in its commercially reasonable
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judgment, or any action shall be legally taken by a judgment creditor to attach
or levy upon any assets of the Borrower or any Subsidiary or any of the Diamond
M Ranch Collateral to enforce any such judgment;
(k) either of William Luca or Joseph S. Montgomery shall cease
for any reason whatsoever to be actively engaged in the management of the
Borrower's affairs, and such individual shall not have been replaced immediately
thereafter, on an interim basis and within 150 days thereafter, on a permanent
basis, in each case by the Board of Directors of the Borrower with an individual
acceptable to the Required Lenders;
(l) an Event of Default (as defined in the Collateral
Assignment of Shareholder Note) shall occur;
(m) an Event of Default (as defined in the Working Capital
Loan Agreement) shall occur;
(n) any provision of any Loan Document shall at any time for
any reason (other than pursuant to the express terms thereof) cease to be valid
and binding on or enforceable against the Borrower, Diamond M, LLC or Joseph S.
Montgomery or the validity or enforceability thereof shall be contested by any
party thereto, or a proceeding shall be commenced by the Borrower, Diamond M,
LLC or Joseph S. Montgomery or any Governmental Authority having jurisdiction
over it, seeking to establish the invalidity or unenforceability thereof, or the
Borrower, Diamond M, LLC or Joseph S. Montgomery shall deny in writing that such
Person has any liability or obligation purported to be created under any Loan
Document; or
(n) any Loan Document that purports to create or grant in
favor of the Agent a Lien on any property or assets, after delivery thereof
pursuant hereto, shall for any reason fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien in favor of the Agent for the benefit of the Lenders on any
Collateral purported to be covered thereby;
SECTION 10.02. Termination of Commitments; Acceleration. Upon the
occurrence of any Event of Default (other than an Event of Default with respect
to the Borrower described in clause (g) or (h) of Section 10.01), and at any
time thereafter during the continuance of such event, the Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments and thereupon the Commitments shall terminate immediately, and (ii)
declare the Term Loan and all other Obligations then outstanding to be due and
payable in whole (or in part, in which case any principal or other Obligation
not so declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Term Loan and all other Obligations
so declared to be due and payable, together with accrued interest thereon and
all fees and other obligations of the Borrower accrued hereunder, shall become
due and payable immediately, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower. In case of
any Event of Default with respect to the Borrower described in clause (g) or (h)
of Section 10.01, the Commitments shall automatically terminate and the
principal of the Term Loan then outstanding, together with accrued interest
thereon and all fees and other Obligations of the Borrower accrued
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hereunder, shall automatically become due and payable, without presentment
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 10.03. Exercise of Remedies. Immediately upon the
occurrence of any Event of Default, the Agent may, to the extent permitted by
law: (a) remove from any premises where same may be located any and all books
and records, computers, electronic media and software programs associated with
any Collateral (including any electronic records, contracts and signatures
pertaining thereto), documents, instruments, files and records, and any
receptacles or cabinets containing same, relating to the Accounts, or the Agent
may use, at the Borrower's expense, such of the Borrower's personnel, supplies
or space at the Borrower's places of business or otherwise, as may be necessary
to properly administer and control the Accounts or the handling of collections
and realizations thereon; (b) bring suit, in the name of the Borrower or the
Agent, and generally shall have all other rights respecting said Accounts,
including without limitation the right to: accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any Accounts and issue credits in the name of the Borrower or the Agent; (c)
sell, assign and deliver the Collateral and any returned, reclaimed or
repossessed Inventory, with or without advertisement, at public or private sale,
for cash, on credit or otherwise, at the Agent's sole option and discretion, and
the Agent may bid or become a purchaser at any such sale, free from any right of
redemption, which right is hereby expressly waived by the Borrower; (d)
foreclose the security interests in the Collateral created herein or by the Loan
Documents by any available judicial procedure, or to take possession of any or
all of the Collateral, including any Inventory, Equipment and/or Other
Collateral without judicial process, and to enter any premises where any
Inventory and Equipment and/or Other Collateral may be located for the purpose
of taking possession of or removing the same; and (e) exercise any other rights
and remedies provided in law, in equity, by contract or otherwise. The Agent
shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of the
Borrower or the Agent, or in the name of such other party as the Agent may
designate, either at public or private sale or at any broker's board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as the Agent in its sole discretion may
deem advisable, and the Agent shall have the right to purchase at any such sale.
If any Inventory and Equipment shall require rebuilding, repairing, maintenance
or preparation, the Agent shall have the right, at its option, to do such of the
aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment in such saleable form as the Agent shall deem appropriate and any such
costs shall be deemed an Obligation hereunder. The Borrower agrees, at the
request of the Agent, to assemble the Inventory and Equipment and to make it
available to the Agent at premises of the Borrower or elsewhere and to make
available to the Agent the premises and facilities of the Borrower for the
purpose of the Agent's taking possession of, removing or putting the Inventory
and Equipment in saleable form. The Agent agrees to give the Borrower ten (10)
days prior notice of intended disposition of any Collateral, and the Borrower
agrees that ten (10) days prior notice shall constitute reasonable notification
and full compliance with all applicable laws. The net cash proceeds resulting
from the Agent's exercise of any of the foregoing rights, (after deducting all
charges, costs and expenses, including reasonable attorneys' fees) shall be
applied by the Agent to the payment of the Obligations, whether due or to become
due, in such order as the Agent may elect, and the Borrower shall remain liable
to the Agent for any deficiencies, and the Agent in
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turn agrees to remit to the Borrower or its successors or assigns, any surplus
resulting therefrom. The enumeration of the foregoing rights is not intended to
be exhaustive and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative. The Borrower hereby
indemnifies the Agent and holds the Agent harmless from any and all costs,
expenses, claims, liabilities, Out-of-Pocket Expenses or otherwise, incurred or
imposed on the Agent by reason of the exercise of any of its rights, remedies
and interests hereunder, including, without limitation, from any sale or
transfer of Collateral, preserving, maintaining or securing the Collateral,
defending its interests in Collateral (including pursuant to any claims brought
by the Borrower, the Borrower as debtor-in-possession, any secured or unsecured
creditors of the Borrower, any trustee or receiver in bankruptcy, or otherwise),
and the Borrower hereby agrees to so indemnify and hold the Agent harmless,
absent the Agent's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction. The foregoing indemnification shall
survive termination of this Financing Agreement until such time as all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof the Agent, may establish such reserves for
Obligations hereunder (including any contingent Obligations) as it may deem
advisable in its reasonable business judgment.
ARTICLE XI
THE AGENT
SECTION 11.01. Appointment. Each of the Lenders hereby irrevocably
appoints the Agent as its agent and authorizes the Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Agent by the
terms hereof, together with such actions and powers as are reasonably incidental
thereto.
SECTION 11.02. Agent as a Lender. The financial institution serving as
the Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Agent, and such financial institution and its Affiliates may lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Agent hereunder.
SECTION 11.03. Scope of Duties. The Agent shall not have any duties or
obligations except those expressly set forth herein. Without limiting the
generality of the foregoing, (a) the Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby that the Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
12.02), and (c) except as expressly set forth herein, the Agent shall not have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the financial institution serving as Agent or any
of its Affiliates in any capacity. The Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 12.02) or in the absence of its
own gross negligence or willful misconduct. The Agent shall be deemed not to
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have knowledge of any Default unless and until written notice thereof is given
to the Agent by the Borrower or a Lender, and the Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Financing Agreement, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the covenants
contained in this Financing Agreement or other terms or conditions set forth
herein, (iv) the validity, enforceability, effectiveness or genuineness of this
Financing Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article II or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Agent.
SECTION 11.04. Reliance. The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Agent may consult with legal counsel (who may
be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
SECTION 11.05. Sub-Agents. The Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Agent. The Agent and any such sub-agent may perform any and all
its duties and exercise its rights and powers through their respective
directors, officers, employees, agents and advisors. The exculpatory provisions
of the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Agent.
SECTION 11.06. Successors. Subject to the appointment and acceptance of
a successor Agent as provided in this paragraph, the Agent may resign at any
time by notifying the Lenders, and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor from among the Lenders. If no successor shall have been so
appointed by the Required Lenders or shall have accepted such appointment within
30 days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a financial institution with an office in New York, New York, or an
Affiliate of any such financial institution, provided that such financial
institution is a financial institution organized under the laws of the United
States of America or any State thereof, and has a combined capital and surplus
and undivided profits of not less than $100,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Agent's resignation
hereunder, the provisions of this Article and Section 12.03 shall continue in
effect for the benefit
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of such retiring Agent, its sub-agents and their respective directors, officers,
employees, agents and advisors in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
SECTION 11.07. Independent Credit Analysis of Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Financing Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Financing Agreement, any related agreement or any document furnished
hereunder or thereunder.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at:
Cannondale Corporation
16 Trowbridge Drive
Bethel, Connecticut 06801
Attn: William Luca
Fax No.: (203) 748-4218
With a copy to:
Kelley Drye & Warren LLP
2 Stamford Plaza
281 Tesser Boulevard - 14th Floor
Stamford, Connecticut 06901
Attn: John Capetta, Esq.
Fax No.: (203) 964-3188
and
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(b) if to the Agent, to:
Ableco Finance LLC
450 Park Avenue
28th Floor
New York, New York 10022
Attn: Kevin Genda
Fax No.: (212) 758-5305
and
(c) if to any Lender, to its address (or telecopy number)
as it may specify in writing to each other party
hereto, from time to time.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Financing Agreement shall be deemed to have been given on the date of
receipt.
SECTION 12.02. Waivers; Amendments. (a) No failure or delay by the
Agent or any Lender in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Financing
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of the Term Loan shall not be construed as a waiver of
any Default, regardless of whether the Agent or any Lender may have had notice
or knowledge of such Default at the time.
(b) Neither this Financing Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an agreement in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Agent with the consent of the Required Lenders, provided that no such agreement,
unless it shall have been agreed to by all of the Lenders, shall: (a) amend the
Financing Agreement so as to (i) increase the Commitment; (ii) reduce the
interest rates; (iii) reduce or waive (x) any fees in which the Lenders share
hereunder, or (y) the repayment of any Obligations due the Lenders; (iv) extend
the maturity of the Obligations; or (v) alter or amend (x) this Section 12.02(b)
or (y) the definitions of Collateral or Required Lenders, or (b) except as
otherwise required in this Financing Agreement, release any guaranty or
Collateral in excess of $500,000 during any year.
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SECTION 12.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Financing Agreement or any amendments, modifications or waivers of the
provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all amounts paid by the Agent which
constitute indemnity payments under the Old Credit Agreement, and (iii) all
reasonable out-of-pocket expenses incurred by the Agent or any Lender, including
the reasonable fees, charges and disbursements of any counsel (including the
allocated costs of internal counsel) for the Agent or any Lender, in connection
with the enforcement or protection of its rights in connection with this
Financing Agreement, including its rights under this Section, or in connection
with the Term Loan made, including all such reasonable out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Term Loan.
(b) The Borrower shall indemnify the Agent and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Financing Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of
transactions contemplated hereby, (ii) the Term Loan, or the use of the proceeds
therefrom, (iii) any actual presence or release of Hazardous Materials from any
property owned or operated by the Borrower or any of its Subsidiaries in
violation of applicable Environmental Laws and resulting in Environmental
Liability, or any Environmental Liability related in any way to the Borrower or
any of its Subsidiaries, or (iv) any actual claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are deter- mined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount
required to be paid by it to the Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Agent, such Lender's pro
rata share (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent in
its capacity as such.
(d) To the extent permitted by applicable law, the Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Financing Agreement or the transactions contemplated
hereby, the Term Loan or the use of the proceeds thereof.
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(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 12.04. Assignments and Participations. (a) This
Agreement and the Notes shall be binding upon and inure to the benefit of the
Borrower and the Agent and each Lender and their respective successors and
assigns; provided, however, that the Borrower may not assign or transfer any of
their rights hereunder, or under the Notes, without the prior written consent of
each Lender and any such assignment without the Lenders' prior written consent
shall be null and void.
(b) Each Lender may, with the written consent of the Agent,
assign to one or more other lenders or other entities (provided that no written
consent of the Agent shall be required in connection with an assignment and
delegation by a Lender to an Affiliate of such Lender) all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitments, the portion of the Term Loan made by it, and
the Notes held by it); provided, however, that (i) such assignment is in an
amount which is at least $5,000,000 (except such minimum amount shall not apply
to any Affiliate of a Lender or to any fund or account managed by a Lender) or a
multiple of $1,000,000 in excess thereof (or the remainder of such Lender's
Commitment) and (ii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance, an Assignment and Acceptance, together
with any Note subject to such assignment and such parties shall deliver to the
Agent a processing and recordation fee of $5,000. Anything contained in this
Section to the contrary notwithstanding, no consent of the Agent shall be
required (and payment of any fees shall not be required) if such assignment is
in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender or the assignee is an Affiliate (other than individuals) of, or a
fund, money market account, investment account or other account managed by, a
Lender. Upon such execution, delivery and acceptance, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least three Business Days after the delivery thereof to the Agent
(or such shorter period as shall be agreed to by the Agent and the parties to
such assignment), (A) the assignee thereunder shall become a "Lender" hereunder
and, in addition to the rights and obligations hereunder held by it immediately
prior to such effective date, have the rights and obligations hereunder that
have been assigned to it pursuant to such Assignment and Acceptance and (B) the
assigning Lender thereunder shall, to the extent that rights (except with
respect to Section 12.03) and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(i) By executing and delivering an Assignment and
Acceptance, the assigning Lender and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (A) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto; (B) the assigning
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Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its Subsidiaries or
the performance or observance by the Borrower of any of its obligations under
this Agreement or any other Loan Document furnished pursuant hereto; (C) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (D) such assignee will, independently and without
reliance upon the Assigning Lender, the Agent or any Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents; (E) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (F) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Lender.
(ii) The Agent shall maintain, or cause to be
maintained at the Payment Office, a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
portion of the Term Loan owing to each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower and any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(iii) Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee, together with the
Notes subject to such assignment, the Agent shall, if the Agent consents to such
assignment and if such Assignment and Acceptance has been completed (i) accept
such Assignment and Acceptance, (ii) give prompt notice thereof to the Borrower
(other than in connection with an assignment to an Affiliate or Lender), (iii)
record the information contained therein in the Register, and (iv) prepare and
distribute to each Lender and the Borrower (other than in connection with an
assignment to an Affiliate or Lender), a revised Annex 1 hereto after giving
effect to such assignment, which revised Annex 1 shall replace the prior Annex 1
and become part of this Agreement.
(iv) A Registered Loan (and the Registered Note, if
any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or sale
duly executed by) the holder of such Registered Note, whereupon, at the request
of the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or sale of
any Registered Loan (and the Registered Note, if any evidencing the same), the
Agent
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shall treat the Person in whose name such Registered Loan (and the Registered
Note, if any, evidencing the same) is registered as the owner thereof for the
purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
(v) In the event that any Lender sells participations
in the Registered Loan, such Lender shall maintain a register on which it enters
the name of all participants in the Registered Loans held by it (the
"Participant Register"). A Registered Loan (and the Registered Note, if any,
evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Note shall expressly so provide). Any participation of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by the registration of such participation on the Participant
Register.
(vi) Any foreign Person who purchases or is assigned
or participates in any portion of such Registered Loan shall provide the Agent
(in the case of a purchase or assignment) or the Lender (in the case of a
participation) with a completed Internal Revenue Service Form W-8 (Certificate
of Foreign Status) or a substantially similar form for such purchaser,
participant or any other affiliate who is a holder of beneficial interests in
the Registered Loan.
SECTION 12.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Financing Agreement
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Financing Agreement and the
making of the Term Loan, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on the Term Loan
or any fee or any other amount payable under this Financing Agreement is
outstanding and unpaid and so long as the Commitments have not expired or
terminated. Each provision contained in this Financing Agreement pursuant to
which the Borrower indemnifies, or agrees to be liable for any loss suffered by,
the Agent or any Lender, shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Term Loan, the expiration or termination of the Commitments or
the termination of this Financing Agreement or any provision hereof.
SECTION 12.06. Counterparts; Integration; Effectiveness. This Financing
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Financing
Agreement constitutes the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 2.01, this Financing Agreement shall become effective
when it shall have been executed by the Agent and when the Agent shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Financing Agreement by
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telecopy shall be effective as delivery of a manually executed counterpart of
this Financing Agreement.
SECTION 12.07. Severability. Any provision of this Financing Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 12.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Financing Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Financing
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 12.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Financing Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Financing Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Financing Agreement shall affect any right that the Agent or any
Lender may otherwise have to bring any action or proceeding relating to this
Financing Agreement against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or here-after have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Financing
Agreement in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
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(d) Each party to this Financing Agreement irrevocably
consents to service of process in the manner provided for notices in Section
12.01. Nothing in this Financing Agreement will affect the right of any party to
this Financing Agreement to serve process in any other manner permitted by law.
SECTION 12.10. WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS FINANCING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
FINANCING AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 12.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Financing Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Financing Agreement.
SECTION 12.12. Confidentiality. Each of the Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to Securitization Parties
(c) to the extent requested by any regulatory authority, (d) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (e) to any other party to this Financing Agreement, (f) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Financing Agreement or the enforcement of rights hereunder, (g)
subject to a confidentiality agreement containing provisions substantially the
same as those of this Section, to any participant or prospective participant of
a Lender or to any assignee of, or any prospective assignee of, any of its
rights or obligations under this Financing Agreement, (h) with the consent of
the Borrower or (i) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. Notwithstanding the foregoing, the Borrower hereby
acknowledges that the Agent and each Lender may be subject to review by
Securitization Parties or other regulatory agencies and may be required to
provide to, or otherwise make available for review by, the representatives of
such parties or agencies any such non-public information. For the purposes of
this Section, "Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower
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after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 12.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
the Term Loan, together with all fees, charges and other amounts which are
treated as interest on the Term Loan under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such portion of the Term Loan in accordance with applicable law, the rate of
interest payable in respect of the Term Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and, to
the extent lawful, the interest and Charges that would have been payable in
respect of the Term Loan but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other periods shall be increased (but not above the Maximum
Rate therefor) until such cumulated amount, together with interest thereon at
the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this
Financing Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
CANNONDALE CORPORATION
By /s/ John P. Moriarty
-----------------------------------
Name: John P. Moriarty
Title: Assistant Treasurer
ABLECO FINANCE LLC,
as Agent and as Lender
By /s/ Kevin Genda
-----------------------------------
Name: Kevin Genda
Title: Senior Vice President
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ANNEX I
Commitments
Commitment
Ableco Finance LLC $15,000,000
450 Park Avenue
28th Floor
New York, NY 10022
-----------
$15,000,000
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ANNEX II
Lien perfection Information
[to be provided by Borrower and its counsel]
Exact Name of the Borrower in its State of Organization:
State of Incorporation or Formation:
Federal Tax I.D. No.
Chief Executive Office:
Collateral Locations:
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