EXHIBIT 99.10
EXTENSION AND MODIFICATION AND SECURITY AGREEMENT
This Extension and Modification And Security Agreement, dated as of
January 30, 2003 (the "Extension Agreement"), is made by and among Nutritional
Sourcing Corporation ("NSC"), a Delaware Corporation (f/k/a/ Pueblo Xtra
International, Inc.), Pueblo International, LLC ("Pueblo"), a Delaware limited
liability company, Xtra Super Food Centers, Inc.(Xtra), a Delaware corporation,
Pueblo Entertainment, Inc., a Delaware corporation, Xtra Merger Corporation, a
Delaware corporation, Caribad, Inc., a Puerto Rico corporation and All Truck,
Inc., a Delaware corporation (all, except NSC, herein referred to as a"Borrower"
or "Borrowers") and Westernbank Puerto Rico, a Puerto Rico banking corporation
(the "Lender").
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BACKGROUND
A. Reference is made to the Amended and Restated Credit Agreement dated
as of April 29, 1997 (as amended from time to time and including the Consent
Agreement, the "Credit Agreement"), among NSC, Pueblo, Xtra and the Syndication
Agent, the Administrative Agent (together, the "Agents"), and the Banks party
thereto from time to time. As provided in Article XII capitalized terms used
herein that are defined in the Credit Agreement and are not otherwise defined
herein shall have the respective meanings prescribed in the Credit Agreement.
B. Prior to August 1, 2002 Pueblo had informed the Banks that it would
not pay certain interest due and payable on August 1, 2002 to NSC which in turn
resulted in the failure of NSC to pay required interest to the United States
Trust Company of New York as indenture trustee, pursuant to the terms of the
indentures (the "Indentures"), dated as of July 28, 1993 and April 29, 1997, on
August 1, 2002 (which was then the next due date for interest) in respect of the
PXI Senior Notes (collectively referred to as "Interest Payment Defaults"). The
Interest Payment Defaults constituted Events of Default under Section 9.04(a)(i)
of the Credit Agreement. The Interest Payment defaults also constituted defaults
in payment under the Indentures and were not cured and constituted "Events of
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Default" under and as defined in such Indentures. Pueblo has also failed to
perform and comply with the covenanst contained in Sections 8.09, 8.10 and 8.11
of the Credit Agreement( the "Financial Covenant Defaults") which also
constituted Events of Default under the Credit Agreement.
C. In connection with the Interest Payment Defaults, Pueblo requested
that the Banks forbear from exercising their rights and remedies under the
Credit Documents. Subject to the terms and conditions of a Consent Agreement,
dated as of August 1, 2002 by and among NSC, Pueblo, Xtra, the Agents and the
Banks (the "Consent Agreement"), the Banks agreed to such request.
D. As a result of the Interest Payment Defaults an involuntary petition
was filed against NSC under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code") in Case No. 02-12550 (the "Chapter 11 Case") in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").
The Chapter 11 Case is pending.
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E. All Obligations of Pueblo to the Banks pursuant to the Credit
Agreement, are due and payable February 1, 2002 (the "Due Date"). Such
Obligations are guaranteed by NSC. Neither the Borrower, NSC nor any other
person liable thereon has the means or ability to pay such Obligations on the
Due Date.
F. The Borrowers and NSC have requested that Lender make revolving and
term loans to the Borrower and grant the Borrower other financial
accommodations, up to the maximum amount of $80,000,000 for a period of 5 years.
However, there is insufficient time for Lender to prepare the necessary
documentation and for the Borrower and NSC to provide the necessary security and
obtain the required approvals prior to the Due Date.
G. Consequently, the Borrowers and NSC have requested that: (i) Lender
purchase the Loans and other Obligations under the Credit Agreement, (ii) extend
the times for payment thereof and (iii) grant the Borrowers additional Loans and
other financial accommodations, as a bridge loan until September 30, 2003, all
as a "bridge" facility and Lender is willing to do so, but only on the terms and
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subject to the conditions of this Extension Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, and intending to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
ACKNOWLEDGMENTS
1.1 ACKNOWLEDGMENT OF EXISTING INTEREST PAYMENT DEFAULTS; EXISTING
CREDIT DOCUMENTS. The Borrowers and NSC acknowledge and agree that: (a) the
Interest Payment Defaults are material in nature and constitute Events of
Default; (b) the Credit Documents are, legal, binding, valid and enforceable
against the Borrowers and NSC in every respect and all of the terms and
conditions thereof are binding upon the Borrowers and NSC; (c) the PXI Senior
Notes are fully subordinated to the Obligations of the Borrower to the Banks
under the Credit Agreement; (d) the Subordinated Intercompany Notes are fully
subordinated and subject in right of payment to the prior payment in full of the
Obligations and (e) as of the date hereof there exists no defense, setoff,
offset or counterclaim on the part of the Borrowers and NSC to any of the
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Obligations. The Borrowers and NSC further acknowledge and agree that as of a
result of the Interest Payment Defaults and the Chapter 11 Case, the holder of
the Obligations is entitled, upon notice to the Borrower, to accelerate the
Obligations pursuant to the Credit Documents and to exercise all rights and
remedies under the Credit Documents, applicable law or otherwise. With respect
to the Interest Payment Defaults, to the extent that any of the Credit Documents
require notification to the Borrowers and NSC of the existence of a default or
an opportunity for the Borrowers and NSC to cure such a default, or both, such
notice and period for cure have been properly given by the Banks or are hereby
waived by the Borrower and NSC.
1.2 ACKNOWLEDGMENT OF OUTSTANDING OBLIGATIONS. (a) The
Borrowers and NSC represent and warrant to Lender that as of the Closing
Date, the Borrower will be indebted to the Banks in an aggregate amount
not in excess of:
(i) the principal sum of $33,900,000, which it is anticipated will
be apportioned as follows:
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Revolving Loans: $ 30,000,000,
Swingline Loans: $ -0-,
L/Cs Outstanding: $ 3,900,000, plus
(ii) accrued but unpaid interest, L/C Fees, Facing Fees and
Commitment Commissions; plus
(iii) the costs and expenses (including, reasonable attorneys' fees)
incurred by the Banks in connection with negotiation and preparation of the sale
of the Obligations to Lender.
(b) The foregoing amounts, items 1.2(a)(i) through 1.2(a)(iii),
inclusive, are hereafter collectively referred to as the "Current Outstanding
Obligations". All such indebtedness will be owing by Borrowers and guaranteed by
NSC, without any rights of offset, counterclaims or defenses of any kind.
Nothing contained herein shall alter, amend, modify or extinguish the
obligations of any Credit Party to repay the Current Outstanding Obligations and
neither this Extension Agreement nor any of the other Financing Agreements
constitute a novation of any of the Credit Documents.
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1.3 ACKNOWLEDGMENT OF LIENS AND PRIORITY. Borrowers and NSC (a)
represent and warrant to Lender that pursuant to the Credit Documents the Banks
hold (directly or through the Collateral Agent for their benefit) and upon
purchase of the Obligations Lender will hold, first priority (subject only to
those Liens specified on Part 1 of Schedule 8.4 hereto), valid, perfected
security interests in and Liens upon (i) all of the Borrowers' assets, wherever
located, including assets now owned or hereafter acquired, and as more
specifically described in the Credit Documents; and (ii) those assets of NSC
described on Schedule 1.3 hereto; (b) agree to promptly take all actions and
execute all documents required by Lender in regard to such security interest and
Liens, (c) represent and warrant to Lender that such security interest and liens
secure and will as of the Closing Date secure all of the Obligations now or
hereafter incurred including the Current Outstanding Obligations and all other
amounts now owed by the Credit Parties to the Banks and which will hereafter be
owed by the Credit Parties to the Lender hereunder and under the Credit
Documents.
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1.4 REAFFIRMATION OF SECURITY INTERESTS. (a) All of the assets of the
Credit Parties which were pledged, assigned, conveyed, mortgaged, hypothecated
or transferred to or in favor of the Banks pursuant to the Credit Documents
including, the Collateral, constitute and will constitute collateral security
for all of the Obligations. Each Credit Party hereby reaffirms its respective
prior conveyance to or in favor of the Collateral Agent and the Banks of a
continuing security interest in and lien on the Collateral as well as a security
interest in and lien upon any and all funds and/or monies of such Credit Party.
(b) Not later than seven(7) days prior to the Extension Agreement
Effective Date, the Borrower agrees to furnish Lender from the relevant filing
offices in Puerto Rico, Florida, Delaware (and other relevant jurisdictions) UCC
lien searches (or title searches in the case of real property) in respect of
each Credit Party and the Mortgaged Properties.
(c) In addition to the liens and security interest referred to in
Sections 1.3 and 1.4(a) above the Borrowers and NSC will, on the Closing Date,
grant the Lender additional liens and security interests, pursuant to Article V
hereof.
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ARTICLE II
PURCHASE OF OBLIGATIONS
2.1 PURCHASE. On the terms and subject to the conditions of this
Extension Agreement, but subject also to the terms and provisions of any
agreement between Lender and the Banks, Lender shall purchase from the Banks
(but, only if the Banks shall agree thereto on terms acceptable to Lender) as of
the Closing Date all of the Banks' rights under the Credit Agreement and other
Credit Documents, including all the Banks' rights in the Loans(as defined in the
Credit Agreement [the "Purchased Loans"] and the Collateral(as defined in the
Credit Agreement[ the "Purchased Collateral"]) (collectively, the "Purchased
Assets").NSC and Borrowers acknowledge and agree that Lender will succeed to all
rights of the Banks, the Administrative Agent and the Collateral Agent in, to
and under the Purchased Assets.
2.2 EXCLUSION OF LIABILITIES. Lender will not, and NSC and Borrowers
agree Lender does not, assume any liabilities or obligations relating to the
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Purchased Assets arising prior to the Closing Date including those for breach of
contract, tortious acts, fraudulent conveyance, lender liability claims, claims
of usury, claims for illegality or violations of law.
2.3 REPRESENTATIONS AND WARRANTIES RESPECTING THE PURCHASED ASSETS. To
induce Lender to enter into this Extension Agreement and to consummate the
transactions contemplated herein, Borrowers and NSC hereby represent and warrant
to Lender:
(a) The Banks will transfer to and Lender will acquire, good, valid and
marketable title to the Purchased Assets, free and clear of any pledges,
mortgages, Liens, charges, security interests, encumbrances, restrictions on
transfer, defects or adverse claims or interests of any kind or nature
whatsoever.
(b) There are no claims, actions, suits, proceedings or investigations
pending or threatened against the Banks or any Credit Party in respect of, or
affecting any Purchased Asset, at law or in equity, or
before any federal, commonwealth, state, county, municipal or other court,
governmental body or arbitration tribunal.
(c) The Banks, the Agent or the Collateral Agent has possession of, and
will deliver possession of to Lender, on the Closing Date, all agreements,
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documents and instruments relating to the Purchased Assets, including, but not
limited to, all original promissory notes executed by any Borrower or any other
Credit Party in connection therewith, all certificates and all recorded lien and
security interest instruments relating to the Purchased Collateral.
(d) The Purchased Loans and all agreements, documents and instruments
relating to the Purchased Assets constitute the legal, valid and binding
obligations of the Credit Parties thereto, enforceable in accordance with their
respective terms, all without offset, defense or counterclaim, including,
without limitation, the liability and indebtedness of any Borrower in the
amounts of the outstanding principal balances of the Purchased Loans. Without
limiting the generality of the foregoing, all interest, fees, commissions or
other compensation provided to be paid under the Purchased Assets are legally
chargeable and collectible from the Borrowers under the laws of Puerto Rico or
other applicable law (including amounts accrued through the Closing Date).
(e) Schedule 2.3(e) sets forth the following information as to the
Purchased Loans (as of the close of business on the date immediately preceding
the date hereof and will be updated as of the date immediately preceding the
Closing Date): (i) the outstanding principal amount, (ii) all outstanding
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letters of credit, trade acceptances, purchase and other guarantees, if any,
issued by or on behalf of the Banks for the benefit of Borrower or any Obligor
or other person in connection with Purchased Assets (together with the number,
original and outstanding amount, issuer, account party, beneficiary and
expiration date), (iii) the name and address of Obligors, subordinating
creditors and/or participants or lead lenders (as the case may be), and (iv)
participations (including the original, maximum and current amount of
participation and percentage of participation, if any),
(f) Except for the Interest Payment Defaults, and the filing and
pendency of the Chapter 11 Case and possibly the failure by Pueblo to comply
with the financial covenants in the Credit Agreement(Sections 8.09, 8.10 and
8.11 thereof), none of Borrowers or NSC is in default, and no other party is in
default, in any material respect under any of the Purchased Assets and no event
has occurred which with or without the giving of notice or passage of time or
both would constitute an Event of Default.
(g) The security interests, assignments, Liens, pledges, mortgages and
other interests granted to, or in favor of the Banks with respect to the
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Purchased Collateral (i) constitute valid, enforceable and perfected first
priority Liens upon and security interests in the Purchased Collateral (ii) are,
except as set forth on Schedule 8.4 hereto, subject to no prior Liens or
security interests and (iii) are security only for the obligations being
purchased and all instruments and documents relating thereto in which
recordation or filing is required to perfect such Liens have been recorded or
filed in the appropriate section of the applicable registry or registries or
filing office. The Banks have any necessary assignment schedules, Borrower
certificates and consignments.
(h) The Banks have duly and properly filed all financing statements,
statements of assignments, notices of liens, factors lien agreements, accounts
receivable financing agreements, mortgages, assignments of conditional sales
contracts and other documents and instruments in all jurisdictions where
required to perfect, preserve and protect their interests in the Purchased
Collateral, including all continuation statements, affidavits of continuance,
renewals and other instruments that must be filed in order to maintain such
interest in the Purchased Collateral.
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(i) The Banks have possession of, and will deliver possession to Lender
at closing, all Purchased Collateral where possession is a requisite to the
perfection of a security interest in the Purchased Collateral. The Banks have
notified third parties in all cases where notification to third parties is a
requisite to the perfection of a security interest in the Purchased Collateral.
(j) Borrowers have insured the Purchased Collateral at all times
against all hazards normally insured by Borrowers in the ordinary course of
business which shall include at a minimum, but not be limited to, fire, theft,
windstorm, earthquake, vandalism, pilferage and risks covered by extended
coverage insurance, and all such policies are or at Closing will be payable to
Lender and its assigns as loss payee.
(k) The outstanding aggregate amount of Purchased Loans and other
obligations being purchased, including interest accrued on the Purchased Loans
will, as of the Closing Date, as stated by the Banks to Lender, be true,
accurate and complete in all respects.
(l) Schedule 2.3(l) hereto sets forth all bank accounts and lock boxes
relating to the Purchased Assets and indicates the bank account or lock box used
to receive collections from the Purchased Assets.
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(m) No representation or warranty by Borrowers or NSC, in this Section
2.3 and no document, certificates or other instruments or exhibit furnished to
Lender by any of them or any Affiliates pursuant hereto (including but not
limited to all Schedules and Exhibits hereto) or in connection with the
transactions contemplated by this Article II contains as of the date hereof nor
will contain as of the Closing Date any untrue statement of a material fact or
omits or will omit any material fact necessary in order to make the statements
contained herein or therein not misleading.
2.4 WAIVER. The Borrowers and NSC waive and release all rights to
assert against Lender any and all claims, demands or causes of action any of
them may have against any of the Banks. There are no amounts owing or which will
be owing by Lender to any Credit Party (a) by reason of Lender's acquisition of
the Purchased Assets or (b) in respect of or on account of any charges to, or
payments by, any Credit Party in connection with any of the Purchased Loans,
including any rebates on account of fees or similar charges paid to the Banks.
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ARTICLE III
MODIFIED CREDIT FACILITIES
In lieu of the Loans, Commitments and other financial accommodations
provided for in the Credit Agreement, Lender intends to make Loans and grant
Borrower other financial accommodations as hereafter set forth in this Article
III as follows:
3.1 REVOLVING LOANS.
(a) Subject to and upon the terms and conditions contained herein,
Lender agrees to make Revolving Loans to Borrower from time to time in amounts
requested by Borrowers up to the amount equal to:
(i) Up to ninety (90%) percent of the Net Amount of Eligible
Accounts, PLUS
(ii) Up to the lesser of: (A) sixty five percent (65%) of the
Value of Eligible Inventory or (B) eighty percent (80%) of the
"Net Recovery Percentage" for Eligible Inventory, PLUS
(iii) Up to One Hundred Percent (100%)of the Pledged Cash,
LESS
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(iv) any Availability Reserves;
PROVIDED THAT, except in Lender's discretion, the aggregate
amount of Revolving Loans at any time outstanding pursuant to
Section 3.1(a)(i)(ii)and (iii) hereof shall in no event exceed
Thirty Five Million dollars ($ 35,000,000).
(b) Lender may, in its discretion, from time to time, upon not less than
five (5) days prior notice to Borrower, (i) reduce the lending formula with
respect to Eligible Accounts and Eligible Inventory to the extent that Lender
determines in good faith that: (A) the Dilution with respect to the Accounts for
any period has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels, or (B)
the general creditworthiness of account debtors has declined or (C) the amount
determined pursuant to section 3.1(b)(i)(A) hereof as of the close of any month
is greater than 5% or (ii) reduce the lending formula(s) with respect to
Eligible Inventory to the extent that Lender determines that: (A) the number of
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days of the turnover of the Inventory for any period has changed in any material
respect or (B) the liquidation value of the Eligible Inventory, or any category
thereof, has decreased, or (C) the nature and quality of the Inventory has
deteriorated. In determining whether to reduce the lending formula(s), Lender
may consider events, conditions, contingencies or risks which are also
considered in determining Eligible Accounts, Eligible Inventory or in
establishing Availability Reserves. Lender anticipates that any reduction on
account of a determination by Lender under Section 2.1(b)(i)(C) hereof will be
at a rate which is not less than twice the percentage determined thereunder.
(c) Except in Lender's discretion, the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Maximum Credit. In the event that the outstanding amount of any component of
the Loans, or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations exceed the amounts available under the lending formulas, the
sublimits for Letter of Credit Accommodations set forth in Section 3.2(d) or the
Maximum Credit, as applicable, such event shall not limit, waive or otherwise
affect any rights of Lender in that circumstance or on any future occasions and
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Borrower shall, upon demand by Lender, which may be made at any time or from
time to time, immediately repay to Lender the entire amount of any such
excess(es) for which payment is demanded.
(d) Lender may treat the then undrawn amounts of outstanding Letter of
Credit Accommodations for the purpose of purchasing Eligible Inventory as
Revolving Loans to the extent Lender is in effect basing the issuance of the
Letter of Credit Accommodations on the Value of the Eligible Inventory being
purchased with such Letter of Credit Accommodations. In determining the actual
amounts of such Letter of Credit Accommodations to be so treated for purposes of
the sublimit, the outstanding Revolving Loans and Availability Reserves shall be
attributed first to any components of the lending formulas in Section 3.1(a)
that are not subject to such sublimit, before being attributed to the components
of the lending formulas subject to such sublimit.
3.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained herein, at
the request of Borrower, Lender agrees to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Lender and the issuer thereof. Any payments made by
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Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Revolving Loans to
Borrower pursuant to this Section 3.2.
(b) In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations Borrowers shall
pay to Lender a letter of credit fee at a rate equal to two point five percent
(2.5%) per annum on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, except that Borrower shall
pay to Lender such letter of credit fee, at Lender's option, without notice, at
a rate equal to four point five percent (4.5%) per annum on such daily
outstanding balance for: (i) the period from and after the date of termination
or non-renewal hereof until Lender has received full and final payment of all
Obligations (notwithstanding entry of a judgment against any Borrower) and (ii)
the period from and after the date of the occurrence of an Event of Default for
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so long as such Event of Default is continuing as determined by Lender. Such
letter of credit fee shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of Borrowers to pay
such fee shall survive the termination or non-renewal of this Extension
Agreement.
(c) No Letter of Credit Accommodations shall be available unless on the
date of the proposed issuance of any Letter of Credit Accommodations the
Revolving Loans available to Borrower (subject to the Maximum Credit and any
Availability Reserves) are equal to or greater than: (i) if the proposed Letter
of Credit Accommodation is for the purpose of purchasing Eligible Inventory, the
sum of (A) thirty five percent (35%) of the Value of such Eligible Inventory,
plus (B) freight, taxes, duty and other amounts which Lender estimates must be
paid in connection with such Inventory upon arrival and for delivery to one of
Borrower's locations for Eligible Inventory within the United States of America,
Puerto Rico or the Virgin Islands and (ii) if the proposed Letter of Credit
Accommodation is for any other purpose an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation an Availability Reserve shall be established
in the applicable amount set forth in Section 3.2(c)(i) or Section 3.2(c)(ii).
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(d) Except in Lender's discretion, the amount of all outstanding Letter
of Credit Accommodations and all other commitments and obligations made or
incurred by Lender in connection therewith shall not at any time exceed Ten
Million Dollars ($10,000,000) in the aggregate, included within the overall
Revolving Loans. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrower will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for the
Letter of Credit Accommodations and in either case, the Revolving Loans
otherwise available to Borrower shall not be reduced as provided in Section
3.2(d) to the extent of such cash collateral.
(e) Borrower shall indemnify and hold Lender harmless from and against
any and all losses, claims, damages, liabilities, costs and expenses which
Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent or any other person with respect
to any Letter of Credit Accommodation. Borrower assumes all risks with respect
to the acts or omissions of the drawer under or beneficiary of, or any other
person with respect to, any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed Borrower's agent. Borrower assume all
risks for, and agrees to pay, all foreign, Federal, State and local taxes,
duties and levies relating to any goods subject to any Letter of Credit
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Accommodations and any documents, drafts or acceptances thereunder. Borrowers
hereby releases and holds Lender harmless from and against any acts, waivers,
errors, delays or omissions, whether caused by Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodation. The provisions of this Section 3.2(e) shall survive the payment
of Obligations and the termination or non- renewal of this Extension Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrower any right or authority to pledge the credit of Lender in any manner.
Lender shall have no liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lender unless Lender has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any interpretation made in good faith by Lender, or
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any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of Borrower. Lender shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has occurred and is continuing, (A) approve or resolve any questions of
non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times, (A) grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in Borrower names.
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(g) Any rights, remedies, duties or obligations granted or undertaken
by Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been undertaken by Borrower to Lender and to apply in all
respects to Borrower.
3.3 AVAILABILITY RESERVES. All Revolving Loans otherwise available to
Borrower pursuant to the lending formulas and subject to the Maximum Credit and
other applicable limits hereunder shall be subject to Lender's continuing right
to establish and revise Availability Reserves.
3.4 MAXIMUM CREDIT. Except in Lender's discretion, the aggregate amount
of all of the Loans at any time shall not exceed the Maximum Credit. In the
event that the outstanding amount of any component of the Loans, or the
aggregate amount of the outstanding Loans, exceed the amounts available under
the lending formulas, or the Maximum Credit, as applicable, such event shall not
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limit, waive or otherwise affect any rights of Lender in that circumstance or on
any future occasions and Borrower shall, upon demand by Lender, which may be
made at any time or from time to time, immediately repay to Lender the entire
amount of any such excess(es) for which payment is demanded. The Maximum Credit
shall have the following sublimits : (a) Accounts and Inventory- as stated in
Section 3.1(a)(i) and (ii) hereof and (b) Pledged Cash- as stated in Section
3.1(a)(iii) hereof.
3.5 NOTIONAL CONTRACTS. Lender shall have no obligation to furnish any
Credit Party with any facilities relating to interest rate "caps" or other
hedging vehicle or any notional contract.
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ARTICLE IV
INTEREST AND FEES
In lieu of the interest and fees provided for in the Credit Agreement
and the Consent Agreement Borrower shall pay to Lender interest and fees as
follows:
4.1 INTEREST.
(a) Borrower shall pay to Lender interest on the outstanding principal
amount of the non-contingent Obligations at the Interest Rate. Notwithstanding
any other provision hereof(except Section 4.1(d)(i) in no event shall the
interest payable hereunder be less than six percent (6%) per annum. All interest
accruing hereunder on and after the date of any Event of Default or termination
or non-renewal hereof shall be payable on demand.
(b) Borrower may from time to time request that Prime Rate Loans be
converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from Borrower shall
specify the amount of the Prime Rate Loans which will constitute Eurodollar Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
28
contained herein, three (3) Business Days after receipt by Lender of such
request from Borrower, such Prime Rate Loans shall be converted to Eurodollar
Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be,
PROVIDED THAT, (i) no Event of Default, or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing, (ii) no party hereto shall have sent any notice of termination or
non-renewal of this Extension Agreement, (iii) Borrower shall have complied with
such customary procedures as are established by Lender and specified by Lender
to Borrower from time to time for requests by Borrower for Eurodollar Rate
Loans, (iv) no more than four (4) Interest Periods may be in effect at any one
time, (v) the aggregate amount of the Eurodollar Rate Loans must be in an amount
not less than $10,000,000 or an integral multiple of $1,000,000 in excess
thereof, (iv) the maximum amount of the Eurodollar Rate Loans at any time
requested by Borrower shall not exceed the amount equal to eighty (80%) percent
of the lowest principal amount of the Revolving Loans which it is anticipated
will be outstanding during the applicable Interest Period, in each case as
determined by Lender (but with no obligation of Lender to make such Revolving
Loans) and (vii) Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Lender through the Reference Bank and
can be readily determined as of the date of the request for such Eurodollar Rate
29
Loan by Borrower. Any request by Borrower to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Lender
and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Lender has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice by
Lender to Borrower, convert to Prime Rate Loans in the event that (i) an Event
30
of Default or event which, with the notice or passage of time, or both, would
constitute an Event of Default, shall exist, (ii) this Extension Agreement shall
terminate or not be renewed, or (iii) the aggregate principal amount of the
Prime Rate Loans which have previously been converted to Eurodollar Rate Loans
or existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
Exceed either (A) the aggregate principal amount of the Loans then outstanding,
or (B) the Revolving Loans then available to Borrower under Section 3.1 hereof.
Borrower shall pay to Lender, upon demand by Lender (or Lender may, at its
option, charge any loan account of Borrower) any amounts required to compensate
Lender, the Reference Bank or any participant with Lender for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Lender monthly in arrears
not later than the first day of each calendar month and shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of the
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month in which any such change occurs. In no event shall (i) charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation and if any part of
this Extension Agreement is in contravention of any such law or regulation, such
part or provision shall be deemed amended to conform thereto and (ii) except as
may be required by the preceding subclause (i) the Interest Rate never be less
than six percent (6%) per annum.
4.2 EXTENSION FEE. Borrower shall pay to Lender as an extension fee the
amount of $1,200,000 or 1.5% of the Maximum Credit, whichever is greater, which
shall be fully earned as of the date of execution hereof and payable on the
Extension Agreement Effective Date.
4.3 SERVICING FEE. Borrower shall pay to Lender monthly a servicing fee
in an amount equal to $5,000 in respect of Lender's services for each month (or
part thereof) while this Extension Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.
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4.4 UNUSED LINE FEE. Borrower shall pay to Lender monthly, an unused
line fee at a rate equal to zero point five (0.5%) percent per annum calculated
upon the amount by which $30,000,000 exceeds the average daily principal balance
of the outstanding Revolving Loans and Letter of Credit Accommodations during
the immediately preceding month (or part thereof), while this Extension
Agreement is in effect and for so long thereafter as any of the Obligations are
outstanding, which fee shall be payable on the first day of each month in
arrears.
4.5 LETTER OF CREDIT FEES. Borrower shall pay Lender fees for Letter of
Credit Accommodations as stated in Section 3.2(b) hereof.
4.6 EARLY TERMINATION FEE.
If for any reason (a) this Extension Agreement is terminated prior to
the end of then current term or any renewal term of this Extension Agreement, or
(b) Borrower and NSC fail to enter into the Definitive Loan Agreement or the
Definitive Loan Agreement fails to close (i) prior to the end of the current
term or any renewal term of this Extension Agreement or (ii) on or before
September 30, 2003, or (c) NSC's Plan of Reorganization in the Chapter 11 Case
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(as approved by Lender) is not consummated on or prior to September 30, 2003, in
view of the impracticality and extreme difficulty of ascertaining actual damages
and by mutual agreement of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrower agrees to pay to Lender, on
demand, an early termination fee in the amount set forth below if such
termination or failure is effective in the period indicated:
AMOUNT PERIOD
- ------ ------
(a) $4,000,000 From the Closing Date to and including
the day which is 180 days thereafter,
(b) $2,400,000 From the 181st day after the Closing
Date to and including September 30,
2003.
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Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 11.1(g) 11.1(h) hereof, except if
(a)Lender does not exercise its right to terminate this Extension Agreement, (b)
Lender elects, at its option, to provide financing to Borrower or permit the use
of cash collateral under the Bankruptcy Code and (c)such financing is approved
on terms acceptable to Lender; PROVIDED THAT, such termination fee shall remain
payable as otherwise provided herein. The early termination fee provided for in
this Section 4.6 shall be deemed included in the Obligations. Borrower waives
any claim for reduction of fees whether or not such fees are treated as a
penalty.
4.7 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to Borrower, convert to Prime
Rate Loans in the event that (i) any change in applicable law or regulation (or
the interpretation or administration thereof) shall either (A) make it unlawful
for Lender, the Reference Bank or any participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the Eurodollar
35
Rate Loans, or (B) shall result in the increase in the costs to Lender, the
Reference Bank or any participant of making or maintaining any Eurodollar Rate
Loans by an amount deemed by Lender to be material or (C) reduce the amounts
received or receivable by Lender in respect thereof, by an amount deemed by
Lender to be material or (ii) the cost to Lender, the Reference Bank or any
participant of making or maintaining any Eurodollar Rate Loans shall otherwise
increase by an amount deemed by Lender to be material. Borrower shall pay to
Lender, upon demand by Lender (or Lender may, at its option, charge any loan
account of Borrower) any amounts required to compensate Lender, the Reference
Bank or any participant with Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or expense incurred by reason
of the liquidation or re- employment of deposits or other funds acquired by such
person to make or maintain the Eurodollar Rate Loans or any portion thereof. A
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certificate of Lender setting forth the basis for the determination of such
amount necessary to compensate Lender as aforesaid shall be delivered to
Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections or any other
payments made with the proceeds of collateral, Borrower shall pay to Lender upon
demand by Lender (or Lender may, at its option, charge any loan account of
Borrower) any amounts required to compensate Lender, the Reference Bank or any
participant with Lender for any additional loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of such prepayment
or payment, including without limitation, any loss, cost or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by such person to make or maintain such Eurodollar Rate Loans or any portion
thereof.
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ARTICLE V
GRANT AND PERFECTION OF SECURITY INTEREST
5.1 GRANT OF SECURITY INTEREST. In addition to the Collateral provided
for in the Credit Agreement, Security Documents and other Credit Documents, to
secure payment and performance of all Obligations, Borrower hereby grants to
Lender a continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Lender as security, all personal and real
property and fixtures, and interests in property and fixtures, of Borrower,
whether now owned or hereafter acquired or existing, and wherever located
(together with all other collateral security for the Obligations at any time
granted to or held or acquired by Lender (collectively together with the
Collateral provided for in the Credit Agreement, Security Documents and the
other Financing Agreements the "Collateral"), including the following:
(a) all Accounts;
(b) all general intangibles, including, without limitation, all
Intellectual Property;
(c) all goods, including, without limitation, Inventory and Equipment;
(d) all Real Property and fixtures and all Real Estate Security;
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(e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) all instruments, including, without limitation, all promissory
notes;
(g) all documents;
(h) all deposit accounts;
(i) all letters of credit, banker's acceptances and similar instruments
and including all letter of credit rights;
(j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other collateral, including (i) rights and remedies under or
relating to guaranties, contracts of surety ship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
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(k) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of Borrower, now or hereafter held or received by or
in transit to Lender or at any other depository or other institution from or for
the account of Borrower whether for safekeeping, pledge, custody, transmission,
collection or otherwise;
(l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, all Receivables;
(n) all Records;
(o) the Pledged Cash;
(p) all motor vehicles; and
(q) all products and proceeds of the foregoing in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other collateral.
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5.2 PERFECTION OF SECURITY INTEREST. (a) Borrower irrevocably and
unconditionally authorizes Lender (or its agent) to file at any time and from
time to time such financing statements with respect to the Collateral naming
Lender or its designee as the secured party and Borrower as debtor, as Lender
may require, and including any other information with respect to Borrower or
otherwise required by Article 9 of the Uniform Commercial Code of such
jurisdiction as Lender may determine, together with any amendments and
continuations with respect thereto, which authorization shall apply to all
financing statements filed on, prior to or after the date hereof. Borrower
hereby ratifies and approves all financing statements naming Lender or its
designee as secured party and Borrower as debtor with respect to the Collateral
(and any amendments with respect to such financing statements) filed by or on
behalf of Lender (or the Banks) prior to the date hereof and ratifies and
confirms the authorization of Lender (or the Banks) to file such financing
statements (and amendments, if any). Borrower hereby authorizes Lender to adopt
41
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Lender or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements, under any of the Security Documents or otherwise, the filing of such
financing statement shall nonetheless be deemed authorized by Borrower to the
extent of the Collateral included in such description and it shall not render
the financing statements ineffective as to any of the Collateral or otherwise
affect the financing statement as it applies to any of the Collateral. In no
event shall Borrower at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming the Banks
or Lender or its designee as secured party and Borrower as debtor.
5.3 ADDITIONAL SECURITY COVENANTS. (a) Borrower does not have any
chattel paper (whether tangible or electronic) or instruments as of the date
hereof, except as set forth in Schedule 5.3(a) hereto. In the event that
Borrower shall be entitled to or shall receive any chattel paper or instrument
after the date hereof, Borrower shall promptly notify Lender thereof in writing.
Promptly upon the receipt thereof by or on behalf of any Borrower (including by
any agent or representative), Borrower shall deliver, or cause to be delivered
42
to Lender, all tangible chattel paper and instruments that Borrower has or may
at any time acquire, accompanied by such instruments of transfer or assignment
duly executed in blank as Lender may from time to time specify in each case
except as Lender may otherwise agree. At Lender's option, Borrower shall, and
Lender may at any time on behalf of Borrower, cause the original of any such
instrument or chattel paper to be conspicuously marked in a form and manner
acceptable to Lender with the following legend referring to chattel paper or
instruments as applicable: "This _______________________ ____________________ is
subject to the security interest of Westernbank Puerto Rico and any sale,
transfer, assignment or encumbrance of this _________________________
___________________ violates the rights of such secured party".
(b) In the event that Borrower shall at any time hold or acquire an
interest in any electronic chattel paper or any "transferable record" (as such
term is defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), Borrower shall
promptly notify Lender thereof in writing. Promptly upon Lenders request,
Borrower shall take, or cause to be taken, such actions as Lender may request to
give Lender control of such electronic chattel paper under Section 9-105 of the
43
UCC and control of such transferable record under Section 201 of the Federal
Electronic Signatures in Global and National Commence Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such
jurisdiction.
(c) Borrower does not have any deposit accounts as of the date hereof,
except as set forth in Schedule 8.8 hereto. Borrower shall not, directly or
indirectly, after the date hereof open, establish or maintain any deposit
account unless each of the following conditions is satisfied: (i) Lender shall
have received not less than fifteen (15) Business Days prior written notice of
the intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Lender the name of
the account, the owner of the account, the name and address of the bank at which
such account is to be opened or established, the individual at such bank with
whom such Lender is dealing and the purpose of the account and Lender shall have
consented thereto in writing in accordance with Section 15.11 hereof, (ii) the
44
bank where such account is opened or maintained shall be reasonably acceptable
to Lender and (iii) on or before the opening of such deposit account, Borrower
shall as Lender may specify, either (A) deliver to Lender a Deposit Account
Control Agreement in form and substance satisfactory to Lender with respect to
such deposit account duly authorized, executed and delivered by such Person and
the bank at which such deposit account is opened and maintained or (B) arrange
for Lender to become the customer of the bank with respect to the deposit
account on terms and conditions acceptable to lender. The terms of this
subsection 5.3(c) shall not apply to deposit accounts specifically and
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower's salaried employees.
(d) Borrower does not own or hold, directly or indirectly, beneficially
or as record owner or both, any investment property, as of the date hereof, or
have any investment account, securities account, commodity account or other
similar account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the date hereof, in each case
except as set forth in Schedule 5.3(d) hereto. In the event that Borrower shall
be entitled to or shall at any time after the date hereof hold or acquire any
certificated securities, Borrower shall promptly endorse, assign and deliver the
same to Lender, accompanied by such instruments of transfer or assignment duly
executed in blank as Lender may from time to time specify. If any securities now
45
owned or hereafter acquired by Borrower are uncertificated and are issued to
Borrower or its nominee directly by the issuer thereof, Borrower shall
immediately notify lender thereof and shall as Lender may specify, either (i)
cause the issuer to agree to comply with instructions from Lender as to such
securities, without further consent of any of Borrower or such nominee, or (ii)
arrange for Lender to become the registered owner of the securities. Borrower
shall not, directly or indirectly, after the date hereof open, establish or
maintain any investment account, securities account, commodity account or any
other similar account (other than a deposit account) with any securities
intermediary or commodity intermediary unless each of the following conditions
is satisfied (i) Lender shall have received not less than fifteen (15) Business
Days prior written notice of the intention of Borrower to open or establish such
account which notice shall specify in reasonable detail and specificity
acceptable to Lender the name of the account, the owner of the account, the name
and address of the securities intermediary or commodity intermediary at which
such account is to be opened or established, the individual at such intermediary
with whom Borrower is dealing and the purpose of the account and Lender shall
have consented thereto in writing in accordance with Section 15.11 hereof (ii)
the securities intermediary or commodity intermediary (as the case may be) where
such account is opened or maintained shall be acceptable to Lender, and (iii) on
or before the opening of such investment account, securities account or other
46
similar account with a securities intermediary or commodity intermediary, such
person shall as Lender may specify, either (A) execute and deliver, and cause to
be executed and delivered to Lender, a Pledge Agreement and an Investment
Property Control Agreement in form and substance satisfactory to Lender with
respect thereto duly authorized, executed and delivered by Borrower and such
securities intermediary or commodity intermediary or (B) arrange for Lender to
become the entitlement holder with respect to such investment property on terms
and conditions acceptable to Lender.
(e) Borrower is not the beneficiary or otherwise entitled to any right
to payment under any letter of credit, banker's acceptance or similar instrument
as of the date hereof. In the event that Borrower shall be entitled to or shall
receive any right to payment under any Letter of Credit banker's acceptance or
47
any similar instrument, whether as beneficiary thereof or otherwise after the
date hereof, Borrower shall promptly notify Lender thereof in writing. Borrower
shall immediately, as of Lender may specify, either (i) deliver, or cause to be
delivered to Lender, with respect to any such letter of credit, banker's
acceptance or similar instrument, the written agreement of the issuer and any
other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Lender consenting to the assignment of the proceeds of the
letter of credit to Lender by Borrower and agreeing to make all payment thereon
directly to Lender or as Lender may otherwise direct or (ii) cause Lender to
become, at such person's expense, the transferee beneficiary of the letter of
credit, banker's acceptance or similar instrument (as the case may be.
(f) Borrower does not have any commercial tort claims as of the date
hereof, except as set forth on Schedule 5.3(f) hereto. In the event that
Borrower shall at any time after the date hereof have any commercial tort
claims, Borrower shall promptly notify Lender thereof in writing, which notice
shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by Borrower to Lender
48
of a security interest in such commercial tort claim (and the proceeds thereof).
In the event that such notice does not include such grant of a security
interest, the sending thereof by Borrower to Lender shall be deemed to
constitute such grant to Lender. Upon the sending of such notice, any commercial
tort claim described therein shall constitute part of the Collateral and shall
be deemed included therein. Without limiting the authorization of Lender
provided herein or otherwise arising by the execution by Borrower of this
Extension Agreement or any of the other Financing Agreements, Lender is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Lender or its designee as secured party and Borrower as
debtor, or any amendments to any financing statements, covering any such
commercial tort claim as Collateral. In addition, each Borrower shall promptly
upon request, execute and deliver, or cause to be executed and delivered, to
Lender such other agreements, documents and instruments as Person may require in
connection with such commercial tort claim.
49
(g) Borrower represents and warrant to Lender that it does not have any
goods, documents of title or other collateral in the custody, control or
possession of a third party as of the date hereof, except for goods located in
the United States in transit to a location of Borrower permitted herein in the
ordinary course of business of Borrower in the possession of the carrier
transporting such goods. In the event that any goods, documents of title or
other collateral are at any time after the date hereof in the custody, control
or possession of any other person or such carriers, Borrower shall promptly
notify Lender thereof in writing; PROVIDED THAT ,as to such carriers Borrowers
need only notify Lender on an aggregate basis. Promptly upon Lender's request,
Borrower shall deliver a Collateral Access Agreement in form and substance
satisfactory to Lender, duly authorized, executed and delivered by such person
and Borrower.
(h) Borrower shall take any other actions reasonably requested by
Lender from time to time to cause the attachment, perfection and first priority
of, and the ability of Lender to enforce, the security interest of Lender in any
and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing, financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
50
Borrower's signature thereon is required therefor, (ii) causing Lender's name to
be noted as secured party on any certificate of title for a titled good if such
notation is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, the security interest Lender in such Collateral, (iii)
complying with any provision of any statute, regulation or treaty of the United
State, Puerto Rico and the United States Virgin Islands as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, the security interest of Lender in
such Collateral, (iv) obtaining the consents and approvals of any governmental
authority or third party, including, without limitation, any consent of any
licensor, lessor or other person obligated on Collateral, and taking all actions
required by any earlier versions of the UCC or by other law, as applicable in
any relevant jurisdiction and (v) transferring any and all deposit accounts and
investment property to a financial institution or account specified by Lender.
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ARTICLE VI
COLLECTION AND ADMINISTRATION
6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Lender's customary practices as in effect from time to time.
6.2 STATEMENTS. Lender shall render to Borrower each month a statement
setting forth the balance in the Borrower's loan account(s) maintained by Lender
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrowers and conclusively binding
52
upon Borrower as an account stated except to the extent that Lender receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.
6.3 COLLECTION OF ACCOUNTS.
(a) Borrowers shall establish and maintain, at its expense, blocked
accounts or lock boxes and related blocked accounts (in either case, "Blocked
Accounts"), as Lender may specify, with such banks as are acceptable to Lender
into which Borrowers shall promptly deposit and direct its account debtors to
53
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory, Equipment or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner. The banks at which
the Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Lender, providing that all items received or deposited
in the Blocked Accounts are the property of Lender, that the depository bank has
no lien upon, or right to setoff against, the Blocked Accounts, the items
received for deposit therein, or the funds from time to time on deposit therein
and that the depository bank will wire, or otherwise transfer, in immediately
available funds, on a daily basis, all funds received or deposited into the
Blocked Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account"). Borrower agrees that all
payments made to such Blocked Accounts or other funds received and collected by
Lender, whether on the Accounts or as proceeds of Inventory, Equipment or other
Collateral or otherwise shall be the property of Lender.
(b) For purposes of calculating the amount of the Loans available to
Borrower, such payments will be applied (conditional upon final collection) to
the Obligations on the business day of receipt by Lender of immediately
available funds in the Payment Account provided such payments and notice thereof
are received in accordance with Lender's usual and customary practices as in
effect from time to time and within sufficient time to credit Borrower's loan
account on such day, and if not, then on the next business day. For the purposes
of calculating interest on the Obligations, payments or other funds received
54
will be applied (conditional upon final collection) to the Obligations three (3)
business day(s) following the date of receipt of immediately available funds by
Lender in the Payment Account provided such payments or other funds and notice
thereof are received in accordance with Lender's usual and customary practices
as in effect from time to time and within sufficient time to credit Borrower's
loan account on such day, and if not, then on the next business day.
(c) Borrower and all of its affiliates, subsidiaries, shareholders,
directors, employees or agents shall, acting as trustee for Lender, receive, as
the property of Lender, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Accounts or other Collateral which come into
their possession or under their control and immediately upon receipt thereof,
shall deposit or cause the same to be deposited in the Blocked Accounts, or
remit the same or cause the same to be remitted, in kind, to Lender. In no event
shall the same be commingled with Borrower's own funds. Borrower agrees to
reimburse Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
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transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of
Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall
survive the termination or non-renewal of this Extension Agreement.
(d) In addition to the account referred to in Section 6.3(a) hereof,
Borrower may establish and maintain, at its expense, deposit account
arrangements and merchant payment arrangements with the banks set forth on
Schedule 8.8 and after compliance with the provisions of Section 5.3(c) hereof,
such other banks as Borrower may hereafter select as are acceptable to Lender.
The banks set forth on Schedule 8.8 constitute all of the banks with whom
Borrower has deposit account arrangements and merchant payment arrangements as
of the date hereof and identifies each of the deposit accounts at such banks and
describes the nature of the use of such deposit account by Borrower. Borrower
shall deposit all proceeds from sales of Inventory in every form (including,
without limitation, cash, checks, credit card sales drafts, credit card sales or
charge slips or receipts and other forms of daily store receipts and the
collections and proceeds thereof in whatever form) from each store location of
Borrower and all proceeds of Collateral, on each business day into the deposit
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accounts of Borrower used solely for such purpose and identified to each retail
store and location as set forth on Schedule 8.8. Borrower shall irrevocably
authorize and direct in writing, in form and substance satisfactory to Lender,
each of the banks into which proceeds from sales of Inventory from each store
location of Borrowers and any and all other proceeds of Collateral are at any
time deposited as provided above to send by wire transfer on a daily basis, to
an account or accounts designated by Lender, all funds deposited in such
account, and shall irrevocably authorize and direct in writing its account
debtors, Credit Card Issuers and Credit Card Processors to directly remit
payments on its Accounts, Credit Card Receivables and all other payments
constituting proceeds of Inventory and collections to the Blocked Accounts
described in Section 6.3(a) above.
6.4 PAYMENTS. All Obligations shall be payable to the Payment Account
as provided in Section 6.3 or such other place as Lender may designate from time
to time. Lender may apply payments received or collected from Borrower or for
the account of Borrower (including the monetary proceeds of collections or of
realization upon any Collateral) to such of the Obligations, whether or not then
due, in such order and manner as Lender determines. At Lender's option, all
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principal, interest, fees, costs, expenses and other charges provided for in
this Extension Agreement or the Credit Documents or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower. Borrower
shall make all payments to Lender on the Obligations free and clear of, and
without deduction or withholding for or on account of, any setoff, counterclaim,
defense, duties, taxes, levies, imposts, fees, deductions, withholding,
restrictions or conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations, Lender
is required to surrender or return such payment or proceeds to any Person for
any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Lender. Borrower shall be liable to pay to Lender, and does hereby indemnify and
hold Lender harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any contrary
action which may be taken by Lender in reliance upon such payment or proceeds.
This Section 6.4 shall survive the payment of the Obligations and the
termination or non-renewal of this Extension Agreement.
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6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the Loans
and provide Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be the Chief Executive Officer
or Chief Financial Officer of Borrower or other authorized person or, at the
discretion of Lender, if such Loans are necessary to satisfy any Obligations.
All requests for Loans, hereunder shall specify the date on which the requested
advance is to be made or established (which day shall be a business day) and the
amount of the requested Loan and Letter of Credit Accommodation. Requests
received before 11:00 a.m. Atlantic Standard Time on a business day shall be
processed on that day. Requests received after 11:00 a.m. Atlantic Standard time
on any day shall be deemed to have been made as of the opening of business on
the immediately following business day. All Loans and Letter of Credit
Accommodations under this Extension Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrower when
deposited to the credit of Borrower or otherwise disbursed or established in
accordance with the instructions of Borrower or in accordance with the terms and
conditions of this Extension Agreement.
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6.6 USE OF PROCEEDS. Borrower shall use the initial proceeds of the
Loans provided by Lender to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Lender on or about the date hereof and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Extension Agreement, the other Financing Agreements and the acquisition of the
Purchased Assets. All other Loans and Letter of Credit Accommodations made by
Lender to Borrower pursuant to the provisions hereof shall be used by Borrower
only for general operating, working capital and other proper corporate purposes
of Borrower not otherwise prohibited by the terms hereof. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
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ARTICLE VII
COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular basis as
required by Lender, a schedule of Accounts, sales made, credits issued and cash
received; (b) on a monthly basis or more frequently as Lender may request, (i)
perpetual inventory reports, (ii) inventory reports by category, (iii) aging of
accounts payable, (iv) a report of any Inventory shrinkage or Equipment which
has been stolen, and (v) a report of any Equipment which has been sold,
exchanged or otherwise transferred or disposed of, (c) upon Lender's request,
(i) copies of customer statements and credit memos, remittance advices and
reports, and copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and (iii) copies of purchase orders, invoices
and delivery documents for Inventory and Equipment acquired by Borrowers; (d)
aging of accounts receivable on a weekly basis or more frequently as Lender may
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request; and (e) such other reports as to the Collateral as Lender shall request
from time to time. If any of Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrowers hereby irrevocably authorize such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Lender and
to follow Lender's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrower shall notify Lender promptly of: (i) any material delay in
Borrower's performance of any of its obligations to any account debtor or the
assertion of any claims, offsets, defenses or counterclaims by any account
debtor, or any disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information relating to the
financial condition of any account debtor and (iii) any event or circumstance
which, to Borrower's knowledge would cause Lender to consider any then existing
Accounts as no longer constituting Eligible Accounts. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor without Lender's consent, except in the ordinary course of
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Borrower's business in accordance with practices and policies previously
disclosed in writing to Lender. So long as no Event of Default exists or has
occurred and is continuing, Borrower shall have the right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with any account debtor.
At any time that an Event of Default exists or has occurred and is continuing,
Lender shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrower to deliver any other
information to Lender, Borrower shall promptly report to Lender any return of
Inventory by any one account debtor if the inventory so returned in such case
has a value in excess of $10,000. At any time that Inventory is returned,
reclaimed or repossessed, the Account (or portion thereof) which arose from the
sale of such returned, reclaimed or repossessed Inventory shall not be deemed an
Eligible Account. In the event any account debtor returns Inventory when an
Event of Default exists or has occurred and is continuing, Borrower shall, upon
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Lender's request, (i) hold the returned Inventory in trust for Lender, (ii)
segregate all returned Inventory from all of its other property, (iii) dispose
of the returned Inventory solely according to Lender's instructions, and (iv)
not issue any credits, discounts or allowances with respect thereto without
Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any invoice
delivered to Lender or schedule thereof delivered to Lender shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Lender in accordance with
this Agreement and except for credits, discounts, allowances or extensions made
or given in the ordinary course of Borrower's business in accordance with
practices and policies previously disclosed to Lender, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Lender in accordance with
the terms of this Agreement and (v) none of the transactions giving rise thereto
will violate any applicable Commonwealth, State or Federal laws or regulations,
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all documentation relating thereto will be legally sufficient under such laws
and regulations and all such documentation will be legally enforceable in
accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(e) Borrower shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments which Borrower now owns or may at any time acquire
immediately upon Borrower's receipt thereof, except as Lender may otherwise
agree.
(f) Lender may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Lender and that Lender has a security interest
therein and Lender may direct any or all accounts debtors to make payment of
Accounts directly to Lender, (ii) extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
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any terms or conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and Lender shall not be
liable for its failure to collect or enforce the payment thereof nor for the
negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Lender may deem necessary or desirable for the protection
of its interests. At any time that an Event of Default exists or has occurred
and is continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Accounts and such other obligations have
been assigned to Lender and are payable directly and only to Lender and Borrower
shall deliver to Lender such originals of documents evidencing the sale and
delivery or lease of goods or the performance of services giving rise to any
Accounts as Lender may require.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily or weekly
withdrawals therefrom and additions thereto; (b) Borrower shall conduct (i) a
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physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and (ii) test
counts of inventory at any time or times as Lender may request utilizing a third
party service therefore designated by Lender, and promptly following such
physical inventory and test counts of inventory shall supply Lender with a
report in the form and with such specificity as may be reasonably satisfactory
to Lender concerning such physical count and test counts; (c) Borrower shall not
remove any Inventory from the locations set forth or permitted herein, without
the prior written consent of Lender, except for sales of Inventory in the
ordinary course of Borrower's business and except to move Inventory directly
from one location set forth or permitted herein to another such location; (d)
upon Lender's request, Borrower shall, at its expense, no more than four times
in any twelve (12) month period, but at any time or times as Lender may request
on or after an Event of Default, deliver or cause to be delivered to Lender
written reports or appraisals as to the Inventory in form, scope and methodology
acceptable to Lender and by an appraiser acceptable to Lender, addressed to
Lender or upon which Lender is expressly permitted to rely; (e) Borrower shall
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produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including the requirements of the Federal Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto); (f) Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (g) except in the ordinary course of business and then only on prompt
reporting thereof to Lender Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate Borrower to repurchase such Inventory; (h) Borrower shall keep the
Inventory in good and marketable condition, subject to normal deterioration of
produce, deli and bakery food products, expired foods, and products with short
expiration dates or shelf-life; and (i) except in the ordinary course of
business and then only on prompt reporting thereof to Lender, Borrower shall
not, without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval.
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7.4 EQUIPMENT COVENANTS. With respect to the Equipment: (a) upon
Lender's request, Borrower shall, at its expense, at any time or times as Lender
may request on or after an Event of Default, deliver or cause to be delivered to
Lender written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Lender and by an appraiser acceptable to Lender; (b)
Borrower shall keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted); (c) Borrower shall use the
Equipment with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with all applicable laws; (d) the
Equipment is and shall be used in Borrower's business and not for personal,
family, household or farming use; (e) Borrower shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Borrower or to move Equipment directly from one location set forth
or permitted herein to another such location and except for the movement of
motor vehicles used by or for the benefit of Borrower in the ordinary course of
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business; (f) the Equipment is now and shall remain personal property and
Borrower shall not permit any of the Equipment to be or become a part of or
permanently affixed to real property; and (g) Borrower assumes all
responsibility and liability arising from the use of the Equipment.
7.5 POWER OF ATTORNEY. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or chattel paper or other proceeds of
Inventory or other Collateral, (ii) enforce payment of Accounts by legal
proceedings or otherwise, (iii) exercise all of Borrower's rights and remedies
to collect any Account or other Collateral, (iv) sell or assign any Account upon
such terms, for such amount and at such time or times as the Lender deems
advisable, (v) settle, adjust, compromise, extend or renew an Account or any
Chattel Paper (vi) discharge and release any Account, (vii) prepare, file and
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sign Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor, (viii) notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Lender, and open and dispose of all mail addressed to Borrower, and (ix) do all
acts and things which are necessary, in Lender's determination, to fulfill
Borrowers' obligations under the Credit Documents, this Extension Agreement and
the other Financing Agreements and (b) at any time to (i) take control in any
manner of any item of payment or proceeds thereof, (ii) have access to any
lockbox or postal box into which Borrower's mail is deposited, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof and deposit the
same in the Lender's account for application to the Obligations, (iv) endorse
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (v) sign Borrower's name on any verification of
Accounts and notices thereof to account debtors and (vi) execute in Borrower's
name and file any UCC financing statements or amendments thereto. Borrowers
hereby release Lender and its officers, employees and designees from any
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liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Lender's own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.
7.6 RIGHT TO CURE. Lender may, at its option, (a) cure any default by a
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge Borrower's
account therefor, such amounts to be repayable by Borrower on demand. Lender
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of
Borrower. Any payment made or other action taken by Lender under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
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7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at
the cost and expense of Borrower (a) Lender or its designee shall have complete
access to all of Borrowers's premises during normal business hours and after
notice to Borrower or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrowers' and each
Credit Party's books and records, including the Records, and (b) Borrower shall
promptly furnish to Lender such copies of such books and records or extracts
therefrom as Lender may request, and (c) use during normal business hours such
of Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Accounts and realization of other
Collateral.
7.8 INVENTORY SUBJECT TO PACA, ETC. (a) Borrower shall pay, on or
before the due date thereof, all accounts payable arising from the purchase by
Borrower of any Inventory which is subject to or covered by, or with respect to
which the seller is protected under, PACA or PASA and, shall not permit (i) any
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circumstances to exist which would subject Lender to any liability and (ii)
Lender to become liable, to any supplier or other third party with respect to
such Inventory.
(b) Borrower shall furnish to Lender, on each Thursday, during the term
of this Extension Agreement, a Certificate which, as of the proceeding Saturday,
contains the following and such other information or matters as Lender may
request:
(i) The value and description of all of Borrowers' Inventory subject
to PACA or PASA;
(ii) The amount and aging of accounts payable arising from Inventory
purchased subject to PACA or PASA;
(iii) Payments made during the preceding week of accounts payable
arising from Inventory purchased subject to PACA or PASA;
(iv) A statement that no account payable of Borrower arising from the
purchase of Inventory subject to PACA or PASA is unpaid after the due date
thereof or if any are unpaid past the due date, identifying such payables in
detail; and
(v) A statement that no Borrower has received any notice from any
Person of intent to preserve any trust established under PACA or PASA or if any
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such notice has been received describing in detail the transaction involved,
accompanied by a copy of such notice.
(c) Lender may, at its option at any time, (a) pay and discharge any
accounts payable of Borrower arising from the purchase of any Inventory subject
to PACA or PASA, and discharge any liens, security interests other encumbrances
or trusts at any time levied on or existing with respect to such inventory or
the proceeds thereof and (b) pay any amount, incur any expense or perform any
act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the rights of Lender with respect thereto or so that
Lender does not become liable to any supplier or other third party with respect
thereto. Lender may add any amounts so expended to the Obligations and charge
Borrower's account therefor, such amounts to be repayable by Borrower on demand.
Lender shall be under no obligation to make such payment or effect such
discharge and shall not, by doing so, be deemed to have assumed any obligation
or liability of Borrower. Any payment made or other action taken by Lender under
this Section 7.8 shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
(d) Lender may, in its discretion, add to the amount of Availability
Reserves, amounts which it deems appropriate to reserve for liability under PACA
or PASA.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Borrower, NSC and Xtra hereby, jointly and severally represent and
warrant to Lender the following (which shall survive the execution and delivery
of this Agreement), the truth and accuracy of which are a continuing condition
of the making of Loans and providing Letter of Credit Accommodations by Lender
to Borrower:
8.1 CREDIT DOCUMENTS. Except as set forth on Schedule 8.1 hereto all
representations and warranties set forth in the Credit Agreement or in any of
the other Credit Documents are true and correct as of the date hereof, except
when made as of a specified date and as to any such representation and
warranties same were true and correct as of the date specified.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to the Borrower, NSC and any other Credit Party which have
been or may hereafter be delivered by Borrower to Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the results
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of operation of Borrower and such Person as at the dates and for the periods set
forth therein. Except as disclosed in any interim financial statements furnished
by Borrower to Lender prior to the date of this Extension Agreement, there has
been no material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrower, NSC or any other Credit Party,
since the date of the most recent audited financial statements furnished by
Borrower to Lender prior to the date of this Extension Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief executive
office of Borrower, NSC and each other Credit Party and each such Person's
Records concerning Accounts are located only at the address set forth below and
their respective only other places of business and the only other locations of
Collateral, if any, are the addresses set forth in the Information Certificate.
The Information Certificate correctly identifies any of such locations which are
not owned by Borrower and any other Credit Party and sets forth the owners
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and/or operators thereof and to the best of Borrowers knowledge, the holders of
any mortgages on such locations.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Lender under this Extension Agreement, the other Financing
Agreements and the Credit Documents constitute valid and perfected first
priority liens and security interests in and upon the Collateral subject only to
those non material liens indicated on Part 1 of Schedule 8.4 hereto the
existence of which has previously been approved, in writing by Lender. Borrower
has good and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted the Banks and to Lender and such others as are
specifically listed on Parts 1 and 2 of Schedule 8.4 hereto.
8.5 TAX RETURNS. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
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to Lender). All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, Commonwealth, county, local, foreign and other taxes whether or
not yet due and payable and whether or not disputed.
8.6 LITIGATION. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to the
best of Borrower's knowledge threatened, against or affecting Borrower, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Borrower's knowledge threatened, against
Borrower or its assets or goodwill, or against or affecting any transactions
contemplated by this Extension Agreement, which if adversely determined against
Borrower would result in any material adverse change in the assets, business or
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prospects of Borrower or would impair the ability of Borrower to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Lender to enforce any Obligations or realize upon any
Collateral.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Except in
respect of the Interest Payment Defaults, the Financial Covenant Defaults, the
filing of the Chapter 11 Case and the proceedings identified in items 87 and 90
of the Schedule of Litigation attached to the Information Certificate, Borrower
is not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and Borrower is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, State or local governmental authority.
8.8 BANK ACCOUNTS. All of the deposit accounts, merchant payment
accounts, investment accounts or other accounts in the name of or used by
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Borrower maintained at any bank or other financial institution are set forth on
Schedule 8.8 hereto.
8.9 ACCURACY AND COMPLETENESS OF INFORMATION. All information furnished
by or on behalf of Borrower, NSC or any other Credit Party in writing to Lender
in connection with this Extension Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse affect on the business, assets
or prospects of Borrower, which has not been fully and accurately disclosed to
Lender in writing.
8.10 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Extension Agreement or any of the other Financing
Agreements or any of the Credit Documents shall survive the execution and
delivery of this Extension Agreement and shall be deemed to have been made again
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to Lender on the date of each additional borrowing or other credit accommodation
hereunder and shall be conclusively presumed to have been relied on by Lender
regardless of any investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Lender.
8.11 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES. Each
Borrower, except Pueblo, and NSC is a corporation duly organized and in good
standing under the laws of its state of incorporation, and Pueblo is a limited
liability company duly organized and in good standing under the laws of its
state of organization and each is duly qualified as a foreign corporation or
limited liability company and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on a Borrower's or NSC's financial condition, results of
operation or business or the rights of Lender in or to any of the Collateral.
The execution, delivery and performance of this Agreement, the other Financing
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Agreements and the transactions contemplated hereunder and thereunder are all
within Borrowers' and NSC's corporate or limited liability company powers, have
been duly authorized and are not in contravention of law or the terms of any
Borrower's or NSC's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, agreement or undertaking to
which any Borrower or NSC is a party or by which Borrower or NSC or its property
are bound. This Extension Agreement and the other Financing Agreements and the
Credit Documents constitute legal, valid and binding obligations of Borrowers
and NSC enforceable in accordance with their respective terms. No Borrower or
NSC has any subsidiaries except as set forth on the Information Certificate.
8.12 CAPITALIZATION.
(a) All of the issued and outstanding equity interests of Pueblo and
shares of capital stock of each other Credit Party are directly and beneficially
owned and held by those persons specified on Schedule 8.12 hereto, in the
amounts specified therein and all of such equity interests and shares of stock
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have been duly issued and are fully paid and non- assessable, free and clear of
all claims, liens, pledges and encumbrances of any kind except those in favor of
the Banks.
(b) Except for the Borrowers, NSC has no subsidiaries and each of
Pueblo Markets, Inc, Pueblo Super Videos, Inc., Xtra Drugstores, Inc. and Pueblo
Caribbean Videos, Inc. have been dissolved.
8.13 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.13 hereto, neither (i) Borrowers
nor (ii) any other Credit Party with respect to any Real Property including any
Real Estate Security, has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any license, permit, certificate,
approval or similar authorization thereunder and the operations of Borrower and
each other Credit Party complies in all material respects with all Environmental
Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder.
(b) Except as set forth on Schedule 8.13 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
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notice by any governmental authority or any other person nor is any pending or
to the best of Borrower's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
(i) Borrowers or (ii) any other Credit Party with respect to any Real Property
including any Real Estate Security or the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which
affects any Borrower or any such Credit Party with respect to any Real Property
including any Real Estate Security or any Borrower's or Credit Party's business,
operations or assets or any properties at which Borrower has transported, stored
or disposed of any Hazardous Materials.
(c) Neither (i) Borrowers nor (ii) any other Credit Party with respect
to any Real Property including any Real Estate Security, has any material
liability (contingent or otherwise) in connection with a release, spill or
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discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Borrowers and each Credit Party has all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of Borrower or such Credit Party under
any Environmental Law and all of such licenses, permits, certificates, approvals
or similar authorizations are valid and in full force and effect.
8.14 TRADE NAMES. Schedule 8.14 hereto sets forth all trade names
owned or used by Borrowers and each other Credit Party.
ARTICLE IX
CONDITIONS PRECEDENT
9.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to the purchase
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by Lender of the Purchased Assets and Lender making the initial Loans, and
providing the initial Letter of Credit Accommodations hereunder:
(a) All of the representations and warranties of Borrower, NSC and each
other Credit Party contained herein, in any of the other Financing Agreements
and in the Credit Documents shall be true and correct on and as of the Closing
Date, except when made as of a specified date and as to such representations and
warranties same shall have been true and correct as of the date specified and
Lender shall have received a certificate of the Chief Executive Officer and
Chief Financial Officer of Borrower and NSC to such effect.
(b) Borrowers and NSC shall have complied with all conditions and
performed all covenants to be performed by any of them at a prior to the Closing
Date and Lender shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of Borrower and NSC to such effect.
(c) No event shall have occurred which with or without the giving of
notice or passage of time or both would constitute an Event of Default.
(d) Lender shall have received, in form and substance satisfactory to
Lender, (i) evidence that Lender has valid, perfected and first priority
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security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Credit
Party in respect thereof, including the Real Estate Security subject only to the
security interests and liens permitted by Section 15.7 hereof or in the other
Financing Agreements; and (ii) all releases, terminations and such other
documents as Lender may request to evidence and effectuate the termination by
others (except for the Banks and with respect to capitalized lease obligations
of Borrowers not in excess of $12,300,000, in the aggregate) who have provided
financial accommodations to Borrower of their respective financing arrangements
with Borrowers and the termination and release by it or them, as the case may
be, of any interest in and to any assets and properties of Borrower and
each other Credit Party, duly authorized, executed and delivered by it or each
of them, including, but not limited to, (A) UCC termination statements for all
UCC financing statements previously filed by it or any of them or their
predecessors, as secured party and Borrower or any Credit Party, as debtor and
(B) satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by Borrower or any Credit Party in favor of others, (except the
Banks) in form acceptable for recording in the appropriate government office.
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(e) All requisite corporate and other actions and proceedings in
connection with this Extension Agreement and the other Financing Agreements
shall be satisfactory in form and substance to Lender, and Lender shall have
received all information and copies of all documents, including records of
requisite corporate and other actions and proceedings which Lender may have
requested in connection therewith, such documents where requested by Lender or
its counsel to be certified by appropriate corporate officers or governmental
authorities.
(f) No material adverse change shall have occurred in the assets,
business or prospects of Borrower or any other Credit Party since the date of
Lender's latest field examination and no change or event shall have occurred
which would impair the ability of any Borrower or any Credit Party to perform
its obligations hereunder or under any of the other Financing Agreements to
which it is a party or of Lender to enforce the Obligations or realize upon the
Collateral.
(g) Lender shall have completed a field review of the Records and such
other information with respect to the Collateral as Lender may require to
determine the amount of Revolving Loans available to Borrower, the results of
which shall be satisfactory to Lender, not more than three (3) business days
prior to the Closing Date hereof.
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(h) Lender shall have received, in form and substance satisfactory to
Lender, all consents, waivers, acknowledgments and other agreements from third
persons which Lender may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Extension Agreement and the other
Financing Agreements, including acknowledgments by lessors, mortgagees and
warehousemen of Lender's liens and security interests in the Collateral, waivers
by such persons of any security interests, liens or other claims by such persons
to the Collateral and agreements permitting Lender access to, and the right to
remain on, the premises to exercise its rights and remedies and otherwise deal
with the Collateral.
(i) Lender shall have received, in form and substance satisfactory to
Lender, such opinion letters of counsel to Borrowers and NSC with respect to the
Financing Agreements, and the security interests and liens of Lender in the
Collateral and such other matters as Lender may request.
(j) The other Financing Agreements requested or submitted by Lender
from or to Borrower and all instruments and documents hereunder and thereunder
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shall have been duly executed and delivered to Lender, in form and substance
satisfactory to Lender.
(k) Lender shall have received, in form and substance satisfactory to
Lender and its counsel, the guarantee of the Obligations by NSC .
(l) Borrower shall have delivered to Lender (i) the Cash Collateral
Agreement and related documents and (ii) the Cash Collateral.
(m) All Credit Card Issuers and Credit Card Processors shall have been
irrevocably directed by the parties to Credit Card Agreements, and such Credit
Card Issuers and Credit Card Processors shall agree, that all proceeds of Credit
Card Receivables shall be remitted to the Blocked Account designated by Lender.
(n) Lender shall have received in form and substance satisfactory to
Lender copies of all of Borrowers' agreements with financial institutions
regarding the collection of receipts from purchases made by customers on credit
and debit cards.
(o) Each of the depository banks used by Borrower for the deposit of
receipts from the sale of merchandise and each other depository bank used by
Borrower for the deposit of other proceeds of Collateral and other property,
which is collateral security for the Obligations shall have been notified of
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Lender's security interest therein and shall have been irrevocably authorized
and directed to send all funds on deposit with such banks only to the blocked
account designated by Lender or as Lender otherwise directs.
(p) Lender shall have received, and NSC shall have obtained, in form
and substance satisfactory to Lender, an order of the Bankruptcy Court presiding
over the Chapter 11 Case, to which no objection or opposition shall have been
filed or made:
(i) Approving the execution, delivery and performance of this Extension
Agreement and the other Financing Agreements to which it is a party, by NSC and
the consummation of the transactions contemplated hereby and thereby;
(ii) Lifting the automatic stay under Section 362 of the Bankruptcy
Code and authorizing Lender to exercise its rights and remedies against NSC
under this Extension Agreement, the other Financing Agreements and the Credit
Documents on the occurrence of an Event of Default or an event or condition
which with notice or passage of time or both would constitute an Event of
Default;
(iii) Authorizing the delivery of any Collateral given or to be given
by NSC to Lender including without limitation that Collateral given by NSC to
the Banks and confirming Lender's liens and security interest therein in
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accordance with this Extension Agreement, the other financing Agreements and the
Credit Documents and with the priorities stated herein; and
(iv) As to such other matters as Lender may request.
(q) Lender, shall concurrently with the making of the Initial Loans,
have acquired the Purchased Assets, with a portion of the proceeds
thereof.
(r) The amount of the Obligations to be purchased from the Banks shall
not exceed the lesser of (i) the amount of Revolving Loans available to Borrower
pursuant to Section 3.1(a) hereof after compliance with the condition specified
in Section 9.1(s) hereof; or (ii) the Maximum Credit hereof.
(s) Excess Availability, as of the Closing Date shall not be less
than $5,000,000;
(t) All indebtedness owing (i) by any Borrower to NSC and (ii) by the
Borrowers among themselves shall have been fully subordinated to the
Obligations, to Lenders satisfaction.
(u) Lender shall have received, in form and substance satisfactory to
Lender, (i) a pro forma and market value consolidated and consolidating and
combined and combining, as applicable, balance sheet of Borrowers reflecting the
initial transactions contemplated hereunder, including, but not limited to, the
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Loans to be provided by Lender to Borrowers and the use of the proceeds of the
initial Loans as provided herein and (ii) a projection and forecast of
Borrowers' cash flow for their current and succeeding fiscal years all
accompanied by a certificate, dated of even date herewith, of the chief
executive officer and chief financial officer of Borrowers, stating that such
pro-forma balance sheet, market value balance sheet and projection of cash flow,
represents the reasonable, good faith opinion of such officers as to the subject
matter thereof as of the date of such certificate and as to such other matters
as Lender may request.
(v) The market value balance sheet of Borrower, the certificate and the
projection referred to in Section 9.1 (u) hereof shall reflect to Lender's
satisfaction that Borrowers, taken as a whole, are Solvent.
(w) NSC's then proposed Plan of Reorganization in the Chapter 11 Case
shall be acceptable to Lender in accordance with Section 15.27 hereof and
subject to the conditions specified therein.
Lender may permit Borrower periods of up to thirty (30) days from the
Closing Date to comply with and satisfy one or more of the conditions specified
in Section 9.1 hereof and may defer funding of, or not fund at all, such amounts
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of the initial and future Loans as Lender shall determine, unless and until such
conditions have been satisfied, all in Lender's sole discretion. Lender shall
have no liability to Borrower whatsoever for not funding any of the Loans if any
such condition is not satisfied within such 30 day period.
9.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
Lender making Loans and providing Letter of Credit Accommodations to or for
Borrowers, including the initial and any future Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan and after giving effect
thereto; and
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(b) no Event of Default and no event or condition which, with notice or
passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such
Loan, or providing each such Letter of Credit Accommodation and after giving
effect thereto.
ARTICLE X
EXTENSION, DEFINITIVE AGREEMENTS NEW LOANS
10.1 EXTENSION PERIOD. (a) Subject to the terms and conditions of this
Extension Agreement, and without waiving the Interest Payment Defaults or other
Defaults or Events of Default that may exist, Lender agrees to (i) forbear from
enforcing its rights or remedies pursuant to the Credit Documents, the Financing
Agreements and applicable law as a result of the occurrence of the Interest
Payment Defaults and the filing of the Chapter 11 Case until the earliest to
occur of the following (A) October 1, 2003, (B) the occurrence of an Event of
Default (other than the Interest Payment Defaults and the filing of the Chapter
11 Case) under this Extension Agreement (as provided in Article XI below), the
Credit Agreement, any other Credit Documents, any of the Financing Agreement or
any other loan or credit agreement or other document evidencing a debt
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obligation of Borrowers or NSC, including without limitation the PXI Senior
Notes Documents, (C) the exercise of any rights or taking of any action by any
party (including, without limitation, the sending of any notice) to any loan or
credit agreement or other document evidencing a debt obligation, including,
without limitation, the PXI Senior Notes, which the Lender considers to be
materially adverse to its interest, (D) the payment, redemption, purchase,
defeasance or any other partial or full satisfaction in any manner by Borrowers
or NSC of any principal, interest, premium's, fees, expenses or any other
amounts in respect of the obligations of NSC under the PXI Senior Notes or any
other Indebtedness(as defined in the Credit Agreement) incurred by NSC or any of
its Subsidiaries to any holder of any PXI Senior Notes on or after the date
hereof (but nothing contained in this Section 10.1 (a)(i)(D) hereof shall be
construed to authorize or permit any such payment) and (E) the exercise of any
right or taking of any action (including with respect to the Collateral) by any
Credit Party or any other Person which the Lender considers to be materially
adverse to its interest, and (ii) extend the Maturity Date from February 1, 2003
to October 1, 2003.
(b) Notwithstanding Section 10.1(a)(i)(B) above, the Extension
Agreement Termination Date shall not occur as a result of (i) the Interest
Payment Defaults, or the filing of the Chapter 11 Case or (ii) an Event of
Default, if any, under the PXI Senior Note Documents (and thereby under Section
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9.04(a)(ii) of the Credit Agreement) occurring solely as a result of the
execution by any Credit Party of this Extension Agreement.
(c) Notwithstanding any other provision of this Extension Agreement,
the Credit Agreement any other Credit Document or the Financing Agreements all
Loans shall become immediately due and payable upon the earlier of (i) the
termination or non-renewal of this Extension Agreement, (ii) October 1, 2003 or
(iii) in Lender's discretion upon the occurrence of an Event of Default under
this Extension Agreement, the Credit Agreement or any of the other Financing
Agreements.
10.2 PAYMENTS TO AFFILIATES; SUBORDINATED LENDER PAYMENTS. (a) Until
the satisfaction of all Obligations owing to Lender neither the Borrowers nor
NSC nor any Subsidiary of any of the foregoing, will (i) pay, redeem, purchase,
defease or otherwise partially or fully satisfy in any manner, whether in
respect of interest, principal, premium, fees, expenses or otherwise, the PXI
Senior Notes or (ii) make any other payment, whether as a dividend,
distribution, compensation, management fee, bonus, principal or interest on any
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intercompany obligation or otherwise, to any Affiliate of such payor; PROVIDED
THAT, (i) the Borrower may pay up to the amounts specified in section 2.2 of the
Consent Agreement for the purposes described therein and (ii) so long as no
Event of Default, or event which with the giving of notice or passage of time
would constitute an Event of Default, shall occur and be continuing Borrower may
make payment from the proceeds of the Revolving Loans available to Borrower, of
the "Additional Cash Contribution".
(b) The limitations in Section 10.2(a) shall not apply to payments in
respect of advances, loans and contributions otherwise permitted under Sections
8.05(g) and payments otherwise permitted under clause (x) of Section 8.05(h) of
the Credit Agreement.
(c) For purposes of this Extension Agreement the term, "Additional Cash
Contribution" shall mean a payment of $1,500,000 per four(4) week fiscal period
commencing with the period ending January 25, 2003, to be deposited into a
segregated bank account in connection with NSC's proposed plan of reorganization
in the Chapter 11 Case, on the terms and subject to the conditions provided
therein, but subject to provisions hereof and not to exceed the amount of
$13,500,000 in the aggregate.
10.3 COMPLIANCE. In addition to using its best efforts to provide all
the information required to be provided to the Banks under the Credit Agreement,
including without limitation the information required to be provided under
Section 7.01 of the Credit Agreement, the Borrower shall deliver to Lender (a)
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copies of any documents, presentations, forecasts, restructuring plans or other
material distributed to the holders (or their advisors, representatives, or
trustee) of the PXI Senior Notes after the date hereof, and (b) on or prior to
the 10th day of each financial month of the Borrower, commencing with the
financial month that begins in January, 2003, cash flow forecasts for such
financial month on both a consolidated and consolidating basis in substantially
the same form that was delivered to the Banks with respect to the financial
month of the Borrower beginning in August 2002. The cash flow forecasts shall be
on a rolling basis, shall reflect actual receipts and disbursements, shall
compare actual cash flow for the past financial month of the Borrower to the
previously projected amounts for such past month and shall reflect the actual
cash on hand as of the date of the forecasts.
10.4 DEFINITIVE AGREEMENTS. (a) Lender and Borrower and NSC intend to,
on or prior to September 30, 2003 substitute this Extension Agreement with a
definitive "Loan and Security Agreement" (the "Definitive Loan Agreement") and
other definitive "Financing Agreements" as such term will be defined in the
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Definitive Loan Agreement (the "Definitive Financing Agreements") and make
additional loans to Borrower, on the terms and subject to the conditions to be
stated therein; PROVIDED THAT, (i) Lender shall have no obligation to enter into
the Definitive Loan Agreement or other Definitive Financing Agreements (A)
unless all conditions precedent set forth herein and in the other Financing
Agreements shall have been satisfied, (B) unless no Event of Default shall have
occurred and be continuing, and no event which with the giving of notice or
passage of time or both would constitute an Event of Default shall have occurred
and be continuing, (C) if this Extension Agreement shall have been terminated
and (D) unless the Definitive Loan Agreement and Definitive Financing Agreements
and all proceedings in connection therewith shall be satisfactory to Lender and
its counsel in their sole discretion, in form and substance and shall have been
approved by the Bankruptcy Court to Lender's satisfaction and shall have been
included in NSC's confirmed plan of reorganization, and (ii) Lender shall have
no obligation to make any such additional Loans under the Definitive Loan
Agreement and no liability for not so doing unless and until the Definitive Loan
Agreement shall have been executed by Lender and all conditions precedent set
forth therein and the Definitive Financing Agreements shall have been satisfied
and then only as may be provided therein.
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(b) Lender will provide a secured revolving and term loan credit
facility to Borrowers and NSC, pursuant to the Definitive Loan Agreement (i)on
the principal economic terms contained in Exhibit B hereto and (ii) based on the
outline of the additionalterms contained in Exhibit B hereto, subject to the
qualifications contained therein. The Definitive Loan Agreement and Definitive
Financing Agreements will also incorporate such terms, provisions and conditions
that are customary in similar financings by Lender(certain of which are
specified in Exhibit B hereto) or deemed by Lender to be appropriate in the
context of the contemplated transactions.
(c) Upon the Definitive Loan Agreement becoming effective and the
closing thereof the Definitive Loan Agreement will be substituted for this
Extension Agreement and the Credit Agreement; PROVIDED THAT, (i) such
substitution shall not be considered a termination of this Extension Agreement
for purposes of Section 4.6 hereof and (ii) the failure, for any reason (A) of
Borrower and NSC to execute the Definitive Loan Agreement or (B) of the
Definitive Loan Agreement to close during the term of this Extension Agreement
or any renewal or extension thereof shall be considered a termination of this
Extension Agreement for purposes of Section 4.6 hereof.
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ARTICLE XI
DEFAULTS AND REMEDIES
11.1 EVENTS OF DEFAULT. In addition to the Events of Default
specified in the Credit Agreement and the Consent Agreement the occurrence
or existence of any one or more of the following events are referred to herein
individually as an "Event of Default", and collectively as "Events of Default":
(a) Borrower (i) fails to pay when due any of the Obligations or (ii)
Borrower or NSC fails for a period of ten (10) days to perform any of the terms,
covenants, conditions or provisions contained in this Extension Agreement or any
of the other Financing Agreements; EXCEPT THAT, such ten (10) day grace period
shall not be applicable to (A) a failure which cannot be cured within such ten
(10) day period, (B) an intentional breach by Borrower or (C) a failure which
has been the subject of a prior failure within the preceding six (6) months;
(b) any representation, warranty or statement of fact made by Borrower
or NSC to Lender in this Extension Agreement, the other Financing Agreements or
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any other agreement, schedule, confirmatory assignment or otherwise shall when
made or deemed made be false or misleading in any material respect;
(c) any Credit Party (other than Borrower) or any other Obligor
revokes, terminates or fails to perform any of the terms, covenants, conditions
or provisions of any guarantee, endorsement or other agreement of such party in
favor of Lender or any representation, warranty or statements of fact made by
any such Person in any such document shall when made or deemed made be false or
misleading in any material respect (whether directly or by reason of the
acquisition by Lender of the Purchased Assets);
(d) any judgment for the payment of money is rendered against any
Borrower or any other Credit Party or any other Obligor in excess of $250,000 in
any one case, or in excess of $500,000 in the aggregate and shall remain
undischarged or unvacated for a period in excess of sixty (60) days or execution
shall at any time not be effectively stayed, or any judgment other than for the
payment of money, or injunction, attachment, garnishment or execution is
rendered against Borrower or any other Credit Party or any of their assets;
(e) Borrower or any other Credit Party which is a partnership, limited
liability company, limited liability partnership or a corporation, dissolves or
suspends or discontinues doing business;
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(f) Borrowers shall not be Solvent or any Borrower or NSC makes an
assignment for the benefit of creditors, makes or sends notice of a bulk
transfer or calls a meeting of its creditors or principal creditors;
(g) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against Borrower or any other Credit Party (except for the Chapter 11 Case
with respect to NSC) on all or any part of its properties and such petition or
application is not dismissed within thirty (30) days after the date of its
filing or any Borrower or any other Credit Party shall file any answer admitting
or not contesting such petition or application or indicates its consent to,
acquiescence in or approval of any such action or proceeding or the relief
requested is granted sooner.
(h) a case or proceeding under the bankruptcy laws of the United States
of America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of
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any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or any other Credit Party (except for the Chapter 11 Case
with respect to NSC) or for all or any part of its property;
(i) any default by Borrower or any other Credit Party under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Lender, or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favor of any person other
than Lender, in any case in an amount in excess of 200,000, which default
continues for more than the applicable cure period, if any, with respect
thereto, or any default by Borrower or any other Credit Party under any material
contract, lease, license or other obligation to any person other than Lender,
which default continues for more than the applicable cure period, if any, with
respect thereto;
(j) There shall be a Change of Control or change in the present senior
management of Borrower or NSC including such a change in connection with the
"Alternative Plan" referred to in Section 15.27 hereof;
(k) The indictment or threatened indictment of Borrower or any other
Credit Party under any criminal statute, or commencement or threatened
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commencement of criminal or civil proceedings against Borrower or any other
Credit Party, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of any of the property of Borrower or
such other Credit Party;
(l) There shall be a material adverse change in the business, assets or
prospects of Borrowers or any other Credit Party after the date hereof;
(m) There shall be an event of default under any of the other Financing
Agreement, or the Credit Agreement;
(n) The Definitive Loan Agreement and Definitive Financing Agreements
are not executed, delivered and to the extent required by Lender approved by an
order of the Court in the Chapter 11 Case which order has become final and
unappealable, and the transactions contemplated thereby shall not have closed on
or prior to the end of the term of this Extension Agreement or any renewal or
extension thereof;
(o) NSC's Plan of Reorganization in the Chapter 11 Case (i) as
proposed, shall not be consistent with Lender's approval contained in Section
15.27 hereof, (ii) as confirmed, shall not be consistent with Lender's approval
contained in Section 15.27 hereof, (iii) as approved by Lender shall not be
consummated on or prior to September 30, 2003, (iv) as approved by Lender shall
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not be confirmed or (vi) as approved by Lender shall not be complied with in any
material respect;
(p) NSC shall not comply with its covenants contained in Section 15.27
hereof or the conditions specified therein shall not have been satisfied at or
prior to the time of confirmation of such Plan of Reorganization;
(q) The Chapter 11 Case shall (i) be converted to a case under Chapter
7 of the Bankruptcy Code, (ii) be dismissed or (iii) have a trustee appointed
therein; or
(r) NSC shall fail to comply with any of the "Benchmarks" described in
Exhibit C hereto or a "Direction Letter"as described in Exhibit C hereto shall
be sent to NSC or or the Creditors Committee shall seek approval of the
"Alternative Plan"described in Exhibit C hereto.
Notwithstanding the foregoing the Interest Payment Defaults and the filing and
pendency of the Chapter 11 Case shall not constitute an "Event of Default" until
September 30, 2003.
11.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this Extension
Agreement, the other Financing Agreements, the Credit Documents, the Consent
Agreement, the Uniform Commercial Code and other applicable law, all of which
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rights and remedies may be exercised without notice to or consent by Borrower or
any other Credit Party, except as such notice or consent is expressly provided
for hereunder or required by applicable law. All rights, remedies and powers
granted to Lender hereunder, under any of the other Financing Agreements, the
Credit Documents, the Consent Agreement, the Uniform Commercial Code or other
applicable law, are cumulative, not exclusive and enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by
Borrower or NSC of this Extension Agreement or any of the other Financing
Agreements. Lender may, at any time or times, proceed directly against Borrower
or any other Credit Party to collect the Obligations without prior recourse to
the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 11.1(g), or 11.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
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judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
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sale, all of the foregoing being free from any right or equity of redemption of
Borrower, which right or equity of redemption is hereby expressly waived and
released by Borrower and all other Credit Parties and/or (vii) terminate this
Extension Agreement. If any of the Collateral is sold or leased by Lender upon
credit terms or for future delivery, the Obligations shall not be reduced as a
result thereof until payment therefor is finally collected by Lender. If notice
of disposition of Collateral is required by law, five (5) days prior notice by
Lender to Borrower designating the time and place of any public sale or the time
after which any private sale or other intended disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waive any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually received
by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency with interest at the highest rate
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provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event of
Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or providing Letter of Credit Accommodations or reduce the
lending formulas or amounts of Revolving Loans and Letter of Credit
Accommodations available to Borrower and/or (ii) terminate any provision of this
Extension Agreement providing for any future Loans or Letter of Credit
Accommodations to be made or provided by Lender to Borrower.
11.3 SPECIAL EVENT OF DEFAULT. (a) The occurrence or existence of the
following event shall be an additional "Event of Default":
(i) Any condition precedent specified in Section 9.1 hereof, the
satisfaction of which has been deferred by Lender in writing, is not fulfilled
and satisfied on or prior to April 30, 2003 (whether or not such condition is
capable of being fulfilled or satisfied by Borrower); and
(ii) Lender shall give notice to Borrower that it is declaring an Event
of Default.
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(b) On the occurrence and during the continuance of an Event of Default
specified in this Section 11.3 Lender shall be entitled to all rights and
remedies hereunder, including without limitation those set forth in section 11.2
hereof, under the other Financing Agreements, the Credit Documents and at law.
ARTICLE XII
DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Extension Agreement. All capitalized terms used herein
that are defined in the Credit Agreement and are not otherwise defined herein
shall have the respective meanings prescribed in the Credit Agreement. In the
event of any conflict or ambiguity with respect to any term defined herein and
in the Credit Agreement the definition which is more favorable to Lender shall
control. All references to the plural herein shall also mean the singular and to
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the singular shall also mean the plural unless the context otherwise requires.
All references to Borrower and Lender or to any other person herein, shall
include their respective successors and assigns. The words "hereof", "herein",
"hereunder", "this Extension Agreement" and words of similar import when used in
this Extension Agreement shall refer to this Extension Agreement as a whole and
not any particular provision of this Extension Agreement and as this Extension
Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced. The word "including" when used in this
Extension Agreement shall mean "including, without limitation". An Event of
Default shall exist or continue or be continuing until such Event of Default is
waived in accordance with Section 13 or is cured in a manner satisfactory to
Lender, if such Event of Default is capable of being cured as determined by
Lender. Any accounting term used herein unless otherwise defined in this
Extension Agreement shall have the meanings customarily given to such term in
accordance with GAAP. For purposes of this Extension Agreement, the following
terms shall have the respective meanings given to them below:
12.1 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are not
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evidenced by instruments or chattel paper, and whether or not earned by
performance, including Credit Card Receivables.
12.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of the Reference Bank used to fund a Eurodollar Rate Loan or any
Eurodollar Rate Loan made with the proceeds of such deposit, whether or not the
Reference Bank actually holds or has made any such deposits or loans. The
adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any
change in the Reserve Percentage.
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12.3 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to the sum of: (a) the difference between: (i) the aggregate net book
value of all assets of such Person and its subsidiaries, calculating the book
value of inventory for this purpose on a first-in-first-out basis, after
deducting from such book values all appropriate reserves in accordance with GAAP
(including all reserves for doubtful receivables, obsolescence, depreciation and
amortization) and (ii) the aggregate amount of the indebtedness and other
liabilities of such Person and its subsidiaries (including tax and other proper
accruals) PLUS (b) indebtedness of such Person and its subsidiaries which is
subordinated in right of payment to the full and final payment of all of the
Obligations on terms and conditions acceptable to Lender.
12.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
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without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds ten (10%) percent or more of any class of voting
stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds ten (10%) percent or more of any
class of voting stock or in which such Person beneficially owns or holds ten
(10%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
stock, by agreement or otherwise.
12.5 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrower under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Lender in good faith, do or may affect either
(i) the Collateral or any other property which is security for the Obligations
or its value, (ii) the assets, business or prospects of Borrower or any Obligor
or (iii) the security interests and other rights of Lender in the Collateral
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(including the enforceability, perfection and priority thereof) or (b) to
reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrowers or any Obligor to Lender is
or may have been incomplete, inaccurate or misleading in any material respect or
(d) to reflect outstanding Letter of Credit Accommodations as provided in
Section 3.2 hereof or in respect of any state of facts which Lender determines
in good faith constitutes an Event of Default or may, with notice or passage of
time or both, constitute an Event of Default.
12.6 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
12.7 " Change of Control" shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of a Borrower or NSC to any Person or group (as such term is used in
Section 13(d)(3) of the Securities And Exchange Act of 1934[the "Exchange
Act"]); (b) the liquidation or dissolution of Borrower or NSC or the adoption of
a plan by the stockholders of a Borrower or NSC relating to the dissolution or
liquidation of any Borrower or NSC; (c) the acquisition by any Person or group
(as such term is used in Section 13(d)(3) of the Exchange Act), of beneficial
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ownership directly or indirectly, of a majority of the voting power of the total
outstanding voting stock of any Borrower or NSC, or (d) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any Borrower or NSC cease for any reason
to constitute a majority of the Board of Directors of such Borrower or NSC, then
still in office; (e) the failure of the present beneficial holders of voting
stock of NSC to own and control, directly or indirectly, one hundred (100%)
percent of the voting power of the total outstanding voting stock of each
Borrower or NSC or (f) the failure of NSC to be the sole member or sole holder
of the membership interests of Pueblo. As used in this Section 12.6 the term
"Board of Directors" includes the Board of Managers or other governing body of
Pueblo and the term voting stock" includes the membership interests of Pueblo.
12.8 "Closing Date" shall mean a date to be fixed by Lender, within 10
business days after the Extension Agreement Effective Date, at such place at
such time as shall be specified by Lender.
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12.9 "Collateral" shall have the meaning set forth in Section 5 hereof
and shall include the "Collateral" in the Credit Agreement and the Security
Documents.
12.10 "Credit Card Agreement" shall mean all agreements now or
hereafter entered into by any Borrower with any Credit Card Issuer or Credit
Card Processor, as same may now exist or may hereafter be amended, modified,
supplemented, extended, renewed or replaced.
12.11 "Credit Card Issuer" shall mean any person who issues credit
cards or debit cards used by customers of a Borrower to purchase goods,
including without limitation, MasterCard, VISA, America Express, Diners Club,
Carte Blanche and other non bank or bank credit or debit cards.
12.12 "Credit Card Processor" shall mean any servicing or processing
agent or any factor or financial intermediary who services, processes or manages
the credit, authorization, billing, transfer and/or payment with respect to any
sales transactions of any Borrower involving credit card or debit card purchases
by customers using credit cards or debit cards issued by any Credit Card Issuer.
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12.13 "Credit Card Receivables" shall mean all accounts consisting of
the present and future rights of any Borrower to payment by Credit Card Issuers
or Credit Card Processors for merchandise sold and delivered to customers of
Borrowers who have purchased such goods using a credit card or debit card issued
by a Credit Card Issuer.
12.14 "Debt" shall include, as to any Person, at any time (without
duplication): (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, notes, debentures, or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except (i) trade accounts payable not
unpaid more than the greater of (A) sixty (60) days past the invoice date or (B)
the due date thereof and (ii) other accounts payable and current accrued
expenses payable of such Person arising in the ordinary course of business which
are not past due by more than ninety (90) days, (d) all obligations under a
capital lease of such Person, (e) all indebtedness or other obligations of
others guaranteed by such Person, (f) all obligations secured by a lien existing
on property owned by such Person, whether or not the obligations secured thereby
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have been assumed by such Person or are non recourse to the credit of such
Person and (g) all reimbursement obligations of such Person (whether contingent
or otherwise) in respect of letters of credit, bankers acceptances, surety or
other bonds or similar instruments.
12.15 "Definitive Loan Agreement" and "Definitive Financing Agreements"
shall have the respective meanings prescribed in Section 10.4 hereof.
12.16 "Dilution" shall mean, for any period, the ratio of (a) the
aggregate amount of reductions in Accounts other than as a result of payments in
cash to (b) the aggregate amount of total sales, for such
period.
12.17 "EBITDA" shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Net Income After Tax of such Person for such
period, PLUS (b) depreciation and amortization of such Person for such period
(to the extent deducted in the computation of Net Income After Tax of such
Person for such period), PLUS (c) interest expense of such Person for such
period (to the extent deducted in the computation of Net Income After Tax), plus
(d) income taxes of such Person for such period (to the extent deducted in the
computation of Net Income After Tax) all in accordance with GAAP.
12.18 "Eligible Accounts" shall mean Accounts created by Borrower which
are and continue to be acceptable to Lender based on the criteria set forth
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below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and BONA FIDE sale and delivery
by a Borrower or rendition of services by a Borrower in the ordinary course of
its business which transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more (i) more than ninety (90) days
after the date of the original invoice for them; and (ii) more than sixty (60)
days past the due date thereof.
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America or the Commonwealth of
Puerto Rico or at Lender's option: if either (i) the account debtor has
delivered to Borrower an irrevocable letter of credit issued or confirmed by a
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bank satisfactory to Lender and payable only in the United States of America and
in U.S. dollars sufficient to cover such Account in form and substance
satisfactory to Lender and if required by Lender the original of such letter of
credit has been delivered to Lender or Lender's agent and the issuer thereof
notified of the assignment of the proceeds of such letter of credit to Lender,
or (ii) such account is subject to credit insurance payable to Lender issued by
an insurer and on terms and in an amount acceptable to Lender or (iii) such
Account is otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may determined).
(f) such Accounts do not consist of process billings, bill and hold
invoices or retainage invoices, except as to bill and hold invoices, if Lender
shall have received an agreement in writing from the account debtor in form and
substance satisfactory to Lender confirming the unconditional obligation of the
account debtor to take the goods related thereto and pay such invoice.
(g) the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
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transactions which may give rise to, any right of setoff against such Accounts
(but the portion of the Accounts of such account debtor in excess of the amount
at any time and from time to time owed by Borrower to such account debtor or
claimed owed by such account debtor may be deemed Eligible Accounts);
(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
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subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result in
any material adverse change in any such account debtor's financial condition;
(m) such Accounts of a single account debtor or its affiliates do not
constitute more than forty percent (40%) of all otherwise Eligible Accounts (but
the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than sixty (60) days after the date of the original invoice for them
which constitute more than Fifty Percent (50%) percent of the total Accounts of
such account debtor;
(o) such Accounts are owed by account debtors whose total indebtedness
to Borrower does not exceed the credit limit with respect to such account
debtors as determined by Lender from time to time (but the portion of the
Accounts not in excess of such credit limit may be deemed Eligible Accounts);
and
(p) such Accounts are owed by account debtors deemed creditworthy at
all times by Lender, as determined by Lender. General criteria for Eligible
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Accounts may be established and revised from time to time by Lender in good
faith. Any Accounts which are not Eligible Accounts shall nevertheless be part
of the Collateral.
12.19 "Eligible Inventory" shall mean Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower which
are acceptable to Lender based on the criteria set forth below. In general,
Eligible Inventory shall not include (a) raw materials or work-in-process; (b)
components which are not part of finished goods; (c) spare parts for equipment;
(d) packaging and shipping materials; (e) supplies used or consumed in
Borrowers's business; (f) Inventory at premises other than those owned and
controlled by Borrower, except if Lender shall have received an agreement in
writing from the person in possession of such Inventory and/or the owner or
operator of such premises in form and substance satisfactory to Lender
acknowledging Lender's first priority security interest in the Inventory,
waiving security interests and claims by such person against the Inventory and
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permitting Lender access to, and the right to remain on, the premises so as to
exercise Lender's rights and remedies and otherwise deal with the Collateral;
(g) Inventory subject to a security interest or lien in favor of any person
other than Lender except those permitted in this Extension Agreement; (h) bill
and hold goods; (i) unserviceable, obsolete or slow moving Inventory; (j)
Inventory which is not subject to the first priority, valid and perfected
security interest of Lender; (k) returned, damaged and/or defective Inventory;
(l) Inventory purchased or sold on consignment; (m) Inventory in transit other
than Inventory for which Lender has arranged a Letter of Credit Accommodation
described in Section 3.2(c)(i) hereof; (o) Inventory which consists of produce,
deli and bakery food products, expired foods, and products with short expiration
dates or shelf-life; and (p) Inventory which is subject to PACA or PASA and for
which the supplier has not been paid in full. General criteria for Eligible
Inventory may be established and revised from time to time by Lender in good
faith. Any Inventory which is not Eligible Inventory shall nevertheless be part
of the Collateral.
12.20 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower and any
other Credit Party and any governmental authority, (a) relating to pollution and
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the protection, preservation or restoration of the environment (including air,
water vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to record keeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
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common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
12.21 "Equipment" shall mean all of Borrowers' now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, racks,
shelves, freezers, coolers, material handling equipment, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements wherever located.
12.22 "Eurodollar Rate Loans" shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
12.23 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one - sixteenth (1/16) of one (1%) percent) at which the Reference Bank
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is offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Lender) on or
about (9:00a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Extension Agreement, with a maturity of comparable duration
to the Interest Period selected by Borrower.
12.24 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 11.1 hereof or described as an "Event of
Default" in the Credit Agreement or Consent Agreement.
12.25 "Excess Availability" shall mean the amount, as determined by
Lender, calculated at any time, equal to: (a) the lesser of: (i) the amount of
the Revolving Loans available to Borrower as of such time based on (A) the
applicable lending formulas multiplied by (B) the Net Amount of Eligible
Accounts and the lesser of (1) the Value of Eligible Inventory and(2) the Net
Recovery Percentage of Eligible Inventory, as determined by Lender, and the
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amount of the Pledge Cash and subject to the sublimits and Availability Reserves
from time to time established by Lender hereunder, and (ii) the Maximum Credit
MINUS (b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations plus (ii) the aggregate amount of all then outstanding and unpaid
trade payables of Borrower which remain unpaid more than the greater of (A)
sixty (60) days past the invoice date or (B) the due date thereof, as of such
time, plus (iii) the amount of checks issued by Borrower to pay trade payables,
but not yet sent and the book overdraft of Borrower.
12.26 "Extension Agreement Effective Date" shall mean the date the
order referred to in Section 9.1(p) hereof is notified; PROVIDED THAT, no
objection thereto shall be pending.
12.27 "Financing Agreements" shall mean, collectively, this Extension
Agreement and all notes, guarantees, security agreement documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any other Credit Party or other Obligor in connection with this Extension
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
12.28 "Fixed Charge Coverage Ratio" shall mean as to any Person with
respect to any period, the ratio of (a) EBITDA for such period divided by (b)
the sum of (i) the interest expense plus (ii) the current maturities of all
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Debt, except the Revolving Loans, plus (iii) all taxes (not including taxes
deducted from or charged to earnings in computing EBITDA), of such Person for
such period.
12.29 "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
12.30 "Information Certificate" shall mean the Information Certificates
of Borrower constituting Exhibit A hereto containing material information with
respect to Borrowers and NSC and their respective business and assets, provided
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by or on behalf of Borrowers to Lender in connection with the preparation of
this Extension Agreement and the other Financing Agreements and the financing
arrangements provided for herein.
12.31 "Intellectual Property" shall mean as to Borrower and its
Subsidiaries such now owned and hereafter arising or acquired patents, patent
rights, patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service mark applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations in part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of author ship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.
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12.32 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; PROVIDED THAT,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Extension Agreement.
12.33 "Interest Rate" shall mean as to Prime Rate Loans, a rate of one
point five percent (1.5%) per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of three point five percent (3.5%) per annum in
excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable
for the Interest Period selected by Borrower as in effect three (3) Business
Days after the date of receipt by Lender of the request of Borrower for such
Eurodollar Rate Loans in accordance with the term thereof, whether such rate is
higher or lower than any rate previously quoted to Borrower); PROVIDED THAT, the
Interest Rate shall mean the rate of three point five percent (3.5%) per annum
in excess of the Prime Rate as to Prime Rate Loans and the rate of five point
five percent (5.5%) per annum in excess of the Adjusted Eurodollar Rate as to
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Eurodollar Rate Loans, at Lender's option, without notice, (a) for the period
(i) from and after the date of termination or non-renewal hereof until Lender
has received full and final payment of all Obligations (notwithstanding entry of
a judgment against Borrower) and (ii) from and after the date of the occurrence
of an Event of Default for so long as such Event of Default is continuing as
determined by Lender, and (b) on the Revolving Loans at any time outstanding in
excess of the amounts available to Borrower under Section 3 (whether or not such
excess(es), arise or are made with or without Lender's knowledge or consent and
whether made before or after an Event of Default); PROVIDED THAT, at no time
shall the Interest Rate be lower than a rate of six percent (6%) per annum.
12.34 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
12.35 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Lender for the account of Borrower or
any Obligor or (b) with respect to which Lender has agreed to indemnify the
issuer or guaranteed to the issuer the performance by Borrower of its
obligations to such issuer.
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12.36 "Loans" shall mean the Revolving Loans.
12.37 "Maximum Credit" shall mean the amount of $35,000,000.
12.38 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
12.39 "Net Income After Tax" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or non-recurring gains and extraordinary
non-cash charges to property, plant and equipment or goodwill) after deducting
all charges (including income taxes) which should be deducted before arriving at
the net income (loss) for such period, all as determined in accordance with
GAAP; PROVIDED THAT, (a) the net income of any Person that is not a wholly-owned
Subsidiary or that is accounted for by the equity method of accounting shall be
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included only to the extent of the amount of dividends or distributions paid or
payable to such Person or a wholly-owned Subsidiary of such Person; and (b) the
effect of any change in accounting principles adopted by such Person or its
Subsidiaries after the date hereof shall be excluded. For the purposes of this
definition, net income excludes any gain and non-cash loss (but not any cash
loss) realized upon the sale or other disposition of any assets that are not
sold in the ordinary course of business (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or of any capital
stock of such Person or a Subsidiary of such Person and any net income realized
as a result of changes in accounting principles or the application thereof to
such Person.
12.40 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage (a) the numerator of which is the amount equal to the recovery on the
aggregate amount of the Inventory at such time on an orderly liquidation basis
as set forth in appraisals of Inventory received by Lender in accordance with
Section 7.3, net of estimated operating expenses, liquidation expenses and
commissions and (b) the denominator of which is the original cost of the
aggregate amount of the Inventory subject to appraisal.
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12.41 "Net Revenues" shall mean, gross revenues less returns, credits,
discounts and allowances.
12.42 "Obligations" shall mean in addition the "Obligations" as defined
in the Credit Agreement, (and shall include the current outstanding Obligations)
any and all Revolving Loans, Letter of Credit Accommodations, and all other
obligations, liabilities and indebtedness of every kind, nature and description
owing by Borrower to Lender and/or its affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Extension Agreement or after the commencement of any case with respect to
Borrower under the United States Bankruptcy Code or any similar statute
(including the payment of interest and other amounts which would accrue and
become due but for the commencement of such case, whether or not such amounts
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are allowed or allowable in whole or in part in such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary or
secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Lender.
12.43 "Obligor" shall mean in addition to each Credit Party other than
Borrower, any other guarantor, endorser, acceptor, surety or other person liable
on or with respect to the Obligations or who is the owner of any property which
is security for the Obligations, other than Borrower.
12.44 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
12.45 "PACA" shall mean the "Packers and Stockyards Act", 7 USC Section
181, et.seq.
12.46 "PASA" shall mean the "Perishable Agricultural Commodities Act",
7 USC Section 499a, et. seq.
12.47 "Pledged Cash" shall mean the cash collateral delivered by
Borrower to Lender pursuant to a "Cash Collateral Pledge And Security Agreement"
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(the "Cash Collateral Agreement"), dated as of the date hereof subject to the
provisions of such Cash Collateral Agreement and this Extension Agreement.
12.48 "Prime Rate" shall mean the rate from time to time advised by
Westernbank Puerto Rico, or its successors, to its clients as its "prime rate",
whether or not such advised rate is the best rate available at such bank. As of
the date hereof the Prime Rate is 4.25%.
12.49 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
12.50 "Real Estate Security" shall include (a) those leasehold
mortgages requested by Lender to be granted by Borrowers; (b) the mortgage liens
on the Real Property and interests of Borrower and the other credit parties
described in Schedule 5.1(d) hereto (the "Mortgages"), (c) the mortgage notes
described on Schedule 5.1(d) hereto to be pledged to Lender and (d) liens and
security interests in favor of Lender on all other Real Property of Borrowers
and each other credit Party all, on the terms and subject to the provisions
contained herein and in the other applicable Financing Agreements.
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12.51 "Real Property" shall mean all now owned and hereafter acquired
real property of any Borrower and each other Credit Party, including leasehold
interests and those real properties described on Schedule 5.1(d) hereto,
together with all buildings, structures and other improvements located thereon
and all licenses, easements and appurtenances relating thereto, whenever
located.
12.52 " Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of Borrower : (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower; (d) all letters of credit, indemnities,
guarantees, security or other deposits and proceeds thereof issued payable to
Borrower or otherwise in favor of or delivered to any Borrower in connection
with any Account; or (e) all other accounts, contract rights, chattel paper,
instrument, notes, general intangibles and other forms of obligations owing to
any Borrower, whether from the sale and lease of goods or other property,
licensing of any property (including Intellectual Property or other general
intangibles), rendition of services or from loans or advances by any Borrower or
to or for the benefit of any third person (including loans or advances to any
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Affiliates or Subsidiaries of NSC or otherwise associated with any Accounts,
Inventory or general intangibles of any Borrower (including without limitation,
choses in action, causes of action, tax refunds, tax refund claims, any funds
which may become payable to Borrower in connection with the termination of any
Plan or other employee benefit plan and any other amounts payable to Borrower
from any Plan or other employee benefit plan and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, casualty or any similar types of insurance and any process
thereof and proceeds of insurance covering the lives of employees on which
Borrower is a beneficiary.
12.53 "Records" shall mean all of Borrower's present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
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12.54 "Reference Bank" shall mean Westernbank Puerto Rico or such other
bank as Lender may from time to time designate.
12.55 "Restricted Junior Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of any Borrower now or hereafter outstanding or any payment on account of a
return of capital or (b) any redemption, retirement, purchase or other
acquisition, direct of indirect, of any shares of any class of stock of any
Borrower now or hereafter outstanding or (c) any payment, direct or indirect, of
any interest, principal of or premium, if any, on any redemption, retirement,
purchase or other acquisition, direct or indirect, of any Subordinated Debt, or
(d) any payment of money or transfer of any interest in any asset to any
Affiliate of a Borrower.
12.56 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Article III hereof.
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12.57 "Solvent" shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date thereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).
12.58 "Subordinated Debt" shall mean all liabilities, indebtedness and
obligations of any Borrower, NSC or any other Subsidiary of NSC to any person
the payment of which is restricted by this Agreement, any of the other Financing
Agreements or any of the Credit Documents.
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12.59 "Suppressed Availability" shall mean the amount, as determined by
Lender, calculated at any time, which Borrowers shall otherwise be entitled to
borrow under applicable lending formulas but which shall not be available to,
and which shall be withheld from, Borrowers.
12.60 "Uniform Commercial Code" or "UCC" shall include the Puerto Rico
"Commercial Transactions Act" and "UCC shall mean the Uniform Commercial Code.
12.61 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP or (b) market value.
12.62 "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
subsidiaries (as determined in accordance with GAAP), calculating the book value
of inventory for this purpose on a first-in-first-out basis, and (b) all current
liabilities of such Person and its subsidiaries (as determined in accordance
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with GAAP), PROVIDED, THAT, as to Borrowers, for purposes of Section 15.12, (i)
the liabilities of Borrowers to Lender under this Extension Agreement and (ii)
the current amount of Borrowers' reserves for self insurance liabilities, shall
not be considered current liabilities (whether or not classified as current
liabilities in accordance with GAAP).
ARTICLE XXIII
JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
13.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this Extension
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto with respect thereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the Commonwealth of Puerto Rico (without giving effect to principles of
conflicts of law).
(b) Borrowers and NSC and Lender irrevocably consent and submit to the
non- exclusive jurisdiction of the United States District Court for the District
of Puerto Rico and to the Court of First Instance, (Superior Court), of San
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Juan, Puerto Rico and waive any objection based on venue or FORUM NON
CONVENIENCES with respect to any action instituted therein arising under this
Extension Agreement or any of the other Financing Agreements or in any way
connected with or related or incidental to the dealings of the parties hereto in
respect of this Extension Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and agree
that any dispute with respect to any such matters shall be heard only in the
courts described above (except that Lender shall have the right to bring any
action or proceeding against Borrowers or NSC or their respective property in
the courts of any other jurisdiction which Lender deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
Borrower or its property).
(c) Borrower, NSC and Xtra each hereby waives personal service of any
and all process upon each of them and consents that all such service of process
may be made by certified mail (return receipt requested) directed to its address
set forth on the signature pages hereof and service so made shall be deemed to
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be completed five (5) days after the same shall have been so deposited in the
U.S. mails, or, at Lender's option, by service upon Borrower in any other manner
provided under the rules of any such courts. Within thirty (30) days after such
service, the Person so served shall appear in answer to such process, failing
which such Person shall be deemed in default and judgment may be entered by
Lender against such Person for the amount of the claim and other relief
requested.
(d) BORROWER AND NSC AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
EXTENSION AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR ANY OF THE
CREDIT DOCUMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS EXTENSION AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR ANY OF THE CREDIT DOCUMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER
AND NSC AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
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ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER, NSC AND XTRA OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower or NSC (whether in
tort, contract, equity or otherwise) for losses suffered by any of them in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Extension Agreement, or any act, omission or
event occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement.
13.2 WAIVER OF NOTICES. Borrower and NSC hereby hereby expressly waive
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
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Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower or NSC which Lender may
elect to give shall entitle any of them to any other or further notice or demand
in the same, similar or other circumstances.
13.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Borrower and NSC. Lender shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Lender of any right, power and/or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right, power and/or remedy which Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
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13.4 WAIVER OF COUNTERCLAIMS. Borrower and NSC each waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Extension Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
13.5 INDEMNIFICATION. Borrower and NSC shall indemnify and hold Lender,
and its directors, agents, employees and counsel, harmless from and against any
and all losses, claims, damages, liabilities, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Extension Agreement, any other Financing Agreements, or
any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
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counsel. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section may be unenforceable because it violates any law or
public policy, Borrower and NSC shall pay the maximum portion which it is
permitted to pay under applicable law to Lender in satisfaction of indemnified
matters under this Section. The foregoing indemnity shall survive the payment of
the Obligations and the termination or non-renewal of this Extension Agreement.
ARTICLE XIV
TERM OF AGREEMENT; MISCELLANEOUS
14.1 TERM.
(a) This Extension Agreement and the other Financing Agreements shall
become effective as of the Extension Agreement Effective Date and shall continue
in full force and effect for a term ending on September 30, 2003; PROVIDED THAT,
Lender may in its sole discretion extend the term of this Extension Agreement
and the Financing Agreements for successive monthly periods upon notice to
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Borrower given at least 1 day prior to the expiration of the then current term.
Upon the effective date of termination or non-renewal of the Financing
Agreements, Borrower shall pay to Lender, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral to Lender in such amounts as
Lender determines are reasonably necessary to secure Lender from loss, cost,
damage or expense, including attorneys' fees and legal expenses, in connection
with any contingent Obligations, including issued and outstanding Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate in writing to
Borrower for such purpose. Interest shall be due until and including the next
business day, if the amounts so paid by Borrower to the bank account designated
by Lender are received in such bank account later than 12:00 noon, Atlantic
Standard time.
(b) No termination of this Extension Agreement or the other Financing
Agreements shall relieve or discharge Borrower or any other Credit Party of its
respective duties, obligations and covenants under this Extension Agreement, the
other Financing Agreements or the Credit Documents, until all Obligations have
been fully and finally discharged and paid, and Lender's continuing security
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interest in the Collateral and the rights and remedies of Lender hereunder,
under the other Financing Agreements, under the Credit Documents and applicable
law, shall remain in effect until all such Obligations have been fully and
finally discharged and paid.
14.2 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower or
NSC at its respective chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
14.3 PARTIAL INVALIDITY. If any provision of this Extension Agreement
is held to be invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this Extension Agreement
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shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall
be construed and enforced only to such extent as shall be permitted by
applicable law.
14.4 SUCCESSORS. This Extension Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrower and
their respective successors and assigns, except that Borrower and NSC may not
assign their rights under this Extension Agreement, the other Financing
Agreements and any other document referred to herein or therein without the
prior written consent of Lender. Lender may, after notice to Borrower, assign
its rights and delegate its obligations under this Agreement and the other
Financing Agreements and further may assign, or sell participation in, all or
any part of the Loans, the Letter of Credit Accommodations or any other interest
herein to another financial institution or other person, in which event, the
assignee or participant shall have, to the extent of such assignment or
participation, the same rights and benefits as it would have if it were the
Lender hereunder, except as otherwise provided by the terms of such assignment
or participation.
14.5 ENTIRE AGREEMENT. This Extension Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith and the Credit
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Agreement and the other Credit Documents represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersedes all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Extension Agreement and any schedule or exhibit hereto, the terms of this
Extension Agreement shall govern.
14.6 EFFECT ON CREDIT AGREEMENT. (a) The Credit Agreement and each of
the other Credit Documents are hereby amended to the extent provided herein, and
as may be so amended shall remain in full force and effect. Such amendment shall
not constitute a modification or waiver except as specifically provided herein.
(b) In the event of any conflict or inconsistency between any term or
provision of this Extension Agreement or any of the Financing Agreements and any
term or provision of any of the Credit Documents, that which is most favorable
to Lender shall control.
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(c) All rights and remedies of the Agents and the Banks under the
Credit Documents shall as of and subsequent to the date of acquisition of the
Obligations by Lender accrue to and be exercisable solely by Lender.
(d) Borrower and NSC:
(i) State that the purchase by Lender of the Purchased Assets will be
for their benefit;
(ii) Acknowledge that the Lender will be subrogated to the rights of
the Banks;
(iii) Agree that the amount due and owing to the Banks is as stated in
the Bill of Sale and Assignment Agreement and Schedules thereto between the
Banks and Lender and ratified by Borrower and NSC, dated as of the date hereof;
(iv) Represent and warrant to Lender and agree with Lender that such
amounts are due and owing without any offset, defense, or counterclaim, and
(v) Waive any claims or defenses that any alteration of the Obligations
constitute an extinctive novation.
14.7 MULTIPLE BORROWERS. References to Borrowers wherever used in this
Extension Agreement, shall mean each and all of Borrowers and their respective
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successors and assigns, individually and collectively, jointly and severally,
primarily and unconditionally. The liability of each Borrower hereunder shall be
absolute, primary and unconditional, joint and several.
ARTICLE VI
ADDITIONAL COVENANTS
15.1 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Extension Agreement, the other Financing
Agreements and all other documents related hereto or thereto, including any
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amendments, supplements or consents which may hereafter be contemplated (whether
or not executed) or entered into in respect hereof and thereof, including: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage recording taxes and fees, if applicable); (b) all costs and
expenses and fees for insurance premiums, environmental audits, surveys,
assessments, engineering reports and inspections, appraisal fees and search
fees; (c) costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked Accounts,
together with Lender's customary charges and fees with respect thereto; (d)
charges, fees or expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations; (e) costs and expenses of preserving and
protecting the Collateral; (f) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Extension Agreement and the other
Financing Agreements or defending any claims made or threatened against Lender
arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); (g) all
out-of-pocket expenses and costs heretofore and from time to time hereafter
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incurred by Lender during the course of periodic field examinations of the
Collateral and Borrower's operations including the costs of field testing by
third party providers retained by Lender, plus a per diem charge at the rate of
$1,000.00 per person per day plus travel, hotel and all other out of pocket
expenses for Lender's examiners in the field and office; and (h) the fees and
disbursements of counsel (including legal assistants) to Lender in connection
with any of the foregoing.
15.2 RESTRICTED JUNIOR PAYMENTS. Borrower shall not, directly or
indirectly, make any Restricted Junior Payments, except as may be permitted
by(a) Section 15.10 hereof or(b) the proviso to Section 10.2(a) hereof.
15.3 PAYMENT OF TAXES AND CLAIMS. Borrower and NSC shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets or any Real Estate Security of any
Guarantor, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books.
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Borrower shall be liable for any tax or penalties imposed on Lender as a result
of the financing arrangements provided for herein and Borrower agrees to
indemnify and hold Lender harmless with respect to the foregoing, and to repay
to Lender on demand the amount thereof, and until paid by Borrower such amount
shall be added and deemed part of the Loans, PROVIDED, THAT, nothing contained
herein shall be construed to require Borrower or any other Credit Party to pay
any income or franchise taxes attributable to the income of Lender from any
amounts charged or paid hereunder to Lender. The foregoing indemnity shall
survive the payment of the Obligations and the termination or non- renewal of
this Extension Agreement.
15.4 INSURANCE. Borrower and NSC shall at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Lender as to form,
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amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Lender as Lender shall require as proof of such insurance, and,
if Borrower fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrower. All policies shall provide for at
least thirty (30) days prior written notice to Lender of any cancellation or
reduction of coverage and that Lender may act as attorney for Borrower and NSC
in obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Borrower
and NSC shall cause Lender to be named as a loss payee and an additional insured
(but without any liability for any premiums) under such insurance policies and
Borrower and NSC shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance satisfactory to
Lender. Such lender's loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Lender as its interests may appear and
further specify that Lender shall be paid regardless of any act or omission by
Borrower or any of its affiliates. At its option, Lender may apply any insurance
proceeds received by Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Lender may determine or hold such proceeds as cash
collateral for the Obligations.
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15.5 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Borrower and NSC shall, keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and NSC and its
subsidiaries (if any) in accordance with GAAP and Borrower shall furnish or
cause to be furnished to Lender: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated and consolidating financial
statements, of NSC and its subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow, and statements of
shareholders' equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of NSC and Borrowers as of the end of
and through such fiscal month and (ii) within sixty (60) days after the
consummation of NSC's Plan of Reorganization in the Chapter 11 Case, audited
consolidated and consolidating financial statements of NSC and its subsidiaries
(including in each case balance sheets, statements of income and loss,
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statements of cash flow and statements of shareholders' equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of NSC and Borrowers as of
the end of and for the immediately preceeding fiscal year, together with the
unqualified opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Borrower and
reasonably acceptable to Lender, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of operations
and financial condition of NSC and Borrowers as of the end of and for such
fiscal year and (iii) within ninety (90) days after the end of NSC's fiscal year
ending November 2, 2002 financial statements of the kind described in Section
15.5(a)(ii) hereof; EXCEPT THAT, such financial statements need not be audited
or accompanied by an opinion of independent public accountants, but shall be
accompanied by a certificate of the Chief Executive Officer and Chief Financial
Officer of each Borrower containing the opinion specified in Section 15.5(a)(ii)
hereof, to the best of such officers' knowledge, in form and substance,
satisfactory to Lender.
(b) Borrower and NSC shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrowers
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and NSC business, properties, assets, goodwill or condition, financial or
otherwise and (ii) the occurrence of any Event of Default or event which, with
the passage of time or giving of notice or both, would constitute an Event of
Default.
(c) Borrower and NSC shall promptly after the sending or filing thereof
furnish or cause to be furnished to Lender copies of all reports which any of
them sends to their stockholders generally and copies of all reports and
registration statements which any of them files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrower and NSC shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of a
Borrower and NSC to any court or other government agency upon request therefor
or to any participant or assignee or prospective participant or assignee.
Borrower and NSC hereby irrevocably authorize and direct all accountants or
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auditors to deliver to Lender, at Borrower's expense, copies of the financial
statements of NSC and each of its subsidiaries and any reports or management
letters prepared by such accountants or auditors on behalf of NSC and its
subsidiaries and to disclose to Lender such information as they may have
regarding the business of NSC and its subsidiaries. Any documents, schedules,
invoices or other papers delivered to Lender may be destroyed or otherwise
disposed by Lender one (1) year after the same are delivered to Lender, except
as otherwise designated by Borrowers to Lender in writing.
(e) Borrower shall deliver, or cause to be delivered, to Lender, within
sixty (60) days after the Closing Date, opening consolidated and consolidating
balance sheets of NSC and Borrowers after giving effect to the transactions
contemplated by this Extension Agreement, together with the certification of the
Chief Executive Officer and Chief Financial Officer of each Borrower to the
effect that such opening balance sheets have been prepared in accordance with
GAAP and present fairly the financial condition of NSC and its subsidiaries as
of such date.
15.6 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower
and NSC shall not directly or indirectly, (a) merge into or with or consolidate
with any other Person or permit any other Person to merge into or with or
consolidate with it, or (b) sell, assign, lease, transfer, abandon or otherwise
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dispose of any stock or indebtedness to any other Person or any of its assets to
any other Person (except for (i) sales of Inventory in the ordinary course of
business and (ii) the disposition of worn-out or obsolete Equipment or Equipment
no longer used in the business of Borrowers so long as (A) any proceeds are paid
to Lender and (B) such sales do not involve Equipment having an aggregate fair
market value in excess of $500,000 for all such Equipment disposed of in any
fiscal year of Borrower) or (c) form or acquire any subsidiaries, or transfer
any assets to any of its subsidiaries, or (d) wind up, liquidate or dissolve or
(e) agree to do any of the foregoing.
15.7 ENCUMBRANCES. Borrower and NSC shall not incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of their respective assets or
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properties, including the Collateral, EXCEPT: (a) liens and security interests
of Lender; (b) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or NSC and with respect
to which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Borrower or NSC business to the extent: (i) such liens secure
indebtedness which is not overdue or (ii) such liens secure indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower or NSC, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books; (d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of real property which do not interfere in
any material respect with the use of such real property or ordinary conduct of
the business of Borrower or NSC as presently conducted thereon or materially
impair the value of the real property which may be subject thereto; (e) purchase
money security interests in Equipment (including capital leases) and purchase
money mortgages on real estate not to exceed $250,000 in the aggregate at any
time outstanding so long as such security interests and mortgages do not apply
to any property of Borrower or NSC other than the Equipment or real estate so
acquired, and the indebtedness secured thereby does not exceed the cost of the
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Equipment or real estate so acquired, as the case may be; and (f) the security
interests and liens set forth on Schedule 8.4 hereto.
15.8 INDEBTEDNESS. Borrower and NSC shall not, incur, create, assume,
become or be liable in any manner with respect to, or permit to exist, any
obligations or indebtedness, except:
(a) the Obligations;
(b) trade accounts payable not unpaid more than the greater of (i)
sixty (60) days past the invoice date or (ii) the due date thereof, unless
Lender has established Availability Reserves with respect thereto, and other
trade obligations and normal accruals in the ordinary course of business not yet
due and payable, or with respect to which Borrower or NSC is contesting in good
faith the amount or validity thereof by appropriate proceedings diligently
pursued and available to Borrower or NSC and with respect to which adequate
reserves have been set aside on its books;
(c) purchase money indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement;
(d) unsecured indebtedness of Borrower or NSC for borrowed money
incurred after the date hereof owing to any person other than any shareholder,
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officer, director, agent, employee or affiliate of Borrower on commercially
reasonable rates and terms pursuant to an arm's length transaction; PROVIDED,
THAT, (i) Lender shall have received not less than five (5) business days prior
written notice of the intention to incur such indebtedness, which notice shall
set forth in reasonable detail satisfactory to Lender, the amount of such
indebtedness, the person to whom such indebtedness will be owed, the interest
rate, the schedule of repayments and maturity date with respect thereto and such
other information as Lender may reasonably request with respect thereto, (ii)
Lender shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such indebtedness,
(iii) the aggregate amount of such indebtedness at any time outstanding shall
not exceed $250,000, (iv) on and before the date of incurring such indebtedness
and after giving effect thereto, no Event of Default, or event which with the
giving notice or the passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing, (v) Borrower or NSC may
only make regularly scheduled payments of principal and interest in respect of
such indebtedness in accordance with the terms of the agreement or instrument
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evidencing or giving rise to such indebtedness as in effect on the date of the
execution thereof, and (vi) Borrower or NSC shall not, directly or indirectly,
(A) make any prepayments or other non-mandatory payments in respect of such
indebtedness, or (B) amend, modify, alter or change the terms of such
indebtedness or any agreement, document or instrument related thereto, or (C)
redeem, retire, defease, purchase or otherwise acquire such indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose, and (vii)
Borrower or NSC shall furnish to Lender all notices, demands or other materials
in connection with such indebtedness either received by Borrower or NSC or on
its behalf, promptly after the receipt thereof, or sent by Borrower, NSC or on
its behalf, concurrently with the sending thereof, as the case may be; and
(e) indebtedness of Borrowers and NSC described on Schedule 15.8(e)
hereto PROVIDED, THAT: (i) the individual principal amounts of such indebtedness
and aggregate principal amounts of all such indebtedness shall not exceed the
amounts shown on such Schedule 15.8(e) hereto less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory in respect
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thereof, plus interest thereon at the rate provided for in such agreement or
instrument as in effect on the date hereof, (ii) Borrowers and NSC may only make
regularly scheduled payments of principal and interest in respect of such
indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness and with respect to NSC as
modified in it's the Chapter 11 Case and previously approved, in writing, by
Lender, (iii)Borrowers and NSC shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of such indebtedness or any agreement,
document or instrument related thereto and with respect to NSC as modified in
it's the Chapter 11 Case and previously approved, in writing, by Lender, or (B)
redeem, retire, defease, purchase or otherwise acquire such indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose, and (iv)
Borrowers and NSC shall furnish to Lender all notices or demands in connection
with such indebtedness either received by Borrower or NSC or on its behalf,
promptly after the receipt thereof, or sent by a Borrower or NSC or on their
behalf, concurrently with the sending thereof, as the case may be.
15.9 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrower and NSC shall not
directly or indirectly, make or permit to exist any loans or advance money or
property to any person, or invest in (by capital contribution, dividend or
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otherwise) or purchase or repurchase the stock or indebtedness or all or a
substantial part of the assets or property of any person, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, EXCEPT: (a) the endorsement of instruments for collection
or deposit in the ordinary course of business; (b) investments in: (i)
short-term direct obligations of the United States Government, (ii) negotiable
certificates of deposit issued by any bank satisfactory to Lender, payable to
the order of the Borrower or to bearer and delivered to Lender, and (iii)
commercial paper rated A1 or P1; PROVIDED THAT, as to any of the foregoing,
unless waived in writing by Lender, Borrower and NSC shall take such actions as
are deemed necessary by Lender to perfect the security interest of Lender in
such investments; (c) the loans, advances and guarantees set forth on Schedule
15.9 hereto; PROVIDED, THAT, as to such loans, advances and guarantees, (i)
Borrower and NSC shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of such loans, advances or guarantees or any agreement,
document or instrument related thereto, or (B) as to such guarantees, redeem,
retire, defease, purchase or otherwise acquire the obligations arising pursuant
to such guarantees, or set aside or otherwise deposit or invest any sums for
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such purpose, and (ii) Borrower and NSC shall furnish to Lender all notices or
demands in connection with such loans, advances or guarantees or other
indebtedness subject to such guarantees either received by Borrower or NSC or on
its behalf, promptly after the receipt thereof, or sent by a Borrower or NSC or
on its behalf, concurrently with the sending thereof, as the case may be; and
(d) loans and advances not in excess of the amount of $500,000 outstanding in
the aggregate for all such loans and advances during the term of this Extension
Agreement ; provided that no such loan or advance shall be made to any Affiliate
of Borrower or any Person described on Schedule 15.21 hereto.
15.10 TRANSACTIONS WITH AFFILIATES. Borrower and NSC shall not,
directly or indirectly, (a) purchase, acquire or lease any property from, or
sell, transfer or lease any property to, any officer, director, agent or other
person affiliated with Borrower, except in the ordinary course of and pursuant
to the reasonable requirements of such Persons business and upon fair and
reasonable terms no less favorable to such Person than such Person would obtain
in a comparable arm's length transaction with an unaffiliated person (but in no
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event may Borrower, or NSC sell, transfer or lease any property to any
subsidiary) or (b) make any payments (i) of any indebtedness owing to any
officer, employee, shareholder, director or other person affiliated with or any
Credit Party or (ii) of any compensation to any employee except reasonable
compensation to employees for services rendered to in the ordinary course of
business, not in violation of Section 15.21 hereof.
15.11 ADDITIONAL BANK ACCOUNTS. Borrower, and NSC shall not, directly
or indirectly, open, establish or maintain any deposit account, investment
account or any other account with any bank or other financial institution, other
than the Blocked Accounts and the accounts set forth in Schedule 8.8 hereto,
except: (a) as to any new or additional Blocked Accounts and other such new or
additional accounts which contain any Collateral or proceeds thereof, with the
prior written consent of Lender and subject to such conditions thereto as Lender
may establish and (b) as to any accounts used by Borrower or NSC to make
payments of payroll, taxes or other obligations to third parties, after prior
written notice to Lender.
15.12 WORKING CAPITAL. Borrower and NSC shall, at all times, maintain
consolidated Working Capital of not less than $5,000,000.
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15.13 ADJUSTED NET WORTH. Borrower and NSC shall at all times, maintain
a consolidated Adjusted Net Worth of not less than $ 25,000,000.
15.14 SUPPRESSED AVAILABILITY. (a) Borrower shall, maintain with
Lender, at all times after the date hereof, Suppressed Availability of not less
than $1,800,000. Lender may, but shall not be required to and in addition to its
other rights, in its discretion, use the amount of Suppressed Availability (i)
to pay costs and expenses incurred by Borrower or chargeable to the Borrower
under this Extension Agreement, (ii) to cure defaults of Borrower or NSC under
this Extension Agreement, or by Borrower or NSC or any other Obligor under any
of the other Financing Agreements or any other agreement of Borrower or NSC with
any third party, (iii) to pay taxes of Borrower or NSC and (iv) for, any other
purpose permitted by, or to make any other payment which Lender is authorized to
make, under this Extension Agreement.
(b) If the amount of Suppressed Availability shall at any time be less
than $1,800,000 Borrower shall, at all times, on notice by Lender, immediately
take such actions as are required by Lender, including delivery to Lender of
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additional Pledged Cash, so that the amount of Suppressed Availability shall not
be less than $1,800,000.
15.15 CHANGES IN EQUITY. Borrowers and NSC shall not (a) cease to have
their respective capital stock or other equity interests owned by the Persons
now owning such stock in the same percentages of other equity interests
ownership now held by such Persons or (b) issue, sell or deliver any shares or
other equity interests of their respective capital stock, rights, options,
warrants or calls to purchase any shares of their respective capital stock other
equity interests or securities convertible into shares of their respective
capital stock other equity interests.
15.16 LOAN AMOUNT CERTIFICATE. Borrower and NSC shall, promptly upon
the request of Lender, but not more often the 4 times in any fiscal year and in
any event together with the audited Financial Statements referred to in Section
15.5 hereof furnish to Lender a certificate, signed by their President and Chief
Financial Officer, stating as of the date thereof (a) the then outstanding
balance of the Loans and (b) that no defense, offset or counterclaim exists with
respect to Borrowers obligation to pay such Loans or if any does exist,
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specifying in detail the nature and amount thereof and the facts upon which
based.
15.17 COMPLIANCE WITH ERISA. (a) Borrower and NSC shall not, and shall
not permit any other Credit Party to, with respect to any "employee benefit
plans" maintained by Borrower or any of its ERISA Affiliates: (i) terminate any
of such employee benefit plans so as to incur any liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer
to exist any prohibited transaction involving any of such employee benefit plans
or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA, (iii) fail to pay to any such
employee benefit plan any contribution which it is obligated to pay under
Section 302 of ERISA, Section 412 of the Code or the terms of such plan, (iv)
allow or suffer to exist any accumulated funding deficiency, whether or not
waived, with respect to any such employee benefit plan, (v) allow or suffer to
exist any occurrence of a reportable event(other than those as to which the
Pension Benefit Guaranty Corporation has waived notice pursuant to Regulation)
or any other event or condition which presents a material risk of termination by
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the Pension Benefit Guaranty Corporation of any such employee benefit plan that
is a single employer plan, that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation or
(vi) incur any withdrawal liability with respect to any multi employer pension
plan.
(b) As used in this Section 9.21 the terms "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
15.18 ADDITIONAL FINANCIAL COVENANTS. (a) Borrowers and NSC agree that,
as of the close of their fiscal year ending November 2, 2002, and for the 52-53
week period then ending, they will have a consolidated Fixed Charge Coverage
Ratio equal to or greater than 1.5 to 1; PROVIDED THAT, for purposes of this
computation there shall be excluded as current maturities of Debt the amount of
the Loans to Pueblo by the Banks and the amount of the PXI Notes, as of such
date.
(b) Borrower and NSC agree that, as of the close of their fiscal year
ending November 2, 2002, and for the 52-53 week period then ending they will
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derive consolidated (i) EBITDA of not less than $25,000,000 and (ii)
consolidated Net Revenue of not less than $525,000,000.
(c) Borrowers and NSC agree that, as of the close of their fiscal year
ending November 2, 2002, and for the 52-53 week period then ending the ratio of
their consolidated Debt to consolidated EBITDA will not be greater than 10 to 1.
(d) The financial covenants in this Section 15.18 and Sections 15.12
and 15.13 hereof supercede, amend and replace the financial covenants in the
Credit Agreement(Sections 8.09, 8.10 and 8.11 thereof).
15.19 ADDITIONAL COVENANTS.
(a) Within sixty (60) days from the date hereof Borrowers shall deliver
to Lender such appraisals regarding the Real Property forming part of the Real
Estate Security from appraisers acceptable to Lender, as Lender may request, all
in form and substance satisfactory Lender; PROVIDED THAT if such appraisals
shall reflect that such Real Property shall have a net fair market value of less
than $48,000,000 (after reduction for the amount of existing liens thereon)
Borrowers shall on demand furnish to Lender additional Pledged Cash for the
difference, between (i) $48,000,000 and (ii) the net fair market value reflected
in such appraisals.
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(b) Borrowers shall deliver to Lender, within 10 days of the close of
each month a report of essential payments made and expenses incurred, by
Borrowers during such month in such detail as Lender may request.
(c) Borrowers shall deliver to Lender within 10 days of the close of
each quarter a progress report with respect to Borrowers' store remodeling,
relocation and opening plans.
(d) Within 10 days of the close of each month Borrowers shall
deliver to Lender a comparison of its actual "availability" for the preceding
month with its budgeted "availability" for such month.
(e) Borrowers shall furnish to Lender within 10 days of the close of
each quarter a status report on its leased properties, in form and detail and
covering those matters as requested by Lender.
15.20 ENVIRONMENTAL AUDITS. Within ninety (90) days from the date of a
request by Lender from time to time Borrower shall deliver to Lender, at its
expense updated environmental audits of the real estate and the Real Estate
Security conducted by an environmental firm acceptable to Lender and in form,
scope and methodology satisfactory to Lender confirming that (a) Borrower and an
other Credit Parties are in compliance with all Environmental Laws, in all
materials respects and (b) there is no material potential or actual liability of
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any Borrower or any Credit Party for any remedial action with respect to any
environmental condition or any other significant environmental problems;
PROVIDED THAT, if such audits cannot confirm such compliance or that there is no
such liability, Borrowers shall forthwith at their expense, diligently take all
remedial action necessary to cure such condition, effect such compliance and
discharge such liability, to such firm's satisfaction.
15.21 MANAGEMENT COMPENSATION. Borrower and NSC will not pay
compensation or management, consulting or other fees for management or similar
services directly or indirectly, to or for the benefit of (a) as to those
Persons listed on Schedule 15.21 hereto in per annum amounts in the aggregate in
excess of that set forth and determined as described on Schedule 15.21 hereto,
including performance and incentive bonuses, for each such person, (b) as to any
Affiliate or direct or indirect or beneficial stockholder an additional per
annum amount in excess of $120,000 and (c) as to all other officers, directors
or consultants amounts in excess of that which is reasonable, ordinary and
necessary.
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15.22 FURTHER ASSURANCES. At the request of Lender at any time and from
time to time, Borrower and NSC shall and shall, cause each other Credit Party to
at their expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or cause
to be done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Lender may at any time and
from time to time request a certificate from an officer of Borrower representing
that all conditions precedent to the making of Loans and providing Letter of
Credit Accommodations contained herein are satisfied. In the event of such
request by Lender, Lender may, at its option, cease to make any further Loans
and provide Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, Borrower hereby authorizes Lender to execute
and file one or more UCC financing statements signed only by Lender.
15.23 BUSINESS NAMES. Borrowers and NSC shall not use any trade names
in the conduct of their business and operations other than (a)those listed on
Schedule 8.14 hereto and (b)those trade names which a Borrower may hereafter use
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after (i) having given Lender at least 15 Business Days notice after the filing
for registration of such name and (ii) taking all such actions and executing and
delivering all such agreements, instruments, notices and documents as Lender
shall request to(A) grant to Lender a valid and perfected first and prior
security interest and lien therein and (B) protect and preserve Lenders's
security interests and liens in the other Collateral.
15.24 MAINTENANCE OF EXISTENCE. Borrower and NSC shall at all times
preserve, renew and keep in full, force and effect their respective corporate or
other existence and rights and franchises with respect thereto and maintain in
full force and effect all permits, licenses, trademarks, trade names, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Borrowers and NSC shall give Lender
thirty (30) days prior written notice of any proposed change in any of their
corporate or other names, which notice shall set forth the new name(s) and
Borrowers and NSC shall deliver to Lender a copy of the amendment to the
Certificate of Incorporation or other organizational document of Borrower or NSC
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providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation or organization of such Person as soon as it is
available.
15.25 NEW COLLATERAL LOCATIONS. Borrowers may open any new store
location within Puerto Rico or the United States Virgin Island provided
Borrowers (a) gives Lender thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and instruments as
Lender may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location, including UCC financing statements.
15.26 COMPLIANCE WITH LAWS, REGULATIONS, ETC. (a) Borrowers and NSC
shall, at all times, comply in all material respects with all laws, rules,
regulations, licenses, permits, approvals and orders applicable to it and duly
observe all requirements of any Federal, State or local governmental authority,
including the Employee Retirement Security Act of 1974, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, and all statutes, rules, regulations, orders, permits
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and stipulations relating to environmental pollution and employee health and
safety, including all of the Environmental Laws.
(b) Borrowers and NSC shall establish and maintain, at its expense, a
system to assure and monitor their continued compliance with all Environmental
Laws in all of its operations, which system shall include annual reviews of such
compliance by employees or agents of Borrower who are familiar with the
requirements of the Environmental Laws. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by Borrowers to Lender.
Borrowers and NSC shall take prompt and appropriate action to respond to any
non-compliance with any of the Environmental Laws and shall regularly report to
Lender on such response.
(c) Borrowers and NSC shall give both oral and written notice to Lender
immediately upon a Borrower's or NSC's receipt of any notice of, or a Borrower's
otherwise obtaining knowledge of, (i) the occurrence of any event involving the
release, spill or discharge, threatened or actual, of any Hazardous Material or
(ii) any investigation, proceeding, complaint, order, directive, claims,
citation or notice with respect to: (A) any non-compliance with or violation of
any Environmental Law by (1) Borrower or (2) any Guarantor with respect to any
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Real Estate Security or (B) the release, spill or discharge, threatened or
actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety matter,
which affects (1) Borrower or NSC or their respective business, operations or
assets or any properties at which Borrower transported, stored or disposed of
any Hazardous Materials or (2) any Real Estate Security given by any Guarantor.
(d) Without limiting the generality of the foregoing, whenever Lender
reasonably determines that there is non-compliance, or any condition which
requires any action by or on behalf of Borrower or NSC with respect to any Real
Estate Security, in order to avoid any material non-compliance, with any
Environmental Law, Borrower shall, at Lender's request and Borrower's expense:
(i) cause an independent environmental engineer acceptable to Lender to conduct
such tests of the site where Borrower's or NSC's non-compliance or alleged
non-compliance with such Environmental Laws has occurred as to such non-
compliance and prepare and deliver to Lender a report as to such non-compliance
setting forth the results of such tests, a proposed plan for responding to any
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environmental problems described therein, and an estimate of the costs thereof
and (ii) provide to Lender a supplemental report of such engineer whenever the
scope of such non-compliance, or Borrowers' or NSC's response thereto or the
estimated costs thereof, shall change in any material respect.
(e) Borrowers and NSC shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including attorneys' fees and legal expenses) directly or
indirectly arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property of
Borrower or NSC or any Real Estate Security given by any of them and the
preparation and implementation of any closure, remedial or other required plans.
All representations, warranties, covenants and indemnifications in this Section
15.27 shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
15.27 CHAPTER 11 PLAN. The principal economic terms of NSC's tentative
proposed Plan of Reorganization in the Chapter 11 Case is set forth on Exhibit C
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hereto. NSC shall keep Lender appraised of the status of such Plan and advise
Lender of any changes, modifications or alterations thereto. The principal
economic terms of the primary plan with respect to the Senior Note Claims (as
defined therein) is acceptable to Lender; but the Alternative Plan (as defined
therein) is not acceptable to Lender. NSC shall not make any material change (as
determined solely by Lender) to such proposed Plan or submit any Plan of
Reorganization in the Chapter 11 Case not previously approved by Lender.
Lender's acceptance of such proposed Plan is conditioned on and subject to(a)
restructuring the security under the Credit Documents so that under the
Definitive Loan Agreement and Definitive Financing Agreements(i) the Liens and
security interests in the Collateral currently pledged to NSC are granted to
Lender directly by the owners of such Collateral rather than first to NSC and
then by NSC to Lender and (ii) NSC is granted a security interest therein,
junior, subject and fully subordinate to the Liens and security interests of
Lender therein; all in form and substance satisfactory to Lender and (b) the
Alternate Plan not becoming operative. Lender has not reviewed or approved NSC's
draft "Reorganization Plan of Nutritional Sourcing Corporation".
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IN WITNESS WHEREOF, Lender and Borrowers and NSC have caused these
presents to be duly executed as of the day and year first above written.
LENDER:
WESTERNBANK PUERTO RICO
By: /s/ Miguel Vazquez
--------------------------------
Miguel Vazquez
Title: President
Business Credit Division
Address: 268 Munoz Rivera Avenue
Suite 600 6th Floor
Westernbank World Plaza
Hato Rey, Puerto Rico 00918
Further the undersigned Credit Parties ratify and confirm all of their
respective Obligations under the Credit Documents.
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BORROWERS:
Attest:
Pueblo International, LLC
(f/k/a Pueblo International, Inc.)
/s/ Fernando J. Bonilla
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
(Seal) Name: Daniel J. O'Leary
Title: Executive Vice President
and Chief Financial
Officer
Chief Executive Office:
1300 N.W. 22nd Street
Pompano Beach, FL 33069
192
Attest: Xtra Super Food Centers, Inc.
/s/ Fernando J. Bonilla
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
(Seal) Name: Daniel J. O'Leary
Title: Executive Vice President
and Chief Financial
Officer
Chief Executive Office:
1300 N.W. 22nd Street
Pompano Beach, FL 33069
193
Attest:
/s/ Fernando J. Bonilla Pueblo Entertainment, Inc.,
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
Name: Daniel J. O'Leary
(Seal) Title: Executive Vice President
and Chief Financial
Officer
Chief Executive Office:
1300 N.W. 22nd Street
Pompano Beach, FL 33069
194
Attest
/s/ Fernando J. Bonilla Xtra Merger Corporation
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
Name: Daniel J. O'Leary
(Seal) Title: Executive Vice
President and Chief
Financial Officer
Chief Executive Office:
1300 N.W. 22nd Street
Pompano Beach, FL 33069
195
Attest: All Truck, Inc.
/s/ Fernando J. Bonilla
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
Name: Daniel J. O'Leary
(Seal) Title: Executive Vice
President and Chief
Financial Officer
Chief Executive Office:
1300 N.W. 22 Street
Pompano Beach, FL 33069
196
Attest:
/s/ Fernando J. Bonilla Caribad, Inc.
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
Name: Daniel J. O'Leary
(Seal) Title: Executive Vice President
and Chief Financial
Officer
Chief Executive Office:
1300 N.W. 22nd Street
Pompano Beach, FL 33069
197
OTHER CREDIT
PARTIES:
Attest:
Nutritional Sourcing Corporation
/s/ Fernando J. Bonilla (f/k/a Pueblo Xtra International, Inc.)
- -----------------------
Secretary By: /s/ Daniel J. O'Leary
-----------------------------
Name: Daniel J. O'Leary
(Seal) Title: Executive Vice President
& Chief Financial Officer
Chief Executive Office:
550 Biltmore Way - Suite 900
Coral Gables, FL 33134
198