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Exhibit
10.1
WELLS FARGO BUSINESS
CREDIT
CREDIT AND SECURITY
AGREEMENT
THIS CREDIT AND SECURITY
AGREEMENT (the “Agreement”) is dated June 10,
2008, and is entered into by and among PHOENIX FOOTWEAR GROUP,
INC., a Delaware corporation (“Phoenix Footwear”),
PENOBSCOT SHOE COMPANY , a Maine corporation
(“Penobscot”), H.S. TRASK & CO. , a
Montana corporation (“Trask”), CHAMBERS BELT
COMPANY , a Delaware corporation (“Chambers”), and
PHOENIX DELAWARE ACQUISITION, INC. , a Delaware corporation
(“Phoenix Acquisition”; Phoenix Footwear, Penobscot,
Trask, Chambers and Phoenix Acquisition are sometimes individually
referred to in this Agreement as a “Company” and
collectively as the “Companies”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION (as more fully defined in Exhibit A,
“Wells Fargo”), acting through its Wells Fargo Business
Credit operating division.
RECITALS
Companies have asked Wells Fargo to
provide them with a $17,000,000 (increasable to $20,000,000, as
provided herein) revolving line of credit (the “Line of
Credit”) for working capital purposes and to facilitate the
issuance of letters of credit. Wells Fargo is agreeable to meeting
Companies’ request, provided that Companies agree to the
terms and conditions of this Agreement.
For purposes of this Agreement,
capitalized terms not otherwise defined in the Agreement shall have
the meaning given them in Exhibit A.
| 1. |
AMOUNT AND TERMS OF THE LINE OF CREDIT |
| 1.1 |
Line of Credit; Limitations on Borrowings; Termination Date;
Use of Proceeds. |
| (a) |
Line of Credit and Limitations on Borrowing . Wells
Fargo shall make Advances to Companies under the Line of Credit
that, together with the L/C Amount, shall not at any time exceed in
the aggregate the lesser of (i) the Maximum Line Amount
(as in effect from time to time as described below), or
(ii) the Borrowing Base limitations described in
Section 1.2. Within these limits, Companies may periodically
borrow, prepay in whole or in part, and reborrow. Wells Fargo
has no obligation to make an Advance during a Default Period or at
any time Wells Fargo believes that an Advance would result in an
Event of Default. The “Maximum Line Amount” shall
initially be $17,000,000. The Maximum Line Amount may be increased
from time to time from $17,000,000 upon satisfaction of the
following terms and conditions: (i) Wells Fargo has received
an Authenticated Record from Company Funds Administrator requesting
each such increase not less than 30 days prior to the effective
date of such increase; (ii) each increase shall be at least
$2,000,000, and increments above such $2,000,000 amount shall be
not less than $1,000,000 each; provided that the Maximum Line
Amount shall not exceed $20,000,000; (iii) no Default Period
shall exist at the time of each such requested increase; and
(iv) Wells Fargo shall have received from Companies a line
increase fee equal to one-quarter of one percent (0.25%) of the
increase to the Maximum Line Amount. |
| (b) |
Maturity and Termination Dates . Company Funds
Administrator may request Advances from the date that the
conditions set forth in Section 3 are satisfied until the
earlier of (the earliest of such dates, the “Termination
Date”): (i) June 30, 2011 (the “Maturity
Date”), (ii) the date Companies terminate the Line of
Credit, or (iii) the date Wells Fargo terminates the Line of
Credit in accordance with Section 6.2. |
| (c) |
Use of Line of Credit Proceeds . Companies shall use the
proceeds of the initial Advance to repay the Companies’
indebtedness to their existing bank as of such time, and each
subsequent Advance and each Letter of Credit for ordinary working
capital and general corporate purposes. In addition, the proceeds
of initial Advance resulting from any increase in the Maximum Line
Amount may be used for the following additional purposes:
(i) to redeem or repurchase the capital stock of Phoenix
Footwear Group, Inc. at its current market value, and (ii) to
acquire additional brands (free and clear of any Liens (other than
in favor of Wells Fargo) and so long as no indebtedness is incurred
or assumed in connection therewith) subject to such agreements,
documents, and instruments that are in form and substance
acceptable to Wells Fargo in Wells Fargo’s sole
discretion. |
| (d) |
Revolving Note . Companies’ obligation to repay
Line of Credit Advances, regardless of how initiated under
Section 1.3, shall be evidenced by a revolving promissory note
(as renewed, amended or replaced from time to time, the
“Revolving Note”). |
| 1.2 |
Borrowing Base; Mandatory Prepayment. |
| (a) |
Borrowing Base . The borrowing base (the
“Borrowing Base”) is an amount equal to: |
(i) 85% or such lesser
percentage of Eligible Phoenix Accounts as Wells Fargo in its sole
discretion may deem appropriate; provided that this rate may be
reduced at any time by Wells Fargo’s in its sole discretion
by one (1) percent for each percentage point by which Dilution
on the date of determination is in excess of five percent
(5.0%) (Companies acknowledge that, due to Dilution at the
time of the initial Advance, the advance rate applicable to
Eligible Phoenix Accounts shall be 79%, with such advance rate
subject to adjustment from time to time as provided above);
plus
(ii) 85% or such lesser
percentage of Eligible Chambers Accounts as Wells Fargo in its sole
discretion may deem appropriate; provided that this rate may be
reduced at any time by Wells Fargo’s in its sole discretion
by one (1) percent for each percentage point by which Dilution
on the date of determination is in excess of five percent (5.0%),
plus
(iii) the least of
(x) 85% or such lesser percentage (as Wells Fargo in its sole
discretion may deem appropriate) of the Net Orderly Liquidation
Value of Eligible Inventory, (y) 49.4% or such lesser
percentage (as Wells Fargo in its sole discretion may deem
appropriate) of Eligible Inventory valued at the lower of cost or
fair market value in accordance with GAAP, or (z) the
Inventory Sublimit; provided that (A) Advances and/or Letters
of Credit supported by Tommy Bahama branded inventory shall not
exceed $2,000,000, (B) Advances and/or Letters of Credit
supported by Wrangler branded inventory shall not exceed
$2,500,000, and (C) the maximum amount of Eligible In-Transit
Inventory that may be included as Eligible Inventory for purposes
of this paragraph (iii) shall not exceed $2,000,000 (based on
the lower of cost or fair market value), less
(iv) the Borrowing Base
Reserve (such reserve to be adjusted monthly or more frequently in
Wells Fargo’s discretion, and to include, without limitation,
(x) unpaid freight charges and customs duties for in-transit
inventory and (y) accrued and unpaid royalty and license
payments owing by Companies), less
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(v) Indebtedness that
Companies owes Wells Fargo that has not been advanced on the
Revolving Note, less
(vi) Indebtedness that is not
otherwise described in Section 1 that Wells Fargo in its sole
discretion finds on the date of determination to be equal to Wells
Fargo’s net credit exposure with respect to any swap,
derivative, foreign exchange, hedge, deposit, treasury management
or similar transaction or arrangement extended to any Company by
Wells Fargo and any Indebtedness owed by Company to Wells Fargo
Merchant Services, L.L.C.
| (b) |
Mandatory Prepayment; Overadvances . If unreimbursed
Line of Credit Advances evidenced by the Revolving Note plus the
L/C Amount exceed the Borrowing Base or the Maximum Line Amount at
any time, then Companies shall prepay the Revolving Note in an
amount sufficient to eliminate the excess within five
(5) Business Days of such occurrence, and if payment in full
of the Revolving Note is insufficient to eliminate this excess and
the L/C Amount continues to exceed the Borrowing Base, then
Companies shall deliver cash, within such five (5) Business
Day period, to Wells Fargo in an amount equal to the remaining
excess for deposit to the Special Account, unless in each case,
Wells Fargo has delivered to Company Funds Administrator an
Authenticated Record consenting to the Overadvance prior to
its occurrence, in which event the Overadvance shall be temporarily
permitted on such terms and conditions as Wells Fargo in its sole
discretion may deem appropriate, including the payment of
additional fees or interest, or both. |
| 1.3 |
Procedures for Line of Credit Advances. |
| (a) |
Advances to Operating Account . Advances shall be
credited to Company Funds Administrator’s demand deposit
account maintained with Wells Fargo (the “Operating
Account”), unless the parties agree in a Record Authenticated
by both of them to disburse to another account. |
(i) Advances upon Company
Funds Administrator’s Request . Line of Credit Advances
may be funded upon Company Funds Administrator’s request. No
request will be deemed received until Wells Fargo acknowledges
receipt, and Company Funds Administrator, if requested by Wells
Fargo, confirms the request in an Authenticated Record. Companies
shall repay all Advances, even if the Person requesting the Advance
on behalf of Companies lacked authorization.
(A) Floating Rate
Advances . If Company Funds Administrator wants a Floating Rate
Advance, it shall make the request no later than 9:00 a.m.
Pasadena, California Time on the Business Day on which it wants the
Floating Rate Advance to be funded, which request shall specify the
principal Advance amount being requested.
(B) LIBOR Advances .
If Company Funds Administrator wants a LIBOR Advance, it shall make
the request no later than 9:00 a.m. Pasadena, California Time three
(3) Business Days preceding the Business Day on which it wants
the LIBOR Advance to be funded, which request shall specify both
the principal Advance amount and Interest Period being requested.
No more than five (5) separate LIBOR Advance Interest Periods
may be outstanding at any time. Each LIBOR Advance shall be in
multiples of $1,000,000 and in the minimum amount of at least
$1,000,000. LIBOR Advances are not available for Advances made
through the Loan Manager Service, and shall not be available during
Default Periods.
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(ii) Advances through Loan
Manager . If Wells Fargo has separately agreed that Companies
may use the Wells Fargo Loan Manager service (“Loan
Manager”), Line of Credit Advances will be initiated by Wells
Fargo and credited to the Operating Account as Floating Rate
Advances as of the end of each Business Day in an amount sufficient
to maintain an agreed upon ledger balance in the Operating Account,
subject only to Line of Credit availability as provided in
Section 1.1(a). If Wells Fargo terminates Companies’
access to Loan Manager, Company Funds Administrator may continue to
request Line of Credit Advances as provided in
Section 1.3(a)(i). Wells Fargo shall have no obligation to
make an Advance through Loan Manager during a Default Period, or in
an amount in excess of Line of Credit availability, and may
terminate Loan Manager at any time in its sole
discretion.
| (b) |
Protective Advances; Advances to Pay Indebtedness Due .
Wells Fargo may initiate a Floating Rate Advance on the Line of
Credit in its sole discretion for any reason at any time, without
Companies’ compliance with any of the conditions of this
Agreement, and (i) disburse the proceeds directly to third
Persons in order to protect Wells Fargo’s interest in
Collateral or to perform any of Companies’ obligations under
this Agreement, or (ii) apply the proceeds to the amount of
any Indebtedness then due and payable to Wells Fargo. |
| (a) |
Funding Line of Credit Advances as LIBOR Advances for Fixed
Interest Periods . Company Funds Administrator may fund a Line
of Credit Advance as a LIBOR Advance for one, three, or six month
periods (each period an “Interest Period”, as more
fully defined in Exhibit A). |
| (b) |
Procedure for Converting Floating Rate Advances to LIBOR
Advances . Company Funds Administrator may request that all or
any part of an outstanding Floating Rate Advance be converted to a
LIBOR Advance, provided that no Default Period is in effect, and
that Wells Fargo receives the request no later than 9:00 a.m.
Pasadena, California Time three (3) Business Days preceding
the Business Day on which Company Funds Administrator wishes the
conversion to become effective. Each request shall (i) specify
the principal amount of the Floating Rate Advance to be converted,
(ii) the Business Day of conversion, and (iii) the
Interest Period desired. The request shall be confirmed in an
Authenticated Record if requested by Wells Fargo. Each conversion
to a LIBOR Advance shall be in multiples of $1,000,000 and in the
minimum amount of at least $1,000,000. |
| (c) |
Expiring
LIBOR Advance Interest Periods . Unless Company Funds
Administrator requests a new LIBOR Advance, or prepays an
outstanding LIBOR Advance at the expiration of an Interest Period,
Wells Fargo shall convert each LIBOR Advance to a Floating Rate
Advance on the last day of the expiring Interest Period. If no
Default Period is in effect, Company Funds Administrator may
request that all or part of any expiring LIBOR Advance be renewed
as a new LIBOR Advance, provided that Wells Fargo receives the
request no later than 9:00 a.m. Pasadena, California Time three
(3) Business Days preceding the
|
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Business Day that constitutes
the first day of the new Interest Period. Each request shall
specify the principal amount of the expiring LIBOR Advance to be
continued and Interest Period desired, and shall be confirmed in an
Authenticated Record if requested by Wells Fargo. Each renewal of a
LIBOR Advance shall be in multiples of $1,000,000 and in the
minimum amount of at least $1,000,000.
|
| (d) |
Quotation of LIBOR Advance Interest Rates . Wells Fargo
shall, with respect to any request for a new or renewal LIBOR
Advance, or the conversion of a Floating Rate Advance to a LIBOR
Advance, provide Company Funds Administrator with a LIBOR quote for
each Interest Period identified by Company Funds Administrator on
the Business Day on which the request was made, if the request is
received by Wells Fargo no later than 9:00 a.m. Pasadena,
California Time three (3) Business Days preceding the Business
Day on which Company Funds Administrator has requested that the
LIBOR Advance be made effective; provided that any such quote shall
be deemed to be an estimate of LIBOR for such Interest Period, and
the actual LIBOR that will be applicable to a LIBOR Advance as of
the first date of the applicable Interest Period for such LIBOR
Advance shall be subject to adjustment based on the actual LIBOR
determined by Wells Fargo as of the beginning of such Interest
Period. |
| (e) |
Taxes and Regulatory Costs . Companies shall also pay
Wells Fargo with respect to any LIBOR Advance all
(i) withholdings, interest equalization taxes, stamp taxes or
other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority that are related to
LIBOR, and (ii) future, supplemental, emergency or other
changes in the LIBOR Reserve Percentage, the assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar
costs imposed by any domestic or foreign governmental authority or
resulting from compliance by Wells Fargo with any request or
directive (whether or not having the force of law) from any central
bank or other governmental authority that are related to LIBOR but
not otherwise included in the calculation of LIBOR. In determining
which of these amounts are attributable to an existing LIBOR
Advance, any reasonable allocation made by Wells Fargo among its
operations shall be deemed conclusive and binding. |
| (f) |
Maximum Aggregate LIBOR Advances . Notwithstanding any
provision to the contrary in this Agreement, the maximum aggregate
amount of LIBOR Advances shall not exceed an amount equal to 80% of
the aggregate Advances outstanding at any time (the “LIBOR
Cap”). To the extent that the LIBOR Cap is exceeded at any
time, Companies shall not be permitted to convert or continue any
Advances as LIBOR Advances if such conversion or continuation would
cause the aggregate Advances to exceed the LIBOR Cap. |
| 1.5 |
Collection of Accounts and Application to Revolving
Note. |
| (a) |
The Collection Account . Companies have granted a
security interest to Wells Fargo in the Collateral, including all
Accounts. Except as otherwise agreed by both parties in an
Authenticated Record, all Proceeds of Accounts and other
Collateral, upon receipt or collection, shall be deposited each
Business Day into the Collection Account. Funds so deposited
(“Account Funds”) are the property of Wells Fargo, and
may only be withdrawn from the Collection Account by Wells
Fargo. |
| (b) |
Payment of
Accounts by Companies’ Account Debtors . Companies shall
instruct all account debtors to make payments either directly to
the Lockbox for deposit by Wells Fargo directly to the Collection
Account, or instruct them to deliver such payments
|
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to Wells Fargo by wire
transfer, ACH, or other means as Wells Fargo may direct for deposit
to the Collection Account or for direct application to the Line of
Credit. If a Company receives a payment or the Proceeds of
Collateral directly, such Company will promptly deposit the payment
or Proceeds into the Collection Account. Until deposited, it will
hold all such payments and Proceeds in trust for Wells Fargo
without commingling with other funds or property. All deposits held
in the Collection Account shall constitute Proceeds of Collateral
and shall not constitute the payment of Indebtedness.
|
| (c) |
Application of Payments to Revolving Note . Wells Fargo
will withdraw Account Funds deposited to the Collection Account and
pay down borrowings on the Line of Credit by applying them to the
Revolving Note on the first Business Day following the Business Day
of deposit to the Collection Account, or, if payments are received
by Wells Fargo that are not first deposited to the Collection
Account pursuant to any treasury management service provided to
Companies by Wells Fargo, such payments shall be applied to the
Revolving Note as provided in the Master Agreement for Treasury
Management Services and the relevant service
description. |
| 1.6 |
Interest and Interest Related Matters. |
| (a) |
Interest Rates Applicable to Line of Credit . Except as
otherwise provided in this Agreement, the unpaid principal amount
of each Line of Credit Advance evidenced by the Revolving Note
shall accrue interest at an annual interest rate calculated as
follows: |
Floating
Rate:
Line of Credit Advances =
Prime Rate minus the applicable Margin, which
interest rate shall change whenever the Prime Rate changes (the
“Floating Rate”); or
LIBOR Advance Rate for
One, Three, or Six Month Interest Periods:
Line of Credit Advances =
LIBOR plus the applicable Margin (the
“LIBOR Advance Rate”)
Multiple Advances under the
Line of Credit may simultaneously accrue interest at both the
Floating Rate and at the LIBOR Advance Rate, subject to the
limitations of Section 1.3(a)(i).
The Margins through and
including the adjustment occurring as specified below shall be
0.25% per annum for Floating Rate Advances, and 2.40% per
annum for LIBOR Advances. The Margins shall be reduced by
0.25% per annum on a one-time basis if the following
conditions precedent have been satisfied (as verified by Wells
Fargo): (i) the Companies’ Net Income for the fiscal
year ending December 31, 2008 (as presented in
Companies’ financial statements audited by independent public
accountants acceptable to Wells Fargo), is greater than $1,500,000,
and (ii) no Default Period is existing at the time Wells Fargo
receives such year-end audited financial statements.
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The Margin reduction provided
for in the immediately preceding paragraph shall become effective
on the first calendar day of the first calendar month following the
month of receipt by Wells Fargo of fiscal year end financial
statements that have been audited by an independent public
accounting firm, acceptable to Wells Fargo.
If amended or restated
financial statements would change previously calculated Margins, or
if Wells Fargo determines that any financial statements have
materially misstated Companies’ financial condition, then
Wells Fargo may, using the most accurate information available to
it, recalculate the financial test or tests governing the Margins
and retroactively increase the Margins from the date of receipt of
such amended or restated financial statements and charge Companies
additional interest, which may be imposed on them from the
beginning of the appropriate month to which the restated statements
or recalculated financial tests relate, as Wells Fargo in its sole
discretion deems appropriate.
| (b) |
Minimum Interest Charge . Notwithstanding the other
terms of Section 1.6 to the contrary, and except as limited by
the usury savings provision of Section 1.6(e), Companies shall
pay Wells Fargo at least $20,000 of interest for each calendar
month ending on or before December 31, 2008, and at least
$17,500 of interest for each calendar month ending on or after
January 31, 2009 (the “Minimum Interest Charge”)
during the term of this Agreement, and Companies shall pay any
deficiency between the Minimum Interest Charge and the amount of
interest otherwise payable on the first day of each month and on
the Termination Date. When calculating this deficiency, the Default
Rate set forth in Section 1.6(c), if applicable, shall be
disregarded. |
| (c) |
Default Interest Rate . Commencing on the day an Event
of Default occurs, through and including the date that the Event of
Default has been cured or waived by Wells Fargo in a Record (each
such period a “Default Period”), or during a time
period specified in Section 1.9, or at any time following the
Termination Date, in Wells Fargo’s sole discretion and
without waiving any of its other rights or remedies, the principal
amount of the Revolving Note shall bear interest at a rate that is
three percent (3.0%) above the contractual rate set forth in
Section 1.6(a) (the “Default Rate”), or any lesser
rate that Wells Fargo may deem appropriate, starting on the first
day of the fiscal quarter in which the Default Period begins
through the last day of that Default Period, or any shorter time
period to which Wells Fargo may agree in an Authenticated
Record. |
| (d) |
Interest Accrual on Payments Applied to Revolving Note .
Payments received by Wells Fargo shall be applied to the Revolving
Note as provided in Section 1.5(c), but the principal amount
paid down shall continue to accrue interest through the end of the
first Business Day following the Business Day that the payment was
applied to the Revolving Note. |
| (e) |
Usury . No interest rate shall be effective which would
result in a rate greater than the highest rate permitted by law.
Payments in the nature of interest and other charges made under any
Loan Documents or any other document or agreement described in or
related to this Agreement that are later determined to be in excess
of the limits imposed by applicable usury law will be deemed to be
a payment of principal, and the Indebtedness shall be reduced by
that amount so that such payments will not be deemed
usurious. |
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| (a) |
Origination Fee . Companies shall pay Wells Fargo a one
time origination fee of $57,500 shall be fully earned and due and
payable upon the execution of this Agreement. |
| (b) |
Unused Line Fee . [INTENTIONALLY OMITTED]. |
| (c) |
Facility Fee . [INTENTIONALLY OMITTED]. |
| (d) |
Collateral Exam Fees . Companies shall pay Wells Fargo
fees in connection with any collateral exams, audits or inspections
conducted by or on behalf of Wells Fargo at the current rates
established from time to time by Wells Fargo as its collateral exam
fees (which fees are currently $105 per day per collateral
examiner), together with all actual out-of-pocket costs and
expenses incurred in conducting any collateral examination or
inspection; but Companies shall not, with the exception of fees,
costs, and expenses incurred during Default Periods, be required to
reimburse Wells Fargo to the extent that the fees, costs and
expenses incurred after the date of this Agreement exceed
(i) $20,000 during the one-year period after the date of this
Agreement, or (ii) $15,000 during any one-year period after
the first anniversary of this Agreement . So long as no
Default Period has occurred, Wells Fargo does not intend to conduct
collateral examinations, audits, or inspections more frequently
than once every 90 days; provided that after the first anniversary
of this Agreement, Wells Fargo does not intend to conduct
collateral examinations, audits, or inspections more frequently
than once every 120 days if the following conditions precedent are
satisfied: (A) no Default Period is existing;
(B) Companies are performing at a level that is equal to or
better than the financial projections that are presented to Wells
Fargo by Companies prior to the initial Advance and on an annual
basis thereafter; and (C) average daily Excess Availability
measured on a rolling 90-day basis is greater than
$2,000,000. |
| (e) |
Collateral Monitoring Fees . Companies shall pay Wells
Fargo a fee at the rates established from time to time by Wells
Fargo (or any other Person providing such services to the Wells
Fargo, including, but not limited to, Collateral Services, Inc.) as
its Collateral monitoring fees (which fees currently consist of a
one-time set up fee of $1,800 and a monthly fee of $400), due and
payable monthly in advance on the first day of the month and on the
Termination Date. |
| (f) |
Line of Credit Termination and/or Reduction Fees . If
(i) Wells Fargo terminates the Line of Credit during a Default
Period, (ii) Companies terminate the Line of Credit on a date
other than on the Maturity Date, (iii) Companies terminate the
Line of Credit on the Maturity Date but fail to provide Wells Fargo
with an Authenticated Record at least 60 days prior to the Maturity
Date of Companies’ intention to terminate the Line of Credit
on the Maturity Date, or (iv) Company Funds Administrator and
Wells Fargo agree to reduce the Maximum Line Amount, then Companies
shall pay Wells Fargo as liquidated damages a termination or
reduction fee in an amount equal to a percentage of the Maximum
Line Amount (or the reduction of the Maximum Line Amount, as the
case may be) calculated as follows: (A) three percent
(3%) if the termination or reduction occurs on or before
June 30, 2009; (B) two percent (2%) if the
termination or reduction occurs after June 30, 2009, but on or
before June 30, 2010; and (C) one percent (1%) if
the termination or reduction occurs after June 30,
2010. |
| (g) |
Overadvance Fees . Except in those instances in which an
Overadvance results due to a Wells Fargo calculation error,
Companies shall pay a $500 Overadvance fee for each day that an
Overadvance exists which was not agreed to by Wells Fargo in an
Authenticated Record prior to its occurrence if such Overadvance is
not repaid or otherwise eliminated within five (5)
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Business Days of when it
first arises (and, for sake of clarity, if such Overadvance is not
so repaid or eliminated within such five (5) Business Day
period, such $500 per day fee shall accrue and be payable from the
first day that the Overadvance was outstanding); provided that
Wells Fargo’s acceptance of the payment of such fees shall
not constitute either consent to the Overadvance or waiver of the
resulting Event of Default. Companies shall pay additional
Overadvance fees and interest in such amounts and on such terms as
Wells Fargo in its sole discretion may consider appropriate for any
Overadvance to which Wells Fargo has specifically consented in an
Authenticated Record prior to its occurrence.
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| (h) |
Treasury Management Fees . Companies will pay service
fees to Wells Fargo for treasury management services provided
pursuant to the Master Agreement for Treasury Management Services
or any other agreement entered into by the parties, in the amount
prescribed in Wells Fargo’s current service fee
schedule. |
| (i) |
Letter of Credit Fees . With respect to the aggregate
face amount of each Letter of Credit issued by Wells Fargo (the
“Aggregate Face Amount”), the Companies shall pay the
following fees in full in advance upon the issuance of each Letter
of Credit: (i) one percent (1.0%) of the Aggregate Face
Amount of each standby Letter of Credit, and
(ii) three-quarters of one percent (0.75%) of the Aggregate
Face Amount of each documentary (i.e., commercial) Letter of
Credit. Such Letter of Credit fees shall be deemed fully earned and
non-refundable upon the issuance each such Letter of Credit,
regardless of how long such Letters of Credit remain outstanding.
Companies shall pay an additional fee equal one percent
(1%) of the undrawn Aggregate Face Amount of any standby
Letter of Credit that has an expiry date that exceeds one year (or
is renewed for a period that exceeds the initial one-year period),
which fee shall be due and payable in advance on each anniversary
of the issuance date of such standby Letter of Credit. During a
Default Period, Companies shall, at Wells Fargo option (exercised
in Wells Fargo’s sole discretion), pay an additional fee
equal to three percent (3.0%) per annum of the Aggregate Face
Amount, commencing on the first day of the month in which the
Default Period begins and continuing through the last day of such
Default Period, or any shorter time period that Wells Fargo in its
sole discretion may deem appropriate, without waiving any of its
other rights and remedies, and such additional fee shall be due and
payable on demand. |
| (j) |
Letter of Credit Administrative Fees . Companies shall
pay all administrative fees charged by Wells Fargo in connection
with the honoring of drafts under any Letter of Credit, and any
amendments to or transfers of any Letter of Credit, and any other
activity with respect to the Letters of Credit at the current rates
published by Wells Fargo for such services rendered on behalf of
its customers generally. |
| (k) |
Other Fees and Charges . Wells Fargo may impose
additional fees and charges during a Default Period for
(i) waiving an Event of Default, or (ii) the
administration of Collateral by Wells Fargo. All such fees and
charges shall be imposed at Wells Fargo’s sole discretion
following oral notice to Company Funds Administrator on either an
hourly, periodic, or flat fee basis, and in lieu of or in addition
to imposing interest at the Default Rate, and Company Funds
Administrator’s request for an Advance following such notice
shall constitute Companies’ agreement to pay such fees and
charges. |
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| (l) |
Termination Fees Following Refinance by Wells Fargo Bank
Regional Commercial Banking Office or Another Lender .
Notwithstanding paragraph (f) of this Section 1.7, if
after December 31, 2009, the Line of Credit is refinanced in
full by either a Wells Fargo Bank Regional Commercial Banking
Office or another lender that has provided Qualified Refinancing
(as defined below) and no Default Period is existing at the time of
such refinancing, such refinance shall not be deemed a termination
or prepayment resulting in the payment of termination fees,
provided that with respect to such a refinancing by a Wells Fargo
Bank Regional Commercial Banking Office, Companies agree, at the
time of refinance, to the continued payment of comparable
termination and/or prepayment fees in an amount no less than the
amount set forth in this Agreement, in the event that any
facilities subject to this Agreement at the time of the refinancing
facilities are at a later date terminated early or prepaid.
“Qualified Refinancing” means a bona fide financing
offer made by a third-party lender that satisfies the following
criteria (as determined by Wells Fargo): (i) such financing
offer is in writing and signed by the third-party lender, such
financing offer is sufficiently detailed to enable Wells Fargo to
determine all material terms of such financing offer, and Wells
Fargo has received complete copies of such financing offer not less
than 30 days prior to the consummation of any such financing;
(ii) such financing offer is sufficient to fully repay all
Line of Credit Advances and replace all Letters of Credit issued
under or in connection with this Agreement; and (iii) Wells
Fargo shall have been provided with at least 30 days after receipt
of all of the documents referred to clause (i) of this
sentence to match such financing offer, and Wells Fargo has
declined to match such offer within such 30-day period. |
| (m) |
LIBOR Advance Breakage Fees . Companies may prepay any
LIBOR Advance at any time in any amount, whether voluntarily or by
acceleration; provided , however , that if the LIBOR
Advance is prepaid, Companies shall pay Wells Fargo upon demand a
LIBOR Advance breakage fee equal to the sum of the discounted
monthly differences for each month from the month of prepayment
through the month in which such Interest Period matures, calculated
as follows for each such month: |
| |
(i) |
Determine the amount of interest which would have
accrued each month on the amount prepaid at the interest rate
applicable to such amount had it remained outstanding until the
last day of the applicable Interest Period. |
| |
(ii) |
Subtract from the amount determined in (i) above
the amount of interest which would have accrued for the same month
on the amount prepaid for the remaining term of such Interest
Period at LIBOR in effect on the date of prepayment for new loans
made for such term in a principal amount equal to the amount
prepaid. |
| |
(iii) |
If the result obtained in (ii) for any month is greater
than zero, discount that difference by LIBOR used in
(ii) above. |
Each Company acknowledges
that prepayment of the Revolving Note may result in Wells Fargo
incurring additional costs, expenses or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses or
liabilities. Companies agree to pay the above-described LIBOR
Advance breakage fee and agrees that this amount represents a
reasonable estimate of the LIBOR Advance breakage costs, expenses
and/or liabilities of Wells Fargo.
-10-
| 1.8 |
Interest Accrual; Principal and Interest Payments;
Computation. |
| (a) |
Interest Payments and Interest Accrual . Accrued and
unpaid interest under the Revolving Note on Floating Rate Advances
shall be due and payable on the first day of each month (each an
“Interest Payment Date”) and on the Termination Date,
and shall be paid in the manner provided in Section 1.5(c).
Interest shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of
Advance to the Interest Payment Date. Interest accruing on any
LIBOR Advance shall be due and payable on the last day of the
applicable Interest Period and on the Termination Date; provided,
however, for Interest Periods in excess of one month, interest
shall nevertheless be due and payable monthly on the last day of
each month, and on the last day of the Interest Period. |
| (b) |
Payment of Revolving Note Principal . The principal
amount of the Revolving Note shall be paid from time to time as
provided in this Agreement, and shall be fully due and payable on
the Termination Date. |
| (c) |
Payments Due on Non-Business Days . If an Interest
Payment Date or the Termination Date falls on a day which is not a
Business Day, payment shall be made on the next Business Day, and
interest shall continue to accrue during that time
period. |
| (d) |
Computation of Interest and Fees . Interest accruing on
the unpaid principal amount of the Revolving Note and fees payable
under this Agreement shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. |
| (e) |
Liability Records . Wells Fargo shall maintain
accounting and bookkeeping records of all Advances and payments
under the Line of Credit and all other Indebtedness due to Wells
Fargo in such form and content as Wells Fargo in its sole
discretion deems appropriate. Wells Fargo’s calculation of
current Indebtedness shall be presumed correct unless proven
otherwise by Companies. Upon Wells Fargo’s request, Companies
will admit and certify in a Record the exact principal balance of
the Indebtedness that Companies then believe to be outstanding. Any
billing statement or accounting provided by Wells Fargo shall be
conclusive and binding unless Company Funds Administrator notifies
Wells Fargo in a detailed Record of its intention to dispute the
billing statement or accounting within 30 days of
receipt. |
| 1.9 |
Termination, Reduction or Non-Renewal of Line of Credit by
Company Funds Administrator; Notice. |
| (a) |
Termination by Company Funds Administrator after Advance
Notice . Company Funds Administrator may terminate or reduce
the Line of Credit at any time prior to the Maturity Date, if it
(i) delivers an Authenticated Record notifying Wells Fargo of
its intentions at least 90 days prior to the proposed Termination
Date, (ii) pays Wells Fargo the termination fee set forth in
Section 1.7(f), and (iii) pays the Indebtedness in full
or down to the reduced Maximum Line Amount. |
| (b) |
Termination by Company Funds Administrator without Advance
Notice . If Company Funds Administrator fails to deliver Wells
Fargo timely notice of its intention to terminate the Line of
Credit or reduce the Maximum Line Amount as provided in
Section 1.9(a), Company Funds Administrator may nevertheless
terminate the Line of Credit or reduce the Maximum Line
|
-11-
| |
Amount and pay the
Indebtedness in full or down to the reduced Maximum Line Amount if
it (i) pays the termination fee set forth in
Section 1.7(f), and (ii) pays the Default Rate on the
Revolving Note commencing on the 90 th day prior to the proposed Termination
Date and continuing through the date that Wells Fargo receives
delivery of an Authenticated Record giving it actual notice of
Company Funds Administrator’s intention to
terminate.
|
|
(c)
|
Non-Renewal by Company
Funds Administrator; Notice . If Company Funds Administrator
does not wish Wells Fargo to consider renewal of the Line of Credit
on the next Maturity Date, Company Funds Administrator shall
deliver an Authenticated Record to Wells Fargo at least 90 days
prior to the Maturity Date notifying Wells Fargo of its intention
not to renew. If Company Funds Administrator fails to deliver to
Wells Fargo such timely notice, then the Revolving Note shall
accrue interest at the Default Rate commencing on the 90
th
day prior to the Maturity
Date and continuing through the date that Wells Fargo receives
delivery of an Authenticated Record giving it actual notice of
Company Funds Administrator’s intention not to
renew.
|
| (a) |
Issuance of Letters of Credit; Amount . Wells Fargo,
subject to the terms and conditions of this Agreement, shall issue,
on or after the date that Wells Fargo is obligated to make its
first Advance under this Agreement and prior to the Termination
Date, one or more irrevocable standby or documentary letters of
credit (each, a “Letter of Credit”, and collectively,
“Letters of Credit”) for Companies’ account.
Wells Fargo will not issue any Letter of Credit if the face amount
of the Letter of Credit would exceed the lesser of:
(i) $7,500,000 less the L/C Amount, or (ii) the Borrowing
Base, less an amount equal to aggregate unreimbursed Line of Credit
Advances plus the L/C Amount. |
| (b) |
Additional Letter of Credit Documentation . Prior to
requesting issuance of a Letter of Credit, Companies shall first
execute and deliver to Wells Fargo a Standby Letter of Credit
Agreement or a Commercial Letter of Credit Agreement, as
applicable, an L/C Application, and any other documents that Wells
Fargo may request, which shall govern the issuance of the Letter of
Credit and Companies’ obligation to reimburse Wells Fargo for
any related Letter of Credit draws (the “Obligation of
Reimbursement”). |
| (c) |
Expiration . No Letter of Credit shall be issued that
has an expiry date that is later than one (1) year from the
date of issuance, or the Maturity Date in effect on the date of
issuance, whichever is earlier. |
| (d) |
Obligation of Reimbursement During Default Periods . If
Companies are unable, due to the existence of a Default Period or
for any other reason, to obtain an Advance to pay any Obligation of
Reimbursement, Companies shall pay Wells Fargo on demand and in
immediately available funds, the amount of the Obligation of
Reimbursement together with interest, accrued from the date
presentment of the underlying draft until reimbursement in full at
the Default Rate. Wells Fargo is authorized, alternatively and in
its sole discretion, to make an Advance in an amount sufficient to
discharge the Obligation of Reimbursement and pay all accrued but
unpaid interest and fees with respect to the Obligation of
Reimbursement. |
| 1.11 |
Special
Account . If the Line of Credit is terminated for any reason
while a Letter of Credit is outstanding, or if after prepayment of
the Revolving Note the L/C Amount continues to exceed the Borrowing
Base, then Companies shall promptly pay Wells
|
-12-
| |
Fargo in immediately
available funds for deposit to the Special Account, an amount
equal, as the case may be, to either (a) the L/C Amount plus
any anticipated fees and costs, or (b) the amount by which the
L/C Amount exceeds the Borrowing Base. If Companies fail to pay
these amounts promptly, then Wells Fargo may in its sole discretion
make an Advance to pay these amounts and deposit the proceeds to
the Special Account. The Special Account shall be an interest
bearing account maintained with Wells Fargo or any other financial
institution acceptable to Wells Fargo. Wells Fargo may in its sole
discretion apply amounts on deposit in the Special Account to the
Indebtedness. Companies may not withdraw amounts deposited to the
Special Account until the Line of Credit has been terminated and
all outstanding Letters of Credit have either been returned to
Wells Fargo or have expired and the Indebtedness has been fully
paid.
|
| 2. |
SECURITY INTEREST AND OCCUPANCY OF COMPANIES’
PREMISES |
| 2.1 |
Grant of Security Interest. Each Company hereby pledges,
assigns and grants to Wells Fargo, for the benefit of Wells Fargo
and as agent for Wells Fargo Merchant Services, L.L.C., a Lien and
security interest (collectively referred to as the “Security
Interest”) in the Collateral, as security for the payment and
performance of all Indebtedness. Following request by Wells Fargo,
each Company shall grant Wells Fargo, for the benefit of Wells
Fargo and as agent for Wells Fargo Merchant Services, L.L.C., a
Lien and security interest in all commercial tort claims that it
may have against any Person. |
| 2.2 |
Notifying Account Debtors and Other Obligors; Collection of
Collateral. Wells Fargo may at any time (whether or not a
Default Period then exists) deliver a Record giving an account
debtor or other Person obligated to pay an Account, a General
Intangible, or other amount due, notice that the Account, General
Intangible, or other amount due has been assigned to Wells Fargo
for security and must be paid directly to Wells Fargo. Each Company
shall join in giving such notice and shall Authenticate any Record
giving such notice upon Wells Fargo’s request. After any
Company or Wells Fargo gives such notice, Wells Fargo may, but need
not, in Wells Fargo’s or in such Company’s name,
demand, sue for, collect or receive any money or property at any
time payable or receivable on account of, or securing, such
Account, General Intangible, or other amount due, or grant any
extension to, make any compromise or settlement with or otherwise
agree to waive, modify, amend or change the obligations (including
collateral obligations) of any account debtor or other obligor.
Wells Fargo may, in Wells Fargo’s name or in any
Company’s name, as any such Company’s agent and
attorney-in-fact, notify the United States Postal Service to change
the address for delivery of such Company’s mail to any
address designated by Wells Fargo, otherwise intercept such
Company’s mail, and receive, open and dispose of such
Company’s mail, applying all Collateral as permitted under
this Agreement and holding all other mail for such Company’s
account or forwarding such mail to such Company’s last known
address. |
| 2.3 |
Assignment
of Insurance. As additional security for the Indebtedness, each
Company hereby assigns to Wells Fargo and to Wells Fargo Merchant
Services, L.L.C., all rights of each Company under every policy of
insurance covering the Collateral and all business records and
other documents relating to it, and all monies (including proceeds
and refunds) that may be payable under any policy, and each Company
hereby directs the issuer of each policy to pay all such monies
directly to Wells Fargo. At any time, whether or not a Default
Period then exists, Wells Fargo may (but need not), in Wells
Fargo’s or any Company’s
|
-13-
| |
name, execute and deliver
proofs of claim, receive payment of proceeds and endorse checks and
other instruments representing payment of the policy of insurance,
and adjust, litigate, compromise or release claims against the
issuer of any policy. Any monies received under any insurance
policy assigned to Wells Fargo, other than liability insurance
policies, or received as payment of any award or compensation for
condemnation or taking by eminent domain, shall be paid to Wells
Fargo and, as determined by Wells Fargo in its sole discretion,
either be applied to prepayment of the Indebtedness or disbursed to
a Company under staged payment terms reasonably satisfactory to
Wells Fargo for application to the cost of repairs, replacements,
or restorations which shall be effected with reasonable promptness
and shall be of a value at least equal to the value of the items or
property destroyed.
|
| (a) |
Wells Fargo’s Right to Occupy each Company’s
Premises . Each Company hereby grants to Wells Fargo the right,
at any time during a Default Period and without notice or consent,
to take exclusive possession of all locations where each Company
conducts its business or has any rights of possession, including
the locations described on Exhibit B (the “Premises”),
until the earlier of (i) payment in full and discharge of all
Indebtedness and termination of the Line of Credit, or
(ii) final sale or disposition of all items constituting
Collateral and delivery of those items to purchasers. |
| (b) |
Wells Fargo’s Use of each Company’s Premises
. Wells Fargo may use the Premises to store, process, manufacture,
sell, use, and liquidate or otherwise dispose of items that are
Collateral, and for any other incidental purposes deemed
appropriate by Wells Fargo in good faith. |
| (c) |
Each Company’s Obligation to Reimburse Wells Fargo
. Wells Fargo shall not be obligated to pay rent or other
compensation for the possession or use of any Premises, but if
Wells Fargo elects to pay rent or other compensation to the owner
of any Premises in order to have access to the Premises, then each
Company shall promptly reimburse Wells Fargo all such amounts, as
well as all taxes, fees, charges and other expenses at any time
payable by Wells Fargo with respect to the Premises by reason of
the execution, delivery, recordation, performance or enforcement of
any terms of this Agreement. |
| 2.5 |
License. Without limiting the generality of any other
Security Document, each Company hereby grants to Wells Fargo a
non-exclusive, worldwide and royalty-free license to use or
otherwise exploit all Intellectual Property Rights of each Company
for the purpose of: (a) completing the manufacture of any
in-process materials during any Default Period so that such
materials become saleable Inventory, all in accordance with the
same quality standards previously adopted by each Company for its
own manufacturing and subject to each Company’s reasonable
exercise of quality control; and (b) selling, leasing or
otherwise disposing of any or all Collateral during any Default
Period. |
| 2.6 |
Financing
Statements. Each Company authorizes Wells Fargo to file
financing statements describing Collateral to perfect Wells
Fargo’s Security Interest in the Collateral, and Wells Fargo
may describe the Collateral as “all personal property”
or “all assets” or describe specific items of
Collateral including commercial tort claims as Wells Fargo may
consider necessary or useful to perfect the Security Interest. All
financing statements filed before the date of this Agreement to
perfect the Security
|
-14-
| |
Interest were authorized
by each Company and are hereby re-authorized. Following the
termination of the Line of Credit and payment of all Indebtedness,
Wells Fargo shall, at each Company’s expense and within the
time periods required under applicable law, release or terminate
any filings or other agreements that perfect the Security
Interest.
|
| 2.7 |
Setoff. Wells Fargo may at any time, in its sole
discretion and without demand or notice to anyone, setoff any
liability owed to any Company by Wells Fargo against any
Indebtedness, whether or not due. |
| 2.8 |
Collateral Related Matters. This Agreement does not
contemplate a sale of Accounts or chattel paper, and, as provided
by law, each Company is entitled to any surplus and shall remain
liable for any deficiency. Wells Fargo’s duty of care with
respect to Collateral in its possession (as imposed by law) will be
deemed fulfilled if it exercises reasonable care in physically
keeping such Collateral, or in the case of Collateral in the
custody or possession of a bailee or other third Person, exercises
reasonable care in the selection of the bailee or third Person, and
Wells Fargo need not otherwise preserve, protect, insure or care
for such Collateral. Wells Fargo shall not be obligated to preserve
rights Companies may have against prior parties, to liquidate the
Collateral at all or in any particular manner or order or apply the
Proceeds of the Collateral in any particular order of application.
Wells Fargo has no obligation to clean-up or prepare Collateral for
sale. Each Company waives any right it may have to require Wells
Fargo to pursue any third Person for any of the
Indebtedness. |
| 2.9 |
Notices Regarding Disposition of Collateral. If notice
to any Company of any intended disposition of Collateral or any
other intended action is required by applicable law in a particular
situation, such notice will be deemed commercially reasonable if
given in the manner specified in Section 7.4 at least ten
calendar days before the date of intended disposition or other
action. |
| 3.1 |
Conditions Precedent to Initial Advance and Issuance of
Initial Letter of Credit. Wells Fargo’s obligation to
make the initial Advance or issue the first Letter of Credit shall
be subject to the condition that Wells Fargo shall have received
this Agreement and each of the Loan Documents, and any document,
agreement, or other item described in or related to this Agreement,
and all fees and information described in Exhibit C, executed and
in form and content satisfactory to Wells Fargo. |
| 3.2 |
Additional Conditions Precedent to All Advances and Letters
of Credit. Wells Fargo’s obligation to make any Advance
(including the initial Advance) or issue any Letter of Credit shall
be subject to the further additional conditions: (a) that the
representations and warranties described in Exhibit D are correct
on the date of the Advance or the issuance of the Letter of Credit,
except to the extent that such representations and warranties
relate solely to an earlier date; and (b) that no event has
occurred and is continuing, or would result from the requested
Advance or issuance of the Letter of Credit that would result in an
Event of Default. |
-15-
| 4. |
REPRESENTATIONS AND WARRANTIES |
To induce Wells Fargo to
enter into this Agreement, each Company makes the representations
and warranties described in Exhibit D. Any request for an Advance
will be deemed a representation by each Company that all
representations and warranties described in Exhibit D are true,
correct, and complete as of the time of the request, unless they
relate exclusively to an earlier date. Each Company shall promptly
deliver a Record notifying Wells Fargo of any change in
circumstance that would affect the accuracy of any representation
or warranty, unless the representation and warranty specifically
relates to an earlier date.
So long as the Indebtedness
remains unpaid, or the Line of Credit has not been terminated, each
Company shall comply with each of the following covenants, unless
Wells Fargo shall consent otherwise in an Authenticated Record
delivered to the applicable Company.
| 5.1 |
Reporting Requirements. Companies shall deliver to Wells
Fargo the following information, compiled where applicable using
GAAP consistently applied, in form and content acceptable to Wells
Fargo: |
| (a) |
Annual Financial Statements . As soon as available and
in any event within 95 days after Companies’ fiscal year end,
Companies’ audited financial statements prepared by an
independent public accounting firm acceptable to Wells Fargo, which
shall include Companies’ balance sheet, income statement, and
statement of retained earnings and cash flows prepared on a
consolidated and, if requested by Wells Fargo, consolidating basis.
The annual financial statements shall be accompanied by a
certificate (the “Compliance Certificate”) in the form
of Exhibit E that is signed by Companies’ chief financial
officer. |
Each Compliance Certificate
that accompanies an annual financial statement shall also be
accompanied by (i) copies of all management letters prepared
by Companies’ accountants; and (ii) a report signed by
the accountant stating that in making the investigations necessary
to render the opinion, the accountant obtained no knowledge, except
as specifically stated, of any Event of Default under the
Agreement, and a detailed statement, including computations,
demonstrating whether or not Companies are in compliance with the
financial covenants of this Agreement.
| (b) |
Monthly Financial Statements . As soon as available and
in any event within 25 days after the end of each month, a
Companies-prepared balance sheet, income statement, and statement
of retained earnings prepared for that month and for the
year–to-date period then ended, prepared on a consolidated
and, if requested by Wells Fargo, consolidating basis to include
each Company’s Affiliates, and stating in comparative form
the figures for the corresponding date and periods in the prior
fiscal year, subject to year-end adjustments. The financial
statements shall be accompanied by a Compliance Certificate in the
form of Exhibit E that is signed by Companies’ chief
financial officer. |
| (c) |
Collateral
Reports . No later than 15 days after each month end (or more
frequently if Wells Fargo shall request it), detailed agings of
Companies’ accounts receivable and accounts payable, a
detailed inventory report (including the locations and categories
of Inventory at each location), a calculation of Companies’
Accounts, Eligible Accounts, Inventory and Eligible Inventory, a
report as to in-transit inventory and the status of (including
location) of in-transit inventory, a report on all
accrued
|
-16-
| |
royalty, marketing, license,
and similar payments owing to any licensor of a patent, trademark,
copyright, or similar right, a report on all inventory close-out
items, and a general ledger trial balance report, in each case as
of the end of that month or shorter time period requested by Wells
Fargo.
|
| (d) |
Projections . No later than 30 days prior to each fiscal
year end, Companies’ projected balance sheet, income
statement, and statement of retained earnings and cash flows for
each month of the next fiscal year, certified to have been prepared
in good faith and on the basis of reasonable assumptions by
Companies’ chief financial officer and accompanied by a
statement of assumptions and supporting schedules and
information. |
| (e) |
Supplemental Reports . Weekly, or more frequently if
Wells Fargo requests, Companies’ standard form of
“daily collateral report”, together with accounts
receivable schedules, collection reports, adjustments to accounts
receivable, copies of the three (3) largest invoices issued
during the previous week together with copies of any other invoices
in excess of $200,000 issued during such week, and shipment
documents and delivery receipts (or proof of customer pickup) for
goods sold to account debtors for the three (3) largest sales
of goods during the previous week and copies of shipment documents
and delivery receipts for any other sales in excess of $200,000
during such week. Notwithstanding the foregoing, on and after
January 1, 2009, the reporting required by this paragraph
(e) shall be changed to a monthly basis (and due no later than
15 days after each month end) if (A) no Default Period is
existing, (B) Companies are performing in accordance with
financial projections submitted by Companies to Wells Fargo, and
(C) Companies maintain Excess Availability of not less than
$2,000,000 at all times (the continued satisfaction of such
conditions is referred to as the “Monthly Collateral
Reporting Period”). |
| (f) |
Litigation . No later than three (3) Business Days
after discovery, a Record notifying Wells Fargo of any litigation
or other proceeding before any court or governmental agency which
seeks a monetary recovery against any Company in excess of
$100,000. |
| (g) |
Intellectual Property . (i) No later than 30 days
before it acquires material Intellectual Property Rights, a Record
notifying Wells Fargo of any Company’s intention to acquire
such rights; (ii) except for transfers permitted under
Section 5.18, no later than 30 days before it disposes of
material Intellectual Property Rights, a Record notifying Wells
Fargo of any Company’s intention to dispose of such rights,
along with copies of all proposed documents and agreements
concerning the disposal of such rights as requested by Wells Fargo;
(iii) promptly upon discovery, a Record notifying Wells Fargo
of (A) any Infringement of any Company’s Intellectual
Property Rights by any Person, (B) claims that any Company is
Infringing another Person’s Intellectual Property Rights and
(C) any threatened cancellation, termination or material
limitation of any Company’s Intellectual Property Rights; and
(iv) promptly upon receipt, copies of all registrations and
filings with respect to any Company’s Intellectual Property
Rights. |
| (h) |
Defaults . No later than three days after learning of
the probable occurrence of any Event of Default, a Record notifying
Wells Fargo of the Event of Default and the steps being taken by
Companies to cure the Event of Default. |
| (i) |
Disputes . Promptly upon discovery, a Record notifying
Wells Fargo of (i) any disputes or claims by any
Company’s customers exceeding $100,000 individually or
$150,000 in the aggregate during any fiscal year ;
(ii) credit memos not previously reported
|
-17-
| |
in Section 5.1(e);
and (iii) any goods returned to or recovered by any Company
outside of the ordinary course of business which have a book value,
individually or in the aggregate, in excess of $50,000
.
|
| (j) |
Changes in Officers and Directors . Promptly following
occurrence, a Record notifying Wells Fargo of any change in the
persons constituting any Company’s Officers and
Directors. |
| (k) |
Collateral . Promptly upon discovery, a Record notifying
Wells Fargo of any loss of or material damage to any Collateral or
of any substantial adverse change in any Collateral or the prospect
of its payment. |
| (l) |
Commercial Tort Claims . Promptly upon discovery, a
Record notifying Wells Fargo of any commercial tort claims brought
by any Company against any Person, including the name and address
of each defendant, a summary of the facts, an estimate of such
Company’s damages, copies of any complaint or demand letter
submitted by such Company, and such other information as Wells
Fargo may request. |
| (m) |
Reports to Owners . Promptly upon distribution, copies
of all financial statements, reports and proxy statements which any
Company shall have sent to its Owners. |
| (n) |
Tax Returns of Companies . No later than 30 days after
they are required to be filed (inclusive of any extension periods),
copies of each Company’s signed and dated state and federal
income tax returns and all related schedules, and copies of any
extension requests. |
| (o) |
Tax Returns and Personal Financial Statements of Owners and
Guarantors . [INTENTIONALLY OMITTED]. |
| (p) |
Violations of Law . No later than three days after
discovery of any violation, a Record notifying Wells Fargo of any
Company’s violation of any law, rule or regulation, the
non-compliance with which would have a Material Adverse Effect on
Company. |
| (q) |
Pension Plans . (i) Promptly upon discovery, and in
any event within 30 days after any Company knows or has reason to
know that any Reportable Event with respect to any Pension Plan has
occurred, a Record authenticated by Companies’ chief
financial officer notifying Wells Fargo of the Reportable Event in
detail and the actions which Companies propose to take to correct
the deficiency, together with a copy of any related notice sent to
the Pension Benefit Guaranty Corporation; (ii) promptly upon
discovery, and in any event within 10 days after any Company fails
to make a required quarterly Pension Plan contribution under
Section 412(m) of the IRC, a Record authenticated by the
Companies’ chief financial officer notifying Wells Fargo of
the failure in detail and the actions that Companies will take to
cure the failure, together with a copy of any related notice sent
to the Pension Benefit Guaranty Corporation; and
(iii) promptly upon discovery, and in any event within 10 days
after any Company knows or has reason to know that it may be liable
or may be reasonably expected to have liability for any withdrawal,
partial withdrawal, reorganization or other event under any
Multiemployer Plan under Sections 4201 or 4243 of ERISA, a Record
authenticated by Companies’ chief financial officer notifying
Wells Fargo of the details of the event and the actions that
Companies propose to take in response. |
-18-
| (r) |
Other Reports . From time to time, with reasonable
promptness, all receivables schedules, inventory reports,
collection reports, deposit records, equipment schedules, invoices
to account debtors, shipment documents and delivery receipts for
goods sold, and such other materials, reports, records or
information as Wells Fargo may request. |
| 5.2 |
Financial Covenants. Companies agree to comply with the
financial covenants described below, which shall be calculated
using GAAP consistently applied, except as they may be otherwise
modified by the following capitalized definitions: |
| (a) |
Minimum Net Income . Companies shall achieve Net Income
of not less than the amount set forth below for each period set
forth below (numbers appearing between “< >“ are
negative): |
|
|
|
|
|
Period
|
|
Minimum Net Income |
|
Six-month period ending June 30,
2008
|
|
$ |
<1,900,000> |
|
Three-month period ending
September 30, 2008
|
|
$ |
500,000 |
|
Six-month period ending
December 31, 2008
|
|
$ |
2,000,000 |
With respect to the six-month
period ending June 30, 2008 only, Net Income may be adjusted
on a dollar-for-dollar basis for Companies’ write-off
(occurring during the six-month period ending June 30, 2008)
of unamortized loan closing costs incurred in connection with
Companies’ credit facilities prior to the Line of Credit
represented by this Agreement.
| (b) |
Capital Expenditures . Companies shall not incur or
contract to incur unfinanced Capital Expenditures of more than the
following: (i) $850,000 during the six-month period ending
June 30, 2008; (ii) $900,000 during the nine-month period
ending September 30, 2008; and (iii) $900,000 during the
twelve-month period ending December 31, 2008. With respect to
periods after December 31, 2008, the Companies and Wells Fargo
shall undertake reasonable efforts to agree on limits on unfinanced
Capital Expenditures for such future periods based upon the
Companies’ projections required to be delivered to Wells
Fargo under Section 5.1(d). If the Companies and Wells Fargo
are unable to timely agree to such limits on unfinanced Capital
Expenditures for any period after December 31, 2008, the
Companies shall not incur or contract to incur unfinanced Capital
Expenditures for any calendar quarter after December 31, 2008
of more than $50,000 per each such quarter. |
| (c) |
Stop Loss . If the Companies and Wells Fargo have not
agreed to a new minimum Net Income requirement under
Section 5.2(a) above for any period after December 31,
2008, the Companies shall comply with the following covenant during
any such period: Companies’ Net Income shall not be less than
(i) $<350,000> during any fiscal quarter, or
(ii) $<600,000> on a fiscal year to date basis (measured
as of the end of each fiscal quarter). With respect to the
foregoing sentence, numbers appearing between
“<>“ are negative. |
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| 5.3 |
Other Liens and Permitted Liens. |
| (a) |
Other Liens; Permitted Liens . Companies shall not
create, incur or suffer to exist any Lien upon any of their assets,
now owned or later acquired, as security for any indebtedness, with
the exception of the following (each a “Permitted
Lien”; collectively, “Permitted Liens”):
(i) In the case of real property, covenants, restrictions,
rights, easements and minor irregularities in title which do not
materially interfere with Companies’ business or operations
as presently conducted; (ii) Liens in existence on the date of
this Agreement that are described in Exhibit F and secure
indebtedness for borrowed money permitted under Section 5.4;
(iii) The Security Interest and Liens created by the Security
Documents; (iv) purchase money Liens or capitalized lease
obligations for the acquisition of machinery and equipment
(including vehicles) of the Companies not exceeding the lesser of
cost or fair market value thereof, provided such obligations are
subject to the limitation set forth in Section 5.4(d); and
(v) Liens in respect of judgments or awards, individually or
in the aggregate of less than $100,000, for which appeals or
proceedings for review are being prosecuted and in respect of which
a stay of execution upon any such appeal or proceeding for review
shall have been secured and with respect to which Wells
Fargo’s security interest in the Collateral (securing all of
the Indebtedness) remains senior in priority to any such Liens,
provided that (A) such Person shall have established adequate
reserves for such judgments or awards in accordance with GAAP,
(B) such judgments or awards shall be fully insured (subject
to deductibles) and the insurer shall not have denied coverage, or
(C) such judgments or awards shall have been bonded to the
satisfaction of Wells Fargo. |
| (b) |
Financing Statements . Companies shall not authorize the
filing of any financing statement by any Person as Secured Party
with respect to any of Companies’ assets, other than Wells
Fargo or in connection with Permitted Liens. Companies shall not
amend any financing statement filed by Wells Fargo as Secured Party
except as permitted by law. |
| 5.4 |
Indebtedness. Companies shall not incur, create, assume
or permit to exist any indebtedness or liability on account of
deposits or letters of credit issued on Companies’ behalf, or
advances or any indebtedness for borrowed money of any kind,
whether or not evidenced by an instrument, except :
(a) Indebtedness described in this Agreement;
(b) indebtedness of Companies described in Exhibit F;
(c) indebtedness secured by Permitted Liens; and
(d) indebtedness incurred in connection with Capital
Expenditures to the extent (i) the aggregate amount of such
outstanding indebtedness (including capital leases) does not exceed
$200,000 at any time, and (ii) such indebtedness is either
unsecured or secured only by the Capital Expenditures financed by
such indebtedness. |
| 5.5 |
Guaranties. Companies shall not assume, guarantee,
endorse or otherwise become directly or contingently liable for the
obligations of any Person, except : (a) the endorsement
of negotiable instruments by Companies for deposit or collection or
similar transactions in the ordinary course of business;
(b) guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date of this Agreement and described in Exhibit F;
and (c) any guaranty of another Company’s obligations if
such other obligations are otherwise permitted under this
Agreement. |
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| 5.6 |
Investments and Subsidiaries. Companies shall not make
or permit to exist any loans or advances to, or make any investment
or acquire any interest whatsoever in, any Person or Affiliate,
including any partnership or joint venture, nor purchase or hold
beneficially any stock or other securities or evidence of
indebtedness of any Person or Affiliate, except
: |
| (a) |
Investments in direct obligations of the United States of
America or any of its political subdivisions whose obligations
constitute the full faith and credit obligations of the United
States of America and have a maturity of one year or less,
commercial paper issued by U.S. corporations rated
“A-1” or “A-2” by Standard &
Poor’s Ratings Services or “P-1” or
“P-2” by Moody’s Investors Service or
certificates of deposit or bankers’ acceptances having a
maturity of one year or less issued by members of the Federal
Reserve System having deposits in excess of $100,000,000 (which
certificates of deposit or bankers’ acceptances are fully
insured by the Federal Deposit Insurance Corporation); |
| (b) |
Travel advances or loans to Companies’ Officers and
employees not exceeding at any one time an aggregate of $50,000
; |
| (c) |
Prepaid rent not exceeding one month or security
deposits; |
| (d) |
Current investments in those Subsidiaries in existence on the
date of this Agreement which are identified on Exhibit D, or
investments by one Company into another Company; and |
| (e) |
Advances by and between the Companies. |
| 5.7 |
Dividends and Distributions. Companies shall not declare
or pay any dividends (other than dividends made by one Company
solely to another Company) on any class of its stock, or make any
payment on account of the purchase, redemption or retirement of any
shares of its stock, or other securities or evidence of its
indebtedness or make any distribution regarding its stock, either
directly or indirectly; provided, however, that on and after
July 1, 2009, Phoenix Footwear may redeem or repurchase it
capital stock from time to time so long as the following conditions
precedent are satisfied: (i) the Maximum Line Amount has been
increased to $20,000,000 in accordance with the terms and
conditions of this Agreement; (ii) no Default Period is
existing or would result from such stock redemption or repurchase;
(iii) the aggregate amount of consideration paid for such
stock redemptions and repurchases shall not exceed $2,500,000,
(iv) the consideration paid for such stock redemptions or
repurchases shall not exceed the fair market value of such stock at
the time of redemption or repurchase; and (v) Excess
Availability after giving effect to any stock redemption or
repurchase shall be equal to or greater than
$1,500,000. |
| 5.8 |
Salaries. Companies shall not pay excessive or
unreasonable salaries, bonuses, commissions, consultant fees or
other compensation; provided that so long as the compensation
committee of Phoenix Footwear’s board of directors reviews
and approves the compensation for the Companies’ Officers,
such approved compensation will not be considered excessive or
unreasonable. |
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| 5.9 |
Key Person Life Insurance. [INTENTIONALLY
OMITTED]. |
| 5.10 |
Books and Records; Collateral Examination; Inspection and
Appraisals. |
| (a) |
Books and Records; Inspection . Companies shall keep
complete and accurate books and records with respect to the
Collateral and Companies’ business and financial condition
and any other matters that Wells Fargo may request, in accordance
with GAAP. Companies shall permit any employee, attorney,
accountant or other agent of Wells Fargo to audit, review, make
extracts from and copy any of their books and records at any time
during ordinary business hours, and to discuss Companies’
affairs with any of their Directors, Officers, employees, Owners or
agents. |
| (b) |
Authorization to Companies’ Agents to Make Disclosures
to Wells Fargo . Companies authorize all accountants and other
Persons acting as their agent to disclose and deliver to Wells
Fargo’s employees, accountants, attorneys and other Persons
acting as its agent, at Companies’ expense, all financial
information, books and records, work papers, management reports and
other information in their possession regarding
Companies. |
| (c) |
Collateral Exams and Inspections . Companies shall
permit Wells Fargo’s employees, accountants, attorneys or
other Persons acting as its agent, to examine and inspect any
Collateral or any other property of Companies at any time during
ordinary business hours. |
| (d) |
Collateral Appraisals . Wells Fargo may also obtain,
from time to time, at Companies’ expense, an appraisal of
each Company’s Collateral, by an appraiser acceptable to
Wells Fargo in its sole discretion; provided that so long as no
Default Period exists, Wells Fargo will not charge Companies for
more than (i) two such appraisals during the one-year period
after the date of this Agreement, or (ii) one such appraisal
for each one-year period thereafter. |
| 5.11 |
Account Verification; Payment of Permitted
Liens. |
| (a) |
Account Verification . Wells Fargo or its agents may
(i) contact account debtors and other obligors at any time to
verify Companies’ Accounts; and (ii) require Companies
to send requests for verification of Accounts or send notices of
assignment of Accounts to account debtors and other
obligors. |
| (b) |
Covenant to Pay Permitted Liens . Companies shall pay
when due each account payable due to any Person holding a Permitted
Lien (as a result of such payable) on any Collateral. |
| 5.12 |
Compliance with Laws. |
| (a) |
General Compliance with Applicable Law; Use of
Collateral . Companies shall (i) comply, and cause each
Subsidiary to comply, with the requirements of applicable laws and
regulations, the non-compliance with which would have a Material
Adverse Effect on its business or its financial condition and
(ii) use and keep the Collateral, and require that others use
and keep the Collateral, only for lawful purposes, without
violation of any federal, state or local law, statute or
ordinance. |
-22-
| (b) |
Compliance with Federal Regulatory Laws . Companies
shall (i) prohibit, and cause each Subsidiary to prohibit, any
Person that is an Owner or Officer from being listed on the
Specially Designated Nationals and Blocked Person List or other
similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury or included in
any Executive Orders, (ii) not permit the proceeds of the Line
of Credit or any other financial accommodation extended by Wells
Fargo to be used in any way that violates any foreign asset control
regulations of OFAC or other applicable law, (iii) comply, and
cause each Subsidiary to comply, with all applicable Bank Secrecy
Act laws and regulations, as amended from time to time, and
(iv) otherwise comply with the USA Patriot Act and Wells
Fargo’s related policies and procedures. |
| (c) |
Compliance with Environmental Laws . Companies shall
(i) comply, and cause each Subsidiary to comply, with the
requirements of applicable Environmental Laws and obtain and comply
with all permits, licenses and similar approvals required by them,
and (ii) not generate, use, transport, treat, store or dispose
of any Hazardous Substances in such a manner as to create any
material liability or obligation under the common law of any
jurisdiction or any Environmental Law. |
| 5.13 |
Payment of Taxes and Other Claims. Companies shall pay
or discharge, when due, and cause each Subsidiary to pay or
discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income
or profits, upon any properties belonging to it (including the
Collateral) or upon or against the creation, perfection or
continuance of the Security Interest, prior to the date on which
penalties attach, (b) all federal, state and local taxes
required to be withheld by it, and (c) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become
a Lien upon any properties of Companies, although Companies shall
not be required to pay any such tax, assessment, charge or claim
whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which proper reserves have
been made. |
| 5.14 |
Maintenance of Collateral and Properties. |
| (a) |
Companies shall keep and maintain the Collateral and all of
their other properties necessary or useful in their business in
good condition, repair and working order (normal wear and tear
excepted) and will from time to time replace or repair any worn,
defective or broken parts, although Companies may discontinue the
operation and maintenance of any properties if Companies believe
that such discontinuance is desirable to the conduct of their
business and not disadvantageous in any material respect to Wells
Fargo. Companies shall take all commercially reasonable steps
necessary to protect and maintain their Intellectual Property
Rights. |
| (b) |
Companies shall defend the Collateral against all Liens, claims
and demands of all third Persons claiming any interest in the
Collateral. Companies shall keep all Collateral free and clear of
all Liens except Permitted Liens. Companies shall take all
commercially reasonable steps necessary to prosecute any Person
Infringing their Intellectual Property Rights and to defend
themselves against any Person accusing any Company of Infringing
any Person’s Intellectual Property Rights. |
| 5.15 |
Insurance. Each Company shall at all times maintain
insurance with insurers acceptable to Wells Fargo, in such amounts,
on such terms (including any deductibles) and against such risks as
Wells Fargo may require, in such amounts and against
such
|
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| |
risks as is usually
carried by companies engaged in similar business and owning similar
properties in the same geographical areas in which each Company
operates. Each Company shall also, at all times and without
limitation maintain business interruption insurance (including
force majeure coverage) and keep all tangible Collateral insured
against risks of fire (including so-called extended coverage),
theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as Wells Fargo may reasonably
request, with any loss payable to Wells Fargo to the extent of its
interest, and all such policies of insurance shall contain a
lender’s loss payable endorsement for the benefit of Wells
Fargo. All policies of liability insurance shall name Wells Fargo
as an additional insured.
|
| 5.16 |
Preservation of Existence. Each Company shall preserve
and maintain its existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its
business and shall conduct its business in an orderly, efficient
and regular manner. |
| 5.17 |
Delivery of Instruments, etc. Upon request by Wells
Fargo, Companies shall promptly deliver to Wells Fargo in pledge
all instruments, documents and chattel paper constituting
Collateral, endorsed or assigned by each applicable
Company. |
| 5.18 |
Sale or Transfer of Assets; Suspension of Business
Operations. Companies shall not sell, lease, assign, transfer
or otherwise dispose of (a) the stock of any Subsidiary,
(b) all or a substantial part of their assets, or (c) any
Collateral or any interest in Collateral (whether in one
transaction or in a series of transactions) to any other Person
other than the sale of Inventory in the ordinary course of business
and shall not liquidate, dissolve or suspend business operations.
Companies shall not transfer any part of its ownership interest in
any Intellectual Property Rights and shall not permit their rights
as licensee of Licensed Intellectual Property to lapse, except that
Companies may transfer such rights or permit them to lapse if they
have reasonably determined that such Intellectual Property Rights
are no longer useful in their business. Companies shall not license
any other Person to use any of Companies’ Intellectual
Property Rights, except that Companies may grant licenses in the
ordinary course of their business in connection with sales of
Inventory or the provision of services to their
customers. |
| 5.19 |
Consolidation and Merger; Asset Acquisitions. No Company
shall consolidate with or merge into any other entity, or permit
any other entity to merge into it, or acquire (in a transaction
analogous in purpose or effect to a consolidation or merger) all or
substantially all of the assets of any other entity; provided that
one Company may merge into another Company (provided, further, that
Companies shall provide Wells Fargo with written notice of any such
merger, together with copies of the merger documents, within 15
days after the completion of any such merger between one Company
and another Company). |
| 5.20 |
Sale and Leaseback. Companies shall not enter into any
arrangement, directly or indirectly, with any other Person pursuant
to which any Company shall sell or transfer any real or personal
property, whether owned now or acquired in the future, and then
rent or lease all or part of such property or any other property
which such Company intends to use for substantially the same
purpose or purposes as the property being sold or
transferred. |
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| 5.21 |
Restrictions on Nature of Business. Companies will not
engage in any line of business materially different from that
presently engaged in by Companies, and will not purchase, lease or
otherwise acquire assets not related to their business. |
| 5.22 |
Accounting. Companies will not adopt any material change
in accounting principles except as required by GAAP, consistently
applied. Companies will not change their fiscal year. |
| 5.23 |
Discounts, etc. After notice from Wells Fargo, Companies
will not grant any discount, credit or allowance to any customer of
Companies or accept any return of goods sold. Companies will not at
any time modify, amend, subordinate, cancel or terminate any
Account, other than in the ordinary course of business of the
Companies consistent with past practice so long as no Default
Period is existing. |
| 5.24 |
Pension Plans. Except as disclosed to Wells Fargo in a
Record prior to the date of this Agreement, neither Companies nor
any ERISA Affiliate will (a) adopt, create, assume or become
party to any Pension Plan, (b) become obligated to contribute
to any Multiemployer Plan, (c) incur any obligation to provide
post-retirement medical or insurance benefits with respect to
employees or former employees (other than benefits required by law)
or (d) amend any Plan in a manner that would materially
increase its funding obligations. |
| 5.25 |
Place of Business; Name. Companies will not transfer
their chief executive office or principal place of business, or
move, relocate, close or sell any business Premises. Companies will
not permit any tangible Collateral or any records relating to the
Collateral to be located in any state or area in which, in the
event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed
in order to perfect the Security Interest. Companies will not
change their respective names or jurisdictions of
organization. |
| 5.26 |
Constituent Documents; S Corporation Status. Companies
will not amend their Constituent Documents. Companies will not
become subchapter S corporations. |
| 5.27 |
Performance by Wells Fargo. If any Company fails to
perform or observe any of its obligations under this Agreement at
any time, Wells Fargo may, but need not, perform or observe them on
behalf of Companies and may, but need not, take any other actions
which Wells Fargo may reasonably deem necessary to cure or correct
this failure; and Companies shall pay Wells Fargo upon demand the
amount of all costs and expenses (including reasonable
attorneys’ fees and legal expense) incurred by Wells Fargo in
performing these obligations, together with interest on these
amounts at the Default Rate. |
| 5.28 |
Wells Fargo Appointed as Company’s Attorney in
Fact. To facilitate Wells Fargo’s performance or
observance of Companies’ obligations under this Agreement,
each Company hereby irrevocably appoints Wells Fargo and Wells
Fargo’s agents, as such Company’s attorney in fact
(which appointment is coupled with an interest) with the right (but
not the duty) to create, prepare, complete, execute, deliver,
endorse or file on behalf of such Company any instruments,
documents, assignments, security agreements, financing statements,
applications for insurance and any other agreements or any Record
required to be obtained, executed, delivered or endorsed by such
Company in accordance with the terms of this Agreement. |
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| 6. |
EVENTS OF DEFAULT AND REMEDIES |
| 6.1 |
Events of Default. An “Event of Default”
means any of the following: |
| (a) |
Any Company fails to pay the amount of any Indebtedness on the
date that it becomes due and payable; |
| (b) |
Any Company fails to observe or perform any covenant or
agreement of Companies set forth in this Agreement, or in any of
the Loan Documents, or in an |
|
