“ Business Day ” shall mean any day on which commercial banks in Minneapolis, Minnesota are open for the transaction of business of the kind contemplated by this Agreement.

 

“ Cash Management Agreement ” shall have the meaning provided in Paragraph 4A(b).

 

“ Change of Control ” shall mean the occurrence after the date of this Agreement of any event where: (a) Curtis A. Sampson, Randall D. Sampson and Dale Schenian shall cease to respectively own 35%, 5% and 15% of the aggregate voting power of all classes of Borrower’s stock entitled to vote generally in the election of Borrower’s directors; or (b) Curtis A. Sampson, Randall D. Sampson and Dale Schenian, acting individually or in concert, shall cease to control the election of a majority of Borrower’s board of directors or the direction of Borrower’s management policies.

 

“ Chattel Paper ” shall have the meaning ascribed to such term in Article 9 of the Commercial Code.

 

“ Closing Date ” shall mean the day specified by Borrower on which all of the conditions precedent specified in Paragraphs 21 and 23 shall have been satisfied.

 

“ Collateral ” shall have the meaning provided in Paragraph 3.

 

“ Commercial Code ” shall mean the Uniform Commercial Code as enacted in the State of Minnesota, as amended from time to time, including, without limitation, on and after the effective date of Minn. Laws 2000, Chapter 399, substantially adopting Revised Article 9 of the Uniform Commercial Code as approved by the National Conference of Commissioners on Uniform State Law Laws in July, 1998 (as so adopted being sometimes hereinafter referred to as “Revised Article 9”) by Revised Article 9.

 

“ Completion ” shall mean that all Improvements are completed in accordance with the Plans and paid for in full; a certificate of substantial completion for the Improvements has been signed by Borrower, the Construction Manager and the General Contractor and delivered to Lender, and no punch-list items remain to be completed; an unconditional certificate of occupancy for all of the Improvements has been issued by the appropriate governmental authority; and Borrower has delivered to the Lender copies of all licenses and permits needed to operate the Project.

 

“ Completion Deadline ” shall mean August 1, 2000.

 

“ Contingent Obligations ” shall mean, with respect to any Person, all of such Person’s liabilities and obligations which are contingent upon and will not mature unless and until the occurrence of some event or circumstance and which are not included within the definition of Liabilities of such Person.

 

“ Default ” shall mean any event which, with the giving of notice or passage of time, or both, would constitute an Event of Default.

 

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“ Default Rate ” shall mean with respect to any: (a) Note, a rate per annum equal to two percent (2%) per annum in excess of the interest rate which would otherwise be in effect on such Note; or (b) other Obligation, a fluctuating rate per annum equal all times to the sum of the Reference Rate plus 1.50% per annum.

 

“ Disbursing Agreement ” shall mean that certain Disbursing Agreement dated as of even date herewith by and among Borrower, the Lender and Commercial Partners Title, LLC (“CPT”).

 

“ Equipment ” shall have the meaning provided in Paragraph 3(c).

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may from time to time be amended, and the rules and regulations promulgated thereunder by any governmental agency or authority, as from time to time in effect.

 

“ ERISA Affiliate ” shall mean, with respect to any Person, any trade or business (whether or not incorporated) which is a member of a group of which such Person is a member and which is under common control within the meaning of Section 414 of the Code, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“ ERISA Event ” shall mean: (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations); (b) the withdrawal of Borrower or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001 (a)(2) of ERISA; (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041 of ERISA; (d) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA; or (e) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

 

“ Event of Default ” shall have the meaning provided in Paragraph 20.

 

“ GAAP ” shall mean generally accepted accounting principles consistently applied and maintained throughout the period indicated and consistent with the audited financial statements delivered to Lender pursuant to Paragraph l5(h).  Whenever any accounting term is used herein which is not otherwise defined, it shall be interpreted in accordance with GAAP.

 

“ General Intangibles ” shall have the meaning provided in Paragraph 3(d).

 

“ Improvements ” shall mean the 15,828 square foot card club to be constructed within the existing buildings upon the Land.

 

“ Independent Public Accountants ” shall mean Deloitte & Touche or any other firm of independent public accountants which is acceptable to Lender.

 

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“ Inventory ” shall have the meaning provided in Paragraph 3(b).

 

“ Land ” shall mean the land legally described on Schedule A attached hereto and incorporated herein by reference.

 

“ Letters of Credit ” shall have the meaning provided in Paragraph 4D(a) and shall be deemed to include the “Letters of Credit” issued by Lender pursuant to the Original Agreement (the “Existing Letters of Credit”).

 

“ Letter of Credit Application(s) ” shall have the meaning provided in Paragraph 4D(b) and shall be deemed to include the “Letter of Credit Applications” (the “Existing Letters of Credit Applications”) delivered to Lender pursuant to the Original Agreement for the Existing Letters of Credit.

 

“ Letter of Credit Commission ” shall have the meaning provided in Paragraph 4D(e).

 

“ Letter of Credit Commitment ” shall mean, at any date, the maximum amount of Letter of Credit Obligations which may from time to time be outstanding hereunder and under the Letter of Credit Applications, being initially $150,000.00 and, as the context may require, the agreement of Lender to issue the Letters of Credit for the account of Borrower subject to the terms and conditions of this Agreement.

 

“ Letter of Credit Obligations ” on any date shall mean the sum of: (a) the aggregate amount available to be drawn on the Letters of Credit on such date; plus (b) the aggregate amount owed by Borrower to Lender on such date as a result of draws on the Letters of Credit for which Borrower has not reimbursed Lender.

 

“ Letter of Credit Commitment Termination Date ” shall mean the Revolving Credit Termination Date.

 

“ Liabilities ” of any Person shall mean those items which, in accordance with GAAP, appear as liabilities on a balance sheet.

 

“ Loan(s) ” shall mean the Revolving Credit Loan, Term Loan A and Term Loan B.

 

“ Loan Document(s) ” shall mean individually or collectively, as the case may be, this Agreement, the Notes, the Disbursing Agreement, the Letter of Credit Applications and any and all other documents executed, delivered or referred to herein or therein, as originally executed and as amended, modified or supplemented from time to time.

 

“ Loan Year ” shall mean the period from the date of this Agreement (or its anniversary date in a succeeding calendar year) through the day preceding the anniversary date of this Agreement in the immediately following calendar year.

 

“ Material Adverse Occurrence ” shall mean any occurrence of whatsoever nature (including, without limitation, any adverse determination in any litigation, arbitration or governmental investigation or proceeding) which Lender shall determine, in its sole discretion, could adversely affect the present or prospective financial condition or

 

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operations of Borrower or impair the ability of Borrower to perform its obligations under this Agreement or any other Loan Document.

 

“ Maturity Date ” shall mean with respect to: (a) the Revolving Credit Loan, the earlier of: (i) June 30, 2009; or (ii) the date upon which the Obligations are declared to be due and payable (or automatically become due and payable) upon the occurrence of an Event of Default as provided in Paragraph 20; (b) Term Loan A, the earlier of: (i) August 1, 2005; or (ii) the date upon which the Obligations are declared to be due and payable (or automatically become due and payable) upon the occurrence of an Event of Default as provided in Paragraph 20; or (c) Term Loan B, the earlier of: (i) August 1, 2003; or (ii) the date upon which the obligations are declared to be due and payable (or automatically become due and payable) upon the occurrence of an Event of Default as provided in Paragraph 20.

 

“ Maximum Term Loan A Amount ” shall mean an amount up to 75% of the Project Costs as set forth in the Sworn Construction Cost Statement.

 

“ Maximum Term Loan B Amount ” shall mean an amount up to 50% of the card club supply costs (the “Card Club Supply Costs”) as set forth in the budget (the “Approved Card Club Supply Budget”) approved by Lender and as amended to allow for changes under Paragraph 17(n) hereof.

 

“ Monthly Payment Date ” shall mean the first day of each month.

 

“ Multiemployer Plan ” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which Borrower is making or accruing an obligation to make contributions, or has within any of the preceding three plan years made or accrued an obligation to make contributions.

 

“ Net Income ” for any period shall mean net income for such period, determined in accordance with GAAP excluding, however, (i) extraordinary gains, and (ii) gains (whether or not extraordinary) from sales or other dispositions of assets other than the sale of Inventory in the ordinary course of Borrower’s business.

 

“ Note(s) ” shall mean the Revolving Credit Note and the Term Notes.

 

“ Obligations ” shall have the meaning provided in Paragraph 3.

 

“ Original Agreement ” shall have the meaning provided in the recitals hereto.

 

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation or any successor board, authority, agency, officer or official of the United States administering the principal functions assigned on the date hereof to the Pension Benefit Guaranty Corporation under ERISA.

 

“ Participant ” shall mean each Person who purchases a participation interest from Lender in the obligations.

 

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“ Permitted Encumbrances ” shall mean the Security Interests and other matters affecting Borrower’s title to the Land listed on Schedule B attached hereto and incorporated herein by reference.

 

“ Person ” shall mean any natural person, corporation, firm, partnership, association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

 

“ Plan ” shall mean each employee benefit plan or other class of benefits covered by Title IV of ERISA, in either case whether now in existence or hereafter instituted, of Borrower or any of its Subsidiaries.

 

“ Plans ” shall mean the final working plans for the Improvements, including drawings, specifications, details and manuals as approved by the Lender and as amended to allow for changes under Paragraph 17(n) hereof.

 

“ Quarterly Payment Date ” shall mean the last day of each March, June, September and December.

 

“ Receivables ” shall have the meaning provided in Paragraph 3(a).

 

“ Reference Rate ” shall mean the publicly announced base rate (or other publicly announced reference rate) charged by Bremer Financial Corporation; Borrower acknowledges that the Reference Rate may not be the lowest rate made available by Lender to its customers and that Lender may lend to its customers at rates that are at, above or below the Reference Rate.

 

“ Reportable Event ” shall have the meaning given to that term in Title IV of ERISA.

 

“ Revolving Credit Commitment ” shall mean $5,000,000.00 and, as the context may require, the agreement of the Lender to make Advances to Borrower up to the Revolving Credit Commitment subject to the terms and conditions of this Agreement.

 

“ Revolving Credit Loan ” shall mean, at any date of determination, the aggregate outstanding principal amount of all Advances.

 

“ Revolving Credit Note ” shall mean promissory note in the form of Exhibit A attached hereto and made a part hereof made by Borrower payable to the order of Lender to evidence the Advances and each renewal, replacement or substitute note therefor.

 

“ Revolving Credit Termination Date ” shall mean the Maturity Date of the Revolving Credit Loan.

 

“ Security Interest ” shall mean any lien, pledge, mortgage, encumbrance, charge or security interest of any kind whatsoever (including, without limitation, the lien or retained security title of a conditional vendor) whether arising under a security instrument or as a matter of law, judicial process or otherwise or the agreement by Borrower to grant any lien, security interest or pledge, mortgage or encumber any asset.

 

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“ Subordinated Debt ” shall mean indebtedness of Borrower for borrowed money which is subordinated to the Obligations on terms satisfactory to Lender in its sole discretion.

 

“ Sworn Construction Cost Statement ” shall mean one or more itemized, certified statements of actual and estimated costs (the “Project Costs”) for the build out and equipping of the Improvements (the “Project”), signed and sworn to by: (a) Borrower, Kraus-Anderson Construction Company as the General Contractor (the “General Contractor”) and Christenson Building Corp., as the Construction Manager (the “Construction Manager”), in the case of any Project Costs relating to work to be done under the construction contract (the “General Construction Contract”) between Borrower and the General Contractor; and (b) Borrower, in the case of any Project Costs relating to work separately contracted for by Borrower; and, in either case, as amended to allow for changes under Paragraph l7(n) hereof.

 

“ Tangible Net Worth ” shall mean, at any date of determination, the difference between: (a) the total assets appearing on Borrower’s balance sheet at such date prepared in accordance with GAAP after deducting adequate reserves in each case where, in accordance with GAAP, a reserve is proper; and (b) the total liabilities appearing on such balance sheet (the “Total Liabilities”); excluding , however , from the determination of total assets: (i) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, covenants not to compete, training costs and other similar intangibles; (ii) all deferred charges or unamortized debt discount and expense other than deferred income taxes; (iii) securities which are not readily marketable; (iv) any write-up in the book value of any assets resulting from a re-evaluation thereof subsequent to the date of Borrower’ s annual financial statement described in Paragraph 15(h); (v) amounts due from officers or Affiliates; and (vi) any asset acquired subsequent to the date of this Agreement which the Lender, in its reasonable business judgment, determines to be an intangible asset.

 

“ Term Loan(s) ” shall mean Term Loan A and Term Loan B.

 

“ Term Loan A ” shall mean the loan described in Paragraph 4B.

 

“ Term Loan A Commitment ” shall mean $1,586,750.00 and, as the context may require, the agreement of the Lender to make Term Loan A subject to the terms and conditions of this Agreement.

 

“ Term Loan A Commitment Termination Date ” shall mean the earlier of: (a) August 1, 2000; or (b) the Maturity Date of Term Loan A.

 

“ Term Loan B ” shall mean the loan described in Paragraph 4C.

 

“ Term Loan B Commitment ” shall mean $290,699.00 and, as the context may require, the agreement of the Lender to make Term Loan B subject to the terms and conditions of this Agreement.

 

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“ Term Loan B Commitment Termination Date ” shall mean the earlier of: (a) August 1, 2000; or (b) the Maturity Date of Term Loan B.

 

“ Term Note(s) ” shall mean Term Note A and Term Note B.

 

“Term Note A ” shall mean the promissory note in the form of Exhibit B attached hereto and made a part hereof made by Borrower payable to the order of Lender to evidence Term Loan A and each renewal, replacement or substitute note therefor.

 

“ Term Note B ” shall mean the promissory note in the form of Exhibit C attached hereto and made a part hereof made by Borrower payable to the order of Lender to evidence Term Loan B and each renewal, replacement or substitute note therefor.

 

“ Total Usage ” shall mean, at any date of determination, the sum of the Revolving Credit Loan and the Letter of Credit Obligations.

 

3.              Security .  As security for all present and future sums loaned or advanced by Lender to Borrower and for all other obligations now or hereafter chargeable to Borrower’s loan account hereunder, and all other obligations and liabilities of any and every kind of Borrower to Lender, due or to become due, direct or indirect, absolute or contingent, joint or several, howsoever created, arising or evidenced, now existing or hereafter at any time created, arising or incurred including, without limitation, the Loans and the Letter of Credit Obligations (herein called “Obligations”), Borrower hereby grants to Lender a security interest in and to the following property (any quoted term used in this Paragraph which is a defined term under the Commercial Code is being used as defined in the Commercial Code except as otherwise defined herein):

 

(a)            All Receivables of Borrower, whether now owned or existing, or owned, acquired or arising hereafter, together with all customer lists, original books and records, ledger and account cards, computer tapes, discs, printouts and records, whether now in existence or hereafter created.  ‘Receivables’ means all rights of Borrower to the payment of money, whether or not earned and howsoever evidenced or arising, including (without limitation) all present and future ‘Accounts’, ‘Chattel Paper’ including, without limitation, all ‘Electronic Chattel Paper’ and ‘Tangible Chattel Paper’, ‘Instruments’, and rights to payment which are ‘General Intangibles’ including, without limitation, all ‘Payment Intangibles’, all security therefore including, without limitation, all ‘Supporting Obligations’ and all of Borrower’s rights as an unpaid seller of goods (including rescission, replevin, reclamation and stopping in transit) and all of Borrower’s rights to any goods represented by any of the foregoing including returned or repossessed goods;

 

(b)            All ‘Inventory’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter and wherever located including, without limitation, all ‘Goods’ leased to Borrower as a lessor, all ‘Goods’ intended for sale or lease or to be furnished under contracts of service, all ‘Goods’ furnished by Borrower under a contract for service, all raw materials and work in process therefor, all finished goods thereof, all materials and supplies of every nature used or usable or consumed or consumable in connection with the manufacture, packing, shipping, advertising, selling, leasing or furnishing of such ‘Goods’, and all accessories thereto and all documents of title therefor evidencing the same;

 

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(c)            All ‘Equipment’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter and wherever located including, without limitation, all of Borrower’s ‘Goods’ other than ‘Inventory’, all replacements and substitutions therefor and all accessions thereto, and specifically includes, without limitation, all present and future machinery, equipment, vehicles, manufacturing equipment, shop equipment, office and record keeping equipment, furniture, ‘Fixtures’, parts, tools and all other ‘Goods’ (except ‘Inventory’) used or acquired for use by Borrower for any business or enterprise;

 

(d)            All ‘General Intangibles’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter, including without limitation, all present and future domestic and foreign patents, patent applications, trademarks, trademark applications, copyrights, trade names, trade secrets, patent and trademark licenses (whether Borrower is licensor or licensee), shop drawings, engineering drawings, blueprints, specifications, parts lists, manuals, operating instructions, customer and supplier lists, licenses, permits, franchises, the right to use Borrower’s corporate name and the goodwill of Borrower’s business;

 

(e)            All ‘Deposit Accounts’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter;

 

(f)             the ‘Commercial Tort Claims’ of Borrower described on Schedule I attached hereto;

 

(g)            All ‘Investment Property’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter excluding, however, ‘Investment Property’ pledged to secure Borrower’s bond in favor of the Bureau of Alcohol, Tobacco and Firearms;

 

(h)            All ‘Letter of Credit Rights’ of Borrower, whether now owned or existing, or owned, acquired or arising hereafter; and

 

(i)             All products and ‘Proceeds’ of any and all of the foregoing and all products and ‘Proceeds’ of any other Collateral (as hereinafter defined) including the ‘Proceeds’ of any insurance covering any of the Collateral.

 

All such Receivables, ‘Inventory’, ‘Equipment’, ‘General Intangibles’, ‘Deposit Accounts’, ‘Commercial Tort Claims’, ‘Investment Property’, ‘Letter of Credit Rights’, products and ‘Proceeds’, together with all other assets and properties of Borrower in or on which Lender is now or hereafter granted a security interest, mortgage, lien or encumbrance pursuant to this Agreement or otherwise, are hereinafter sometimes referred to as ‘Collateral’

 

4.              Terms of Lending; etc.

 

4A            Revolving Credit Loan Advances .

 

(a)            At the request of Borrower, Lender agrees, subject to the terms and conditions of this Agreement, to make loans (each such loan being herein sometimes called individually an “Advance” and collectively the “Advances”) to Borrower from time to time on any Business Day during the period from the date hereof and ending on the Revolving

 

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Credit Termination Date; provided , however , that Lender shall not be required to make any Advance if, after giving effect to such Advance, the Total Usage would exceed the Revolving Credit Commitment. The amount of each such Advance shall be charged to Borrower’s loan account.

 

(b)            In order to obtain an Advance, Borrower shall give written or telephonic notice to Lender, by not later than 1:00 p.m. (Minneapolis time) on the date the requested Advance is to be made Lender, shall make such Advance by transferring the amount thereof in immediately available funds for credit to an account (other than a payroll account) of Borrower at Lender, as specified in such notice; provided , however , that no request for an Advance shall be required if such Advance is to be made under that certain Execusweep-Loan Sweep Agreement dated as of June 10, 1998 (the “Cash Management Agreement”) between Borrower and Lender and each such Advance shall deemed to have been requested by Borrower under this Agreement. At the request of Lender, Borrower shall confirm in writing any telephonic notice.

 

(c)            The obligation of Lender to make Advances shall terminate on the Revolving Credit Termination Date.

 

(d)            Borrower agrees that, on the Maturity Date of the Revolving Credit Loan, it will repay the entire outstanding principal balance of the Revolving Credit Loan together with accrued interest thereon and all accrued fees without presentment or demand for payment, notice of dishonor, protest or notice of protest, all of which are hereby waived.

 

(e)            The Advances shall be evidenced by the Revolving Credit Note made by Borrower payable to the order of Lender; subject , however , to the provisions of such Note to the effect that the principal amount payable thereunder at any time shall not exceed the then unpaid principal amount of the Revolving Credit Loan made by Lender.  Borrower hereby irrevocably authorizes Lender to make or cause to be made, at or about the time of each Advance made by Lender, an appropriate notation on the records of Lender, reflecting the principal amount of such Advance, and Lender shall make or cause to be made, on or about the time of receipt of payment of any principal of the Revolving Credit Note, an appropriate notation on its records reflecting such payment.  The aggregate amount of all Advances set forth on the records of Lender shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Revolving Credit Note.

 

4B            Term Loan A

 

(a)            At the request of Borrower made prior to the Term Loan A Commitment Termination Date, Lender agrees, subject to the terms and conditions of this Agreement, to make a term loan (the “Term Loan A”) to Borrower in an amount up to the lesser of: (i) the Term Loan A Commitment; or (ii) the Maximum Term Loan A Amount.  Term Loan A proceeds shall be disbursed by the Lender solely for the purpose of paying, or reimbursing Borrower for the payment of, Project Costs.

 

(b)            Term Loan A proceeds shall be advanced by the Lender in accordance with the terms and conditions of this Agreement and in accordance with the Disbursing

 

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Agreement.  All monies advanced by the Lender to CPT shall constitute Advances under this Agreement, and shall bear interest from the date of advance to CPT, whether such Term Loan A proceeds are fully disbursed by CPT or are withheld in full or in part.

 

(c)            The obligation of Lender to make Term Loan A shall terminate on the Term Loan A Commitment Termination Date.

 

(d)            Term Loan A shall be evidenced by, and payable in accordance with, the Term Note A made by Borrower payable to the order of Lender; subject , however , to the provisions of such Note to the effect that the principal amount payable thereunder at any time shall not exceed the then unpaid principal amount of Term Loan A made by Lender.  Borrower hereby irrevocably authorizes Lender to make or cause to be made, at or about the time on which the Term Loan A proceeds are advanced to CPT, an appropriate notation on the records of Lender, reflecting the principal amount of Term Loan A, and Lender shall make or cause to be made, on or about the time of receipt of payment of any principal of the Term Note A, an appropriate notation on its records reflecting such payment.  The outstanding principal amount of Term Loan A set forth on the records of Lender shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Term Note A.

 

(e)            Lender shall not be obligated to advance any Term Loan A proceeds unless and until Borrower has provided Lender with evidence that Borrower has paid sufficient Project Costs so that all remaining unpaid Project Costs do not exceed the amount of the Term Loan A proceeds not yet advanced by Lender.  If the Lender or Borrower determines that the unadvanced balance of Term Loan A proceeds is insufficient to cover any Project Cost, or to complete the Project, it shall notify the other party of such determination, and Borrower shall, within five (5) Business Days after such notice, deposit with the Lender funds equal to the amount of the deficiency, except that, with respect to any such deficiency with respect to the payment of Project Costs or estimated expenses of Completion arising at any time when no other Event of Default has occurred and is continuing, Lender agrees that Borrower shall not be required to make any such deposit until five (5) Business Days after the deficiency is at least $250,000.00. Borrower hereby assigns and pledges to the Lender all funds so deposited as additional security for the Obligations.  Borrower may not reallocate items of costs or change the Sworn Construction Cost Statement without the consent of the Lender.

 

4C            Term Loan B

 

(a)            At the request of Borrower made prior to the Term Loan B Commitment Termination Date, Lender agrees, subject to the terms and conditions of this Agreement, to make a term loan (the “Term Loan B”) to Borrower in an amount up to the lesser of: (i) the Term Loan B Commitment; or (ii) the Maximum Term Loan B Amount.  Term Loan B proceeds shall be disbursed by the Lender solely for the purpose of paying, or reimbursing Borrower for the payment of, Borrower’s Card Club Supply Costs.

 

(b)            In order to obtain Term Loan B proceeds, Borrower shall give written or telephonic notice to Lender, by not later than close of Lender’s business at least one (1) 

 

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Business Day prior to the date on which Borrower desires that Term Loan B proceeds be disbursed to Borrower.  Each request for a disbursement of Term Loan B proceeds shall be in the form of Exhibit D attached hereto.  On the requested date but subject to the terms and conditions of this Agreement, Lender shall make Term Loan B proceeds available to Borrower by transferring the amount thereof in immediately available funds for credit to an account (other than a payroll account) of Borrower at Lender.

 

(c)            The obligation of Lender to make Term Loan B shall terminate on the Term Loan B Commitment Termination Date.

 

(d)            Term Loan B shall be evidenced by, and payable in accordance with, the Term Note B made by Borrower payable to the order of Lender; subject , however , to the provisions of such Note to the effect that the principal amount payable thereunder at any time shall not exceed the then unpaid principal amount of Term Loan B made by Lender.  Borrower hereby irrevocably authorizes Lender to make or cause to be made, at or about the time on which the Term Loan B proceeds are advanced to the Borrower, an appropriate notation on the records of Lender, reflecting the principal amount of Term Loan B, and Lender shall make or cause to be made, on or about the time of receipt of payment of any principal of the Term Note B, an appropriate notation on its records reflecting such payment.  The outstanding principal amount of Term Loan B set forth on the records of Lender shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Term Note B.

 

4D            Letters of Credit

 

(a)            Subject to the terms and conditions of this Agreement, Lender agrees to issue stand-by letters of credit (the “Letters of Credit”) from time to time on terms acceptable to Lender on any Business Day during the period from the date hereof and ending on the Letter of Credit Commitment Termination Date; provided , however , that Lender shall not be required to issue any Letter of Credit if, after giving effect to such issuance, either: (i) the Total Usage would exceed the Revolving Credit Commitment; or (ii) the Letter of Credit Obligations would exceed the Letter of Credit Commitment.

 

(b)            In order to obtain a Letter of Credit, Borrower shall appropriately complete, duly execute and deliver to Lender an application for a Letter of Credit in form acceptable to Lender (the “Letter of Credit Application(s)”) by no later than the close of Lender’s business at least five (5) Business Days prior to the date on which Borrower desires that the Letter of Credit be issued.  Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document, no Letter of Credit shall have an expiry date later than the Letter of Credit Commitment Termination Date.

 

(c)            The obligation of Lender to issue Letters of Credit shall terminate on the Letter of Credit Commitment Termination Date.

 

(d)            Borrower agrees to pay to Lender on demand: (i) the amount of each draft or other request for payment drawn under any Letter of Credit (whether drawn before or on its stated expiry date) issued by Lender; and (ii) interest on all amounts referred to in clause (i) 

 

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above from the date of such draw until payment in full at a fluctuating rate per annum at all times equal to the Reference Rate plus 2.00% per annum.

 

(e)            Borrower agrees to pay to Lender a commission (the “Letter of Credit Commission”) of 1.5% per annum upon the undrawn face amount of each Letter of Credit issued by Lender outstanding from time to time.  The Letter of Credit Commission for each Letter of Credit shall be payable in advance: (1) on the date of issuance of such Letter of Credit for the initial period from the date of issuance through, to and including the day preceding the immediately following Quarterly Payment Date; and (2) on each Quarterly Payment Date following such issuance date for the following quarter (or, any lesser period if the relevant Letter of Credit is scheduled to expire prior to the end of such quarter).  Borrower further agrees to pay to Lender all reasonable and customary charges, fees and expenses which Lender may generally assess to its customers in connection with, and any and all expenses which Lender may payor incur in connection with, the issuance, extension, amendment or payment of any Letter of Credit.

 

(f)             The rights of Lender against Borrower hereunder shall be in addition to all rights under (and shall control over any conflict under) any Letter of Credit Application.

 

5.              Interest .  Borrower agrees to pay interest on the outstanding principal amount of each Loan at the rates and at the times specified in the Note evidencing such Loan.  Each change in the interest rates due to a change in the Reference Rate shall take effect simultaneously with the corresponding change in the Reference Rate.  Interest may be charged to Borrower’s loan account as an Advance at Lender’s option, whether or not Borrower then has a right to obtain an Advance pursuant to the terms of this Agreement.

 

6.              Set-Off; etc.   Upon the occurrence of a Default or an Event of Default, Lender is hereby authorized at any time and from time to time, without notice to Borrower (any such notice being expressly waived by Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lender or any Participant to or for the credit or the account of Borrower, any amounts held in any account maintained at Lender or any Participant, against any and all amounts which may be owed to Lender or any Participant by Borrower whether in connection with this Agreement or otherwise and irrespective of whether Borrower shall have made any requests under this Agreement.

 

7.              Collection .

 

(a)            At any time after the occurrence of an Event of Default, Lender may notify account debtors on the Receivables (the “Customers”) at any time that Receivables have been assigned to Lender and collect them directly in Lender’s own name but unless and until Lender does so or gives Borrower other instructions, Borrower shall make collection for Lender at Borrower’s sale cost and expense.  Following the occurrence of an Event of Default, Borrower shall deliver to Lender all full and partial payments arising from the sale or other disposition of Collateral received by Borrower their original form, except for endorsement where necessary.  Until such payments are so delivered to Lender, such payments shall be held in trust by Borrower for and as Lender’s property and shall not be commingled with any funds of Borrower.  The net amount received by Lender as proceeds

 

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arising from the sale or other disposition of Collateral will be credited by Lender to Borrower’s loan account (subject to final collection thereof) after allowing the number of days required by the applicable bank for collection of checks and other instruments.  On and after the effective date of Revised Article 9, Borrower, for purposes of the security interest granted pursuant to this Agreement, has granted to the Lender a direct security interest in all Deposit Accounts constituting part of the Collateral and such Deposit Accounts are not claimed merely as Proceeds of other Collateral.

 

8.              Warranty as to Collateral .   Borrower warrants that:

 

(a)            All Receivables l