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Exhibit 4.17
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NATIONAL RECORD MART, INC.
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated: November 1, 1999
$35,000,000
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FLEET CAPITAL CORPORATION
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TABLE OF CONTENTS
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SECTION 1. GENERAL DEFINITIONS............................................. 1
1.1. Defined Terms................................................... 1
1.2. Accounting Terms................................................ 12
1.3. Other Terms..................................................... 12
1.4. Certain Matters of Construction................................. 12
SECTION 2. CREDIT FACILITY................................................. 13
2.1. Revolving Credit Loans.......................................... 13
2.2. Manner of Borrowing Revolving Credit Loans...................... 13
2.3. Eurodollar Loans................................................ 14
2.4. All Loans to Constitute One Obligation.......................... 15
2.5. Loan Account.................................................... 16
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT.............................. 16
3.1. Interest, Fees and Charges...................................... 16
(A) Interest............................................... 16
(B) Default Rate of Interest............................... 16
(C) Unused Facility Fee.................................... 16
(D) Collateral Monitoring Fee.............................. 16
(E) Closing Fee............................................ 16
(F) Intentionally Omitted.................................. 17
(G) Capital Adequacy Charge................................ 17
(H) No Impact of Usury Laws; Limitation on Interest........ 17
(I) Examination and Inspection............................. 17
3.2. Term of Agreement............................................... 17
3.3. Termination..................................................... 18
3.4. Payments........................................................ 18
3.5. Application of Payments and Collections......................... 19
3.6. Statements of Account........................................... 20
SECTION 4. COLLATERAL: GENERAL TERMS...................................... 20
4.1. Security Interest in Collateral................................. 20
4.2. Lien on Real Property........................................... 20
4.3. Representations, Warranties and Covenants--Collateral........... 21
4.4. Lien Perfection................................................. 21
4.5. Location of Collateral.......................................... 21
4.6. Insurance of Collateral......................................... 22
4.7. Protection of Collateral........................................ 22
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SECTION 5. PROVISIONS RELATING TO ACCOUNTS................................. 23
5.1. Representations, Warranties and Covenants....................... 23
5.2. Collection of Accounts.......................................... 24
SECTION 6. PROVISIONS RELATING TO INVENTORY................................ 24
6.1. Representations, Warranties and Covenants....................... 24
6.2. Inventory Reports............................................... 25
6.3. Returns of Inventory............................................ 25
SECTION 7. PROVISIONS RELATING TO EQUIPMENT................................ 25
7.1. Representations, Warranties and Covenants....................... 25
7.2. Evidence of Ownership of Equipment.............................. 25
7.3. Records and Schedules of Equipment.............................. 25
7.4. Dispositions of Equipment....................................... 25
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................. 26
8.1. General Representations and Warranties.......................... 26
(A) Organization and Qualification......................... 26
(B) Corporate Names........................................ 26
(C) Corporate Power and Authority.......................... 26
(D) Legally Enforceable Agreement.......................... 26
(E) Use of Proceeds........................................ 26
(F) Margin Stock........................................... 27
(G) Governmental Consents.................................. 27
(H) Patents, Trademarks, Copyrights and Licenses........... 27
(I) Capital Structure...................................... 27
(J) Solvent Financial Condition............................ 27
(K) Restrictions........................................... 27
(L) Litigation............................................. 28
(M) Title to Properties.................................... 28
(N) Financial Statements; Fiscal Year...................... 28
(O) Full Disclosure........................................ 28
(P) Pension Plans.......................................... 28
(Q) Taxes.................................................. 29
(R) Labor Relations........................................ 29
(S) Compliance With Laws................................... 29
(T) Surety Obligations..................................... 30
(U) No Defaults............................................ 30
(V) Brokers................................................ 30
(W) Business Locations; Agent for Process.................. 30
(X) Trade Relations........................................ 30
(Y) Leases................................................. 30
(Z) Investment Company Act................................. 30
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(AA) OSHA and Environment Compliance........................ 30
(BB) Senior Indebtedness.................................... 31
(CC) Indebtedness........................................... 31
(DD) True Copies of Charter and Other Documents............. 31
8.2. Reaffirmation................................................... 31
8.3. Survival of Representations and Warranties...................... 31
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS............................. 31
9.1. Affirmative Covenants........................................... 31
(A) Taxes and Liens........................................ 32
(B) Tax Returns............................................ 32
(C) Payment of Bank Charges................................ 32
(D) Business and Existence................................. 32
(E) Maintain Properties.................................... 32
(F) Compliance with Laws................................... 32
(G) ERISA Compliance....................................... 32
(H) Business Records....................................... 33
(I) Visits and Inspections................................. 33
(J) Financial Statements................................... 34
(K) Notices to Lender...................................... 35
(L) Landlord and Storage Agreements........................ 35
(M) Subordinations......................................... 35
(N) Further Assurances..................................... 35
(O) Projections............................................ 36
(P) Environmental Matters.................................. 36
(Q) Insurance.............................................. 37
(R) Landlord Waivers....................................... 37
(S) Rental Reports......................................... 37
9.2. Negative Covenants.............................................. 37
(A) Mergers; Consolidations; Acquisitions.................. 37
(B) Loans.................................................. 38
(C) Total Indebtedness..................................... 38
(D) Affiliate Transactions................................. 38
(E) Partnerships or Joint Ventures......................... 38
(F) Intentionally Omitted.................................. 38
(G) Guaranties............................................. 38
(H) Limitation on Liens.................................... 38
(I) Subordinated Debt...................................... 39
(J) Distributions.......................................... 39
(K) Subsidiaries........................................... 39
(L) Capital Expenditures................................... 39
(M) Business Locations..................................... 40
(N) Change of Business..................................... 40
(O) Disposition of Assets.................................. 40
(P) Name of Borrower....................................... 40
(Q) Bill-and-Hold Sales, Etc............................... 40
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(R) Use of Lender's Name................................... 40
(S) Margin Securities...................................... 40
(T) Restricted Investment.................................. 40
(U) Fiscal Year............................................ 41
(V) Stock of Subsidiary, Etc............................... 41
(W) Leases................................................. 41
(X) Tax Consolidation...................................... 41
(Y) Compliance with Environmental Laws..................... 41
9.3. Specific Financial Covenants.................................... 41
(A) Minimum Adjusted Tangible Net Worth.................... 41
(B) Cash Flow.............................................. 41
SECTION 10. CONDITIONS PRECEDENT............................................ 42
10.1. Documentation................................................... 42
10.2. Other Conditions................................................ 42
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT............... 43
11.1. Events of Default............................................... 43
(A) Payment of Note........................................ 43
(B) Payment of Obligations................................. 43
(C) Misrepresentations..................................... 43
(D) Breach of Covenants.................................... 43
(E) Default Under Other Agreements......................... 43
(F) Other Defaults......................................... 43
(G) Uninsured Losses; Unauthorized Dispositions............ 44
(H) Insolvency, etc........................................ 44
(I) Business Disruption; Condemnation...................... 44
(J) Change of Management................................... 44
(K) ERISA.................................................. 44
(L) Litigation............................................. 44
(M) Repudiation of or Default Under Guaranty Agreement..... 45
(N) Criminal Forfeiture.................................... 45
(O) Judgments.............................................. 45
11.2. Acceleration of the Obligations................................. 45
11.3. Remedies........................................................ 45
11.4. Remedies Cumulative; No Waiver.................................. 46
SECTION 12. MISCELLANEOUS................................................... 46
12.1. Power of Attorney............................................... 46
12.2. Indemnity....................................................... 47
12.3. Modification of Agreement; Sale of Interest..................... 47
12.4. Reimbursement of Expenses....................................... 48
12.5. Indulgences Not Waivers......................................... 48
12.6. Severability.................................................... 49
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12.7. Successors and Assigns.......................................... 49
12.8. Cumulative Effect; Conflict of Terms............................ 49
12.9. Execution in Counterparts....................................... 49
12.10. Notice.......................................................... 49
12.11. Lender's Consent................................................ 50
12.12. Demand Obligations.............................................. 50
12.13. Time of Essence................................................. 50
12.14. Entire Agreement................................................ 50
12.15. Interpretation.................................................. 51
12.16. GOVERNING LAW; CONSENT TO FORUM................................. 51
12.17. WAIVERS BY BORROWER............................................. 52
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of
this 1st day of November, 1999, by and among FLEET CAPITAL CORPORATION
("Lender"), a Connecticut corporation with an office at 200 Glastonbury
Boulevard, Glastonbury, Connecticut 06033; and NATIONAL RECORD MART, INC.
("Borrower"), a Delaware corporation with its chief executive office and
principal place of business at 507 Forest Avenue, Carnegie, Pennsylvania 15106.
BACKGROUND
Borrower entered into a Loan and Security Agreement with Lender dated
June 11, 1993 (as same may have been amended, modified, restated or supplemented
from time to time, the "Original Loan Agreement"). By execution of this
Agreement, Borrower and Lenders, wish to amend and restate the Original Loan
Agreement on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, the parties hereto hereby agree as follows:
A. Amendment and Restatement.
As of the date of this Agreement, the terms, conditions, covenants,
agreements, representations and warranties contained in the Original Loan
Agreement shall be deemed amended and restated in their entirety as follows and
the Original Loan Agreement shall be consolidated with and into and superseded
by this Agreement; provided, however, that nothing contained in this Agreement
shall impair limit or effect the Liens heretofore granted, pledged and/or
assigned to Lenders as security for the Obligations to Lender under the Original
Loan Agreement, except as otherwise herein provided.
SECTION 1. GENERAL DEFINITIONS
1.1. Defined Terms. When used herein, the following terms shall have
the following meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower or
in which Borrower now has or hereafter acquires any interest.
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
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Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings after provision for income taxes for such fiscal
period of Borrower, all as reflected on the financial statement of Borrower
supplied to Lender pursuant to Section 9.1(J) hereof, but excluding: (i) any
gain or loss arising from the sale or other disposition of capital assets other
than in the ordinary course of business; (ii) any gain arising from any write-up
of assets; (iii) earnings of any Subsidiary accrued prior to the date it became
a Subsidiary; (iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by Borrower, realized by such corporation
prior to the date of such acquisition; (v) net earnings of any business entity
(other than a Subsidiary) in which Borrower has an ownership interest unless
such net earnings shall have actually been received by Borrower in the form of
cash distributions; (vi) any portion of the net earnings of any Subsidiary which
for any reason is unavailable for payment of dividends to Borrower; (vii) the
earnings of any Person to which any assets of Borrower shall have been sold,
transferred or disposed of, or into which Borrower shall have merged, or been a
party to any consolidation or other form of reorganization, prior to the date of
such transaction; (viii) any gain or non-cash loss arising from the issuance or
acquisition of any Securities of Borrower; and (ix) any gain or non-cash loss
arising from extraordinary items.
Adjusted Tangible Assets - all assets except: (i) any surplus resulting
from any write-up of assets subsequent to March 27, 1993; (ii) deferred assets,
other than prepaid items in the ordinary course such as insurance and prepaid
taxes; (iii) patents, copyrights, trademarks, trade names, non-compete
agreements, franchises and other similar intangibles; (iv) good will, including
any amounts, however designated on a Consolidated balance sheet of a Person and
its Subsidiaries, representing the excess of the purchase price paid for assets
or stock over the value assigned thereto on the books of such Person; (v)
Restricted Investments; (vi) unamortized debt discount and expense; (vii) assets
located and notes and receivables due from obligors outside of the United States
of America; and (viii) Accounts, notes and other receivables due from Affiliates
or employees.
Adjusted Tangible Net Worth - at any date means a sum equal to: (i) the
net book value (after deducting related depreciation, obsolescence,
amortization, valuation, and other proper reserves) at which the Adjusted
Tangible Assets of a Person would be shown on a balance sheet at such date in
accordance with GAAP, plus (ii) the then outstanding principal balance of
Subordinated Debt, minus (iii) the amount at which such Person's liabilities
(other than capital stock and surplus) would be shown on such balance sheet in
accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of Borrower; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by Borrower or a
Subsidiary of Borrower. For purposes hereof, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise. Notwithstanding the foregoing, neither Remsen
Partners, Ltd. nor AlarMax Distributors, Inc. shall be considered an Affiliate
for purposes of this Agreement.
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Aggregate Adjusted Availability - an amount equal to (i) the Borrowing
Base minus (ii) the sum of (a) the aggregate unpaid balance of Revolving Credit
Advances plus (b) all sums due and owing to trade creditors which remain
outstanding beyond normal business practices or beyond special terms granted by
trade creditors.
Agreement - this Loan and Security Agreement.
Average Monthly Loan Balance - the amount obtained by adding the unpaid
balance of Revolving Credit Loans owing by Borrower to Lender at the end of each
day for each day during the month in question and by dividing such sum by the
number of days in such month.
Bank - Fleet National Bank
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its United States of America prime rate for commercial loans, whether
or not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if the prime rate for commercial loans is discontinued by Bank
as a standard, a comparable reference rate designated by Bank as a reasonable
substitute therefor shall be the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) the Maximum Revolving Amount; or
(b) an amount equal to:
(i) sixty-five percent (65%) or such lesser
percentage as Lender may, in the good faith exercise of its
business judgment, determine from time to time of the value of
Eligible Inventory at such date consisting of finished goods,
calculated on the basis of the lower of cost or market with
the cost of finished goods calculated on an average cost
basis:
PLUS (ii) an amount equal to $1,500,000 solely during the
period commencing on October 1 in each year of the term hereof
and ending on December 31 of each such year;
MINUS (iii) in Lender's sole and absolute discretion, an
amount equal to forty percent (40%) of all gift certificates
issued by Borrower and then outstanding;
MINUS (iv) in Lender's sole and absolute discretion, an amount
equal to one hundred percent (100%) of Eligible Inventory
subject to recorded Liens (other than Permitted Liens); and
MINUS (v) any amounts which Lender may pay pursuant to any of
the Loan Documents for the account of Borrower.
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Business Day - a day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are closed.
Capital Expenditures - expenditures made and liabilities incurred for
the acquisition of any fixed assets or improvements, replacements, substitutions
or additions thereto which have a useful life of more than one year, including
the total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
Cash Flow - for the end of any fiscal quarter with respect to the four
fiscal quarters then ended, an amount equal to (i) Adjusted Net Earnings from
Operations of Borrower, plus (ii) amounts attributable to depreciation and
amortization which were deducted in determining Adjusted Net Earnings from
Operations for such fiscal period; plus (iii) amounts contributed to the equity
of Borrower during such fiscal period; plus (iv) any subordinated loans or
advances made to Borrower during such fiscal period, minus (v) any non-financed
Capital Expenditures made during such fiscal period, minus (vi) all
Distributions paid during such fiscal period and minus (vii) scheduled
repayments of principal on Indebtedness for Money Borrowed other than Revolving
Credit Loans for such fiscal period.
CERCLA - the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. ss.ss. 9601 et seq.
Closing Date - the date on which all of the conditions precedent in
Section 10 are satisfied and the initial Loan is made hereunder.
Code - the Uniform Commercial Code as adopted and in force in the State
of New York, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 4 hereof, and all other Property and interests in Property that now or
hereafter secure the payment and performance of any of the Obligations.
Controlled Group - shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Sections 414(b) or (c) of the IRC.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets on a
balance sheet at such date in accordance with GAAP except that amounts due from
Affiliates and investments in Affiliates shall be excluded therefrom.
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Current Liabilities - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP (including
the Loans but excluding current maturities of Subordinated Debt).
Debt Service Coverage - the ratio of (a) the sum of (i) Cash Flow plus
(ii) scheduled repayments of principal on Indebtedness for Money Borrowed other
than Revolving Credit Loans to (b) scheduled repayments of principal on
Indebtedness other than Revolving Credit Loans during the relevant fiscal
period.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in Section 3.1(B) of this Agreement.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Dominion Account - a special account of Lender established by Borrower
pursuant to this Agreement at a bank selected by Borrower, but acceptable to
Lender, in its sole discretion, and over which Lender shall have sole and
exclusive access and control for withdrawal purposes.
Eligible Inventory - such Inventory of Borrower (other than packaging
materials and supplies, raw materials and work-in-process) which Lender, in the
exercise of its commercially reasonable credit judgment, deems to be Eligible
Inventory. Without limiting the generality of the foregoing, no Inventory shall
be Eligible Inventory unless, in Lender's opinion, it (i) is finished goods,
(ii) is in good, new and saleable condition, (iii) is not obsolete, slow-moving
or unmerchantable (as determined by reference to prevailing industry standards),
(iv) meets all standards imposed by any governmental agency or authority, (v)
conforms in all respects to the warranties and representations set forth in
Section 6.1 hereof, (vi) is at all times subject to Lender's duly perfected,
first priority security interest and no other Lien except a Permitted Lien and
(vii) is situated at a location in compliance with Section 4.5 hereof and is not
in transit from a vendor.
Environmental Complaint - as defined in Section 9.1(P) of this
Agreement.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters, including, but not
limited to, the Resource Conservation and Recovery Act; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; the Toxic
Substances Control Act, as amended; the Clean Water Act; the River and Harbor
Act; the Water Pollution Control Act; the Marine Protection Research and
Sanctuaries Act; the Deep-Water Act; the Superfund Amendments and
Reauthorization Act of 1986; the Federal Insecticide, Fungicide and Rodenticide
Act; the Mineral Lands and Leasing Act; the Surface Mining Control and
Reclamation Act; state and federal superlien and environmental cleanup programs
and laws; and U.S. Department of Transportation regulations.
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Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures and other tangible personal Property (other than motor vehicles and
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
ERISA - the Employee Retirement Income Security Act of 1974 and all
rules and regulations from time to time promulgated thereunder.
ERISA Affiliate - each trade or business (whether or not incorporated)
which, together with Borrower, would be treated as a single employer under
Section 4001(a)(14) of ERISA or IRC Section 414(b), (c), (m), (n) or (o), as
applicable.
Eurodollar Loan - a Loan at any time that bears interest based on the
Eurodollar Rate.
Eurodollar Rate - for any Eurodollar Loan, for the then current
Interest Period relating thereto, the rate per annum (such Eurodollar Rate to be
adjusted to the next higher 1/16 of one (1%) percent) equal to the quotient of
(a) LIBOR, divided by (b) a number equal to 1.00 minus the aggregate of the
rates (expressed as a decimal) of reserve requirements current on the day that
is two Business Days prior to the beginning of the Interest Period (including
without limitation basic, supplemental, marginal and emergency reserves) under
any regulation promulgated by the Board of Governors of the Federal Reserve
System (or any other governmental authority having jurisdiction over the Bank)
as in effect from time to time, dealing with reserve requirements prescribed for
Eurocurrency funding including any reserve requirements with respect to
"Eurocurrency liabilities" under Regulation D of the Board of Governors of the
Federal Reserve System.
Event of Default - as defined in Section 11.1 of this Agreement.
Fiscal Year - the fiscal year of Borrower ending on the date which is
the Saturday in late March or early April of each year that is consistent for
such fiscal year with the 4-5-4 retail method of accounting.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
General Intangibles - all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer programs, all
claims under guaranties, security interests or other security held by or granted
to Borrower to secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification and all other intangible property of every kind and
nature (other than Accounts).
Guarantor - NRM and any other Person who may hereafter guarantee
payment or performance of the whole or any part of the Obligations.
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Guaranty Agreements - the Guaranty Security Agreement and each Guaranty
executed and delivered to Lender by any Guarantor in form and substance
satisfactory to Lender.
Guaranty Security Agreement - the Security Agreement dated as of April
16, 1998 issued by NRM Investment, Inc. to Lender.
Hazardous Discharge - as defined in Section 9.1(P) hereof.
Hazardous Substance - without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychorinated byphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances as defined in CERCLA,
the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801,
et seq.), RCRA or any other applicable Environmental Law and in the regulations
adopted pursuant thereto.
Hazardous Wastes - all waste materials subject to regulation under
CERCLA, RCRA or similar applicable state law, and any other applicable Federal
and state environmental laws now in force or hereafter enacted relating to
hazardous waste disposal.
Indebtedness - as applied to a Person means, without duplication (i)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (ii) all obligations of other Persons
which such Person has guaranteed and (iii) in the case of Borrower (without
duplication), the Obligations.
Interest Period - the period provided for any Eurodollar Loan pursuant
to Section 2.3.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired by Borrower, including, but not limited to, all goods intended for sale
or lease by Borrower, or for display or demonstration; all work in process; and
all documents evidencing and General Intangibles relating to any of the
foregoing, whether now owned or hereafter acquired by Borrower.
IPO Equity - the net proceeds realized by Borrower from an initial
public offering of Borrower's common stock.
IRC - the Internal Revenue Code of 1986, as amended, and all references
to sections thereof shall include such sections and successor provisions
thereto.
Junior Subordinated Indebtedness - all principal, premium, if any,
interest and other amounts payable or chargeable in connection with the Junior
Subordinated Lending Agreements.
Junior Subordinated Lender - Robert Fleming Inc. and each of the other
"holders" under and as defined in the Junior Subordinated Lending Agreements.
Junior Subordinated Note or Note(s) - those certain promissory notes
issued by Borrower to the Junior Subordinated Lender in the aggregate original
principal amount of $7,500,000 each
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dated April 16, 1998 as further described on Exhibit A-1 hereto, together with
any extensions thereof, securities issued in exchange therefor or modifications
or amendments thereto.
LIBOR - for any Eurodollar Loan for the then current Interest Period,
the rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Bank in the interbank eurodollar
market as at or about 2:00 p.m. New York time two (2) Business Days prior to the
beginning of such Interest Period, for delivery on the first day of such
Interest Period, and in an amount approximately equal to the amount of such
Eurodollar Loan for a period approximately equal to such Interest Period.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, deed to secure debt, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 2.5 hereof.
Loan Documents - this Agreement, the Other Agreements and the Security
Documents.
Loans - all loans and advances made by Lender pursuant to this
Agreement, including, without limitation, all Revolving Credit Loans.
Maximum Revolving Amount - Thirty Five Million Dollars ($35,000,000).
Money Borrowed - as applied to Indebtedness, means (i) Indebtedness for
borrowed money; (ii) Indebtedness, whether or not in any such case the same was
for borrowed money, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations evidenced
by bonds, debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; and (iv) Indebtedness under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof.
Multiemployer Plan - a plan described in Sections 3(37) and 4001(a)(3)
of ERISA which covers employees of Borrower or any ERISA Affiliate.
New Mortgages - as defined in Section 4.2 hereof.
NRM - NRM Investment, Inc., a Delaware corporation.
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Note - the secured promissory note executed by Borrower in favor of
Lender to evidence the Revolving Loans as some may be amended and restated from
time to time.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrower
to Lender of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, whether arising under this Agreement or
any of the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorney's fees and any other sums chargeable to Borrower under
any of the Loan Documents.
Original Term - as defined in Section 3.3 of this Agreement.
OSHA - the Occupational Safety and Health Act, and all rules and
regulations from time to time promulgated thereunder.
Other Agreements - any and all agreements, instruments and documents
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower and delivered to Lender in respect to the
transactions contemplated by this Agreement, including, without limitation, the
Note.
Overadvance - as defined in Section 2.1(B).
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in this Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.
PBGC - the Pension Benefit Guaranty Corporation or any successor
agency.
Permitted Liens - any Lien of a kind specified in subparagraphs (i)
through (x) of Section 9.2(H) of this Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Purchase Money Indebtedness and the current portion of Capitalized Lease
Obligations of Borrower at the time outstanding, does not exceed $500,000 per
any consecutive twelve (12) month period. For the purposes of this definition,
the principal amount of any Purchase Money Indebtedness consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, joint stock company,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan within the meaning of Section 3(3) of
ERISA, maintained by Borrower or any member of the Controlled Group or any such
employee benefit plan to which Borrower or any member of the Controlled Group is
required to contribute on behalf of any of its employees.
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Prime Loans - all Loans other than Eurodollar Loans.
Prohibited Transaction - any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any transaction
described in Section 4975(c) of the IRC which is not exempt by reason of
Sections 4975(c)(2) or (d) of the IRC, and which could result in any excise tax,
fine, penalty or other liability being imposed on Borrower.
Projections - Borrower's forecasted monthly (a) balance sheets, (b)
profit and loss statements and (c) cash flow statements, all prepared on a
consistent basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness for
the payment of all or any part of the purchase price of any fixed assets, (ii)
any Indebtedness (other than the Obligations) incurred at the time of or within
ten (10) days prior to or after the acquisition of any fixed assets for the
purpose of financing all or any part of the purchase price thereof, and (iii)
any renewals, extensions or refinancings thereof, but not any increases in the
principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - mean, as of the date of determination, all payments which
Borrower, as lessee, is required to make by the terms of any lease.
Renewal Terms - as defined in Section 3.3 of this Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
Restricted Investment - any investment in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following: (i) investments in one or
more Subsidiaries of Borrower; (ii) Property to be used in the ordinary course
of business; (iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries; (iv)
investments in direct obligations of the United States of America, or any agency
thereof or obligations guaranteed by the United States of America, provided that
such obligations mature within one year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one year from the
date of acquisition issued by a bank or trust company organized under the laws
of the United States or any state thereof having capital surplus and undivided
profits aggregating at least $100,000,000; (vi) investments in commercial paper
given the highest rating by a national credit rating agency and maturing not
more than two hundred seventy (270) days from the date of creation thereof; and
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(vii) any publicly traded securities listed on a national stock exchange if
purchased with IPO Equity.
Revolving Credit Loan - a Loan made by Lender as provided in Section
2.1 of this Agreement.
RMF Investment - RMF Investment Company.
Security - shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreements and the Trademark
Assignment and all other instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
Senior Subordinated Lending Agreements - collectively the Senior
Subordinated Secured Note Purchase Agreement dated April 16, 1998 between
Borrower, NRM and Senior Subordinated Lender, the Senior Subordinated Note and
all promissory notes, agreements, documents, guarantees and instruments now or
at any time hereafter executed and/or delivered by Borrower, NRM or any other
Person to, with or in favor of the Senior Subordinated Lender in connection
therewith or related thereto, as all of the foregoing now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced each
as from time to time in effect.
Senior Subordinated Indebtedness - all principal, interest and other
amounts payable or chargeable in connection with the Senior Subordinated Lending
Agreements.
Senior Subordinated Lender - Robert Fleming Inc. and each of the other
"holders" under and as defined in the Senior Subordinated Lending Agreements.
Senior Subordinated Note - those certain promissory notes issued by
Borrower to Senior Subordinated Lender in the aggregate original principal
amount of $7,500,000 each dated April 16, 1998 as further described on Exhibit
A-2 hereto, together with any extensions thereof, securities issued in exchange
therefor or modifications or amendments thereto.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is expressly
subordinated to the Obligations including, without limitation, Indebtedness
evidenced by the Senior Subordinated Note and Junior Subordinated Note.
Subordinated Lending Agreements - collectively, the Subordinated Note
Purchase Agreement dated April 16, 1998 between Borrower, NRM and Junior
Subordinated Lender, and all promissory notes, agreements, guarantees, documents
and instruments now or at any time
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<PAGE> 18
hereafter executed and/or delivered by Borrower, NRM or any other Person to,
with or in favor of the Junior Subordinated Lender in connection therewith or
related thereto, as all of the foregoing now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
Subordination Agreements - collectively, (i) the Subordination
Agreement dated May 9, 1996 among Borrower, Lender and NRM, (ii) the Junior
Subordinated Agreement dated as of April 16, 1998 among Borrower, Lender, NRM
and Junior Subordinated Lender ("Junior Subordination Agreement") and (iii) the
Subordination Agreement dated as of April 16, 1998 among Borrower, Lender, NRM
and Senior Subordinated Lender ("Senior Subordination Agreement").
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Trademark Assignment - the Trademark Collateral Assignment to be
executed by Borrower on or about the Closing Date in favor of Lender and by
which Borrower shall assign to Lender and grant to Lender a security interest
in, as security for the Obligations all of Borrower's right, title and interest
in and to all of its trademarks.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Working Capital - at any date means Current Assets minus Current
Liabilities.
1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistent with that applied
in preparation of the financial statements referred to in Section 9.1(J), and
all financial data pursuant to the Agreement shall be prepared in accordance
with such principles.
1.3. Other Terms. All other terms contained in this Agreement shall
have, when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.
1.4. Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of this Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
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SECTION 2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to THIRTY FIVE
MILLION DOLLARS ($35,000,000) available upon Borrower's request therefor, as
follows:
2.1. Revolving Credit Loans
(A) Subject to all of the terms and conditions of this Agreement,
Lender agrees, for so long as no Default or Event of Default exists, to make
Revolving Credit Loans to Borrower from time to time, as requested by Borrower
in accordance with the terms of Section 2.2 hereof, up to a maximum principal
amount at any time outstanding equal to the Borrowing Base at such time. It is
expressly understood and agreed that Lender may use the Borrowing Base as a
maximum ceiling on Revolving Credit Loans outstanding to Borrower at any time.
If the unpaid balance of the Revolving Credit Loans should exceed the Borrowing
Base or any other limitation set forth in this Agreement, such Revolving Credit
Loans shall nevertheless constitute Obligations that are secured by the
Collateral and entitled to all the benefits thereof. In no event shall Borrower
be authorized to request a Loan at any time that there exists a Default or an
Event of Default. Notwithstanding the foregoing provisions of this Section
2.1(A), Lender shall have the right to establish reserves in such amounts, and
with respect to such matters, as Lender shall deem necessary or appropriate,
against the amount of Revolving Credit Loans which Borrower may otherwise
request under this Section 2.1(A), including, without limitation, with respect
to (i) shrinkage, spoilage and obsolescence of Inventory; (ii) other sums
chargeable against Borrower's Loan Account as Revolving Credit Loans under any
section of this Agreement; and (iii) such other matters, events, conditions or
contingencies as to which Lender, in its good faith business judgment determines
reserves should be established from time to time hereunder.
(B) Insofar as Borrower may request and Lender may be willing in its
sole and absolute discretion to make Revolving Credit Loans to Borrower at a
time when the unpaid balance of Revolving Credit Loans exceeds, or would exceed
with the making of any such Revolving Credit Loan, the Borrowing Base (any such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively as "Overadvances"), Lender shall enter such Overadvances as debits
in the Loan Account. All Overadvances shall be payable on demand, shall be
secured by the Collateral and shall bear interest as provided in this Agreement
for Revolving Credit Loans generally.
(C) Intentionally Omitted.
(D) The Revolving Credit Loans shall be used solely for Borrower's
general operating capital needs to the extent not inconsistent with the
provisions of this Agreement.
2.2. Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 2.1 shall be as follows:
(A) A request for a Revolving Credit Loan shall be made, or shall be
deemed to be made, in the following manner: (i) Borrower may give Lender notice
of its intention to borrow, in which notice Borrower shall specify the amount of
the proposed borrowing and the
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proposed borrowing date; (ii) the becoming due of any amount required to be paid
under this Agreement as interest shall be deemed irrevocably to be a request for
a Revolving Credit Loan on the due date in the amount required to pay such
interest; and (iii) the becoming due of any other Obligations shall be deemed
irrevocably to be a request for a Revolving Credit Loan on the due date in the
amount then so due. As an accommodation to Borrower, Lender may permit
telephonic requests for Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any request, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower, and
Lender shall have no duty to verify the origin of any such communication or the
authority of the Person sending it.
(B) Borrower hereby irrevocably authorizes Lender to disburse the
proceeds of each Revolving Credit Loan requested, or deemed to be requested,
pursuant to this Section 2.2 as follows: (i) the proceeds of each Revolving
Credit Loan requested under Section 2.2(A)(i) shall be disbursed by Lender in
lawful money of the United States of America in immediately available funds, in
the case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower, and in the case of each subsequent borrowing,
by wire transfer to such bank account as may be agreed upon by Borrower and
Lender from time to time; and (ii) the proceeds of each Revolving Credit Loan
requested under Section 2.2(A)(ii) or (iii) shall be disbursed by Lender by way
of direct payment of the relevant Obligation.
2.3. Eurodollar Loans.
(A) Notwithstanding the provisions of Section 2.2, (a) in the event
Borrower desires to obtain a Eurodollar Loan, it shall give Lender prior written
irrevocable notice no later than 11:00 a.m. New York time on the fifth (5th)
Business Day prior to the requested borrowing date; specifying (i) the date of
the proposed borrowing (which shall be a Business Day) and (ii) the amount to be
borrowed, which amount shall be an integral multiple of $1,000,000. In no event
shall Borrower be permitted to have outstanding at any one time Eurodollar Loans
with more than five (5) different Interest Periods. In addition, and
notwithstanding any other provision of this Agreement, Borrower shall have no
right to request or obtain a Eurodollar Loan at any time that an Event of
Default exists.
(B) Provided that no Event of Default has occurred which is then
continuing, each interest period of a Eurodollar Loan shall commence on the date
such Eurodollar Loan is made and shall end on the date which is thirty (30) days
later ("Interest Period") provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next preceding or succeeding
Business Day as is the Bank's custom in the market to which such Eurodollar Loan
relates; and
(ii) there remains a minimum of thirty (30) days in the
Original Term (or if this Agreement has been renewed, in the then applicable
Renewal Term).
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(C) Provided that no Event of Default has occurred which is then
continuing, Borrower may, on any Business Day, convert any Prime Loans into a
Eurodollar Loan in the same aggregate principal amount. If the Borrower desires
to convert a Prime Loan, it shall give Lender not less than five (5) Business
Days' prior written notice (prior to 11:00 a.m. New York time on such Business
Day), specifying the date of such conversion and the loans to be converted. Each
conversion into or conversion of a Eurodollar Loan shall be an integral multiple
of $1,000,000. After giving effect to any conversion of Prime Loans to
Eurodollar Loans, Borrower shall not be permitted to have outstanding at any one
time Eurodollar Loans with more than five (5) different Interest Periods.
(D) Subject to the provisions of Section 3.4, Borrower may prepay any
Loan in whole at any time or in part from time to time, without premium or
penalty provided that a Eurodollar Loan may only be prepaid on the last Business
Day of the then current Interest Period with respect thereto. Borrower shall
specify the date of prepayment of Loans which are Eurodollar Loans and the
amount of loans to be prepaid. In the event that any prepayment of a Eurodollar
Loan is made on a date other than the last Business Day of the then current
Interest Period with respect thereto, the Borrower shall indemnify Lender
therefor in accordance with Section 2.3(E) hereof.
(E) Borrower hereby indemnifies Lender and holds Lender harmless from
and against any and all losses or expenses that Lender may sustain or incur as a
consequence of any prepayment or any default by the Borrower in the payment of
the principal of or interest on any Eurodollar Loan or failure by the Borrower
to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar
Loan after notice thereof has been given, including (but not limited to) any
interest payable by Lender to lenders of funds obtained by it in order to make
or maintain its Eurodollar Loans hereunder, and any other loss or expense
incurred by Lender by reason of the liquidation or reemployment of deposits or
other funds acquired by Lender to make, continue, convert into or maintain, a
Eurodollar Loan.
(F) Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for Lender (for purposes of this
subsection (F), the term "Lender" shall include Lender and the office or branch
where Lender or any corporation or bank controlling Lender makes or maintains
any Eurodollar Loans) to make or maintain its Eurodollar Loans, or if with
respect to any Interest Period, Lender is unable to determine the Eurodollar
Rate relating thereto, or adverse or unusual conditions in or changes in
applicable law relating to the applicable Eurodollar interbank market make it,
in the reasonable good faith judgment of Lender, impracticable, to fund therein
any of the Eurodollar Loans or make the projected Eurodollar Rate unreflective
of the actual costs of funds therefor to Lender, the obligation of Lender to
make Eurodollar Loans hereunder shall forthwith be cancelled and Borrower shall,
if any affected Eurodollar Loans are then outstanding, promptly upon request
from Lender, convert such affected Eurodollar Loans into Prime Loans.
2.4. All Loans to Constitute One Obligation. All Loans shall constitute
one general obligation of Borrower, and shall be secured by Lender's security
interest in and Lien upon all of the Collateral, and by all other security
interests and Liens heretofore, now or at any time or times hereafter granted by
Borrower to Lender.
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2.5. Loan Account. Lender shall enter all Revolving Credit Loans as
debits to the Loan Account and shall also record in the Loan Account all
payments made by Borrower on Revolving Credit Loans and all proceeds of
Collateral which are finally paid to Lender, and may record therein, in
accordance with customary accounting practice, all charges and expenses properly
chargeable to Borrower hereunder.
SECTION 3. INTEREST, FEES, TERM AND REPAYMENT
3.1. Interest, Fees and Charges.
(A) Interest. Interest shall accrue on the principal amount of Prime
Loans outstanding at the end of each day (computed on the actual days elapsed
over a year of 360 (days) at a fluctuating rate per annum equal to the Base
Rate. After the date hereof, the foregoing rate of interest shall be increased
or decreased, as the case may be, by an amount equal to any increase or decrease
in the Base Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes effective. The
Base Rate in effect on the date hereof shall be the Base Rate effective as of
the opening of business on the date hereof, but if this Agreement is executed on
a day that is not a Business Day, the Base Rate in effect on the date hereof
shall be the Base Rate effective as of the opening of business on the last
Business Day immediately preceding the date hereof. Eurodollar Loans shall bear
interest on the principal amount thereof owing, at a rate per annum equal to two
percentage points (2.0%) above the Eurodollar Rate. Default Rate of Interest.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of the Obligations shall bear
interest, calculated daily (computed on the actual days elapsed over a year of
360 days), at a fluctuating rate per annum equal to two percent (2.00%) above
the respective rates of interest then in effect with respect to outstanding
Prime Loans and Eurodollar Loans, as the case may be (the "Default Rate").
(C) Unused Facility Fee. In the event the Average Monthly Loan Balance
during any month is less than the Maximum Revolving Amount, a fee at the rate of
one-quarter of one percent (1/4%) per annum on the average daily unused portion
of the Maximum Revolving Amount is payable to Lender monthly in arrears,
commencing on the first day of the first month following the Closing Date.
(D) Collateral Monitoring Fee. Borrower shall pay to Lender monthly in
arrears, commencing on the first day of the first month following the Closing
Date, a collateral monitoring fee in an amount equal to $3,500.00 per month.
(E) Closing Fee. Borrower shall pay to Lender a closing fee of $75,000
(of which $37,500 has previously been paid to Lender as a commitment fee and
which will be applied toward the closing fee on the Closing Date), which shall
be deemed fully earned and nonrefundable at the closing of the transactions
contemplated hereby and shall be paid concurrently with the initial Loan
hereunder. Such fee shall compensate Lender for the costs associated with the
origination, structuring, processing, approving and closing of the transactions
contemplated by this Agreement, including, but not limited to, administrative,
out-of-pocket,
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<PAGE> 23
general overhead and lost opportunity costs, but not including any expenses for
which Borrower has agreed to reimburse Lender pursuant to any other provision of
this Agreement or any of the other Loan Documents, such as, by way of example,
legal fees and expenses.
(F) Intentionally Omitted.
(G) Capital Adequacy Charge. In the event that Lender shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application thereof
or compliance by Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) from any central bank or governmental
authority, does or shall have the effect or reducing the rate of return on
Lender's capital as a consequence of its obligations hereunder to a level below
that which Lender could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by Lender, in its sole discretion, to be material,
then from time to time, after submission by Lender to Borrower of a written
demand therefor, the Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender.
(H) No Impact of Usury Laws; Limitation on Interest. (i)
Notwithstanding anything to the contrary contained in this Agreement, Borrower
agrees (to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any usury law wherever enacted, now or at any time hereof in
force, which may affect the covenants or the performance of this Agreement; and
Borrower (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder, by
resort to any such law, delay or impede pursuant to such law the execution of
any power herein granted to Lender, but will suffer and permit the execution of
every such power as though no such law had been enacted.
(ii) No provision of this Agreement shall require the payment
or permit the collection of interest in excess of the rate then permitted by
applicable law; provided that if any provision is so limited by such applicable
law, the interest shall be the maximum amount permitted thereunder. In the event
that a court of competent jurisdiction determines that Lender has charged or
received interest hereunder in excess of the maximum permitted rate, Lender
shall promptly refund to Borrower any interest received by Lender in excess of
the maximum permitted rate or, if so requested by Borrower, shall apply such
excess to the principal balance of the Obligations.
(I) Examination and Inspection. Borrower shall pay to Lender on demand
in connection with Lender's examination of Borrower's books and records
out-of-pocket costs and expenses for loan analysts and loan administrators.
Lender, in its sole discretion, may engage outside consultants for any such
examination and inspection.
3.2. Term of Agreement. Subject to Lender's right to cease making Loans
to Borrower at any time upon the occurrence and during the continuance of a
Default or Event of Default, this Agreement shall be in effect for a period of
ten (10) years from June 11, 1993 through and including June 10, 2003 (the
"Original Term").
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<PAGE> 24
3.3. Termination.
(A) Upon at least ninety (90) days prior written notice to Lender,
Borrower may, at its option, terminate this Agreement; provided, however, no
such termination shall be effective until Borrower has paid all of the
Obligations in immediately available funds.
(B) At the effective date of any voluntary such termination by
Borrower, Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other charges owing under the terms of this
Agreement and any of the other Loan Documents including prepayment premiums
under any promissory note from Borrower to Lender), as liquidated damages for
the loss of the bargain and not as a penalty, an amount equal to one percent
(1%) of the Maximum Revolving Amount if termination occurs during the period
February 17, 1999 through February 16, 2000; and one half of one percent (.50%)
of the Maximum Revolving Amount during the period February 17, 2000 through
February 16, 2001. If termination occurs after the last of such periods, no
termination charge shall be payable.
(C) Lender may terminate this Agreement effective as of the end of the
Original Term or any Renewal Term upon ninety (90) days prior written notice to
Borrower or without notice upon or after the occurrence of an Event of Default.
No termination charge shall be payable hereunder if Lender terminates this
Agreement as of the end of the Original Term or any Renewal Term.
(D) All of the Obligations shall be forthwith due and payable upon any
termination of this Agreement. Except as otherwise expressly provided for in
this Agreement or the other Loan Documents, no termination or cancellation
(regardless of cause or procedure) of this Agreement or any of the other Loan
Documents shall in any way affect or impair the rights, powers, or privileges of
Lender or obligations, duties, rights, and liabilities of Borrower or Lender in
any way relating to (i) any transaction or event occurring prior to such
termination or cancellation or (ii) any of the undertakings, agreements,
covenants, warranties or representations of Borrower contained in this Agreement
or any of the other Loan Documents. All such undertakings, agreements,
covenants, warranties and representations of Borrower shall survive such
termination or cancellation and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under this Agreement and the other Loan
Documents notwithstanding such termination or cancellation, until all of the
Obligations have been paid in full, in immediately available funds.
(E) It is understood that Borrower may elect to terminate this
Agreement in its entirety only; no section or lending facility may be terminated
singly.
(F) No termination charge shall be payable hereunder in the event that
Borrower is required to pay to Lender a sum in excess of $100,000 per Fiscal
Year in accordance with Section 3.1(G) herein.
3.4. Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this
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<PAGE> 25
Section 3.4 (in which event the conflicting provisions of said notes or other
instruments shall govern and control), that portion of the Obligations
consisting of:
(A) Principal, payable on account of Revolving Credit Loans made by
Lender to Borrower pursuant to Section 2.1 of this Agreement, shall be payable
by Borrower to Lender immediately upon the earliest of (i) the receipt by Lender
or Borrower of any proceeds of any of the Collateral, to the extent of said
proceeds, (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of such Loans, or (iii)
termination of this Agreement pursuant to Section 3.3 hereof; provided, however,
that if the principal balance of Revolving Credit Loans outstanding at any time
shall exceed the Borrowing Base at such time, Borrower shall, on demand, repay
the Revolving Credit Loans in an amount sufficient to reduce the aggregate
unpaid principal amount of such Revolving Credit Loans by an amount equal to
such excess;
(B) Interest accrued on the Revolving Credit Loans shall be due on the
earliest of (i) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (ii) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations or (iii) termination of
this Agreement pursuant to Section 3.3 hereof; provided, however, that Borrower
hereby irrevocably authorizes Lender, in Lender's sole discretion, to advance to
Borrower, and to automatically charge to Borrower's Loan Account hereunder as a
Revolving Credit Loan on the first Business Day of each month, a sum sufficient
each month to pay all interest accrued on the Obligations during the immediately
preceding month;
(C) Costs, fees and expenses payable pursuant to this Agreement shall
be payable by Borrower to Lender or to any other Person designated by Lender in
writing within five (5) days of Lender's demand, provided that Lender may charge
such costs, fees and expenses as a Revolving Loan when incurred; and
(D) The balance of the Obligations requiring the payment of money, if
any, shall be payable by Borrower to Lender as and when provided in this
Agreement, the Other Agreements or the Security Documents, or within five (5)
days of Lender's demand, provided that Lender may charge such costs, fees and
expenses as a Revolving Loan when incurred.
3.5. Application of Payments and Collections. Borrower irrevocably
waives the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrower, and Borrower does hereby irrevocably agree that Lender shall have
the continuing exclusive right to apply and reapply any and all such payments
and collections received at any time or times hereafter by Lender or its agent
against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records; provided,
however, in the event that Lender reapplies such payments and collections,
Lender shall reflect such adjustment in its books and records. If as the result
of collections of Accounts as authorized by Section 5.2 hereof a credit balance
exists in the Loan Account, such credit balance shall not accrue interest in
favor of Borrower, but shall be available to Borrower at any time or times for
so long as no Event of Default exists.
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<PAGE> 26
3.6. Statements of Account. Lender will account to Borrower monthly
with a statement of Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days after the date each account is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
SECTION 4. COLLATERAL: GENERAL TERMS
4.1. Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby acknowledges and
confirms that Lender has and shall continue to have a Lien in all Collateral
heretofore granted by such Borrower pursuant to the Original Loan Agreement, and
to the extent not otherwise granted thereunder, Borrower grants to Lender a
continuing security interest and Lien upon all of Borrower's assets, including
all of the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(A) Accounts;
(B) Inventory;
(C) Equipment;
(D) General Intangibles;
(E) real Property;
(F) All monies and other Property of any kind, now or at any time or
times hereafter, in the possession or under the control of Lender or a bailee of
Lender;
(G) All accessions to, substitutions for and all replacements, products
and cash and non-cash proceeds of (A), (B), (C), (D), (E) and (F) above,
including, without limitation, proceeds of and unearned premiums with respect to
insurance policies insuring any of the Collateral; and
(H) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer materials
and records) of Borrower pertaining to any of (A), (B), (C), (D), (E), (F) or
(G) above.
4.2. Lien on Real Property. If Borrower shall acquire at any time or
times hereafter any interest in real Property, at Lender's request, Borrower
agrees promptly to execute and deliver to Lender, as additional security and
Collateral for the Obligations, deeds of trust, security deeds, mortgages or
other collateral assignments satisfactory in form and substance to Lender and
its counsel (herein collectively referred to as "New Mortgages") covering such
real Property. Each New Mortgage shall be duly recorded in each office where
such recording is required to constitute a valid Lien on the real Property
covered thereby. Borrower shall deliver to Lender, at Borrower's expense,
mortgagee title insurance policies issued by a title insurance company
satisfactory to Lender insuring Lender as mortgagee; such policies shall be in
form and
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<PAGE> 27
substance satisfactory to Lender and shall insure a valid first Lien in
favor of Lender on the real Property covered thereby, subject only to those
exceptions of record or otherwise acceptable to Lender and its counsel. Borrower
shall deliver to Lender such other documents, including, without limitation,
as-built survey prints of the real Property, as Lender and its counsel may
reasonably request relating to the real Property subject to any such New
Mortgages.
4.3. Representations, Warranties and Covenants --Collateral. To induce
Lender to enter into this Agreement, Borrower represents, warrants, and
covenants to Lender:
(A) The Collateral is now and, so long as any Obligations are
outstanding, will continue to be owned solely by Borrower. No other Person has
or will have any right, title, interest, claim, or Lien therein, thereon or
thereto other than a Permitted Lien.
(B) Except as specifically consented to in writing by Lender, the Liens
granted to Lender shall be first and prior on the Collateral and as to the
Accounts and proceeds, including insurance proceeds, resulting from the sale,
disposition, or loss thereof. No further action need be taken to perfect the
Liens granted to Lender, other than the filing of continuation statements under
the Code or other applicable law, continued possession by Lender of that portion
of the Collateral constituting instruments or documents.
(C) All goods evidenced by the Collateral constituting chattel paper,
documents or instruments, the possession of which has been given to Lender, are
owned by Borrower and the same are free and clear of any prior Lien. Borrower
further warrants and guarantees the reported book value, quantities, sound
condition, grades and qualities of the goods and services described therein.
Borrower shall pay and discharge when due all taxes, levies, and other charges
upon said Collateral and upon the goods evidenced by any documents constituting
Collateral and shall defend Lender against and save it harmless from all claims
of any Person with respect to the Collateral. This indemnity shall include
reasonable attorneys' fees and legal expenses.
4.4. Lien Perfection. Borrower agrees to execute the financing
statements provided for by the Code together with any and all other instruments,
assignments or documents and shall take such other action as may be required to
perfect or to continue the perfection of Lender's security interest in the
Collateral. Unless prohibited by applicable law, Borrower hereby authorizes
Lender to execute and file any such financing statement on Borrower's behalf.
The parties agree that a carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu thereof.
4.5. Location of Collateral. All Collateral, other than Inventory in
transit, will at all times be kept by Borrower at one or more of the business
locations set forth in Exhibit 4.5 as the same may be updated from time to time
effective upon receipt thereof by Lender, and shall not, without the prior
written approval of Lender, be moved therefrom except, prior to an Event of
Default for (A) sales of Inventory in the ordinary course of business; (B) the
storage of Inventory at locations within the continental United States other
than those shown on Exhibit 4.5 if (i) Borrower gives Lender written notice of
the new storage location at least sixty (60) days prior to storing Inventory at
such location, (ii) Lender's security interest in such Inventory is and
continues to be a duly perfected, first priority Lien thereon, (iii) neither
Borrower's nor Lender's
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<PAGE> 28
right of entry upon the premises where such Inventory is stored, or its right to
remove the Inventory therefrom, is in any way restricted, (iv) the owner of such
premises agrees with Lender not to assert any landlord's, bailee's or other Lien
in respect of the Inventory for unpaid rent or storage charges and (v) all
negotiable documents and receipts in respect of any Collateral maintained at
such premises are promptly delivered to Lender; (C) temporary transfers (for a
period not to exceed three (3) months in any event) of Equipment from a location
set forth on Exhibit 4.5 to another location if done for the limited purpose of
repairing, refurbishing or overhauling such Equipment in the ordinary course of
Borrower's business and (D) removals in connection with dispositions of
Equipment that are authorized by Section 7.4 hereof.
4.6. Insurance of Collateral. Borrower agrees to maintain and pay for
insurance upon all Collateral wherever located, in storage or in transit in
vehicles, including goods evidenced by documents, covering casualty, hazard,
public liability and such other risks and in such amounts and with such
insurance companies as is customary in the industry in which Borrower conducts
business to insure Lender's interest in the Collateral. Borrower shall deliver
the originals of such policies to Lender with satisfactory lender's loss payable
endorsements naming Lender loss payee. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than thirty (30)
days prior written notice to Lender in the event of cancellation of the policy
for any reason whatsoever and a clause that the interest of Lender shall not be
impaired or invalidated by any act or neglect of Borrower or owner of the
Property nor by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and pay for such
insurance, Lender may, at Borrower's expense, procure the same, but shall not be
required to do so. Borrower agrees to deliver to Lender, promptly as rendered,
true copies of all reports made in any reporting forms to insurance companies.
Borrower will maintain, with financially sound and reputable insurers, insurance
with respect to its Properties and business against such casualties and
contingencies of such type (including public liability, product liability,
larceny, embezzlement, or other criminal misappropriation insurance) and in such
amounts as is customary in the industry in which Borrower conducts business.
4.7. Protection of Collateral. All insurance expenses and all expenses
of protecting, storing, warehousing, insuring, handling, maintaining and
shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral or in
respect of the sale thereof shall be borne and paid by Borrower. If Borrower
fails to promptly pay any portion thereof when due, Lender may, at its option,
but shall not be required to, pay the same and charge the Loan Account therefor.
Borrower agrees to reimburse Lender promptly therefor with interest accruing
thereon daily at the Default Rate provided in this Agreement. All sums so paid
or incurred by Lender for any of the foregoing and all costs and expenses
(including reasonable attorneys' fees, legal expenses and court costs) which
Lender may incur in enforcing or protecting its Lien on or rights and interest
in the Collateral or any of its rights or remedies under this or any other
agreement between the parties hereto or in respect of any of the transactions to
be had hereunder until paid by Borrower to Lender with interest at the Default
Rate, shall be considered Obligations owing by Borrower to Lender hereunder.
Such Obligations shall be secured by all Collateral and by any and all other
collateral, security, assets, reserves, or funds of Borrower in or coming into
the hands or inuring to the benefit of Lender. Lender shall not be liable or
responsible in any way for the safekeeping of any of the Collateral
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<PAGE> 29
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
SECTION 5. PROVISIONS RELATING TO ACCOUNTS
5.1. Representations, Warranties and Covenants. With respect to all
Accounts, Borrower represents and warrants to Lender that Lender may rely on all
statements and representations made by Borrower with respect to any Account or
Accounts, and , unless otherwise indicated in writing to Lender, that with
respect to each Account:
(A) It is genuine and in all respects what it purports to be, and it is
not evidenced by a judgment;
(B) It arises out of a completed, bona fide sale and delivery of goods
or rendition of services by Borrower in the ordinary course of its business and
in accordance with the terms and conditions of all purchase orders, contracts or
other documents relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(C) It is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which has been
furnished or is available to Lender;
(D) Such Account, and Lender's security interest therein, is not, and
will not be in the future, subject to any offset, Lien, deduction, defense,
dispute, counterclaim or any other adverse condition except for disputes
resulting in returned goods where the amount in controversy is immaterial, and
each such Account is absolutely owing to Borrower and is not contingent in any
respect or for any reason;
(E) Borrower has made no agreement with any Account Debtor thereunder
for any deduction therefrom, except discounts or allowances which are granted by
Borrower in the ordinary course of its business for prompt payment and which are
reflected in the calculation of the net amount of each respective invoice
related thereto;
(F) There are no facts, events or occurrences which in any way impair
the validity or enforceability thereof or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Lender with respect thereto;
(G) To the best of Borrower's knowledge, the Account Debtor thereunder
(i) had the capacity to contract at the time any contract or other document
giving rise to the Account was executed and (ii) such Account Debtor is Solvent;
and
(H) Borrower has no knowledge of any fact or circumstance which would
impair the validity or collectability of the Account, and to the best of
Borrower's knowledge there are no proceedings or actions which are threatened or
pending against any Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectability of such Account.
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5.2. Collection of Accounts.
(A) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender. All remittances received
by Borrower on account of Accounts shall be held as Lender's property by
Borrower as trustee of an express trust for Lender's benefit and Borrower shall
immediately deposit same in the Dominion Account. Lender retains the right after
an Event of Default to notify Account Debtors that Accounts have been assigned
to Lender and to collect Accounts directly in its own name and to charge the
collection costs and expenses, including attorneys' fees to Borrower. Lender has
no duty to protect, insure, collect or realize upon the Accounts or preserve
rights in them. For the purpose of computing interest hereunder, all items of
payment received by Lender shall be deemed applied by Lender on account of the
Obligations (subject to final payment of such items) on the first Business Day
after Lender's receipt of payment in immediately available funds.
(B) Borrower shall deposit all proceeds of the Collateral or cause the
same to be deposited in kind in a Dominion Account pursuant to a lockbox
arrangement with such banks as may be selected by Borrower and be acceptable to
Lender. Borrower shall issue to any such banks an irrevocable letter of
instruction directing such banks to deposit all payments or other remittances
received in the lockbox to the Dominion Account for application on account of
the Obligations. All funds deposited in the Dominion Account shall immediately
become the property of Lender and Borrower shall obtain the agreement by such
banks to waive any offset rights against the funds so deposited. Lender assumes
no responsibility for such lockbox arrangement, including, without limitation,
any claim of accord and satisfaction or release with respect to deposits
accepted by any bank thereunder.
SECTION 6. PROVISIONS RELATING TO INVENTORY
6.1. Representations, Warranties and Covenants. With respect to
Inventory, Borrower represents and warrants to Lender that Lender may rely, in
determining which items of Inventory constitute Eligible Inventory, on all
statements and representations made by Borrower with respect to any Inventory
and, unless otherwise indicated in writing to Lender, that:
(A) All Inventory is presently and will continue to be located at
Borrower's places of business listed on Exhibit 4.5 and will not be removed
therefrom except as authorized by Section 4.5 of this Agreement;
(B) No Inventory is now, nor shall any Inventory at any time or times
hereafter be, stored with a bailee, warehouseman or similar party without
Lender's prior written consent and, if Lender gives such consent, Borrower will
concurrently therewith cause any such bailee, warehouseman, or similar party to
issue and deliver to Lender, in form and substance acceptable to Lender,
warehouse receipts therefor in Lender's name;
(C) No Inventory is or will be consigned to any Person; and
(D) No Inventory is or will be produced in violation of the Fair Labor
Standards Act.
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<PAGE> 31
6.2. Inventory Reports. Borrower agrees to furnish Lender with
Inventory reports at least once each week or more frequently as requested by
Lender. Such reports shall be in form and detail satisfactory to Lender.
Borrower shall conduct a physical inventory no less frequently than once per
Fiscal Year or at Lender's request after the occurrence of and during the
continuance of an Event of Default and shall provide to Lender a report based on
each such physical inventory promptly thereafter, together with such supporting
information as Lender shall in its discretion request.
6.3. Returns of Inventory. After the occurrence of an Event of Default,
Borrower shall hold all returned Inventory in trust for Lender, shall segregate
all returned Inventory from all other Property owned by Borrower or in its
possession and shall conspicuously label such Inventory as the Property of
Lender.
SECTION 7. PROVISIONS RELATING TO EQUIPMENT
7.1. Representations, Warranties and Covenants. With respect to the
Equipment, Borrower represents, warrants and covenants to and with Lender that
the Equipment is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted.
7.2. Evidence of Ownership of Equipment. Immediately on request
therefor by Lender, Borrower shall deliver to Lender any and all evidence of
ownership, if any, of any of the Equipment (including, without limitation,
certificates of title and applications for title).
7.3. Records and Schedules of Equipment. Borrower shall maintain
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with Section 7.4
hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender.
7.4. Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Event of Default
exists, to (i) dispositions of Equipment which, in the aggregate during any
consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $100,000 or less, (ii) dispositions of Equipment
(including disposal thereof) in the normal course of business in connection with
the termination of a store lease or the relocation of a store from one location
to another or (iii) replacements of Equipment that is substantially worn,
damaged or obsolete with Equipment of like kind, function and value, provided
that the replacement Equipment shall be acquired prior to or concurrently with
any disposition of the Equipment that is to be replaced, the replacement
Equipment shall be free and clear of Liens other than Permitted Liens that are
not Purchase Money Liens, Borrower shall give Lender at least five (5) days
prior written notice of such disposition and Borrower shall turn over to Lender
all proceeds realized from any such disposition.
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<PAGE> 32
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1. General Representations and Warranties. To induce Lender to enter
into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
(A) Organization and Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Borrower has duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each state or jurisdiction listed on
Exhibit 8.1(A) attached hereto and made a part hereof and in all other states
and jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary.
(B) Corporate Names. During the preceding seven (7) years, Borrower has
not been known as or used any corporate, fictitious or trade names except as
disclosed on Exhibit 8.1(B) attached hereto and made a part hereof. Except as
set forth on Exhibit 8.1(B), Borrower has not, during the preceding seven (7)
years, been the surviving corporation of a merger or consolidation or acquired
all or substantially all of the assets of any Person.
(C) Corporate Power and Authority. Borrower has the right and power and
is duly authorized and empowered to enter into, execute, deliver and perform
this Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the shareholders of
Borrower; (ii) contravene Borrower's charter, articles of incorporation or
by-laws; (iii) violate, or cause Borrower to be in material default under, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award in effect having applicability to Borrower; (iv)
result in a breach of or constitute a material default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
Borrower is a party or by which it or its Properties may be bound or affected;
or (v) result in, or require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Properties now owned or
hereafter acquired by Borrower.
(D) Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower enforceable against it in accordance with
their respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or by principles of equity pertaining to the
availability of equitable remedies.
(E) Use of Proceeds. Borrower's uses of the proceeds of any Loans
pursuant to this Agreement are, and will continue to be, legal and proper
corporate uses, duly authorized by its Board of Directors, and such uses will
not violate any applicable laws including, without limitation, the Foreign
Assets Control Regulations, the Foreign Funds Control Regulations and the
Transaction Control Regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended).
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<PAGE> 33
(F) Margin Stock. Borrower is not engaged principally, or as one of its
important activities, in the business of purchasing or carrying "margin stock"
(within the meaning of Regulation G or U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Loans to Borrower
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock, or be used for any
purpose which violates or is inconsistent with the provisions of Regulation X of
said Board of Governors.
(G) Governmental Consents. Borrower has, and is in good standing with
respect to, all material governmental consents, approvals, authorizations,
permits, certificates, inspections, and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.
(H) Patents, Trademarks, Copyrights and Licenses. Borrower owns or
possesses all the patents, trademarks, service marks, trade names, copyrights
and license necessary for the present and planned future conduct of its business
without any known conflict with the rights of others. All such patents,
trademarks, service marks, tradenames, copyrights, licenses and other similar
rights are listed on Exhibit 8.1(H) attached hereto and made a part hereof.
(I) Capital Structure. Exhibit 8.1(I)(i) attached hereto and made a
part hereof states (a) the correct name of each of the Subsidiaries of Borrower,
the jurisdiction of incorporation and the percentage of its Voting Stock owned
by Borrower, (b) the name of each of Borrower's corporate or joint venture
affiliates and the nature of the affiliation, (c) the number, nature and holder
of all outstanding Securities of Borrower and each Subsidiary of Borrower, and
(d) the number of authorized, issued and treasury shares of Borrower and each
Subsidiary of Borrower. Borrower has good title to all of the shares it purports
to own of the stock of each Subsidiary, free and clear in each case of any Lien
other than Permitted Liens. All such shares have been duly issued and are fully
paid and non-assessable. There are not outstanding any options to purchase, or
any rights or warrants to subscribe for, or any commitments or agreements to
issue or sell, or any Securities or obligations convertible into, or any powers
of attorney relating to, shares of the capital stock of Borrower. There are not
outstanding any agreements or instruments binding upon any of Borrower's
shareholders relating to the ownership of its shares of capital stock except as
set forth on Exhibit 8.1(I)(ii) attached hereto and made a part hereof.
(J) Solvent Financial Condition. Borrower is now and, after giving
effect to initial Loans to be made hereunder, at all times will be, Solvent.
(K) Restrictions. Borrower is not a party or subject to any contract,
agreement, or charter or other corporate restriction, which materially and
adversely affects its business or the use or ownership of any of its Properties.
Borrower is not a party or subject to any contract or agreement which restricts
its right or ability to incur Indebtedness, other than as set forth on Exhibit
8.1(K) attached hereto, none of which prohibit the execution of or compliance
with this Agreement by Borrower. Neither Borrower nor any of its Subsidiaries
has
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<PAGE> 34
agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien that is not a Permitted Lien.
(L) Litigation. Except as set forth on Exhibit 8.1(L) attached hereto
and made a part hereof, there are no actions or suits, or to the knowledge of
Borrower, proceedings or investigations pending or threatened, against or
affecting Borrower or any of its Subsidiaries, or the business, operations,
Properties, prospects, profits or condition of Borrower or any of its
Subsidiaries, in any court or before any governmental authority or arbitration
board or tribunal, and no action, suit, proceeding or investigation shown on
Exhibit 8.1(L) involves the possibility of materially and adversely affecting
the Properties, business, prospects, profits or condition (financial or
otherwise) of Borrower or the ability of Borrower to perform this Agreement.
Neither Borrower nor any of its Subsidiaries is in default with respect to any
order, writ, injunction, judgement, decree or rule of any court, governmental
authority or arbitration board or tribunal.
(M) Title to Properties. Borrower and its Subsidiaries each has good,
indefeasible and marketable title to and fee simple ownership of, or valid and
subsisting leasehold interests in, all of its real Property, and good title to
all of its other Property, in each case, free and clear of all Liens except
Permitted Liens.
(N) Financial Statements; Fiscal Year. The balance sheets of Borrower
as of March 27, 1993, and the related statements of income, changes in
stockholder's equity, and cash flows for the periods ended on such dates, have
been prepared in accordance with GAAP (except for material changes in
application in which Borrower's independent certified public accountants
concur), and present fairly the financial position of Borrower at such dates and
the results of Borrower's operations for such periods. Since March 27, 1993,
there has been no material change in the condition, financial or otherwise, of
Borrower and no change in the aggregate value of Equipment and real property
owned by Borrower except changes in the ordinary course of business, none of
which individually or in the aggregate has been materially adverse. Each fiscal
year of Borrower shall be a Fiscal Year.
(O) Full Disclosure. The financial statements referred to in Section
8.1(N) above, do not, nor does this Agreement or any other written statement of
Borrower to Lender (including, without limitation, Borrower's filings, if any,
with the Securities and Exchange Commission), contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact which Borrower has failed to
disclose to Lender in writing which materially affects adversely or, so far as
Borrower can now foresee, will materially affect adversely the Properties,
business, prospects, profits, or condition (financial or otherwise) of Borrower
or any of its Subsidiaries or the ability of Borrower or its Subsidiaries to
perform this Agreement.
(P) Pension Plans. Except as disclosed on Exhibit 8.1(P) attached
hereto and made a part hereof, neither Borrower nor any of its Subsidiaries has
any Plan. Except as disclosed on Exhibit 8.1(P), neither Borrower, any ERISA
Affiliate of Borrower, nor any Plan is in material violation of any of the
provisions of ERISA, the IRC, or other applicable laws.
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Except as set forth on Schedule 8.1(P), within the six (6) years prior to the
date of this Agreement, (a) no Prohibited Transaction or Reportable Event has
occurred with respect to any Plan, nor has any Plan been the subject of a waiver
of the minimum funding standard under Section 412 of the IRC; (b) no Plan has
experienced an accumulated funding deficiency under Section 412 of the IRC; (c)
no lien has been imposed upon the Borrower or any ERISA Affiliate of Borrower
under Section 412(n) of the IRC; (d) no Plan has been amended in such a way that
the security requirements of Section 401(a)(29) of the IRC apply; (e) no notice
of intent to terminate a Plan has been distributed to affected parties or filed
with the PBGC under Section 4041 of ERISA, nor has any Plan been terminated
under Section 4041(e) of ERISA; (f) the PBGC has not instituted proceedings to
terminate, or appoint a trustee to administer, a Plan and no event has occurred
or condition exists which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan;
(g) neither Borrower nor any ERISA Affiliate of Borrower would be liable for any
amount pursuant to Sections 4062, 4063 or 4064 of ERISA if all Plans terminated
as of the most recent valuation dates of such Plans; (h) neither Borrower nor
any ERISA Affiliate of Borrower maintains any employee welfare benefit plan, as
defined in Section 3(1) of ERISA, which provides any benefits to an employee or
the employee's dependents with respect to claims incurred after the employee
separates from service other than is required by applicable law; (i) neither
Borrower nor any ERISA Affiliate has incurred any material liability for any
excise tax arising under Section 4972 or 4980B of the IRC and, to the best
knowledge of Borrower, no fact or event exists which would give rise to any such
material liability; and (j) neither Borrower nor any ERISA Affiliate of Borrower
has incurred or expects to incur any withdrawal liability to any Multiemployer
Plan.
(Q) Taxes. Borrower's federal tax identification number is 11-2782687.
Borrower and its Subsidiaries each has filed all federal, state and local tax
returns and other reports it is required by law to file and has paid, or made
provision for the payment of, all taxes, assessments, fees and other
governments, charges that are due and payable, except such taxes, if any, as are
being actively contested in good faith and as to which adequate reserves have
been provided. To the best of Borrower's knowledge, the provision for taxes on
the books of Borrower and its Subsidiaries are adequate for all years not closed
by applicable statutes, and for its current Fiscal Year.
(R) Labor Relations. Except as described on Exhibit 8.1(R) attached
hereto and made a part hereof, neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement, and there are no material
grievances, disputes or controversies with any union or any other organization
of Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
(S) Compliance With Laws. Borrower has duly complied with, and its
Properties, business operations and leaseholds are in compliance in all material
respects with, the provisions of all federal, state and local laws, rules and
regulations applicable to Borrower, its Properties or the conduct of its
business, including, without limitation, OSHA and all Environmental Laws, and
there have been no citations, notices or orders of noncompliance issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation.
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(T) Surety Obligations. Borrower is not obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
(U) No Defaults. No event has occurred and no condition exists which
would, upon the execution and delivery of this Agreement or Borrower's
performance hereunder, constitute a Default or an Event of Default. Neither
Borrower nor any of its Subsidiaries is in default, and no event has occurred
and no condition exists which constitutes, or which with the passage of time or
the giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.
(V) Brokers. There are no claims for brokerage commissions, finder's
fees or investment banking fees in connection with the transactions contemplated
by this Agreement.
(W) Business Locations; Agent for Process. During the preceding seven
(7) year period, Borrower has had no office, place of business or agent for
service of process located in any state or county other than as shown on Exhibit
8.1(W).
(X) Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of
Borrower, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely
Borrower or prevent Borrower from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
(Y) Leases. Exhibit 8.1(Y)(i) attached hereto is a complete listing of
all capitalized leases of Borrower and Exhibit 8.1(Y)(ii) attached hereto is a
complete listing of all operating leases of Borrower.
(Z) Investment Company Act. Borrower is not an "investment company" or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(AA) OSHA and Environment Compliance. (a) There have been no
outstanding citations, notices or orders of non-compliance issued to Borrower or
relating to its business, assets, Property, leaseholds or Equipment under any
Environmental Laws, rules or regulations.
(b) Except as set forth on Exhibit 8.1(AA)(b), to the best of
Borrower's knowledge, Borrower has been issued all material federal, state and
local licenses, certificates or permits relating to all applicable Environmental
Laws.
(c) Except as set forth in Exhibit 8.1(AA)(c), (i) there are
no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as
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"Releases") of Hazardous Substances at, upon, under or within any real Property
or any premises leased by Borrower which require remediation by Borrower under
any applicable Environmental Laws; (ii) there are no underground storage tanks
or polychlorinated biphenyls on the real Property or any premises leased by
Borrower which are in violation of any applicable Environmental Laws; (iii)
neither the real Property nor any premises leased by Borrower has ever been used
as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no
Hazardous Substances are present on the real Property or any premises leased by
Borrower in violation of any Environmental Laws.
(BB) Senior Indebtedness. Borrower's Obligations under this Agreement
and the other Loan Documents are, and will continue to constitute, senior debt
or senior bank indebtedness under the terms of any agreement or instrument
evidencing Subordinated Debt. All of the representations and warranties made by
Borrower to Senior Subordinated Lender and Junior Subordinated Lender in the
Senior Subordinated Note and Junior Subordinated Note, as applicable, and all
material agreements and documents related thereto, are true, accurate and
correct.
(CC) Indebtedness. The Borrower has no Indebtedness for Money Borrowed
other than Indebtedness expressly permitted by the provisions contained in
Section 9.2(C) hereof, after giving effect to the transactions contemplated by
this Agreement and the payments being made on the Closing Date.
(DD) True Copies of Charter and Other Documents. Borrower has furnished
or caused to be furnished to Lender true and complete copies of (a) all charter
and other incorporation documents together with any amendments thereto), with
respect to the Borrower, and (b) by-laws (together with any amendments thereto).
8.2. Reaffirmation. Each request for a Loan made by Borrower pursuant
to this Agreement or any of the other Loan Documents shall constitute (i) an
automatic representation and warranty by Borrower to Lender that there does not
then exist any Default or Event of Default and (ii) a reaffirmation as of the
date of said request of all of the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents.
8.3. Survival of Representations and Warranties. Borrower covenants,
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement or any of the other Loan Documents shall be
true at the time of Borrower's execution of this Agreement and the other Loan
Documents, and shall survive the execution, delivery and acceptance thereof by
Lender and the parties thereto and the closing of the transactions described
therein or related thereto.
SECTION 9. COVENANTS AND CONTINUING AGREEMENTS
9.1. Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
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(A) Taxes and Liens. Pay and discharge, and cause each Subsidiary to
pay and discharge, all taxes, assessments and governmental charges upon it, its
income and Properties as and when such taxes, assessments and charges are due
and payable, except and to the extent only that such taxes, assessments and
charges are being actively contested in good faith and by appropriate
proceedings, Borrower maintains adequate reserves on its books therefor and the
nonpayment of such taxes, assessments and charges does not result in a Lien upon
any Properties of Borrower other than a Permitted Lien. Borrower shall also pay
and discharge any lawful claims which, if unpaid, might become a Lien against
any of Borrower's Properties except for Permitted Liens.
(B) Tax Returns. File, and cause each Subsidiary to file, all federal,
state and local tax returns and other reports Borrower or such Subsidiary is
required by law to file and maintain adequate reserves for the payment of all
taxes, assessments, governmental charges, and levies imposed upon it, its
income, or its profits, or upon any Property belonging to it.
(C) Payment of Bank Charges. Pay to Lender, in accordance with the
terms of this Agreement, any and all fees, costs or expenses which Lender or any
Participating Lender pays to a bank or other similar institution (including,
without limitation, any fees paid by the Lender to any Participating Lender)
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Lender or any Participating Lender, proceeds of
loans made by Lender to Borrower pursuant to this Agreement and (ii) the
depositing for collection, by Lender or any Participating Lender, of any check
or item of payment received or delivered to Lender or any Participating Lender
on account of the Obligations.
(D) Business and Existence. Preserve and maintain, and cause each
Subsidiary to preserve and maintain, its separate corporate existence and all
rights, privileges, and franchises in connection therewith, and maintain, and
cause each Subsidiary to maintain, its qualification and good standing in all
states in which the failure to be so qualified might have a material adverse
effect on the financial condition, business or Properties of Borrower.
(E) Maintain Properties. Maintain, and cause each Subsidiary to
maintain, its Properties in good condition and make, and cause each Subsidiary
to make, all necessary renewals, repairs, replacements, additions and
improvements thereto.
(F) Compliance with Laws. Comply, and cause each Subsidiary to comply,
with all laws, ordinances, governmental rules and regulations to which it is
subject, including, without limitation, all Environmental Laws, and obtain and
keep in force any and all licenses, permits, franchises, or other governmental
authorizations necessary to the ownership of its Properties or to the conduct of
its business, which violation or failure to obtain might materially and
adversely affect the business, prospects, profits, Properties, or condition
(financial or otherwise) of Borrower.
(G) ERISA Compliance. (i) At all times make prompt payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to each Plan; (ii) promptly after the filing thereof, furnish to
Lender copies of any annual report
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required to be filed pursuant to ERISA in connection with each Plan and any
other employee benefit plan of it and its Affiliates subject to said Section;
(iii) notify Lender as soon as practicable of any Reportable Event and of any
additional act or condition arising in connection with any Plan which Borrower
believes might constitute grounds for the termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States district court of a trustee to administer the Plan; and (iv) furnish to
Lender, promptly upon Lender's request therefor, such additional information
concerning any Plan or any other such employee benefit plan as may be reasonably
requested. Borrower shall furnish to Lender: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any Reportable Event with respect to any Plan has occurred, a statement of
the Chief Financial Officer of Borrower setting forth the details concerning
such Reportable Event and the action which Borrower proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC, if a copy of such notice is available to Borrower; (b)
promptly after receipt thereof, a copy of any notice of any potential material
liability, adverse determination letter, ruling or opinion Borrower may receive
from the PBGC or the Internal Revenue Service with respect to any Plan; (c) when
the same is made available to participants in a Plan, all notices of a
significant reduction in the rate of benefit accrual or plan termination to the
participants by the administrator of such Plan; and (d) promptly after receipt
thereof, any notice from any Multiemployer Plan to which Borrower or any ERISA
Affiliate of Borrower contributes which quantifies any actual or potential
withdrawal liability which will or may be imposed upon the withdrawal of the
Borrower or any ERISA Affiliate of Borrower from such Multiemployer Plan.
Borrower shall furnish to Lender: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any Reportable Event with respect to any Plan has occurred, a statement of
the Chief Financial Officer of Borrower setting forth the details concerning
such Reportable Event and the action which Borrower proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC, if a copy of such notice is available to Borrower; (b)
promptly after receipt thereof, a copy of any notice of any potential material
liability, adverse determination letter, ruling or opinion Borrower may receive
from the PBGC or the Internal Revenue Service with respect to any Plan; (c) when
the same is made available to participants in a Plan, all notices of a
significant reduction in the rate of benefit accrual or plan termination to the
participants by the administrator of such Plan; and (d) promptly after receipt
thereof, any notice from any Multiemployer Plan to which Borrower or any ERISA
Affiliate of Borrower contributes which quantifies any actual or potential
withdrawal liability which will or may be imposed upon the withdrawal of the
Borrower or any ERISA Affiliate of Borrower from such Multiemployer Plan.
(H) Business Records. Keep, and cause each Subsidiary to keep, adequate
records and books of account with respect to its business activities in which
proper entries are made in accordance with GAAP reflecting all its financial
transactions.
(I) Visits and Inspections. Permit representatives of Lender, from time
to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of Borrower, inspect and
make extracts from its books and records,
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and discuss with its officers, its employees and its independent accountants,
Borrower's business, assets, liabilities, financial condition, business
prospects and results of operations.
(J) Financial Statements. Cause to be prepared and furnished to Lender
the following (all to be kept and prepared in accordance with GAAP applied on a
materially consistent basis, unless Borrower's certified public accountants
concur in any change therein and such change is disclosed to Lender and is
consistent with GAAP):
(i) as soon as possible, but not later than ninety (90) days
after the close of each Fiscal Year of Borrower, unqualified audited financial
statements of Borrower and its Subsidiaries as of the end of such year,
certified by a firm of independent certified public accountants of recognized
national standing or otherwise acceptable to Lender (except for a qualification
for a change in accounting principles with which the independent public
accountant concurs);
(ii) as soon as possible, but not later than the end of the
calendar month immediately succeeding the calendar month end closest to the end
of each fiscal month, unaudited interim consolidated financial statements of
Borrower and its Subsidiaries as of the end of such month and of the portion of
Borrower's Fiscal Year then elapsed, on a consolidated and consolidating basis,
certified by the principal financial officer of Borrower as prepared in
accordance with GAAP and fairly presenting the consolidated financial position
and results of operations of Borrower and its Subsidiaries for such month-end
period subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders and copies of any regular,
periodic and special reports or registration statements which Borrower files
with the Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or any national securities exchange;
(iv) as soon as available, and in any event no later than
thirty (30) days following the commencement of each Fiscal Year of Borrower, a
merchandising plan for such Fiscal Year; and as soon as available,` a
merchandising plan for the next Fiscal Year; and
(v) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or related to
the Collateral, Borrower's financial condition or results of operations,
including, without limitation, federal income tax returns of Borrower, accounts
payable ledgers, and bank statements.
Concurrently with the delivery of the financial statements described in
clause (i) of this Section 9.1(J), Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such financial statements and shall also cause to be prepared and furnish
to Lender a certificate of the aforesaid certified public accountants certifying
to Lender that, based upon their examination of the financial statements of
Borrower and its Subsidiaries performed in connection with their examination of
said financial statements, they are not aware of any Event of Default relating
to Section 9.3 hereof, or, if they are aware of such Event of Default,
specifying the nature thereof. Concurrently with the delivery of the
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financial statements described in clauses (i) and (ii) of this Section 9.1(J),
Borrower shall cause to be prepared and furnished to Lender a certificate from
the Chief Financial Officer of Borrower certifying to Lender that to the best of
his knowledge, Borrower has kept, observed, performed and fulfilled each and
every covenant, obligation and agreement binding upon Borrower in this Agreement
and the other Loan Documents and that no Default or Event of Default has
occurred, or, if such Default or Event of Default has occurred, specifying the
nature thereof.
(K) Notices to Lender. Notify Lender in writing: (i) promptly after
Borrower's learning thereof, of the commencement of any litigation affecting
Borrower or any of its Properties, whether or not the claim is considered by
Borrower to be covered by insurance, and of the institution of any
administrative proceeding which may materially and adversely affect Borrower's
operations, financial condition, Properties or business or Lender's Lien upon
any of the Collateral; (ii) at least sixty (60) days prior thereto, of
Borrower's opening of any new office or place of business or Borrower's closing
of any existing office or place of business; (iii) promptly after Borrower's
learning thereof, of any labor dispute to which Borrower may become a party, any
strikes or walkouts relating to any of its plants or other facilities, and the
expiration of any labor contract to which it is a party or by which it is bound;
(iv) promptly after Borrower's learning thereof, of any material default by
Borrower under any note, indenture, loan agreement, mortgage, lease, deed,
guaranty or other similar agreement relating to any Indebtedness of Borrower
exceeding $50,000; (v) promptly after the occurrence thereof, of any Default or
Event of Default; (vi) promptly after the occurrence thereof, of any default by
any obligor under any note or other evidence of Indebtedness payable to
Borrower; and (vii) promptly after the rendition thereof, of any judgment
rendered against Borrower or any of its Subsidiaries.
(L) Landlord and Storage Agreements. If so requested by Lender, provide
Lender with copies of all agreements between Borrower and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
(M) Subordinations. Provide Lender with a debt subordination agreement,
in form and substance satisfactory to Lender, executed by Borrower and any
Person who is an officer, director or Affiliate of Borrower to whom Borrower is
or hereafter becomes indebted for Money Borrowed, subordinating in right of
payment and claim all of such Indebtedness and any future advances thereon to
the full and final payment and performance of the Obligations.
(N) Further Assurances. At Lender's request, promptly execute or cause
to be executed and deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry out the terms
or intent of this Agreement or any of the other Loan Documents. Without limiting
the generality of the foregoing, if any of the Accounts, the face value of which
exceeds $l,000, arises out of a contract with the United States of America, or
any department, agency, subdivision or instrumentality thereof, Borrower shall
promptly notify Lender thereof in writing and shall execute any instruments and
take any other action required or requested by Lender to comply with the
provisions of the Federal Assignment of Claims Act.
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(O) Projections. As soon as available, and in any event no later than
thirty (30) days prior to the end of each Fiscal Year of Borrower, deliver to
Lender Projections of Borrower for the forthcoming Fiscal Year, month by month.
(P) Environmental Matters. (i) Borrower will ensure that the real
Property remains in compliance with all Environmental Laws and it will not place
or permit to be placed any Hazardous Substances on any real Property except as
not prohibited by applicable law or appropriate governmental authorities.
(ii) In the event the Borrower obtains, gives or receives
written notice of any Release or threat of Release of a reportable quantity of
any Hazardous Substances at the real Property (any such event being hereinafter
referred to as a "Hazardous Discharge") or receives any written notice of
violation, request for information or notification that it is potentially
responsible for investigation or cleanup of environmental conditions at the real
Property, demand letter or complaint, order, citation, or other written notice
with regard to any Hazardous Discharge or violation of Environmental Laws
affecting the real Property or Borrower's interest therein (any of the foregoing
is referred to herein as an "Environmental Complaint") from any Person or
entity, including any state agency responsible in whole or in part for
environmental matters in the state in which the real Property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the "Authority"), then the Borrower shall, within five (5) Business
Days, give written notice of same to the Lender setting forth facts and
circumstances giving rise to the Hazardous Discharge or Environmental Complaint.
Such information is to be provided to allow Lender to protect its security
interest in the real Property and is not intended to create nor shall it create
any obligation upon Lender with respect thereto.
(iii) Borrower shall promptly forward to the Lender copies of
any request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by
Borrower to dispose of Hazardous Substances which notice, potential liability or
potential responsibility might have a Material Adverse Effect and shall continue
to forward copies of correspondence between the Borrower and the Authority
regarding such claims to the Lender until the claim is settled. The Borrower
shall promptly forward to the Lender copies of all documents and reports
concerning a Hazardous Discharge at the real Property that the Borrower is
required to file under any Environmental Laws. Such information is to be
provided solely to allow the Lender to protect Lender's security interest in the
real Property and the Collateral.
(iv) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
real Property to any Lien. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower shall fail to comply
with any of the requirements of any Environmental Laws which failure might have
a Material Adverse Effect, the Lender may, but without the obligation to do so,
for the sole purpose of protecting the Lender's interest in Collateral: (A) give
such notices or (B) enter onto the real Property (or authorize third parties to
enter onto the real Property) and take such actions as the Lender (or such third
parties as directed by the Lender) deem reasonably necessary or
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advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and
expenses incurred by the Lender and the Lender (or such third parties) in the
exercise of any such rights, including any sums paid in connection with any
judicial or administrative investigation or proceedings, fines and penalties,
together with interest thereon from the date expended at the Default Rate for
Loans constituting Revolving Credit Loans shall be paid upon demand by the
Borrower, and until paid shall be added to and become a part of the Obligations
secured by the Liens created by the terms of this Agreement or any other
agreement between Lender and Borrower.
(v) Borrower shall defend and indemnify the Lender and hold
the Lender, and its respective employees, agents, directors and officers
harmless from and against all loss, liability, damage and expense, claims,
costs, fines and penalties, including attorney's fees, suffered or incurred by
the Lender under or on account of Borrower's violation of any Environmental
Laws, including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the real Property, whether or not the same originates or emerges from
the real Property or any contiguous real estate (except to the extent such loss,
liability, damage and expense, claims, costs, fines and penalties are caused by
the gross negligence, (but not mere negligence) or willful misconduct of Lender,
its employees, agents, directors or officers), including any loss of value of
the real Property as a result of the foregoing. The Borrower's obligations under
this Section 9.1(P) shall arise upon the discovery of the presence of any
Hazardous Substances at the real Property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the presence of any Hazardous Substances. The Borrower's obligation and the
indemnifications hereunder shall survive the termination of this Agreement.
(vi) For purposes of Sections 8.1(AA), 9.1(P) and 9.2(Y), all
references to real Property shall be deemed to include all of Borrower's right,
title and interest in and to leased premises.
(Q) Insurance. Maintain, at all times, insurance coverage in accordance
with the provisions of Section 4.6.
(R) Landlord Waivers. At Lender's request, promptly cause to be
executed and delivered to Lender landlord waivers for any and all future leased
locations.
(S) Rental Reports. Deliver to Lender on a monthly basis reports on any
and all Rentals which are in excess of forty-five (45) days past due.
9.2. Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
(A) Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary to merge or consolidate, with any Person, except a
consolidation or merger involving only Borrower and one or more wholly owned
Subsidiaries; nor acquire all or any substantial part of the Properties of any
Person.
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(B) Loans. Make, or permit any Subsidiary to make, any loans or other
advances of money (other than for salary, travel advances, advances against
commissions and other similar advances in the ordinary course of business and
other than previously disclosed in writing to Lender) to any Person, including,
without limitation, any of Borrower's Affiliates, officers or employees.
(C) Total Indebtedness. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create incur or suffer to exist, any Indebtedness,
except: (i) Obligations owing to Lender; (ii) Subordinated Debt; (iii)
Indebtedness of any Subsidiary to Borrower; (iv) accounts payable to trade
creditors which are not aged beyond normal business practices and current
operating expenses (other than for Money Borrowed) which are not more than sixty
(60) days past due, in each case incurred in the ordinary course of business and
paid within such time period, unless actively the same is actively contested in
good faith and by appropriate and lawful proceedings and Borrower shall have set
aside such reserves, if any, with respect thereto as are required by generally
accepted accounting principles and deemed adequate by Borrower and its
independent accountants; (v) Obligations to pay Rentals permitted by Section
9.2(W); (vi) Permitted Purchase Money Indebtedness and total unsecured
Indebtedness incurred in connection with the purchase of fixed assets not to
exceed the sum of $500,000 in the aggregate at any time outstanding; and (vii)
contingent liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the ordinary course of
business.
(D) Affiliate Transactions. Enter into, or be a party to, or permit any
Subsidiary to enter into or be a party to, any transaction with any Affiliate or
stockholder, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are fully disclosed to Lender and which are no less
favorable to Borrower than would obtain in a comparable arm's length transaction
with a Person not an Affiliate or stockholder of Borrower or such Subsidiary.
(E) Partnerships or Joint Ventures.
Become or agree to become a general or limited partner in any general or limited
partnership or a joint venturer in any joint venture.
(F) Intentionally Omitted.
(G) Guaranties. Guarantee, assume, endorse or otherwise, in any way,
become directly or contingently liable with respect to the Indebtedness of any
Person except by endorsement of instruments or items of payment for deposit or
collection.
(H) Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary to create or suffer to exist, any Lien upon any of its Property,
income or profits, whether now owned or hereafter acquired, except: (i) Liens at
any time granted in favor of Lender; (ii) Liens for taxes (excluding any Lien
imposed pursuant to any of the provisions of ERISA) not yet due or being
contested as permitted by Section 9.1(A) hereof, but only if in Lender's
judgment such Lien does not affect adversely Lender's rights or the priority of
Lender's Lien in the Collateral; (iii) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like Persons
for labor, materials, supplies or rentals incurred in the ordinary
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course of Borrower's business, but only if the payment thereof is not at the
time required and only if such Liens are junior to the Liens in favor of Lender;
(iv) Liens resulting from deposits made in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, social security
and other like laws; (v) attachment, judgment and other similar non-tax Liens
arising in connection with court proceedings, but only if and for so long as the
execution or other enforcement of such Liens is and continues to be effectively
stayed and bonded on appeal in a manner satisfactory to Lender for the full
amount thereof, the validity and amount of the claims secured thereby are being
actively contested in good faith and by appropriate lawful proceedings and such
Liens do not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the operation of
Borrower's business; (vi) Purchase Money Liens securing Permitted Purchase Money
Indebtedness which is not incurred in violation of Section 9.2(C) of this
Agreement; (vii) reservations, exceptions, easements, rights of way, and other
similar encumbrances affecting real Property, provided that, in Lender's sole
judgment, they do not in the aggregate materially detract from the value of said
Properties or materially interfere with their use in the ordinary conduct of
Borrower's business; (viii) Liens securing Indebtedness of a Subsidiary to
Borrower or another Subsidiary; (ix) such other Liens as appear on Exhibit
9.2(H) attached hereto; (x) Liens Securing the Senior Subordinated Note; and
(xi) such other Liens as Lender may hereafter approve in writing.
(I) Subordinated Debt. Make, or permit any Subsidiary to make, any
payment of any part or all of any Subordinated Debt in violation of the
respective Subordination Agreement or voluntarily prepay any Subordinated Debt;
or otherwise repurchase, redeem or retire any instrument evidencing any such
Subordinated Debt prior to maturity; or enter into any agreement (oral or
written) which could in any way be construed to amend, modify, alter or
terminate any one or more instruments or agreements evidencing or relating to
any Subordinated Debt.
(J) Distributions. Declare or make, or permit any Subsidiary to declare
or make, any Distributions; provided, however, that if Borrower elects Section
1362 of the Internal Revenue Code of 1986 to have the provisions of Subchapter S
of the IRC apply to Borrower and its shareholder[s], then for so long as no
Event of Default exists, Borrower may make cash Distributions to its
shareholders equal to the federal and state income taxes payable by them on
taxable income of Borrower based on the maximum statutory rate applicable to the
individual shareholder[s] for the applicable tax year plus the individual
alternative minimum tax attributable solely to the inclusion of such taxable
income of Borrower in the individual tax return of such shareholder[s].
(K) Subsidiaries. Hereafter create any Subsidiary or divest itself of
any material assets by transferring them to any Subsidiary to whose existence
Lender has consented.
(L) Capital Expenditures. Make Capital Expenditures in any Fiscal Year
(including, without limitation, by way of capitalized leases) in excess of sums
equal to (1) the lesser of (a) 50% of projected EBITDA (as defined under GAAP)
for such Fiscal Year as set forth in the Projections for such Fiscal Year or (b)
60% of actual EBITDA (as defined under GAAP) for the preceding Fiscal Year as
set forth in the audited financial statements of Borrower
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and its Subsidiaries as at the end of such Fiscal Year plus (2) the proceeds
received by Borrower with respect to any equity contribution made to Borrower or
any Subordinated Debt, to the extent not utilized in any prior Fiscal Year for
Capital Expenditures.
(M) Business Locations. Transfer its principal place of business or
chief executive office, or open new manufacturing plants, or transfer existing
manufacturing plants, or maintain warehouses or records with respect to Accounts
or Inventory, to or at any locations other than those at which the same are
presently kept or maintained, as set forth on Exhibit 4.5 hereto, except upon at
least sixty (60) days prior written notice to Lender and after the delivery to
Lender of financing statements, if required by Lender, in form satisfactory to
Lender to perfect or continue the perfection of Lender's Lien and security
interest hereunder.
(N) Change of Business. Enter into any new business or make any
material change in any of Borrower's business objectives, purposes and
operations.
(O) Disposition of Assets. Sell, lease or otherwise dispose of any of
its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of Borrower's business, (ii) a transfer of
Property to Borrower by a Subsidiary or (iii) dispositions expressly authorized
by this Agreement.
(P) Name of Borrower. Use any corporate name (other than its own) or
any fictitious name, tradestyle or "d/b/a" except for the names disclosed on
Exhibit 8.1(B) attached hereto.
(Q) Bill-and-Hold Sales, Etc. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
(R) Use of Lender's Name. Without the prior written consent of Lender,
use the name of Lender or the name of any Affiliates of Lender in connection
with any of Borrower's business or activities, except in connection with
internal business matters, as required in dealings with governmental agencies
and financial institutions and to trade creditors of Borrower solely for credit
reference purposes.
(S) Margin Securities. Own, purchase or acquire (or enter into any
contract to purchase or acquire) any "margin security" as defined by any
regulation of the Federal Reserve Board as now in effect or as the same may
hereafter be in effect unless, prior to any such purchase or acquisition or
entering into any such contract, Lender shall have received an opinion of
counsel satisfactory to Lender to the effect that such purchase or acquisition
will not cause this Agreement to violate Regulations G or U or any other
regulation of the Federal Reserve Board then in effect.
(T) Restricted Investment. Make or have, or permit any Subsidiary to
make or have, any Restricted Investment.
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(U) Fiscal Year. Change, or permit any Subsidiary to change, its Fiscal
Year, or permit any Subsidiary to have a Fiscal Year different from that of
Borrower.
(V) Stock of Subsidiary, Etc. Sell or otherwise dispose of any shares
of capital stock of any Subsidiary, except in connection with a transaction
permitted under Section 9.2(A), or permit any Subsidiary to issue any additional
shares of its capital stock except director's qualifying shares.
(W) Leases. Unless Borrower has raised at least $8,000,000 in the
aggregate subsequent to the Closing Date in IPO Equity, become a lessee under
any operating lease of Property if the aggregate Rentals payable during any
future period of twelve (12) consecutive months under the lease in question and
all other leases under which Borrower is then lessee would exceed sixteen
percent (16%) of total net sales during such period based upon Borrower's
reasonable projections for the same period.
(X) Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary.
(Y) Compliance with Environmental Laws. (a) Use any of the real
Property or any portion thereof for the handling, processing or storage of
Hazardous Substances except in compliance with Environmental Laws, (b) use any
of the real Property or any portion thereof for the disposal of Hazardous
Substances, (c) cause or permit to be located on any of the real Property any
underground tank or other underground storage receptacle for Hazardous
Substances except in compliance with Environmental Laws, (d) generate any
Hazardous Substances on any of the real Property except in compliance with
Environmental Laws, (e) conduct any activity at any real Property or use any
real Property in any manner so as to cause a Release or threatened Release of
Hazardous Substances on, upon or into the real Property except in compliance
with Environmental Laws, or (f) otherwise conduct any activity at any real
Property or use any real Property in any manner that would violate any
Environmental Law or bring such real Property in violation of any Environmental
Law.
9.3. Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
(A) Minimum Adjusted Tangible Net Worth. Maintain at the end of each
month a Minimum Adjusted Tangible Net Worth of not less than $10,500,000 during
the Fiscal Year ended March 31, 1999, which amount shall be increased by
$250,000 on the last day of such Fiscal Year and on the last day of each Fiscal
Year thereafter.
(B) Cash Flow. Achieve Cash Flow of not less than $250,000 at the end
of each fiscal quarter with respect to the four fiscal quarters then ended as of
the last day of such fiscal quarter.
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SECTION 10. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other Sections of this Agreement, it is understood and agreed that
Lender will not make any Loan under Section 2 of this Agreement unless and until
each of the following conditions has been and continues to be satisfied, all in
form and substance satisfactory to Lender and its counsel:
10.1. Documentation. Lender shall have received the following
documents, each to be in form and substance satisfactory to Lender and its
counsel:
(A) A copy of the Articles or Certificate of Incorporation of Borrower,
and all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation;
(B) Good standing certificates for Borrower, issued by the Secretary of
State or other appropriate official of Borrower's jurisdiction of incorporation
and each jurisdiction where the conduct of Borrower's business activities or the
ownership of its Properties necessitates qualification and where the failure to
so qualify would have a material adverse effect on the Borrower;
(C) A closing certificate signed by the President and Chief Financial
Officer of Borrower dated as of the date hereof, stating that (i) the
representations and warranties set forth in Section 8 hereof are true and
correct on and as of such date, (ii) Borrower is on such date in compliance with
all the terms and provisions set forth in this Agreement and (iii) on such date
no Default or Event of Default has occurred or is continuing;
(D) Reaffirmation of each holder of Subordinated Debt with respect to
the terms and conditions of each Subordination Agreement;
(E) The favorable, written opinion of Reed, Smith, Shaw & McClay,
counsel to Borrower, as to the transactions contemplated by this Agreement and
any of the other Loan Documents, to be substantially in the form of Exhibit
10.1(E) attached hereto;
(F) Copies of the resolutions in form and substance reasonably
satisfactory to it, of the Board of Directors of Borrower authorizing (i) the
execution, delivery and performance of this Agreement, the Note, and the Other
Agreements on behalf of Borrower;
(G) Reaffirmation of each Guaranty Agreement; and
(H) Such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
10.2. Other Conditions. The following conditions have been and shall
continue to be satisfied, in the commercially reasonable discretion of Lender
acting in good faith:
(A) No Default or Event of Default shall exist;
(B) Each of the conditions precedent set forth in the other Loan
Documents shall have been satisfied;
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(C) Intentionally Omitted.
(D) All instruments and documents required hereby or relating to the
Borrower's capacity and authority to execute the Loan Documents relating thereto
and such other agreements, instruments, certificates, opinions and assurances as
Lenders may reasonably request, and all procedures in connection herewith would
be subject to Lender's approval and the approval of Lenders' counsel as to form
and substance;
(E) Lender's field examiners shall have completed examinations of the
books and records of Borrower and of the Collateral and the results of such
examinations shall be reasonably satisfactory to Lender;
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
11.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(A) Payment of Note. Borrower shall fail to pay any installment of
principal, interest or premium, if any, owing on the Note within ten (10) days
after the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
(B) Payment of Obligations. Borrower shall fail to pay any of the
Obligations that are not evidenced by the Note within ten (10) days written
notice of the due date thereof (whether due at stated maturity, upon
acceleration or otherwise).
(C) Misrepresentations. Any warranty, representation, or other
statement made or furnished to Lender by or on behalf of Borrower or Guarantor
or in any instrument, certificate or financial statement furnished in compliance
with or in reference to this Agreement or any of the other Loan Documents proves
to have been materially false or misleading in any material respect when made or
furnished.
(D) Breach of Covenants. Borrower shall fail or neglect to perform,
keep or observe (i) any covenant contained in Sections 4.3, 4.4, 4.5, 4.6, 6.2,
9.1(A), 9.1(F), 9.1(J), 9.1(N), 9.2 or 9.3 of this Agreement or (ii) any other
covenant contained in this Agreement (other than a covenant a default in the
performance or observance of which is dealt with specifically elsewhere in this
Section 11.1) and the breach of such other covenant is not cured to Lender's
satisfaction within fifteen (15) days after the sooner to occur of Borrower's
receipt of notice of such breach from Lender or the date on which such failure
or neglect becomes known to any officer of Borrower.
(E) Default Under Other Agreements. Any event of default shall occur
under, or Borrower shall default in the performance or observance of any term,
covenant, condition or agreement contained in, any of the Other Agreements or
any of the Security Documents and such default shall continue beyond any
applicable period of grace.
(F) Other Defaults. There shall occur any default on the part of
Borrower (including specifically, but without limitation, due to non-payment)
under any agreement,
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document or instrument to which Borrower is a party or by which Borrower or any
of its Property is bound, creating or relating to any material Indebtedness
(other than the Obligations) if the payment or maturity of such Indebtedness is
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made.
(G) Uninsured Losses; Unauthorized Dispositions. Any material loss,
theft, damage or destruction not fully covered by insurance (as required by this
Agreement and subject to such deductibles as Lender shall have agreed to in
writing), or sale, lease or encumbrance of any of the Collateral or the making
of any levy, seizure, or attachment thereof or thereon except in all cases as
may be specifically permitted by other provisions of this Agreement.
(H) Insolvency, etc. Borrower or any Guarantor shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower or
any Guarantor under the Bankruptcy Code (if against Borrower or any Guarantor,
the continuation of such proceeding for more than thirty (30) days), or Borrower
or any Guarantor shall make any offer of settlement, extension or composition to
their respective unsecured creditors generally.
(I) Business Disruption; Condemnation. There shall occur a cessation of
a substantial part of the business of Borrower for a period which significantly
affects Borrower's capacity to continue its business, on a profitable basis; or
Borrower shall suffer the loss or revocation of any license or permit now held
or hereafter acquired by Borrower which is necessary to the continued or lawful
operation of its business; or Borrower shall be enjoined, restrained or in any
way prevented by court, governmental or administrative order from conducting all
or any material part of its business affairs; or any material lease or agreement
pursuant to which Borrower leases, uses or occupies any Property shall be
cancelled or terminated prior to the expiration of its stated term; or any part
of the Collateral shall be taken through condemnation or the value of such
Property shall be impaired through condemnation; and, as to all of the
foregoing, the same shall have a material adverse effect on Borrower.
(J) Change of Management. William A. Teitelbaum shall cease to be
employed on a full-time basis as Borrower's chief executive officer and a
suitable replacement of comparable experience and ability shall not have been
employed in his place within ninety (90) days of his departure.
(K) ERISA. A Reportable Event shall occur which Lender, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the PBGC of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or if any Plan shall be
terminated or any such trustee shall be requested or appointed, or if Borrower
is in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from Borrower's complete or partial
withdrawal from such Plan.
(L) Litigation. Borrower or any Guarantor, or any Affiliate of either,
shall challenge or contest in any action, suit or proceeding the validity or
enforceability of this
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Agreement or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
(M) Repudiation of or Default Under Guaranty Agreement. Any Guarantor
shall revoke or attempt to revoke the Guaranty Agreement signed by such
Guarantor, or shall repudiate such Guarantor's liability thereunder or shall be
in material default under the terms thereof.
(N) Criminal Forfeiture. Borrower or any Guarantor shall be criminally
indicted or convicted under any law that could lead to a forfeiture of any
Property of Borrower or any Guarantor.
(O) Judgments. Any money judgment, writ of attachment or similar
process is entered or filed against Borrower or any of its Property and results
in the creation or imposition of any Lien that is not a Permitted Lien.
11.2. Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.4(A) hereof, upon or at any time after the
occurrence of an Event of Default as above provided, all or any portion of the
Obligations due or to become due from Borrower to Lender, whether under this
Agreement, or any of the other Loan Documents or otherwise, shall, at the option
of Lender and without notice or demand by Lender, become at once due and payable
and Borrower shall forthwith pay to Lender, in addition to any and all sums and
charges due, the entire principal of and interest accrued on the Obligations.
11.3. Remedies. Upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:
(A) All of the rights and remedies of a secured party under the Code or
under other applicable law, and all other legal and equitable rights to which
Lender may be entitled, all of which rights and remedies shall be cumulative,
and none of which shall be exclusive, and shall be in addition to any other
rights or remedies contained in this Agreement or any of the other Loan
Documents.
(B) The right to take immediate possession of the Collateral, and (i)
to require Borrower to assemble the Collateral, at Borrower's expense, and make
it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) to enter any of the premises of Borrower or
wherever any of the Collateral shall be located, and to keep and store the same
on said premises until sold (and if said premises be the Property of Borrower,
Borrower agrees not to charge Lender for storage thereof).
(C) The right to sell or otherwise dispose of all or any Inventory or
Equipment in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its reasonable discretion, may deem advisable. Borrower agrees that ten (10)
days written notice to Borrower of any public or private sale or other
disposition of such Collateral shall be reasonable notice thereof, and such sale
shall be at such locations as Lender
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may designate in said notice. Lender shall have the right to conduct such sales
on Borrower's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Lender shall have the right
to sell, lease or otherwise dispose of such Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase all or any part
of such Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Obligations.
(D) Lender is hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
(E) The proceeds realized from the sale of any Collateral may be
applied, after allowing two (2) Business Days for collection, first to the
costs, expenses and reasonable attorneys' fees incurred by Lender in collecting
the Obligations, in enforcing the rights of Lender under the Loan Documents and
in collecting, retaking, completing, protecting, removing, storing, advertising
for sale, selling and delivery any of the Collateral; secondly, to interest due
upon any of the Obligations; and thirdly, to the principal of the Obligations.
If any deficiency shall arise, Borrower and each Guarantor shall remain jointly
and severally liable to Lender therefor.
11.4. Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to exercise or enforce
any rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such Liens, rights, powers and remedies, but all such Liens, rights,
powers, and remedies shall continue in full force and effect until all Loans and
all other Obligations owing or to become owing from Borrower to Lender shall
have been fully satisfied, and all Liens, rights, powers, and remedies herein
provided for are cumulative and none are exclusive.
SECTION 12. MISCELLANEOUS
12.1. Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
(A) At such time or times upon or after the occurrence of an Event of
Default as Lender or said agent, in its sole discretion, may determine, endorse
Borrower's name on any
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checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Lender
or under Lender's control; and
(B) At such time or times upon or after the occurrence of an Event of
Default as Lender or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral and to which Borrower has access; (xi) make and adjust
claims under policies of insurance; and (xii) do all other acts and things
necessary, in Lender's determination, to fulfill Borrower's Obligations under
this Agreement.
12.2. Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender as the result of Borrower's
failure to observe, perform or discharge Borrower's duties hereunder. Without
limiting the generality of the foregoing, this indemnity shall extend to any
claims asserted against Lender by any Person under any Environmental Laws or
similar laws by reason of Borrower's or any other Person's failure to comply
with laws applicable to solid or hazardous waste materials or other toxic
substances. Notwithstanding any contrary provision of this Agreement, the
obligation of Borrower under this Section 12.2 shall survive the payment in full
of the Obligations and the termination of this Agreement.
12.3. Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement or any of the other Loan Documents, or any portion thereof,
including, without limitation, Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrower hereby consents to Lender's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement and any of the other Loan Documents or any of
the Obligations, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests,
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remedies, powers, and duties hereunder or thereunder so long as Lender shall,
at all times, remain as lead lender, administrative agent and collateral agent
under this Agreement.
12.4. Reimbursement of Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not an Event of Default
then exists or any of the transactions contemplated hereunder are concluded,
Lender or any Participating Lender employs counsel for advice or other
representation, or incurs legal expenses or other costs or out-of-pocket
expenses in connection with: (A) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents, or any sale or attempted
sale of any interest herein to a Participating Lender; or (B) the administration
of this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (C) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (D) any attempt to enforce any
rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Lender by virtue of this Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors; or
(E) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then, in any
such event, the reasonable attorneys' fees arising from such services and all
reasonable expenses, costs, charges and other fees of such counsel or of Lender
or relating to any of the events or actions described in this Section shall be
payable, on demand, by Borrower to Lender or to such Participating Lender, as
the case may be, and shall be additional Obligations hereunder secured by the
Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include accountants' fees, costs and expenses; court
costs and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial over-time charges; and expenses for travel,
lodging and food paid or incurred in connection with the performance of such
legal services. Additionally, if any taxes (excluding taxes imposed upon or
measured by the net income of Lender or the value or net worth of Lender's
capital stock) shall be payable on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any of the other
Loan Documents, or the creation of any of the Obligations hereunder, by reason
of any existing or hereafter enacted federal or state statute, Borrower will pay
all such taxes, including, but not limited to, any interest and penalties
thereon, and will indemnify and hold Lender harmless from and against liability
in connection therewith.
12.5. Indulgences Not Waivers. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Lender of a Default or an Event of Default by Borrower under this Agreement or
any of the other Loan Documents shall not suspend, waive or affect any other
Event of Default by Borrower under this Agreement or any of the other Loan
Documents, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any of the other Loan Documents shall be deemed to have
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been suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrower.
12.6. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
12.7. Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender. This provision, however, shall
not be deemed to modify Section 12.3 hereof.
12.8. Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.6 of
this Agreement and except as otherwise provided in any of the other Loan
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in direct conflict with, or
inconsistent with, any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
12.9. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
12.10. Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be in writing and shall be
sent by certified or registered mail, return receipt requested or by telegraph
or telex and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered when delivered against receipt or
one Business Day after deposit in the mail, postage prepaid, or, in the case of
telegraphic notice, when delivered to the telegraph company, or, in the case of
telex notice, when sent, answer back received, addressed as follows:
(A) If to Lender: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033
Attention: Northeast Loan
Administration Manager
Telephone: (203) 659-3200
Telecopier: (203) 657-7759
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with a copy to: Hahn & Hessen
350 Fifth Avenue
New York, New York 10118
Attention: Daniel J. Krauss, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
(B) If to Borrower: National Record Mart, Inc.
507 Forest Avenue
Carnegie, Pennsylvania 15106
Attention: Theresa Carlise
Telephone: (412) 276-6200
Telecopier: (412) 276-6201
with a copy to Reed Smith Shaw & McClay LLP
435 Sixth Avenue
Pittsburgh, Pennsylvania 15219
Attention: Robert Morris, Esq.
Telephone: (412) 288-3131
Telecopier: (412) 288-3063
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 12.10; provided, however, that any notice,
request or demand to or upon Lender pursuant to Sections 2.3 or 3.4 shall not be
effective until received by Lender. Any written notice that is not sent in
conformity with the provisions hereof shall nevertheless be effective on the
date such notice is actually received by the noticed party.
12.11. Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
12.12. Demand Obligations. Nothing in this Agreement shall affect or
abrogate the demand nature of any portion of the Obligations expressly made
payable on demand by this Agreement or by any instrument evidencing or securing
same, and the occurrence of an Event of Default shall not be a prerequisite for
Lender's requiring payment of such Obligations.
12.13. Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.14. Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
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12.15. Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
12.16. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
NEW YORK, NEW YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK,
THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
NEW YORK. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, AND
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT
OF NEW YORK COUNTY, NEW YORK OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
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12.17. WAIVERS BY BORROWER. EXCEPT TO THE EXTENT OTHERWISE PROVIED IN
THIS AGREEMENT, BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH LENDER
HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION
OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) ANY RIGHT
BORROWER MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE LENDER TO
TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF
BORROWER UNTIL TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS AND
THE EXECUTION BY BORROWER, AND BY ANY PERSON WHOSE LOANS TO BORROWER IS USED IN
WHOLE OR IN PART TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING LENDER
FROM ANY LOSS OR DAMAGE LENDER MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR
OTHER ITEMS OF PAYMENT RECEIVED BY LENDER FROM BORROWER OR ANY ACCOUNT DEBTOR
AND APPLIED TO THE OBLIGATIONS; AND (vi) NOTICE OF ACCEPTANCE HEREOF. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed in New York,
New York, on the day and year specified at the beginning hereof.
NATIONAL RECORD MART, INC.
("Borrower")
By:
------------------------------------
Name:
Title:
FLEET CAPITAL CORPORATION
("Lender")
By:
------------------------------------
Name:
Title:
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LIST OF EXHIBITS
Exhibit A-1 Junior Subordinated Notes
Exhibit A-2 Senior Subordinated Notes
Exhibit 4.5 Location of Collateral
Exhibit 8.1.(A) Authorization To Do Business - Jurisdictions
Exhibit 8.1.(B) Corporate Names
Exhibit 8.1.(H) Patents, Trademarks, Copyrights and Licenses
Exhibit 8.1.(I)(i) Capital Structure of Borrower
Exhibit 8.1.(I)(ii) Shareholder Agreements
Exhibit 8.1.(K) Contracts Restricting Borrower's Right to Incur Debts
Exhibit 8.1.(L) Litigation
Exhibit 8.1.(P) Pension Plans
Exhibit 8.1.(R) Labor Contracts
Exhibit 8.1.(W) Service of Process Locations
Exhibit 8.1.(Y)(i) Capitalized Leases
Exhibit 8.1.(Y)(ii) Operating Leases
Exhibit 8.1.(AA)(b) Environmental Compliance
Exhibit 8.1.(AA)(c) Hazardous Substances
Exhibit 9.2(H) Permitted Liens
Exhibit 10.1(E) Form of Opinion of Counsel
